Case: Commissioner of Income Tax, Madras Vs. Managing Trustees, Nagore Durgha, Nagore

the said income in the hands of the managing trustee fell outside the scope of S. 41 of the Act. 7. There are two answers to this contention. The doctrine of vesting is not germane to this contention. In some of the enumerated persons in the section the property vests and in others it does not vest, but they only manage the property. In general law the property does not vest in a receiver or manager but it vests in a trustee, but both trustees and receivers are included in S. 41 of the Act. The common thread that passes through all of them is that they function legally or factually for others; they manage the property for the benefit of others. That the technical doctrine of vesting is not imported in the section is apparent from the fact that a trustee appointed under a trust deed is brought under the section though legally the property vests in him. In the case of a Muslim Wakf the property vests in the Almighty; even so the mutawallies are brought under the section. A reasonable interpretation of the section is that all the categories of persons mentioned therein are deemed to receive the income on behalf of another person or persons or manage the same for his or their benefit. None of them has any beneficial interest in the income; he collects the income for the benefit of others. In this view, even if the Nattamaigars were trustees in whom the properties of the Durgha vested, they should be deemed to have received the income only on behalf of the Kasupangudars in definite shares. 8. The same conclusion will be reached even if the problem was approached from a different angle. In the well-known decision of the Privy Council in Vidya Varuthi Thirtha Swamigal v. Baluswami Ayyar, 48 Ind App 302 at p. 315: (AIR 1922 PC 123 at p. 128), the inappropriateness of the use of the expression trustee to the manager of a Hindu or Mahommadan religious endowments was brought out. Therein their Lordships observed: Neither under the Hindu Law nor in the Mahommedan system is any property conveyed to a shebait or a mutawalli, in the case of a dedication. Nor is any property vested in him; whatever property be holds for the idol or the institution he holds as manager with certain beneficial interests regulated by custom and usage. Under the Mahommedan Law, the moment a wakf is created all rights of property pass out of the wakif, and vest in God Almighty. The curator, whether called mutawalli or sajjadanjshin, or by any other name, is merely a manager. He is certainly not a trustee as understood in the English system. The Privy Council, in the context of a wakf property, reaffirmed the said observations, in Mt. Allah Rakhi v. Mohammad Abdur Rahim, 61 Ind App 50 : (AIR 1934 PC 77). The effect of the said decisions is that Nattamaigars are only the managers of the properties in which the Durgha and the kasupangudars have beneficial interests. The properties do not vest in them. They receive the income therefrom on behalf of both of them. After meeting the expenses of the Durgha they hold the balance on behalf of the kasupangudars and distribute the same in accordance with their shares. In this view, in terms of S. 41 of the Act the Nattamaigars are the managers of the properties on behalf of others and are entitled to receive the income therefrom on behalf of them. With the result, the income which they hold on behalf of the kasupangudars can be assessed only in their hands in the manner prescribed thereunder. But it is said that whatever may be the doctrine of Hindu or Mohammadan law, under the terms of the aforesaid scheme the properties vested in the Nattamaigars and therefore, they receive the income in their own right and not on behalf of the kasupangudars. A careful reading of the relevant part of the scheme does not countenance this argument. Clause 3 of the scheme, which is the material clause, reads: The management and administration of the affairs of the Nagore Durgha at Nagore, Tanjore District, and other thakias and shrines connected therewith (mentioned in Schedule A hereunder) and all properties - movables and immovables - which belong to or have been or may hereafter be given, dedicated, endowed thereto, shall subject to the provisions thereof vest hereditarily in the eight trustees or Nattamaigars of the Durgha who shall constitute the Board of Trustees. Each trustee or Nattamaigar is entitled to hold office for life, and after him the trusteeship shall devolve on his next male heir in accordance with the custom prevailing in respect of such office in the Durgha. Under this clause the management and administration of the Nagore Durgha and its properties vest in the Nattamaigars. What vests in the Nattamaigars is not the properties of the Durgha but the management and administration thereof. Unless the words are clear we are not prepared to hold that the High Court in framing a scheme for the endowments of the Durgha had introduced a foreign concept of trust in derogation of Mohammadan law. We, therefore, hold that the scheme did not vest the properties of the Durgha in the Nattamaigars. 9. Lastly, a faint argument was raised to the effect that under the scheme the managing trustee was not appointed under any order of a Court but was appointed by an agreement among the trustees. But in cl. 4 of the scheme the High Court gave a specific direction that the managing trustee shall be elected from among the Board of Trustees. The Managing Trustee elected was certainly appointed under an order of a Court, for the election was held pursuant to the order of the Court. That apart, in the view, we have taken, namely, that the Nattamaigars are not interest in the English sense of the term, this question does not arise for consideration.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]7. There are two answers to this contention. The doctrine of vesting is not germane to this contention. In some of the enumerated persons in the section the property vests and in others it does not vest, but they only manage the property. In general law the property does not vest in a receiver or manager but it vests in a trustee, but both trustees and receivers are included in S. 41 of the Act. The common thread that passes through all of them is that they function legally or factually for others; they manage the property for the benefit of others. That the technical doctrine of vesting is not imported in the section is apparent from the fact that a trustee appointed under a trust deed is brought under the section though legally the property vests in him. In the case of a Muslim Wakf the property vests in the Almighty; even so the mutawallies are brought under the section. A reasonable interpretation of the section is that all the categories of persons mentioned therein are deemed to receive the income on behalf of another person or persons or manage the same for his or their benefit. None of them has any beneficial interest in the income; he collects the income for the benefit of others. In this view, even if the Nattamaigars were trustees in whom the properties of the Durgha vested, they should be deemed to have received the income only on behalf of the Kasupangudars in definite shares8. The same conclusion will be reached even if the problem was approached from a different angle. In the well-known decision of the Privy Council in Vidya Varuthi Thirtha Swamigal v. Baluswami Ayyar, 48 Ind App 302 at p. 315: (AIR 1922 PC 123 at p. 128), the inappropriateness of the use of the expression trustee to the manager of a Hindu or Mahommadan religious endowments was brought out. Therein their Lordships observed:Neither under the Hindu Law nor in the Mahommedan system is any property conveyed to a shebait or a mutawalli, in the case of a dedication. Nor is any property vested in him; whatever property be holds for the idol or the institution he holds as manager with certain beneficial interests regulated by custom and usage. Under the Mahommedan Law, the moment a wakf is created all rights of property pass out of the wakif, and vest in God Almighty. The curator, whether called mutawalli or sajjadanjshin, or by any other name, is merely a manager. He is certainly not a trustee as understood in the English systemThe Privy Council, in the context of a wakf property, reaffirmed the said observations, in Mt. Allah Rakhi v. Mohammad Abdur Rahim, 61 Ind App 50 : (AIR 1934 PC 77). The effect of the said decisions is that Nattamaigars are only the managers of the properties in which the Durgha and the kasupangudars have beneficial interests. The properties do not vest in them. They receive the income therefrom on behalf of both of them. After meeting the expenses of the Durgha they hold the balance on behalf of the kasupangudars and distribute the same in accordance with their shares. In this view, in terms of S. 41 of the Act the Nattamaigars are the managers of the properties on behalf of others and are entitled to receive the income therefrom on behalf of them. With the result, the income which they hold on behalf of the kasupangudars can be assessed only in their hands in the manner prescribed thereunder. But it is said that whatever may be the doctrine of Hindu or Mohammadan law, under the terms of the aforesaid scheme the properties vested in the Nattamaigars and therefore, they receive the income in their own right and not on behalf of the kasupangudars. A careful reading of the relevant part of the scheme does not countenance this argument. Clause 3 of the scheme, which is the material clause, reads:The management and administration of the affairs of the Nagore Durgha at Nagore, Tanjore District, and other thakias and shrines connected therewith (mentioned in Schedule A hereunder) and all properties - movables and immovables - which belong to or have been or may hereafter be given, dedicated, endowed thereto, shall subject to the provisions thereof vest hereditarily in the eight trustees or Nattamaigars of the Durgha who shall constitute the Board of Trustees. Each trustee or Nattamaigar is entitled to hold office for life, and after him the trusteeship shall devolve on his next male heir in accordance with the custom prevailing in respect of such office in the DurghaUnder this clause the management and administration of the Nagore Durgha and its properties vest in the Nattamaigars. What vests in the Nattamaigars is not the properties of the Durgha but the management and administration thereof. Unless the words are clear we are not prepared to hold that the High Court in framing a scheme for the endowments of the Durgha had introduced a foreign concept of trust in derogation of Mohammadan law. We, therefore, hold that the scheme did not vest the properties of the Durgha in the Nattamaigars9. Lastly, a faint argument was raised to the effect that under the scheme the managing trustee was not appointed under any order of a Court but was appointed by an agreement among the trustees. But in cl. 4 of the scheme the High Court gave a specific direction that the managing trustee shall be elected from among the Board of Trustees. The Managing Trustee elected was certainly appointed under an order of a Court, for the election was held pursuant to the order of the Court. That apart, in the view, we have taken, namely, that the Nattamaigars are not interest in the English sense of the term, this question does not arise for consideration.