Case: Satyanarayana Modi Vs. The Controller Of Estate Duty, Delhi And Rajasthan,N

1. Purnabai widow of Sagarmal Mody held on April 1, 1953 three deposit receipts of the aggregate face value of Rs. 6,26,724-14-0 with the State Bank of Bikaner. By her letter dated July 22, 1952 Purnabai informed the Bank that she intended to make a gift of the amounts of two out of the three receipts to Suryakant son of her adopted son Satyanarayana, and requested that the receipts be renewed for three months in the joint names of "Purnabai Sagarmal Mody and/or Suryakant S. Mody - payable to either orthat the renewed fixed deposit receipts be sent to Satyanarayana at Bombay. Pursuant to this letter two fresh receipts were issued on August 3, 1953 for Rs.5,00,000 and 45,793-4-0. It appears that a receipt for Rs. 80,931-10-0 was previously obtained in the joint names of Purnabai and Suryakant on July 4, 1953.2. On August 16, 1953 Purnabai executed a deed of gift in favour of Suryakant in respect of the three receipts containing the followingof natural love and affection I have towards the said Suryakant son of Satyanarayana I hand over to the said Satyanarayana as the father and natural guardian of the said Suryakant Fixed Deposit receipts total for Rs. 6,26,724-14-0. * * * * F. D. R. No. 222/8293, dated 3rd August, 1953 for Rs. 45,793-4-0, F. D. R. No. 221/8292, dated 3rd August, 1953 for Rs. 5,00,000 of the Bank of Bikaner Ltd., Jaipur and F. D. R. No. 11446, dated 4th July, 1953 for Rs. 80, 931-10-0 of Bank of Bikaner Ltd., Jhunjhunu in the name of Purnabai Sagarmall and Suryakant Satyanarayana Mody payable to either or survivor as and by way of gift to the said Suryakant on the 15th day of August 1953 and that the said Satyanarayana for and on behalf of and as the natural guardian of the said Suryakant accepted the said gift of Rs. 6,26,724-14-0 * * * gifted by me asgift deed contained a confirmation by Satyanarayana that he had accepted the gift for and on behalf of and as natural guardian of Suryakant, "to the intent and effect that the said Suryakant shall be the absolute owner of the sum gifted."3. On August 17, 1953 Purnabai addressed a letter to the Manager of the Bank enclosing a copy of the declaration of gift and intimated that her grandson Suryakant was the sole owner of the amount of the two fixed deposit receipts and till Suryakant S. Mody attained the age of majority the receipts should remain in the joint names as they then stood.4. From time to time, Purnabai presented the receipts for renewal when they matured and obtained fresh receipts in the joint names of herself and Suryakant. On August 25, 1955 the receipt for Rs. 80,931,10-0 was encashed and out of the amount of Rs. 86,732 realized, Rs. 5,000 were invested in the name of Suryakant in National Savings Certificates. The balance was also deposited alone with a firm in Bombay also in the name of Suryakant alone. The other two receipts were renewed in the joint names of Purnabai and Suryakant.5. After the death of Purnabai on February 15, 1956, the two receipts were encashed by Suryakant alone. The Assistant Controller of Estates Duty in proceedings for assessment of estate duty held inter alia that possession and enjoyment of the gifted property was not assumed by the donee to the entire exclusion of the donor, and on that account the amount of the two receipts and interest thereon formed part of the estate of Purnabai and was liable; to estate duty. Regarding the third receipt for Rs. 80,931-10-0 the Assistant Controller observed that even though the earlier receipt was discharged on August 25, 1955 i. e., within two years of the death of Purnabai and the amount was invested in the name of Suryakant, by virtue of the provisions of the Estate Duty Act the amount held in the name of Suryakant alone, was for assessment of estate duty liable to be included in the estate of Purnabai.6. In appeal the Central Board of revenue confirmed the order. The Board held that at all material times during the currency of the fixed deposit Purnabai had the right to receive the money from the Bank by giving discharge for the same and that whenever the Fixed Deposit Receipts matured during the lifetime of Purnabai, the receipts were, in fact, discharged by her alone and in the circumstances it could not be said that the property was held by the donee to the entire exclusion of the donor.7. The Board of Revenue referred the following question to the High Court of Rajasthan foron the facts and in the circumstances of the case the sum of Rs. 6,85,193 was correctly included in the estate of the deceased as property deemed to pass on her death under Section 10 ofthe Estate Duty Act, 1953High Court of Rajasthan answered the question in the affirmative. With certificate granted by the High Court this appeal has been preferred.

Court's reasoning:
It is clear that Purnabai desired to make a gift of the amount represented by the previous deposit receipts and did in fact execute a deed of gift. The Bank had notice of the gift deed.It is unnecessary to consider whether in the present case the investment was made by renewal of fixed deposit receipts after August 16, 1953 for a purpose which the Bank knew was inconsistent with Purnabais fiduciary character and duty. We are not concerned in this case to decide whether the Bank could have refused to pay the amount of the renewed deposit receipts if demanded byphraseology of the section is some what involved. The purport of the section is however, clear. The section clearly means that if in respect of any property which is gifted, bona fide possession and enjoyment is not immediately assumed by the donee and thenceforward retained by him to the entire exclusion of the donor or of any benefit to him therein the property gifted shall not be excluded from the estate subject to estateconduct of Purnabai clearly indicates that she had no intention to part with control over the property; the deposit receipts were obtained in joint names, and Purnabai had authority to withdraw the amount from the Bank, without consulting the guardian of Suryakant.The deposit receipts were renewed on several occasions even after the execution of the deed of gift in the joint names of Purnabai and Suryakant. Purnabai alone presented the fixed deposit receipts for renewal. She could under the terms of the receipts receive the moneys to the entire exclusion of Suryakant.We are unable to hold, in the circumstances, that bona fide possession and enjoyment of the property gifted was immediately assumed by Suryakant and thenceforward retained by him to the entire exclusion of Purnabai. The right retained by Purnabai to have the receipts made out in her name jointly with Suryakant and the power to recover the amount form the Bank without the concurrence of Suryakant clearly indicate that she was not excluded, but she had retained important benefits in herself in the fixed deposit receipts.12. It is true that the third receipt was encashed during the life time of Purnabai, and the amount was invested in the name of Suryakant alone. But the encashment and reinvestment were within two years of the death of Purnabai and the amounts so reinvested were liable to be included in the estate of Purnabai.13. The argument that fixed deposit receipts had remained exclusively in the possession of Satyanarayana as guardian of Suryakant and they were obtained by him from Purnabai for the purpose of renewal is not supported by any evidence. There is also no evidence that in obtaining the receipts in the joint names Purnabai acted as a guardian of Suryakant nor that she was a benamidar of Suryakant. We are of the view that the High Court was right in answering the question against the appellant.