dedol-hf/india-case-legal-rag huggingface dataset:
reversioner  were  remote.  Mst. Mohan Dei had  a  son  Shri
Kishan  Das who was the next presumptive reversioner and  as
the  boy  was a good deal younger  than  Brijlal,  Brijlal's
chances  were  slim. Actually, the boy survived  Brijlal  by
nearly forty years. Brijlal died in 1889or 1890 and the  boy
did not die till March 1929.  Had  he lived another eight or
nine months he would have succeeded and the plaintiffs would
have  been nowhere. Now this dispute, seriously  pressed  by
both sides, was referred to arbitration.  It is neither here
nor there whether the award was valid, whether the  decision
fell within the scope of the reference or whether it had any
binding character in itself.  Even if it was wholly invalid,
it was still open to the parties to say: Never mind  whether
the arbitrator was right or wrong, his decision is fair  and
sensible,  so instead of wasting further time and  money  in
useless litigation, we will accept it and divide the  estate
in  accordance  with his findings.  That would have  been  a
perfectly  right and proper settlement of the  dispute,  and
whether  it  bound third parties or not it  would  certainly
bind the immediate parties; and that in effect is what  they
did.  By his conduct Brijlal induced Mst. Mohan Dei  to  be-
lieve  that this would be the case and on the faith of  that
representation,  namely  the  acceptance of  the  award,  he
induced  Mst. Mohan Dei to act greatly to her detriment  and
to  alter  her position by accepting the award  and  parting
with  an appreciable portion of the estate, and  he  himself
obtained  a  substantial  advantage to which  he  would  not
otherwise  have been entitled and enjoyed the benefit of  it
for  the rest of his life; and to his credit be it said,  he
never attempted to go behind his decision.  In any event, we
are clear that that created an estoppel as against Brijlal.
    In our opinion, the present case is very similar to  the
one  which their Lordships of the Privy Council  decided  in
Kanhai  Lal v. Brij Lal (1). There also there was a  dispute
between  a  limited owner and a person who, but for  an  un-
proved claim (adoption) which he
 (1) (1919) 45 I.A. 118.
485
put  forward, had no right to the estate.  The  dispute  was
taken to the courts but was compromised and according to the
agreement  the  property was divided between the  two  rival
claimants and the agreement was given effect to and acted on
for  a period of twenty years. Later, the succession  opened
out  and the other party to the compromise, who by then  had
stepped into the reversion, claimed the rest of the  estate,
which  had been assigned to the limited owner,  against  her
personal  heirs.  The Judicial Committee rejected the  claim
on  the  ground of estoppel and held that  even  though  the
plaintiff  claimed  in a different character  in  the  suit,
namely as reversioner, he having been a party to the compro-
mise  and having acted on it and induced the other  side  to
alter  her position to her detriment, was estopped.   We  do
not  think  the fact that there was a  voluntary  compromise
whereas  here there was the imposed decision of an  arbitra-
tor.  makes any difference because we are not proceeding  on
the  footing of the award but on the actings of the  parties
in  accepting  it  when they need not have done  so  if  the
present contentions are correct.
     It is true that in one sense a question of title is one
of law and it is equally true that there can be no  estoppel
on  a  question of law.  But every question of law  must  be
grounded on facts and when Brijlal's conduct is analysed  it
will be found to entail an assertion by him that he admitted
and recognised facts which would in law give Mst. Mohan  Dei
an  absolute interest in the lands awarded to her.   It  was
because  of that assertion of fact, namely  his  recognition
and  admission  of the existence of facts which  would  give
Mst. Mohan Dei an absolute interest, that she was induced to
part with about one-third of the property to which  Brijlal,
on a true estimate of the facts as now known, had no  right.
There  can be no doubt that she acted to her  detriment  and
there  can, we think, be equally no doubt that she  was  in-
duced  to  do so on the faith of  Brijlal's  statements  and
conduct  which induced her to believe that he  accepted  all
the implications of the
63
486
award.   But in any event, we are clear that  Brijlal  would
have  been estopped. The nature of the dispute and  the  de-
scription  of  it  given in the award show  that  there  was
considerable  doubt, and certainly much dispute,  about  the
true  state of affairs.  Even if the arbitrator  was  wholly
wrong  and even if he had no power to decide as he  did,  it
was  open to both sides to accept the decision and by  their
acceptance  recognise the existence of facts which would  in
law give the other an absolute estate in the properties they
agreed to divide among themselves and did divide.  That,  in
our  opinion is a representation of an existing fact or  set
of  facts.  Each would consequently be estopped  as  against
the other and Brijlal in particular would have been estopped
from  denying the existence of facts which would  give  Mst.
Mohan Dei an absolute interest in the suit property.
     We  turn next to his son Kishan Lal.  Brijlal  died  in
1889 or 1890.  At that date Mst. Mohan Dei's son Shri Kishan
Das  was  alive and was the  next  presumptive  reversioner.
Brijlal's  sons therefore had no more right to that  portion
of  his  estate which was assigned to Brijlal  than  Brijlal
himself. But they took possession and claimed through  their
father.  ]hey  did not claim an independent title  in  them-
selves,  and,  as we know, they had no other title  at  that
date.  They were therefore in no better position than  Brij-
lal  and as Brijlal would have been estopped,  the  estoppel
descended to them also because they stepped into his  shoes.
This  would be so even if Brijlal had claimed  the  property
independently  for himself, which he did not; but much  more
so as he claimed in joint family rights and evidently  acted
as karta or manager on behalf of his family.
   But  apart  from  this, there was  also  an  independent
estoppel  in Kishan Lal.  We have said, he had no  right  to
this part of the estate when his father died apart from  the
award.  But nevertheless he took possession along  with  his
brother  and the two of them treated the property  as  their
own and derived benefit
487
from it.  They partitioned the estate between themselves and
sold  away parts of it to third parties. Kishan Lal knew  of
the  award.   He  knew that mutation had  been  effected  in
accordance with it and possession taken by Brijlal under  it
and that the rest had been retained by Mst. Mohan Dei.   His
retention  of the property therefore and his  continuing  to
deal  with  it on the basis of the award indicated  his  own
acceptance  of  the award and, therefore, by  his  acts  and
conduct,  he  represented  that he also,  like  his  father,
admitted the existence of facts which would in law give Mst.
Mohan  Dei an absolute estate; and further, he allowed  Mst.
Mohan  Dei to deal with the estate as her own, for  she,  on
her  part.  also  acted on the award  and  claimed  absolute
rights  in the property assigned to her.  She dealt with  it
on  that footing and gifted it in that right to  her  grand-
sons, the contesting defendants, on 4th April, 1929.   Muta-
tion was effected and Kishan Lal raised no objection. We see
then  that Brijlal retained possession of property to  which
he  was not entitled for a period of five or six years  from
1884 to 1889 or 1890 and induced Mst. Mohan Dei to part with
it by representing that he accepted the award and her  abso-
lute  title  to the rest, and after him Kishan Lal  and  his
brother between them enjoyed the benefit of it from 1889  or
1890 down to October 1929 when Mst. Mohan Dei died, that is,
for a further forty years, and led Mst. Mohan Dei to believe
that they also acknowledged her title to an absolute estate.
We have no doubt that down to that time Kishan Lal was  also
estopped for the reasons given above.  Had he questioned the
award and reopened the dispute Mst. Mohan Dei would at  once
have  sued and would then for forty years have obtained  the
benefit  of property from which she was excluded because  of
her acceptance of the award on the faith of Brijlal's asser-
tion  that  he too accepted it. Kishan Lal's  inaction  over
these years with full knowledge of the facts, as is  evident
from the deposition of D.W. 2, Dhiyan Singh, whose testimony
is uncontradicted, and his acceptance of the estate with all
its  consequential   benefits,  unquestionably   creates  an
estoppel in him. This witness tells us that--
488
  "Kishanlal always accepted this award and acted upon it."
He  qualifies this in cross-examination by  saying  that
Kishan  Lal had also objected to it but the witness did  not
know  whether  that  was before or after  Mst.  Mohan  Dei's
death.   The documents filed show it was after, so there  is
no  reason  why the main portion of his statement  which  is
uncontradicted,  and  which could  have  been  contradicted,
should not be accepted.
    In  March,  1929, Mst. Mohan Dei's son Shri  Kishan  Das
died  and Kishan Lal thereupon became the  next  presumptive
reversioner, and in October, 1929, when the reversion opened
out the estate vested in him, or rather would have vested in
him but for the estoppel. The question therefore is, did  he
continue  to be bound by the estoppel when he assumed a  new
character on the opening out of the reversion ?  We have  no
doubt  he did. The decision of the Judicial Committee  which
we have just cited, Kanhai Lal v. Brijlal(1), is, we  think,
clear on that point. Although other reversioners who do  not
claim  through the one who has consented are not bound.  the
consenting  reversioner is estopped. This is beyond  dispute
when there is an alienation by a limited owner without legal
necessity.  See Ramgouda Annagouda v. Bhausaheb  (2)   where
the ground of decision was
      ".......but  Annagouda  himself being a party  to  and
benefiting by the transaction evidenced thereby was preclud-
ed from questioning any part of it."
In  our opinion, the same principles apply to a case of  the
present kind.
It  was  contended, however, on the  strength  of  Rangasami
Gounden  v.  Nachiappa  Gounden(3) and Mr. Binda    Kuer  v.
Lalitha Prasad(4), that even if Kishan Lal  did take posses-
sion in 1889or 1890 on the strength of a title derived  from
his father, that would not have precluded him from asserting
his own rights in a different character when the  succession
opened
  (1)(1918)  45  I.A 118.        (2) (1927) 54 I.A.  396  at
403.
  (3)  (1919) 46 I.A. 72.   (4) (1936) A.I.R. 1936 P.C.  304
at 308.
489
out.  Reliance in particular was placed upon page 808 of the
latter  ruling.   In  our opinion, that decision  is  to  be
distinguished.
    In  that case the reversion did not fall in  till  1916.
Long  before  that,  namely in 1868,  the  next  presumptive
reversioners entered into a compromise whereby the  grandfa-
ther of one Jairam who figured in that case obtained a  good
deal  more than he Would have been entitled to in the  ordi-
nary  way.   But for the compromise this  grandfather  would
have  got only one anna 12 gundas share, whereas due to  the
compromise  he got as much as 2 annas 4 gundas,  The  actual
taking of possession was however deferred under the  compro-
mise  till the death of one Anandi Kuer.  She died  in  1885
and  on that date Jairam was entitled to  his  grandfather's
share as both his father and grandfather were dead.   Jairam
accordingly reaped the benefit of the transaction. But it is
to  be observed that the extra benefit which he derived  was
only as to a 12 gundas share because he had an absolute  and
indefeasible  right to 1 anna 12 gundas in any event in  his
own  right under a title which did not spring from the  com-
promise.
    Jairam  lost 1 anna 4 gundas to a creditor Munniram  and
out  of  the one anna which he had left from the 2  annas  4
gundas he sold 13 gundas to the plaintiffs for a sum of  Rs.
500.  Now it is evident that on those facts it is impossible
to  predicate that the 13 gundas which the  plaintiffs  pur-
chased came out of the extra 12 gundas which Jairam obtained
because  of the compromise rather than out of the 1 anna  12
gundas to which he had a good and independent title  anyway;
and  of  course unless the plaintiffs' 13  gundas  could  be
assigned with certainty to the 12 gundas it would be  impos-
sible  to  say that they had obtained any benefit  from  the
compromise.  The Judicial Committee also added that even  if
it  was possible to assign this 13 gundas with certainty  to
the  12 gundas it by no means followed that  the  plaintiffs
admitted  that  fact nor would that necessarily  have  given
them a benefit under the compromise.  They had the right  to
contest 'the
490
position  and  gamble on the possibility of  being  able  to
prove the contrary. Their Lordships added-
    "  Unless  the plaintiffs' individual conduct  makes  it
unjust  that they should  have a place among Bajrangi  Lal's
reversioners their legal rights should have effect."
    In the other case, Rangasami Gounden v. Nachiappa  Goun-
den(1),  their Lordships' decision about this matter  turned
on the same sort of point: see page 87.
     The  present case is very different.  When  Kishan  Lal
took  possession of his father's property he held by  virtue
of  the award and under no other title, and for forty  years
he  continued  to derive benefit from  it.  Accordingly,  he
would have been estopped even if he had claimed in a differ-
ent  character  as reversioner after the  succession  opened
out.
    It was conceded that if the estoppel against Kishan  Lal
enured  after October 1929, then the plaintiffs,  who  claim
through Kishan Lal, would also be estopped.
    The appeal succeeds. The decree of the High Court is set
aside and that of the first Court dismissing the plaintiffs'
claim is restored.  Costs here and in the High Court will be
borne by the plaintiffs-respondents.
                                     Appeal allowed.
Agent for the appellants: Ganpat Rai.
Agent for the respondents: Sardar Bahadur Saharya.
(1) (1919) 46 I.A. 72.
491
PETITIONER:
V.V.R.N.M. SUBBAYYA CHETTIAR
        Vs.
RESPONDENT:
COMMISSIONER OF INCOME-TAX, MADRAS.
DATE OF JUDGMENT:
21/12/1950
BENCH:
FAZAL ALI, SAIYID
BENCH:
FAZAL ALI, SAIYID
MUKHERJEA, B.K.
AIYAR, N. CHANDRASEKHARA
CITATION:
 1951 AIR  101            1950 SCR  961
 CITATOR INFO :
 R          1958 SC 779  (6)
 E&R        1960 SC1147  (9,11,16,18,22,24,25)
ACT:
    Indian  Income-tax  Act (XI of 1922), s.  4A  (b)--Hindu
undivided  family--Residence--Tests--Occasional  visits   to
India   and  attending  to  family  affairs  there,   effect
of--Burden of proof----" Control and management ", "situated
", "wholly" and "affairs ", meanings of.
HEADNOTE:
   The  words used in s. 4A (b) show: (i) that, normally  a
Hindu undivided family will be taken to be resident, in  the
taxable  territories, but such a presumption will not  apply
if  the  case can be brought under the second  part  of  the
provision,  (ii)the word "affairs" means affairs  which  are
relevant  for  the purpose of the Income-tax Act  and  which
have some relation to income, (iii) the question whether the
case falls within the exception depends on whether the  seat
of the direction and control of the affairs of the family is
inside or outside British India, and (iv)the onus of proving
facts which would bring his case within the exception  which
is provided by the latter part is on the assessee.
The expression "control and management" in s. 4A (b)  of
the  Income-tax Act signifies the controlling and  directive
power,  the  "head and brain" as it  is  sometimes  called;"
situated" implies the functioning of such power at a partic-
ular  place  with some degree of  permanence;  and  "wholly"
seems to recognise the possibility of the seat of such power
being  divided between two distinct and separate places  and
that  a Hindu undivided family may have more than one  resi-
dence in the same way as a corporation may have.
    The  karta  of a Hindu undivided family lived  with  his
wife  and children and carried on business in Ceylon,  which
had become their place of domicile.  [He owned some  immove-
able  property  and had a house and investments  in  British
India.  In the year of account he visited British India  and
stayed  there for periods amounting in all to 101  days  and
during his stay started two firms in British India,  person-
ally attended to a litigation relating to the family  lands,
and  appeared before the Income-tax authorities in  proceed-
ings relating to assessment of the income of the family:
    Held,  that these facts were not necessarily  conclusive
to  establish the existence of a centre of control and  man-
agement  of the affairs of the family in British India,  but
they were by no means irrelevant to the matter in issue, and
inasmuch  as the assessee had not discharged the onus  which
lay  upon  him under the law by producing all  the  material
evidence  which he was called upon to produce to  show  that
normally and as a matter of
962
course the affairs in India were  also being controlled from
Colombo,  the normal presumption under the first part of  s.
4A  (b)   must be given effect to and the assessee  must  be
treated  as a resident in British India during the  year  in
question.   It was however open to the assessee to prove  in
future years by proper evidence that the seat of eontrol and
management  of the affairs of the family was wholly  outside
British  India.
 De Beere v. Howe (5 Tax Cas. 198), Swedish Central  Railway
Co. Ltd. v. Thompson (9 Tax Cas. 373) referred to.
JUDGMENT:
APPELLATE   JURIDICTION:  Civil  Appeal No. XXXVIII  of
1949.
     Appeal from a Judgment of the High Court of  Judicature
at Madras (Gentle C.J. and Patanjali Sastri J.) dated August
22, 1947, in a reference under section 66 (1) of the  Indian
Income-tax  Act  made by the Income-tax  Appellate  Tribunal
(Re/. No. 25 of 1946).
     K. Rajah Aiyar (K. Srinivasan, with him) for the appel-
lant.
     M.C. Setalvad (G. N..Joshi, with him) for the  respond-
ent.
1950. December 21.  The Judgment of the Court was  delivered
by
     FAzL  ALI J.--This is an appeal from a judgment of  the
High Court of Judicature at Madras on a reference made to it
under  section  66 (1) of the Indian Incometax  Act  by  the
Income-tax Appellate Tribunal in connection with the assess-
ment  of the appellant to income-tax for the  year  1942-43.
The  question of law referred to the High Court was as  fol-
lows :--
     "Whether in the circumstances of the case, the assessee
(a  Hindu undivided family) is 'resident' in  British  India
under section 4A (b) of the Income-tax Act."
      The circumstances of the case may be briefly stated as
follows. The appellant is the karta of a joint Hindu  family
and  has been living in Ceylon with his wife, son and  three
daughters,  and  they  are stated to be  domiciled  in  that
country.  He carries on business in Colombo under  the  name
and style of the General Trading Corporation, and he owns  a
house,  some immoveable property and investments in  British
India.
    963
He has also shares in two firms situated at Vijayapuram  and
Nagapatnam  in British India. In the year of account,  1941-
42, which is the basis of the present assessment, the appel-
lant  is said to  have visited British India on seven  occa-
sions and the total period of his stay in British India  was
101  days. What he did during this period is  summarized  in
the judgment of one of the learned Judges of the High  Court
in these words :--
    "During such stays, he personally attended to a  litiga-
tion  relating to the family lands both in the  trial  Court
and  in the Court of appeal. He was also attending  the  in-
come-tax  proceedings  relating  to the  assessment  of  the
family  income, appearing before the income-tax  authorities
at  Karaikudi  and Madras.  On one of  these  occasions,  he
obtained  an extension of time for payment of the tax  after
interviewing  the  authority concerned...... "
The other facts relied upon by  the  income-tax authori-
ties were that he did not produce the file of correspondence
with the business in Colombo so as to help them in determin-
ing  whether the management and control of.the business  was
situated  in  Colombo  and he had  started  two  partnership
businesses in India on 25th February, 1942, and remained  in
India  for some time after the commencement of  those  busi-
nesses.
    Upon the facts so stated, the Income-tax Officer and the
Assistant Commissioner of Income-tax held that the appellant
was  a resident within the meaning of section 4A (b) of  the
Income-tax  Act, and was therefore liable to be assessed  in
respect  of  his foreign income.  The  Income-tax  Appellate
Tribunal  however  came to a different conclusion  and  held
that  in the circumstances of the case it could not be  held
that  any act of management or control was exercised by  the
appellant during his stay in British India and therefore  he
was  not liable to assessment in respect of his income  out-
side British India. This view was not accepted by a Bench of
the  Madras High Court consisting of the learned Chief  Jus-
tice and Patanjali Sastri J. They held that the Tribunal had
misdirected itself in determining the
964
question  of the" residence" of the appellant's  family  and
that  on the facts proved the control and management of  the
affairs  of  the family cannot be held to have  been  wholly
situated  outside  British India, with the result  that  the
family  must  be deemed to be resident  ,fin  British  India
within the meaning of section 4A (b) of the Income-tax  Act.
In this appeal, the appellant has questioned the correctness
of the High Court's decision :-
   Section 4A (b) runs thus:--
  "For the purposes of this Act----
A Hindu undivided family, firm or other association of  per-
sons  is  resident in British India unless the  control  and
management of its affairs is situated wholly without British
India."
     It  will  be  noticed  that   section  4A  deals   with
"residence"  in the taxable territories, of  (a)individuals,
(b)a  Hindu undivided family, firm or other  association  of
persons, and (c) a company.  In each of these cases, certain
tests  have been laid down, and the test with which  we  are
concerned is that laid down in section 4A (b).  This  provi-
sion appears to be based very largely on the rule which  has
been applied in England to cases of corporations, in  regard
to  which  the law was stated thus by Lord  Loreburn  in  De
Beers Howe(1).
    "A  company cannot eat or sleep, but it can keep  house
and  do  business.   We ought, therefore, to  see  where  it
really keeps house and does business......  The decision  of
Chief Baron Kelly and Baron Huddleston in The Calcutta  Jute
Mills v. Nicholson and The Cessna Sulphur Company v. Nichol-
son(2), now' thirty years ago, involved the principle that a
company  resides for purposes of income-tax where  its  real
business   is  carried on. Those decisions have  been  acted
upon  ever since.  I regard that as the true rule,  and  the
real business is carried on where the central management and
control actually abides."
It is clear that what is said in section 4A (b) of  the
Income-tax Act is what Lord Loreburn intended to
(1) 5 Tax Cas. 198.                (2) (1876) 1 Ex. D. 428,
965
convey  by the words "where the central management and  con-
trol actually abides."
    The  principles which are now well-established in'  Eng-
land  and  which  will be found to have  been  very  clearly
enunciated  in  Swedish Central Railway Company  Limited  v.