Ku. Sonia Bhatia Vs. State of U.P.
& Ors [1981] INSC 71 (17 March 1981)
FAZALALI, SYED MURTAZA FAZALALI, SYED MURTAZA
VARADARAJAN, A. (J) ERADI, V. BALAKRISHNA (J)
CITATION: 1981 SCR (3) 239 1981 SCC (2) 585
1981 SCALE (1)491
ACT:
U.P. Imposition of Ceiling on Land Holdings
Act 1960- Section 5(6)-Scope of-Gift of property for love and affection-If
could be said to be a transfer for consideration.
Words and
phrases-"Consideration."-'Adequate"-"Gift"-
"Transfer"-Meanin of.
Interpretation-Words of everyday use-How
interpreted.
HEADNOTE:
Sub-section 6 of section 5 of the U.P.
Imposition of Ceiling on Land Holdings Act, 1960 as it stood at the relevant
time provided that in determining the ceiling area any transfer of land made
after January, 24, 1971 should be ignored and not taken into account. Clause
(b) of the proviso to sub-section 6 which carves out an exception states that
the sub-section shall not apply to a transfer proved to the satisfaction of the
Prescribed Authority to be in good faith and for adequate consideration under
an irrevocable instrument. Explanation II to this proviso places the burden of
proof that a case fell within clause (b) of the proviso is on the party
claiming its benefit.
On January 28, 1972 the donor gifted away
certain lands in favour of his grand-daughter, the appellant, daughter of a
pre-deceased son.
The gift having been made after the
prescribed date, the Prescribed Authority ignored the gift for purposes of
section 5 (6) of the Act.
On appeal, the District Judge gave a finding
in favour of the appellant holding that the gift was bona fide having regard to
the circumstances in which it was made and that it could not be held invalid
merely because it was executed after the due date of January 24, 1971.
Purporting to follow one of its earlier
decisions, the High Court held that a gift not being a transfer for
consideration, had to be ignored under the provisions of the Act and that a
gift being a gratuitous transfer made out of love and affection fell outside
the purview of clause (b) of the proviso.
On behalf of the appellant it was contended
that a gift could not be said to be a transfer without consideration because
even love and affection may 240 provide sufficient consideration and hence the
condition regarding adequate consideration would not apply to a gift.
Dismissing the appeal
HELD: It is a well settled rule of
construction of statutes that where the definition of a word has not been given
in an enactment it must be construed in its popular sense if it is a word of
every day use, that is, the sense in which people conversant with the
subject-matter with which it deals would attribute to it. Similarly if the
language used is clear and explicit, the provision cannot be reduced to a
nullity by reading into it a meaning which it does not carry. [246B] In the
instant case therefore, the word "transfer" being a term of
well-known legal significance with well ascertained incidents the legislature
did not consider it necessary to define it separately. It is used in the sense
in which it is used in the Transfer of Property Act. [245 G] C.I.T., Andhra
Pradesh v. M/s. Taj Mahal Hotel, Secunderabad [1972] 1 S.C.R. 168 and Union of
India v. Sankal Chand Himatlal Sheth and Anr. [1978] 1 S.C.R. 423 applied.
Keats v. Lewis [1911] A.C. 641 referred to.
A conspectus of the meaning of the term
"gift" is that it is a transfer which does not contain an element of
consideration in any shape or form. Where in respect of a gift there is a
benefit measurable in terms of money the transaction ceases to be a gift and
assumes a different colour. Yet another salient feature of a gift is that love,
affection and many other factors may constitute the motive for the gift and may
enter into the intention of the donor making a gift, but none of these can be
held to be legal consideration, as understood by law. [251 G-H; 252F]
"Consideration" means a reasonable equivalent or other valuable
benefit passed on by the promisor to the promisee or by the transferor to the
transferee. When the term consideration is qualified by the word
"adequate" it makes it sufficient and valuable having regard to the
facts, circumstances and necessities of the case. [251 F] The word
"transfer for adequate consideration" used in clause (b) of the
proviso excludes a transaction, which is in the nature of a gift and which is
without consideration.
[252 E] The argument that if the legislature
intended to exclude gifts clause (b) of the proviso would have expressly said
so and by not excluding it must be deemed to have included a gift is without
force particularly in the face of the clear and unambiguous language of the
proviso. Every legislature has its own technical device to express its
intendment. Express exclusion is not the only method of conveying the
legislative intent there may be other methods or devices by which a legislature
expresses its intent;
namely, by using expressions, which would
exclude a particular transaction by necessary intendment. This is what is done
in enacting clause (b) of the proviso. [252 G-H] 241 The legislature has made
its intention clear that a gift is excluded by qualifying the word
"consideration" with the adjective "adequate". [252 H] By
using the word "adequate" to qualify the word "consideration"
the legislature has ruled out gifts from the ambit of clause (b) of the
proviso. [253 C] The words "adequate consideration" clearly postulate
that consideration must be capable of being measured in terms of money, having
regard to the market price of the property, the value that it may fetch if
sold, the value of similar lands situate in the vicinity and so on. [253 B] The
argument that since in the case of a gift there is no question of
consideration, the words for "adequate consideration" in the 3rd part
of clause (b) of the proviso are inapplicable and should, therefore, be ignored
is opposed to the well known rule of interpretation that Courts, while
interpreting statutes, must not legislate. A legislature does not use words
without any intention and every word used by the legislature must be given its
due import. The intention of the legislature in using the words "adequate
consideration" is to exclude any transaction which is not for adequate
consideration. Even if a sale is bona fide if to but consideration is
inadequate, the transaction would fall beyond the protection of clause (b) of
the proviso. [253 E-F] Debi Saran Koiri and Anr. v. Nandlal Chaubey and Ors. A.I.R.
1929 Patna 591 and Kulasekaraperumal v. Pathakutty Thalevanar and Ors. A.I.R.
1961 Madras 405 approved, The words "adequate consideration" carry a
well-known legal significance and, therefore, convey the same meaning and
import in whichever statute they are used unless a contrary intention appears
from the language employed by the legislature in a particular Act. [256 E-F] Tulsidas
Kilachand v. The Commissioner of Income-tax Bombay City I, [1961] 3 S.C.R. 351,
referred to Fateh Mohammed v. District Judge [Civil Writ Petition No. 915 of
1975, decided on 10-7-78] overruled.
An explanation merely widens the scope of the
main section and is not meant to carve out a particular exception to the main
section. The words admission, acknowledgment, relinquishment or declaration
used in Explanation I, do not absolve the party concerned from proving that the
transfer should be executed in good faith and for adequate consideration. [256
E-F] However laudable the object of the donor in gifting the property to his
grand-daughter (particularly in the circumstances of this case) may be and
whatever hardship might ensue to the donee by applying the provision, the gift
fails if it does not fulfill the other essential requirements of the section.
The act was enacted to implement one of the Directives contained in Part IV of
the Constitution and if in this process a few individuals suffer that cannot be
helped, for, individual interests must yield to the larger interests of the
community. [258 D-F] 242
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 775 of 1981.
Appeal by Special Leave from the Judgment and
Order dated 21.12.78 of the High Court of Allahabad in C.M.W.P. No. 12602/77.
S. N. Kacker and Prem Malhotra for the
Appellant.
O. P. Rana and S. Dikshit for the Respondent.
The Judgment of the Court was delivered by
FAZAL ALI, J. This appeal by special leave is directed against a judgment dated
December 21, 1978 of the Allahabad High Court allowing the writ petition filed
by the State of U.P. before the Court.
The case arose out of an order passed by the
Prescribed Authority under the U.P. Imposition of Ceiling on Land Holdings Act,
1960 (hereinafter referred to as the 'Act'), as amended uptodate, by which the
said Authority rejected the claim of the petitioners on the basis of a gift
which had been executed by her grandfather by a registered document dated
January 28, 1972. The Act was passed as far back as 1960 but by virtue of an
amendment, being U.P. Act No. 18 of 1973, section 5 was introduced which placed
a ceiling on any tenure holder to hold land in excess of the ceiling area fixed
under the Act. Section 5 contained various sub-sections but in the instant case
we are concerned only with sub-section (6) as also clause (b) of the proviso to
the said sub-section. By another amendment, being U.P. Act No. 2 of 1975, which
was given retrospective operation with effect from 8.6.1973 Explanation I,
along with its sub-clauses, was added to sub-section (6) of section 5.
The decision in the present case turns upon
the interpretation of sub-section (6) of s. 5 and the proviso therein in order
to determine the validity of the deed of gift said to have been executed by
Chunni Lal Bhatiya, the grandfather of the petitioner Sonia and respondent No.
4 before the District Judge.
To begin with, we might like to state here
that the facts of the case undoubtedly reveal that if the provisions of the
said sub-section (6) were to apply it would work serious hardship to the
petitioner but as we are concerned with interpretation of an important statute
the mere fact that a correct interpretation may lead to hardship would not be a
valid consideration for distorting the language of the statutory provisions.
243 Before we proceed to examine the relevant
provisions, it may be necessary to give a resume of the facts of the case.
Chunni Lal Bhatiya had two sons, Sudesh and Mahesh and a daughter Smt. Sarla,
On 14.9.1969 Chunni Lal executed a registered deed of gift in respect of 110
bighas in favour of his son, Sudesh. A month later, another deed of gift was
executed in favour of his son, Sudhir. So far as these two gifts are concerned,
as they were made before the amendment of the Ceiling Act, their validity was
beyond question and they are not the subject-matter of any dispute in the
present case. On January 28, 1972 Chunni Lal executed a gift in respect of 80
bighas in favour of his grand-daughter, Sonia (daughter of Mahesh.) It appears
that a serious misfortune had befallen Chunni Lal in that he lost his two sons,
Sudesh and Mahesh, who were serving in the Air Force and died in two different
air crashes. As Chunni Lal wanted to make sufficient provision for his grandsons
and grand- daughter, he executed the three gifts.
The gift executed in favour of Sonia is the
subject- matter of the dispute in the instant case. The Prescribed Authority
held that as the gift was made after the due date, i.e. 24.1.1971, as
prescribed by sub-section (6) of s. 5, the transfer would have to be ignored.
Against the decision of the Prescribed Authority, the appellant filed an appeal
before the District Judge being the Appellate Authority, and assailed the
finding of the Prescribed Authority. The District Judge, after hearing the
parties, came to a clear finding that the gift was a bona fide one having
regard to the circumstances in which the transfer was made and merely because
it was executed after the due date (24.1.1971) it could not be held to be
invalid. Thereafter, the State of U.P. filed a writ petition in the High Court
which was allowed following a Division Bench decision of its Court in Fateh
Mohammad v. District Judge which had held that a deed of gift not being a
transfer for consideration had to be ignored under the provisions of the Act.
Hence, this appeal before us.
The finding of the District Judge that the
gift was a bona fide one has not been challenged by Mr. Rana, appearing for the
respondent, who however argued that the said gift itself was not covered by the
Explanations laid down in the proviso to the said sub-section (6) of s. 5 of
the Act. Thus the only question for determination in the instant case is the
legal effect of the prohibition contained in sub-section (6) and clause (b) of
its proviso. In order to 244 understand the scope and ambit of sub-section (6)
and its proviso, it may be necessary to extract the relevant portions of
sub-section (6) and Explanations concerned:- "6. In determining the
ceiling area applicable to a tenure-holder, any transfer of land made after the
twenty fourth day of January, 1971, which but for the transfer would have been
declared surplus land under this Act, shall be ignored and not taken into
account:
Provided that nothing in this sub-section
shall apply to:- ... ... ... ...
"(b) a transfer approved to the
satisfaction of the prescribed authority to be in good faith and for adequate
consideration and under an irrevocable instrument not being a benami
transaction or for immediate or deferred benefit of the tenure-holder or other
members of his family.
Explanation I-For the purposes of this sub-
section, the expression transfer of land made after the twenty fourth day of
January, 1971, includes:- (a) a declaration of a person as a co-tenure made
after the twenty-fourth day of January, 1971 in a suit or proceeding
irrespective of whether such suit or proceeding was pending on or was
instituted after the twenty fourth day of January, 1971;
(b) any admission, acknowledgement,
relinquishment or declaration in favour of a person to the like effect, made in
any other deed or instrument or in any other manner." "Explanation
II-The burden of proving that a case falls within clause (b) of the proviso
shall rest with the party claiming its benefit." The substantive provision
which is contained in sub- section (6) clearly provides that any transfer after
the 24th of January 1971 would have to be ignored and not taken into account in
determining the surplus area. Clause (b) of the proviso to sub-section (6)
(hereinafter referred to as 'clause (b) of the proviso') however, carves out an
exception to the general rule contained in sub-section (6) and 245 Explanation
II places the burden of proving the fact, that the case falls within the
protection of clause (b) of the proviso, on the party relying on the transfer
and claiming its benefit. A careful analysis of clause (b) of the proviso would
reveal that it requires the following conditions to be fulfilled before a
transfer can seek its protection:
(1) that the transfer must be in good faith,
(2) that it must be proved to be in good faith to the satisfaction of the
Prescribed Authority, (3) that it should be for adequate consideration and
under an irrevocable instrument, and (4) that it should not be in the nature of
a benami transaction for immediate or deferred benefit of the tenure holder or
other members of his family.
It is manifest that if these conditions are
satisfied and proved to the satisfaction of the Prescribed Authority then the
burden which lies on the claimant under Explanation II would have been
discharged and the transfer would not be ignored but would fall under the
protective umbrella contained in clause (b) of the proviso. It may be noticed
that the legislature in its wisdom has neither defined the word 'transfer' in
any of the definitions of the Act nor has clarified it. The primary object of
the Act is to prevent the tenure holders from evading the Law of Ceiling by
making fictitious transfers even by registered documents either before or after
the due date so as to evade the provisions of the Act and thus frustrate the
very object and the social purpose for which the Act had been passed. In these
circumstances, therefore, the word 'transfer' has obviously been used by the
legislature in the general sense of the term as defined in the Transfer of
Property Act, which is the statute that governs all transfers of movable or
immovable properties. In other words, the word 'transfer' being a term of
well-known legal significance having well ascertained incidents, the
legislature did not think it necessary to define the term 'transfer'
separately.
Similarly, the word 'consideration' also
being a term commonly used to denote contracts, sales and transactions, has
been used in the same sense, that is to say, as defined by s. 2(d) of the
Contract Act.
It is well settled that whenever the
legislature uses certain terms or expressions of well-known legal significance
or connotation the courts must interpret them as used or understood in the
popular 246 sense. In the case of C.I.T. Andhra Pradesh v. M/s. Taj Mahal
Hotel, Secundrabad this Court while laying down guidelines for holding how a
particular expression has been defined, observed as follows:- "Now it is
well settled that where the definition of a word has not been given, it must be
construed in its popular sense if it is a word of every day use.
Popular sense means "that sense which
people conversant with the subject matter with which the statute is dealing,
would attribute to it".
Lord Atkinson in Keats v. Lewis observed as
follows:
"In the construction of a statute it is,
of course, at all times and under all circumstances permissible to have regard
to the state of things existing at the time the statute was passed, and to the
evils, which as appears from its provisions, it was designed to remedy. If the
words are capable of one meaning alone then it must be adopted, but if they are
susceptible of wider import, we have to pay regard to what the statute or the
particular piece of legislation had in view." These observations are fully
applicable to the present Act which has for its object remedying the evil of
evading the ceiling law by the large landholders by executing sale deeds or
other instruments so as to escape the consequences of the law. In Union of
India v. Sankal Chand Himatlal Sheth & Anr. Chandrachud, J., as he then
was, observed as follows:- "The normal rule of interpretation is that the
words used by the legislature are generally a safe guide to its intention. Lord
Reid in Westminster Bank Ltd. v. Zang [1966 A.C. 182] observed that "no
principle of interpretation of statutes is more firmly settled than the rule
that the Court must deduce the intention of Parliament from the words used in
the Act." Applying such a rule, this Court observed in S. Narayanaswami v.
G. Panneerselvam (AIR 247 1972 SC 2284 at 2290) that "where the statute's
meaning is clear and explicit, words cannot be interpolated." ... ... ...
...
"But, if the provision is clear and
explicit, it cannot be reduced to a nullity by reading into it a meaning which
it does not carry." Against this background we have now to consider the
real intention of the words "transfer for adequate consideration" as
used in clause (b) of the proviso. The High Court has held that although the
deed of gift is a transfer but as it is a transfer without any consideration,
therefore such a transfer does not fulfill one of the essential ingredients
mentioned in clause (b) of the proviso, namely, that it should be for
consideration. The High Court has further held that its view is reinforced by
the word 'adequate' which qualifies the word 'consideration' which completely
rules out a transfer in the nature of a gift. The High Court was of the view
that a transfer of property by way of a gift being a purely gratuitous transfer
made out of love and affection or for the spiritual benefit of the donor, falls
completely beyond the ambit of clause (b) of the proviso and, therefore, has to
be ignored under the provisions of the said sub-section (6) of s. 5 of the Act.
Mr. Kacker, appearing for the appellant,
assailed the view taken by the High Court on the ground that the High Court has
given a very restricted meaning to the term 'transfer for adequate
consideration' by limiting the import of the word 'consideration'. He argued in
the first place that a gift cannot be said to be a transfer without
consideration because even love and affection, spiritual benefit or other
factors of similar nature may provide sufficient consideration for the gift.
Secondly, it was argued that even if a gift was a transfer without
consideration and was intended to be excluded by clause (b) of the proviso,
then there should have been an express indication of the same in the provisions
of clause (b) of the proviso by expressly excluding gifts. Another facet of
this argument advanced before us by Mr. Kacker was that as gift has not been
expressly excluded by clause (b) of the proviso, we should be persuaded to hold
that the conditions regarding adequate consideration would not apply to a gift
as a gift, was a transfer without consideration and if other conditions were
satisfied a gift would also fall within the purview of clause (b) of the
proviso. We have given our anxious consideration to the arguments put forward
248 by Mr. Kacker and although the arguments are extremely attractive yet we
find ourselves unable to agree with the same.
To begin with, it may be necessary to dwell
on the concept of gift as contemplated by the Transfer of Property Act and as
defined in various legal dictionaries and books.
To start with, Black's Law Dictionary (Fourth
Edition) defines gift thus:- "A voluntary transfer of personal property
without consideration. A parting by owner with property without pecuniary
consideration. A voluntary conveyance of land, or transfer of goods, from one
person to another made gratuitously, and not upon any consideration of blood or
money." A similar definition has been given in Webster's Third New
International Dictionary (Unabridged) where the author defines gift thus:
"Something that is voluntarily
transferred by one person to another without compensation; a voluntary transfer
of real or personal property without any consideration or without a valuable
consideration- distinguished from sale." (Emphasis ours) Volume 18 of
Words & Phrases (Permanent Edition) defines gift thus:
"A 'gift' is a voluntary transfer of
property without compensation or any consideration. A 'gift' means a voluntary
transfer of property from one person to another without consideration or compensation."
(Emphasis ours) In Halsbury's Laws of England (Third Edition-Volume 18) while
detailing the nature and kinds of gift, the following statement is made:
"A gift inter vivos (a) may be defined
shortly as the transfer of any property from one person to another
gratuitously. Gifts then, or grants, which are the eighth method of
transferring personal property, are thus to be distinguished from each other,
that gifts are always gratuitous, grants are upon some consideration or
equivalent." 249 Thus, according to Lord Halsbury's statement the
essential distinction between a gift and a grant is that whereas a gift is
absolutely gratuitous, grant is based on some consideration or equivalent.
Similarly in Volume 38 of Corpus Juris Secundum, it has been clearly stated
that a gift is a transfer without consideration and in this connection while
defining the nature and character of a gift the author states as follows:
"A gift is commonly defined as a
voluntary transfer of property by one to another, without any consideration or
compensation there for. Any piece of property which is voluntarily transferred
by one person to another without compensation or consideration. A gift is a
gratuity, and an act of generosity, and not only does not require a
consideration but there can be none; if there is a consideration for the
transaction it is not a gift." It is, therefore, clear from the statement
made in this book that the concept of gift is diametrically opposed to the
presence of any consideration or compensation. A gift has aptly been described
as a gratuity and an act of generosity and stress has been laid on the fact
that if there is any consideration then the transaction ceases to be a gift.
Before closing this aspect of the matter we might also refer to the definition
of consideration given in various books. Black's Law Dictionary defines
'consideration' thus:
"Consideration" is not to be
confounded with motive. Consideration means something which is of value in the
eye of the law, moving from the plaintiff, either of benefit to the plaintiff
or of detriment to the defendant"." This is the view expressed in 2
Q.B. 851. Similarly, at p.61 in the same volume, the words 'adequate
consideration' have been defined thus:- "One which is equal, or reasonably
proportioned, to the value of that for which it is given. Fair and reasonable
under circumstances." (Emphasis ours) Webster's Third New International
Dictionary (Unabridged) defines, consideration' thus:
"Something that is legally regarded as
the equivalent or return given or suffered by one for the act or promise of
another." 250 And the word 'adequate' has been defined in the same volume
at page 25 thus:
"Legally sufficient: such as is lawfully
and reasonably sufficient" Similarly, in words and Phrases (Permanent Edition-volume
2) the word 'adequate' has been defined at p.545 thus:
'Adequate' means fully equal to requirements
or occasions, commensurate, but in its primary and more popular significance
nothing can be said to be 'adequate' which is not equal to what is required,
suitable to the case or occasion, fully sufficient, proportionate, and
satisfactory." And when used to qualify consideration, it has been defined
thus: in the same volume at p.545:
"Fair consideration in money or money's
worth" is consideration which under all circumstances is honest,
reasonable, and free from suspicion, whether or not strictly 'adequate' or
'full'." (Emphasis supplied) 'Adequate Consideration' has been further
defined as follows in the same volume at p.553:- "Adequate consideration"
generally is one which is a fair equivalent in value for benefit
obtained................
'Adequate consideration' required in action
for specific performance merely means that contract price must be substantially
just and fair valuation under all circumstances." (Emphasis supplied) In
Volume 17 of Corpus Juris Secundum (p.420-421 and 425) the import of
'consideration' has been described thus:- "Various definitions of
consideration are to be found in the textbooks and judicial opinions. A
sufficient one, as 251 stated in Corpus Juris and which has been quoted and
cited with approval is, "a benefit to the party promising, or a loss or
detriment to the party to whom the promise is made...............
At common law every contract not under seal
requires a consideration to support it, that is, as shown in the definition
above, some benefit to the promisor, or some detriment to the
promisee.................
There is a sufficient consideration for a
promise if there is any benefit to the promisor or any detriment to the
promisee..........It may be laid down as a general rule, in accordance with the
definition given above, that there is a sufficient consideration for a promise
if there is any benefit to the promisor or any loss or detriment to the promisee."
The gist of the term 'consideration' and its legal significance has been
clearly summed up in s. 2(d) of the Contract Act which defines 'consideration'
thus:
"When, at the desire of the promisor,
the promisee or any other person has done or abstained from doing, or does or
abstrains from doing, or promises to do or to abstain from doing, something,
such act or abstinence or promise is called a consideration for the
promise." From a conspectus, therefore, of the definitions contained in
the dictionaries and the books regarding a gift or an adequate consideration,
the inescapable conclusion that follows is that 'consideration' means a
reasonable equivalent or other valuable benefit passed on by the promisor to
the promisee or by the transferor to the transferee. Similarly, when the word
'consideration' is qualified by the word 'adequate', it makes consideration
stronger so as to make it sufficient and valuable having regard to the facts,
circumstances and necessities of the case. It has also been seen from the
discussions of the various authorities mentioned above that a gift is
undoubtedly a transfer which does not contain any element of consideration in
any shape or form. In fact, where there is any equivalent or benefit measured
in terms of money in respect of a gift the transaction ceases to be a gift and
assumes a different colour. It has been rightly pointed out in one of the books
referred to above that we should not try to confuse the motive or the purpose
of making a gift with the consideration which is the subject matter of the
gift.
Love, affection, spiritual benefit and many
other 252 factors may enter in the intention of the donor to make a gift but
these filial considerations cannot be called or held to be legal considerations
as understood by law. It is manifest, therefore, that the passing of monetary
consideration is completely foreign to the concept of a gift having regard to
the nature, character and the circumstances under which such a transfer takes
place. Furthermore, when the legislature has used the word 'transfer' it at
once invokes the provisions of the Transfer of Property Act.
Under section 122 of the Transfer of Property
Act, gift is defined thus:
"'Gift' is the transfer of certain
existing movable or immovable property made voluntarily and without
consideration, by one person, called the donor, to another, called the donee,
and accepted by or on behalf of the donee.
Such acceptance must be made during the
lifetime of the donor and while he is still capable of giving.
If the donee dies before acceptance, the gift
is void." Thus, s. 122 of the Transfer of Property Act clearly postulates
that a gift must have two essential characteristics-(1) that it must be made
voluntarily, and (2) that it should be without consideration. This is apart
from the other ingredients like acceptance, etc. Against the background of
these facts and the undisputed position of law, the words, 'transfer for
adequate consideration' used in clause (b) of the proviso clearly and expressly
exclude a transaction which is in the nature of a gift and which is without
consideration. Love and affection, etc., may be motive for making a gift but is
not a consideration in the legal sense of the term. As regards the argument of
Mr. Kacker that if the legislature intended to exclude gifts, clause (b) of the
proviso should have expressly said so; the answer is very simple. Every
legislature has its own technical or legal device to express its intendment.
Some legislatures may have chosen to expressly exclude gift as Mr. Kacker says
but that is not the only method of conveying the legislative intent. There may
be other methods or devices by which the legislative intent can be expressed,
namely, by using such expressions which would expressly or by necessary
intendment exclude a particular transaction.
This method seems to have been adopted by the
legislature in enacting clause (b) of the proviso. In fact, the legislature has
made its intention clear that gift is excluded by qualifying the word
'consideration' by the adjective 'adequate'. Assuming that love and affec- 253
tion, spiritual benefit or similar other factors may amount to a consideration
for the gift, the word 'adequate' is wholly inapplicable to and inconsistent
with the concept of a gift because it is impossible to measure love and
affection, the sentiments or feelings of the donor by any standard yardstick or
barometer. The words 'adequate consideration' clearly postulate that
consideration must be capable of being measured in terms of money value having
regard to the market price of the property, the value that it may fetch if
sold, the value of similar lands situated in the vicinity, so on and so forth.
In the instant case, therefore, in our opinion, the legislature by using the
word 'adequate' to qualify the word 'consideration' has completely ruled out
and excluded gift from the ambit of clause (b) of the proviso. In these
circumstances, therefore, the argument of Mr. Kacker that by not expressly
excluding gift, clause (b) of the proviso includes gift cannot be accepted
particularly in the face of the clear and unambiguous language used by clause
(b) of the proviso in describing the nature of the transaction as one for
adequate consideration.
We now deal with the second limb of the
argument of Mr. Kacker that as in the case of a gift there is no question of a
consideration, we should hold that the 3rd part of clause (b) of the proviso
which contains the words 'for adequate consideration' is inapplicable and
ignore the same. This argument is diametrically opposed to the well-known rule
of interpretation that courts in interpreting statutes must not interpolate or
legislate. It is well settled that a legislature does not waste words without
any intention, and every word that is used by the legislature must be given its
due import and significance. In the instant case, the words 'adequate
consideration' have undoubtedly a well recognised concept and, as indicated
above, the intention was to exclude any transaction which is not for adequate
consideration. Not to speak of a gift but even if a sale is found to be bona
fide but the consideration is inadequate, for instance, where the property has
been sold for a nominal price or below the market value, the transaction would
fall beyond the protection given by clause (b) of the proviso.
Our attention has been drawn by Mr. Kacker to
a single Bench decision by Banerji, J, in Fateh Singh v. State of Uttar Pradesh
& Ors where the learned Judge had taken the view that the definition of a
transfer given in clause (b) of the proviso included a gift because a gift also
could not be said to be a transfer without consideration even though 254
consideration may not be weighed in terms of money. The learned Judge in taking
this view had obviously fallen into error of confusing what was the motive or
the reason for the gift as being a legal consideration of it. It has already
been pointed out that in considering the nature of a gift one should not
confuse the motive, which may be love and affection, or spiritual benefit, with
valuable consideration which has to be either in the shape of a money
compensation or equivalent of the same. It is true that in every gift the donor
has a particular motive and objective or a reason to part with his property in
favour of the donee, the reason being, in some cases, love and affection where
the gift is in favour of a relation or friend, or spiritual benefit in other
cases but this will be the immediate motive for making the gift and cannot be
regarded as a consideration for the gift because the very concept of gift is
based on a purely gratuitous consideration. The Division Bench of the Allahabad
High Court in the case referred to above has rightly overruled the view of
Banerji, J,, on this count. In fact the matter has been considered by other
High Courts who have consistently taken the view that a gift is a transfer
without consideration, love and affection being only the motive for making the
transfer. In Debi Saran Koiri & Anr. v. Nandalal Chaubey and Ors. while
elucidating the nature and character of a gift Sahay, J. made the following
observations:
"Now, S. 122, T.P. Act defines
"gift" as a transfer of certain existing movable or immovable
property made voluntarily and without consideration, by one person, called the
donor, to another, called the donee, and accepted by or on behalf of the
donee." "To my mind consideration in S. 122, T.P. Act, means valuable
consideration and not consideration in the shape of conferring spiritual
benefit to the donor.
If valuable consideration be not the
consideration referred to in S. 122, I fail to understand how any gift can be
made without consideration at all. There must be some sort of consideration in
every gift, for instance, a consideration of an expectation of spiritual or
moral benefit or consideration of love and affection. Such considerations are
not considerations contemplated in S. 122. The consideration there contemplated
must be valuable consideration, that is consideration either of money of
money's worth".
(Emphasis supplied) 255 In Kulasekaraperumal
v. Pathakutty Thalevanar & Ors.
Jagadisan, J. made the classic observations
which may be extracted thus:- "A gift is essentially a gratuitous
transfer.
Complete absence of consideration marks the
transfer as a gift and differentiates it from a grant." The learned Judge
has rightly pointed out that complete absence of consideration is the main
hallmark which distinguishes a gift from a grant or for that matter other
transactions which may be for valuable or adequate consideration. We find
ourselves in complete agreement with the observations made by Jagdisan, J. in
Kulasekaraperumal's case (supra) and Sahay, J. in Debi Saran's case (supra)
which correctly represent the character and nature of the gift as contemplated
by law. Banerji, J. in Fateh Singh's case (supra) seems to have relied heavily
on Explanation I of sub-section (6) of s. (5) of the Act which refers to a
declaration of a tenure holder made in a suit or any admission,
acknowledgement, relinquishment, etc., made in any other deed or instrument in
order to reinforce his conclusion that clause (b) of the proviso did not
exclude a gift. With due respect, here the learned Judge completely failed to
appreciate the scope of clause (b) of the proviso and Explanation I. It is well
settled that an Explanation merely widens the scope of the main section and is
not meant to carve out a particular exception to the contents of the main
section. Thus, even if the words 'relinquishment, admission or declaration' are
used in Explanation I. the use of such words do not absolve the party concerned
from proving the essential ingredients laid down in clause (b) of the proviso,
namely, that the transfer should be executed in good faith and should be for
adequate consideration.
Whatever be the nature of the declaration,
acknowledgement, relinquishment, adequacy of consideration has to be proved in
any case. Thus, in our view, the Division Bench was fully justified in
overruling the view of Banerji, J. in regard to the interpretation of the
Explanation also.
Finally, we would like to mention that the
matter is no longer res integra but is fully covered in principle by a decision
of this Court in Tulsidas Kilachand v. The Commissioner of Income-tax, Bombay
City 1, where Hidayatullah J, speaking for the Court observed as follows:-
"It remains to consider whether there was a adequate consideration for the
transfer. Reliance has been placed 256 only upon love and affection. The words
"adequate consideration" denote consideration other than mere love
and affection which, in the case of a wife, may be presumed. When the law
insists that there should be "adequate consideration" and not
"good consideration", it excludes mere love and affection. They may
be good consideration to support a contract, but adequate consideration to avoid
tax is quite a different thing.
To insist on the other meaning is really to
say that consideration must only be looked for, when love and affection cease
to exist." (Emphasis supplied) It would thus, appear that this Court
clearly held that the words 'adequate consideration' completely exclude the
concept of love and affection and this decision appears to be on all fours with
the facts of the present case.
Realising this predicament Mr. Kacker
submitted that the words 'adequate consideration' used in the Income Tax Act
denote a different texture. Mr. Kacker argued that it is not permissible to
interpret or use an expression in one Act as having the same meaning in another
Act which is of a different kind. Of course, there can be no dispute with this proposition
but then the Act as also the Income Tax Act have both used the words 'adequate
consideration' which, as we have already held, are terms of well-known legal
significance having a well recognised popular sense and hence they would convey
the same meaning and import whenever used in other statutes unless a contrary
intention appears from the language employed by the legislature in the statute.
Moreover, the object of the Income Tax Act as also the present Act seems to be
more or less identical. Whereas the object of the Income Tax Act in enacting s.
16(3)(b) which is extracted below, is to circumvent and prevent a growing
tendency on the part of the assessees to avoid or reduce tax liability by means
of settlements:
"16(3)....
(a) (b) so much of the income of any person
or association of persons as arises from assets transferred otherwise than for
adequate consideration to the person or association by such individual for the
benefit of his wife or a minor child or both." 257 In the instant case also
the avowed object of sub-section (6) of section 5 of the Act is to prevent the
large landholders from evading the ceiling law by executing transfers,
instruments or gifts so as to reduce their surplus area. Where the two statutes
have a common and identical object then the legal terms used in one statute
must be given the same meaning in the other. It cannot be said that the words
'adequate consideration' appearing in sub-section (6) of s. 5 of the Act do not
take their colour from the context but are in conformity with the main object
of the Act, to prevent evasion of the ceiling law by large tenure holders in
anticipation of the passing of the Ceiling Law. For these reasons, therefore,
the argument of Mr. Kacker on this score must be rejected. We, therefore, hold
that in view of the interpretation placed by this Court on the words 'adequate
consideration' which fully applies to the present case and to the same language
employed in sub- section (6) of s. 5 of the Act, a gift is not only impliedly
but expressly excluded by the Act.
In the Division Bench decision of the
Allahabad High Court referred to above, after a consideration of a large number
of authorities the following observations were made:
"The Legislature while enacting the U.P.
Imposition of Ceiling on Land Holdings Act,
was alive to the provisions of the Transfer of Property Act dealing with the
transfer of immovable property. the terms 'transfer', sale, 'mortgage' and
'lease' have not been defined in the Act. Therefore, these terms must have been
used only in the sense in which they have been used in Transfer of Property
Act. If the Legislature intended to use those terms in a different sense and
with a different connotation, it would have defined those terms in the Act. But
that has not been done....
The legislature, however, thought that there
may be genuine and bona fide transfers for consideration.
To protect such tenure holders and other
transfers, proviso (b) to sub-section (6) of section 5 of the Act was enacted.
It saved transfers for adequate consideration. Gift is a gratuitous transfer
and there is no consideration which obviously means valuable consideration. If
transfer for love and affection is taken to be a transfer for consideration
then the purpose of the Act would be 258 completely defeated as the tenure
holders would transfer their land by gift after 24th January 1971." We
fully endorse the observations made by the Division Bench which lay down the
correct law on the subject and we overrule the decision of Banerji, J. in Fateh
Singh's case (supra).
Lastly, it was urged by Mr. Kacker that this
is an extremely hard case where the grand-father of the donee wanted to make a
beneficial provision for his grand-daughter after having lost his two sons in
the prime of their life due to air crash accidents while serving in the Air
Force.
It is true that the District Judge has come
to a clear finding that the gift in question is bona fide and has been executed
in good faith but as the gift does not fulfil the other ingredients of the section,
namely, that it is not for adequate consideration, we are afraid, however
laudable the object of the donor may have been, the gift has to fail because
the genuine attempt of the donor to benefit his granddaughter seems to have
been thwarted by the intervention of sub-section (6) of s. 5 of the Act. This
is undoubtedly a serious hardship but it cannot be helped. We must remember
that the Act is a valuable piece of social legislation with the avowed object
of ensuring equitable distribution of the land by taking away land from large
tenure holders and distributing the same among landless tenants or using the
same for public utility schemes which is in the larger interest of the
community at large. The Act seems to implement one of the most important constitutional
directives contained in Part IV of the Constitution of India. If in this
process a few individuals suffer severe hardship that cannot be helped, for
individual interests must yield to the larger interests of the community or the
country as indeed every noble cause claims its martyr.
As this was the only point raised before us,
we find no merit in the same.
For the reasons given above, we hold that the
High Court was right in allowing the writ petition in respect of the gift in
question. The appeal fails and is accordingly dismissed but without any order
as to costs.
P.B.R. Appeal dismissed.
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