067-NLR-NLR-V-38-N.-RAMASWAMY-CHETTIAR-v.-THE-ATTORNEY—GENERAL.pdf
1937
N. Ramaswamy Chettiar v. The Attorney-General.
Present: Poyser S.PJ. and Soertsz J.
313
N. RAMASWAMY CHETTIAR v. THE ATTORNEY-GENERAL.
297—D. C. Colombo, 3,130.
Estate duty—Business carried on in Ceylon by member of Hindu joint-family—Use of ancestral funds—Movable property left by deceased—Entireproperty is not property passing on the death—Property a person iscompetent to dispose of—Property in the hands of a manager of Hinduestate—Meaning of the words “ otherwise disposed of ”—Action forrecovery of estate duty overpaid—Ordinance No. 8 of 1919, s. 8 (1) (a)and (b).
Where the member of a Hindu joint-family carried on business withancestral funds, the movable property left by him is joint-property.
The entire movable property left by him is not property passingon the death within the meaning of section 8 (1) of the Estate DutyOrdinance.
The manager of a Hindu joint-family who can only alienate for legalnecessity, can only gift within limits and is accountable to others forancestral property in his hands is not a person competent to dispose ofthe property within the meaning of section 8 (1) (a) of the Ordinance.The words "otherwise disposed of” in section 8 (1) (b) mean dispositionby juristic acts and do not include by operation of law, such as the vestingof ancestral property in sons under the Hindu joint-family system.
Estate duty that has been overpaid may be recovered by actionagainst the Crown.
Periacaruppen Chettiar v. Commissioner of Stamps (38 N. L. R. 201) andAdaicappa Chetty v. Thomas Cook & Son (31 N. L. R. 405) referred to.
T
HIS was an action brought by the administrator to recover a sumof money alleged to have been overpaid as estate duty on the
estate of one Ramaswamy Chettiar. Ramaswamy Chettiar was themember of a Hindu joint-family who carried on business in Ceylon. Hedied leaving movable property in Ceylon and letters of administrationto his estate were issued to his attorney in Ceylon. In the declarationfurnished to the Commissioner of Stamps under section 21 of the EstateDuty Ordinance all the movable property of which Ramaswamy Chettiarwas possessed was given as his separate property. The estate duty wasassessed on this basis and a portion of the duty paid. The present claimfor a refund was based on the assertain that Ramaswamy Chettiar wasthe member of a Hindu joint-family consisting of himself and his twosons and that only a third of the movable property left by him was liableto estate duty. The claim was not accepted by the Commissioner and thepresent action was instituted to recover the sum overpaid. The learnedDistrict Judge held that Ramaswamy Chettiar was the member of ajoint Hindu family and that he traded in Ceylon out of ancestral funds.He gave judgment for the plain tiff.
A. L. Wijewardene, S.-G. (with him Crossette-Thambiah, C.C.),for defendant, appellant.—The evidence does not prove that the propertythat was partitioned was ancestral in the hands of Natchiappa.
314
N. Ramaswamy Chettiar v. The Attorney-General.
If it was acquired property in Natchiappa’s hands, then Natchiappa'ssons, who got it under the partition, held it as acquired property, "there-fore, on the death of Ramaswamy, the whole business of N. S. M. R. ^1. S.passed to his heirs.
The documents D 1-D 3 and the absence of the previous administratorfrom the witness box supports the view that this was not joint-familyproperty of Ramaswamy. The burden is on the administrator to showthat this was joint-family property.
Even if it was joint-family property Ramaswamy could have disposedof it according to the Hindu law, subject to certain restrictions. Theproperty would therefore come under section 7 of Ordinance No. 8 of1919.
Ramaswamy could have given title to a purchaser of this propertywhich is movable property in Ceylon. The coparceners of Ramaswamymay have an action against Ramaswamy, but this would not affect thetitle of the purchaser. Therefore Ramaswamy had disposing power overthis property. The only trusts that create an exception are to be foundin section 8 (2) of Ordinance No. 8 of 1919.
The property was vested in Ramasamy absolutely in 1910. By hismarriage in 1914 and the birth of his sons, Ramaswamy caused theproperty to be vested in himself and his sons. Therefore this propertyis governed by section 8 (1) (d) of Ordinance No. 8 of 1919.
The District Court has no jurisdiction under section 27 of OrdinanceNo. 8 of 1919. Where the Court is given jurisdiction it is so statedspecifically—see sections 17 (8), 22 (3), and 33. The finding must beby the Commissioner of Stamps ; otherwise it would be difficult toconstrue section 27 so as to give effect to the words “ shall be foundwithin three years ”. Section 27 applies only where the property hasbeen over-valued in the declaration sent to the Commissioner of Stamps.It does not apply where it is found that the declaration has set outmore property than actually belonged to the estate. Note the words“ true value ”.
There is nothing repugnant to the law in making the Commissioner ofStamps the sole judge. In fact in this case he is not the judge in his owncause. The money to be refunded is not his personal property—seePeriacaruppen Chettiar v. Commissioner of Stamps'.
H. V. Perera (with him Tisseverasinghe and Chelvanayagam) ,for plaintiff,respondent.—There is ample evidence in support of the trial Judge’sfindings of fact which cannot therefore be disturbed.
The evidence is that the property with which we are concerned hada nucleus which was joint-family property. This nucleus, with whichdeceased did business, he obtained from his father.
Joint-family property even after partition continues to be ancestralproperty. The corpus is derived by the joint exertions of the family.The share which a coparcener obtains on partition of ancestral propertyis still ancestral property—see Mulla (1936 ed.), p. 242.
It makes no difference that the father got no share of the partitionedproperty—see the evidence on this point of the Indian Vakil Mr. Krishna-swamy Iyer.
> 3S X. L. R. 201
SOERTSZ J.—N. Ramaswamy Chettiar v. The Attorney-General.315
The members of a joint-family are not partners. They are entitledto certain floating rights which become crystallized only on partition.In the declaration made under Ordinance No. 6 of 1918, therefore, itwould have been incorrect to have described the sons of the deceasedas partners.
The head of a Hindu joint-family is a manager with certain limitedpowers—see Mulla (op. cit.), p. 270. The powers of the manager of aHindu joint-family property have two aspects—
in relation to the family ;
in relation to the business.
The power of management with a limited power of disposition doesnot connote competency to dispose of the property as the managerpleases.
The language of section 27 of Ordinance No. 8 of 1919 is wide enoughto make it applicable to every case where there has been a mistake ofsome kind. It will be extraordinary if the subject is left without aremedy in circumstances such as these. If the Legislature intended togive the Commissioner of Stamps the power to decide this matter finally,it would have used the appropriate words—see section 28.
Wijewardene, in reply.—An action must be based on a cause of action.The cause of action here can only be payment of money under a mistakeof fact or a mistake of law. There is no evidence that money was paidunder a – mistake of fact. If it is payment under a mistake of law, noaction lies—see Nathan, vol. II., pp. 556 to 560.
H. V. Perera (with permission).—There is here a statutory duty toreturn the money.
Cur. adv. vult.
March 5, 1937. Soertsz J.—
Ramaswamy Chettiar died leaving an estate in Ceylon that fell to beadministered. Arunaehalam who had held his power of attorney andhad been the manager of his business here, applied for and obtainedletters of administration. In this case, we are concerned with thequestion of what the true value of his property that was subject to estateduty was. In the declaration made by the administrator in compliancewith section 21 of the Estate Duty Ordinance, he treated all the movablesRamaswamy died possessed of in Ceylon as the property of Rama-swamy alone, and the Commissioner of Stamps valued them for thepurpose of estate duty at Rs. 389,085 and claimed a sum of Rs. 23,954.82with interest at 4 per cent, from September 6, 1933, as the duty payable.When the administrator had paid a sum of Rs. 20,610.53 on account of theduty due, he and the others concerned in the ad ministration of Rama-swamy’s estate appear to have realized that only a third of the movablesdeclared and assessed for the purpose of estate duty, belonged to Rama-swamy, and that estate duty had been overpaid. Arunaehalam evidentlyfelt too embarrassed to take action in the matter himself andrenounced his administratorship. The present plaintiff took his placeand launched this case to obtain a refund of the amount alleged to havebeen overpaid. He maintained that under Hindu law, Ramaswamywas entitled only to one-third of the movables in Ceylon and that the
24/38
316SOERTSZ J.—N. Ramaswamy Chettiar v. The Attorney-General.
other two-thirds belonged to his two sons. The trial Judge found infavour of the plaintiff arid entered decree for him for a sum of Rs. 12,190less 2J per cent, discount, with interest at 9 per cent, from the date ofthe decree, and costs. He held that Ram as warn y was a member of ajoint Hindu family and that the business he carried on in Ceylon wascarried on with ancestral funds and that, therefore, the movables foundat the time of his death belonged to him and his two sons jointly. Theappeal is against those findings. The Solicitor-General who appearedin support of the appeal, pressed it on the following grounds : firstly,that there was not satisfactory evidence for holding that Ramaswamywas a member of joint Hindu family—secondly, that there was notsatisfactory evidence for establishing the allegation that the funds withwhich Ramaswamy did business in Ceylon were coparcenary funds—thirdly, that assuming that Ramaswamy was a member of a joint familyand that the fluids he used were coparcenary, the whole estate must bedeemed to have passed for the purpose of estate duty under section 8(1) (a) and/or 8 (1) (d)—fourthly, that the questions whether there hadbeen overpayment and whether there should be a refund were entirelyfor the decision of the Commissioner of Stamps and that Courts ofLaw had no jurisdiction in the matter—fifthly, that if the Courts hadjurisdiction the plaintiff had misconceived his remedy when he proceededby way of a regular action instead of by way of Mandamus or Petition ofRight. The first two submissions involve questions of fact. In- regardto these, it is important to bear in mind that Ramaswamy was a native ofSembanur in Southern India and was a Hindu, and that “ the jointand undivided family is the normal condition of Hindu Society ” (Mulla).Speaking of the members of this community doing business in Ceylon,Drieberg J., observed in Adaicappa Chetty v. Thomas Cook & Son'“ they are Hindus from South India among whom the joint-familysystem prevails ”. With those facts in mind; it is easy to understandthe trial Judge’s acceptance of Swaminathan’s evidence when he says“ From my knowledge, this system of living in joint-family ownershiphas been the law and custom of my family and of my father and his fatheras long as I can remember ”, as sufficient proof of the fact that Rama-swamy was a member of a joint Hindu family. Once a joint Hindu familyhas been established it follows, almost as a corollary in the case of families,that in addition to “ jointness ” of food and worship, own property, thatwithin that family there is a narrower body called the “ coparcenary ”composed of these members who acquire by birth an interest in that property.This coparcenary usually consists of sons, grandsons, and great grandsons,and the property that falls to them is ancestral property as distinct fromself-acquired property. The question, then, is whether the propertywith which we are concerned in this case was coparcenary or self-acquired.On this question, Mulla says on page 256 of the 1936 edition of hisPrinciples of Hindu Law, “ there is no presumption that a family,because it is joint, possesses joint property or any property ….to render property joint, the plaintiff must prove that it was purchasedwith joint-family funds, or that it was produced out of the joint-familyproperty, or by joint labour. None of these alternatives is a matter of
1 31 N. L. R. 405.
SOERTSZ J.—N. Ramasxoamy Chettiar v. The Attorney-General 317
legal presumption. It can only be brought to the cognizance of a Courtin the same way as any other fact, namely, by evidence This was theview adopted in Periyacaruppan Chettiar v. The Commissioner of Stamps The burden was therefore on the plaintiff to prove that Ramaswamy’sbusiness here was carried on with ancestral funds. For this too, herelies entitrely on the evidence of Swaminathan. Swaminathan testifiesas follows—“during his lifetime Ramasamy lived in Sembanur withhis family, and he had his business in Colombo. My father had livedin Sembanur before him. I and my other brothers and my father hadour property in common. I am familiar with the system in India ofowing property as a joint Hindu family. That is the nature of myproperty …. During my father’s lifetime, the properties weredivided. That was in 1910. It was divided among the five of us. .,. After that division I am aware that my brother Ramaswamy
with the share that he got, did business in Colombo. He joined the threebrothers including myself and carried on business inpartnership ….he was trading there with the monies that he got as his share out of thejoint property …. that business was wound up …. Atthat winding-up each got his share. Ramaswamy carried on businessunder the vilasam of K. M. N. R. M. That was his own business. Thatwas from 1915. That was the same business he was carrying on up tohis death ”. This evidence if accepted affords ample proof that thejoint-family to which Ramaswamy belonged owned a joint estate, andthat the funds with which he conducted his Ceylon business came tohim out of ancestral funds as a result of the 1910 partition. This evidenceis very much stronger than the evidence upon which the unsuccessfulplaintiff in Periyacaruppan Chettiar v. The Commisisoner of Stamps (supra)relied. The learned Solicitor-General, however, urges that the evidenceof Swaminathan on these points, should not have been accepted by thetrial Judge for two reasons, namely, that it is the evidence of an interestedparty, and that it is inconsistent with documents D 1, D 2, D 3. Itis no doubt a fact that Swaminathan is interested, but on the other handit is a near kinsman who would be able to speak with authority onmatters of this nature.
In regard to th documents referred to, D 1 is the dclaration madeby the first administrator Arunachalam under section 21, including allthe movables as the property of the deceased. This is prime. facie apoint against the plaintiff, but it is by no means conclusive. It is easyto understand Arunachalam taking the view that although Ramaswamybelonging to a joint-family, and carried on his business with coparcenaryfunds, the whole estate was, none the less, liable for estate duty. ThatI believe, was the assumption on which all Chettiar estates in Ceylonwere administered till the question arose in a recent case and servedto instruct local Chettiars as to the correct position in the matter. D 2is an extract from the Registrar of Business Names. It shows that thebusiness Ramaswamy carried on here was registered by him as hisindividual business. In my opinion, this can hardly be said to be a pointagainst the plaintiff’s case. The father as the manager or “ karta ”of the joint-family is entitled to carry on a business with coparcenary
1 38 N. L. R. 20.
318 SOER.TSZ J.—N. Ramaswamy Chettiar v. The Attorney-General.
funds, and when he does so, either by himself or in partnership with astranger or strangers, the other members of the joint-family do not becomepartners in that business. The manager is, however, accountable to the.family in regard to that business. Mulla, on the authority of a numberof cases cited by him on page 261 on his 1936 edition, says “ it is competentto the manager of the joint-family business, acting on behalf of thefamily to enter into partnership with a stranger. But not all the membersof the joint-family, but only such of its members as have in fact, enteredinto partnership with the stranger, become partners. The manager is,no doubt, accountable to the family, but the partnership is one exclu-sively between the contracting members and the stranger”. That is theview adopted locally in Adaicappa Chettiar v. Thomas Cook & Son (supra)Ramaswamy therefore correctly described himself as the individual whowas carrying on the business. D 3 serves but to confirm this view. It isa notice given by Ramaswamy’s elder son to the Registrar of the factthat his father died on September 5, 1932, and that the business he hadbeen carrying on, had come to an end. To say the least, I do not thinkthese documents are inconsistent with the plaintiff’s present case. Thetrial Judge himself considered these documents when he was examin-ing Swaminathan’s evidence and he came to the conclusion that thatevidence was true, and that the claim made in this case was madebona fide.
I see no reason for disturbing these findings of fact. On these findingsonly a one-third share of the movables was the property of the deceasedand only that share would, ordinarily, be liable for estate duty. Butthe Solicitor-General contends that by operation of sections 8 (1) (a)and 8 (1) (d) the entire movables must be deemed to have passed becausethey were (a) “ property of which the deceased was at the time of his deathcompetent to dispose” and/or because they were (d) “property whichthe deceased having been absolutely entitled thereto has caused to betransferred to or vested in himself and any other person jointly eitherby disposition or otherwise ”.
In my opinion upon a proper interpretation of both those sub-sectionsof section 8, these contentions fail. The words “ competent to dispose of ”are explained in section 2 (2) as follows:—“A person shall be deemedcompetent to dispose of property if he has such an estate or interesttherein or such general power as would, if he were sui juris, enable him todispose of the property ; and the expression “ general power ” includesevery power or authority enabling the donee or other holder thereof toappoint or dispose of property as he thinks fit ”.
Now, under the Hindu law governing joint-families, the manager or“ karta ” as large, indeed very large powers. He may enter intocontracts, he may borrow money, give valid discharges, alienate propertyfor “ legal necessity ” and may even make gifts of a proper kind andwithin reasonable limits. But, he is always accountable to the familyfor his acts, and his coparceners are entitled to pursue their shares im-properly alienated and, in certain circumstances, to recover them. Seethe rulings of the Privy Council in Deen Dayal v. Jugdeep Narainl,Suraj Bansi Koer v. Sheo Per sad *, Hardi Narain v. Ruder Perkash*.
• (1880) 5 Cal 148.
1 (1877) 3 Cal 19S.
(1883) 10 Cal. 626.
SOERTSZ J.—N. Ramaswamy Chettiar v. The Attorney-General319
It is obvious that a person who can only alienate for “ legal necessitycan only gift within certain limits, and is accountable to others for theancestral property in his hands, cannot be appropriately described asone who is free to dispose of that property “ if he were sui juris ” or“ as he thinks fit In regard to the submission that the entire propertypassed under section 8 (1) (d) the argument, as I understand it, was thatit passed because the deceased had caused what had become his absoluteproperty in consequence of the partition of 1910 to be vested in himselfand his sons jointly when he married and begot them. It is contendedthat in that emergency the entire property was caught up by virtue ofthe word “ otherwise ” in the phrase “ caused to be transferred to orvested … by disposition or otherwise ”. I find myself quiteunable to subscribe to that proposition and I fully appreciate the tenta-tive manner in which the learned Solicitor-General submitted it for ourconsideration. For one thing, it is hardly correct to say that Ramaswamybecame absolutely entitled to the property in question on the partitionof 191G, for although on that date, it became in a sense his absoluteproperty it remained subject to the incidence of the law governing thecommunity to which he belonged. Moreover, it seems clear that “ other-wise ” in the context means by disposition or other, juristic acts, and doesnot include “ by operation of law ”. The vesting of ancestral propertyin sons takes place in the joint family by operation of law, on their birth.
■ Mulla says on page 230 “ a coparcenary is purely a creature of law ; itcannot be created by act of parties save in so far that by adoption astranger may be introduced as a member thereof”. It can scarcely besaid that the birth of the male of the species lies so much at the biddingor under the control of the father as to justify its being spoken of inanything but a loose sense, as “ caused ” by him. “ Cut tanta deo permissapotestas ” ?
The next point taken by the Solicitor-General is that the Commissionerof Stamps is the sole judge of the question whether there has been over-payment and whether there should be a refund. The Courts, he says,have no jurisdiction in the matter. In this connectipn we were referredto the case in In re Nathan That case arose on an application madeunder section 23 of 5 & 6 Victoria, Chapter 79, which is the counterpartof section 28 of our Estate Duty Ordinance. These sections provide that“ when it is proved by affidavit or declaration on oath or affirmation andproper vouchers to the satisfaction of the Commissioners ….
Brett M.R., commenting on a similar argument,, addressed to the Courtsaid that it was not necessary to decide the point, but that he would“ be very loth to hold that that is s6, and to think that there is no remedyopen to persons in the position of the prosecutor …. and thatthe officials in a department of the Government have been constitutedthe sole and exclusive judge whether they ought to be satisfied or notIn this case too, it is not necessary to decide that point for the plaintiff’sclaim is not made under section 28, but under section 27, of the Ordinance.In section 27 the words “ to the satisfaction of the Commissioner ” do notoccur. The simple words are “if at any time within three years, .. .
… the value of the property on which estate duty has been paid is found
' L. R. 12 O. B. 4G1.
320 SOERTSZ J.—N. Ramastoamy Chettiar v. The Attorney-General.
to exceed the true value of the property subject to estate duty ….it shall be lawful for the Commissioner of Stamps, and he is herebyrequired to return the amount of duty which had been overpaid In theinterpretation of this section I have derived much assistance from the judg-ment of Brett M.R. in the case of In re Nathan (supra). The learnedMaster of the Rolls points out that the section he was considering was anenabling section which gives power to servants of the Crown to whommoney has been paid to get back, without a direct order from the Crownin each particular case, from some other department of the executivebut which is, after all, from the Crown and out of the general fund intowhich it has been paid, the money which is to be repaid. But, if theservants in question do not act in pursuance of their power and therequirements imposed by the statute, the prosecutor’s or plaintiff’s right,if any, is against the Crown, for although the statute imposes a duty onthe Commissioner it is not a duty which raises any relation between himand the plaintiff and therefore, the duty he owes is not to the plaintiff butto the Crown. It was money paid into his hands for the use of the Crownand he has no right to hold it against the directions given to him by theCrown. Here the Crown has given express directions by enacting that“ he is hereby required to return” ….
The clear implication of these observations of the Master of the Rollsis that if the Commissioner neglects or refuses to perform the duty castupon him by the statute an action lies. But that action lies against theCrown, provided of course, the Crown is liable to be sued. The point isthat the subject is not left without means of relief if the official concernedjrefuses or fails to perform his duty. If it was the intention of theLegislature to establish so surprising a state of things, very clear wordswere required for the purpose. An action or some proceedings for theobtaining of redress must be held to lie. In England no action lies againstthe Crown. The subject must seek redress for his grievance by way of apetition of right. The position is, however, different in Ceylon. It wasruled by the Collective Court many years ago in D. M. Jayawardene v.Juanis Fernando and the Hon. the Queen's Advocate1 that “ the practiceadopted here of suing the Crown in the name of the Queen’s Advocateboth in real actions for the recovery of specific property, and in actionsfor the recovery of money due ex contractu has prevailed here for a longseries of years, and has been recognized by this Court in hundreds ofdecisions—indeed has not so far as we can ascertain been called in questionuntil now …. Under the circumstances we think it too late, atthis day, to contest in this Court the validity of this practice ”. An action,therefore, lies against the Crown and after the Civil Procedure Code wasenacted, the Attorney-General is the proper party to be sued. It hasnot been contended that in this particular case an action does not lieagainst the Crown on any other ground. If therefore an action lies,the Solicitor-General’s contention that the plaintiff should apply fora Mandamus fails, for a Mandamus is a last resort and lies only whenthere is no other remedy. Likewise, his contention that the plaintiff’sremedy was by petition of right fails for as pointed out in th.» CollectiveCourt case such a proceeding is not known locally.
1 4 Si C. C. 77.
ABRAHAMS C.J.—Marshall v. Veero.
321
In reply to respondent’s Counsel, the Solicitor-General contendedfurther that the plaintiff must base his action either on an allegation ofmistake of fact or mistake of law. He said that there is no evidencethat there was any mistake of fact—Arunachalam who could havespoken on the point had not given evidence. There could be no actionfounded on a mistake of law, because the correct view in Roman-Dutchlaw was that taken by Kotze J. in Rooth v. State, that ignorance of lawor mistake of law excuses no one. See Nathan, vol. II. (1913 ed.),pp. 617. 618. But the simple answer to this argument is that thepresent action is founded on the statute which gives a person who isfound to have overpaid estate duty, the right to a return of the amountoverpaid during a certain period, regardless of the cause of the overpay-ment. In my opinion, the appeal fails and must be dismissed with costs.
Poyser J.—I agree.
Appeal dismissed.