Supreme Court of India
COMMISSIONER OF WEALTH-TAX, BHOPALversusABDUL HUSSAIN MULLA MUHAMMAD ALI (DEAD) BY L.RS.
- Citation
- 1988 INSC 157
- Decided
- 9 May 1988
- Disposal
- Appeal(s) allowed
- Bench
- R S PATHAK
Holding
The loan is a payable debt and must be included in the assessee's wealth; the alleged 'Quaraza‑e‑Hasana' is not a recognized principle and the burden of proof lies with the assessee.
Summary
The case concerned a Rs.4,00,000 loan advanced by the assessee to his partner in a flour and oil mill partnership, which the assessee claimed was a 'Quaraza-e-Hasana'—an interest‑free goodwill loan under Muslim law—and therefore should be excluded from his wealth for tax purposes. The Wealth‑Tax Officer and the Appellate Commissioner taxed the amount, but the Income‑Tax Appellate Tribunal and the Madhya Pradesh High Court accepted the assessee's claim and held the loan not a debt. The Revenue appealed, contending that no authoritative Muslim‑law source defined 'Quaraza‑e‑Hasana' and that, in a commercial partnership, the parties intended a legally enforceable repayment obligation. The Supreme Court held that the concept was not established, that the loan was a payable debt, and that the burden of proving the absence of legal obligation rested on the assessee. Accordingly, the loan was includable in the assessee's wealth and the appeal was allowed.
Issues considered
- Whether a loan claimed to be 'Quaraza‑e‑Hasana' under Muslim personal law can be excluded from wealth tax.
- Whether the concept of 'Quaraza‑e‑Hasana' is recognized in Muslim law for the purpose of taxation.
- Who bears the burden of proving the absence of a legal obligation to repay the loan.
- Whether the loan constitutes a debt payable and thus must be included in the assessee's wealth under the Wealth Tax Act, 1957.
Legislation cited
- Wealth Tax Act, 1957s. 27, s. 5
Subjects
wealth taxloanQuaraza-e-HasanaQard HasanMuslim personal lawdebtlegal obligationburden of proofinclusion of assetscontract law
Judgment
COMMISSIONER OF WEALTH-TAX, BHOPAL
A
v.
ABDUL HUSSAIN MULLA MUHAMMAD ALI
(DEAD) BY L.Rs.
MAY 9, 1988
B
[R.S. PATHAK, CJ. AND M.N. VENKATACHALIAH, J.]
Wealth Tax Act, 1957-Sections 5 and 27-Loan-Termed by
assessee as. 'Quaraza-e-hasana' held includible as wealth of assessee and
liable to tax.
Words and Phrases: 'Quaraza-e-Hasana'~Meaning of. c
The assessee-respondent had advanced a sum of Rs.4,00,000 to
his partner Faizullabhai Mandlawala which sum ' was employed as a
part of Mandlawala's capital in their partnership firm. The assessee
sought to have the value of that loan excluded from his wealih on the D
claim that this loan was what was known to Muslim Law as 'Quaraza-e-
Hasana'-a debt of good faith and goodwill carrying with it no legal
obligation on the part of the debtor to repay and correspondingly, no
right on the part of assessee to expect, much le.S enforce a repayment.
This claim was supported by debtor's declaration that the sum was
received by him 'without any obligation and without any rate of interest E
and without any consideration.'
The Wealth Tax Officer and the Appellate Assistant Commis-
sioner found it difficult to accept this claim. The Appellate Tribunal,
however, accepting the assessee's claim held that the loan partook of the
character of 'Quaraza-e-Hasana' with its special incidents as known to F
Muslim Law; that the transaction was one of good faith and goodwill
. and lacked the concomitants of a legally enforceable claim for repay-
ment and that, therefore, the amount was not a debt due to the assessee.
The High Court upheld this view.
It was contended on behalf of the Revenue (I) thatthe Tribunal as G
well as the High Court erroneously accepted the hypothetical incidents
of a supposedly peculiar institution of the personal law of the Muslims,
any rule or tenet of Muslim Law respecting which had not having
been established; (2) that both the Tribunal and the High Court, while
rightly noticing that the special incidents of what was called 'Quaraza-e-
Hasana' had not IJeen established, gave the benefit of doubt as to the H
227
228 SUPREME COURT REPORTS [1988] Supp. 1 S.C.R.
very existence of this institution of 'Quaraza-e-Hasana' to the assessee,
A and (3) that the reliance by the High Court on the incidents of 'Hiba-ba-
shart-ul-iwaz', a form of Mussalman gift, was misplaced as this kind of
gift expressly stipulated contemporaneous liability for a return.
Counsel for the assessee, sought to support the conclusions of the
B High Court on an alternative and independent ground that, at all
events, by entering into this transaction the parties must be held not to
have intended to create a legal obligation between them and that, there-
fore, the debt remained a debt of honour. It was contended that an
agreement would not, by itself, yield legal obligations unless it was one
which could reasonably be regarded as having been made in contempla-
tion of creating legal consequences, and that in this case the parties
C must be held to have excluded the contemplation of legal conse-
quences flowing from the transaction.
Allowing the appeal it was,
D HELD: ( l) As no authoritative text nor any principle or prece-
dent recognised in Muslim Law was cited before the High Court or this
Court, establishing the nature, content and incidents of the institution
of 'Quaraza-e-Hasana', it was not possible to say, one way or the other,
whether Courts could recognise and act upon such a rule of Muslim
Law much less afford relief to the proponent of that rule. (232G-H; 233A-B]
E
(2) If the concept of 'Qard Hasan' was the same as that of
'Quaraza-e-Hasana', the obligation on the part of the debtor of the loan
to repay nor the right of tbe creditor to repayment were excluded. The
only incident appeared to be that it was 'interest-free'. (234C]
F (3) The reliance by the High Court on the concept of mussa!man
gift 'Hiba-ba-shart-uHwaz' did not help the assessee because this kind
of gift stipulated liability for return. (232E-FI
(4) The debt, though a 'passive debt' would require to be treated
as due and payable to tbe assessee. It was not the assessee's case that the
G debt was bad and irrecoverable. The debtor's declaration itself estab-
lished its existence. ii3SB]
(S) Where, as in the instant case, the tax implications of large
financial obligations were sought to be put an end to, the burden as
heavy on the assessee to establish that what would otherwise be the
H usual incidents Of the transaction were excluded from contemplation by
COMMR. OF WEALTH-TAX v. ABDUL HUSSAIN [VENKATACHALIAH,J.] 229
the parties. Here, one partner had lent a large sum to the other to be
A
utilized as capital in the partnership venture. The transaction was in the
context of.a commercial venture. The presumption therefore, was that
legal obligations were Intended. The onus was on the parties asserting
the absence of legal obligations. The test was not subjective to the
parties, but an objective one. [236E-F] ' '
B
(6) The non-enforceability of debt was pleaded not as a part of
what was permissible in law of contracts, but specifically as some inexo-
rable Incident of a particular tenet peculiar to and characteristic of the
personal law of the Muslims. That not having been established, no
appeal could be made to the principle of permissibility of exclusion of
legal obligations in the law of contracts. In the instant case, the admit- C
ted existence of a debt implied an obligation to repay. No legal bar of
the remedy was pleaded. What was set up, and was unsubstantiated,
was the non-existence of the remedy itself. The loan would therefore
become includible in the wealth of the assessee. [238C-E]
D
Rose and Franc Co. v. J.R. Crompton and Bros. Ltd., [1923] 2
K.B. 261; Edwards v. Skyways, [1964] 1 W .L.R. 340; Bahamas OU
Refining Co. v. Kristiansands Tankraderie A/s and Others and Shell
International Marine Ltd., [1978] Lloyds Law Reports211, referred to.
E
CIVIL APPELLAIB JURISDICTION: Civil Appeal Nos. 740
to 743 of 1975.
From the Judgment and Order dated 30.8.1974 of the High
Court of Madhya Pradesh in Miscellaneous Civil Case No. 352 of 1971.
B.B. Ahuja, Ms. A. Subhashini and K.C. Dua for the Appellant. F
T.A. Ramachandran, Vinek Gambhir, Sanjay Sareen and S.K.
Gamohjr for the.Respondents.
The Judgment of the Court was delivered by
G
VENKATACHALIAH, J. These appeals, by special leave, by
the Commissioner of Wealth-tax, Bhopal, arise out of the opinion
rendered by the High Court of Madhya Pradesh, Bhopal, in four-
consolidated wealth-tax references under Section 27(1) of the Wealth-
tax Act, 1957. They raise a short but interesting question touching the H
230 SUPREME COURT REPORTS [1988] Supp. 1 S.C.R.
incidents of what is described as the 'Quaraza-e-Hasana' said to be a
A
transaction known in and peculiar to the personal law of the muslims.
2. The matters arise out of the proceedings concerning the
assessment to wealth:tax of the respondent, Abdul Hussain Mulla
Mohammad Ali ('the assessee') for the four assessment-years 1957-58
B to 1960-61.
In the original-returns for the assessment year 1957-58 relevant
to the valuation date 31.3.1957, the assessee filed a return of net
wealth of Rs.8,57,910 which included a sum of Rs.4,00,000 represent-
ing the principal value of the loan advanced by the assessee to a certain
Faizullabhai Mandlawala, Sidhpur. Both the assessee and the said
c Faizullabhai Mandlawala were partners of a firm carrying on business
under the name and style 'Rising Sun Flour & Oil Mills' at Ujjain. The
borrower had employed this sum as part of his capital in the firm. In
the revised return, filed by him, the assessee, however, sought to have
the value of that loan excluded from his wealth, on the claim that this
D loan was what was known to Muslim Law as 'Quaraza-e-Hasana'-a
debt of good faith and goodwill carrying with it no legal obligation on
the part of the debtor to repay and correspondingly, no right on the
part of the assessee to expect, much less enforce a repayment. The
claim for the non-inclusion of this asset in the wealth of the assessee
was sought to be supported by the declaration dated 26.3.1965 fur-
E nished by the debtor that the sum was received by him 'without any
obligation and without any rate of interest and without any considera-
tion'. Reliance was also .placed on some extracts of the Quran said to
relate to this transaction.
Both the Wealth-tax Officer and the Appellate Assistant Com-
F missioner in the appeal found it difficult to accept this claim and,
accordingly, brought this sum of Rs.4,00,000 to tax on the respective
valuation dates.
However, the Income-tax Appellate Tribunal, Indore Bench,
accepting the assessee's appeals held that the loan partook of the
0 ·character of 'Quaraza-e-Hasana' with its special incidents as known to
Muslim Law; that the transaction was one of good faith and goodwill
and lacked the concomitants of a legally enforceable claim for re-
payment and that, therefore, the amount was not a debt clue to ihe
assessee.
H 3. The High Court before which the Tribunal, at the instance of
COMMR. OFWEALTII-TAXv. ABDUL HUSSAIN IVENKATACHALIAH,J.) 231
the Revenue, stated a case and referred two questions of Jaw for opi·
nion upheld the view that had commended itself to the Tribunal and A
answered the questions against the Revenue. The two questions so
referred were: ·
(1) "Whether on the facts and in the circumstances of the
case, the Tribunal was justified. in holding that the B
amount of Rs.4 lakbs cannot be included in the total
assets of the assessee ?"
(2) "Whether on the facts and in the circumstances of the
case the Tribunal was justified in accepting that the
amount of Rs.4 lakhs was in the nature of 'Quaraza-e
·Hasana' particularly when Rs.1,21,500 out of Rs.4 c
lakhs has been repaid?".
4. Shri B.B. Ahuja, learned counsel for the Revenue, contended
that that the Tribunal as well as the High Court fell into a serious error
in their acceptance of the hypothetica\ incidents of a supposedly pecu· D
liar institution of the personal law of the muslims, respecting which
nothing tangible by way of evidence as to the existence of such rule or
tenet of muslim law was forthcoming. Learned counsel invited our
particular attention to the following observations of the Tribunal:
"The learned counsel for the assessee, Mr. Chitale, has E
also stated before us that he has not come across any judi·
cial decision defining or describing the exact characteristics
of the expression 'Quaraza-e·Hasana' nor has become
across any discussion on this matter in any of the treaties on
Mohammedan Law. We. are, therefore, satisfied that on
the facts and circumstances of this case, the amount of Rs.4 F
lakbs cannot be treated as a debt due to the assessee and
the same cannot be included in the total asset of the
assessee."
Learned counsel submitted that the inference drawn does not only not
flow from the premise but would clearly be antithetical. If the concept G
of 'Quaraza-e·Hasana' and the peculiar incidents attributed to it are
not established, the plea that there is a debt but yet there is no obliga·
tion to repay becomes mutually contradictory. In regard to the sub·
sidiary or supporting reasons for the acceptance by the Tribunal to
hold that there was no debt which could be said to be due and owing to
the assessee, the learned counsel invited our attention to the following H
reasoning of the Tribunal:
232 SUPREME COURT REPORTS. [1988] Supp. 1 S.C.R,
"........ Faizullabhai in a declaration dated 26.3.1965 has
A stated that this amount was received by him without anY
obligation and without any rate of interest and without any
consideration. Therefore, the question that arises for con-
sideration is wheth~r unc1er this peculiar circm:nstance it
can be said that this sum of Rs.4 lakhs which was given by
B the assessee to Faizullabhai prior to 1950 for which there is
no document and for which there is no obligation to repay
can be treated as a debt due to the assessee ........ "
Learned counsel submitted that neither the circm:nstance that the
loan was advanced prior to 1950 ~or the self-serving \leclaration by the
borrower; nor even that no repayment had been made during the
<tCCOunting years or earlier would, by themselves, detract from the
existence and incidents of a debt which was, otherwis.e, admitted.
~earned counsel pointed out that, admittedly, on 24.7.1961, a sum of
Rs.1,21,821 had been repaid by the borrower to the assessee.
D Learned counsel said that both the Tribunal and the High Court,
while rightly noticing that the special incidents of what was called
'Quaraza-e-Hasana' had not been established, however, by excluding
the sum from the wealth, gave the benefit of this doubt as to the very
existence of this institution of 'Quaraza-e-Hasana' to the assessee.
E 5. Referring to the reliance by the High Court on the incidents
.'Hiba-ba-shart-ul-evaz' learned counsel submitted that the reasoning
of the High Court based on this form of a mussalman gift was destruc-
tive of the assessee's case inasmuch as the kind of gift envisaged by
'Hiba-ba-Shart-UI Evaz' expressly stipulated contemporanc;ous. liabi-
lity for a return.
F
Shri Ramachandran, learned counsel for the assessee, sought to-
support the conclusion of the High Court also another independent
ground that, at all events, by entering into this transaction the parties
did not intend to create a legal obligations between them and that~
therefore, the debt remained a debt of honour. We will presently refer
G to the possibilities of this contention in the facts of this case.
6. No authoritative texts nor any principle or precedent recog-
nised in Muslim Law was cited before the High Court to show that a
transaction of this nature and incidents is known to and recognised by
the personal law of the Muslims. As no material was placed before the
H High Court, or before us, to establish the content and incidents ofthis
COMMR. OF WEALTII-TAX v. ABDUL HUSSAIN IVENKATACHALIAH, J.] 233
idea of what is referred to 'Quaraza-e_-Husana' it is not possible to say,
A
one way or the other, whether Courts can recognise and act upon such
a rule of Muslim Law much less afford relief to the propi>neat of that
rule.
Indeed literature on the Principles of Islamic Banking "Unlawful
gain and legitimi:te profit in Islamic Law" (Nibil A. Saleh, Cambridge B
University Press, 1986) does not appear though we do not want to be
understood to have pronounced on the subject finally to support the
particular incidents of the non-existence of the element of repayability
attributed to this kind of loans. Learned author says that Sharia dis-
tinguishes between two types of loans: one the 'Ariya' the 'loan for
use' which transfers the usufruct of the property temporarily and
gratuitously while ownership of the loaned-object remains with the c
lender; and the second, the 'qard'. In regard to this second type of
loan, the 'qard' the author says (at pages 35 and 36):
"The second type of loan recognished by Sharia is the qard,
which 'involves the loan of fungible commodities; that is, D
goods which may be estimated and replaced according to
weight, measure or numba. In this case, the borrower
undertakes to return the equivalent or likes of that he has
received but without any premium on the property, which
would, of course, be construed as interest. The most likely
object of a qard loan would be currency or other standard E
means of exchange."
(emphasis supplied)
On the question whether the lender of 'Qard' is entitled to derive
any advantage from it, the learned author refers to the views of the dif-
ferent schools namely, Hanafia, Hanbalis, Malikis, Shafi and F
Ibadis. (See pages 41to43). Again, the learned author refers to 'Qard-
Hasan' as interest free loan. Explaining its incidents the author says:
"Qard Hasan means an interest-free loan, which is the only
loan pennitted by Sharia principles. We have seen previ-
ously that not only can interest not be charged on the lent G
capital, but iio advantage whatsoever should be derived by
the lender from the loan. Of course, each school of law has
its own interpretation of what constitutes 'advantage' and
that we have already seen in detail ....... .
One may wonder how lending could be a business H
234 SUPREME COURT REPORTS [1988] Supp. 1 S.C.R.
proposition once interest is abolished ......... "
(emphasis supplied)
(see page 89)
The learned author also proceeds to enumerate the circumstances in
B which the Islamic Financial Institutions are advised to make use of
'Oard Hasan'.
7. From what is gatherable from the author's observations-of
course, if the concept of 'Oard Hasan' is the same as that 'Quaraza-e-
Hasana'-the obligation on the part of the debtor of the loan to repay
nor the right of the creditor to repayment are excluded. The only
c incident appears to be that it is 'interest-free'.
However, we do not want to be understood to have pronounced
on this question finally as neither side has produced nor relied upon
any literature of Islamic Law on the point. The extracts of the Quran
D relied upon merely calls some loan a beatific loan which blesses the
giver. The incidents of the transactions are not found in the passages.
8. Nor does the reliance by the High Court on the well recog-
nised institution in Muslim Law, of Hiba-ba-Shart-ul-lwaz' advance the
case of the assessee any further. In Principles of Mohammadan Law
E (Mulla, 16th Edition page 165) this kind of gift is explained:
"Where a gift is made with a stipula,tion (shart) for a
return, it is called hibaba-~hart-ul-iwaz .......... The
main distinction between Hi6a-bil-Iwaz as defined by older
jurists and Hiba-ba-shart-ul-Iwaz is that in the former iwaz
,F proceeds voluntarily from the donee of the gift while in the
latter it is expressly stipulated for between the parties."
Referring to what distinguishes Hiba-bil-Iwaz from Hiba-ba-
shart-ul-Iwaz, the learned author, Syed Ameer Ali, in 'MahOmmadan
Law' (4th Edition), Vol. I, p. 158 excerpting from Fatawai Alamgiri,
G says:
- ;
'·'Iwaz or consideration was Qf two kinds: one which was
subsequent to the contract (of gift), the other which was
conditkmed in it."
H "In the other kind, the consideration was expressly stipu-
COMMR. OFWEAL1H-TAXv. ABDUL HUSSAIN IVENKATACHALIAH,J.I 235
lated in the contract, and when once it was received the
A
transaction acquired the legal character of a sale. The
modem hiba-ba-shart-ul-iwaz has unquestionably sprung
from the above."
Then, in the last analysis what follows as a logical consequence is
that the debt, though a 'passive debt' would require to be treated as B
due and payable to the assessee. It was not the assessee's case that the
debt was a bad and irrecoverable debt. The declaration of the debtor
itself establishes its existence.
9. But, then, Shri Ramachandran, anticipating the inherent in-
firmity of the claim based on 'Quaraza-e-Hasana' sought to treat us to
a resourceful argument that the conclusion of the High Com-t is, at all c
events, supportable on an independent ground that an agreement will
not, by itself, yield legal obligations unless it is one which can reason-
ably be regarded as having been made between the parties in contell)-
plation of legal consequences and that in the present case the parties
had excluded the contemplation: of legal consequence flowing from the D
transactions. This proposition is stated in 'Chitty on Contracts' (25th
Edn. Volume I para 123) thus:
"An agreement, even though it is supported by considera-
tion, is not binding as a contract if it was made without any
intention of creating legal relations. Of course, in the case of E
ordinary commercial transactions it is not normally neces-
sary to prove that the parties in fact intended to create legal
relations."
(emphasis supplied)
F
Learned counsel cited certain cases to illustrate the point. In Rose and
Frank Co. v. J.R. Cro;,,pton and Bros. Ltd., [1923] 2 K.B. 261 Sccut-
ton, LI, said:
" ..... Now it is quite possible for parties to come to an
agreement by accepting a proposal with the result that the G
agreement concluded does not give rise to legal relations.
The reason of this is that the parties do not intend that their
agreement shall give rise to legal relations. This intention
may be implied from the subject matter of the agreement,
but it may also be expressed by the parties. In social and
family relations such an intention is readily implied, while H
236 SUPREME COURT REPORTS [1988] Supp. 1 S.C:R.
in business matters the opposite result would ordinarily
A ~ollow .... "
At page 293, Atkin, LJ, said:
" ..... To create a contract there must be a common inten-
B tion of the parties t~ enter into legal obligations, mutually
communicated expressly or impliedly."
The novelty of the clause in the contract relied upon in that case did
not miss the learned Judge's notice. He observed:
" ...... I have never seen such a clause before, but I see
c nothing necessarily absurd in business men seeking to regu-
late their business relations by mutual promises which fall
short of legal obligations, and rest on obligations of either
honour or self-interest, or perhaps both .... "
D This contention of Shri Ramachandran was not, in this form, urged
before the High Court. It was not the case of the parties that, apart
altogether from the Rule of Muslim Law relied upon, they had agreed
otherwise also that no legal obligation should arise. ·
10. The contention has, no doubt, its possibilities. But where, as
E here, the tax implications of large financial obligations are sought to be
put an end to, the burden is heavy on the assessee to establish that
what would otherwise be the incidents of the transaction were excluded
from contemplation by the parties. Here, one partner has lent a large
sum to the other to be utilised as capital in the partnership venture.
The transaction is in the context of a commercial venture. The pre-
F sumption is that legal obligations are intended. The onus is on the
parties asserting the absence of legal obligations and the test is not
subjective to the parties; but is an objective one. Chitty says (para 123,
supra):
" ..... The onus of proving that there was no such inten-
G tion 'is on the party who asserts that no legal effect is
intended, and the onus is a heavy one. Where such evidence
is adduced, the Courts normally apply an objective test."
(emphasis supplied)
The observations of Atkin, LJ in the case cited by counsel are also
H worth recalling:
COMMR. OF WEALTH-TAX v. ABDUL HUSSAIN [VENKATACHALIAH, J.] 237
" ....... Such an intention ordinarily will be inferred when A
parties enter into an agreement which in other respects
conforms to the rules of law as to the formation of con-
tracts. It may be negatived impliedly by the nature of the
agreed promise or promises, as in the case of offer and
acceptance of hospitality, or of some agreements made in
the course of family life between members of a family as in B
Balfourv.Balfour, [1919]2KB571 ..... "
In Edwards v. Skyways, 11964] 1WLR340 at 355 Megaw Jsaid:
"In the present case, the subject matter of the agreement is
business relations, not social or domestic matters. There c
was a meeting of minds-an intention to agree. There was,
admittedly, consideration for the company's promise. I
accept the propositions of counsel for the plaintiff that in a
case of this nature the onus is on the party who asserts that
no legal effect was intended, and the onus is a heavy one."
D
Again, in Bahamas Oil Refining Co. v. Kristiansands Tankre-
derie A/S and Others and Shell International Marine Ltd., [1978]
Lloyds Law Reports 211 it was said:
" ...... In deciding whether or not there was any animus
contrabendi in relation to a certain transaction, or whether E
or not sufficient notice of a certain term was given, the law
applies an objective and not a subjective test ...... "
" ...... In the absence of such evidence, how can the
Court assume, even if it might be relevant in law, that the
master did not intend to enter into a contract ...... " · F
11. The arguments of learned counsel proceeds on the general
proposition that in addition to the existence of an agreement and the
presence of consideration there is also a third contractual element in
the form of intention of the parties to create legal relations. This
proposition, though accepted in English Law, has not passed unchal- G
lenged. In Cheshire and Fifoot's Law of Contract, 10th Edn., it is said:
" ...... the criticism of it made by Professor Williston
demands attention, not only as emanating from a disti-
nguished American jurist, but as illuminating the whole
subject now under discussion. In his opinion, the separate H
238 SUPREME COURT REPORTS I 1988] Supp. 1 S.C.R.
A element of intention is foreign to the common law, impor-
ted from the Continent by academic influences in the
nineteenth century and useful only in systems which lack
the test of consideration to enable them to determine the
boundaries of contract ...... "
(at page 97)
B
Be that as it may, the point, however, to note and emphasise is that
this intention not· to create legal obligation is not inferable from the
application of any objective text. The non-enforceability of debt was
pleaded not as a part of what is permissible in law of contracts, but
specifically as some inexorable incident of a particular tenet peculiar to
c and characteristic of the personal law of the Muslims. That not having
been established, no appeal, in our opinion, could be made to the
principle of permissibility of exclusion of legal obligations in the law of
contracts. We are afraid both the Tribunal and the High Court
accepted, somewhat liberally perhaps, what was at best an argument of
hypothetical probabilities. The admitted existence of a debt implies an
D obligation to repay. No legal bar .of the remedy is pleaded. What was
set up, and unsubstantiated, was the non-existence of the remedy
itself.
12. Accordingly, the appeals are allowed and, in reversal of the
view taken by the High Court, the questions referred for opinion, are
E answered in the negative and in favour of the Revenue, with the
attendant implication that the loan would become includible in the
wealth of the assessee for the relevant assessment years. In the
circumstances of the case, we make no order as to costs.
R.S.S. Appeals allowed.
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