Holding

The settlement created only a contingent interest that would vest after the settlor’s death, so the settlor could revoke it and execute a fresh settlement.

Summary

Kokilambal, a Hindu widow with no issue, executed two settlement deeds in 1963‑64 granting her nephew Varadan a life usufruct and an absolute interest after her death. Varadan died in 1979 before Kokilambal, who then revoked the deeds and executed a fresh settlement in favour of Babu and Shanthi. Varadan's brother, N. Raman, sued to declare that the earlier settlement vested an absolute right in Varadan, that the revocation and the new settlement were void, and that he was entitled to the properties. The trial court dismissed the suit, but the lower appellate courts reversed that decision. The Supreme Court held that the settlement created only a contingent interest that would vest after Kokilambal’s death; consequently, upon Varadan’s death the settlement ended, Kokilambal retained ownership and could lawfully revoke the deeds and make a new settlement. The appeal was allowed, setting aside the orders of the High Court and the first appellate court.

Issues considered

The settlement deeds created a vested or contingent interest in favour of Varadan.
Whether Kokilambal could revoke the settlement deeds after Varadan's death.
Whether the fresh settlement deed in favour of Babu and Shanthi is valid.
The interpretation of settlement deeds under Sections 19 and 21 of the Transfer of Property Act, 1882.

Legislation cited

Indian Succession Act, 1925s. 119, s. 120
Transfer of Property Act, 1882s. 19, s. 21

Subjects

settlement deedcontingent vestingrevocation of settlementTransfer of Property ActHindu lawlife interestsuccessionproperty rights

Judgment

KOKILAMBAL AND ORS. A
v.
N. RAMAN

APRIL 21, 2005

[ASHOK BHAN AND A.K. MATHUR, JJ.] B.

Deeds and Documents :

Deed of settlement-Contingent vesting or absolute vesting-Intention
of the sett/or to be gathered by reading recitals in the settlement deed as a C
whole-Hindu widow having no issue had executed two settlement deeds in
respect of certain property in favour of her deceased husband's nephew--
Recitals in the sett!ement deeds indicated that the sett/or had not completely
divested her right infavour of the settlee but it was a cohtingent one which
was to come into effect after death ofthe sett/or-Since the settlee died during D
lifetime ofthe sett/or, the latter reserved her right to revoke the earlier settlement
deeds and execute fresh settlement deeds in favour of others-Transfer of
Property, 1882-Sections 19 and 21.

The first appellant is a Hindu widow who had no issue. She executed
two settlement deeds, Al and A2, in respect of certain properties in favour E
of her dece..lsed husband's nephew. But the settlee died as a bachelor
during the lifetime of the settlor, i.e. the first appellant, and she revoked
both the earlier settlement deeds and executed a fresh settlement deed in
favour of the second and third appellant. Respondent, brother of the
deceased settlee, filed a suit for declaration that he was entitled to the said
properties after the death of his brother; that the· revocation of earlier F
two settlement deeds was null and void and that likewise the fresh deed
of settlement executed in favour of second and third appellant was also
void. The suit was dismissed. Respondent preferred appeal before the first
appellate court and it decreed the same. Appeal against that was dismissed
by High Court, holding that by the instruments of settlement, i.e. Al and G
A2 a vested right was created in favour of the respondent's brother and
hence, the first appellant cannot subsequently revoke that settlement and
execute a fresh settlement in respect of the suit schedule properties in
favour of second and third appellant. Hence the present appeal.

839 H
840 SUPREME COURT REPORTS [2005] 3 S.C.R.

A Allowing the appeal, the Court

HELD : 1.1. Settlement is one of the recognized modes of transfer
of movable and immovable properties under Hindu law. Courts have
emphasized that in order to find out the correct intent of the settlor the
settlement deed has to be read as a whole and draw their inference of its
B content. (844-G, HJ

1.2. Sometimes there is absolute vesting and sometimes there is
contingent vesting as contemplated in Sections 19 and 21 of the Transfer
of Property Act, 1882. In order to ascertain the true intention of the settlor
C one has to closely scrutinize the settlement deed, whether the intention of
the settlor was to divest the property in his l~fe time or to divest the
property contingently on the happening of certa.in event. (845.-A-B)

Rajesh Kanta Roy v. Santi Debi, (1957) SCR 77; Usha Subarao v.
B.N. Vishveswaraiah and Ors., (1996) S SCC 201 and Namburi Basava
D Subrahmanyam v. Alapati Hymavathi and Ors., [1996) 9 SCC 388, relied on.

Halsbury's Laws of England, 4th Edn., Vol. SO, paras 589, 591 and
592, referred to.

2. The recitals of the settlement deeds i.e. A-1 and A-2 clearly says
E that since the first a~pellant had no soil, and· her husband during his life
tim,e has bestowed his love and affection on the respondent's brother, and
therefore, out of love and affection; she has settled that ~he income derived
from the suit schedule properties shall be enjoyed J>y herself and the
respondent's brother, till her life time and after her demise, it shall be
enjoyed by respondent's brother absolutely. She further authorised him
F to collect the rental income of the aforesaid property and pay the
Corporation and land tax, repairs etc. and the remai~der rental amount
shall be enjoyed by herself arid the respondent's brother in moiety. The
first appellant furtller settled tha.t she would not alienate the property but
both of them reserve the right to alienate the property jointly. These
settlement deeds clearly make out that respondent's brother was not made
G absolute owner of the property during the life time of the first appellant.
The first appellant had not completely divested her right in favour of the
respondent's brother but it was a contingent one that it would vest after
her death. Therefore, the intention of the settlor was very clear that the
settlement was to come into effect after the death of the first appellant.
H (847-D-G; 848-A, F)
KOKILAMBAL v. N. RAMAN [A.K. MATHUR, J.] 841

P.Ram Mohan v. Lalitha Raghuraman and Ors., AIR 1976 Madras 333, A
distinguished.

Turlapaty Rajeswara Rao and Anr. v. Kamarajugadda Rangamma and
Ors., (1949) I MW 480 (Vol. 96), referred to.

3. There is an additional factor. Respondent's brother who was a B
bachelor and had certain property inherited from his real parents,
executed a Will in favour of respondent. But he did not include the suit
schedule properties, that shows that at the relevant time it was also clear
that the property which would come to him by way of settlement had not
come to be vested in him and therefore, that property was not included C
in his Will when he made the same with regard to the property which was
received by him from his father or from his ancestors. Therefore, the view
taken by the High Court as well as by the first appellate Court was not
correct and it was totally misreading of the deed of settlement.
1848-G, H; 849-AJ

4. Since the first appellant survived after the respondent's brother, D
she revoked the settlement deeds and issued a fresh settlement in favour
of second and third appellant. On account of the death of respondent's
brother, the first appellant who was the settlor remained the sole owner
of the suit property because the settlement deed had come to an end on
account of the death of settlee, the respondent's brother. Therefore, she E
had the right to execute fresh deed of settlement in favour of second and
third appellant. (849-8)

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 6994 of 1999.

From the Judgment and Order dated 19.11.98 of the Madras High F
Court in S.A. No. 1866 of I 986.

K.K. Mani, G. Kurapathiran and K.B. Sandeep for the Appellants.

R. Sundaravaradhan, R.Ayyam Perumal, S. Vallinayagam and Sewa
Ram with him for the Respondent.
G
The Judgment of the Court was delivered by

A.K. MATHUR, J. This appeal is directed against an order passed by
learned Single Judge of the High Court of Madras in Second Appeal No.1866
of \986 on November 19,1998 whereby learned Single Judge affirmed the
judgment and order of the First Appellate Court and dismissed the second H
842 SUPREME COURT REPORTS . [2005] 3 S.C.R.

A appeal filed by the appellant herein.

Brief facts giving rise to this appeal are as follows. The plaintiff-
respondent instituted Original Suit No.8182 of 1980 before the XVlth Assistant
Judge, City Civil Court, Chennai praying for seven reliefs. The main reliefs
prayed for in the suit read as under :
B
"(i) Declaring that the plaintiff is entitled to the properties in
plaint A & B Schedule absolutely after the life time of the !st
defendant;
---
(ii) For a declaration that the deeds of revocation dated 27 .3.1979
c r~gistered as document Nos.431 and 432 of 1979 in the office of
the Sub-Registrar, Madras in respect of properties described in
Schedule A and B hereunder arc void in law and not valid and
binding on the plaintiff; .
(iii) For a declaration that the deeds of settlement dated 30.3.1979
executed by the !st defendant in favour of defendants 2 and 3 in
D
respect of plaint A and B schedule properties are void in law and
are not valid and binding on the plaintiff;
(iv) For a declaration that the deed of mortgage dated 29.9.1979
executed by defendants 1 to 3 in fayour of 4th defendant in
respect of the plaint A and B Schedule properties are not valid
E and binding on the plaintiff;
(v) Directing the defendant to render true and correct account of the
rental income from the properties described in the Schedule A
and B and to pay over the half share payable to the plaintiff;"

F According to the plaintiff in the suit, schedule properties A & B b~longed
to one Late Manicka Mudaliyar, the husband of the first defendant. That the
said Manicka Mudaliyar died in or about 1963 leaving behind Kokilambal,
the first defendant as his sole legal heir. Since the deceased Manicka Mudaliyar
had no issue, he showered his love and affection to his elder sister's son 'r
Varadan and had a mind to adopt him but before he could do so, he expired.
G Keeping in view the wishes of her deceased husband, Kokilambal got all the
last rites performed through Varadan. Kokilambal, the wife of deceased
Manicka Mudaliyar made settlement on June 12, 1963 of A schedule property
in favour ofVaradan while reserving her right and interest there.in. Similarly,
she also made a settlement on June 27, 1964 in respect of B schedule property
H anc! executed a deed of settlement in favour of Varadan. By virtue of these
KOKILAMBAL v. N. RAMAN [A.K. MATHUR, J.] 843
two settlement deeds, settler Kokilambal stipulated certain terms and conditions A
(reference shall be made hereinafter). Varadan who was a bachelor executed
a will on May 22, 1978 in respect of his other properties other than those
properties which were received by him from Kokilambal by way of settlement
in favour of his brother( Plaintiff). But Varadan died as a bachelor on February
1, 1979. On March 27, 1979 the settlor, Kokilambal revoked both the
settlement deeds in favour of Varadan and she executed a fresh settlement B
deed in favour of one Babu @ Pilani and Shantha @ Shanthi, the wife of
Babu. Shanti was the daughter ofKokilambal's brother. Thereafter, Varadan's
brother, N.Raman filed a suit to declare that he is entitled to the suit properties
after the death of Varadan and sought a declaration that the revocation of
settlement deed made by Kokilambal on March 27, 1979 be declared as null C
and void and likewise the fresh deed of settlement executed by Kokilambal
on March 30, 1979 in favour of Defendant Nos.2 & 3 i.e. Babu and Shanthi
be declared void in law. The suit was dismissed by .the trial court. The
plaintiff preferred an appeal before the first appellate court which decreed the
same. Against that an appeal was preferred by the appellant and the same was
also dismissed by the impugned judgment of the High Court in second appeal D
on November 19, 1998. Aggrieved against this order dated November 19, 1998,
special leave petition was filed and on grant of special leave this appeal has
come up for disposal before us.

The basic question which calls for consideration is what is the effect of E
the earlier two settlements made by settlor Kokilambal in favour of deceased
Varadan; and whether by virtue of that settlement deceased Varadan became
the absolute owner and after his death whether Kokilambal reserved her right
to revoke the settlement or not ? In order to appreciate t~e contents of the
settlement of the suit schedule properties i.e. A & B it would be necessary
to reproduce the recitals in the settlement deeds (A-1 and A-2) which read F
as under:

"Since we did not beget issues, even during my husband's life time
he brought up Varadan, the younger son of his elder sister viz.,
Kuppammal, as his own son. He ( my husband) suddenly passed
away. Even during his life time he has decided to take Varadan as an G
adopted son. I have also decided to act according to his wishes and
hence, I performed the last rites of my deceased husband through
l Varadan. Due to the love and affection that I have towards Varadan,
I intend to make an arrangement for him, and hence I executed and
delivered this Deed of Settlement.
H
844 SUPREME COURT REPORTS [2005) 3 S.C.R.

A This income derived from out of the under-mentioned Schedule
property viz., Door No.43, Kakkaran Basin Road, shall be enjoyed by
myseif and Varadan, till my life time. After my demise, the house,
more fully described in the schedule, shall be enjoyed· byVaradan
absolutely.

B From now on, the aforesaid Varadan himself, shall collect the
rental income of the aforesaid house and pay the corporation and land
tax, repairs etc., and the reminder rental amount shall be enjoyed by
me and Varadan in moiety. Hereafter, I have no right to alienate the
property. But, both of us have right to alienate the same jointly."

C Learned Single Judge of the High Court of Madras came to the finding
after review of various decisions of this Court as well as. the .said High Court,
that by instruments of settlement i.e. A- I and A-2, a vested right was created
in favour of deceased, Varadan and since vesting has taken place in favour
ofVaradan, the settlor cannot subsequently revoke that settlement and execute
D a fresh settlement in respect of the suit schedule property in favour of Babu
& Shantha. Learned Single· Judge affirmed the finding of the trial court that
the order of revocation of the settlement was bad and likewise the execution
of a fresh settlement in favour of. the appellant Nos.2 & 3 was also
consequently bad.

E Learned counsel for the appellant has submitted that both the courts
below have not correctly approached the matter because the settlement deed
does not create a vested right in favour of Varadan so long as Kokilambal
was alive and as per the terms of the settlement the vesting of the suit
schedule property i.e. A and B would only arise after the death of Kokilambal.
Therefore, there is total mis-reading on the part of both the courts of the
F contents of the ..ettlement deeds. As against this, learned counsel for the
respondent submitted that by virtue of the aforesaid settlement, a vested right
was created in favour of the deceased settlor, Varadan and therefore, by way
of succession the suit propertr should come to his brother plaintiff and the
settlor Kokilambal cannot revoke the settlement deeds and issue a fresh
G settlement in favour of appellant No~.2 and 3.

. Settlement is one of the recognized modes of transfer of moveable and
immovable properties under Hindu law. The Courts have accepted such mode
as legal and valid mode of transfer of properties. Courts have emphasized
that in order to find out the correct intent of the settlor the settlement deed
H · has to be read as a whole and draw their inference of its content. Therefore,
KOKILAMBAL v. N. RAMAN [A.K. MATHUR, J.] 845
it has always been emphasized that the tenns of the settlement should be A
closely examined and the intention of the settlor should be given effect to.
Sometimes there is absolute vesting and sometimes there is contingent vesting
as contemplated in Sections 19 and 21 of the Transfer of Property Act, 1882.
In order to ascertain the true intention of the settlor one has to closely scrutinize
the settlement deed, whether the intention of the settlor was to divest the
property in his life time or to divest the property contingently on the happening B
of certain event. In this connection, reference may be made to a decision of
this Court in the case of Rajesh Kanta Roy v. Santi Debi, reported in (1957)
SCR 77. Their Lordships observed that the detennination of the question as
to whether an interest created is vested or contingent has to be guided generally

- by the principles recognized under Sections 19 and 21 of the Transfer of · C
Property Act, 1882 and Sections I i9 and 120 of the Indian Succession Act,
1925. Their Lordships quoted a passage from Jarman on Wills (8th Ed. , Vol
II at page 1390 which states as follows :

"So, where a testator clearly expressed his intention that the
benefits given by his will should not vest till his debts were paid, .. D
the intention was carried into execution, and the vesting as well as
payment was held to be postponed."

Their Lordships in the case of Rajesh Kanta Roy (Supra) have observed
as follows :
E
"Apart from any seemingly technical rules which may be gathered
from English decisions and text-books on this subject, there can be
no doubt that the question is really one of intention to be gathered
from a comprehensive view of all the terms of a document."

Their Lordships have clearly observed that in order to decide the F
issue one has to closely go thro~gh the terms of settlement and the
intention of the settlor.

In this connection, our attention was invited to a decision of this Court
in the case of Usha Subarao v. B.N. Vishveswaraiah and Ors., reported in
[1996) 5 sec 201 wherein it was observed as follows : 0

-· "An interest is said to be a vested interest when there is immediate
right of present enjoyment or a present right for future enjoyment. An
interest is said to be contingent if the right of enjoyment is made
dependent upon some event or condition which may or may not
happen. On the happening of the event or condition a contingent H
846 SUPREME COURT REPORTS [2005] 3 S.C.R.

A interest becomes a vested interest."

Their Lordships also relied upon an observation made in Halsbury's Laws of
England, 4th Edn., Vol. 50, paras 591, 592 which read as under :

"Although the question whether the interest created is a vested or a
B contingent interest is dependent upon the intention to be gathered
from a comprehensive view of all the terms of the document creating
the interest, the court while construing the document has to approach
the task of construction in such cases with a bias in favour of vested
--
interest unless the intention to the contrary is definite and clear. As
regards Wills the rule is that " where there is a doubt as to the time
c of vesting, the presumption is in favour of the early vesting of the gift
and, accordingly, it vests at the testator's death or at the earliest
moment after that date which is possible in the context."
-
Their Lordships also relied upon Halsbury's Laws of England, 4th Edn., Vol.
50, Para 589 at page 395 which reads as under :
D
"It is necessary to construe the Will to find out the intention of the
testator. With regard to construction of Wills the law is well settled
that intention has to be ascertained from the words used keeping in
view the surrounding circumstances, the position of the testator, his
family relationship and that the Will must be read as· a whole"
E
.Our attention was also invited to a decision of this Court in the case of
Namburi Basava Subrahmanyam v. Alapati Hymavathi and Ors., reported in
[1996] 9 sec 388. In this case also the question was whether the document

F
is a will or settlement. Their Lordships held that the nomenclature of the
document is not con ··Jsive one. It was observed as follows : -.,

"The nomenclature of the document is not conclusive. The recitals in
the document as a whole and the. intention of the executant and
acknowledgment thereof by the parties are conclusive. The Court has
to find whether the document confers any interest in the property in
G praesenti so as t~ take effect intra vivos and whether an irrevocable
interest thereby, is created in favour of the recipient under the
document, or whether the executant intended to transfer the interest
in the property only on the demise of the settlor. Those could be
gathered from the recitals in the document as a whole.

H The document in this case described as 'settlement deed' was to take
KOKILAMBAL v. N. RAMAN [A.K. MATHUR, J.] 847
effect on the date on which it was executed. The settlor created rights A
thereunder intended to take effect from that date, the extent of the
lands mentioned in the Schedule with the boundaries mentioned there
under. A combined reading of the recitals in the document and also
the Schedule would clearly indicate that on the date when the document
was executed she had created right, title and interest in the property B
in favour of her second daughter but only on her demise she was to
acquire absolute right to enjoyment, alienation etc. In other words,
she had created in herself a life interest in the property in praesenti
and vested the remainder in favour of her second daughter. It is
settled law that the executant while divesting herself of the title to the
property could create a life estate for her enjoyment and the property C
would devolve on the settlee with absolute rights on the settlor's
demise. Thus the document in question could be construed rightly as
a settlement deed but not as a Will. The settlor, having divested
herself of the right and title there under, had, thereafter, no right to
bequeath the same property in favour of her first daughter. "
D
In this background, we have to examine the settlement deeds created by
Kokilambal in favour of the deceased Varadan. The recitals of the settlement
deeds i.e. A-1 and A-2 as reproduced above, clearly says that since Kokilambal
had no son and her husband Konicka Mudaliyar during his life time has
bestowed his love and affection on Varadan, the son of his elder sister, and E.
therefore, out of love and affection, she has settled that the income derived
from the properties i.e. Door No.43, Kakkaran Basin Road, shall be enjoyed
by herself and Varadan, till her life time and after her demise, it shall be
enjoyed by Varadan absolutely. She further authorised him to collect the
rental income of the aforesaid house and pay the corporation and land tax,
repairs etc. and the remainder rental amount shall be enjoyed by herself and F
Varadan in moiety. The appellant No.l further settled that she would not
alienate the property but both of them reserve the right to alienate the property
jointly. Therefore, this settlement in no uncertain terms lays down that the
properties in question will vest absolutely after the death of the appellant
No. I and during their life time, both will enjoy the usufructs but Varadan
would collect the rental income of the aforesaid property. It is further G
mentioned that both will have the right to alienate the property in question
jointly. These conditions are very clear , Varadan would have acquired the
absolute right over the property after the death of Kokilambal. Even during
their life time if the property was to be alienated then the same would be
alienated by them jointly meaning thereby that the appellant No. I continued H
848 SUPREME COURT REPORTS (2005) 3 S.C.R.

A to hold the property during her life time and both of them were permitted to
enjoy the usufructs of that property. These settlement deeds in our opinion,
clearly make out that Varadan was not made absolute owner of the property
during the life time of the settlor, Kokilambal.

Lean~ed counsel for the respondent has tried to interpret this document
B that since the appellant No. I had already divested her right to alienate the
property that should be enough to show that the entire property stood v_ested
in favour ofVaradan. Learned counsel for the respondent tried to seek support
from a decision in the case of Turlapaty Rajeswara Rao and Anr. v.
Kamarajugadda Rangamma and Ors., reported in (1949) I MLJ 480 ( Vol.96)
C In that case ·also it was observed that the wife got the life estate in the
proJ>erties and the nephews got the vested interest in the same although they
are postponed till her death. In this case also it was held that the fundamental
rule of construction of a ·will is that the intention of the testator should be
gathered from a reading of the will as a whole. Learned counsel for the
respondent also invited our attention to a decision in the case of P.Ram
D Mohan v. Lalitha Raghuraman and Ors., reported in AIR (1976) Madras
333. In that case, on the facts Their Lordships came to the conclusion that
where a settlor by .a deed of settlement created a life interest in favour of
himself, his wife, his foster son, it was held that the two sons of the settlor
acquired a vested interest in the property on the date of execution of the
E deed. Therefore, this depended on the construction of the settlement deed.
I
But in the present case, we have quoted above the recitals in the settlement
deeds i.e. A- I and A-2 and have also interpreted the same that the settlor l
Kokilambal had not completely divested her right in favour of the deceased
Varadan but it was a contingent one that it would vest after her death. •
i
Therefore, the intention of the settlor was very clear that the settlement was •
""!'I
F to come into effect after the death of settlor, Kokilambal.

There is an additional factor for coming to this conclusion. Vardan who
was a bachelor and had certain property inherited from his real parents, he
executed a will in favour of his brother, the plaintiff. But he did not include
this property, that shows that at the relevant time it was also clear that the
G property-which would come to him by way of settlement had not come to be
vested in him and therefore, that property was not included in his will when
he made the same with regard to the property which was received by him
from his father or from his ancestors. Therefore, from this we have no
hesitation in our mind to hold that the view taken by the.leaned Single Judge
H of the High Court of Madras as well as by the first appellate Court was not
KOKILAMBAL v. N. RAMAN (A.K. MATHUR, J.] 849
correct and it was totally misreading of the deed of settlement. A
Since Kokilambal survived after Vardan, she revoked the settlement
deeds and issued a fresh settlement in favour of Appellant Nos.2 and 3. On
account of the death of Varadan Kokilambal who was the settlor remained
the sole owner of the suit property because settlement deed had come to an
end on account of the death of settlee, Varadan. Therefore, she had the right B
to execute fresh deed of settlement in favour of appellant Nos.2 & 3. Thus,
we do not find that subsequent settlement made by the appellant No. I in
favour of Appellant Nos.2 & 3 suffers from any illegality.

Hence, as a result of our above discussion, we allow this appeal and set
aside the impugned order dated November 19, 1998 passed by learned Single C
Judge of the High Court of Madras in Second Appeal No.1866 of 1986 as
well as the order of the first appellate court whereby the order of the trial
court dismissing the suit was reversed. There would be no order as to costs.

B.B.B. Appeal allowed. D