LexCOMMISSIONER OF WEALTH TAX, MYSORE versus HER HIGHNESS VIJAYABA, DOWGER MAHARANI SAHEB OF BHAVNAGAR PALACE, BHAVNAGAR & ORS.
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545
COMMISSIONER OF WEALTH TAX, MYSORE
v.
HER HIGHNESS VIJAYABA, DOWGER MAHARANI SAfIEB OF
BHAVNAGAR PALACE, BHAVNAGAR & ORS.
March 9, 1979
[N. L. UNTWALIA AND R. S. PATHAK, JJ.]
Wealth Tax Act, 1957-S. 2(m)-By a family arrangcnu•nt assessce agreed
to pay certain szun to her younger son-The sum agreed to pay-If a debt owed
under s. 2(m)-Whether the undertaking to pay the sum an agreement without
const.leration.
Thi:: respondent's wealth was assessed to Wealth Tax under the Wealth Tax
Act, 1957 for three assessment years 1960·61, 1961-62 and 1962-63 the corres-
ponding valuation dates being 31-12-1959, 31-12-1960 and 31-12-1961. On
14th May, 1953 the assessee wrote a letter to her younger son stating that his
late father expressed the wish that he (the second son)
should
be
paid
Rs. 50 lakhs out of the family properties and that to keep his promise and
elso to get peace of mind, if his elder brother did not pay the sum of Ro;;. 50
lakbs, she would pay such balance that remains unpaid. The elder brother
paU Rs. 20 lakhs.
The balance liability of Rs. 19 lakhs remained due and
continued to be due on all the three aforesaid valuation dates. It was finally
wiped off in February, 1962. On the question "whether, while assessing the
net weaHh of the respondent within section 2(m) of the Wealth Tax Act, the
sum of Rs. 19 lakhs was to be deducted" as debt owed by her, the Wealth
Tax Tribunal held in favour of the respondent.
The High Court held that the
sum of Rs. 19 lakhs constituted a debt owed by the assessee
and was
de-
ductible under the Wealth Tax Act from the value of the total assets as on
31-12-1959.
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..
On appeal to this Court, the appellant argued (i) that the letter dated
14-5-1953 created no debt as the undertaking given by the respondent to her
son on his elder brother's failure to pay any portion ,Of
the sum was an
agreement without consideration and hence it was void and therefore it was
not cr.fvrceable at law on any of the valuation dates and could not be deduct-
ed; (ii) that the undertaking given by the
respondent in her letter dated
14-5-1953 was a contingent contract within the meaning of section 31 of the
Contrac: Act.
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•
Dismissing the appeal,
HELD : ( 1) Taking the totality of facts it was a case of family settle-
ment or family arrangement which was binding on the parties. The respondent
a.greed to purchase peace for the family and to pay to her younger son the
amount which fell •hart of R•. 50 lakh• if her elder son did
not pay any
portion thereof. _It is well established that such a consideration is good consi-
derafion which brings an enforceable agreement between the
parties and is
not hit by •ection 25. Even if it be held that the letter dated 14-5-1953 had
not the effect of bringing about the family arrangement or any binding arrange~
men bewteen the parties, their ~ubsequent conduct upto 12th September 1959
brought a concluded hmily arrangement. The respondent paid R•. 11 lakho
and reiterated her obligation to pay the balance in the shape of ornaments.
A
B
c
D
E
F
G
H
546
SUPREME COURT REPORTS
(1979] 3 s.c.R.
A
That was net honoured by reason of which the younger son had a right tA>
enforce the family arrangement again~t his mother.
The
respondent would.
have been bound to pay the balance if a suit had been filed again.st her as
he bad refrained from going to the law court against his brother on
her
bringing about the family arrangement. [548 C--GJ
(2) Assuming that it was a contingent contract within the
mOO'lling of
B
s. 31 of the Contract act, such a contract under section 32 of the Contract Act,.
becomes enforceably by law when the future event contemplated in the contin-
f
gent contract had happened.
The contingency in this case 'vas the liability of
't
the mother to pay a ceriain sum of n1oney on the failure by the elder son to
pay Rs. 50 lakhs or any part thereof. In that view, the liability of
the
~
mother became enforceable by law on the latter date, if not earlier.
[548 G-H, 549]
c
D
Kesora1n Industries and Cotton Mills Ltd. v. Con1missioner of Wealth 1'ax
(Central), Calcutta, 59 J.T.R. 767; Standard Mills Co. Ltd. v. Commissioner
of Wealth Tax, Bombay, 63 J.T.R., 470; and Bombay Dyeing and Manufac-
turing Co. Lt. v. Commissioner of Wealth Tax, Bombay City-I, 93 J.T.R., 603,
distinguished and held inapplicable.
CIVIL APPELLATE JURISDICTION : Civil APoeal Nos. 2170-2172
of 1972
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