M. CT. MUTHIAH & ANOTHER ETC. versus THE CONTROLLER OF ESTATE DUTY, MADRAS ETC. (AND VICE VERSA)

Citation: [1986] 3 S.C.R. 315 · Decided: 17-07-1986 · Supreme Court of India · Bench: R.S. PATHAK · Disposal: Disposed off

Judgment (excerpt)

A 
M. CT. MUTHJAH & ANOTHER ETC. 
v. 
THE CONTROLLER OF ESTATE DUTY, MADRAS ETC. 
(AND VICE VERSA) 
B 
JULY 17. 1986 
[ R.S. PATHAK AND SABYASACHJ MUKHARJJ, JJ.) 
Estate Duty Act 1953-Sections 2( 15), 5, 6, 15, 34(3)-Estate 
duty-Property liable to estate duty-Personal accident Insurance 
policy-Money received by heirs of deceased under the policy-
Whether forms part of estate of deceased, passes on death-Accident 
policy and life policy-DistinCtion between. 
Jurisprudence-Custom-Prevalence of-Matter of evidence-
'Dwyanamanus.hyana' form of adoption-Prevalence of in Madras 
State. 
The deceased was the Karla of a Hindn undivided family. He had 
two sons. He gave his first son in adoption to his divided paternal uncle. 
c 
D 
He was joint with his second son throughout his life. He took out a 
E 
personal accident insurance policy with the lnsurant-e Company and 
effected a nomination in favour of his first son. During the currency of 
the policy, the deceased die.: following the crash of the airliner in which 
he had travelled, and the Insurance Company paid the nominee a sum 
of Rs.2 lakhs, the benefit stipulated under the terms of the policy. At 
the time of his death, the deceased had other properties and interests. 
F 
One was his interest as an undivided coparcener in his joint family 
which consisted of himself and his second son. 
Jn the assessment proceedings under the Estate Duty Act 195:1, 
the accountable persons urged before the Deputy Controller of Estate 
Duty: (i) that the amount of Rs.2 lakhs could not he aggregated with the 
rest of the properties, but must be brought to charge independently as a 
se~arate estate in itself, because the deceased had no interest at all in 
the insurance money, and (ii) that the adoption in 1931 was on the basis 
that notwithstanding adoption into another family, the ad op tee must 
continue to retain his interest in the properties belonging to the family 
of his birth and, therefore, he was entitled, as on the date of the. de-
:ns 
G 
H 
316 
SUPREME COURT REPORTS 
11986] 3 S.C.R. 
A 
ceased's death, to an equal interest in the deceased's family properties, 'f 
so that the quantum of the deceased's coparcenary interest was not 
one-half hut only one third of the total value of the family properties. A 
"Muri" (deed of adoption) that was executed was produced in this 
regard. 
B 
c 
The Deputy Controller rejected these' contentions and held: (i) 
that the personal accident insurance money of Rs.2 lakhs paid by the 
Insurance Company should be charged to estate duty and it had to be 
aggregated with the rest of the properties passing on the deceased's 
death; (ii) that the insurance money of Rs.2 lakhs was property which 
the deceased was competent to dispose of by will; (iii) that the deceased 
did have an interest in the insurance money; (iv) that the deceased's 
interest in the coparcenary property, which had to be included in the 
dutiable estate, extended to one half share of the joint properties on the 
basis that the deceased and his second son were alone entitled as 
coparceners to the said properties; (v) that the document produced in 
D 
support of the plea of adoption was not genuine and even otherwise it 
had no legal effect on the continued rights of the adopted son in the 
family of his birth subsequent to his adoption. He, therefore, included 
in the dutiable estate, one-half of the joint family properties as being the 
measure of the deceased's coparcenary interest. 
E 
The accountable persons appealed against the above assessment to 
the Central Board of Revenue. The Board held: (i) that the insurance 
money of Rs.2 lakhs was chargeable to estate duty under s. 6; ('i) that 
the deceased had interest in the insurance money; (iii) that the deceased 
did have the power of disposition over the insurance money both by the 
exercise of power of nomination under the policy and also indepen-
F 
dently by the exercise of any testamentary power; (iv) that the Hindu 
law of adoption makes the adopted son lose his property interests in the 
family of his birth and that the "dwyamanushyana" form of adoption 
had become obsolete in Madras, and no such custom was prevailing in 
the Nattukottai Chettiar community, under which the adopted son 
never loses his property rights in the family of his birth and, therefore, 
G 
upheld the assessment of one-half of the value of the whole of the jQint 
family property as the measure of the deceased's dutiable interest. 
On refere

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