1936 (5) TMI 38 - Other - Indian Laws

Inheritance Settlement Requires Registered Transfer Instrument

M.E. Moolla Sons Limited Versus The Official Assignee of the High Court of Judicature and Ors.

The High Court held that Maung Chit Maung's interest under his father's settlement constituted immovable property, requiring a registered instrument for ... - Issues Involved:1. Whether the interest of Maung Chit Maung under his father's settlement was immovable property.2. Whether the unregistered instrument of December 22, 1920, was valid for transferring the interest.3. Whether Moolla was a trustee for the plaintiff Company.4. Whether the Official Assignee was estopped from denying the plaintiff Company's claim.Detailed Analysis:1. Whether the interest of Maung Chit Maung under his father's settlement was immovable property:The primary issue was to determine if Maung Chit Maung's interest under his father's deed of settlement dated May 5, 1908, constituted immovable property under the Transfer of Property Act and the Registration Act. The court noted that the settlement provided for the distribution of income and eventual sale proceeds of the property among the children and their descendants. The court referenced prior judgments, including Ma Yait v. Official Assignee, which described the settlement as an ordinary one transferring property to trustees for the benefit of the settlor and his descendants. The court concluded that the interest in the income and the ultimate proceeds of sale was indeed immovable property, emphasizing that future rents and profits from the property were considered immovable property. Thus, the High Court of Rangoon rightly held that Maung Chit Maung's interest was immovable property.2. Whether the unregistered instrument of December 22, 1920, was valid for transferring the interest:The court examined whether the unregistered instrument purporting to transfer Maung Chit Maung's interest to the plaintiff Company was valid. According to Section 54 of the Transfer of Property Act, the sale of immovable property must be made by a registered instrument. The court noted that no registered instrument existed to carry out the contract of sale contained in the agreement of December 22, 1920. Therefore, the unregistered instrument could not transfer the interest in immovable property, rendering the transfer invalid.3. Whether Moolla was a trustee for the plaintiff Company:The plaintiff Company contended that Moolla was a trustee for the Company and that the interest never vested in the Official Assignee. The court found no reasonable evidence of any declaration by Moolla expressing an intention to assume the character of a trustee. The court highlighted that a contract for the sale of immovable property does not create any interest in or charge on such property, according to Section 54 of the Transfer of Property Act. Additionally, the Indian Trusts Act requires a non-testamentary instrument in writing and registered to declare a trust in relation to immovable property. Since no such instrument existed, the claim that Moolla was a trustee was unfounded.4. Whether the Official Assignee was estopped from denying the plaintiff Company's claim:The plaintiff Company argued that the Official Assignee was estopped from denying the interest vested in the Company, based on the fact that the Company had funded an appeal in a previous suit without prejudice to any future claims. The court found that the Official Assignee had agreed to the Company's proposal without prejudice to the ultimate decision of the question as between the Company and the Official Assignee. The court concluded that no estoppel was made out, as the Company's actions were based on an understanding that did not prejudice the ultimate decision.Conclusion:The court ultimately dismissed the appeal, affirming that the interest of Maung Chit Maung was immovable property, requiring a registered instrument for transfer. The unregistered instrument of December 22, 1920, was invalid for transferring the interest. Moolla was not a trustee for the plaintiff Company, and the Official Assignee was not estopped from denying the Company's claim. The Division Bench of the Rangoon High Court rightly dismissed the suit, and the appeal was dismissed with costs.