Customary joint family rights preserved for Cutchi Memons, limiting estate duty to the deceased's undivided share.

Cutchi Memon families settled in Madras and Bangalore were found, by settled custom and family usage, to have adopted Hindu law not only for succession and inheritance but also for joint family property, coparcenary and survivorship. The respondents had therefore acquired a birthright in the property, so only the deceased's undivided share passed on death for estate-duty purposes. The later Cutchi Memons enactments did not abrogate those accrued rights; the 1920 Act was enabling, and the 1938 Act preserved pre-existing rights and liabilities by saving clause. The answer to the referred question was against the Revenue.

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Issues: Whether the entire estate of a Cutchi Memon deceased was chargeable to estate duty, or whether the respondents had already acquired, by custom and family usage, a birthright in joint family property with devolution by survivorship so that only the deceased's undivided share passed on his death; and whether the later Cutchi Memons enactments displaced that pre-existing position.

Analysis: The governing inquiry was the customary law applicable to Cutchi Memons settled in Madras and Bangalore. The Court reviewed the conflicting Bombay and Madras authorities and accepted the Madras line of reasoning that, in the surroundings in which these families had settled, they had regulated their affairs according to Hindu law not merely in matters of succession and inheritance but also in relation to joint family property, coparcenary, and survivorship. The Court further held that the earlier and later Cutchi Memons enactments were not shown to have abrogated accrued rights; the 1920 Act was merely enabling, while the 1938 Act contained a saving clause preserving rights or liabilities acquired before its commencement. On the facts, the respondents had acquired a birthright in the property long before the relevant statutory change.

Conclusion: The entire estate was not chargeable to estate duty; only the deceased's undivided share could be treated as having passed on death, and the answer to the referred question was against the Revenue.

Ratio Decidendi: Where a Cutchi Memon family had, by settled custom in a particular environment, adopted Hindu law as governing joint family property and survivorship, accrued birthrights in that property were preserved by a subsequent saving provision and did not pass on the ancestor's death for estate-duty purposes.

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