Discretionary acceptance of property for estate duty must be exercised bona fide and on relevant considerations

Section 52(1) of the Estate Duty Act is an enabling provision and does not compel the Government to accept property in satisfaction of estate duty. Because acceptance depends on an agreed price and the statutory scheme permits administrative choice, the power is discretionary rather than mandatory. However, the discretion must be exercised bona fide, on relevant considerations, and not arbitrarily or capriciously. On the facts discussed by the SC, the rejection was not shown to reflect a proper lawful evaluation, so the matter required fresh consideration in accordance with law, without imposing any obligation to accept the property.

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Issues: (i) whether the power under section 52(1) of the Estate Duty Act, 1953 to accept property in satisfaction of estate duty is mandatory or discretionary; (ii) whether the competent authority properly exercised its discretion in rejecting the application.

Issue (i): whether the power under section 52(1) of the Estate Duty Act, 1953 to accept property in satisfaction of estate duty is mandatory or discretionary

Analysis: Section 52(1) is an enabling provision that permits the Central Government, on application by the accountable person, to accept property at a price agreed upon between the parties. The language does not compel acceptance, and the requirement of agreement on price shows that the provision contemplates administrative choice rather than a statutory obligation. The scheme of the Act, which primarily provides machinery for collection of duty, supports the view that the Government may accept or reject the offer depending on the circumstances.

Conclusion: The power under section 52(1) is discretionary and not mandatory; the accountable person cannot insist that the Government must accept the offered property.

Issue (ii): whether the competent authority properly exercised its discretion in rejecting the application

Analysis: Although the power is discretionary, it must be exercised bona fide, on relevant considerations, and not arbitrarily or capriciously. The rejection in the present case was not shown to rest on a proper administrative evaluation of the application. The materials placed before the authority did not demonstrate a satisfactory exercise of discretion in accordance with law.

Conclusion: The discretion was not properly exercised, and the application had to be reconsidered afresh in accordance with law.

Final Conclusion: The rejection of the offer could not be sustained as a matter of final administrative decision, but the Government was not bound to accept the property; the matter was remitted for fresh consideration on lawful and relevant grounds.

Ratio Decidendi: A statutory power framed in permissive terms is discretionary when the scheme requires acceptance on agreed price, but such discretion must be exercised bona fide on relevant considerations and is reviewable if exercised arbitrarily.

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