Mutual wills and estate duty exemption: survivor bound by the joint testamentary scheme and lacks disposing power over the deceased share.

A joint testamentary instrument can create mutual wills where its overall scheme shows an implied agreement that the property must remain intact for ultimate beneficiaries after the first spouse's death. On that construction, the survivor, having accepted the benefit under the will, is bound not to revoke or alter the disposition and has no disposing power over the deceased spouse's share. The property is treated as settled property for estate duty purposes, and where duty has already been paid on the first death, exemption under section 29 of the Estate Duty Act, 1953 is available.

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Issues: Whether the joint testamentary disposition created mutual wills so that, on the death of the first spouse, the survivor became bound not to revoke or alter the disposition and therefore had no disposing power over the deceased spouse's share, entitling the accountable person to exemption from estate duty under section 29 of the Estate Duty Act, 1953.

Analysis: The property was dealt with in one joint instrument which described the spouses as joint owners during their lifetimes and provided that, after the death of one, the survivor would enjoy the property and that the ultimate bequests in favour of the grandchildren would take effect only after the death of the survivor, in specified portions and in specie. The arrangement contained no provision for compensating any diminution of the property during the survivor's lifetime. Reading the will as a whole, the dominant intention was that the property should remain intact for the ultimate beneficiaries, and this supported an implied agreement that neither spouse would defeat the ultimate disposition after accepting the benefit under the will. On that construction, the survivor had no disposing power over the deceased spouse's share after her death, and the property answered the description of settled property. Since estate duty had already been paid on the first death, the statutory condition for exemption was satisfied.

Conclusion: The will was mutual in character, the survivor was not competent to dispose of the deceased spouse's share contrary to the ultimate bequest, and exemption under section 29 applied in favour of the assessee.

Ratio Decidendi: Where a joint testamentary instrument, construed as a whole, shows an implied agreement that the property is to remain intact for ultimate beneficiaries after the death of the first testator and the survivor accepts the benefit under it, the survivor is bound by that arrangement and lacks disposing power over the first testator's share for purposes of estate duty exemption under section 29 of the Estate Duty Act, 1953.

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