Valid wakf-alal-aulad under Mohammedan law excludes settled property from estate duty and defeats perpetuity objections.

A wakf-alal-aulad recognised under Mohammedan law was held valid despite objections based on the rule against perpetuity, because section 2 of the Transfer of Property Act preserves the operation of Mohammedan law and sections 13 and 14 do not invalidate such a dedication. The permanent dedication of property for descendants and thereafter for a religious or charitable object was therefore effective, and the settlor ceased to own the property on creation of the wakf. As the settlor had divested title and retained no interest at death, the corpus of the valid wakf was not property passing on death and was excluded from the principal value of the estate for estate duty.

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Issues: (i) Whether the trust created in 1953 was void ab initio for contravention of the rule against perpetuity under the Transfer of Property Act; (ii) whether the corpus of the trust was includible in the principal value of the deceased's estate for estate duty purposes.

Issue (i): Whether the trust created in 1953 was void ab initio for contravention of the rule against perpetuity under the Transfer of Property Act.

Analysis: The settlement was a wakf-alal-aulad recognised by Mohammedan law. Section 2 of the Transfer of Property Act preserved the operation of Mohammedan law and, therefore, the restrictions in sections 13 and 14 of that Act did not invalidate a wakf of this nature. On the accepted principles of Islamic law, a wakf for the benefit of the settlor's descendants and thereafter for a religious or charitable object is a valid permanent dedication, and the properties cease to belong to the settlor on the creation of the wakf.

Conclusion: The trust was valid and not void ab initio; this issue was decided in favour of the assessee.

Issue (ii): Whether the corpus of the trust was includible in the principal value of the deceased's estate for estate duty purposes.

Analysis: Once the wakf was validly created, the settlor had divested himself of the properties during his lifetime and retained no interest in them at the date of death. Property over which the deceased had already parted with title and interest could not be treated as property passing on death.

Conclusion: The corpus of the trust was not includible in the deceased's estate; this issue was decided in favour of the assessee.

Final Conclusion: The trusts were valid wakfs under Mohammedan law, the settlor had divested himself of the properties long before his death, and the trust corpus could not be brought to estate duty.

Ratio Decidendi: A valid wakf-alal-aulad governed by Mohammedan law is not hit by sections 13 and 14 of the Transfer of Property Act by virtue of section 2, and property validly dedicated in such wakf does not form part of the settlor's estate on death for estate duty purposes.

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