Trust settlement by settlor-trustee is not a gift, so tenancy transfer restrictions do not apply.
Creating a trust over one's own property while appointing oneself as sole trustee is treated as a vesting of legal and beneficial interests under the Trusts Act, not as a gift under the Transfer of Property Act, because a gift requires a transfer to a distinct donee capable of acceptance. On that basis, the arrangement does not fall within the transactions regulated by Section 63 of the Bombay Tenancy and Agricultural Lands Act, which applies to gifts and other specified transfers. The stated effect is that the statutory bar was inapplicable and the reference to the Mamlatdar could not be sustained.
Issues: (i) Whether creation of a trust by a settlor in respect of his own property, while appointing himself as sole trustee, amounts to a gift within the meaning of the Transfer of Property Act, 1882; (ii) whether such a transaction attracts the prohibitions in Section 63 of the Bombay Tenancy and Agricultural Lands Act, 1948, and whether the reference to the Mamlatdar was without jurisdiction.
Issue (i): Whether creation of a trust by a settlor in respect of his own property, while appointing himself as sole trustee, amounts to a gift within the meaning of the Transfer of Property Act, 1882.
Analysis: A gift requires a transfer from a donor to a donee, and acceptance by or on behalf of the donee. A person cannot, in law, be both donor and donee of the same property in the sense required by Section 122. When the settlor creates a trust and appoints himself as sole trustee, the transaction is one of vesting and bifurcation of legal and beneficial ownership under the Trusts Act, not a gift. The property is settled for the benefit of beneficiaries, but there is no transfer to an ascertainable donee capable of accepting the gift.
Conclusion: The transaction did not amount to a gift.
Issue (ii): Whether such a transaction attracts the prohibitions in Section 63 of the Bombay Tenancy and Agricultural Lands Act, 1948, and whether the reference to the Mamlatdar was without jurisdiction.
Analysis: Section 63 applies to sales, gifts, exchanges, leases, mortgages, and agreements for such transactions. Since the settlement in trust was not a gift and did not effect a transfer in the statutory sense, it did not fall within the transactions regulated by Section 63. Consequently, there was no tenancy question requiring adjudication under that provision, and the reference made to the Mamlatdar could not be sustained.
Conclusion: Section 63 was not attracted, and the reference to the Mamlatdar was without jurisdiction.
Final Conclusion: The order of the learned single Judge was set aside and the District Court's order was restored, leaving the trust settlement effective and the appellant successful in appeal.
Ratio Decidendi: Where a settlor settles property in trust and appoints himself sole trustee, the act is a vesting declaration under the Trusts Act and not a gift under the Transfer of Property Act; such a transaction does not attract statutory restrictions limited to gifts or other specified transfers.
TaxTMI 
AI Drafter ✕
TaxTMI 
