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In the light of the principles of Mohammedan Law the two trusts are valid Wakfs and are not affected by Sections 13 and 14 of the Transfer of Property Act, 1882. As a result the settlor had divested himself of these properties during his lifetime for the benefit of his grand daughter and his daughter-in-law and thereafter for their descendants and then for holy shrine. On the date of his death the settlor did not have any interest in the properties nor had he reserved any interest to himself under these trusts. Hence, for the purposes of Estate Duty, the deceased cannot be considered as having any interest in the trust property, which passed on his death. The properties, which constituted the subject matter of the two trusts, therefore cannot be included in the estate of the deceased for purposes of estate duty. [955-F-H] Sala v. Hussain, AIR (1955) Hyd 229, approved. Abul Fata Mohammad Ishak v. Rasamaya Dhur Chowdhary, (1894) 22 IA 76, overruled. Rasamaya Dhur Chowdhary v. Abul Fata Mohammad Ishak, (1891) ILR 18 Cal 399, referred to. Syed Ameer Ali: Mahommedan Law (Fourth Edn.) Vol. 1 p. 284, A.A. Fyzee Outlines of Muhammadan Law

Asaf Jah I, Nizam of Hyderabad

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PETITIONER:
TRUSTEES OF SAHEBZADI OALIA KULSUM TRUST

 Vs.

RESPONDENT:
THE CONTROLLER OF ESTATE DUTY, A.P.

DATE OF JUDGMENT: 03/08/1998

BENCH:
SUJATA V. MANOHAR, M. SRINIVASAN

ACT:

HEADNOTE:

JUDGMENT:
 J U D G M E N T
Mrs. Sujata V. Manohar. J.
 On 21st of March, 1953, the Nizam of Hyderabad, Sir Mir
Osman Ali Khan, executed a deed of trust under which he
settled certain jewellery and other properties on trust for
the benefit of Sahebzadi Oalia Kulsum, his grand daughter
for life and thereafter for her children and their children
for life etc. and ultimately for the maintenance of a holy
shrine. On the same date, he also executed a deed of trust
in favour of his daughter-in-law, Sahebzadi Anwar Begum, the
wife of second Prince Muazzam Jah. The terms of the two
trust deeds are similar. For the sake of convenience, we are
referring only to the trust deed executed in favour of
Sahebzadi Oalia Kulsum.
 Under the deed of trust, the settlor who was a Muslim,
created a trust in respect of certain jewellery and
ornaments and other properties for the benefit of his grand
daughter oalia Kulsum who was given a right to wear the
jewellery after her marriage or on completing the age of 30
years whichever was earlier. She was allowed to wear the
jewellery and ornaments during her life time and after her
death the trustees were directed to sell the ornaments and
invest the sale proceeds, thus turning them into an income
yielding investment. A further direction was given to the
trustees to pay the income to the children of Oalia Kulsum
or remoter issue of Prince Muazzam Jah Bahadur from
generation to generation in the ratio of two shares for male
and one share female heirs. In the absence of the
contingencies mentioned above, the income was directed to be
paid to remoter issues of Prince Muazzam Jah Bahadur from
generation to generation in the ratio of two shares for male
and one share for female. On the death of the last survivor
of the persons entitled to the net income of the fund, the
income was directed to be utilised for the benefit of the
holy shrine at Khum in Iran. Thus the trust was in the
nature of wakf-alal-Aulad. In fact the recital in the trust
deed is to the same effect:
 "AND WHEREAS out of natural love
 and affection which the settlor
 bears towards his relatives
 hereinafter mentioned and for
 divers other good causes and
 considerations him thereunto moving
 he the settlor is desirous of
 making a settlement and wakf-ul-
 aulad in the name of the most
 merciful God in respect of the said
 articles specified in the First
 Schedule hereunder
 written............ for the purpose
 of the maintenance and support of
 the members of his family and his
 descendants and ultimately for the
 religious and charitable purposes
 hereinafter mentioned in the manner
 hereinafter appearing...."
 Pursuant to the deed of trust the jewellery and
ornaments and certain other properties were transferred by
the settlor as a wakf.
 The settlor Sir Mir Osman Ali Khan expired on 24th of
February, 1967. By an order passed by the Additional
Assistant Collector of Estate Duty dated 25th of January,
1973, the properties which were the subject matter of these
two trusts were deemed to pass on the death of the deceased
and were and were treated as property passing on the death
of the deceased for the purposes of estate duty. The appeal
of the present appellant, however, was allowed by the
Appellate Controller of Estate Duty by his order dated 2nd
of June, 1975. In the further appeal to the Tribunal, the
Tribunal by its order dated 7th of July, 1976 dismissed the
appeal of the department and confirmed the order of the
Appellate Controller by holding that the value of the
property forming the corpus of the trust cannot be included
in the principal value of the estate of the deceased.
 From this finding of the Tribunal, the following two
questions were referred to the High Court of Andhra Pradesh
at Hyderabad:
 "A: Whether on the facts and in the
 circumstances of the case the trust
 created by the deceased on
 21.3.1953 known as Sahebzadi Oalia
 Kulsum Trust is ab initio void?
 B: Whether on the facts and in the
 circumstances of the case and on
 the interpretation of the trust
 deed the value of the corpus of the
 Shabzadi Oalia Kulsum Trust is
 liable to be included in the
 Principal value of the estate of
 late Sir Osman Ali Khan Bahadur?"
 Similar questions were referred in connection with the
second trust. The High Court by its impugned judgment and
order dated 9th of December, 1983 decided the questions in
favour of the revenue and against the assessee. The present
appeals arise from the impugned judgment of the High Court
dated 9th of December, 1983.
 It is contended by the respondent i.e. the department
that the trusts created under the said deeds of trust are
void ab initio since they violate Sections 13 and 14 of the
Transfer of Property Act, particularly the Rule against
Perpetuity incorporated there. The appellant, however,
review upon Section 2 of the Transfer of Property Act under
which it is provided, inter alia, that nothing in the second
chapter of this Act shall be deemed to affect any rule of
Mahomedan law. Section 13 and 14 relied upon by the
department, form a part of the second chapter of the
Transfer of Property Act. The appellant submits that under
Mahomedan Law it is permissible to create a Wakf-alal-aulad
under which a trust in perpetuity can be created for the
maintenance and support wholly or partially, of the family
of the settlor, his children or descendants from generation
to generation and thereafter for the benefit of poor or for
any other purpose recongnised by Mohammedan Law as a
religious, pious or charitable purpose of a permanent
character. The provisions of Chapter 2 of the Transfer of
Property Act which inter alia embody the Rule against
Perpetuity applicable to transfers inter vivos, do not apply
to such trusts.
 Syed Ameer Ali in his book on Mahommedan Law, Fourth
Edition, Volume 1, page 284 stated as follows:
 "When a man,' says the Fatawai
 Alamgiri quoting the Zakhira, has
 made a wakf of land or something
 else with a condition, that the
 whole or part of it shall be for
 himself while he lives and after
 him for the poor, the wakf is valid
 according to Abu Yusuf, and the
 jurists of Balkh have adopted his
 opinion and ruled accordingly, and
 the Fatwa is in conformity with
 that opinion as an inducement to
 the making of wakfs."
 Dealing with wakf in favour of descendants, Ameer Ali
says (p.284):
 "So also if he should, 'This my
 land is a sadakah-mowkoofa, he
 (meaning the mutwalli) will pass
 the produce to me while I live,
 then after me to my child and my
 child's child and their nasl for
 ever, while there are any and when
 they cease, to the indigent,' This
 is lawful."
 (N.B. nasl = descendants)
 There is general consensus on this proposition amongst
the various authorities on Islam.
 The Privy Council, however, had an occasion to consider
a wakf-alal-aulad created by a Muslim in the case of Abul
Fata Mohammad Ishak v. Rasamaya Dhur Chowdhary (1894 22
Indian Appeals 76) in which two Muslim brothers made a wakf
whereby they were the first mutwallis of the wakf. The
entire benefit of the wakf was to go to the children in the
first instance and their descendants from generation to
generation until the total extinction of the family.
Thereafter the income was to be applied for the benefit of
widows, orphans, beggar and the poor. The Privy Council held
that since the bequest to charity was illusory and too
remote, the wakfs were not valid as they offended the rule
against perpetuity.
 Criticising the decision of the Calcutta High Court in
the case of Rasamaya Dhur Chowdhary v. Abdul Fata Mohammad
Ishak ([891]) I.L.R. 18 Cal. 399) which was subsequently
upheld by the Privy Council in Abdul Fata Mohammad Ishak v.
Rasamaya Dhur Chowdhary (supra), Ameer Ali explains the
position in Mahommadan Law by saying that the provision for
one's children and descendants is regarded as a pious duty
by which nearness (kurbat) to God is attained. The mention
of the poor is required by Mohammad (not by Abu Yusuf with
whom is the Fatwa) not to give validity to the wakf, but to
ensure perpetuity; and as human beings are liable to become
extinct and as a wakf must be a permanent dedication,
Mohammad required that the poor should be expressly named or
implied by the use of the word "sadakah". Abu Yusuf, on the
other hand, held that whether the poor were named or not, or
whether the word "sadakah" was used or not, the word "wakf"
implied perpetuity, and, therefore, unless some other object
was named, on failure of the wakif's posterity, the income
would be applied for the poor. There is no question about
the validity of the wakf; the mention of the poor does not
make the wakf per se more or less valid; it only ensures
perpetuity insisted upon in the law (pages 296-297).
 Asaf A.A. Fyzee in his book "Outlines of Muhammadan
Law", Fourth Edition at pages 303 states that according to
the ancient texts, wakfs for the support of a man's
descendants and family were considered to be proper and
lawful. He says, " The Prophet is reported to have said that
'When a Muslim bestows on his family and kindred, hoping for
reward in the next world, it becomes alms, although he was
not given to the poor, but to his family and children.' What
in the estimation of the English lawyers would be a
pernicious perpetuity, calculated to aggrandize the family
of the founder, is, according to the shariat, the best of
charities." The position in Islamic Law is summed up by
Fyzee at page 303 by quoting the words of Ameer Ali:
 From the promulgation of Islam up
 to the present day there has been
 an absolute consensus of opinion
 regarding the validity of wakfs on
 one's children, kindred and
 neighbours. Practical lawyers,
 experienced judges, high officers
 of every sect and school under
 Mussulman sovereigns are all in
 unison on this point. There are
 minor differences, viz. Whether a
 wakf can be created for one's self,
 whether the unfailing object should
 be designated, whether the property
 should be partitioned or not,
 whether consignment is necessary or
 not; but so far as the validity of
 a wakf constituting one's family or
 children the benefaction, in
 whole or in part, is concerned,
 there is absolutely no difference.
 A wakf is a permanent benefaction
 for the good of God's creatures:
 the wakif may bestow the usufruct,
 but not the property, upon
 whomsoever he chooses and in
 whatsoever manner he likes, only it
 must endure for ever. If he bestows
 the usufruct in the first instance
 upon those whose maintenance is
 obligatory on him, or if he gives
 it to his descendants so long as
 they exist to prevent their falling
 into indigence, it is a pious act,
 - more pious, according to the
 Prophet than giving to the general
 body of the poor. he laid down that
 one's family and descendants are
 fitting objects of charity, and
 that to bestow on them and to
 provide for their future substance
 is more pious and obtain greater
 'reward' than to bestow on the
 indigent stranger. And this is
 insisted upon so strongly that when
 a wakf is made for the indigent or
 poor generally, the proceeds of the
 endowment is applied to the relieve
 the wants of the endower's children
 and descendants and kindred in the
 first place (see Baillie's Dig.,
 2nd ed., p.593). When a wakf is
 created constituting the family or
 descendants of the wakf [sic, for
 wakif] the recipients of the
 charity so long as they exist, the
 poor are expressly or impliedly
 brought in not for the purpose of
 making the wakf charitable (for the
 support of the family and
 descendants is a part and parcel of
 the charitable purpose for which
 dedication is made), but simply to
 impart permanency to the endowment.
 When the wakif's descendants fail,
 it must come to the poor. So it is
 an enduring benefaction - an act of
 ibadat or worship, to use the
 language of the Jawahir-ul-Kalam,-
 an act by which kurbat or
 'nearness' is gained to the Deity,
 according to the bahr-ur-Raik."
 Despite this clear Islamic pronouncement regarding the
validity of wakfs-alal-aulad, the Privy Council pronounced
in the case of Abdul Fata Mohammad Ishak (supra) that such a
wakf would be invalid, even if there is an express ultimate
dedication to the poor, because the bequest to "charity" is
too remote. The decision can, at best, be held as
interpreting Mohammedan Law as interpreted in British India
of the time, as the case arose in British India. Not
surprisingly, it led to large scale protests.
 On account of large scale protests in British India
against the decision, the Mussalman Wakf Validating Act of
1913 was enacted to validate such wakfs. This Act cannot be
looked upon as laying down any new principle of Mohammedan
Law. As Fyzee has put it, (page 304) the Act purported to
restore the law of the Shariat in India and to overrule the
law as laid down by the Privy Council. This Act was given
retrospective effect by the Mussalman Wakf Validation Act of
1930. Both the Acts applied to British India. After the
Constitution came into force, the operation of the
Validation Act of 1913 was, therefore, by amendment,
excluded from Part-B States i.e. territories which were
originally native States or outside British India. After the
Constitution (Seventh Amendment) Act, 1956 abolishing Part-B
States (inter alia), all the territories which were included
in Part-B States prior to 1956 were excluded from the
Validation Act, 1913. It is, therefore, contended by the
department that the Validation Act did not apply to the
State of Hyderabad which was a Part-B State upto 1956. And
hence the wakfs in the present case are hit by the Privy
Council decision in Abdul Fata Mohammad Ishak (Supra).
 However, the Privy Council decision in Abdul Fata
Mohammad Ishak (supra) can be taken to have interpreted
Mohammedan Law as applicable in British India. The
Validation Act, 1913 merely restored the law of the Shariat
which had been disturbed by the Privy Council judgment.
Hyderabad, which was outside British India, must be
considered as continuing to be governed by the principles of
Mohammedan Law as understood by the accepted authorities on
the subject. Non-applicability of the Mussalman Wakf
Validation Act, 1913 to the State of Hyderabad will not
affect wakfs-alal-aulad created in the State of Hyderabad
which are valid under the accepted principles of Mohammedan
Law.
 In fact, the Hyderabad High Court in 1955, referred to
and applied the general principles of Mohammedan Law to
declare a wakf invalid. In the case of Salah v. Husain and
Ors. (AIR 1955 Hyderabad 229), one Salah Bin Ahmed purported
to create a wakf-alal-aulad with himself as mutawalli.
 After his death his sons were to be mutwallis and
thereafter his grandsons. There was no dedication to the
poor. Dealing with the position under the Mohammedan Law,
the High Court of Hyderabad referred to the difference of
opinion between the disciples of Abu Hanif viz. Imam
Mohammad and Abu Yusuf. While Imam Mohammed was of the view
that without dedication to the poor, the wakf was invalid,
Abu Yusuf was said to be of the view that such a dedication
was implicit in the wakf. The Court held that there was no
clear authority that the view of Abu Yusuf differed from
that of Imam Mohammad on this point. On the principles of
Mohammedan Law the wakf, in the absence of dedication to the
poor, was invalid.
 Although the High Court referred, inter alia, to the
Privy Council decision in Abdul Fata Mohammad Ishak (supra),
and the Mussalman Wakf Validation Acts 1913 and 1930 which
applied only to British India, it appears to have accepted
the submission that the Court was obliged to apply the
original principles of Mohammedan Law in as much as H.E.H.
the Nizam in the Charter granted to the High Court directed
that in cases where the parties were Muslims the case would
be governed by Sharai-Shariff. The High Court held the wakf
to be invalid under Mohammedan Law.
 Of course, in the case before it, both under the law as
declared by the Privy Council as also the dictum of Imam
Mohammad (said to be no different from that of Abu Yusuf on
this issue) the wakf was invalid. But the High Court, in the
light of its Charter also took the assistance of Mohammedan
Law as laid down by Islamic authorities in deciding the
issue.
 In the light of the principles of Mohammedan Law as set
out earlier, the two trusts created in 1953 in the present
case are valid wakfs. The wakif-settlor made a dedication in
perpetuity of the subject matter of these trusts for
purposes which are considered pious under Islamic Law. The
properties, therefore, ceased to be the properties of the
settlor on the creation of the wakfs in 1953. When the
settlor died in 1967, they could not form a part of his
estate - the settlor having divested himself of these
properties fourteen years prior to his death.
 The appellant has also pointed out that during the life
time of the settlor, the income-tax authorities had accepted
the validity of the wakfs and had not treated the income of
the wakfs as the income of the settlor.
 In the present case, therefore, the beneficial interest
created in favour of Oalia Kulsum and Anwar Begum is a valid
creation of trust which is not affected by Sections 13 and
14 of the Transfer of Property Act. As a result the settlor
had divested himself of these properties during his lifetime
for the benefit of his grand daughter Oolia Kulsum and his
daughter-in-law Anwar Begum and thereafter for their
descendants and then for the holy shrine at Khum. On the
date of his death the Settlor did not have any interest in
the properties nor had he reserved any interest to himself
under these trusts. Hence, for the purposes of Estate Duty,
the deceased cannot be considered as having any interest in
the trust property which passed on his death. The properties
which constituted the subject matter of the two trusts,
therefore, cannot be included in the estate of the deceased
Sir Mir Osman Ali Khan, the Nizam of Hyderabad for the
purposes of estate duty.
 In the premises, the judgment and order of the High
Court are set aside and the two questions are answered in
the negative and in favour of the appellant. The appeals are
accordingly allowed with costs.

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