1. ' SALEEM AKHTAR, J.--One Mr. Hussain Ebrahim Jamal died in London on 7-6-1972. He was survived by two brothers, two daughters, two widows and four sisters. The deceased had left a Will executed on 3-6-1968 whereby 1/3rd of his estate was to go to certain legatees. All the legal heirs filed estate duty return as accountable persons of the deceased before the Controller of Estate Duty. They raised preliminary objection before the Controller that 1/3rd of the estate should be excluded from the principal value of the estate liable to duty in accordance with the will of the deceased. This contention was repelled by the Controller. In appeal before the Tribunal this plea was again repeated and it was urged that under Muslim Law, inheritance does not open until the debts and legatees are paid out and therefore, estate which passes for the purposes of estate duty will include only that part which remains after payment to the creditors and legatees, and therefore, the provisions of Estate Duty Act are against the injunction of Holy Quran.
2. ' The deceased has left insurance policies valued at Rs,2,95,250. After allowing the deduction of Rs,50,000 under section 24 of the Estate Duty Act, the Controller included in the property passing, the balance amount of Rs,2,45,250. It was contended before the Controller that two policies valued at Rs,1,25,900 were assigned by the deceased to the two widows, and therefore, it should also be excluded from the valuation of the property. This plea was not accepted by the Controller. In appeal before the Tribunal it was pleaded that by virtue of section 6 of Married Women's Property Act 1874 the policy assigned to the two wives could not form part of the estate of the deceased. It was further pleaded that as there is a conflict between the Married Women's Property Act and Section 14 of the Estate Duty Act which is a Special Act it shall prevail. The Tribunal held that there is no conflict between the provisions of these enactments and maintained the order of the Controller.
3. The applicant then filed an application under section 59-A of Estate Duty Act 1950 and the following questions have been referred:-
(1) Whether the Tribunal was right in holding that the provisions of Estate Duty Act as contained in section 6 are not ultra vires the Constitution, for being in conflict with the injunctions of Holy Quran?
(2) Whether the Tribunal was justified in holding that there was no conflict between the provisions of the Married Women's Property Act 1874 and Estate Duty Act 1950?
4. ' There is no dispute about the facts as the deceased left a Will by which' 1/3rd of his estate was to be distributed among the legatees which included his step mother, step-sisters, and step-brothers.
5. He also left two insurance policies which were assigned to his two widows. In the background of these facts we will now consider the questions referred to us: ' Question No,1: ' This question challenges the vires of the Estate Duty Act. The Tribunal has a limited jurisdiction which is exercised by it as conferred by law. In this case it exercises jurisdiction as provided by the Estate Duty Act. It is not the jurisdiction of the Tribunal of a limited jurisdiction to consider the vires of any Act. This jurisdiction is conferred by Constitution on the superior Courts in certain cases where jurisdiction is not barred even by the Federal Shariat Court. Therefore, in our view the Tribunal has no jurisdiction to decide this question.
6. ' QUESTION No,2: ' The conflict between the provisions of Married Women's Property Act 1874 and Estate Duty Act 1950 is in respect of the following provisions of both these enactments:-
(i) Section 6 of Married Women's Property Act 1874.-- "6 (1) A policy of insurance effected by any married man on his own life, and expressed on the face of it to be for the benefit of his wife, or of his wife and children, or any of them, shall enure and be deemed to be a trust for the benefit of his wife, or of his wife and children, or any of them, according to the interest so expressed, and shall not, so long as any object of the trust remains, be subject to the control of the husband, or to his creditors, or form part of his estate.
7. ' When the sum secured by the policy becomes payable, it shall, unless special trustees are duly appointed to receive and hold the same, be paid to the Official Trustee of the (Province) in which the office at which the insurance was effected is situate, and shall be received and held by him upon the trusts expressed in the policy, or such of them as arc then existing.
8. ' And in reference to such sum he shall stand in the same position in all respects as if he had been duly appointed trustee, thereof by a High Court, under (the Official Trustees Act 1913 (11 of 1913).
9. ' Nothing herein contained shall operate to destroy or impede the right of any creditor to be paid out of the proceeds of any policy of assurance which may have been effected with intent to defraud creditors.
(2) Notwithstanding anything contained in section 2, the provisions of subsection (1) shall apply in the case of any policy of insurance such as is referred to therein which is effected by any Hindu, Muslim, Sikh or Jain (in any Province) after the first day of April, 1923.
(2) Section 6 of Estate Duty Act, 1950. "deceased person". And "the deceased" means a person dying after the commencement of this Act;
(3) Section 14 of Estate Duty Act, 1950.
10. ' Policies kept up for a done: (1) Money received under a policy of insurance effected by any person on his life where the policy is wholly kept up by him for the benefit of a done, whether nominee or assignee, or a part of such money in proportion to the premiums paid by him, where the policy is partially kept up by him for such benefit, shall be deemed to pass on the death of the assured.
11. ' Explanation.--A policy of insurance on the life of a deceased person effected by virtue or in consequence of a settlement made by the deceased shall be treated as having been effected by the deceased.
(2) For the purposes of subsection (1) so much of the premiums paid on any policy of insurance as was, 'by virtue or in consequence of a settlement made by the deceased, paid out of property, whether or not provided by the deceased, comprised in the settlement or out of income whether or not provided by the deceased: arising under the settlement shall be treated as having been paid by the deceased: ' Provided that any payments which were not made either out of property provided directly or indirectly by the deceased for the purposes of the settlement, or out of property representing that property, or out of income provided directly or indirectly by the deceased whether arising from such property or otherwise shall not be treated as having been made by the deceased if the Controller is satisfied that those payments were not made as part of any reciprocal arrangements between the deceased and any other person.
(3) For the purposes of this section.--
(a) the expression "settlement" includes any disposition, trust, covenant, agreement or arrangement, and
(b) a person shall be deemed to have made a settlement if he has made or entered into the settlement directly or indirectly, and in particular (but without prejudice to the generally of the foregoing words of this clause) if he has provided or undertaken to provide funds directly or indirectly for the purposes of the settlement, or has made with any other person a reciprocal arrangement for that other person to make or enter into the settlement."
12. The Married Women's Property Act is intended to protect the rights of married women in their properties, earnings and wages earned by them from any employment, occupation or trade and such property is deemed to be a separate property under section 6 of Married Women's Property Act an insurance policy A effected by any married man on his own life expressly for the benefit of his wife or his wife or children, is deemed to be a trust for the benefit of the wife or children or both and shall not remain in the control of the husband or his creditors or form part of his estate.
13. ' Question is whether a policy effected by the husband in his name and assigned to his wife will be covered by section 6 of the Married Women's Property Act. In this regard although no authorities were cited at the Bar, we have noted that there seems to be difference of opinion in the High Courts of India. In Shamdas Gobindram v. Mt. Savitribai and others AIR 1937 Sindh 181 it was held as follows:- "In order to attract the applicability of section 6, Married Women's Property Act policy must be expressed to be for the benefit of the insured wife or his children and money may be made payable to the Official Trustee. Until these two conditions are fulfilled there can he no statutory trust in favour of the wife. Merely the words 'payable to the assured or his wife' would not in my opinion contemplate a trust in favour of the wife because as I have discussed above these words could not confirm an absolute estate or could not create trust in favour of the wife."
14. ' This view was followed in Shirimati Manibai v. Bhimji Lalji AIR 1946 Sind 171 and it was observed that mere assignment of policy in favour of the wife does not bring the policy within the terms of section 6 (1). In Sm. Asha Laila's case AIR 1940 Cal. 217 it was held that in an endowment policy by which the wife is nominated to receive the amount payable in the event of the death of the assured before a certain date, is a policy for the benefit of the wife and falls within section 6 of the Married Women's Property Act. This Judgment has dissented from the view taken earlier in AIR 1937 Mad.
645. In Bharat Insurance Co. Ltd. Lahore v. Shirimati Lakshmi Devi AIR 1948 Lah. 21 while referring to various authorities and dissenting from AIR 1937 Sindh 181 and agreeing with and relying on Kanayalal v. Subraya Chettey AIR 1938 Mad. 413 and in re Fleet Woods Policy (1926) Ch. 48 it was observed as follows:-- "The above case fully supports the proposition that if any benefit is reserved for the wife a trust is created in favour of the wife from the very birth of the policy even though the trust may be that of a contingent interest. Contingent interest is property though the interest which ensured for the benefit of the wife may not be available to her straightway. If the husband is allowed to operate on the policy he may raise a loan to the full extent of the policy and may destroy the trust of the contingent interest created in favour of his wife at the inception of the policy. If a trust of a contingent interest is created from the moment that the policy is taken out the husband cannot be allowed to destroy the trust of the contingent interest which had come into being at the time that the policy was effected. I am therefore, in respectful agreement with the opinion expressed by the Full Bench of the Madras High Court in ILR (1938) Mad.
909. In my opinion, the Bombay and Sind Courts have unduly restricted the meaning of the words "expressed on the face of it for the benefit of his wife" occurring in S.6, Married Women's Property Act".
15. ' In Sm. Shanti Devi v. Shree Ramlal AIR 1958 All. 569 it was observed that unless the wife is made beneficiary ab initio the policy is not effected by the husband for the benefit of his wife and by assignment under section 39 of the Insurance Act the policy will not be covered by section 6 (1) of the Married Women's Property Act.
16. ' So far as judgments earlier to the year 1948 are concerned they have been thoroughly discussed by Abdul Rasheed,C.J. (as he then was) in Bharat Insurance Co. Ltd. Case and we respectfully agree with the observations made in it. Now there remains to be considered the case of Allahabad High Court in which restriction has been imposed for bringing the policy within the four corners of section 6 (1) of the Married Women's Property Act. One of the main reasonings advanced in that judgment is that the wife should be made beneficiary a initio i.e, at the time the policy is affected.
17. There is no such restriction imposed by section 6 itself. It merely states that insurance policy effected by any married man on his own life and expressed to be for the benefit of the wife will be covered by this section. Therefore, the policy is to be effected by the husband on his own life and it should be on the face of it for the benefit of the wife or children or both. It is possible that a person may effect policy on his own life, but later on he may assign it to his wife thus from the date of such assignment the policy shall be deemed to be for the benefit of the wife and from that very moment a trust shall be created.
18. ' The second argument which has prevailed upon the learned Judges of the Allahabad High Court is that under section 39 of the Insurance Act by virtue of which nomination is made, it can also be cancelled at any time before maturity I of the policy. However, section 39 is not applicable to policy of life insurance to which section 6 of Married Women's Property Act applies. It is possible to argue that in case of nomination, a nominee receives the insured amount in trust for all the legal heirs, but so far as assignment is concerned it is completely different from nomination and is dealt with by section 38 of the Insurance Act. presently we are not concerned with nomination therefore, we do not wish to comment upon it. Assignment is made by an endorsement on the policy or by a separate instrument signed in either case by the transferor or the assignee which is attested by at least one witness in the prescribed manner and on execution of such endorsement or instrument the transfer or assignment becomes complete and effectual. Such assignment shall be binding upon the insured only after a notice is affected on the insurance company by the transferor and the transferee. From the date of receipt of such notice the insurer shall recognize the transferee or assignee as the only person entitled to the benefits under the policy. Therefore, the policy which has been assigned unconditionally shall under law be treated to be for the benefit of the transferee.
19. The provisions of Married Women's Property Act is a beneficial legislation for the purposes of protecting the interest of married women. Therefore, a liberal construction should be placed to broaden the scope of its applicability. The restrictions placed by the Allahabad High Court and by the Judicial Commissioner's Court Sindh, we may say so with respect, have narrowed down the scope, operation and benefit under the Act.
20. In the case before us the deceased had assigned the policies in favor of his two wives therefore, it shall be deemed to be for the benefit of the wives to whom they were assigned. Consequently section 6 of the Married Women's Property Act shall he applicable and a trust shall be deemed to have been created. From the date of assignment the deceased ceased to have control on the policy and was not competent to dispose it off ' Now coming to section 14 of the Estate Duty Act we find that it deals with policy of insurance which is effected by any person on his life and is wholly or partially kept up by him for the benefit of the done whether nominee or assignee and such policy shall be deemed to pass on the death of the assured. The words "kept up by him" are significant which convey the meaning that the deceased had control over the policy in spite of nomination or assignment. The dominant aspect of section 14
(1) is the control the deceased maintained on the policy which includes the right to cancel the nomination or assignment. He would thus at the time of his death be competent to dispose it.
21. Section 14 has to be read with section 6 of the Estate Duty Act which provides that only that property shall pass which the deceased was at the time of his death competent to dispose. It will have therefore, to be investigated whether the policy referred in section 14 can be disposed of by the deceased. Assignment of policy to any person except the wife or children may be subject to change and thus the deceased would he having G) control over the property, but where the policy has been the unconditionally assigned to the wife or children or both the, insured loses all control over it and from the inception of assignment, a trust is created. Therefore, policies which are unconditionally assigned to the wife or children or both cannot he made subject to section 14 nor money received under such policy shall be deemed to pass on the death of the deceased. This interpretation of section 14 is based on the principle that the provisions of the same Act have to be interpreted in such manner that they reconcile to each other. Sections 6 and 14 of the Estate Duty Act cannot be read in isolation or in conflict with each other. They have to be harmoniously construed and conflict should be avoided. We are therefore, of the view that section 6 of the Married Women's Property Act and section 14 of the Estate Duty Act do not conflict with each other though for different reasons which have prevailed upon the Tribunal.
22. ' We answer in the affirmative.