Settlement Deed – Intention of Settlor – To settle the property absolutely or to create specific endowment?

Recently, the Hon’ble Madras High Court in MEERA BAI & 8 OTHERS Vs SRI KANDASWAMY TEMPLE AND SRI MUTHUKUMARASWAMY DEVASTHANAM, REP.BY BALASUBRAMANIAM MANAGING TRUSTEE AND ANOTHER had to find out the real intention of the Settlor as to whether she intended to settle the subject property absolutely in favour of the Settlee or she intended to create a specific endowment?

The recitals of the Settlement Deed are as under;

“.....Whereas the Settlor out of her own Stridhanam monies to which she is absolutely entitled, purchased House and Ground No.1, Kulandai Street, Peddu Naickenpet, Madras of the value of Rs.3700/- and more particularly described in the Schedule hereto by a Deed of Sale Dated the 31 st Day of March, 1935 and whereas the Settlor is desirous of providing for certain charities and whereas she is requested the Settlee to take charge of the property as Owner and Trustee and pay the debts due by the Settlor to Ramachandra Tarvadi, amounting to Rs.700/- from out of the said property and also perform the Kathiri (ortsavam) utsavam (for Sree Kandaswamy) every year in Sri Muthukumarasami Temple Devasthanam in Rasappa Chetty Street from the net income of the property or the proceeds thereof after payment of the aforesaid debt which has to be performed in or about the month of Chittrai every year and whereas the Settlee to take the Property and pay the debts and perform the said Utsavam annually. This Deed of Settlement witnesseth that in consideration of the Settlee undertaking to discharge the debt and perform the utsavam as aforesaid the Settlor doth hereby grant assign and convey the said property more particularly described in the Schedule hereto to and in favour of the Settlee. The Settlee shall be entitled in his discretion to convey the property into any form which may be beneficial and conducive for the purposes mentioned in the settlement. The Settlee is the Grandson of the Settlor and Sole heir....”        

The Hon’ble High Court held that the Settlee intended to create a specific endowment. The relevant portion of the judgment is as under:

(ii) It is a cardinal principle that the document must be read as a whole to find out the real intention of the executor. If the document Ex.P.1 is read as a whole, I am of the opinion, a specific endowment has been created for the performance of any religious charity. It is stated in the said document that the settlor was desirous of providing for certain charities and requested the settlor to take charge of the property as owner and trustee. The settlor did not confer absolute right over the settlee and that was conveyed by describing the settlee as owner and trustee. Further, the settlee was directed to discharge debt of Rs.700/- and also perform Kathiri Utsavam in Sri Kandasamy Temple in Sri  Muthukumarasamy Devasthanam from the income of the property after paying the debt. It is further stated that the settlor has also granted, assigned or conveyed the suit property in favour of the settlee and the settlee was also entitled in his discretion to convert the property into any form which may be beneficial and conducive for the purposes mentioned in the settlement. The settlee was also the grand son of the settlor and her sole legal heir. Had it been the intention of the settlor that the settlee must be benefitted, she would have stated specifically that after discharging the loan and after performing the charities, the settlee would be entitled to appropriate the rest of the income for his personal purposes but that was not the intention of the settlor and the settler made it very clear that the income shall be used for the purpose of charity. Therefore, the settlor intended to spend the entire income for the charity and no beneficial interest was given to the settlee to appropriate the income for his personal benefit. Though the settlee was given discretion to sell the property or convert the property into any form that was also with the qualification that such conversion must be only for the beneficial and conducive for the purposes mentioned in the settlement deed. Therefore, no absolute discretion was given to the settlee under the settlement deed to convert the property for any purposes of his choice. These aspects would only lead to the conclusion that the settlee was not given any absolute right over the property and the property was dedicated or endowed for doing certain religious charities and therefore, it comes within the definition of charity as per Section 6(18) of the Tamil Nadu Hindu Religious and Charitable Endowments Act, 1959.

20. In the judgment reported in AIR 2000 MADRAS 422 cited supra, it is held that though the settlee was given no right to encumber or alienate the property, when the property was given for the purpose of feeding poor and paradesis, religious endowment has been created. In this case also, though a discretion was given to the settlee to convert the property, that discretion was not an unqualified discretion and the settlee was entitled to convert the property only for the purpose as stated in the settlement which means for the performance of Kathiri Utsavam in the Temple.”