The Lucknow Bench of the Allahabad Court has clarified in one of its important decisions that for a valid Waqf, there should be actual dedication/delivery of possession of the waqf property.
A Single Bench of Justice Vivek Chaudhary passed this order while hearing a petition filed by Azad Ahmad Khan.
By the petition, the petitioner is challenging the assessment order dated 31.01.1989, passed by respondent No 3; order dated 16.09.1991 whereby Appellate Authority partly allowed petitioner’s appeal against the assessment order and; order dated 30.11.1999, passed by the Income Tax Appellate Tribunal whereby it dismissed petitioner’s appeal.
The facts of the case are that one Gulam Ahmad Khan was running an engineering workshop in the name and style M/s General Engineering Works. On 25.08.1951, he claims to have created a waqf-alal-aulad under the provisions of the Mussalman Wakf Validating Act, 1913 through a registered deed and transferred his business to the waqf and became its first mutwalli. Gulam Ahmad Khan was useless and claims to have adopted his nephew Sardar Abdullah Khan alias Azad Ahmad Khan, the petitioner, as his son.
As per the terms of the Waqf deed, an amount of Rs 100 out of the total proceeds of the M/s General Engineering Works was to be spent towards almighty and rest of the proceeds were to be utilised as per the wishes of the waqif Gulam Ahmad Khan during his lifetime
. Gulam Ahmad Khan also reserved to himself the right to effect titamma of the original waqf deed and sell off the assets entrusted to the waqf including M/s. General Engineering Works.
With regard to succession of mutwalli, it provided that one Mst Hasina Khatun would be the next mutwalli and after her demise, her children and their descendants were to succeed her as mutwalli.
In case, Mst Hasina Khatun was to die issueless, then Inam Ahmad Khan, who is the brother of waqif Gulam Ahmad Khan and after him his son Azad Ahmad Khan and his descendants would succeed as Mutwalli of the Waqf.
As per clause C (jim) of the waqf-deed, after death of Gulam Ahmad Khan, Rs100 were to be continued to spent towards charitable purposes and with regard to rest of the proceeds from the waqf property, Rs 400 was to be paid to Inam Ahmad Khan for helping Mst Hasina in managing the waqf property and the remaining amount was to be divided amongst Inam Ahmad Khan, Azad Ahmad Khan and Mst Hasina Khatun.
It is an admitted fact that even after creating the waqf, Gulam Ahmad Khan continued to mention the waqf property as his personal property while filing his income tax returns. Waqif Gulam Ahmad Khan amended the original waqf-deed by a titamma dated 22.01.1980.
As per the relevant amendments affected by the titamma, the waqf now excludes Inam Ahmad Khan from ever becoming a mutwalli and he was also ousted from receiving any benefits out of the waqf property. Since, Mst Hasina Khatun died issueless, therefore, two-third of share would now go to Azad Ahmad Khan and one-third was to be utilised for charitable purposes.
It is also disclosed in the titamma that a portion of the property of the workshop was rented out and machineries lying in the workshop were sold to pay off personal debts of the waqif Gulam Ahmad Khan.
Gulam Ahmad Khan died issueless on 02.12.1980, and as per the terms of the amended deed, petitioner Azad Ahmad Khan, became mutwalli of the waqf. The petitioner filed returns under Estate Duty Act, 1953 with regard to the properties of the waqf and claimed immunity from paying estate duty on the same. However, a show cause notice was issued to the petitioner on 24.11.1988 seeking explanation for the exemption claimed by him from paying estate duty.
Petitioner submitted his reply on 29.12.1988 and on the basis of the same impugned assessment order dated 31.01.1989 is passed. Petitioner challenged the assessment order before the Appellate controller of Estate Duty, which upheld the assessment order by its order dated 16.09.1991. Against the same, petitioner preferred an appeal before the Income Tax Appellate Tribunal, which was dismissed by order dated 30.11.1999.
Pradeep Agarwal, counsel for the petitioner challenges the judgment and order of the Tribunal on the ground that the Tribunal was wrong in holding that the waqf created by late Gulam Ahmad Khan was not a valid waqf as he never intended to give effect to the waqf deed. He submits that it is a settled law that once a waqf is created the waqif stands divested of his title to the waqf properties.
The Court observed that,
As per the waqf-deed, a waqf-alal-aulad was created under the provisions of the Act of 1913. As per Section 3(a) of the Act of 1913, a waqf could be created for maintenance and support, wholly or partially, of waqif’s family, children or descendants. Inclusion of Mst Hasina Khatun as one of the beneficiaries of the usufruct of the waqf property, without establishing waqif Gulam Ahmad Khan’s relationship with her, goes against the tenets of a waqf-alal-aulad.
Further, no doubt creation of a waqf divests the waqif of the waqf property and dedicates it to the almighty, but, there should be actual dedication/delivery of possession of the waqf property to constitute a valid waqf. When the waqif is himself the first mutwalli of the waqf, it becomes difficult to establish actual dedication/delivery of possession, and thus, his subsequent conduct with regard to the waqf property becomes relevant to decide whether there was an actual dedication and creation of a waqf.
In the case even after dedicating M/s General Engineering Works to almighty, waqif Gulam Ahmad Khan continued to show the same as his own property in income tax returns filed by him. He even sold off some of the waqf property to pay off his personal debts without seeking necessary permission from appropriate authority.
Furthermore, there is no evidence on record to prove that Gulam Ahmad Khan ever spent Rs 100 towards any charitable purpose. Absence of any real dedication and subsequent treatment of the property by waqif Gulam Ahmad Khan as his personal property, thus, falls into the exception to the rule, once a waqf always a waqf, carved out by their Lordships in the case of Chhedi Lal Mishra (supra) relied upon by the counsel for the petitioners.
Actions of the waqif Gulam Ahmad Khan shows that he has throughout treated the waqf property as his personal, therefore, it could rightly be held that there was no actual dedication of property and he had no intention to create a waqf and as such the deed can not be held to have constituted a valid waqf.
The second ground of challenge that the Appellate Tribunal has wrongly interpreted the explanation to Section 12(1) of the Act of 1953 and read the word ‘and’ as ‘or’ to reject petitioner’s claim for exemption from paying estate duty also does not hold good as waqif Gulam Ahmad Khan had, while executing the waqf deed made provisions for maintenance of himself, his brother and the petitioner, who himself claim to have been adopted as a son by the waqif Gulam Ahmad Khan.
Therefore, the conditions laid down in the case of B.B. Nigudkar (supra) as relied upon by the counsel for the petitioner is already fulfilled. Furthermore, what is required to avail the exemptions from paying estate duty as provided under Section 12 of the Act of 1953 is that there should not be any reservation of interest in the settled property for life by the settler.
As Gulam Ahmad Khan reserved to himself the right to modify the terms of the waqf-deed and he actually effected a titamma not less than a year before his demise goes to show that he had reserved life interests in the property while settling it through the waqf deed.
“Since waqif Gulam Ahmad Khan reserved to himself the absolute right to amend the waqf deed and made provisions therein for his maintenance out of the waqf property therefore it is held that petitioner cannot claim exemptions from paying estate duty”, the Court further observed while dismissing the petition.