Under the Sunni law, gift of the ‘life-interest’ or ‘life estate’ is not possible because a gift for life operates as an absolute gift. But, under Shia law, the gift of life-interest (or life-estate) is possible. Where a Shia donor makes a gift ‘for life’, the donee can enjoy the property during his life but after his death the property reverts back to donor or to donor’s legal heirs.
Under Muslim law, whenever the term property is used in its general sense it means and includes its corpus as well as the usufruct. Therefore, ordinarily a transfer of property means transfer of the corpus together with all the beneficial interests (usufruct) of that property.
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ADVERTISEMENTS:
In other words, unless otherwise provided, in the transfer it is implied that the transferee would have all the incidental benefits i.e. usufruct. But technically, the ownership of the corpus i.e. the property itself may be distinguished from the ownership of the usufruct of that property.
For example, a garden is the corpus and is owned by its owner but its usufruct, that is to say, the producer of the garden (fruits and the flowers) may be allowed to be owned for sometime by another person. Thus, where the owner of a mango-grove sells only the mangoes to another person for one year, the purchaser gets the ownership in all the mangoes for one year but he does not get the ownership of the mango-grove as such.
As the owner of a property can sell the usufruct while retaining the property with him, he may also make a gift only of the usufruct for a specified duration. In such a case, the donee may not get any interest in the property but he may get the absolute interest in its produce or benefits for a specified duration.
This distinction between the ownership of a corpus and the ownership of an usufruct of a property has been the basis of validating a gift of life-interest under the Shia law in Nawazish Ali Khan’s case given below:
Nawazish Ali Khan v. Ali Raza Khan:
Facts:
Nawab Nasir Ali Khan, a Shia Muslim, executed a will under which he appointed his nephew Fateh Ali Khan as the successor of his properties with all the powers, including the power of possession and enjoyment as owner provided he be alive. The Will further provided that after the death of Fateh Ali Khan, Mohd. Ali Khan would be the successor of the said properties.
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After the death of this successor (i.e. Mohd. Ali Khan) testator’s another nephew Hidayat Ali Khan was made the successor, provided he was alive. The Will further provided that the last successor (Hidayat Ali Khan) was authorised also to nominate his own successor of the said properties.
But Hidayat Ali Khan died before the death of Mohd. Ali Khan ‘therefore, Mohd. Ali Khan became the last successor. And, under the power of appointment (given under the will to the last surviving Successor) he appointed Nawazish Ali Khan (son of Hidayat Ali Khan) to succeed after his death.
In the language of law, successive life interests were granted under this will and the last successor was given also the vested remainder.
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This appointment was challenged by Ali Raza Khan who was a grandson of the testator Nawab Nasir Ali Khan. The questions to be decided in this case were:
(i) Whether the creation of successive life interests was valid under Muslim law and
(ii) Whether Muslim law recognises a vested remainder?
Decision:
The Privy Council held that if it is found that a gift has been made of limited interest; the gift can take effect out of the usufruct, leaving the ownership of the corpus unaffected except to the extent to which its enjoyment is postponed. In other words, gift of a limited or life interest is valid because it may be accepted as a gift of absolute interest in the usufruct of the property for a fixed period.
Regarding the second issue, namely, the validity of the power of appointment given to a life tenant, the Privy Council held that the power of appointment was not valid because no concept of ‘vested remainder’ is recognised under Muslim personal law.
The court observed that where an Ithna Asharia Shia testator bequeaths his property to A, В and С successively, and then provides that the last surviving devisee should have the power to nominate his successor from among the descendents of the three life tenants, such power was not known to any school of Muslim law as received in India.
Accordingly, it was held by the Court that Fateh Ali Khan and Mohd. Ali Khan took the life interests lawfully and after the death of Mohd. Ali Khan, the property should revert back to the natural heir of the testator. Thus, Ali Raza Khan, being the grandson of Nawab Nasir Ali Khan (testator) was entitled to succeed the properties as a natural heir in preference to Nawazish Ali Khan.
Note:
It may be noted that the interest created in favour of the last two successors were contingent interests. Contingency was their survival at the death of the preceding successor. Being contingent interests, the interest of the last two successors were void. But neither of the parties to the litigation was interested in raising this point.
The reasoning and the law laid down in the above case was followed in another Shia case, Anjuman Ara v. Nawab Asif Kadar, where the Calcutta High Court, after analysing all the provisions of Muslim law on the point, observed:
“In the Mahomedan law, there is a clear distinction between the corpus or ‘the substance’ and the usufruct. Over the corpus that law recognizes only absolute, complete and indivisible ownership and there it countenances no detraction or limitation. In the usufruct however, limited interests can be created and the limitation may well be in point of time or duration, e.g. for life or for a fixed period.”
It is interesting to note that the validity and enforceability of a gift of life interest has been recognised-also in a Sunni case. In Shaik Mastan Bi v, Shaik Bikari Sahab which was a Sunni case, the Andhra Pradesh High Court held that although a Hanafi Muslim cannot make a gratuitous transfer of ownership of a property with limitation for the life of the donor “but when the absolute ownership is transferred to A, and only the enjoyment of the property is reserved to B, then both the gifts are valid.
In other words, the court held that limitations in the enjoyment of a property are permissible but limitations in the ownership are not allowed. According to Fyzee, normally Hiba is a gift of the corpus therefore, Hiba for life is not valid; Ariyat on the other hand, is gift of the usufruct, therefore, Ariyat for life is legal and permissible in the Hanafi law.