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23. With regard to the objection that there was no contractual obligation to make a payment to the trustees, he pointed out that this was deliberately omitted because otherwise such contributions would become taxable in the hands of the trustees. With the result very little money would be available for trust activities. He then pointed out that the reduction in the tax liability of the company was a mere consequence and it was not an object.

24. With regard to the objection that the trust was not valid, he submitted that the rule against perpetuity has two aspects : (i) a general aspect and (2) a specific aspect as laid down in Section 14 of the Transfer of Property Act. He further submitted that the provisions of Section 14 of the said Act would not apply since the provision assumes that a transfer of property has been made in which an interest in property is sought to be created which will take effect after the lifetime of one or more persons living at the date of such transfer. The provisions, therefore, postulate a future vesting of property. In this case, there is an immediate vesting of property in the trustees. When the trust is a discretionary trust, i.e., where the trustees have the power to apply both income as well as corpus for the benefit of the beneficiaries, then the trustees may apply the entire trust fund in the year of donation itself and, therefore, it cannot be said that the transferor intended to create an interest which is yet to take effect. Shri Khare referred to the provisions in the trust deed which had provided distribution of the property of the trust on the determination of the trust. This would take place when the company is wound up. At that stage, the properties of the trust would be distributed among the members of the staff serving the company at the time of winding up. Even this, Shri Khare submitted, did not act to create an interest for an unborn person. At best it could be said that such a vesting of property on employees, who had not born at the time of creation of the trust, was void. The trust itself cannot be said to be void. He then submitted that the settlor is a company. The company has got perpetual life till it is wound up. So, the issue would be whether the expression 'beyond lifetime of persons living' would have to exclude the lifetime of the settlor which is a company. He pointed out that Section 5 of the Transfer of Property Act refers to companies specifically. If that is so, the assessee has to be treated as a living person and so long as the company is in existence, Section 14 of the Transfer of Property Act cannot apply.

34. Shri Sathe had referred to Lawin on Trust and had cited the passage dealing with perpetuities which shows that even under these circumstances a trust similar to these would be void. We find that the case laws mentioned in the foot notes in Lawin are the same as the case law mentioned in Halsbury, to which we have made a reference earlier. Since Halsbury deals with them a little more elaborately than Lawin and since the facts and principles culled out by the Court are made clear therein, it appears that there is no real conflict on this point between the two authorities Halsbury and Lawin. What we have to see is whether the trustees are limited to utilising only the income and further whether they are limited from disposing of the property, i.e., the corpus. A careful reading of the trust deed shows that neither of the two limitations is present. As Shri Khare pointed out, the trustees are the owners of the property. This ownership is subject to the rights of the beneficiaries but, nonetheless, the trustees are the full owners. They have only a legal obligation attached to the ownership of the properties to utilise the property and income for the purpose for which the trust was created. The trust deed makes no difference between the income and the corpus. Both of them are part of the trust fund and this is made clear by the rules. The trust gives full authority to dispose of the trust fund for the objectives of the trust. Rule 6 makes clear that the trust fund, whether representing accumulated income or corpus, can be utilized in making loans or granting facilities to the employees of the company according to their requirements. Thus, there is no limitation that only the income should be utilised and consequently there is no tying of the property in violation of perpetuity. The three questions posed by Megarry and Wade (supra) have to be answered in favour of the assessee. We, therefore, hold that the trust deed does not violate the rule of perpetuity in its primary and general sense.

36. We have also considered this aspect from the point of the determination of the trust. According to Clause 6 of the trust deed the trust will determine on the winding up of the company. On such determination, the trustees would distribute the trust fund among the employees in a specified manner given in the clause. Merely because the manner of distribution of trust funds upon determination of the trust on winding up of the company is provided for in the trust deed, it cannot be said that there is an intention on the part of the settlor to create interest in favour of any specific unborn person. The trust being discretionary in corpus as well as income, there is no certainty that any property will remain at the time of winding up. Even if there is some property left we are of opinion that it would not create any invalidity. Only the creation of an interest in property in favour of the employees at the time of winding up of the company becomes void and this does not permit one 1o say that the transfer of the properties made to the trustees when the trust deed had full liberty to dispose of the corpus itself is ab initio void. There are no words or expression in the trust deed or the rules by which one could say that an attempt is made to create an interest which will take effect for the beneficiaries living at the time of winding up of the company.