Where a testator bequeaths a certain sum of money, or a certain quantity of any other commodity, and refers to a particular fund or stock so as to constitute the same the primary fund or stock out of which payment is to be made, the legacy is said to be demonstrative.
Explanation.- The distinction between a specific legacy and a demonstrative legacy consists in this, that- where specified property is given to the legatee, the legacy is specific; where the legacy is directed to be paid out of specified property, it is demonstrative.
Illustrations:
(i) A bequeaths to B 1,000 rupees, being part of a debt due to him from W. He also bequeaths to C 1,000 rupees to be paid out of the debt due to him from W. The legacy to B is specific, the legacy to C is demonstrative.
(ii) A bequeaths to B-
"ten bushels of the corn which shall grow in my field of Green Acre":
"80 chests of the indigo which shall be made at my factory of Rampur":
"10,000 rupees out of my five per cent.promissory notes of the Central Government":
"An annuity of 500 rupees from my funded property":
"1,000 rupees out of the sum of 2,000 rupees due to me by C":
An annuity, and directs it to be paid "out of the rents arising from my taluk of Ramnagar".
(iii) A bequeaths to B-
"10,000 rupees out of my estate at Ramnagar," or charges it on his estate at Ramnagar:
"10,000 rupees, being my share of the capital embarked in a certain business."
Each of these bequests is demonstrative.
Legal Commentary & Landmark Judgments: Section 150
Section 150 defines a Demonstrative Legacy, establishing a hybrid class of legacy that is primarily payable out of a specified fund but retains the fallback security of the general estate.
In estate planning, advise testators to phrase monetary gifts demonstratively ('I bequeath Rs. 10 Lakhs to X, to be paid primarily out of my account at Bank Y'); under Section 150, this guarantees X receives the money even if the account is closed.