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Shankar Lal and anr. Vs. Mohammad Ismail and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAllahabad
Decided On
Reported inAIR1930All552
AppellantShankar Lal and anr.
RespondentMohammad Ismail and anr.
Excerpt:
.....and her claims satisfied in priority to the claim of a creditor of the..........during the subsistence of the attachment.8. it may also be conceded that a simple creditor of a deceased mahomedan has no specific lien upon the assets left by the deceased which are now in the hands of his heirs. but we have no doubt in our mind that the creditor of the deceased under the mahomedan law occupies a more favourable position than the creditors of the heirs and is entitled to a marshalling of the assets left by the deceased, as will be borne out from the following text in al sirajiyyah translated by sir william jones:there belong to the property of a person deceased four successive duties to the performed by the magistrate: first, his funeral ceremony and burial without superfluity of expense, yet without deficiency; next, the discharge of his just debts from the whole of.....
Judgment:

Sen, J.

1. This is an appeal from an appellate order passed by the District Judge of Saharanpur in a matter arising out of insolvency.

2. One Mahmud Ahmad had borrowed money from Mohammad Ismail, respondent 1, and executed a promissory note in his favour. He died leaving as his heirs three sons, Ziaul Haq, Nazir Ahmad and Inamul Haq and a widow Mt. Mariam Bibi. Mohammad Ismail sued these heirs on the promissory note and obtained a decree in suit No. 163 of 1926. The assets left by the deceased were attached in execution of this decree and 20th February 1929 was fixed for sale of the property.

3. Ziaul Haq, his mother and his two brothers had contracted debts from Shankar Lal and Pearey Lal in their personal capacity. On 26th November 1928, the creditors applied that these persons be adjudicated insolvent. Before any order of adjudication had been passed, these creditors applied to the insolvency Court on 11th February 1929, for the stay of sale pending the disposal of their petition for adjudication. The Subordinate Judge, who, in the exercise of the insolvency jurisdiction had the seisin of the case, made the following order:

Let the sale be stayed pending the disposal of the insolvency application.

4. On 19th February 1929, Mohamed Ismail moved the insolvency Court to revoke the order passed on the application of Shankar Lal and Pearey Lal upon the ground that his decree in suit No. 163 of 1926, was passed for recovery of a debt due from Mahmud Ahmad against his assets in the hands of Ziaul Haq and others, that the latter were in possession of those assets 'as administrators' under the Mahomedan law and that Shankar Lal and Pearey Lal, by reason of their claim against Ziaul Haq and others personally, were not entitled to a priority over his decree. This application was rejected with the following order:

Whatever may be the right of the applicant in respect of his debt there can be no doubt that the property belongs to the debtors. If they are adjudged insolvents the property shall vest in the receiver subject to any equities that may exist in favour of the applicant. I do not think it desirable that the property be sold during the pendency of the insolvency application. I see no reason to alter my order.

5. On appeal, the learned District Judge upheld the contention of Mohamed Ismail, set aside the order of the Court below, and directed that the sale in execution of Mohamed Ismail's decree should be proceeded with according to law.

6. Shankar Lal and Pearey Lal have appealed to this Court and contend that no priority can be claimed by a judgment-creditor over the Official Receiver in respect of property attached by him previously to the vesting order. Reliance is placed upon Frederick Peacock v. Madan Gopal [1902] 29 Cal. 428.

7. It may be conceded at once that in the normal course of things, attachment does not per se create or confer a title. It only prevents an alienation of the property during the subsistence of the attachment.

8. It may also be conceded that a simple creditor of a deceased Mahomedan has no specific lien upon the assets left by the deceased which are now in the hands of his heirs. But we have no doubt in our mind that the creditor of the deceased under the Mahomedan law occupies a more favourable position than the creditors of the heirs and is entitled to a marshalling of the assets left by the deceased, as will be borne out from the following text in Al Sirajiyyah translated by Sir William Jones:

There belong to the property of a person deceased four successive duties to the performed by the Magistrate: first, his funeral ceremony and burial without superfluity of expense, yet without deficiency; next, the discharge of his just debts from the whole of his remaining effects; then the payment of his legacies out of a third of what remains after his debts are paid; and lastly, the distribution of the residue among his successors, according to the Divine Book, to the traditions, and to the assent of the learned. (Sir William Jones Work, Vol. 3, p. 517).

9. In Jafri Begam v. Amir Muhamad Khan [1885] 7 All. 822, Mahmood, J., quotes the above passage and observes:

I have quoted this passage to show the priority possessed by the three charges to which the estate is subject when inherited by heirs. This order of priority is, as is obvious from the passage, merely a direction as to the administration of the estate, and has no bearing upon the question of the exact point of time when inheritance devolves upon the heirs.

10. An unsecured creditor of a deceased Mahomedan may not have a specific lien or charge upon the general assets left by the deceased, but he may well have a general charge upon the assets so left. This general charge may partake the character of an equitable lien such as has been recognized in the case of Kinderley v. Jervis [1856] 22 Beav. 1. The last-mentioned case was expressly applied by this Court in favour of a creditor of a deceased Mahomedan in Bhola Nath v. Maqbulunnissa [1904] 26 All. 28.

11. This case was argued with considerable skill and ability by Mr. G.S. Pathak who contended that upon the death of a Mahomedan his property immediately devolved upon his heirs, and upon the latter's insolvency it vested in the Official Receiver under Section 28(2), Provincial Insolvency Act (Act 5 of 1920). He relied upon the decision in Jafri Begam's case which has already been referred to in support of the proposition that upon the death of a Mahomedan intestate who leaves unpaid debts, whether large or small, with reference to the value of his estate, the ownership of such estate devolves immediately upon his heirs and such devolution is not contingent upon and suspended till the payment of his debts. He further contended on the authority of P.K. Nainar Rowthen v. Kuppai Pichai Rowthen : AIR1929Mad609 , that the debts of a deceased Mahomedan did not form any charge on the property inherited by the heirs and so there could be no lien or charge on the property in the hands of the Official Receiver where Mahomedan heirs became insolvent subsequent to the decree against the estate of their ancestors in their hands and the creditors could not claim to be secured creditors but must prove as ordinary creditors.

12. It cannot be controverted that where a Mahomedan dies leaving certain assets and certain unsecured debts, the payment of the debt is not a condition precedent to the devolution of inheritance. It is settled law that the inheritance opens out immediately at the moment of death and is not suspended till the payment of debts. We have conceded that an unsecured creditor has no specific lien upon the assets of the deceased, but we are not in agreement with the learned Judges of the Madras High Court in the case referred to above if they intend to lay down that no general lien exists upon the assets on account of the debts left by the deceased.

13. The question of the devolution of the estate ought not to be confounded with the question as regards the administration or marshalling of assets. This distinction was sharply pointed out in the case of Jafri Begam; and the following passage from the judgment of Mahmood, J., will bear quotation:

It is one thing to say that these three charges take precedence of the inheritance, in the administration of the estate and its distribution among heirs, and it is another thing to say that the inheritance itself does not open up until those charges are satisfied....

Funeral expenses, debts and legacies, or any one or more of them, may indeed absorb the estate of the deceased, defeating every succeeding charge: and it is obvious that if nothing is left for the heirs they can take nothing. But this is a proposition widely different from saying that the devolution of inheritance is suspended till the various charges are satisfied.

14. It is clear therefore that the debt has priority and if the estate is absorbed in the payment of the debt, nothing is left to the heirs to inherit.

15. Under Section 28(2), Provincial Insolvency Act, upon adjudication, the estate of the insolvent vests in the Official Receiver. Where such estate has devolved by inheritance and there are creditors of the deceased and also creditors of the insolvent, the question of priority between the two has to be decided by the Court of insolvency. Section 4(1), Provincial Insolvency Act, enacts:

Subject to the provisions of this Act, the Court shall have full power to decide all questions whether of title or priority or of any nature whatsoever, and whether involving matters of law or of fact which may arise in any case of insolvency coming within the cognizance of the Court, or which the Court may deem it expedient or necessary to decide for the purpose of doing complete justice or making a complete distribution of property in any such case.

16. The powers of the Court of insolvency are therefore very wide. Those conferred by this section do not in any way militate against Section 28(2). The mere fact that the inheritance has devolved upon the sons and the widow of the deceased does not justify the Court of insolvency to place the creditors of the deceased on the same level with the creditors of the insolvent. The property may have become the property of the insolvent by devolution under the Mahomedan law and yet may not be available to the creditors of the insolvents themselves as distinguished from the creditors of the deceased. The creditors of the insolvents cannot seize the property in competition with the creditors of the deceased. It may, indeed, be doubted if the property, which under these peculiar circumstances, has descended to the insolvents under the Mahomedan law can be called 'property' within the definition of that term in Section 2 of the Act. In Section 2(d);

Property includes any property over which or the profits of which any person has a disposing power which he may exercise for his own benefit.

17. According to the Mahomedan law the property has to be administered in a particular order; after the several charges already enumerated in a previous part of our judgment have been met, the residue is the property of the heirs over which or the profits of which they may be said to possess an unconditional power of disposal.

18. Indeed, the matter is not res integra. The matter came up before this Court in a suit which did not arise out of an insolvency proceeding: Bhola Nath v. Maqbulunnissa [1904] 26 All. 28. In this case, Mt. Maqbulunnissa who was the widow of Chaudhry Said Uddin Husain, obtained a decree for dower against Yaqub Husain, son and heir of Said Uddin Husain. In execution of that decree, she attached certain shares in the property which had been Said Uddin Husain's in his lifetime. The defendant Bhola Nath held a simple money decree against Yaqub Husain for a personal debt and in execution thereof he proceeded to attach the property which had previously been attached by Maqbulunnissa. The question which arose in the case was which of the two decree-holders had precedence. The answer was that Mt. Maqbulunnissa who held a decree for debts due from her husband was entitled to priority. Stanley, C.J., made the following observation (p. 33):

According to the principle of the Mahomedan law debts are claimable before legacies, and legacies must be paid before the inheritance is distributed. (Macnaghten's Mohammadan Law, Chap. 1, Rule 5);

also:

All the debts due by the testator must be liquidated before the legacies can be claimed: id. Chap. 6 of Wills, Rule 6),

and again:

Heirs are answerable for the debts of their ancestor as far as there are assets: id., Chap. 2 on Debts, Rule 1. It cannot be disputed that the liquidation of the debts of a deceased Mahomedan should precede the distribution of his property amongst the heirs. Here the immovable property of the respondent's husband is intact and available for the satisfaction of his debts. It has not been sold or mortgaged, and it appears to me only just and equitable that it should be applied in satisfaction of the respondent's debt before a creditor of the heir can realize out of it his claim. The property is under attachment to satisfy the respondent's claim, and I see no good reason why it should not be realized and her claims satisfied in priority to the claim of a creditor of the heir.

Banerji, J., also took the same view:

It would be inequitable to make one man's property pay the debt of another. Under the Mahomedan law, although upon the death of the ancestor, his estate devolves immediately upon his heirs, the heirs take it subject to the payment of his debts, and therefore, although there may not be a specific charge upon the estate for the payment of the debts, the debts may be deemed to constitute a general charge on the estate. That being so, the plaintiff who is the creditor of the father of the appellant's debtor has priority over the appellant in respect of her debt (vide p. 36).

19. It makes no difference that the above-mentioned case did not arise out of insolvency proceedings. The same principle would apply. The insolvency Court was bound to consider the case of the competing creditors and to determine the question of priority. This is what has been done in this case. We are in complete agreement with the view taken by the lower appellate Court and dismiss this appeal with costs including in this Court fees on the higher scale.


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