Skip to content


Thangathammal Vs. Veerama Reddiar - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai
Decided On
Reported inAIR1942Mad260; (1941)2MLJ1024
AppellantThangathammal
RespondentVeerama Reddiar
Cases ReferredVeerasokkaraju v. Papiah
Excerpt:
.....altered and vested in himself, that is, he has them as his own proper goods in satisfaction of his debt, and not as executor. wherefore windham might well retain goods to satisfy his own debt. this again brings in the theory of satisfaction because the ground on which execution is denied is that she being the same hand to receive and to pay, the debt due to her must be deemed to have been paid from and out of the assets in her hands and therefore it must be deemed to have been satisfied. ' the question whether the decree has been satisfied is one which has to be gone into. sesha aiyangar may be right in so far as section 73 may not apply because the decree must be held to have been satisfied and therefore execution cannot issue, still she is entitled to urge her claim under section 47,..........the judgment made the following observations:the plaintiffs became the legal representatives of their debtor and they were therefore entitled to execute the decree against themselves to the extent of his property which had come to their hands and the plaintiffs must accordingly be deemed to have obtained satisfaction of their decree. the circumstance that the plaintiffs did not actually take out execution against themselves and recover the sum in execution is immaterial and i am therefore satisfied that the principal obligation was in this case extinguished.spencer, j., observed thus:what they must be deemed to have got in succession by the first defendant's untimely death and his mother's release deed was the balance of his estate after wiping out his debt to them.in sankaralingam v......
Judgment:

Venkataramana Rao, J.

1. This appeal raises a question of some difficulty. The question is whether the appellant is entitled to a rateable distribution by virtue of her being the holder of a decree in O.S. No. 334 of 1934 on the file of the District Munsif of Thuraiyur against one Ramaswami Pillai from and out of the sale proceeds of property realised in execution of a decree in S.C.S. No. 340 of 1936 on the file of the said Court. The said Ramaswami Pillai was the brother of the appellant. The decree in O.S. No. 334 of 1934 was obtained by the appellant against the said Ramaswami Pillai who died subsequent to the decree, and the appellant became his heir and representative. The decree in S.C.S. No. 340 of 1936 was obtained by the respondent against the appellant as the heir and representative of the said Ramaswami Pillai in respect of a debt due by him. The respondent in execution of his decree attached the immovable property belonging to Ramaswami Pillai. The property was sold and the sale proceeds were deposited into Court. The appellant as the decree-holder in O.S. No. 334 of 1934 applied for rateable distribution. From the affidavit filed by her, it appears that she obtained an attachment before judgment of the said property in her suit and the said attachment was subsisting on the date of sale. The attachment must therefore have been obtained during the lifetime of Ramaswami and after the decree it would enure to her benefit under Order 38, Rule 11, Civil Procedure Code. She has stated in her affidavit that she filed an execution petition and the same was pending on the date of her application for rateable distribution. The learned District Munsif allowed rateable distribution to her; but his order was reversed by the learned Subordinate Judge of Trichinopoly. In the course of the order the learned Subordinate Judge observes thus:

As soon as Ramaswami Pillai died, the petitioner respondent (the appellant) became his heir and legal representative. In other words, in the decree which the petitioner respondent obtained against Ramaswami Pillai she became both the judgment-creditor and the judgment-debtor. The result is, I think, a total merger....That merger, I think, has taken place as soon as Ramaswami Pillai died and he died long before the petitioner respondent filed the petition E.A. No. 404 of 1937 from which this appeal arose. So on the date that petition was filed petitioner's decree was not in existence as it had become merged long before that date and thereby ceased to exist ....So it follows that she was not entitled to apply for rateable share.

2. This appeal is against the said decision and the question is whether the view of the learned Subordinate Judge is tenable. Mr. Ramanatha Aiyar on behalf of the appellant contends that the doctrine of merger on which the lower appellate Court relied is not applicable because the appellant, when she succeeded to the estate of Ramaswami Pillai as his heir, took only a limited interest analogous to that of a widow's interest under the Hindu law and further, the doctrine of merger should not be allowed to oparate when there are also other creditors of the deceased besides the appellant. Mr. K.V. Sesha Aiyangar on behalf of the respondent contends that where a debtor and creditor happen to be the same person, the doctrine of merger will operate and the only remedy of the creditor who succeeds as heir to the debtor, if at all, is to rile a suit for administration and get her rateable share of the debt and the remedy by way of rateable distribution is not open to her because the decree by reason of the merger was no longer executable. In order to test the soundness of these contentions it is necessary to examine the legal effect of a creditor succeeding as heir to his debtor under the Hindu law by which the parties are governed. Under the Hindu law when a person dies, his property vests in his heir irrespective of his will. But the heir takes the property subject to the obligation of paying the debts of the deceased. Dealing with the right of an heir under the Mohammadan law their Lordships of the Privy Council in Kazim Ali Khan v. Sadiq Ali Khan and Jahan Begum v. Sadiq Ali Khan (1938) 2 M.L.J. 210 : L.R. 65 IndApp 219 : I.L.R. 13 Luck. 494 remarked thus:

That the right of an heir under the Mohammadan law is a share in the estate after debts and valid legacies have been provided for is undeniable ....But in providing that the heir takes a share in the nett estate after deduction of the debts of the deceased, the Mohommadan law is in line with other laws including the Hindu law.

(The italics are mine).

3. Therefore the debt due to an heir is also one of the debts which will have to be deducted in finding out the net residue taken by an heir. Can it therefore be said that when a Hindu heir to whom the deceased was indebted succeeds to his property only the net balance after deduction of such a debt is taken by the heir? Spencer, J., seems to think that only the net balance would vest in him (vide the observations in Sami Iyer v. Ramaswami Chetti (1922) 44 M.L.J. 171 In English law where the creditor of the deceased happens to be his executor, what is known as the principle of retainer is applied. What is 'retainer' is thus explained by Cotton, L.J., in In re Compton., Norton v. Compton (1885) 30 Ch.D. 15 :

What is retainer? It is this, that an executor having a claim against the testator's estate is not to be put in a worse position than any other creditor, who by suing and obtaining a judgment against the executor could obtain priority, while the executor not being able to sue himself could not obtain priority. The right of retainer applies to that which the executor has in his hands, or which has been paid into Court while he was executor, and which but for that payment would have come into his hands. The word 'retainer' speaks for itself. When the personal representative is also a creditor of the estate he may retain out of the assets which he has got in his possession, the amount of the claim for which he cannot sue, and when money has been paid into Court during the life of the executor, the Court does not withdraw from the executor his right in respect of that money. The Court treats that payment into Court as in effect a payment into the executor's own hands.

In In re Baker., Nichols v. Baker (1890) 44 Ch.D. 262 Lindley, L.J., stated the origin of the principle thus:

A man cannot sue himself, and out of that the law developed the right of an executor to retain a debt due to him from the testator.

He further explained it in In re Rhoades., Rhoades Ex parte (1890) 2 Q.B. 347 thus:

The older common law authorities go far to shew that if an executor was a creditor of his deceased testator and had assets in his hands sufficient to pay his debt...such debt was treated as extinguished. Sufficient assets to pay his own debt and properly applicable thereto being in the executor's hands, such assets were treated without more as applied by him to such payment. Blackstone says so distinctly. His words are 'so much as is sufficient to answer his own demand is, by operation of law, applied to that particular purpose.' Plowden goes further, and says that the property in the assets is changed.

On this principle it has been held that if the assets in his hands were insufficient to pay his debt he is entitled to retain the whole of it in satisfaction of his debt. In English law it is also well settled that an executor can assert the right of retainer until distribution of the estate; it is not lost even by a decree for the administration of assets (1 Sm. and Giff. 415) and Lindley, L.J., in In re Rhoades., Rhoades Ex parte (1890) 2 Q.B. 347 points out when a right can be asserted by the executor and when it is lost:

It is quite plain from these authorities that the executor's right to retain assets in his hands was, as against him, treated as enforced as soon as he could properly enforce it. It would be very strange if it were held that he had lost his right because he had done nothing to assert it before there was any occasion to do so. It is only when some one seeks to take assets out of the executor's possession that it becomes necessary for him to assert his right of retainer ; and, if he asserts it then, his right must be protected, unless, of course, he has released it or done something to deprive himself of it.

4. What happened in that case was, the executrix after collecting a sum of $ 1,100 paid the amount to the trustee in bankruptcy. The testator was indebted to her in the sum of .600. It was held that only the balance of .1,100 less the sum of .600 vested in the trustee in bankruptcy and she was entitled to be paid the .600. The same principle was applied before the Land Transfer Act to the case of an heir to whom the testator owed a specialty debt, the foundation of the rule being that he cannot sue himself, (vide the observations of Cotton, L.J., in In re Illidge., Davidson v. Illidge (1884) 27 Ch. D. 478 . The question is how far these principles can be applied to Hindu law and whether there is anything in that law which precludes the application of those principles. In a very early case in Banarsi Das v. Maharani Kuar I.L.R.(1882) All. 27 a question arose as to the legal effect of one of several joint judgment-debtors acquiring only a partial interest in the decree by right of inheritance. It was there held that the effect was not to extinguish the judgment debt in its entirety which could only happen if he acquired the whole debt but so much only as the judgment-debtor had acquired. Mahmood, J.,. in the course of the judgment remarked thus:

We are prepared to hold that, when on account of death a creditor becomes heir to a debtor or a debtor becomes heir to a creditor, and thus the two opposite characters of debtor and creditor become united in the same person, the obligation to pay money may be regarded as extinguished. But this rule, even though applied in its full scope to judgment creditors and judgment debtors, falls short of showing that when the debtor inherits the rights of only one of his joint creditors the effect is to extinguish the entire judgment-debt. The rule, no doubt, owes its origin to the confusio of the Roman Law.

5. In Kudhai v. Sheo Dayal I.L.R. (1888) All. 570, the same learned Judge affirmed this principle. The principle of these decisions was followed in our High Court (vide Sami Iyer v. Ramaswami Chetti (1922) 44 M.L.J. 171 and Sankaralingam v. Arumugham (193 ) 2 M.L.J. 156 : I.L.R. (1939) Mad. 73.) In Sami Iyer v. Ramaswami Chetti (1922) 44 M.L.J. 171 the question arose thus. There was a decree for mesne profits in favour of the plaintiffs against the first defendant in the suit out of which the appeal, with which the learned Judges were dealing, arose. The first defendant died subsequent to the decree and his mother the second defendant succeeded to his property as his heir. Subsequently the second defendant surrendered the property to the plaintiffs. During the course of the litigation a person stood surety for the payment of the mesne profits and executed a surety bond. The question was whether the plaintiffs could recover the amount of the mesne profits from the surety. The learned Judges held that he could not on the ground that the plaintiffs having become the heirs of the first defendant the debt must be deemed to have been paid out and extinguished and as the principal obligation became extinguished, the surety's obligation also became extinguished. Venkatasubba Rao, J., in the course of the judgment made the following observations:

The plaintiffs became the legal representatives of their debtor and they were therefore entitled to execute the decree against themselves to the extent of his property which had come to their hands and the plaintiffs must accordingly be deemed to have obtained satisfaction of their decree. The circumstance that the plaintiffs did not actually take out execution against themselves and recover the sum in execution is immaterial and I am therefore satisfied that the principal obligation was in this case extinguished.

Spencer, J., observed thus:

What they must be deemed to have got in succession by the first defendant's untimely death and his mother's release deed was the balance of his estate after wiping out his debt to them.

In Sankaralingam v. Arumugham : AIR1938Mad814 , Venkatasubba Rao, J., had to deal with a case where a decree-holder became an heir of one of the judgment-debtors. After observing that Order 21, Rule 16, Civil Procedure Code would not in terms apply, he remarked that the principle which that section would embody was that:

. . . where the decree-holder's right and the judgment-debtor's liability became united in one and the same individual, it stands to reason that the decree should be treated as satisfied.

6. But a distinction should be made between a partial and complete satisfaction and the decree must only be treated as satisfied pro tanto, that is, to the extent of his share. This was the view taken in the early Allahabad cases and also in the recent decision of that Court reported in Asia Bibi v. Malik Aziz Ahmad I.L.R. (1931) All. 448. But in a case in Chidambaram Pillai v. Thangathammal (1918) 16 L.W. 678 Spencer, J., took the view that where a creditor was a limited owner like a Hindu widow there would be no extinguishment. In that case one N died leaving a widow and a daughter. The widow succeeded to the estate of N and she was also a creditor of her husband. The widow died subsequently leaving a will by which she assigned that debt to the plaintiff. The plaintiff brought a suit to recover the amount from the daughter who succeeded to the estate of her father after the widow's death. He was held entitled. The ground on which the learned Judge put it was that the principle of English law of retainer which applies to executors would not apply to Hindu widows as such, that the question of merger was one of intention and that it was not for the advantage of a widow to pay off her stridhanam debt out of the income of her husband's estate as she was entitled to enjoy the whole of the income of the estate.

7. This principle of retainer could not be considered to be a peculiarity of English law. It is founded on a general principle of jurisprudence, namely, where it is the same hand that has to receive and pay, he cannot sue himself and the law must infer satisfaction of the debt on the ground that the debt must be deemed to have been paid from and out of the assets in the hands of the representative whether he be the executor or heir. The fact that the heir is a limited owner would not make any difference in the application of the principle. The principle is founded on common justice. In Attorney-General v. Jackson (1918) 16 L.W. 678 Lord Atkin refers to the case of Woodward v. Darcy (1558) 1 Plow. 184 : 75 E.R. 282 for the reason underlying this principle and states thus:

The reason for it is to be found in the report in Plowden of the, opinions of the Judges of both the King's Bench and the Common Pleas in the case of Woodward v. Darcy (1558) 1 Plow. 184 : 75 E.R. 282 given in 1547 after discussion in several previous terms. The explanation is that without the right the executor would be bound to pay the other debts of the testator and to leave the testator's debt to himself unpaid.

In Woodward v. Darcy (1558) 1 Plow. 184 : 75 E.R. 282 the scope of the principle is thus explained in a passage which in spite of its length I shall quote as it is informing and instructive:

If the execution of the administration should extinguish the debt, this would be derogatory to testaments, and to the souls of testators. To testaments, for that executors would refuse father than lose their debts, and without an executor a will is null and void; and to the souls of testators, for that if the executor takes upon him the administration, which is an act of charity, then thereby the just debt due from the testator to the executor, would remain for ever unpaid, which would be dangerous for the soul of the testator. So that such a law would induce a man to omit charity and friendship, or if he did execute it, he would be ungratefully requited with the loss of a just debt due to him, and would be forced to pay all the other debts of the testator, and to leave the testator's debt due to himself unpaid. But our law is not so unreasonable or uncharitable for the executor may retain assets to pay himself, notwithstanding he may not bring an action to recover it, for true it is that the action is gone by the act of administration.... But the reason why the action is lost for ever is, because in judgment of law he is satisfied before, for if the executor has as much goods in his hands as his own debt amounts to, the property of those goods is altered and vested in himself, that is, he has them as his own proper goods in satisfaction of his debt, and not as executor. So that there is a transmutation of property, by the operation of law, without suit and execution, for inasmuch as Windham here could not have an action against himself as executor, nor have execution against himself as executor, the operation of the law is equivalent to a recovery and execution for him, and the property is as strongly altered as it could be by recovery and execution. So that the reason why the action is gone is, because, he has full satisfaction by the alteration of the property. And although the debt was a chose in action, yet it is not so in him as executor, for his action is totally gone for the reason aforesaid, in which respect the chose in action is become converted into a chose in possession and a satisfaction executed. Wherefore Windham might well retain goods to satisfy his own debt.

8. No doubt, Wright, J., in In re Gilbert., Ex parte Gilbert (1898) 1.Q.B. 282 doubted whether it was the law that the property in the assets was absolutely altered without something showing assent or appropriation by the executor. Lindley, L.J., seemed to approve of it and Lord Atkin in referring to Woodward v. Darcy (1558) 1 Plow. 184 : 75 E.R. 282 did not express any doubt about it. Whether in the case of a creditor executor the principle of alteration of property should be held to be applicable or not, I do not see why it should not be applied to the case of a property vesting in an heir. However the basis on which the debt is said to be extinguished is clear, that is, so much of the property as is available in his hands must be deemed to have been appropriated and only the net balance of the estate must be deemed to have vested in him. So that if any other creditor brings a claim for his debt he will be entitled to assert the right of retainer and plead the creditor can only claim payment from and out of the balance of the assets in his hands after deduction of his debt. I do not see there is anything in the Hindu law which precludes the application of this principle. In fact this principle was applied in the Indian decisions referred to above. In Tamiz Bano v. Nand Kishore I.L.R.(1927) All. 645 dealing with a case of a dower debt Ashworth, J., expressed the view in which Mukerji, J., concurred, that this principle would apply to India (vide the observations of Ashworth, J., at pages 650 and 651). As remarked in Woodward v. Darcy (1558) 1 Plow. 184 : 75 E.R. 282 it would be unreasonable and uncharitable that an heir should forego his debt and that the other creditors should be paid. So far as I am able to see there is nothing in the Hindu law which says that the moment an heir succeeds to his debtor, he foregoes his debt. The appellant in this case is entitled to say that it is only the net balance of the sale proceeds of the house that will be available for the payment of the debt of the respondent if the suit property was the only property left by the deceased Ratnaswami. But she claims rateable distribution. The question is can she claim it? In order that a decree-holder may claim rateable distribution the following requisites are necessary : (1) he must have made an application to the Court which holds the assets before their receipt for the execution of his decree; (2) it must be a decree for the payment of money; (3) it must be against the same judgment-debtor, and (4) he has not obtained satisfaction of it. In this case she has applied for the execution of the decree before the receipt of the assets and it is pending. It is a decree for payment of money. Though her decree was obtained against Ramaswami and the decree of the respondent was obtained against her as the legal representative of Ramaswami it must be held to be against the same judgment-debtor. In regard to the question of satisfaction her case is that no satisfaction of the decree has been entered up and the decree must be deemed to be subsisting. The contention of Mr. Sesha Aiyangar is, though the execution application is still pending, no order can issue thereon because the appellant cannot have execution against herself. This again brings in the theory of satisfaction because the ground on which execution is denied is that she being the same hand to receive and to pay, the debt due to her must be deemed to have been paid from and out of the assets in her hands and therefore it must be deemed to have been satisfied. As pointed out in Williams on Executors this remedy arises from the mere operation of law (Volume 1, 11th edition, page 797). In the language of the learned Judges in Woodward v. Darcy (1558) 1 Plow. 184 : 75 E.R. 282 'the operation of the law is equivalent to a recovery and execution.' The question whether the decree has been satisfied is one which has to be gone into. If Ramaswami had left assets other than the property which was sold sufficient to satisfy the decree debt of the appellant, her claim must be disallowed. But if the only asset that he left was the property which was sold, so much of the property that would be, necessary to satisfy her debt must be deemed to have been appropriated for her debt and only the balance will be available for payment to the respondent. Though the contention of Mr. Sesha Aiyangar may be right in so far as Section 73 may not apply because the decree must be held to have been satisfied and therefore execution cannot issue, still she is entitled to urge her claim under Section 47, Civil Procedure Code and prevent the respondent from appropriating the whole of the sale proceeds for satisfaction of his debt. The fact that she has chosen to claim rateable distribution should not stand in the way of her getting this limited relief which she has claimed. In this connection I would like to refer to Veerasokkaraju v. Papiah (1902) 13 M.L.J. 258 : I.L.R. Mad. 792 which appears to me to be a case in point. The facts in that case were as follows : A succeeded to the property of his mother B. C, a creditor of 13, obtained a decree against A for the amount payable from and out of the assets of the mother in his hands. C then attached in execution of his decree certain jewels in the possession of A. A admitted liability of the jewels to attachment but claimed a lien on the sale proceeds of the jewels to the extent of Rs. 1, 562; Rs. 361 paid by him to redeem two of the jewels which had been pledged by the mother; Rs. 110 lent to the mother for remaking jewel No. 11; Rs. 1,091 paid by him in discharge of debts contracted by the mother. The District Judge took the view that A's contention that the assets in his hands must be taken to be what was left after he had satisfied his own claims against the mother's estate was unsound and he therefore disallowed the claim. On appeal Subrahmania Aiyar, J., and Davies, J., held that A was entitled to be paid out of the sale proceeds the sums which he proves he is entitled to. In regard to the debt owing to him they remarked thus:

In regard to the Rs. 110 said to have been advanced to the mother in her lifetime the appellant A has a right to pay himself out of the assets as he cannot sue himself.(The italics are mine).

9. It will thus be seen that the learned Judges in that case applied the principle of retainer. They set aside the order of the District Judge and remanded the case for enquiry as to whether A in fact discharged the debt of the mother and if so, to what extent. Therefore, if the ratio decidendi of this case were to be applied to the present case, it follows that the appellant could have justly claimed that the amount payable to her under the decree should be paid first out of the sale proceeds and the balance only should be available for the respondent's decree. It was open to her to prefer this claim under Section 47, Civil Procedure Code, being a party to the decree. Since she has chosen only to ask for a rateable distribution, her claim to this limited extent is perfectly justified. But before a rateable distribution can be ordered, an enquiry must be held as to whether Ramaswami left any other estate besides the property that has been sold, so-that if it is found that there were other assets of the judgment-debtor which would cover the value of the appellant's debt, to that extent it must be deemed to be satisfied and only for the balance she could claim rateable distribution; if there were no other assets of the judgment-debtor, she must be allowed to participate in the sale proceeds along with the respondent.

10. I therefore set aside the decision of the learned Subordinate Judge and remand the petition of the appellant to the learned District Munsif of Thuraiyur for disposal in the light of the observations contained in this judgment. I direct each party to bear his or her costs throughout. Leave to appeal refused.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //