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Sudhir Chandra Das Vs. Rasseswari Chaudhuri and ors. - Court Judgment

LegalCrystal Citation
Decided On
Reported inAIR1921Cal419,69Ind.Cas.796
AppellantSudhir Chandra Das
RespondentRasseswari Chaudhuri and ors.
Cases ReferredSudhir Chandra Das v. Kamal Chandra Dutta
will - probate, grant of, effect of--executor, duties and liabilities of--executor contracting debts for business contrary to terms of will--leave of court not taken--personal liability--indemnification out of profits of business--delay in tiling accounts, effect of. - .....on the 27th april 1912 the plaintiff sudhir commenced the present suit for administration of srish's estate and a degree for administration was passed on the 6th may 1913. the following further facts show why the administration has not been completed. in august 1917 an application was made to revoke the grant of probate, the probate was revoked but on appeal there was a remand to enable the will to be proved in solemn form, and on the 19th august 1919 proceedings were stayed in the administration suit. in september 1919 the plaintiff attained his majority, in january 1920 administration with the will annexed was granted to the plaintiff and in march 1920 the stay of proceedings was removed. shortly put the contentions of the parties are as follows:8. the plaintiff contends that.....

Greaves, J.

1. This is a claim for Rs. 28,286-13-6 put forward by the firm of Ram Kissen Das Bagri in the administration of the estate of one Srish Chunder Das. The following issues were raised;

(1) Was any money advanced by Ram Kissen Das Bagri, if so, when and to whom?

(2) If the debt was in fact incurred in carrying on the testator's business, were the executors entitled or justified in carrying on the business at the date when such debt was incurred, and was sash debt properly incurred and has the testator's estate benefited thereby?

(3) Are the executors entitled to be indemnified out of the assets of the testator or any part thereof in respect of the debt in question?

(4) Is the claimant entitled to be subrogated to the right of indemnity, if any, of the executors?

(5) What sum, if any, is the claimant entitled to recover out of the estate?

(6) Was the business mentioned in the pleadings ancestral?

(7) Was the business carried on with the assent of the guardian of Sudhir?

(8) Was the business carried on with the assent of the creditors of the estate or the legatees under the testator's Will?

2. Srish Chandra Das died on the 12th December 1904 leaving four daughters and a widow, the defendant Rasseswari Chaudhurani. Srish left a Will dated the 11th December 1904 whereby he appointed as his executors Srimati Rasseswari and one Rajani Mohan Das and gave his wife power to adopt a son to him, and made the adopted son proprietor of his estate. He gave monthly allowaness to two of his daughters and gave them two houses. The executrix and executor applied for Probate of the Will in the Dacca Court, and a caveat having been entered by one Indumoni on the 5th April 1905, Chunder Kumar Dutt and Amar Chand Laha were appointed Administrators pendente lite. They made a report to the District Judge of Dacca on the 9th April 1905, stating that the estate consisted inter alia of (1) a banking business at Dacca (2) A banking business at Calautta, that the banking business was the backbone of the firm although it was to a great extent hazardous and that the credit of the estate rested entirely on this business which was carried on by borrowing money and was without capital.

3. On the 10th April 1905 the District Judge of Dacca passed an order as follows: I think that the Administrators should continue their business on the lines which have been followed heretofore but avoiding transactions which are essentially speculative in their nature. '

4. The businesses are, it is admitted, for the purpose of these proceedings ancestral businesses.

5. On the 24th May 1905 the caveat was discharged and Probate issued to the executors.

6. On the 26th April 1906 the plaintiff Sudhir was taken in adoption by Srimati Rasseswari to Srish.

7. The executors after the issue to them of Probate without obtaining the leave or directions of the Court continued the testator's business down to the 19th April 1912 when they stopped payment in Calcutta and in Dacca, the claimant during the period the executor were carrying on the business lent money on hatchittas to the business the account being a running one, and all the sums now claimed by the claimants are in respect of liabilities incurred by the executors during their conduct of the business. On the 27th April 1912 the plaintiff Sudhir commenced the present suit for administration of Srish's estate and a degree for administration was passed on the 6th May 1913. The following further facts show why the administration has not been completed. In August 1917 an application was made to revoke the grant of Probate, the Probate was revoked but on appeal there was a remand to enable the Will to be proved in solemn form, and on the 19th August 1919 proceedings were stayed in the administration suit. In September 1919 the plaintiff attained his majority, in January 1920 administration with the Will annexed was granted to the plaintiff and in March 1920 the stay of proceedings was removed. Shortly put the contentions of the parties are as follows:

8. The plaintiff contends that Srish's estate is not liable for the present claim but that the only persons liable are the executors personally. The claimant contends on the' other hand that Srimati Rasseswari as manager could carry on the business and bind the infant and the estate and that it was the duty of the executors to keep and preserve the business and to hand it over to the plaintiff as a going concern and that the executors, although executors, were de facto managers. The claimant further claims to stand in the shoes of the executors in respect of their right of indemnity from the estate. Various authorities ware cited to me but none really seems to me to be in point and I have not been able myself to find any authority which covers the point. I think there is no doubt that on the 24th May 1905 when Probate was granted to the executors the whole of the testator's estate including the business vested in them and that they held it from that time not as managers but as executors and subject to their rights and liabilities as snob. Their duties, therefore, were to collect with reasonable diligence the property of the testator and the debt due to him (See Hindu Wills Act, Section 216). The Will contained no power to carry on the business, and they did not, as they might have done, seek the directions of the Court with regard to it. Consequently, their right was not to carry on the business for an indefinite period but only for the purpose of realisation as one of the assets of the estate. They carried it on from 1903 until 1912 when the business stopped payment--a longer period than was presumably necessary for the purposes of realisation and on the evidence not for realisation. Under these circumstances, I think the law is clear, namely, that the executors are personally liable far the debts and have no general right of indemnity out of the estate Evans In re Evans v. Evans (1837) 34 Ch.D. 597 : 56 L.T. 768 : 35 W.R. 586; Strickland v. Symons (1884) 23 Ch. D. 245 : 53 L.J.Ch. 582 : 51 L.T. 406 : 32 W.R. 889 Williams on Executors, 11th Ed!., Vol. II, 1537. If, however', assets have accrued to the business and through it to the estate during the trading, the executors are entitled to be indemnified from the estate for what it had cost them to obtain such assets if they are not indebted to the estate, and the creditors could stand in their shoes to the extent of the executors' rights. Such being the law as I conceive it, it remains to consider what is the position here. Nritya Gopal Das who was examined on commission, stated that he was employed for some 27 years in the service of this estate and that he was all along employed in the banking department and that he was so employed after Srish's death. He stated that after Srish's death the executors carried on the business not for winding up, butt that they entered into fresh transactions; that it was carried on upon an extensive scale and was a risky business. He stated that at Srish's death; (12th December 1904) the cash in the till or the banking business at Dacca was Rs. 36,020 3 9 and in the Calcutta banking business Rs. 7,721-15.6; he gave the figured as to the capital in the business and the losses during the time the business was carried on. Having read this evidence, it seems to me clear that the banking business was carried on at a loss and indeed I cannot find that Counsel who appeared for the applicants sought to show to the contrary from the evidence. In argument before me, however, it was suggested that assets were purchased for the estate oat of the business and that the estate has benefited. From the evidence, however, I find nothing to support this contention, and it seems to have been raised before me in argument for the first time. Moreover, it is noticeable that in the case of Sudhir Chandra Das v. Kamal Chandra Datta 41 Ind. Cas. 503 : 46 C. 538 : 21 C.W.N. 1043 where the carrying on of this business was under discussion, no suggestion was made that profit or benefit to the estate bad resulted from carrying on this business, Chitty, J., at p. 543, states : The executors continued to carry on the business of the testator and for that purpose appear Co have borrowed very large sums of money. Their management was not successful and the estate became more and more heavily involved, and again: 'The business had gone from bad to worse and in 1912 it was finally closed.'

9. I am not suggesting that the findings in that suit are binding on the claimant here, but it is curious that if there is anything in the suggestion now put forward, that it was never even urged or suggested in the case reported as Sudhir Chandra Das v. Kamal Chandra Dutta 41 Ind. Cas. 503 : 46 C. 538 : 21 C.W.N. 1043. On the fasts and materials before me and on the law as applicable to these facts and materials, it does not appear that the executors are entitled to any indemnity under the circumstances of this case in respect of the sums borrowed by them for the purposes of the business, and I hold on these facts and materials (1) that the business was not carried on merely for the purposes of realization, (2) that it was in fact carried on at a loss and that no benefit accrued to the estate,

10. Admittedly, the claimants' rights stand or fall by the rights of, the executors, and if they have as I hold no right of identify from the estate, it follows that the claimants have no such right.

11. But I am asked to say that these proceedings are premature and that I should before dismissing the claim wait until the executors or their representatives have filed their accounts.

12. Now the position is as follows: the decree for administration was made on the 6th May 1913, on the 6th May 1916 the executrix was ordered to file her accounts on or before the 15th July 1916, on the 7th August 1916 the time for filing accounts was extended and the executrix was given order peremptorily until the 15th September 1916, to file her accounts. In default the reference was to proceed and the executrix was precluded from filing any accounts. On the 15th September 1913 the executrix applied for farther time bat her application was refused. So far as the other executor Rajani in concerned, he is dead and so long ago as the year 1914 he filed a statement of fasts slating (paragraph 13) that he was not in a position to file accounts. Under these circumstances I am not prepared to arcade to the argument that I ought to wait any longer for accounts that will not be forthcoming. It is true that mere delay in filing accounts does not destroy any right of indemnity that may exist, but in any case for such right to exist the executors must show that they are not indebted to the estate. In default of accounts this will be difficult if not impossible to establish. On the evidence before me the executors are prima facie indebted and are accountable and this accountability has not and cannot, I think, under the circumstances, be displaced. Is would, moreover, appear from the evidence that general assets of the estate were used for the business without authority under the Will or from the Court, a course which was clearly unjustifiable.

13. I answer the issues as follows:

(1) Money was advanced by the claimant to the executors after the death of the testator.

(2) The executors were not entitled or justified in carrying on the business as they did, and the debt was not properly incurred and the testator's estate has not benefited,

(3) The answer is in the negative.

(4) Yes, if any such right exists, but on the evidence I cannot find that it does exist.

(5) Nothing.

(6) Tea.

(7) yes.

(8) I have no evidence on this point.

14. The applicant's claim against the estate accordingly fails and he must pay the costs to be taxed as of a hearing and the costs will include the coats of the Dacca Commission.

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