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In Re: Goods of Nani Lal Das - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKolkata
Decided On
Reported inAIR1939Cal737
AppellantIn Re: Goods of Nani Lal Das
Cases ReferredArthur Gerald Norton Knight v. Emperor
Excerpt:
- .....it. the words have remained in the bond. so far as i am aware they do not appear in the english bonds for administration.4. now, the questions dealt with by the indian courts relating to administration bonds are of two categories to which i have added a third: (1) discharge from or vacating the bond at the instance and at the will of the surety. (2) discharge from or vacating the bond by order of court on the ground of default by the administrator. (3) discharge from or vacating the bond by the court because of the fulfilment of the obligations by some form of declaration or finding that the estate has been properly administered. the last category is the one with which i have especially to deal.5. dealing with class (1) the view taken by this court in rajnarain mookerjee v......
Judgment:

Ameer Ali, J.

1. In this matter I am much indebted to the assistance of Mr. Mitra whom I asked to argue the matter and I will consider the judgment now given after further perusal of the note which he has handed in. This is an application by the administratrix for her own discharge and the discharge of her surety, the Alliance Assurance Co., from the bonds given to the Court. The administratrix filed her inventory and her account and the petition states that the estate has been duly administered. The practical difficulty involved is that the Assurance Company, like other companies doing suretyship work, continues to charge an annual premium until some order of Court is obtained.

2. I have repeatedly expressed a doubt whether such orders should or can be made by this Court and I asked the office in this case to report upon the practice. The office reported that orders of this kind have be come the practice either in an unconditional form or without prejudice to anything done or undone by the administrator up to the date of the order. I have looked into the matter further and I am the more convinced subject as I say to a further perusal of Mr. Mitra's note that the practice is erroneous. The bonds are given under Section 256, now Section 291(1) of the Succession Act, read with Rs. 15 and 16 of Chap. 35. The forms of the bonds are given in Appendix M, Forms 6 and 8.

3. I have a printed form of the bond before me supplied by the office and this contains the words 'the said administration account, the same being first examined and allowed by the said High Court.' The first thing to note is that these words are wholly inappropriate to our practice. We have no procedure for examining or checking these accounts and we have never done it. The words have remained in the bond. So far as I am aware they do not appear in the English bonds for administration.

4. Now, the questions dealt with by the Indian Courts relating to administration bonds are of two categories to which I have added a third: (1) Discharge from or vacating the bond at the instance and at the will of the surety. (2) Discharge from or vacating the bond by order of Court on the ground of default by the administrator. (3) Discharge from or vacating the bond by the Court because of the fulfilment of the obligations by some form of declaration or finding that the estate has been properly administered. The last category is the one with which I have especially to deal.

5. Dealing with Class (1) the view taken by this Court in Rajnarain Mookerjee v. Fulcoomatri Bibi (1902) 29 Cal. 68 to the effect that the surety or giver of the second bond is to be regarded in the light of a surety under the Contract Act and that he may therefore discharge himself by notice (see Section 130, Contract Act) was differed from by the Madras High Court Subroya Chetty v. Ragammal (1905) 28 Mad. 161 and has now been definitely disposed of by the Privy Council in Mahomed Ali Mamooji v. Howeson Brothers (1926) 13 A.I.R. P.C. 32 It is now clear that the surety, using that word throughout this judgment in a neutral sense, cannot discharge himself without an order of Court. That ruling however did not indicate the circumstances under which the Court would or could make an order for discharge.

6. Class (2). The Court was applied to for such an order in the following oases. Bai Somi v. Chokshi Ishavardas Mangaldas (1865) 19 Bom. 245. was the case of a surety for a guardian. The Court refused the order on the ground that default by the guardian was the very object of taking and retaining the security. In Kandhya Lal v. Manki (1909) 31 All. 65 the surety for an administrator applied for cancellation of the bond without giving reasons. This was during the course of the administration. The Court held that it had no jurisdiction to make such an order. The matter was dealt with by this Court on the appellate, side in Radhika Nath v. Rati Kanta : AIR1925Cal158 The Court did not decide on the question of jurisdiction but Sir Ashutosh Mukherji and Rankin J. held in that particular case that charges of improper administration were not sufficient ground for the Court's order.

7. Class (3) dealing with the last category, discharge by reason of the fulfilment of the obligations, we have I think only two cases, Arthur Gerald Norton Knight v. Emperor (1910) 33 Mad. 373 where notwithstanding evidence that the administration was complete, the Court refused to make an order on the, ground of want of jurisdiction. The case in In re Kanailal Khan (1914) 1 A.I.R. Cal. 373 is peculiar evidence was given of the satisfactory completion of the administration and of the acceptance of the accounts by the persons entitled to the estate. Nevertheless, after representations, by the Registrar, the Court held that neither the administrator nor the sureties could be discharged. The order made was that the security given by the sureties could be released in the particular circumstances of the case.

8. The above cases lead me to the conclusion that the orders which have been very frequently made on these applications so far as they are applications for discharge, should not be made. Today, I have had the benefit of Mr. Mitra's arguments and, he has dealt mainly with the second category of cases, namely where the Court is; applied to for discharge on the ground of mal-administration or similar grounds. He suggests, and it is a very ingenious suggestion, that the law and the rules of this Court can be reconciled by using as a key to the whole matter Section 263, Succession Act. Let me first quote Rule 18-A of Chap. 36 of our Rules. Rule 48 of Chap. 38 may also be referred to but the Rules in Chap. 36 are those which immediately apply:

(18-A), The surety shall be entitled to bring to the notice of the Court any act, omission or neglect of duty cast on the administrator by law or any other circumstances which would; entitle the surety to be discharged from the obligation created by the bond, and the Court may then make such order as it thinks fit.

9. Mr. Mitra has suggested that this means nothing more than an application, leading to the revocation of the letters of administration; and it does not imply that the surety can be discharged or released from the obligation, but that read with Section 263, it is intended merely to bring about a cessation of the administration, which would have the practical result of protecting the surety. If that is the correct reading I have nothing to say. But in my opinion the language of the rules cannot be so limited. It is apparently assumed: (i) that there are a number of 'circumstances which entitle the surety to be discharged from the obligation created by the bond;' (ii) among those circumstances is to be included 'any omission or neglect of duty cast on the administrator by law;' (iii) that the Court may make an order for the discharge of surety.

10. It is quite true that the Rule does not categorically state that the surety is entitled to be discharged by reason of the administrator's default, but this is dearly the implication. It is also true that it leaves the order at the discretion of the Court. But again it implies that an order of dis. charge can be made. If this is the correct reading of the rules, it may be well argued that the rules of themselves place the surety in the position of a surety under the Contract Act, and of themselves give jurisdiction to the Court to discharge the surety. In my opinion the wording of those rules requires reconsideration. It seems to me that when drawn it was erroneously assumed that the giver of the second bond is a common law surety and nothing else. This, in my opinion, he is not. In my opinion his liability is immediate and permanent and is only to disappear on the fulfilment of the obligations by the administrator. Default by the latter is no ground for discharging the bonds; it may be ground for revoking the grant or taking other steps to control the administration.

11. Mr. Mitra has also assisted me on the question of discharge when the administration is completed, and has suggested that the solution suggested by him can be applied to this case also by reason of Clause (d) of Section 263, i.e. revocation of the grant on the ground that 'the grant has become useless and inoperative.' Here we have no rule to help or to confuse us. In my opinion, this does not apply to cases where the administration has been completed. I do not think that in circumstances such as the present applications for revocation can be made. I am quite aware of the practical difficulty of the annual premium, and that it is felt that under the present system some limit should be put to the period during which the Insurance Company should continue to take an interest in the matter and continue to charge their premium. But as a matter of law it seems to me that what is asked of the Court is not logically justified. The order asked for, either amounts to a discharge or it amounts to a declaration by the Court that the estate has been properly administered. Either it has been properly administered or it has not. If it has the bond does not) operate. If it has not a default has taken place and is taking place and that is one of the very things in respect of which the bond is given.

12. It is suggested that there can be no harm in making an order for discharge 'without prejudice to past acts or defaults.' In my view there is harm in so doing because in the case of administration it is meaningless and may give a false sense of security. The Court is not able to declare the administration complete. If it is complete, it is only for past acts that the surety can be liable. If it is not complete, that is either past default, or not. In the latter case the Court has no right to relieve the administrator or his surety of the consequences. It seems to me that the logic of the law must be followed and that a practical remedy must be found for a practical difficulty. I am aware the guardians and others under special provisions of law are able to get their accounts passed and consequently obtain in some form or other orders for discharge. The above judgment is given on the basis that, notwithstanding the phrase as to passing accounts in the bonds, there is no provision or machinery in our Courts for discharging or vacating the bond after enquiry.


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