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1949 DIGILAW 214 (MAD)

G. F. F. Foulkes v. A. S. Suppan Chettiar

1949-07-22

BALAKRISHNA AYYAR, P.V.RAJAMANNAR

body1949
Judgment Rajamannar, C.J.-These two appeals arise out of a suit, Original Suit No. 67 of 1943, instituted in the Court of the Subordinate Judge of Madura by two plaintiffs on behalf of themselves and on behalf of the other creditors of the estate of one Robert Foulkes, deceased, for an administration of his estate and inter alia to declare certain alienations effected by the first defendant as the administrator of the said estate in favour of defendants 3 to 7 invalid and not binding upon the plaintiffs and the other creditors of the estate, and for directions for the proper disposal of the properties comprised in the said estate, and, alternatively, to direct the first defendant, in any event, to make good to the plaintiffs the loss of Rs. 1,32,268-9-8 with subsequent interest thereon, occasioned by reason of his acts of devastavit. The learned Subordinate Judge granted a decree personally against the first defendant for rendition of accounts of the assets and income of the estate of Robert Foulkes (deceased) from 14th December, 1938 and directing the amount due on taking accounts to be paid by the first defendant in satisfaction of the debts due to the plaintiffs and the other creditors of the estate, if any, in rateable distribu-tion. The suit was dismissed against all the other defendants. Appeal Suit No. 256 of 1945 is by the first defendant and Appeal Suit No. 546 of 1945 is by the plaintiffs. The main facts leading up to the suit are not in dispute and may be briefly stated. One Robert Fischer died on 29th November, 1908, leaving behind him his last will and testament, dated 10th March, 1908, and considerable properties which he disposed of by the said will. Letters of administration with the will annexed were granted to four persons, among whom the first defendant was one, as executors named in the said will. Under the said will, Fischer bequeathed a life interest in certain properties to his wife Sybil Fischer and the remainder over to Robert Foulkes, one of the executors under the will. Letters of administration with the will annexed were granted to four persons, among whom the first defendant was one, as executors named in the said will. Under the said will, Fischer bequeathed a life interest in certain properties to his wife Sybil Fischer and the remainder over to Robert Foulkes, one of the executors under the will. By an indenture, dated 24th April, 1913, Robert Foulkes took on lease the said properties for a period of ten years and on the same day executed in favour of the trustees under the will, a mortgage whereby he assigned to the other trustees the reversionary right to which he was entitled under the will to secure payment of the rent and other moneys due and payable under the indenture of lease up to a maximum limit of one lakh of rupees In pursuance of a covenant for renewal contained in the indenture of 1913, another lease was granted to him on 12th September, 1923, for a further period of ten years commencing from 1st September, 1922 and it was agreed that the mortgage of 1913 would cover also payment of rent reserved under the renewed lease. On 26th June, 1926, Robert Foulkes executed in favour of one Rao Sahib Alagannan Chettiar a deed of mortgage for Rs. 1,25,000 in respect of properties covered by the mortgage to the trustees of Robert Fischer’s estate. On 21st September, 1932, he executed a promissory note in favour of the same Chettiar tor Rs. 20,000. He died on 24th September, 1935 leaving a will, dated 30th May, 1917, in and by which he bequeathed all the properties to his wife Isabel Foulkes. The will could not take effect as the wife had predeceased the testator. The first defendant who was a brother of the deceased Robert Foulkes applied to the District Court of Madura in Original Petition, No. 53 of 1935, for grant of letters of administration to the estate of the deceased. His petition was allowed on 31st March, 1936 and, on the 7th April, 1936, letters of administration were duly issued to him. On 21st January, 1936, he, i.e., the first defendant in the present suit, brought a suit, Original Suit No. 10 of 1936, in the Court of the Subordinate Judge of Sivaganga, later on transferred to the Court of the Subordinate Judge of Ramnad, at Madura. On 21st January, 1936, he, i.e., the first defendant in the present suit, brought a suit, Original Suit No. 10 of 1936, in the Court of the Subordinate Judge of Sivaganga, later on transferred to the Court of the Subordinate Judge of Ramnad, at Madura. and numbered there as Original Suit No. 35 of 1937, against himself as the administrator of the estate of Robert Foulkes (deceased (to recover a sum of Rs. 34 485-2-8 and to enforce the mortgage executed by Robert Foulkes on 24th April 1913, in respect of Rs. 20,323-2-8 out of the said sum. To this suit, Alagannan Chettiar was made the second defendant, because he was entitled to the rights under the mortgage of 26th June, 1926, executed by Robert Foulkes which, however, would rank only after the mortgage of 1913. On 20th December, 1937, a preliminary decree was passed directing the first defendant therein to pay to the plaintiff therein out of the estate of the deceased Robert Foulkes, a sum of Rs. 33,854-1-7, and costs, out of which sum it was declared that the amount due to the plaintiff therein on the mortgage of 1913 up to 20th June, 1938, was Rs. 16,335-13-7. The decree further declared that the amount due to the second defendant Alagannan Chettiar on his mortgage calculated up to the same date was Rs. 2,74,065-13-3 and further interest and that the plaintiff was entitled to the payment of the amount due to him in priority to the second defendant. The decree was in Form No. 9 and the date fixed for payment was 20th June, 1938. The decree contained the usual clauses for sale of the hypotheca on failure to deposit the amount. In that suit a charge was claimed only on one of the three items of properties comprised in the mortgage deed in favour of Alagannan Chettiar and the decree consequently was confined to that item. As Alagannan Chettiar felt that he might not obtain satisfaction of his claim from a sale of the item in that suit, he brought another suit (Original Suit No. 35 of 1938) on the file of the Sub-Court, Madura praying for a mortgage decree in respect of all the three items of the hypotheca and for a personal decree against the other properties belonging to the estate of Robert Foulkes, in the event of the mortgaged properties proving insufficient. On 26th December 1939, a preliminary decree for sale was passed for a sum of Rs. 2,65,445-0-7 and the date of payment was fixed as 30th April, 1940. It was of course provided in this decree that any amount which the plaintiff decree-holder may realize in Original Suit No. 35 of 1937 should be given credit towards the amount due under it. On 5th August, 1940, Alagannan Chettiar died and the plaintiffs in the present suit were brought therein on record as his legal representatives, and a final decree was passed on 7th December, 1940. In the other suit, namely, Original Suit No. 35 of 1937 also, a final decree was passed at the instance of the plaintiffs on 1st August, 1941. There were sales of the mortgaged items in execution of the decrees in both the suits. On 18th June, 1942, the item covered by the decree in Original Suit No. 35 of 1937 was sold in court auction and purchased by the plaintiffs for Rs. 2,01,700 out of which they deposited into Court the amount payable to the plaintiff-decree-holder in that suit in respect of the mortgage of 1913. On 29th December, 1942, the sale was duly confirmed. In execution of the decree in the second suit, the plaintiffs purchased the other two items and their sale was confirmed on 23rd March, 1942. In the preliminary decree in Original Suit No. 35 of 1937, it was provided that if the money realized by the sale directed by it was not sufficient for payment in full of the amount due in respect of the mortgage in favour of Alagannan Chettiar he shall be at liberty to apply for a personal decree against the first defendant therein for the amount of the balance, provided of course, such remedy was open to him and was not barred in law. In the later suit, i.e., Original Suit No. 35 of 1938, a specific issue was raised whether the personal remedy was in time, and it was found by the Court that the personal remedy was not barred and the plaintiff would be entitled to apply for a personal decree under Order XXXIV, rule 6, of the Code of Civil Procedure, if the amount realized by the sale of the mortgaged properties was not sufficient for the payment of the amount declared to be due to him. As the amount actually realized by the sale of the mortgaged items in execution in the two suits was not sufficient to satisfy the decree in their favour, the plaintiffs applied on 15th February, 1943, for a personal decree for Rs. 1,28,285-10-4. This application they made in Original Suit No. 35 of 1937 (Interlocutory Application No. 67 of 1943), and it was granted by an order, dated 30th July, 1943 [Exhibit P-10(d)]. It was during the pendency of the application for personal decree and during the summer recess, that the first defendant executed the sales in favour of defendants 3 to 7, which are being impeached in this suit by the plaintiffs. On 5th June 1943, the first defendant executed five sale-deeds in favour of defendants 3 to 7, respectively and it is common ground that these sales practically covered the entire properties then remaining out of the estate of the deceased Robert Foulkes. We say “practically” because it was represented to us that there was one item of property which the plaintiffs succeeded in proceeding against and having it sold in part satisfaction of the personal decree. But it is apparent that this item was not considered at the time of these sales as a saleable asset. By these sales, it may be now taken as not disputed, all the debts payable out of the estate of Robert Foulkes except the personal decree in favour of the plaintiffs were fully discharged, and among such debts was a debt due to Alagannan Chettiar himself under a decree obtained by him on 21st December, 1936, in Original Suit No. 29 of 1936 on the file of the Sub-Court Madura, for the amount payable on the promissory note executed in his favour by Robert Foulkes on 21st September, 1932. On 27th July, 1943, the decree in respect of the promissory note was fully satisfied with the proceeds of one of the above sales. On 20th August, 1943, the plaintiffs instituted the present suit. There were originally nine defendants of whom the first defendant represented the estate of Robert Foulkes as well as the estate of Robert Fischer, and the second defendant was an additional trustee to Robert Fischer’s estate. Defendants 3 to 7 are the alienees under the sales of 5th June, 1943. On 20th August, 1943, the plaintiffs instituted the present suit. There were originally nine defendants of whom the first defendant represented the estate of Robert Foulkes as well as the estate of Robert Fischer, and the second defendant was an additional trustee to Robert Fischer’s estate. Defendants 3 to 7 are the alienees under the sales of 5th June, 1943. Defendants 8 and 9 were impleaded because provision was made in one of the sale deeds for the satisfaction of the debt in their favour. The ninth defendant died pending the suit and defendants 10 to 13 were added as his legal representatives. Later on, the eleventh defendant also died and defendants 15 to 18 were added as his legal representatives. The fourteenth defendant was added to represent the estate of Mrs. Fischer who died in December 1938. The allegations in the plaint on which the plaintiffs sought the several reliefs in this suit were as follows:- No notice was given to the plaintiffs of any intention on the. part of the first defendant to effect any alienation of the remaining properties of the estate of the deceased Robert Foulkes; but the plaintiffs, coming to know of the secret arrangement for such alienations, sent registered notices on 3rd and 4th June, 1943 to the first defendant and his agent, respectively, protesting against any such alienation The plaintiffs also published in the local newspaper. “Thanthi” on 3rd June 1943, a warning to prospective purchasers that any alienation by the first defendant would not be binding on them. Similar notices were also published subsequently in “Dinamani” and “Hindu,” The alienations of the entire properties then remaining were made without making any provision for the large claim of the plaintiffs to the extent of Rs. 1,30,000. Defendants 3 to 7 were parties and privies to the devastavit by the first defendant in the matter of these alienations and had all acted in collusion and conspiracy to defeat the plaintiff’s claims. 1,30,000. Defendants 3 to 7 were parties and privies to the devastavit by the first defendant in the matter of these alienations and had all acted in collusion and conspiracy to defeat the plaintiff’s claims. The first defendant was in a fiduciary position to all the creditors of the estate and was bound to make provision for the payment of all the debts by a rateable distribution of the assets, as they were insufficient for the payment of the debts in full, and as these alienations were made with the deliberate object of defeating the claim of these plaintiffs and defendants 3 to 7 had full knowledge of the plaintiffs’ claim, the alienations were invalid and inoperative and not binding on the plaintiffs. The consideration recited in the sale deeds was grossly inadequate. Certain allegations were made specially against the first defendant that he has been appropriating the entire profits and income accruing from the estate to the extent of Rs. 30,000 every year. These allegations were substantially denied by the concerned defendants. The learned Subordinate Judge found that at the time the first defendant executed the impugned sales, he was fully aware of the plaintiffs’ claim, made in his application for a personal decree, and he must have had the intention to defeat the plaintiffs’ claim and though there was no positive evidence that defendants 3 to 7 had knowledge of the plaintiff’s claim and that there, was a conspiracy amongst them to defraud the plaintiffs, there were circumstances from which it could be inferred, that defendants 3 to 6 who were creditors of the estate had knowledge of the plaintiffs’ claim and that it was being left out of the settlement with the creditors. The sales were made for proper and adequate consideration. The sixth defendant was a creditor only in respect of a small sum, i.e., about Rs. 1,600 and the seventh defendant was no creditor at all and should be held to be a bona fide purchaser. The alienations therefore could not be held to be fraudulent. The sales were made for proper and adequate consideration. The sixth defendant was a creditor only in respect of a small sum, i.e., about Rs. 1,600 and the seventh defendant was no creditor at all and should be held to be a bona fide purchaser. The alienations therefore could not be held to be fraudulent. The learned Judge also rejected the legal contention raised on behalf of the plaintiffs that, under the provisions of the Indian Succession Act, the creditors who had directly been paid the full amount of their claims, leaving nothing towards the plaintiffs’ claim, should disgorge what they had taken and return the properties purchased by them to the estate, so that there might be an equal and rateable distribution of the assets among all the creditors, including the plaintiffs. He therefore dismissed the suit against the alienees and the creditors who were not alienees. The learned judge, however, held that the first defendant was liable not only to render accounts for the rents and profits of the estate during the period of his administration, but also would be liable for the loss caused to the plaintiffs and other creditors, if any, by his disposal of the remaining assets of the estate without providing for the plaintiffs’ claim. Before dealing with the several questions of fact and law, which were canvassed before us by Counsel on both sides, it will be convenient to dispose of a preliminary objection raised by the respondent in Appeal Suit No. 256 of 1945, which is the appeal preferred by the first defendant. This objection is based on the fact that the second respondent (second plaintiff) died pending the appeal, but his legal representatives were not brought on record in time. There were applications made seeking to excuse the delay and to set aside the abatement (Civil Miscellaneous Petitions Nos. 3276 to 3278 of 1948), but they were dismissed. On behalf of the first respondent, it is contended that the appeal has consequently abated in its entirety. The two plaintiffs, it may be recalled, are the legal representatives of Alagannan Chettiar, who was the original creditor and the decree-holder in Original Suit No. 35 of 1937 and Original Suit No. 35 of 1938. On behalf of the first respondent, it is contended that the appeal has consequently abated in its entirety. The two plaintiffs, it may be recalled, are the legal representatives of Alagannan Chettiar, who was the original creditor and the decree-holder in Original Suit No. 35 of 1937 and Original Suit No. 35 of 1938. According to the respondent, they are in the position of joint decree-holders and the abatement of the appeal as against one of them results in the abatement of the appeal in toto. The appellant met this objection by relying upon the representative capacity in which the two plaintiffs instituted the suit. In paragraph thirty of the plaint, the plaintiffs stated that they had applied for permission to file the suit both on their behalf and on behalf of the other creditors, if any, of the estate of the late Mr. Robert Foulkes. They did apply for an order under Order, 1 rule 8, of the Code of Civil Procedure. In his written statement, the first defendant denied that the’ plaintiffs were entitled to file the suit for and on behalf of themselves and on behalf of the other creditors, if any. He stated that there were no other creditors except the legal representatives of Mrs. Fischer and one Mrs. Zara Berry to whom an annuity of Rs. 6,000 was payable and this annuity was made a charge on all the properties. This written statement was filed on 18th December, 1943. Nevertheless, the plaintiffs pressed their application under Order 1, rule 8, and obtained an order on 21st December, 1943, permitting them to proceed with the suit in a representative capacity. The counsel for the first respondent (first plaintiff) wanted to rely on the fact that there were no other creditors whom the plaintiffs could be said to represent and therefore the suit must be treated as a suit by the two plaintiffs in their individual capacity as joint decree-holders. He relied upon the decision of a Division Bench in Jaina Muhammad Sheriff Maracair v. Official Assignee, Madras1. In that case, there was no order of Court under Order 1, rule 8, of the Code of Civil Procedure and objection was taken that the suit was not maintainable because of the absence of such an order. He relied upon the decision of a Division Bench in Jaina Muhammad Sheriff Maracair v. Official Assignee, Madras1. In that case, there was no order of Court under Order 1, rule 8, of the Code of Civil Procedure and objection was taken that the suit was not maintainable because of the absence of such an order. The learned Judges held that Order 1, rule 8, applied only when some persons out of a large body of persons entitled to file a suit desired to conduct proceedings on behalf of themselves and on behalf of the absentee parties; but when all the persons jointly interested were made parties, Order 1, rule 8, did not apply and there was no need to apply for leave of the Court. This decision can have no application to the facts of the present case. Here, the plaintiffs did apply for an order under Order 1, rule 8 and did obtain such an order. It is impossible thereafter for them to contend that the suit was not brought by them in a representative capacity. There is authority for the position that when a suit is brought by several persons in a representative capacity, and if one of them dies, the suit does not abate, because, the right to represent others of a class is not a right which ipso facto survives to the legal representatives of the deceased party. The source of that right is the order of the Court permitting the party to represent others. In such a contingency, namely, the death of one of the parties to whom originally permission was granted to institute a suit in a representative capacity, it is for the Court to decide whether the suit can be allowed to be continued by the surviving person or persons or whether other person or persons should be joined. In Venkatakrishna Reddi v. Srinivasachariar2, Ramesam, J., has discussed this question and with great respect to that learned Judge, we are in entire agreement with his conclusion. In Venkatakrishna Reddi v. Srinivasachariar2, Ramesam, J., has discussed this question and with great respect to that learned Judge, we are in entire agreement with his conclusion. He points out that the proper procedure, in a case like this, is for the remaining person or persons to apply to the Court for directions and it is for the Court to decide whether it will permit the remaining person or persons to whom the original sanction was given to continue to prosecute or defend the suit or appeal or it will give directions to bring on record additional person or persons [vide also Jagdam Ram v. Asarfi Ram3]. The appellant has made such an application to us and we direct that the appeal be proceeded with as against the surviving respondent. The preliminary objection is therefore overruled. As the main targets of the attack by the plaintiffs were the alienations in favour of defendants 3 to 7 and the scheme of the distribution of the proceeds to certain of the creditors, which was a part of the transactions of sale, it is necessary to ascertain further details relating to them. All the sale deeds contain more or less the same recitals. They bear the same date and each of the sale deeds provides for execution by both the vendor and the purchaser. In the preamble to each of the sale deeds, there is a list of the debts payable by the estate of Robert Foulkes as follows:- (i) Rs. 33, 151-6-8 to the third defendant under a decree obtained by him in Original Suit No. 18 of 1942 on the file of the Court of the Subordinate Judge of Madura on 7th April, 1942. (ii) Rs. 26,966-6-8 to the family of M. Ganapathi Chettiar represented by the fourth defendant due under a decree obtained by the father of the fourth defendant against the estate of Robert Foulkes in Original Suit No. 7 of 136 on the file of the Court of the Subordinate Judge of Madura on nth January, 1937, in which an execution petition had been filed by the fourth defendant as the legal representative of his father, (iii) Rs. 1,600 due to the sixth defendant under a decree obtained by him against the estate in Original Suit No. 178 of 1938 on the file of the Court of the District Munsif of Madura on 27th April, 1939, (iv) Rs. 1,600 due to the sixth defendant under a decree obtained by him against the estate in Original Suit No. 178 of 1938 on the file of the Court of the District Munsif of Madura on 27th April, 1939, (iv) Rs. 18,400 due to Mrs. Fischer under the decree in Original Suit No. 35 of 1937 on the file of the Court of the Subordinate Judge of Ramnad at Madura, already referred to, (v) Rs. 1, 120 due to the eighth defendant being the balance due to him under a decree obtained by him against the estate in Original Suit No. 163 of 1936 on the file of the District Munsif’s Court of Madura Town, (vi) Rs. 700, a book debt, due to the ninth defendant, (vii) a sum of about Rs. 21,000 to Rao Sahib A.S. Alagannan Chettiar, that is to say, the plaintiffs, after his death, due under the decree obtained by Alagannan Chettiar in Original Suit No. 29 of 1936 on the file of the Court of the Subordinate Judge of Madura on foot of the promissory note already referred to and in respect of which the plaintiffs had filed an execution petition and secured an attachment of the properties which were the subject-matter of the sales, (viii) Rs. 5,691-9-6 due to the fifth defendant under two decrees in Original Suit No. 359 of 1946 and Original Suit No. 221 of 1941 respectively on the file of the District Munsif’s Court, Madura, in respect of which he had filed execution petitions in the District Munsif’s Court, Melur, and had attached one of the villages belonging to the estate. The preamble to the sale-deeds contained the following further recitals:- “Whereas by these agreements the entirety of the debts of the estate of Robert Foulkes subsisting to-day is fully discharged; whereas there is no other means of satisfying them in respect of their dues otherwise than by a disposal of the properties of the said Robert Foulkes.” The sale deeds in favour of the third defendant, fourth defendant and the fifth defendant contained rather an unusual covenant which runs thus: “The purchaser undertakes to indemnify the vendor from all claims and litigations that might arise hereafter in respect of the undermentioned property.” All the sale-deeds contain a clause relieving the vendor from all responsibility and liability for any inaccuracy, or misstatement or deficiency or defect of title. Of the five alienees, the seventh defendant was not a creditor of the estate, and the sixth defendant was a creditor only to an extent of Rs. 1,600. The sale in favour of the third defendant (Exhibit D-1) was for a consideration of Rs. 34,971-6-8 made up of Rs. 33, 151-6-8 due to the purchaser himself, Rs. 1, 120 to be paid to the eighth defendant and Rs. 700 to be paid to the ninth defendant. The sale to the fourth defendant (Exhibit D-4) was for a consideration of Rs. 26,966-6-8 being the amount due to the purchaser himself under the decree obtained by him. The sale to the fifth defendant (Exhibit D-7) was likewise in discharge of the decrees obtained by him under which a sum of Rs. 5,691-9-6 was due as aforesaid. The sale in favour of the sixth defendant (Exhibit D-9) was in consideration of a sum of Rs. 20,000 of which Rs. 18,400 went to discharge the decree debt due to Mrs. Fischer under the decree in Original Suit No. 35 of 1937 and the balance of Rs. 1,600 was taken in discharge of the decree debt owing to the purchaser himself. The sale to the seventh defendant (Exhibit D-11), a stranger, was for a sum of Rs. 25,000 out of which Rs. 4,000 was paid to the vendor by cheque and Rs. 21,000 were reserved with the purchaser to be deposited into the Court of the Subordinate Judge of Dindi-gul to the credit of the decree obtained by Alagannan Chettiar in Original Suit No. 29 of 1936. In their plaint, the plaintiffs charged that defendants 3 to 7 acted in collusion and conspiracy with the first defendant to defeat the claim of the plaintiffs under the personal decree in Original Suit No. 35 of 1937 and had acted mala fide in taking such sales. The plaintiffs also charged that the sale transactions were only nominal and not intended to be given effect to. They alleged that the consideration recited in the sale deeds was grossly inadequate. They therefore prayed for a declaration that the alienations were invalid and not binding on the plaintiffs and other creditors, if any, of the estate and that the properties continued to be liable for the plaintiffs’ claim and the claims of the other creditors of the estate. They alleged that the consideration recited in the sale deeds was grossly inadequate. They therefore prayed for a declaration that the alienations were invalid and not binding on the plaintiffs and other creditors, if any, of the estate and that the properties continued to be liable for the plaintiffs’ claim and the claims of the other creditors of the estate. Alternatively, the plaintiffs claimed, as part of the administration of the estate, an equitable enforcement of rateable distribution by calling upon defendants 3 to 6 and 8 and 9 to disgorge the benefit or the consideration received by them in excess of what they would be legitimately entitled to take on a rateable distribution (vide paragraph 28). The learned Subordinate Judge held that the alienees (defendants 3 to 7)had paid proper and adequate consideration for their purchases and that the underlying purpose of these transactions was not to defraud the plaintiffs. Mr. Alladi Krishnaswami Ayyar, the learned counsel for the plaintiffs, did not challenge these findings of the trial Judge. Nor did he press the plea that the sales were nominal and not intended to be acted upon. He did not suggest that the sales were vitiated by fraud and that they should be set aside on that account. His entire argument was based on (i) the right of the creditors to obtain an equal and rateable distribution of the assets of the estate, with the correlative duty of the administrator to make an equal and rateable payment of the debts and (ii) the knowledge of the alienees of the plaintiffs’ claim which had been left unsatisfied in the scheme of distribution evidenced by the sale deeds in question, which amounted to participation by the alienees in the devastavit committed by the first defendant. In our opinion, on the findings of the learned trial Judge that the sales were for adequate consideration, that the sales were not nominal transactions and that they were not vitiated by fraud or other similar defect, it must be held that the sales, as such, in favour of the several alienees must stand, unless the purchasers were privy to a breach of trust committed by the administrator. Under section 307(1) of the Indian Succession Act, an executor or administrator has power to dispose of the property of the deceased, vested in him under section 211, either wholly or in part, in such manner as he may think fit. The restrictions and the conditions to which this general power is subject under sub-section (2)do not apply to the present case as the deceased did not belong to the class of persons enumerated in that sub-section. It is a general rule of law and equity in England-and that rule is followed in India-that an executor may dispose of the testator’s assets over which he has an absolute power and they cannot be followed either by the creditors or by the legatees into the hands of the alienee. But neither jurisdiction will permit the rule to, be observed so as to protect a disposition founded on fraud or a transaction amounting to a breach of trust, concerted between the executor or administrator and the purchaser. There is no duty cast on the purchaser to see to the application of the purchase money. He is not obliged to ascertain whether the executor is discreetly exercising his power, but the purchaser will not be protected if he is privy to a breach of trust and if the transaction of sale is in its nature incompatible with the legitimate administration of the testator’s estate. A purchaser would not have the benefit of the general rule protecting a purchaser from an executor, if the purchaser concurs in any act which manifests from the transaction itself that it is not the legitimate mode of administering the estate. If the nature of the transactions imports notice to him that the executor is dealing with the assets otherwise than in due course of administration, then, he would have participated with the administrator in an improper conversion and application of the estate of the deceased and the sale in his favour would be invalid. Mr. Krishnaswami Ayyar relied upon two provisions of the Indian Succession Act as the foundation of the plaintiffs’ case as against the alienees and the creditors who had received payments in satisfaction of their debts as a result of the sales. They are section 323 and the proviso to section 360 of the Indian Succession Act. Mr. Krishnaswami Ayyar relied upon two provisions of the Indian Succession Act as the foundation of the plaintiffs’ case as against the alienees and the creditors who had received payments in satisfaction of their debts as a result of the sales. They are section 323 and the proviso to section 360 of the Indian Succession Act. Section 323 is as follows:- ‘Save as aforesaid, no creditor shall have a right of priority over another; but the executor or administrator shall pay all such debts as he knows of, including his own, equally and rateably as far as the assets of the deceased will extend.“ Though only the proviso to section 360 was relied upon, it will be useful to set out the main section as well: "Section 360: Where an executor or administrator has given such notices as the High Court may, by any general rule, prescribe or, if no such rule has been made, as the High Court would give in an administration suit, for creditors and others to send in to him their claims against the estate of the deceased, he shall, at the expiration of the time therein named for sending in claims, be at liberty to distribute the assets, or any part thereof, in discharge of such lawful claims as he knows of, and shall not be liable for the assets so distributed to any person of whose claim he shall not have had notice at the time of such distribution: Provided that nothing herein contained shall prejudice the right of any creditor or claimant to follow the assets, or any part thereof, in the hands of the persons who may have received the same respectively.” Having regard to the peculiar and complicated facts of this case, in discussing the various problems which emerge for our solution, it is useful and necessary to adhere to a logical division. Among such major problems are these; ex hypothesi, they arise only when the assets of the deceased are not sufficient to fully satisfy all his creditors: (i) Does section 323 of the Indian Succession Act confer any right on the creditors? (ii) If it does, against whom can such a right be enforced? Among such major problems are these; ex hypothesi, they arise only when the assets of the deceased are not sufficient to fully satisfy all his creditors: (i) Does section 323 of the Indian Succession Act confer any right on the creditors? (ii) If it does, against whom can such a right be enforced? (iii) If some of the creditors have received payment of their debts in full or in excess of what would be due to them rateably, has an unsatisfied or dissatisfied creditor, who has not been paid at all or has been paid less than what would be due to him rateably, any rights enforceable against the creditors who have been paid in full or in excess? Section 323 of the Indian Succession Act of 1925 replaced section 282 of the Succession Act of 1865 and section 104 of the Probate and Administration Act of 1881. Section 282 of the Succession Act of 1865 ran as follows:- “Save as aforesaid, no creditor is to have a right of priority over another, by reason that his debt is secured by an instrument under seal or on any other account. But the executor or administrator shall pay all such debts as, he knows of including his own, equally and rateably, as far as the assets of the deceased will extend.” Section 104 of the Probate and Administration Act was in these terms:- Save as aforesaid, no creditor is to have a right of priority over another. Bur the executor or administrator shall pay all such debts as he knows of, including his own, equally and rateablv as far as the assets of the deceased will extend.” It will be seen that the present section 323 is a reproduction of section 104 of the Probate and Administration Act which did not contain the words “by reason that his debt is secured by an instrument under seal or on any other account.” These words were omitted because they were merely explanatory. But their presence in the Act of 1865 was necessary and not accidental. This was because the Act of 1865, followed the English law with only slight variations and, according to the English Law of that time, precedence in order of payment was given to debts by special contract. But their presence in the Act of 1865 was necessary and not accidental. This was because the Act of 1865, followed the English law with only slight variations and, according to the English Law of that time, precedence in order of payment was given to debts by special contract. The executor or administrator was bound to give preference to bonds covenants and other instruments under seal of the party over debts by simple contract. The framers of the Indian Act deliberately abolished this preference. It may be mentioned that even in England such distinction was abolished by 32 and 33, Victoria, Chapter 46. Apart from this abolition of the distinction between speciality debts and simple debts, section 282 of the Succession Act of 1865 also departed from the English law in another respect. According to the English law of the time, an executor had the right to pay any creditor, whether himself or another person, in preference to another creditor of equal degree. The framers of the Indian Act deliberately departed from this rule and made it incumbent on the executor or administrator to pay all debts (saving exceptions), as he knows of, including his own, equally and rateably. While the distinction between different classes of debts has been abolished in England, the old English rule which confers a right on the executor or administrator to prefer any debt is still retained and is now to be found in section 34(2) of the Administration of Estates Act of 1925, which runs thus: “The right of retainer of a personal representative and his right to prefer creditors may be exercised in respect of all assets of the deceased * * * *” There is no doubt then that section 323 does restrict the powers of an executor or administrator as regards payment of debts. He must pay all debts as he knows of, including his own, equally and rateably. There can be no doubt that a creditor can insist upon such an equal and rateable payment among creditors by filing an administration action. He must pay all debts as he knows of, including his own, equally and rateably. There can be no doubt that a creditor can insist upon such an equal and rateable payment among creditors by filing an administration action. The same principle substantially underlies the provisions of Order 20, rule 13(2) of the Civil Procedure Code, which lays down that in the administration of the property of any deceased person, if such property proves to be insufficient for the payment in full of his debts and liabilities, the same rules as those applicable in bankruptcy shall be observed. But if an administration action had not been filed in due time, and the executor or administrator had paid some of the creditors in excess of the rateable amount due to them, what are the rights of the other creditors who had not been paid? One right they certainly have and that is against the executor or administrator who has committed a breach of his duty. It was held as early as 1871 in Asiatic Banking Corporation v. Amador Viegas1 that an administrator who pays such debts as he knows of otherwise than equally and rateably as far as the assets of the deceased will extend was personally liable for any loss occasioned to a creditor of the deceased by such improper distribution of the assets; vide also Kissondas v. Jivatlal Pratapshi & Co.2 But have the unsatisfied and unpaid creditors any further right? Have they the right to call upon the creditors who have received in excess of their rateable proportion to refund the excess? Is this right an absolute right, that is to say, can it be enforced against any creditor who has received an excess payment irrespective of the fact that he had or had no notice of the fact that the assets of the deceased were not sufficient to fully satisfy all the debts? There is very little of authority bearing on this question in any of the reported cases in this country and this question cannot arise in England in the absence of a rule corresponding to that contained in section 323 of the Indian Succession Act. The only decision on which Mr. There is very little of authority bearing on this question in any of the reported cases in this country and this question cannot arise in England in the absence of a rule corresponding to that contained in section 323 of the Indian Succession Act. The only decision on which Mr. Alladi Krishnaswami Aiyar relied in support of his contention that irrespective of any notice of the insufficiency of the assets to discharge all the debts in full, creditors who have received payment in excess of their rateable proportion should refund the excess for the benefit of unpaid and unsatisfied creditors, is that of Tyabji, J., in Mathuradas v. Raimal3. Even this decision is not on all fours, but there are observations which prima facie appear to support this contention of his. The material facts in that case were as follows: One K died leaving a will appointing his widow as executrix. She obtained probate of the will. The first defendant, one H, was one of the creditors of the estate, and he demanded payment of his debt. The executor thereupon created in favour of the first defendant an equitable mortgage of some of the immoveable properties belonging to the estate to secure his claim. The first defendant brought a suit on his mortgage and obtained a preliminary and then a final decree. At this stage, the other creditors of the estate brought the suit to prevent that decree from being executed so as to infringe the rights of the other creditors of the deceased. They prayed for a declaration that the mortgage in favour of the first defendant was unauthorized and not binding upon the other creditors of the estate, and that the properties purported to be mortgaged should be followed in the hands of the first defendant for the purpose of having the debts of all the creditors liquidated therefrom, without priority and equally and rateably as far as the assets of the deceased extended. It was admitted that the executrix committed a breach of her duty to pay the debts equally and rateably and the personal liability of the executrix to make good the loss to the other creditors under section 368 of the Indian Succession Act was also admitted. It was admitted that the executrix committed a breach of her duty to pay the debts equally and rateably and the personal liability of the executrix to make good the loss to the other creditors under section 368 of the Indian Succession Act was also admitted. The only question which had to be decided was whether creditors who suffered by this breach of duty had a right to prevent the decree being executed for enforcement of the mortgage created in disregard of their rights. The learned Judge substantially granted a decree as prayed for. He granted an injunction restraining the first defendant from executing the decree so as to affect other creditors’ rights to have the property equally and rateably applied towards the payment of their debts and declare that he was entitled to satisfaction of the decree according to law in due course of administration. As Mr. Alladi Krishnaswami Ayyar adopted the reasoning and observations of the learned Judge in this case as part of his argument, we shall analyse the judgment. We wish, however, to preface the discussion by stating that we are in entire agreement with the decision of the learned Judge in that case in so far as he granted an injunction restraining one of the creditors from recovering more than his rateable share from the assets of the deceased. The steps in the reasoning of the learned Judge are as follows:- Section 323, which is an innovation in the Indian law, provides for an equal and rateable payment of the creditors (with a few exceptions). Therefore, the rights of all the creditors become inter-dependent and the rights of each creditor are brought into relation with the rights of all others. This is not the case in England. The section no doubt lays down the duty of the executor to pay equally and rateably, but this duty comes only as a sequel to the declaration that no creditor shall have a right of priority over another. The intention of the Legislature appears to be to cut down each creditor’s claim; he is not entitled to his full debt, but merely to an equal and rateable payment out of the assets. It would be the duty of the Court to protect the rights of the creditors under that section to receive equal rateable payment. The intention of the Legislature appears to be to cut down each creditor’s claim; he is not entitled to his full debt, but merely to an equal and rateable payment out of the assets. It would be the duty of the Court to protect the rights of the creditors under that section to receive equal rateable payment. How the rights of the creditors, declared by this section, are to be worked out is not specifically provided in the Act. The proviso to section 360, though it does not create by itself a new right, assumes the existence of the creditor’s right to follow the assets. The Court ought to intervene so long as the situation is not beyond its control or irremediably altered and so long as no injustice is done to any innocent party. The assets coming to the hands of the first defendant in excess of what he was entitled to receive may be followed in his hands. As the creditors had intervened before the injustice to them had been effectuated and before any steps were taken as would create new equities, they were entitled to an injunction restraining the first defendant from executing the decree in his favour so as to affect the other creditors’ rights to have the property equally and rateably applied towards the payment of their debts. This, in short, is the gist of the judgment of Tyabji, J. It may be conceded that section 323 not only enjoins on the executor or administrator the duty of equal and rateable payment of debts; it also declares that no creditor is entitled to priority over another. It may also be conceded that it is the duty of the Court to assist the creditors to protect their rights. We are in entire agreement with the learned Judge in his observation that “it would be the duty of the Court to assist the creditors to resist the attempts of other parties to secure for themselves more than what has been laid down as their due.” In our opinion, the creditors would certainly be entitled to seek intervention by the Court to prevent a breach of the duties of the executor or administrator being consummated. If any of the creditors apprehend that the executor or administrator intends to commmit a breach of the duty laid on him by section 323, they can forthwith file a suit for administration and obtain an order restraining the executor or administrator from effectuating his intention. The case of Soobul Chunder Law v. Russick Lall Mitter1, which was decided by a Bench of three Judges (Petheram, C.J., Wilson and Tottenham JJ.) is an instance in point. In that case, one of the creditors of the deceased who had obtained a money decree secured an attachment of certain properties belonging to the estate. Before further proceedings in execution could take place, another creditor filed a suit for administration of the estate and applied for an order staying all proceedings taken by the attaching decree-holder against the estate and directing him to come in, should he think fit so to do and prove his claim in the administration suit, i.e., share rateably along with other creditors. The application was granted and the attaching decree-holder was restrained from further execution of the decree. The case before Tyabji, J., himself -was another example. It appears from the judgment that though the first defendant had obtained a final mortgage decree, the decree had not been executed. So, it cannot be said that the imperative terms of section 323 would be reduced to a mere recommendation, unless the creditors are given a right to proceed against such of the creditors who had been paid in excess of their rateable share and rights of refund similar to those expressly conferred on them against legatees (section 361). The learned Judge admits, what is quite apparent, that while the Act makes specific provision empowering the unsatisfied creditor in certain circumstances to call upon a legatee who has received payment of his legacy to refund, the Act is silent in respect of such questions as to whether or not a creditor who had not received equal and rateable payment had any rights against another creditor who had received more than his due on an equal and rateable basis. But the learned Judge assumes that the omission by the Legislature to work out its intention expressed in section 323 in and by appropriate provisions was a mere oversight and that omission can be supplied;by taking guidance from the analogy of provisions relating to legatees. But the learned Judge assumes that the omission by the Legislature to work out its intention expressed in section 323 in and by appropriate provisions was a mere oversight and that omission can be supplied;by taking guidance from the analogy of provisions relating to legatees. With great respect to the learned Judge, we think this is a dangerous principle to assume that there was an inadvertent oversight on the part of the Legislature in such an important matter. As Earl Loreburn observed in Bristol Guardians v. Bristol Waterworks Company2: Now it is one thing to introduce terms into an Act of Parliament in order to give effect to its clear intention by remedying mere defects of language. It is quite another thing to imply a provision which is not in the statute in order to remedy an omission, without any ground for thinking that you are carrying out what Parliament intended.... To insert such a provision would be simply making, not interpreting, the law. After all, it is not our function to repair the blunders that are to be found in legislation. They must be corrected by the Legislature.‘‘ [Vide also Halsbury’s Laws of England, Second Edition, Volume XXXI, paragraph 635.] We must now refer to a line of cases which starts from the decision in Nilkomul Shaw v. Reed3, in 1872. It has been uniformly held in these cases that when a creditor has obtained a decree against the estate of a deceased person, and applies to execute the decree in the hands of the legal representative of the deceased, such as an executor or administrator, he is entitled to have the amount of his decree paid out of the assets of the deceased in the hands of such legal representative. In such a case, the executor or administrator is bound to pay to the decree-holder the full amount of the decree, though there may be other creditors of the deceased and the assets may not be sufficient to pay them all in full. Tyabji, J., no doubt refers to the decision in Nilkomul Shaw v. Reed3, but distinguished it on the ground that there, the other creditors were not before the Court and the question whether they could object to the assets being applied in disregard of their rights under section 323 was not under consideration. Tyabji, J., no doubt refers to the decision in Nilkomul Shaw v. Reed3, but distinguished it on the ground that there, the other creditors were not before the Court and the question whether they could object to the assets being applied in disregard of their rights under section 323 was not under consideration. We do not think that this distinction helps the learned Judge to escape from the principle of the decision, namely, that in certain cases a creditor may receive more than what is rateably due to him. And it has never been held, nor did Mr. Alladi Krishnaswami Ayyar contend, that when a creditor has received his debt in full in execution of a decree obtained by him, he can be asked subsequently to refund for the benefit of other unsatisfied creditors the amount received by him in excess of what would have been payable to him rateably. In other words, the unsatisfied creditors have never been held to be entitled to follow up the moneys which so came into the hands of the decree-holder-creditor. In Nilkomul Shaw v. Reed1, Couch, C.J., expressly held that section 282 of the Indian Succession Act (corresponding to section 323 of the present Act) did not interfere with the right of a decree-holder to have his decree satisfied out of the property of the deceased or out of the property of the executor, if it should appear that he has not duly applied the property of the deceased. The principle of this decision was followed by Pigot, J., in Remfry v. De Penning2, in which it appeared that the assets were not sufficient to pay in full all the claims made against the estate. The case of Venkatarangayan Chetti v. Krishnaswami Ayyangar3 was one to which the Probate and Administration Act of 1881 applied, in which the provision corresponding to the present section 323 was section 104. It was held by Shephard, O.C.J., and Benson, J., that the right of a decree-holder to have his decree executed against the legal representative of a deceased judgment-debtor was not affected by section 104 of the Probate and Administration Act. It was held by Shephard, O.C.J., and Benson, J., that the right of a decree-holder to have his decree executed against the legal representative of a deceased judgment-debtor was not affected by section 104 of the Probate and Administration Act. The following observation in the judgment is significant: “Although there are certainly difficulties in construing section 104 of the Probate and Administration Act, we think that the language of the section is so far similar to that of the corresponding section in the Indian Succession Act that we must follow the ruling in Nilkomul Shaw v. Reed1.” In Bai Meherbai v. Maganchand4, a creditor of an estate represented by the administrator obtained a decree on an award against the administrator and in execution of that decree, certain property forming part of the estate was purchased by the decree-holder. Afterwards a suit was brought to set aside the said decree and the sale in execution on the ground that under section 282 of the Indian Succession Act, the decree-holder was entitled only to a rateable distribution among the creditors of the estate. It was held that, in the absence of fraud or collusion, the decree and the subsequent sale in execution could not be set aside. It was contended therein that having obtained the decree, the creditor was bound by section 282 of the Indian Succession Act to ask for a rateable distribution in due course of administration in satisfaction of his decree and that was his only right. The answer given by the learned Judges was: whatever might have been the proper way of executing such a decree, as a matter of fact it had been executed rightly or wrongly and the sale could not be set aside. Chandavarkar, J., threw out a suggestion that a creditor’s action against a deceased person’s estate must be always treated as an administration suit and the decree should merely give a declaration of the debt due and that the decree-holder is entitled to satisfaction of the decree according to law in due course of administration and not otherwise. Chandavarkar, J., threw out a suggestion that a creditor’s action against a deceased person’s estate must be always treated as an administration suit and the decree should merely give a declaration of the debt due and that the decree-holder is entitled to satisfaction of the decree according to law in due course of administration and not otherwise. The learned Judge said: “It is the duty of the Court to see in such actions that one creditor is not enabled to gain advantage-over other creditors by getting an unconditional decree for full payment and executing it against the deceased’s estate to the prejudice of those creditors.” Whatever force there may be in these observations, they proceed on the basis, that once a creditor realises in full his debt from the assets of the estate in execution of a decree obtained by him, the other unsatisfied creditors cannot compel such, a creditor to refund the excess which he had received over his rateable share. In our opinion, there is nothing in the proviso to section 360 which necessarily leads to the conclusion that creditors who have received a payment from the executor or administrator of their debts in full or in excess of their legitimate proportion’ should refund the excess received by them for the benefit of unpaid and unsatisfied creditors. The main section, it may be noticed, deals both with creditors and other claimants and, provided certain conditions are fulfilled, it absolves the executor or administrator from all liability for the assets distributed by him to any person or of whose claim he shall not have had notice at the time of the distribution. The proviso is really in the nature of a saving clause which declares that the fact that the executor or administrator is discharged from liability does not destroy such rights which a creditor or a claimant may have to follow the assets in the hands of the persons receiving the payments from an executor. Tyabji, J., himself was of the same view that the proviso itself did not confer any new right, if the creditor or claimant had no right apart from it. It is legitimate to presume that the proviso contemplates the rights of creditors and claimants embodied in the other sections in the chapter. Tyabji, J., himself was of the same view that the proviso itself did not confer any new right, if the creditor or claimant had no right apart from it. It is legitimate to presume that the proviso contemplates the rights of creditors and claimants embodied in the other sections in the chapter. We may also concede that if there are, under the general law, any rights to which the creditors or claimants may be entitled to, such rights also would not be prejudiced, having regard to the proviso. It is not as if the proviso would be devoid of content unless we hold that the unpaid or unsatisfied creditors have a right to follow the assets in the hands of the creditors who have received payment. The proviso can well apply to the right of a creditor under section 361 to call upon a legatee to refund. It is unnecessary to devote any time to a discussion of the question in the abstract whether a proviso as such can or cannot create a substantive right. There may be provisos and provisos and there is nothing inherently impossible in even a proviso conferring a substantive right. The learned Advocate-General cited to us a number of decisions of the English Courts, namely, Gillespie v. Alexander1, March v. Russell2 Jervis v. Wolferstan3 and Harrison v. Kirk4 to show that the rights of the unpaid and dissatisfied creditor is only against the legatee. In Hedges v. Waddington5 there is the following observation, the full significance of which it is difficult to gather from the very meagre report: “But if an executor pays a debt upon a simple contract, there shall be no refunding to a creditor of a higher nature.” These decisions have little bearing on the present question. It is not entirely without significance that this proviso which was a proviso to section 320 of the Succession Act of 1865 is in terms identical with the proviso to section 29 of 22 and 23 Victoria, Chapter 35 (Lord St. Leonard’s Act). Surely, the proviso in the English statute could not have regard to the right of a creditor to claim a refund from another creditor and there can be no doubt whatever that the proviso had reference mainly to the refunding by legatees and others in certain special circumstances. Leonard’s Act). Surely, the proviso in the English statute could not have regard to the right of a creditor to claim a refund from another creditor and there can be no doubt whatever that the proviso had reference mainly to the refunding by legatees and others in certain special circumstances. On this point we agree with the view of Rangnekar, J., in Kissondas v. Jivatlal Pratapshi & Co.6, and his construction of section 323 and the proviso to section 360; and in particular, with the following remarks: “The scheme under the Indian Succession Act seems to me to be this, namely, that when the executor finds that the assets of a deceased person are insufficient for the payment of his debts in full, he has to pay reteably, and section 323 casts the duty on the executor. If the executor is about to act in contravention of that duty, there is a perfectly simple remedy open to the creditor, and that is to file an administration action. If, on the other hand, payment has already been made and the executor cannot be protected because he has not acted in accordance with section 360, then there is a remedy open to the creditor to proceed against the executor, who, in turn, has a right to proceed against the legatees. Section 360, which was enacted to protect the executors making bona fide payments to creditors and in order that the administration of estates should not be unduly and indefinitely hampered, saves a right which the legislature gives to the creditor when he finds that the estate has been distributed by the executor properly and enables the creditor to proceed against the legatees.” Our answers to the three questions formulated at the outset of this discussion are as follows: (i) Section 323 of the Indian Succession Act does confer a right on the creditors to an equal and rateable payment of all the debts. (ii) Such a right can be enforced against the executor or administrator unless he is protected by following the procedure in section 360, in which case, a creditor of whose debt the executor or administrator had no notice cannot proceed against the executor. The creditor can also file an administration suit making the other creditors parties to the suit and can in that suit enforce the right. The creditor can also file an administration suit making the other creditors parties to the suit and can in that suit enforce the right. Order 20, rule 13(2) of the Code of Civil Procedure also comes to his aid. Ordinarily he cannot have a right of action against the other creditors. (iii) Generally speaking, an unsatisfied or dissatisfied creditor who has not-been paid or has been paid less than what would be due to him rateably has no rights enforceable against the creditors who have been paid in full or in excess of their rateable share, i.e., he cannot compel those who have received the payment to refund the excess. Having stated the general rule, the next question which falls for consideration is whether there is an exception to it. As this question is also mixed up in this case with the alienations which are being impeached by the plaintiffs, it is convenient to deal with this question bearing in mind the alienations. It was not disputed before us that an administrator who pays certain creditors out of the available assets of the estate, deliberately leaving other creditors who have equal claims against the estate, will be guilty of a breach of duty. Such a misapplication of the assets goes by the technical name of devastavit in English law. We have already expressed the view that payments made in contravention of the provisions of section 323 make an executor or administrator liable for devastavit; See Asiatic Banking Corporation v. Amador Viegas1. As the executor or administrator occupies a fiduciary position towards the creditors of the estate and the beneficiaries, including the legatees, if he is guilty of devastavit, he is guilty of breach of trust. Now it is a cardinal principle of English law-and that principle is applicable to India also-that a person, who joins a trustee in the commission of a breach of trust and earns a benefit by that wrongful act of the trustee, shall hold the advantage so obtained for the benefit of all the beneficiaries: vide section 68 of the Trusts Act. This doctrine has been applied over and over again in England as a recognised exception to the general rule that a purchaser of the assets of a deceased from his. This doctrine has been applied over and over again in England as a recognised exception to the general rule that a purchaser of the assets of a deceased from his. legal representative like an executor or administrator obtains a free, complete and valid title and the subject-matter of the sale cannot be followed by creditors or legatees into the hands of the alienee. In India, the general rule is embodied in section 307(1)of the Indian Succession Act. The exception is stated thus in the early case of Scott v. Tyler2: "If one concerts with an executor or legatees by obtaining the testator’s effects at a nominal price or at a fraudulent under-value or by applying the real value to the purchase of other subjects, lor his own behoof or in extinguishing the private debt of the executor, or in any other manner contrary to the duty of the office of executor, such concert will involve the seeming purchaser or his pawnee and make him liable for the full value." In Hill v. Simpson3, a transfer by an executor which was a clear misapplication of assets, because, it was made to secure a debt of the executor and future advances under circumstances of gross negligence, though not direct fraud, was set aside at the instance of legatees. Williams, in his book on Executors, Volume I (1930 Edition) states the law in the following manner at page 576:- "Thus, where the person to whom an executor collusively conveys the property knows that the executor is acting in violation of his trust, and in fraud of the persons interested in the due administration of the assets, the fraud vitiates the transaction, and the attempt to transfer the property is ineffectual and void. That an executor may waste the money is not alone sufficient to invalidate the sale or mortgage; it must further appear that the purchaser or mortgagee participated in the devastavit, or breach of duty in the executor. Where there exists such collusion as to render a dealing by a personal representative invalid, not only a creditor, but a legatee, whether general or specific is entitled to follow the assets. But they must enforce their right within a reasonable time, or it may be barred by their acquiescence." The case of Crane v. Drake1, is an apposite instance. Where there exists such collusion as to render a dealing by a personal representative invalid, not only a creditor, but a legatee, whether general or specific is entitled to follow the assets. But they must enforce their right within a reasonable time, or it may be barred by their acquiescence." The case of Crane v. Drake1, is an apposite instance. A purchased a leasehold estate from an executor, having notice that a debt of the testator was unpaid and out of the purchase money set off a sum of two hundred £ due to him from the testator and a debt of five hundred and fifty due to him from the executor and the remainder one hundred and fifty was paid in money. An unsatisfied creditor filed an action to have satisfaction of his debt out of the leasehold purchased by A as part of the testator’s assets. The sale was held to be not good, because the defendant was a party consenting to and contriving a devastavit. Actually in this case there does not appear to have been a charge of fraud or collusion between the purchaser and the executor. But it was admitted that the defendant had notice of the plaintiff’s debt which remained unsatisfied. In Andrew v. Wrigley2, there is a reference to a note in Gilbert’s Equity Reports that "Where the party knew of other debts, he could not take the testator’s property in satisfaction of his own debt." Sir John Leach in Watkins v. Cheek3, stated the general rule and the exception as follows:- "So a mortgagee or purchaser from the executor of a part of the personal property of the testator has a right to infer that the executor is, in the mortgage or sale, acting fairly in the execution of his duty, and is not bound to inquire as to the debts or legacies. But if the nature of the transaction affords intrinsic evidence that the executor, in the mortgage or sale, is not acting in the execution of his duty, but is committing a breach of trust, as where the consideration of the mortgage or sale is a personal debt due from the executor to the mortgagee or purchaser, there, such mortgagee or purchaser being a party to the breach of trust, does not hold the property discharged from the trusts, but equally subject to the payment of debts and legacies as it would have been in the hands of the executor." These principles we find embodied in the Trusts Act in India. Section 93 of the Act enacts: "Where creditors compound the debts due to them, and, one of such creditors, by a secret arrangement with the debtor gains an undue advantage over his co-creditors he must hold for the benefit of such creditors the advantage so gained." Section 94 is a residuary section in Chapter IX dealing with constructive trusts and runs thus: "In any case not coming within the scope of any of the preceding sections, where there is no trust but the person having posession of property has not the whole beneficial interest therein, he must hold the property for the benefit of the persons having such interest, or the residue thereof (as the case may be), to the extent necessary to satisfy their just demands." Illustration (a) to this section is material. It says: "A, an executor, distributes the assets of his testator B to the legatees without having paid the whole of B’s debts. The legatees hold for the benefit of B’s creditors, to the extent necessary to satisfy their just demands, the assets so distributed." The person who is thus under an obligation to hold the property for the benefit of persons having interests or claims against the property are subject to the same liabilities and disabilities as if he were a trustee of the property for the person for whose benefit he holds it. For an application of this doctrine, it is clear that three conditions should be satisfied: (i) there should be an act of a person occupying a fiduciary position like an executor or administrator, (ii) such person must be under a duty, statutory or otherwise, and have committed a breach of such duty. For an application of this doctrine, it is clear that three conditions should be satisfied: (i) there should be an act of a person occupying a fiduciary position like an executor or administrator, (ii) such person must be under a duty, statutory or otherwise, and have committed a breach of such duty. In the case of an executor or administrator, he must be guilty of devastavit, and (iii) the person deriving an advantage from such wrongful act of the trustee (or executor or administrator) must have participated in it; participation necessarily implying notice of the wrongful nature of the act. It now remains to be considered whether these conditions are fulfilled in this case. Admittedly, the first two conditions are satisfied. Then is the third condition satisfied and in respect of which of the defendants? The alienees are defendants 3 to 7. While defendants 3 to 6 are creditors, the seventh defendant is not a creditor. He is a stranger who had nothing to do with any of the transactions of the estate except the purchase under Exhibit D-11. In spite of the argument of Mr. Narayanaswami Aiyar, we are not convinced that it has been proved satisfactorily that the seventh defendant was a party to the scheme of the alienations and the distribution of the assets. We accept the finding of the learned judge that he is a bona fide purchaser for value and that he was not aware of either the plaintiff’s claim or the intentions of the first defendant. The sixth defendant is a creditor only for a small sum of Rs. 1,600. As already mentioned it is only this sum he was allowed to set off against the consideration for the sale in his favour and he had to pay the balance of consideration Rs. 18,400 towards the amount due to the decree-holder in Original Suit No. 35 of 1937. The learned Judge found that all the creditors, namely, defendants 3 to 6 and 8 and 9 had notice of the plaintiff’s claim and of the available assets of the estate and that the assets were not sufficient to pay all the debts including the debt of the plaintiffs under their claim for a personal decree against the estate. None of the defendants 3 to 6 was examined to deny knowledge of the plaintiff’s claim or the other facts relating to the scheme of alienations. None of the defendants 3 to 6 was examined to deny knowledge of the plaintiff’s claim or the other facts relating to the scheme of alienations. It is enough to refer to Exhibit P-6 series, the proceedings before the Debt Conciliation Board, Madura Taluk, to impute to the several creditors a knowledge of the total claim of the plaintiffs in respect of their mortgage. Exhibit P-14 series which relate to an application filed by one of the plaintiffs herein to be added as a party to the suit filed by the third defendant (Original Suit No. 18 of 1942) clearly fix the third defendant with notice of the plaintiff’s claim [vide paragraph 3 of Exhibit P-14(a)]. The fourth defendant, in the written statement filed by him in this case, admits that he was aware of the decrees obtained by the plaintiffs and the sales in execution of them and that he made investigation thereafter. The decree obtained by the fifth defendant expressly limited his right to the satisfaction of the amount decreed according to law in due course of administration and not otherwise [Exhibit D-8 (a)]. A few days before the date of the sale-deeds, the plaintiffs published notices in“Thanthi,” a local Tamil, newspaper and in “Dinamani” and in the “Hindu”, newspapers published in Madras, notifying that a large sum of about Rs. 1,50,000 was due to them from the estate of Robert Foulkes and warning intending purchasers from the first defendant [Exhibits P-12(a) and P-12(b) respectively]. The plaintiffs also sent a registered letter to the first defendant himself and to his agent prohibiting him from entering into any kind of negotiations for alienation of the assets of the estate of Robert Foulkes [Exhibits P-11 (a) and P-11 (b)]. There can be no doubt that all the sales virtually formed one transaction and were executed by the first defendant in pursuance of a general agreement with all the creditors other than the plaintiffs. Each sale deed, as already mentioned, recites the subsisting debts and the fact that there is no other means of satisfying them than by disposal of the remaining properties of the deceased Robert Foulkes. Mention has already been made of the unusual covenant in the sale-deeds in favour of defendants 3 to 5 and the clause relieving the vendor of his responsibility and liability for any deficiency or defect of title. Mention has already been made of the unusual covenant in the sale-deeds in favour of defendants 3 to 5 and the clause relieving the vendor of his responsibility and liability for any deficiency or defect of title. The third defendant obtained full satisfaction of the debt due to him (Rs. 33, 151-6-8) by the sale in his favour. He had to pay Rs. 1, 120 to the eighth defendant and Rs. 700 to the ninth defendant. Likewise, the sales to the fourth and fifth defendants were in consideration of the amounts due to them respectively. An application of the legal principles set out above to the facts in respect of the several defendants leads to the following conclusions. The sale in favour of the seventh defendant is valid and proper because he had no notice of the plaintiffs claim and he obtained no advantage by reason of the sale as he was not a creditor. Though the sixth defendant was a creditor, the advantage which he obtained from the sale was only to the extent of his debt of Rs. 1,600, the balance of the consideration he paid in cash. The third, fourth and the fifth defendants secured the advantage of having their debts satisfied in full by the respective sales to them. The eighth and ninth defendants were also paid in full by the third defendant. As the learned trial Judge found that the consideration for the several sales was not low and inadequate, the sales will stand. But the creditors who were a party to this scheme of disposal of the available assets of the deceased and thereby gained an undue advantage over the plaintiffs cannot be allowed to retain such advantage. The measure of this advantage is the amount which they must be deemed to have received in excess of what they would have got if there had been an equal and rateable distribution, taking into account the plaintiffs’ claim also. It is this excess amount that must be held by them for the benefit of the plaintiffs. There will be a declaration accordingly. Appeal No. 546 of 1945 is allowed to this extent, except as against the seventh-defendant against whom it shall stand dismissed with costs. In Appeal No. 256 of 1945, the first defendant was the appellant. He died pending the appeal and his legal representative has been brought on record. There will be a declaration accordingly. Appeal No. 546 of 1945 is allowed to this extent, except as against the seventh-defendant against whom it shall stand dismissed with costs. In Appeal No. 256 of 1945, the first defendant was the appellant. He died pending the appeal and his legal representative has been brought on record. So far as the first defendant is concerned, as an administrator who clearly committed a breach of the duty imposed on him by section 323 of the Indian Succession Act, he would be liable under section 368 of the Act for devastavit. The very decision relied upon by Mr. O.T.G. Nambiar in Kissondas v. Jivatlal Pratapshi & Co.1 contains observations which go directly against his client. At page 436, the learned Judge said: “If an executor follows it (section 323) and further follows the provisions of section 360, he is protected. If he does not, he is liable * * * * * If the executor pays out of Court, the unpaid creditor has a remedy against him.”See also Asiatic Banking Corporation v. Amador Viegas2. Mr. Nambiar attempted to found an argument on the series of decisions beginning with Nilkomul Shaw v. Reed3, to which reference has been made above, based on the fact that most of the creditors who had been satisfied by the sales had obtained decrees. All these cases, however, will have no application, because the payment was made by the administrator out of Court and in pursuance of a scheme of distribution of the available assets among all the creditors except the plaintiffs. Mr. Nambiar’s next contention was that it is not open to the plaintiffs to file an administration suit when they could get the relief they now claim against the first defendant in execution of their decrees. For this contention, he sought support in the judgment of Somayya, J., in Venugopala Naidu v. Valambal Ammal4. The answer to this contention is twofold. There is nothing in the circumstances of this case to preclude the plaintiffs from filing an administration suit simply because they could have obtained a personal decree against the administrator under section 52(2) of the Code of Civil Procedure. Moreover, the suit was not only against the administrator but also against alienees and creditors and these latter could not have been made parties to the proceedings in execution of the plaintiffs’ decrees. Moreover, the suit was not only against the administrator but also against alienees and creditors and these latter could not have been made parties to the proceedings in execution of the plaintiffs’ decrees. Another answer is that the suit must be deemed to have been filed not only on behalf of the plaintiffs in their individual right but also in a representative capacity on behalf of all the creditors. Surely, it cannot be maintained that the right of the creditors as a body could be agitated in the execution proceedings. Mr. Nambiar cannot be heard to say this is not a suit in a representative capacity, because it was on that ground that we have held that the appeal did not abate though the legal representatives of the second respondent were not brought on record in time. Clauses 1(a) and (b) of the decree must stand. Apart from the devastavit which consisted of the alienations in favour of defendants 3 to 7, the plaintiffs also alleged that the first defendant has been appropriating the entire profits and income from the estate to the extent of nearly Rs. 30,000 every year without making any payment either towards the principal or the interest on the debts of the estate. The first defendant, therefore, must account for the income of the estate. Of course, when such an account is rendered it would be open to the plaintiffs to surcharge and falsify. Clause 1(c) of the decree, however, appears to be in the highest degree vague and indefinite. It seeks to make the first defendant personally liable “for maladministration and neglect, if any, in the management of that estate as administrator.” Now, a preliminary decree cannot be in that hypothetical form. It must be first decided on allegations specifically and properly made of maladministration whether any of the charges has been made out. It is only thereafter that the Court can direct an account on that basis. Mr. Alladi Krishnaswami Ayyar very properly conceded that such a vague decree should not have been passed. This clause will therefore be deleted but otherwise the appeal will be dismissed with costs. [These appeals having been posted for being mentioned, the Court made the following Order:-] These appeals have been posted to-day for mentioning certain matters. Mr. Alladi Krishnaswami Ayyar very properly conceded that such a vague decree should not have been passed. This clause will therefore be deleted but otherwise the appeal will be dismissed with costs. [These appeals having been posted for being mentioned, the Court made the following Order:-] These appeals have been posted to-day for mentioning certain matters. So far as costs of the suit and the appeal are concerned, we have heard counsel again, and we think that the best order to be made in the circumstances of this case is as follows:- The first defendant will be liable to pay to the plaintiffs the costs of the suit and the appeal calculated on the amount in which he may be found ultimately liable at the stage of the final decree. So far as the seventh defendant is concerned, our order will stand, namely, that Appeal No. 546 of 1945 will stand dismissed as against him with costs. The order of costs in the lower Court will also stand. As regards the defendants other than 1 and 7, the order will be that the costs of all of them shall come out of the estate. The costs of the plaintiffs, after giving credit to the costs they may be entitled to against the first defendant personally, shall come out of the estate, both in the suit and in the appeal. As the first defendant is dead, the costs will be recoverable against his legal representatives to the extent of the assets in their hands. On behalf of the first defendant’s legal representatives, it was represented that as this Court has set right, as it were, the devastavit committed by the first defendant, viz., distributing the sale-proceeds of the several alienations between the creditors to the exclusion of the plaintiffs, clause 1(b) of the decree of the lower Court should be deleted. That clause dealt with the loss caused by the first defendant’s act of devastavit, namely, the distribution of the assets of the estate among the other creditors leaving out the plaintiffs. No other act of devastavit was specifically made out against the first defendant except, of course, the charge as to the appropriation of the income of the estate. The lower Court obviously included that clause in the decree because it found that the plaintiffs were not entitled to any relief whatever against defendants other than the first defendant. No other act of devastavit was specifically made out against the first defendant except, of course, the charge as to the appropriation of the income of the estate. The lower Court obviously included that clause in the decree because it found that the plaintiffs were not entitled to any relief whatever against defendants other than the first defendant. Now that we have found that the creditors who have received payments in excess of their rateable share should bring into Court for the benefit of the plaintiffs such excess, the plaintiffs cannot be said to have again a claim against the first defendant in respect of the alienations and the distribution of the proceeds of the alienations. Mr. Narayana-swami Aiyar contended that though the sales might be good as against the alienees as not being for a grossly inadequate consideration, it is open to the plaintiffs to establish that the sales were at under-value and that the first defendant would be liable for the loss sustained by the creditors on account of such under-value. In the lower court, there was no finding that the sales were actually made at an under-valuation, nor was it sought to be established before us. On the other hand, the finding of the learned Judge was that the alienees paid proper and adequate consideration for their purchases. We think that, having regard to our judgment and decree in Appeal No. 546 of 1945, the proper order would be, rather than to completely delete clause 1(b) of the decree of the lower Court, to declare that clause 1(b) will be confined to cases in which the plaintiffs are unable to recover the excess payments made to any of the creditors from such creditors themselves. The first defendant will be liable for such amounts. Otherwise, clause (b) will have no operation. Finally, we think, in the interests of clarity, it is better to indicate that if any amounts are recovered from the first defendant or from properties belonging to the estate of Robert Foulkes, other than the subject-matter of the alienations in favour of defendants 3 to 7, all the creditors including the plaintiffs will be entitled to rateable distribution of such moneys. Of course, the payments which the creditors may have to refund in accordance with our judgment will enure only to the benefit of the plaintiffs. Of course, the payments which the creditors may have to refund in accordance with our judgment will enure only to the benefit of the plaintiffs. These appeals having been set down to be mentioned, the Court made the following Order:- In our judgment we held that the creditors, who had received excess payments in the distribution consequent on the several alienations in favour of defendants 3 to 6, should refund the excess amounts which they must be deemed to have received. The creditors who were mentioned specifically were defendants 3 to 6, 8 and 9. Actually, however, there was admittedly another creditor, namely, the first defendant himself as representing the estate of Mrs. Fischer. This dual capacity which cannot be denied was not specifically adverted to in this portion of the judgment. The decree as drafted, which follows the judgment, naturally did not mention the first defendant in his capacity as representative of Mrs. Fischer as creditor along with defendants 3 to 6, 8 and 9. To bring the decree in accordance with the finding in the judgment, it is necessary that the following words should be added in clause 1, sub-clause 1(a) of the decree after the word “defendants”, “No. 1 as representative of the estate of Mrs. Fischer.” In sub-clause 1(b) of clause 1, the words from “and do personally render accounts” to “in favour of defendants 3 to 6 as aforesaid” shall be deleted, because the effect of this direction is contained in the clause left after deleting these words. We dismissed Appeal No. 546 of 1945 with the costs of the seventh defendant. The seventh defendant is interested only in one item of property covered by the sale in its favour which was for a sum of Rs. 25,000. It would be entitled to Advocate’s fee calculated on this amount only. The decree will be drafted in accordance with these directions. K.S. ----- Appeals dismissed.