STATE OF GUJARAT v. KEKHUSHRU ARDESHAR BHUJWALA — 1975 DIGILAW 150 (GUJ)

D. P. DESAI, J. B. MEHTA, J. ( 1 ) THIS matter arises in respect of the administration of the estate of one Ardeshar Faramji Bhujwala (hereafter referred to as the deceased) by the Court under a preliminary decree passed on April 28 1956 in Regular Civil Suit No. 267 of 1955 filed by present respondent No. 1 for administration of the estate of the deceased. Original defendant Nos. 1 to 6 were heirs of the deceased and were joined as such. Original defendant No. 7 was the State of Saurashtra which was the mortgagee of some property of the deceased; and original defendant Nos. 8 and 9 were the creditors of the deceased. A plea was taken during the pendency of the suit that the State of Saurashtra was not a necessary party to this suit for administration. This plea was taken by defendant No. 7 State of Saurashtra. The trial Court accepting this plea deleted the State of Saurashtra as defendant No. 7. Thereafter the preliminary decree came to be passed on April 28 1956 as stated above. ( 2 ) THE aforesaid preliminary decree gave a direction inter alia to take accounts from the State of Saurashtra for the mortgage debt on the property known as Lathi State Utara. Pursuant to this direction a notice was issued to the State of Bombay (on account of reorganization of States) to file accounts; and in compliance with this notice accounts were filed by the said State showing that Rs. 96 655 were due under the mortgage to that State. The Administrators submitted their report to the Court on August 6 1958 holding that Rs. 41 965 were due to the State of Saurashtra under the mortgage including interest upto 6-8-1958. Against this report of the Administrators the State filed objections. The Court held that Rs. 37 760 with interest were due to the said State till December 31 1951 The Court directed the heirs of the deceased to deposit this amount with future interest in Court within six months and provided in the final decree that if the heirs do not deposit this amount the administrators may sell away the property and after deducting the expenses of sale pay the mortgage dues to the State and deposit the surplus if any in the Court for the purpose of its distribution amongst the heirs of the deceased. The State of Gujarat filed an appeal against this final decree in the District Court of Rajkot at Gondal being Civil Appeal No. 42 of 1964 contending that the State of Saurashtra was not a necessary party to the suit; and having been deleted no decree could have been passed against it by the trial Court. This contention was not accepted by the Appellate Court. As regards the correctness of the amount adjudicated by the trial Court the objections urged by the State also were not accepted by the District Court. The result was that the States appeal to the District Court failed and that led to Second Appeal to this High Court being Second Appeal No. 503 of 1966 by the State of Gujarat. ( 3 ) OUT of the contentions raised before the learned Single Judge on behalf of the State of Gujarat only three which have been repeated here at the time of hearing of this Letters Patent Appeal survive and they are: (1) Original defendant No. 7 State of Saurashtra having been deleted by an order of the trial Court it was not open to the same Court to adjudicate upon the mortgage dues of the State because the State was not a party to the proceedings; (2) In any case if the State was made a party it would have been able to show that it had acquired the equity of redemption by means of a document; and the property therefore ceased to belong to the deceased and no administration of the said property could be made: and (3) In the absence of a notice under sec. 80 of the Code of Civil Procedure adjudication as to the claim as to the mortgage dues of the State could not have been made by the trial Court. ( 4 ) SO far as the first two contentions are concerned they bring into focus the scope of the administration of the estate of the deceased by a Court under a decree passed in an administration suit. ( 4 ) SO far as the first two contentions are concerned they bring into focus the scope of the administration of the estate of the deceased by a Court under a decree passed in an administration suit. Sub-rule (2) of Rule 13 of Order 20 of the Civil Procedure Code which has some bearing upon this question may be reproduced: (2) In the administration by the Court 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 shall be observed as to the respective rights of secured and unsecured creditors and as to debts and liabilities provable and as to the valuation of annuities and future and contingent liabilities respectively as may be in force for the time being within the local limits of the Court in which the administration suit is pending with respect to the estates of persons adjudged or declared insolvent; and all persons who in any such case would be entitled to be paid out of such property may come in under the preliminary decree and make such claims against the same as they may respectively be entitled to by virtue of this Code the aforesaid Rule would allow that in the contingency mentioned in the said sub-rule the Court administering the estate of the deceased would be called upon to exercise the powers akin to the powers exercised by an Insolvency Court with regard to the respective rights of secured and unsecured creditors and as to the debts and liabilities provable etc. This subrule would therefore allow that the decree in an administration suit is not merely concerned with the determination of claims of the parties on record in the suit. In fact in administering the estate of a deceased under a decree passed in a suit the Court is administering the estate for the benefit of all the creditors of the deceased. The following observations in N. ABDUL RAHIM V. LINGAPPA VAIJAPPA ANGOL 45 BOMBAY LAW REPORTER PAGE 534 at pages 540-541 clearly bring out the wider scope and powers of the Court with regard to the administration of the estate of a deceased under a decree passed by the Court. The following observations in N. ABDUL RAHIM V. LINGAPPA VAIJAPPA ANGOL 45 BOMBAY LAW REPORTER PAGE 534 at pages 540-541 clearly bring out the wider scope and powers of the Court with regard to the administration of the estate of a deceased under a decree passed by the Court. The learned Single Judge in that case after referring to the provisions of Rule 13 of Order 20 of the Code of Civil Procedure stated as under: the entire administration and settlement of the estate are assumed by the Court. The assets are marshalled and a decree is made for the benefit of all the creditors. . . . . In an administration suit the receivers possession is the possession of the Court which takes upon itself the management during the continuation of the litigation. The interest in the property is not thereby transferred either to the Court or to the receiver. It is however the duty of the Court to see that all the assets are realised and equitably distributed among all the creditors. Hence even though the suit be filed by a single creditor as in the present case the decree passed would be in favour of all the creditors and even after the preliminary decree is passed every creditor has a right to be joined as a party and to prove his claim. But no creditor will be allowed to steal a march over others by obtaining a separate decree and recovering his dues by executing it. He cannot gain a priority even though he may have got the property attached before the appointment of the receiver in the administration suit (GOURGOPAL DE SARKAR V. KAMALKALIKA DATTA I. L. R 61 CALCUTTA 240 If such a creditor proceeds with the execution of his decree four courses are open to the Court which has passed a preliminary decree in an administration suit; (1) it may stop the execution proceedings either by a stay order or an injunction served on the decree-holder or (2) if the sale of the property has taken place it may call for the sale proceeds for being included in the assets for distribution or (3) it may take proper steps to have the sale set aside or (4) it may call for the proceedings from the executing Court and include them in the administration proceedings. This last course was recognised in BENARASIDAS V. ANRIGA DEBI A. I. R. 1934 CALCUTTA 33. The question as to the competency of the Court to determine the question of title in an administration suit in respect of alienation which was said to have been Made illegally arose before this Court in BAI JEBUNNISA V. GULAMNABI 13 G. L. R. 950 where my learned brother after considering various decisions held that where a suit was with the primary object of having administration of the estate of the deceased it was open to the plaintiff seeking administration to claim ancillary relief by way of an incident of administration that certain alienations were illegal and inoperative and did not affect the estate of the deceased. It was further pointed out that there could never be any administration unless the Court had determined the estate of the deceased and therefore as an incident of administration if such an ancillary question arose as between the parties themselves the nature of the primary relief of administration was not affected. My learn brother also referred to Order 2 Rule 5 of the Civil Procedure Code and stated that the claims by or against an administrator executor or heir which have reference to the estate in respect of which the plaintiff seeks administration can always be joined in that suit. It is only when the title question or the question about the validity about alienations arise against a stranger that Order 2 Rule 5 would not permit such a joinder of the claims. Therefore in the same administration suit all claims arising against such an executor administrator or heir which have reference to the same estate can always be joined. The decision of a Division Bench of Bombay High Court in MAHOMADALLI ADAMJI V. ABDUL HUSSAIN A. I. R. 1924 BOMBAY 313 was also referred to. Therefore in the same administration suit all claims arising against such an executor administrator or heir which have reference to the same estate can always be joined. The decision of a Division Bench of Bombay High Court in MAHOMADALLI ADAMJI V. ABDUL HUSSAIN A. I. R. 1924 BOMBAY 313 was also referred to. It was in terms pointed out from the observations of Crump J. at page 317 that it would follow almost of necessity that the question as to title of the property must be determined in an administration suit: and that it was impossible for the Court to administer the estate without deciding what the estate was and until the question of title had been settled the Court did not know as to what property its orders were to operate and if that question was decided it would be for the Court in what manner the administration should be effected. To hold otherwise would lead to absurdity for it would be a necessary conclusion that though the Court could entertain administration suit as regards property outside the territorial jurisdiction it could not in that suit decide whether that properly belonged to the estate or not. It is only when the title question or the question about the validity about alienations arise against a stranger that Order 2 Rule 5 would not permit such a joinder of the claims. But so far as the heirs executor or administrator are concerned the settled legal position was that in the same administration suit all claims arising against such an executor administrator or heir which have reference to same estate can always be joined. ( 5 ) IT is thus clear that the trial Court in administering the estate of the deceased under the preliminary decree passed by it could adjudicate upon the claim of defendant No. 7 State even though the said defendant was deleted prior to the passing of the preliminary decree provided notice was given and an enquiry into the claim was held. There is no dispute about the fact that a notice was given to the State. The State in compliance with the notice filed accounts was heard and then the determination was made. There is no dispute about the fact that a notice was given to the State. The State in compliance with the notice filed accounts was heard and then the determination was made. In these circumstances it cannot be said that the adjudication of the amount made by the trial Court in the present case was an adjudication without jurisdiction or was contrary to any provision of law. Even though the State has not been made a party in terms after passing of the preliminary decree which course was open to the trial Court administering the estate of the deceased as observed in N. Abdul Rahims case (supra) in substance the State was heard in respect of the amount due to it under the mortgage in question as a party. The first contention of Mr. Shelat must therefore fail. ( 6 ) SO far as the question of title which is the subject matter of the second contention is concerned the learned Single Judge has in details given reasons for negativing that contention. He has pointed out that the plea that the State had become full owner of the mortgaged property under any document was not taken when it filed its written statement in the suit as defendant No. 7; nor was this plea was taken in reply to the notice served upon the State to submit accounts under the mortgage; nor was the said plea taken in the objections raised before the trial Court to Administrators report and in the first appellate Court. That plea was sought to be taken up for the first time in the memorandum of appeal filed in the High Court. The learned Judge was in these circumstances quite justified in disallowing the plea which raised a pure question of fact at the stage of the second appeal. In fact as observed by the learned Single Judge even though the State claimed to have become owner of the equity of redemption under some document no such document was produced and no such document was found with the learned Assistant Government Pleader when the learned Single Judge enquired of him about the said document. In our opinion therefore the second contention of Mr. Shelat must also fail. In our opinion therefore the second contention of Mr. Shelat must also fail. ( 7 ) SO far as the third contention is concerned it is quite clear that in administering the estate of the deceased the Court is not in the position of a plaintiff intending to file a suit against the State as contemplated by sec. 80 of the Code of C P. C. Therefore no notice under sec. 80 was necessary in the present case. Therefore third contention also must fail. ( 8 ) NO other contention was raised. ( 9 ) IN the result the appeal fails and is dismissed with costs of respondent No. 1 There will be no order as to costs of other respondents. .