THANGATHAMMAL Vs. VEERAMA REDDIAR

JUDGEMENT

(1.) This appeal raises a question of some difficulty. The question is whether the appellant is entitled to a rateable distribution by virtue of her being the holder of a decree in O.S. No. 334 of 1934 on the file of the District Munsif of Thuraiyur against one Ramaswami Pillai from and out of the sale proceeds of property realised in execution of a decree in S.C.S. No. 340 of 1936 on the file of the said Court. The said Ramaswami Pillai was the brother of the appellant. The decree in O.S. No. 334 of 1934 was obtained by the appellant against the said Ramaswami Pillai who died subsequent to the decree, and the appellant became his heir and representative. The decree in S.C.S. No. 340 of 1936 was obtained by the respondent against the appellant as the heir and representative of the said Ramaswami Pillai in respect of a debt due by him. The respondent in execution of his decree attached the immovable property belonging to Ramaswami Pillai. The property was sold and the sale proceeds were deposited into Court. The appellant as the decree-holder in O.S. No. 334 of 1934 applied for rateable distribution. From the affidavit filed by her, it appears that she obtained an attachment before judgment of the said property in her suit and the said attachment was subsisting on the date of sale. The attachment must therefore have been obtained during the lifetime of Ramaswami and after the decree it would enure to her benefit under Order 38, Rule 11, Civil Procedure Code. She has stated in her affidavit that she filed an execution petition and the same was pending on the date of her application for rateable distribution. The learned District Munsif allowed rateable distribution to her; but his order was reversed by the learned Subordinate Judge of Trichinopoly. In the course of the order the learned Subordinate Judge observes thus: As soon as Ramaswami Pillai died, the petitioner respondent (the appellant) became his heir and legal representative. In other words, in the decree which the petitioner respondent obtained against Ramaswami Pillai she became both the judgment-creditor and the judgment-debtor. The result is, I think, a total merger....That merger, I think, has taken place as soon as Ramaswami Pillai died and he died long before the petitioner respondent filed the petition E.A. No. 404 of 1937 from which this appeal arose. So on the date that petition was filed petitioner's decree was not in existence as it had become merged long before that date and thereby ceased to exist ....So it follows that she was not entitled to apply for rateable share.

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

(3.) Therefore the debt due to an heir is also one of the debts which will have to be deducted in finding out the net residue taken by an heir. Can it therefore be said that when a Hindu heir to whom the deceased was indebted succeeds to his property only the net balance after deduction of such a debt is taken by the heir? Spencer, J., seems to think that only the net balance would vest in him (vide the observations in Sami Iyer V/s. Ramaswami Chetti (1922) 44 M.L.J. 171 at p. 174.) In English law where the creditor of the deceased happens to be his executor, what is known as the principle of retainer is applied. What is retainer is thus explained by Cotton, L.J., in In re Compton., Norton V/s. Compton (1885) 30 Ch.D. 15 at 19: What is retainer? It is this, that an executor having a claim against the testator's estate is not to be put in a worse position than any other creditor, who by suing and obtaining a judgment against the executor could obtain priority, while the executor not being able to sue himself could not obtain priority. The right of retainer applies to that which the executor has in his hands, or which has been paid into Court while he was executor, and which but for that payment would have come into his hands. The word retainer speaks for itself. When the personal representative is also a creditor of the estate he may retain out of the assets which he has got in his possession, the amount of the claim for which he cannot sue, and when money has been paid into Court during the life of the executor, the Court does not withdraw from the executor his right in respect of that money. The Court treats that payment into Court as in effect a payment into the executor's own hands. In In re Baker., Nichols V/s. Baker (1890) 44 Ch.D. 262 at 272, Lindley, L.J., stated the origin of the principle thus: A man cannot sue himself, and out of that the law developed the right of an executor to retain a debt due to him from the testator. He further explained it in In re Rhoades., Rhoades Ex parte (1890) 2 Q.B. 347 at 352 thus: The older common law authorities go far to shew that if an executor was a creditor of his deceased testator and had assets in his hands sufficient to pay his debt...such debt was treated as extinguished. Sufficient assets to pay his own debt and properly applicable thereto being in the executor's hands, such assets were treated without more as applied by him to such payment. Blackstone says so distinctly. His words are so much as is sufficient to answer his own demand is, by operation of law, applied to that particular purpose. Plowden goes further, and says that the property in the assets is changed. On this principle it has been held that if the assets in his hands were insufficient to pay his debt he is entitled to retain the whole of it in satisfaction of his debt. In English law it is also well settled that an executor can assert the right of retainer until distribution of the estate; it is not lost even by a decree for the administration of assets (1 Sm. and Giff. 415) and Lindley, L.J., in In re Rhoades., Rhoades Ex parte (1890) 2 Q.B. 347 at 353, points out when a right can be asserted by the executor and when it is lost: It is quite plain from these authorities that the executor's right to retain assets in his hands was, as against him, treated as enforced as soon as he could properly enforce it. It would be very strange if it were held that he had lost his right because he had done nothing to assert it before there was any occasion to do so. It is only when some one seeks to take assets out of the executor's possession that it becomes necessary for him to assert his right of retainer ; and, if he asserts it then, his right must be protected, unless, of course, he has released it or done something to deprive himself of it.