Calcutta High Court
Sudhir Asher & Anr. vs Vijay Shroff & Ors. on 11 October, 1999
Equivalent citations: (2000)1CALLT548(HC)
Author: R. Pal
Bench: Ruma Pal
JUDGMENT R. Pal, J.
1. This appeal arises out of questions answered on an originating summons filed by the respondents Nos.1 and 2 as executors of the will of Dharam Singh Suralya (referred to as the deceased). The testator was the owner of several immoveable properties and moveable properties including shares in Food Specialities Private Limited and Suraiya Brothers Private Limited. Prior to his death the testator executed a will on 13th September, 1971 at Bangalore appointing the respondents Nos.l and 2 as well as one Vijay Merchant as executors of his will. Alter the testators death on 4th July, 1972, the respondent Nos.l and 2 applied and obtained probate from this court in respect of the Will. The testator bequeathed several Immoveable properties to named legatees. One of the properties was the house and grounds at No.40, East End Road, Bangalore known as Rita Bhavan. Thfs property was bequeathed to Sm. Grace Shanthappa, the respondent No.3 herein. The testator also bequeathed the shares to named legatees in this language "1 have benequath the following specific legacies to the under mentioned for their sole use and benefits". In making these bequests the testator named the quality of the shares, the company and the legatees in respect of Suraiya Brothers Private Limited as well as Food Specialities Limited. There were 38 recipients of the shares of which 250 shares in Food Specialities Private Limited were given to Sudhlr Asher (the appellant No. 1 herein), 250 shares in Food Specialities Private Limited were given to Usha Asher (now Usha Sampat, the appellant No.2), and 1500 shares of Food Specialities Private Limited were given to Grace Shanthappa.
2. The will went on to state that "after payment of the aforesaid legacies, testamentary dues and debts whatsoever I give bequeath the rest and residue of my estate unto Miss Anita Suraiya (Minor)". Direction was also given to the executor in connection with the legacies of Anita Suraiya until the minor attained the age of 18 years.
3. The originating summons which was taken out by two of the three executors before this court on 20th July, 1983 was for determination of the following questions :
"(a) Whether bequest of the shares in Food Specialities (P) Ltd., made under the will of Dharam Singh Surlaya deceased abovenamed in favour of the defendants, (except the defendant No. 16) is :
(I) a specific legacy, or (II) a general legacy, or (III) a demonstrative legacy in the facts and circumstances of the case.
(b) Whether the'executors abovenamed are justified in utilising the divided Income of the said shares of the Food Specialities (P) Ltd. for the management/administration of the estate of Dharam Slngh Suraiya, deceased abovenamed, in the facts and circumstances of the case as stated in paragraph 13 of the affidavit affirmed by the plaintiffs on 13th day of July. 1983.
(c) Whether the executors abovenamed are Justified in assigning/ transferring the option to purchase the said right shares against 6000 shares in the said Food Specialities (P) Ltd. to Messers. Stewart & Co. as stated in paragraph 9 of the said affidavit.
(d) (i) Where the executors can retain the equity shares and/or right shares and/or bonus shares in the said Food Specialities (P) Ltd. and any accretion thereto in due course of administration of the estate of the deceased until the same being complete in the facts and circumstances of the case as stated in paragraph 15 of the said affidavit.
(d) (II) if not, in what manner the said shares may be distributed by the executors.
(e) in the event, this Hon'ble Court holds that the bequests of the said shares in the Food Specialities Limited, made under the will of the said Dharam Slngh Suraiya deceased is a demonstrative legacy, whether such legacy and accretions thereto, if any, are liable to meet the general costs of administration by the executors at the first instance.
(f) if the Hon'ble Court holds that the said bequest is a specific legacy then in what event whether any subsequent Issue of right or bonus shares in respect of the shares holding in Food Specialities (P) Ltd., as stated above be treated as specific legacy."
4. The learned single Judge only answered question (a) on 7th August, 1984. The learned single Judge held that the bequest of shares in Food Specialities Private Limited was a demonstrative legacy. No other question was answered. This appeal was preferred on 30th August, 1984 and an interim order was passed by the Appeal Court directing the executors to maintain status quo in respect of the specific legacies in dispute till the disposal of the appeal.
5. Before us the appellants, who were supported by Grace Shanthappa, submitted that the learned Judge erred in answering the question raised by the respondent Nos.1 and 2 without determining the issue in a properly constituted trial. It is also submitted that the learned Judge Incorrectly interpreted the will as well as the law. It is further submitted that the executors had wrongfully sought to without the specific bequests of the shares in Food Specialities (P) Ltd. from the appellants and treated the legacy as having abated by reason of alleged dues of the testator's estate. According to the appellants no notice was given to them before the respondent Nos. 1 and 2 applied for probate of the will more than five years after the death of the testators. It is also their case that they were not informed of the bequests made by the testator in their favour at all. They came to know about the bequests only on January, 1980. According to the appellants the Executor refused to give them the shares bequeathed to them, or the dividends or the rights or bonus shares nor was any account whatsoever rendered despite demands.
6. Vijay Merchant has never appeared in the proceeding. The other two executors namely Shroff and Rajda submitted that there was no question of any trial as there was no dispute as to the facts involved. It is further submitted that the learned Judge has correctly construed the will in arriving at the conclusion that the bequests of shares were demonstrative legacies. It is also submitted that this conclusion has also been arrived at in a proceeding initiated by Grace Santappa before the City Civil Judge at Bangalore in Original Suit No. 8052 of 1980 as well as by the Bombay High Court while allowing the Criminal Revision petition and quashing the complaint filed by the appellant No.1 agatnst the executors under section 482 of the Criminal Procedure Code.
7. Before considering the respective submissions, it is necessary to clearly define and determine the scope and effect of the different kinds of : legacies. Broadly speaking legacies are classifiable under three heads 1 namely, (a) general;
" 142. Specific legacy defined.--Where a testator bequeaths to any person a specified part of his property, which is distinguished from all other parts of his property, the legacy is said to be specific."
8. It has been described in Black's Law Dictionary (5th Edition) as :
"One which operates on property particularly distinguished. A legacy or gift by will of a particular specified thing, as of a horse, a piece of furniture, a term of years, and the like. In a strict sense, a legacy of a particular chattel, which is specified and distinguished from all other chattels of the testator of the same kind; as of a horse of a certain colour. A legacy of a quantity of chattels described collectively; as a gift of all the testotor's pictures. A legacy is specific, when it is limited to a particular thing, subject, or chose in action, so Identified as to render the bequest inapplicable to any other; as the bequest of a horse, a picture, or Jewel, or a debt due from a person named, and, in special cases, even of a sum of money."
9. Jessel M.R. In Bothamley v. Sherson LR 20 Eq.308, 309 apply. Summed up the matter when he said that if a legacy satisfy both condltlons-that it is (1) part of the testator's property Itself, and (2) is a part as distinguished from the whole or from the whole of the residue-then it satisfies everything that is required to treat it as a specific legacy.
10. The "advantages" enjoyed by a specific legacy is that a specific legacy must be paid by the executor prior to general legacies. A specific legacy cannot also be sold to satisfy the testator's debt until all property undisposed of by the testator in his will or comprised in his residuary estate have been exhausted. It is only when the other assets are Insufficient to pay off the debts of the testator as well as the specific legacy, that there will be a pro-rata abatement of all specific legacies (See section 330 of the Indian Succession Act). The " disadvantage" of a specific legacy is that since it is Identified, it may a deemed in the sense that it may be extinguished or revoked by any act of the-testator. In fact, the Chapter on ademptlon of legacies in the Indian Succession Act, 1925 is Chapter XVI which pertains only to ademptlon of specific legacies. Thus under section 152 of the Indian Succession Act, 1925 if a thing has been specifically bequeathed which does not belong to the testator at the time of his death, or has been converted into property of different kind, the legacy does not take effect. The executors are under no obligation to make available or to procure other property to satisfy the specific legacy.
11. The respondents Nos.1 and 2 have relied on a passage in Paruck's The Indian Succession Act, 1925, 8th Edition, page 431 being a commentry on section 143 to contend that the legacy of shares to the Appellants was not a specific legacy. The passage reads :
"A money legacy is prima facie a general legacy and the mere description of the securities in which the money is Invested is Indicated Will not make it a specific legacy. In the Administration of Estates Act, 1925 a pecuniary legacy is defined as general legacy. A legacy of a certain number of shares of a particular description is not specific."
12. There can be no quarrel with the proposition in so far as it states that a money legacy is prima facie a general legacy but the decision Re : Grey : 36 Ch.D.205 noted in support of the comment that "a legacy of certain number of shares of a particular description is not specific" does not support the comment. In that case the testator had left 50 shares in the York Union Banking Company to the executors of the will on trust to receive the annual income of the shares during her life time and after her death to sell the shares and divide the money between the named heirs. After the date of the will and before the testator's death the company changed its Constitution and was registered as a limited company. The shares in the newly incorporated company were limited shares whereas in the old company there was no limit of liability. The value of the shares were also different. The testator was given the option of exchanging the shares held by him in the company for shares in the new corporation. He exercised this option and became possessed of a large number of shares in the new corporation. He, however, did not alter his will. Kay J. held that the testator did not have shares in the company at the time of his death and therefore it was not a specific legacy because the will could not read to mean that the testator Intended to pass shares in the Incorporated company formed after the date of the will. The case therefore is an authority for the principle that a legacy in order to be specific must exist at the time of the death of the testator.
13. It is true that the use of the word "my" before the thing bequeathed has always been considered to be a factor almost conclusive in determining that the legacy is specific. This was one of the reasons for the learned single Judge holding that the bequest of shares to the appellant was not specific. But the absence of the word "my" does not mean that the legacy is necessarily not specific. In re. Rose (deed) (supra) is an authority for this proposition. In that case the testator had given legatees specified quantities of shares in E.P. Rose and Sons. Jenklns-J found that despite the absence of the word "my" while describing the shares and:-
"Notwithstanding the leaning of the court against specific legacies, there are sufficient indications in this will, read as a whole in the light of the relevant surrounding circumstances, to constrain the court to hold that here the testator was intending to dispose specifically of the shares he actually owned at the date of his will in E.P. Rose & Sons Ltd., by dividing them in effect equally between his niece. Margaret, and his nephew, Michael."
14. Chapter V of the Indian Succession Act deals with demonstrative legacies. A demonstrative legacy has been defined in section 150 of the Act thus :
" 150. Demonstrative legacy defined.--Where testator bequeaths a certain sum of money, or a certain quantity of any other commodity, and refers to a particular fund or stock so as to constitute the same the primary fund or stock out of which payment is to be made, the legacy is said to be demonstrative.
Explanation. The distinction between specific legacy and a demonstrative legacy consists in this, that-
Where specified property in given to the legatee, the legacy is specific.
Where the legacy is directed to be paid out of specified property, it is demonstrative."
15. The characteristics of a demonstrative legacy therefore are bequests by description of a certain portion of either a specified sum of money or stock. The language of the section also seems to Indicate that the bequest is ultimately one of money. This appears to be clear from the use of the phrases "out of which payment is to be made" in the body of the section and "paid out of specified property" in the Explanation. That a demonstrative legacy is a pecuniary fund also appears from Blacks' Law Dictionary 5th End. Page 802. "A legacy of quantity is ordinarily a general legacy; but there are legacies of quantity in the nature of specific legacies, as of so much money, with reference to a particular fund for payment. This kind of legacy is called a 'demonstrative legacy', and it is so far general and differs so much in effect from one properly specific that if the fund be called in or fall, the legatee will not be deprived of his legacy, but be permitted to receive it out of the general assets; yet the legacy is so far specific that it will not be liable to abate with general legacies upon a deficiency of assets". Thus it was held in Pagetv. Hulsh (I) (1864)1 Hemlng & Miller's Reports (Chancery) 663 that legacies "In the shape of maintenance and annuities charged on a portion of the testator's estate fell within the category of demonstrative legacy and not of specific legacy, because the maintenance and annuities were not equivalent to the bequeathal of a specific part of the testator's property, but only a particular item of his property was made primarily liable for their payment". The "advantage" of a demonstrative legacy is that it partakes the character of a general legacy in that if the fund out of which the legacy is payable fails, nevertheless, it is to be paid to the legatee out of the general assets. So in Swarnalata Bose & Nirode Kanjan Ghosh v. Promode Chandra Roy Choudhury : it was held that "the maintenance and annuity moneys were realisable from other properties of the testator as well than the charged property". The additional "advantage" is that a demonstrative legacy does not abate with general legacies but like specific legacies abates only after the general legacies and residue are exhausted.
16. Whether a bequest is specific, demonstrative or general is ultimately the Intention of the testator. The rules of Interpretation of a will evolved by courts are not the only means of determining such intention. The surrounding facts and circumstances of will contribute to such determination.
17. The learned Single Judge in disposing of the originating summons found that the legacies in question were demonstrative. The learned Judge said :
"In view of the nature of the disposition and in view of the facts and circumstances of this case as indicated earlier the disposition made in favour of the respondents Nos. 1 and 2 appears to be demonstrative legacy and not specific legacies."
18. The primary question is whether such a conclusion could have been arrived at in a proceedings Initiated by way of originating summons?
19. Originating summons suits are proceedings which are provided for in Chapter XIII of the Original Side Rules of this Court. They are suits of a peculiar nature. The proceedings are initiated by summons in the form of questions for the determination by the court in respect of certain classes of cases. One of such classes is an application by executors for the determination without an administration of estate of inter alia of questions affecting the rights or interests of persons claiming to be legatees or heirs under a will. (Chapter XIII Rule 1).
20. In each case the court will consider whether, (a) the questions asked, or the relief sought, are such as the court, can under the Rules, deal with on the originating summons, and {b) they are such as the court can conveniently deal with on originating summons. If either of (a) or (b) are decided in the negative sense, the court will relegate the parties to an ordinary suit [(Ormond: The Rules of the Calcutta High Court, 1914 (1940 Edn.)].
21. Ordinarily, originating summons are determined on affidavits and determined in a summary manner and where the matters in respect of which relief is sought cannot be disposed of in a summary manner, the court may refuse to pass any order on the summons, may dismiss the same and refer the parties to a suit in the ordinary course (Rule 18). (See : J.C. Gaulstaun v. D. Sarktes (1927) ILR 54 Cal. 1057].
22. In the case before us the learned Judge found as a fact "The testator during his lifetime was the owner of 12000 equity shares in Food Specialities Pvt. Ltd. out of which 3000 equity shares were pledged with the United Commercial Bank, Bangalore. 3000 further shares were also pledged with the Syndicate Bank, Bangalore."
23. How did the learned Judge arrive at this conclusion? if this were true did the testator pledge the shares prior to his death? Except for the statement of Shroff there is no evidence in support of this. Yet proof of these facts would be material in determining whether the legacies were demonstrative or specific.
24. In fact on 10th December, 1980 the appellant No. I had written to the Food Specialities (P) Ltd. asking for particulars regarding the Issuance of right shares and Food Specialities (P) Ltd. (FSL) replied stating that the testator held only 6000 equity shares which were transferred to the Executor on 21st March, 1978 and not 12000 shares as claimed by the executors and found by the learned Judge.
25. It was also stated by FSL in its letter that rights shares had been offered to the executors but the executors had renounced the same in favour of M/s. Sevantllal Anupchand Shah and Manoj Kumar Dhupella. The learned Judge however found that :
"In July, 1978 the executors sold the option to purchase the 7200 right shares in the said company to one M/s. Stewart & Co. at a price of Rs, 8.25 per share."
26. The learned Judge also came to several other factual conclusions which have not at all been proved. It was said, for example, that the estate did not yield substantial income and therefore the executors had to rely upon the dividend collected in respect of the shares. It was also found that the executors did not have sufficient funds; that the dispositions made by the testator in respect of the shares in Suraiya Brothers Pvt. Ltd. had already been transferred in favour of the legacies named in the Will: but that the shares available in the hands of executors of Food Specialities Ltd. were not sufficient to meet the bequests in respect thereof. These matters should not have and indeed could not have been gone into by the learned Judge in originating summons proceedings.
27. Very different conclusions were arrived at in a suit tiled by Grace Shanthappa before the City Civil Judge at Bangalore (Original Suit No. 8052 of 1980). In her suit Grace Shanthappa prayed inter alia for a direction on the executors to transfer and deliver possession of premises No.40 East End Road, Bangalore as well as transfer and deliver possession of 1500 equity shares held by her in Food Specialities Ltd. (FCL) and for rendition of accounts.
28. In that suit it was in evidence that till 1986 the executors had 97,800 shares in FSL and in March 1989 about 99,500 shares. It was also found that the Estate Duly had been paid and that the executors were in possession of the shares. It was in evidence that the shares of FSL had already been distributed to the various beneficiaries under the will. By a judgment dated 29.2.92, the City Civil Court Judge at Bangalore accordingly held that Grace Shanthappa was entitled to delivery of the 1500 shares bequeathed by the testator to her. It was held that Grace Shanthappa was entitled to the 1500 shares as a demonstrative legacy under the Will and that she was entitled to the benefits arising out of the 1500 shares. We are told that this decree is pending in appeal. Nevertheless, the need to have the matter decided at a properly constituted trial is apparent.
29. Indeed further startling facts came to light from the Bangalore Judgment. It appears that by an order dated 5.8.1987 in the Bangalore suit, the trial Judge had directed the Executors to transfer 12000 shares of FSL to Grace Shanthappa being the accretions on the initial bequest of 1500 shares. The Executors filed a civil revision application from this order before the Karnataka High Court. The High Court did not interfere with the order. The Executors transferred 12000 shares of FSL in favour of Grace Shanthappa. Against the High Court's decision a SLP was moved by the Executors in the Supreme Court in SLP 11527/90 and the Supreme Court directed Grace Shanthappa to ensure that the shares remained available in case the suit failed and that it would be open to the Executor to move the High Court for modification of the Interim order in the suit by Imposing such conditions as it deemed fit to ensure availability of shares in the case if the suit failed. Subject to these observations the SLP was dismissed. Thereafter, it appears that a transfer petition No.67/91 was moved before the Supreme Court The Supreme Court directed the City Civil Court. Bangalore to finally dispose of Grace Shanthappa's suit as expeditlously as possible and not later than a period of 6 months from the date of receipt of the order and directed that the 12.000 shares in dispute should be handed over to the Registrar of the court who was to keep them in his custody until further orders. The Supreme Court also stayed further proceedings not only in this appeal but also tn another suit filed by one Anita Sukul (Suralya?) apparently pending in this High Court, until the suit at Bangalore was disposed of.
30. On 18th November. 1981 the appellant Initiated a criminal proceeding against the executors before the Metropolitan Magistrate at Bombay under section 409 read with section 34 of the Indian Penal Code. It was alleged that the executors had committed criminal breach of trust in respect of the appellants' share in Food Specialities (P) Ltd. The proceedings were challenged under section 482 of the Criminal Procedure Code before the High Court at Bombay which held that by pledging the shares as security with the Estate Duty Authorities there was no questions of any criminal breach of trust. It was also found that what was left to the appellant under the Will was not a specific legacy. It was held that at the best the complaint disclosed certain amount of casualness or at the most negligence on the part of the executors but the facts as disclosed in the complaint did not disclose a criminal breach of trust within the meaning of Indian Penal Code. The proceedings against the executors were accordingly quashed by the High Court. The decision is certainly not binding on this court and the learned Judge correctly held, relying on Adl Pherozshah Gandhi v. H.M. Seerval ; :
"that in a civil proceeding the decision of the Criminal Court is not res judlcata. The decision of the Criminal Court would not preclude a party from raising the Issue before a Civil Court. Under the circumstances the decision of the Bombay High Court was no bar on the part of the respondents from contending that the Igacies given in favour of the respondents were specific legacies before this court" (See Central Bank of India v. Taitras Foundry Put. Ltd. : )
31. Given the nature of the disputes raised by the parties and the contentions as to the basic facts which would be necessary to be resolved before the questions raised in the Originating Summons could be decided, we are of the view that the learned Judge erred in deciding the matter summarily and by resting her decision on disputed and unproven facts.
We accordingly allow the appeal and set aside the Impugned decision and decree with costs.
S.N. Bhattacharjee J.
32. I agree.
33. Stay prayed for and the same is refused.
34. Let a xerox copy of this Judgment duly signed by the Assistant Registrar of this court be made available to the parties upon their undertaking to apply for and obtain certified copy thereof on payment of usual charges.
35. Appeal allowed