MUMBAI HIGH COURT

PRAVINA VIKRANT GHOTGE VS. VINAYAK RAMCHANDRA DINDORIKAR & ANOTHER 

DATED : 03.07.2014

Summarised Judgement :

Introduction :

The question that arises for consideration of the Court, in this petition is whether a third party who is not a beneficiary under a Will, can be impleaded as a party respondent to a probate petition.

Facts of the Case :

The set of facts within which the question arises is as follows :- 

Shri. Narayanrao Ramrao Bhave was the ruler of Ramdurg Sansthan. He died intestate on 10th April, 1996 leaving behind his daughter, the petitioner herein and his wife, Ushadevi (since deceased). Ushadevi expired on 10th April, 2000.

In view of death of her parents, the petitioner preferred two applications being Misc. Application No.507 of 2000 and Misc. Application No.508 of 2000 in the Court of Civil Judge Senior Division, Pune on 11th July, 2000 for issuance of succession certificate in respect of the properties left behind by them.

By the letter dated 18th October, 2000, one R.G. Joshi a resident of Kolhapur informed the petitioner about the Will dated 26th March, 2000 left by Ushadevi and forwarded true copy of the Will to her.

Respondent no.1 and original respondent no.2 filed Misc. Application No.707 of 2001 before the same Court for probate of the Will of Ushadevi as the executors and administrators appointed under the Will. The petitioner was made a party respondent to the application. Then, the petitioner filed Regular Civil Suit No.1505 of 2003 in the Court of Civil Judge Junior Division, Pune against the executors and Shri. R.G. Joshi to challenge the Will of Ushadevi contending that the same was a false and fabricated document. It was also her contention that, her father having died intestate, she was entitled to succeed to one-half of his properties and her rights could not have been bequested by her mother in the Will.

It would be convenient at this stage, to note the details of the Will so as to understand the terms of compromise between the parties.  As regards two of the immovable properties, the Will mentions that Ushadevi had formed a trust in respect of the temple at Nargund. She was the Chief Trustee of that trust.  She wished that a trust should be formed also of the temple at Wai, Satara, with the executors of the Will as it's trustees.  The sale proceeds of all other properties were to be utilized by the executors for putting up a memorial in the name of Shri. Narayanrao and also for social causes.

Original respondent no.2 who was the Diwanji of Ramdurg and respondent no.1 were appointed as executors-cum-administrators of the Will.

Under the compromise, the petitioner admitted the Will and agreed to fulfill the wishes of Ushadevi stated therein. The executors accepted and confirmed that the petitioner had at no point of time, released her share in the properties inherited by her on the death of Narayanrao, and that the Will was not binding upon the petitioner's one-half undivided share in the properties.

The executors, further admitted that on the death of Narayanrao, both, the petitioner and Ushadevi became equally entitled to all the estate and properties of Narayanrao and that the Will cannot be implemented in respect of all the properties of Narayanrao.

In view of the settlement and in view of the petitioner agreeing to fulfill the wishes of Ushadevi, the executors withdrew themselves as the administrators or executors of the Will and agreed for the petitioner to be appointed as the executor.

They undertook not to object or obstruct the petitioner for her lawful ownership and enjoyment of the suit properties.

It was further agreed that, the petitioner and the executors shall form a Charitable Trust in the name of Late Shrimant Narayanrao Bhave, within a period of 6 months from the date of the petitioner obtaining probate or letters of administration in respect of the Will.

The trustees of the trust were to be, the petitioner as the Chief Managing Trustee, Vikrant Ghotge-the husband of the petitioner, Vivek Ghotge- father-in-law of the petitioner and the two executors under the Will. For implementation of the Will, it was agreed that the petitioner shall be entitled to sell the properties except the flat and appropriate 50% of the sale proceeds for her own benefits. The balance 50% was to be deposited with the Trust, for the purpose of its utilization as per the wishes of Ushadevi.

The executors gave their "No Objection", for allowing the application in favour of the petitioner. She also filed her affidavit of examination-in-chief in the application. Thereafter, however, the application remained pending in the Court.

On 13th February, 2012 respondent no.3, a Charitable Trust filed application for impleading itself to the Miscellaneous application. It claimed to be a charitable trust established in pursuance of the Will vide trust deed dated 4th October, 2011 registered with Sub-Registrar, Ramdurg.

It further claimed that the properties of late Shrimant Narayanrao Bhave and his wife vest in it. As such, it claimed to be necessary party to the application. Respondent no.3 alleged in the application that the compromise arrived at between the petitioner and the executors travelled beyond "scope of law and jurisdiction of Hon'ble court" and that the petitioner has no legal right to seek probate of the Will or seek Letters of Administration.

The petitioner contested the application alleging that it was defective since it was neither verified nor was supported by an affidavit. Further respondent no.3 has no locus-standi to file the application. It is not entitled to challenge the compromise decree and that the Will nowhere provides for establishment of a trust. The petitioner denied that respondent no.3 is a necessary party to the application and that the properties of Narayanrao vest in it and that the petitioner has no legal right to seek probate of the Will. She also denied that she is not entitled to succeed to or inherit the estate of her father, who had died intestate.

Judgement :

In all the above circumstances, the trust can never be said to be a necessary party to the proceedings for probate/letters of administration with Will attached. Besides, as long as respondent no.1 is available for taking care of the Will and it's contents, in view of the provision of Section 312 of Indian Succession Act, no other party can be concerned with the Will.

For the above reasons, the petition is allowed in terms of prayer clause (a). The application at Exhibit-77 filed by respondent no.3 in Misc. Application No.486 of 2004 is dismissed. Respondent no.3 shall pay costs of the petition quantified at Rs.25,000/- (Rs. Twenty Five Thousand only) to the petitioner within a period of 4 weeks from today. At the request of Mr. Kanetkar, the operation of this order is stayed for a period of 4 weeks from today. The interim order in the petition shall continue during the period of stay.

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MUMBAI HIGH COURT

THRITY SAM SHROFF VS. SHIRAZ BYRAMJI ANKLESARIA

DATED : 07.03.2007

Summarised Judgement :

Introduction :

The appeal arises from impugned order, the Learned Single Judge has discharged the notice of motion while imposing costs of Rs. 10,000/-on the appellant. By the impugned order, the Learned Single Judge has held that in the civil suit the plaintiffs have died and it is not in dispute that the original petition was filed by them for probate of the Will of the deceased in their capacity as the executors as named in the Will, the suit abates and therefore, obviously the notice of motion in the suit, which does not remain pending for interim orders, cannot be entertained.

Facts of the Case :

The appellant herein had taken out the said notice of motion seeking various reliefs including the relief for appointment of an Official Administrator for administration and governance of the estate of Late B.R.B.Vakil. The said notice of motion was opposed on behalf of the respondents contending the same to be not maintainable on account of abatement of the suit while contending that the right to sue does not survive on account of death of all the executors of the Will.

On 23rd February, 1988, a Will came to be executed by B.R.B.Vakil and he expired on 9th October, 1989. Probate Petition No. 84 of 1993 came to be filed by the Executors of the Will on 2nd March, 1993. During the pendency of the probate proceedings and by 17th October, 2005, all the five executors to the Will had expired.

The appellant herein is one of the legal heirs of B.R.V.Vakil. It is her contention that the property was mismanaged and being wasted and therefore, it is necessary to appoint an Administrator consequent to the death of all the five Executors of the Will.

On the other hand, it is the case of the respondents that the suit wherein the notice of motion was sought to be taken out itself had abated and therefore, the notice of motion in such a suit was not maintainable and therefore, no interference is called for in the impugned order.

Judgement :

As regards Rule 4A of Order XXII of the Code of Civil Procedure is concerned, it would have no application to such proceedings. Firstly that the right to sue does not survive in such proceeding. Secondly the said rule applies to 'suits' within the meaning of the said expression under the Code of Civil Procedure and not to proceedings like those for grant of probate. Thirdly, Section 226 read with Section 222 of the said Act clearly indicates that the proceeding would abate on the death of all the executors. Being so, in probate proceedings, the provisions of Order XXII Rule 4A of the Code of Civil Procedure are not attracted.

For the reasons stated above, therefore, no fault can be found with the impugned order dismissing the notice of motion taken out by the appellant in a proceeding which has already abated consequent to the death of all the executors. However, the appellant is justified in contending that the imposition of costs of Rs. 10,000/- while dismissing the notice of motion cannot be justified and needs to be set aside.

The appeal, therefore, partly succeeds. While the challenge to the dismissal of the notice of motion is rejected, the impugned order to the extent it imposes the costs of Rs. 10,000/- is set aside. The impugned order, therefore, stands modified to that extent and the appeal stands disposed of accordingly, with no order as to costs.

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MUMBAI HIGH COURT

RUSTAM ARDESHIR GAGRAT VS. UNKNOWN  

DATED : 21.09.1989 

Summarised Judgement :

Introduction :

This Petition by the sole surviving executor raises a question which is as interesting as it is difficult. The sole surviving executor appointed under the Will and the grantee of the Probate seeks from this Court in its testamentary jurisdiction, an order, appointing another person, not being an executor, to administer the estate jointly with him. Can such an order be made?

Framroze Dinshaw Bilimoria, the Petitioner herein, and Chinubhai Nagindas Mehta were the executors and trustees appointed under the Will and Codicil respectively, dt. 13/2/1957 and 25/11/1965, executed by Hirjeebhoy Dinashaw Bilimoria. In testamentary Petition No. 265 of 1968, the probate of the Will was granted to the Petitioner and Chinubhai Mehta --- Framroze Bilimoria, the third executor, having died during the pendency of the petition. The probate is dt. 10th March, 1989. After the death of Chinubhai Mehta on 10th May, 1989, the Petitioner is the sole surviving executor of the estate of the deceased, Hirjeebhoy Bilimoria.

The Petitioner, 89 years of age, seeks a direction under S. 302 of the Succession Act that in the interest of the estate and the beneficiaries, some fit and proper person be 'appointed to act along with the Petitioner'.

The Petitioner seeks the appointment of a person not being an executor to 'act' jointly with him. Whether such an appointment could be made by the Court exercising testimentary jurisdiction may be considered in the light of the provisions of the Succession Act.

Observation of Court :

It is clear from the scheme of the relevant provisions of law that the acts of representation of the estate of the deceased can be done only by the executor. That is why the probate shall be granted only to an executor; the grantee of the probate alonecan sue or prosecute am suit or otherwise act as representative of the deceased', and upon the death of one of several executors', the obligation to administer accrues to the surviving executors. The sanctity of the Will and therefore, of the appointment of executor is highlighted by the law which declares that the probate shall be granted 'only to an executor appointed by the Will'.

In the circumstances of this case, permitting anyone except the Petitioner to act even jointly with him to do the acts set out in the petition and summarised in paragraph 4 of this judgment is to permit such appointee to represent the estate. I am afraid, the petition cannot be allowed without deviating from the law laid down in the Succession Act. Therefore, as long as one of the joint grantees of the probate is alive, no one can be appointed to 'act' with him for doing acts of administration of the estate.

Judgement :

This petition is for direction under S. 302 of the Succession Act. Such directions must necessarily be 'in regard to the estate or in regard to the administration thereof' These words limit the authority of the Court to question arising between executors or between executors and legatees, and which relate, to the administration of the estate. What the Petitioner seeks is beyond the scope of the administration of the estate. He seeks a direction that a person who is not appointed executor by the Will be permitted to do acts which are in the exclusive authority of the executor. Such a direction is clearly beyond the advisory scope of S. 302 of the Succession Act - for, it seeks to entrust the administration of the estate to a person not named by the testator and who is not in law entitled to administer the estate of the deceased. - Petition is dismissed.

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KARNATAKA HIGH COURT

MRS. JUNE PERRETT DAUGHTER OF LATE…. VS. THE INCOME TAX OFFICER

DATED : 15.11.2007

Summarised Judgement :

Introduction :

The assessee is one of the daughters of one A.W.S. Barnard. A.W.S. Barnard died leaving behind a Will appointing one Mrs. Elsie F. Barnard, Mr. Robin Alexander Barnard and Mr. David Barnard, as executors, who were all residents of United Kingdom. A.W.S. Barnard owned a residential house situated in Bangalore.

As per the Will, the executors were required to obtain probate of the Will and thereafter sell the residential property and divide the sale proceeds and distribute the same to the three sons and a daughter of A.W.S. Barnard. After the death of A.W.S. Barnard, the executors filed probate proceedings and obtained the probate by paying a court fee of Rs. 1,23,000 towards letter of administration.

Since the executors were residing in England, they were forced to come to India in order to settle the matter. The probate proceedings were opposed by one of the sons of A.W.S. Barnard. Therefore, there was a long-drawn litigation. Further, the house was illegally occupied by a maid-servant.

In order to secure the vacant possession of the property, the executors were forced to file an Eviction Petition in Bangalore and ultimately they succeeded in Court. Accordingly, the possession was obtained. After obtaining the possession and after clearing all the litigation pending over the house property, it was sold on 23.11.1995 for a total consideration of Rs. 1,18,46,850/-.

The assessee being a daughter of A.W.S. Barnard, received 1/4th of the sale proceeds of the house, filed return of income for the assessment year 1996-97 showing 1/4th of the capital gains. While computing capital gains, she claimed certain expenditures incurred by the executors towards litigation expenses, travelling expenses incurred by them to travel from England to India and their stay at Bangalore and the fee paid to the Lawyers towards litigation expenses.

The expenses claimed by the assessee while computing the capital gains, was rejected by me Assessing Officer. Against the said order, she filed an appeal before the Commissioner of Income Tax (Appeals), which appeal was also allowed in part denying the expenses incurred towards legal and professional taxes, executors expenses in India, executors expenses in England and the Court fee paid to obtain letter of administration. Against the order of the Commissioner of Income Tax (Appeals), an appeal was filed before the Tribunal and the same has also been rejected.

Against the concurrent findings of the authorities below, the present appeal is filed, raising the following substantial question of law:

Whether the assessee can claim deduction incurred by her while computing capital gains under Section 48(1) of the Income Tax Act towards the expenses incurred by the executors for legal and professional charges and court fee expenses?

Observation of Court :  

After hearing the parties, we have noticed that the real owner of the property in question late A.W.S. Barnard had executed a Will. The executors who were residing in London were required to obtain the probate and the letter of administration and any expenditure incurred by the executors in order to obtain the probate and the letter of administration are to be treated as expenses incurred by them in connection with the transfer of property in question, since the executors could not sell the property to any party without a letter of administration. Admittedly, the person executed the Will was a Christian. When a Christian has executed a Will, without there being a probate, the letter of administration will not be granted to the executors. 

Therefore, the department cannot expect the executors to spend the money from their pocket in order to obtain the letter of administration. Therefore, the amount spent by the executors to obtain probate and letter of administration has to be treated as expenditure incurred to transfer the property. Similarly, without paying the court fee, no letter of administration would be issued by the court. Therefore, Rs. 1,23,000/- paid by the executors as court fee at the time of obtaining the letter of administration has to be treated as expenditure incurred in connection with the transfer of property.

Then the last question to be considered by us is, whether the amount spent by the executors to secure an order of eviction to evict unauthorised occupant has to be treated as expenditure in connection with the transfer of property?

The executors could have sold the property even without evicting the unauthorised occupant. If such an attempt were to be made by the executors, no man of prudence would have come to buy the property, since the unauthorised occupant were claiming adverse possession of the property. In order to clear the cloud cast on the property, me executors were required to file a civil suit. Any expenses incurred in connection with such suit has to be treated as expenditure in order to transfer the property. Our view is supported by the judgment of the Bombay High court in the case of Commissioner of Income Tax (Appeals) v. Miss. Piroja C Patil reported in : [2000]242ITR582(Bom) . In the aforesaid case, certain eviction proceedings were initiated to evict the unauthorised occupant from the land. 

Due to eviction of the unauthorised occupant from the house, the value of the property was increased and the expenditure incurred for vacating the land has been treated as cost of improvement. Similarly, in this case also, if the unauthorised occupant had not been evicted, the value of the property would have been decreased instead of increasing. Therefore, we have to treat the expenditure incurred by the executors to evict the unauthorised occupant as an amount spent towards cost of improvement of the property. In the circumstances, we have to answer the question of law framed in favour of the assesse.

In so far as the judgment relied upon by the revenue is concerned, in the aforesaid case a sum of Rs. 41,507/- was claimed by the assessee towards lawyer fee travelling expenses and damages for wrongful detention of the property. The Court, while doubting the genuineness of the claim of the assessee therein has rejected the contention of the assessee.

Here the Assessing Officer or the Commissioner of Income Tax (Appeals) are not doubting the claim made by the assessee. But the contention of the Assessing Officer in the instant case is that the amount claimed by the assessee are not in connection with the transfer of the property. Therefore, the judgment relied upon by the revenue has no application to the facts and circumstances of this case. In the result, the questions of law raised in this appeal are answered in favour of the appellant.

Judgement :

Accordingly, this appeal is allowed by holding that the assessee is entitled to claim deduction of the amount incurred towards legal and professional tax, executors expenses in England and India and the court fee expenses.

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ALLAHABAD HIGH COURT-

CIT VS. A.M.L. PRICE  

DATED : 23.04.2007

Summarised Judgement :

Introduction :

The assessee along with his two brothers, namely Sarvasri P.A.G. Price and J.A.W. Price, was the owner of the building 'Royal Hotel', 56-58, The Mall, Meerut Cantt., each having 1/3rd share in it. Sri A.M.L. Price was a resident of UK and the remaining two brothers were carrying on the hotel business, known as 'Royal Hotel', in partnership having equal shares therein. Sri A.M.L. Price was only realising the rent of Rs. 500 per year for use and occupation of the building by the remaining two brothers. Sri P.A.G. Price died intestate in the year 1977 and his share was inherited by his surviving brothers. Thus, they became the owners to the extent of half share each in the building.

Facts of the Case :

The business of Royal Hotel, after the death of Sri P.A.G. Price, had been taken over and continued by the remaining partner. Sri J.A.W. Price, became the sole proprietor of the Royal Hotel. Sri J.A.W. Price died on 25th July, 1979. He executed a will in favour of one Mrs. Essma Jones, resident of UK, and also appointed executors, namely, Sri H.A. Sarkies and Shri A.M.L. Price (assessee). It is a matter of record that the probate could not be obtained from the Court of competent jurisdiction as necessary steps were not taken. The application for probate was rejected on technical grounds and not on merits.

Before the tax authorities, the assessee's case was that since probate was not granted for technical reasons, the will continued to hold the field and, therefore, in terms of the said will, it was the executor or administrator, as the case may be, of the deceased, who would be the legal representative for all purposes and further the property of the deceased person vested in him in view of Section 211 of the Indian Succession Act. It was accordingly claimed that the half share in the property of the hotel and income thereof was assessable in the hands of the executors since there was no administrator appointed by the Court.

The AO rejected the plea and treated the will as invalid on the ground that the application for probate had been rejected by the Court. According to the-AO, the assessee who was the sole surviving brother of Sri J.A.W. Price, was the legal heir and the entire income from the property in question was assessable in his hands. The Dy. CIT(A) upheld the orders of the AO.

In appeal, the Tribunal opined that since the probate application had been rejected on technical ground, the will still held the field. The Tribunal further held that the order of the II Addl. District Judge rejecting the application for probate did not operate as res judicata in view of the decision of the apex Court in the case of Sheodan Singh v. Daymo Kunwai : [1966]3SCR300.

Referring to Sections 211 and 213 of the Indian Succession Act, the Tribunal opined that Section 213 was not applicable whereas Section 211 referred to the executor or administrator, as the case may be, as his legal representative for all purposes and vested in him all the property of the deceased as such.

The Tribunal also referred to Section 168 of the Act, which provided that subject to the provisions contained in that section, the income of the estate of a deceased person shall be chargeable to tax in the hands of the executor or executors and this being a case where the executor had been named in the will left by the deceased and which had not been declared as non-genuine by a Court of competent jurisdiction under the Indian Succession Act.

The Tribunal, therefore, held that the half share of the income from the estate of the deceased could not be clubbed with the income of the assessee. The additions made by the ITO and confirmed by the Dy. CIT(A) were accordingly deleted.

Following questions of law :

1. Whether on the facts and in the circumstances of the case, the Tribunal was legally correct to hold that the share of income from the estate of the deceased was not includible in the hands of the assessee especially when the Will has not been administered and probate application stands rejected by the competent Court?

2. Whether the Tribunal was legally correct to hold that the will still holds the field even when the probate was not granted?

3. Whether the Tribunal was legally correct to hold that provisions of Section 213 of the Indian Succession Act were not applicable in proceedings before the IT authorities?

Observation of Court :

We find that the income of an estate of a deceased person is to be charged to tax in the hands of the executor by treating it to be an individual, if there is only one executor and if there are more than one executor, then as an AOP. It further provides that the assessment of an executor has to be made separately from any assessment that may be made on him in respect of his own income. Thus, for the purposes of the Act, the executor is treated to be a separate assessee other than his individual assessment.

In the present case, we find that the assessing authority has not followed the provisions of Section 168 of the Act and instead has assessed the income of the deceased in the individual hands of the respondent assessee by clubbing the same, which was not permissible under the law. As there were two executors mentioned in the will by the deceased, the assessment, if any, could have been made on the two executors' treating them to be an AOP and not on the individual.

Judgement :

Further, we are of the considered opinion that where the application for grant of probate is rejected by a competent Court on some technical grounds, such as, for want of steps, the will executed by the deceased does not cease. It is still in existence and, therefore, the respondent assessee will not inherit the property in his individual capacity as a natural heir, but shall be governed by the provisions of Section 211 of the Indian Succession Act and the assessment of income derived from the estate of the deceased is to be made under Section 168 of the Act.

The questions referred to us are, therefore, answered in favour of the assessee and against the Revenue.

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