Calcutta High Court
For The vs The Administrator General Of Bengal & ... on 5 October, 2024
IN THE HIGH COURT AT CALCUTTA
TESTAMENTARY AND INTESTATE JURISDICTION
ORIGINAL SIDE
I.A. No. G.A. 1 of 2022
In
PLA No. 96 of 2020
IN THE GOODS OF:
Kamla Jindal, Wife of Late Murli Dhar Jindal,
lately residing at 8A, Alipore Road, Kolkata -
700027 a Hindu Inhabitant, deceased
Before: The Hon'ble Justice Apurba Sinha Ray
For the petitioner in : Mr. Soumabho Ghose, Adv.
GA/1/2022 being a Mr. Soumalya Ganguli, Adv.
beneficiary Rajib Jindal Ms. Sudarshana Dutta, Adv.
Ms. Tiana Bhattacharyya, Adv.
For the Executor : Mr. Jishnu Chowdhury, Adv.
Mr. Aritra Basu, Adv.
Ms. Shruti Swaika, Adv.
Ms. Tulika Agarwal, Adv.
Ms. Yukti Agarwal, Adv.
CAV On : 12.07.2024
Judgment On : 05.10.2024
2
Apurba Sinha Ray, J. :-
1.
The present application has been filed by one of the beneficiaries
of the Will of the testator Mrs. Kamla Jindal for removal of the
surviving executor Mr. Karan Paul for not taking effective steps for
administering the estate and also for siphoning off the money of the
relevant bank accounts without any justification.
2. According to the applicant, the application for probate was filed
on 20.03.2020 and on the basis of the consent of all the heirs and
beneficiaries probate was granted on 19.02.2021 and thereafter the
Letters of Administration was handed over on 05.04.2021 but since
then the executor took no effective steps until 24.11.2021. It is further
alleged that on 24.11.2021 the surviving executor had issued one
letter from his side for the first time. On 16.02.2022 executor applied
for death certificate before the Kolkata Municipal Corporation and as
there was refusal the matter became contentious as the executor filed
one writ petition.
3. It is also alleged that in an estate worth 1.40 crores the executor
has drawn out a sum of Rs. 23,00,000/- till January, 2024. In
January, 2024, the executor handed over a cheque for a sum of Rs.
30,00,000/- to the applicant whereas a sum of Rs. 60,00,000/-was to
come to the applicant. Moreover, the executor has further deducted a
sum of Rs. 7,00,000/- of contingency fund. From a breakup of costs
provided by the executor to the advocates of the applicant as on July
31, 2023 a sum of Rs. 18,00,000/- has almost less than doubled and
come to Rs. 30,00,000/- as of January, 2024 when the applicant was
handed over his share of Rs. 30,00,000/-.
4. The learned counsel for the applicant has also drawn attention
of this court to the fact that from the breakup of costs provided under
the cover of the email dated July 31, 2023 and it is evident that the
executor has charged Rs. 9,00,000/- for writing email to banks and
authorities. Moreover, such emails have been written by his staff and
not even himself. Expenses like executing a deed of assent has been
charged to the estate even without such steps having been taken
because the executor in his affidavit in opposition filed in November,
2022 (after lapse of one year) has stated that he is still taking steps for
executing the deed of assent. Whereas such sums were already
charged to the estate one year prior thereto.
5. Furthermore, a sum of Rs. 30,000/- has been charged for taking
adjournments from time to time.
6. Mr. Ghose, the learned counsel of the applicant, contends that
all expenses prior to grant of probate may be considered for charging
the estate. However, expenses charged for defending the executor's
own conduct cannot be charged to the estate. It is the executor who
owes a fiduciary and pious duty. If the executor fails to carry out such
duties ascribed to him, the applicant is empowered under Section 301
of the Indian Succession Act, 1925 to file for his removal due to his
conduct. In other words, the executor cannot charge the estate to
defend his own cause and term the same as administrative expenses.
In support of his contention the learned counsel has drawn attention
of this court to the judicial decision reported at (1894) ILR 21 Cal 683
(Narayani Dasi Vs. The Administrator General of Bengal & Ors.). In
support of his contention that as the instant probate is uncontested
and does not require the assistance of the court with regard to the
construction of the Will, the estate will not be charged as expenses to
defend the executor's own conduct. The learned counsel has also
referred to the decision reported at 1971 MhLJ 884 (The Union of
India Vs. the Official Assignee of Bombay) to fortify his view that
defending the own cause of the executor do not come under
administrative expenses within the meaning of Section 321 of the
Indian Succession Act, 1925. The solicitor can charge to the estate
only after taking leave of the court. Solicitors would only be entitled to
the cost of the administration of the estate and not profits. The costs
charged by the solicitor were considered to be excessive in that case
and, therefore, claims made on their behalf were rejected and
dismissed.
7. Denying the allegations leveled against the executor, the learned
advocate appearing for the executor has submitted that Mr. Karan
Paul has diligently undertaken various steps to administer the estate
of the deceased. The steps are as follows:-
a) After grant of probate on 19.02.2021 one bank account was
opened in the name of the executor for the purpose of administration
of the estate of the deceased with HDFC Bank, Park Street Branch,
Kolkata.
b) Letters, emails were issued to ICICI Bank, Syndicate Bank and
Yes Bank to transfer all amounts lying in the said three bank accounts
of the deceased to the executor's account. The bank demanded the
death certificate or duly certified copy. The executor held diverse
meetings and requested that a copy of the death certificate be
permitted to be used but to no avail.
c) The executor also made attempts in the WhatsApp portal of the
Kolkata Municipal Corporation to obtain a death certificate. Up to
February, 2022 a resilient attempt was made by the executor to obtain
a death certificate through the WhatsApp portal.
d) This was followed by a letter dated 20th April, 2022 demanding
original duplicate copies of the death certificate for the purpose
mentioned above.
e) The Kolkata Municipal Corporation did not issue the said death
certificate.
f) Accordingly, WPA No. 8907 of 2022 was prepared and filed by
the executor praying for duplicate copies of the death certificate in or
around 24th May, 2022. The effort was made to have the writ petition
listed. Upon the service of the writ petition, duplicate death certificate
were made over by KMC.
g) Thereafter, ICICI Bank and Syndicate Bank transferred the
funds lying in the deceased's bank account to the executor's bank
account.
h) Yes bank further delayed the matter and ultimately made over
the funds to the executor.
i) The executor wrote a letter to LIC to transfer all amounts
receivable under the mature policies.
j) The executor also wrote to National Highways Authority of India
to make over the proceeds of bonds which had matured to the
executor's account by the letter dated 13.07.2022. Executor was
informed by an email dated 13.07.2022 that the funds had already
been transferred to the petitioner. The applicant had incorrectly taken
the money directly.
k) By an email dated 26.07.2022 the petitioner requested Rajiv
Jindal to transfer the funds who agreed to do so by sending an email
dated 05.08.2022.
l) Further information was given to the petitioner by email dated
15.08.2022.
m) The petitioner transferred Rs. 10,00,000/- out of the sum of Rs.
32,32,499/- and omitted to transfer the remaining sum. This is
recorded in an email dated 02.11.2022.
n) By further email dated 04.11.2022 the petitioner stated that he
would only transfer the funds after receiving funds from Yes Bank.
o) The executor thereafter by an email dated 26.07.2022 requested
the petitioner and Sanjiv Jindal to return jewelry, gold coins and silver
utensils.
p) Sanjiv Jindal and petitioner replied on 30.07.2022 and
05.08.2022 respectively denying possession of the said items.
q) Thereafter, diligent efforts were made from the side of the
executor to administer the estate of the deceased in accordance with
the desire of the testatrix.
8. Further, one deed of assent was executed and registered by the
executor in favour of Aditya Jindal. This took months of preparation
and the same was registered at New Delhi for which the executor had
to travel and registration took place on 12.12.2023.
9. During the course of administration, it was found that one bank
locker of the deceased was lying with Indian Bank and the executor
took effective steps to facilitate the opening of the said locker but in
vain. The executor has further submitted that in terms of Indian
Succession Act, 1925 inventory and accounts shall be filed.
10. The learned counsel of the executor has submitted that GA 1 of
2022 has become infructuous since the administration is almost
complete. According to him, the executor has acted diligently and with
due dispatch. The accounts of the estate as on 10.11.2023 was
furnished and ultimately administration has stood almost completed.
11. According to the learned counsel, it is not open to the applicant
Mr. Rajiv Jindal to contend that the executor should incur necessary
expenditure for administration and for defending proceedings for his
removal on his own. Administrator's position is that of a trustee and
just as a trustee is not liable to defend the proceeding for his removal
by incurring expenditure on his own but is entitled to reimbursement
from the trust, the executor is also entitled to similar reimbursement.
In this regard the learned counsel has relied upon in 14 CWN 261
para 18 (Peary Mohun Mukerjee Vs. Narendra Nath Mukerjee), in
support of his contention that trustees estate is entitled to be
reimbursed all moneys spent in performing the obligation imposed
upon the executor by the original testator's will. The right of indemnity
is to the position of a trustee. The liability in respect of that indemnity
is the first charge on the trust estate. Therefore, the estate is to
reimburse and this is a position indent to executor-ship.
12. The learned counsel for the executor has further relied upon the
case law reported in (2019) EWHC 1231 (Ch) (Anita Doreen Mussell,
David Keith Williams VS. Christopher Edward Keith Patience,
Veronica Lesley Patience) in support of his contention that the
executors can lose their right of indemnity only if they are guilty of
misconduct. In other words, the executor's right of indemnity out of
the estate for costs or other expenses or liabilities which they have
incurred for the estate cannot be wiped out unless they have incurred
them improperly.
13. Learned counsel has also drawn attention of this court to the
case law reported in 1982 1 W.L.R 756 (In re. Dallaway, Decd,)
wherein the Hon'ble Court has been pleased to hold that the trustee
can take their costs as of right and the court, nevertheless, has a
discretion to allow the trustee to take their costs out of the fund before
handing over the successful litigants. There is no reason to distinguish
between trustees and executors in that respect and no distinction has
been suggested. According to the learned counsel of the executor that
the trustee and executors are similarly placed and are entitled to cost
as of right. The learned counsel has further pointed out that the term
'administration expenses' which the executor is bound to incur also
include lawyer expenses and that have to be paid out of the estate. In
this regard, he has relied upon the judicial decision reported in 1879
10 Ch.D. 468 (Sharp Vs. Lush) and 164 E.R 1280 (Mitchell and
Mitchell Vs. Gard and Kingwell).
14. The learned counsel has also pointed out that under Section 317
to India Succession Act, 1925 it is a duty of the executor to file an
inventory and accounts. In the present case, administration has also
been completed. Inventory and accounts have also been completed,
save inventory of one locker is to be done. At the present stage,
accounts are not to be questioned. Accounts have been questioned
after they are finally filed before the Hon'ble Court.
15. According to the learned counsel as the administration is almost
complete the present application has become infructuous. The learned
counsel has further submitted bills of the concerned solicitor firms in
Kolkata to raise bills at rates at which the executor has been charged.
The executor for his personal matters and matters of the Apeejay
Group makes payment at similar rates. It is disrespectful to question
bills of solicitors and claim that they are exorbitant in the present
proceedings. Further submitted that expenditure about Rs. 6.29 lakhs
were incurred for the purpose of obtaining probate and minor
expenditure would have been incurred for administration. 29 hearings
in the present application and steps for defending the applicant's
position as executor have led to the bills. It is the applicant who has
caused harm to the estate and should be directed to pay costs.
16. In reply, the learned counsel for the applicant distinguishes the
decision of Peary Mohun Mukerjee (supra) that the said judgment
pertains to the administration of a trust and therefore is not an
applicable expenses incurred by the trustee for the preservation of the
interest of the minor child but that is not the case herein. Moreover, in
Mitchell and Mitchell (supra) it is laid down that if the executor who
is under an obligation to act and discharge his duties, fails to do so,
the law permits the beneficiaries under the will to apply for his
removal. The law laid down in Sharp Vs. Lush (supra) has no
application in this case since the said judgment dealt with the issue of
proper expenses.
17. The case law reported in Anita Doreen Mussell, David Keith
Williams (supra) is relied upon by the executor, who contends that in
the paragraph 16 of the judgment it is held that litigation cost
principles are different from trust and estate cost principles. It
concerns whether the executor and trustee have acted properly or
reasonably or not. In re. Dallaway, Decd (supra) it has been held that
the executor acting with proper prudence should take proper steps for
administering the estate against adverse claim. But here the applicant
has no claim against the estate let alone any adverse claim. Therefore,
the said case law is not applicable here.
18. The learned counsel further submitted that the position in
Common Law is thus well settled. Only the costs incurred for the
purpose of administration of estate is the highest charge. Today the
Court will only look into whether expenses incurred for the purpose of
defending the executor's own conduct after filing of the present
application are administrative expenses and whether those expenses
are reasonable expenses. Such expenses for defending his conduct
after filing the application for removal will have to be paid out of his
own funds and cannot be charged to the estate. Till the time the
probate was granted, the accounts for administering the estate would
roughly be around 5 lacs. The moment the present application was
filed, the bill amounted to a sum of Rs. 30 lacs. He ought to have
stepped down when the allegations came forth. Today, there remains
no estate to administer or creditors to be paid. In-spite thereof, the
executor has retained a sum of Rs. 7 lacs towards contingency
expenses without the leave of the Court. Such expenses are neither
proper nor reasonable.
Court's View:-
19. The moot point which has been raised by the applicant is that
expenses incurred by the executor depict that in order to defend his
own conduct he has charged the estate of the testator. It is further
submitted on behalf of the applicant that the executor did not exercise
proper care and prudence. He has charged the estate excessively on
the garb of administering the estate of the testator. As the executor
defended his own cause, the estate cannot be charged for such action
of the executor.
20. On the other hand the executor has submitted that whatever he
did was for the purpose of administering the estate of the testator in
accordance with her desire. In this regard he has chronologically listed
the actions undertaken by him.
21. After considering the material on record it transpires that the
executor was compelled to file one writ petition against KMC for
obtaining duplicate original death certificate of the testator since
without such document the bank authorities were not allowing
relevant transactions in the new bank account which was opened in
the name of the executor for the purpose of administration of the
estate of the deceased with HDFC Bank, Park Street Branch, Kolkata.
Ultimately, the executor succeeded in obtaining the original duplicate
death certificate of the testator from KMC through the legal
proceedings. I do not think that the commencement of litigation
compelling the KMC to hand over a duplicate death certificate can be
termed as expenses charged for defending the executor's own conduct.
It is true that one reputed firm of solicitors at Kolkata has been
engaged to proceed with such writ petition against KMC and if the
executor thinks that the said firm of solicitors and lawyers will be the
most suitable for defending the cause of the estate, it is difficult for
any court to question such decision of the executor. It is true that this
application was filed in the year 2022 for removal of the executor and
it appears that the executor has again appointed the said law firm of
solicitors to defend him. The question is whether or not the
engagement of such a law firm to defend the executor's personal cause
will allow the executor to pay the charges of the Advocates and
Solicitors from the estate of the testator. Needless to mention that If
the executor acted in good faith in discharging his duties as an
executor, the executor is entitled to charge the estate of the deceased
provided the allegation leveled against the executor is found to be
incorrect and not genuine. In this regard, the appropriate observations
in several cited judicial decisions may be quoted:-
In the case of Anita Doreen Mussell, David Keith Williams
(Supra) it was observed that:-
"16. In my judgment, it is wrong to assume that
there will be any automatic "carry-over" from a
litigation costs order which happens to involve
trustees or executors to an order concerning the
right to indemnity of such trustees or executors.
Litigation costs principles are different from
trust and estate costs principles. Litigation
costs orders are concerned largely with who
has won, and then if there are reasons to
depart from the general principle that costs
follow the event. On the other hand, the
entitlement of trustees and executors to an
indemnity for their costs (or any other trust or
estate expenses) is concerned largely with
whether they have acted properly (or
reasonably) or not.
17. I cannot deprive executors of their
indemnity out of the estate for costs or other
expenses or liabilities which they have incurred
for the estate unless they have incurred
them improperly. This in summary form is the
effect of section 31 of the Trustee Act 2000
(applied to executors by section 35) and CPR
Part 46 Practice Direction, paragraph 1, acting
as an exception to the general rule in CPR rule
46.3. In the case law before the CPR and the
2000 Act it was sometimes put (and is still
sometimes put) in the form, had the executors
or trustees behaved unreasonably, or
committed misconduct? But I do not think the
variation in words makes any difference in
substance."
In the case of re Dallaway, Decd. (Supra) it was observed that:-
"I take it to be axiomatic that, acting with proper
prudence, executors should take proper steps to
protect their testator's estate against adverse
claims. However, when there is an adverse
claim not merely to a small part of the estate,
but to the whole of it, the executors are in a
difficult position; for if the claim succeeds, the
decision establishes that nothing is theirs, and
so they hold nothing out of which they can
indemnify themselves for the costs of defending
what they believed to be their estate. Executors
who have an estate which is held to consist of
nothing can have nothing out of which they
could take their costs. However, in the parallel
case of trustees the courts have tempered this
icy logic. It has been held that where a
settlement is set aside and so there is no
property out of which 760 the trustees can take
their costs as of right the court nevertheless has
a discretion to allow the trustees to take their
costs out of the fund before handing it over to
the successful litigants. It has also been held
that in exercising this discretion, trustees who
have acted properly ought to be allowed their
costs."
In the case of Mitchell and Mitchell (Supra) it was observed
that:-
"If the party supporting the will has such an
interest under it that the costs, if thrown upon
the estate, will fall upon him, and he by his
improper conduct has induced a litigation which
the court considers reasonable, it is not unjust
that the estate should bear the costs of the
litigation which his conduct has caused."
It is true that in Peary Mohun Mukherjee's case (supra) the
Hon'ble Court has granted the trustees certain right to reimburse the
cost incurred by him from the fund of the estate. It is also true that in
another case, that is, Anita Doreen Mussell, David Keith Williams
(supra) the Hon'ble Court has also been pleased to hold that the
executor has the right to get reimbursement from the fund of the
estate in respect of the cost incurred by him.
In the present case, it appears that the executor having control
of the fund of the estate has already paid off the charges of litigation
costs without waiting for the nod of the court. This is not a case for
reimbursement. In other words, it is not a case that the
executor incurred cost from the personal fund and his prayer for
reimbursement is pending before the Court.
The case of Anita Doreen Mussell, David Keith Williams
(supra) is also not applicable since I have already discussed that the
cost incurred by the executor in paying the charges for defending GA 1
of 2022 has been done without taking into consideration the net worth
of the estate, and therefore, such payment cannot be regarded as
proper exercise of discretionary power available to the Executor under
the law. The executor did not follow the basic principle "Cut your coat,
according to your cloth ".
Both the cases deal with the role of the concerned court in
allowing plea of reimbursement of cost incurred by the trustees/
executors from their own fund. They are not applicable in the factual
scenario of the case in hand.
22. From the materials on record and chronological list submitted
by the Executor, the liability of the Executor of this case can be
segregated in two parts viz the stage of compelling the KMC through
litigation to provide the executor the duplicate death certificate of the
testator and the stage of defending the present GA 1 of 2022. The
record reveals that the executor has been able to show the matter
involving the first stage was beyond his control at the relevant time.
The decision for engagement of a reputed law firm of Kolkata, in
protecting the interest of the estate, cannot, therefore, be frowned
upon. However, so far as regards the second stage, it appears that the
Executor has contested the plea of his removal from Executorship, and
he again engaged the said law firm. The Executor has argued that the
said law firm is used to look after the personal legal matters of the
executor and that is why he again engaged the said law firm of
tremendous repute in the field. The Executor may be multi billionaire,
and he has the capacity of engaging such law firm in his personal
matters, but engagement of such law firm to defend the instant
application and to burden the estate of the testator having worth of Rs.
1.40 crore only for payment of legal charges to the said law firm in
defending the present petition cannot be said to be a prudent and
proper decision of the executor. As the estate does not belong to the
Executor only, it is his utmost duty to spend the funds arising out of
the estate in a reasonable, and prudent manner, and not with
retaliatory passion. The decision of the executor in defending the
present petition after imposing huge burden upon the Estate of the
testator, particularly when the net worth of the estate amounting to
Rs. 1.40 crore, is not proper, and therefore, the cost of defending GA 1
of 2022 cannot be charged upon the Estate of the testator and the
Executor should himself pay the same out of his own fund. However,
as the administration of the Estate, as per submission of the Executor,
is going to be complete very soon, this court is not inclined to remove
the Executor at this stage.
23. In fine, the GA 1 of 2022 is allowed in part. The Executor, Mr.
Karan Paul is to complete the administration of estate of the testator
as per probate granted to him within 3 (three) months from date, and
to submit the report of true inventory within two weeks thereafter. The
Executor Mr. Karan Paul is to bear the cost and charges defending the
GA 1 of 2022 and is liable to return back the money spent from the
estate of the testator on account of such legal charges, if any, to the
fund of the estate within one month from date. No order as to costs.
24. GA 1 of 2022 is thus disposed of accordingly. No order as to
costs.
25. Liberty to mention before appropriate bench.
26. Urgent Photostat certified copies of this Judgment, if applied for,
be supplied to the parties on compliance of all necessary formalities.
(APURBA SINHA RAY, J.)
