Report No. 110
VI. Scope of the Expression "Debt"
34.27. Meaning of "debt" Bombay and Patna view.-
There seems to be a conflict of decisions on the exact scope of the expression "debt" in sections 214, 370, 372(1)(f) and 381. The conflict is apparent from a Bombay judgment1, which has discussed the matter at length, dissenting from an Allahabad case1, and agreeing with a Patna case3.
In the Patna4 case, the appellant applied, under section 370, for a succession certificate in respect of certain ornaments pledged with the Punjab National Bank at Darbhanga. The High Court dismissed the application, holding that the expression "debts and securities" (in sections 370 and 381)5 did not cover pledged ornaments.
1. Ranchoddas v. Govind Das, (1976) 78 Born LR 219 (Madon, J.).
2. Dinanath v. Balkrishna, AIR 1963 All 46 (Mithan Lal, J.).
3. Shyam Sundari Devi v. Sarla Devi, AIR 1962 Pat 220.
4. Shyam Sundari Devi v. Sarla Devi, AIR 1962 Pat 220 (Untwalia, J.).
5. For gist of the sections see para. 34.31, infra.
34.28. Allahabad view.-
In the Allahabad case1, one lady had died in the Kumbha Mela tragedy and the district authorities had taken possession of certain cash and ornaments from the body of the deceased. When the petitioners, as her heirs, asked for the return of valuables, the authorities insisted on the production of a succession certificate. Consequently, the petitioners approached the court for the purpose. The question arose whether "debt" would cover pledged movables.
The High Court held that the term "debt' meant a liability owing from one person to another whether in cash or kind, secured or unsecured, whether ascertained or ascertainable, arising out of any obligation, express or implied. The refund of ornaments recovered from the dead body became an obligation of the authorities who were bound to hand over the same to the person entitled. Accordingly, a succession certificate was granted.
1. Dina Nath v. Balkrishna, AIR 1963 All 46 (Mithan Lal, J.).
34.29. Bombay case.-
The Bombay case1 discusses the problem of interpretation of the term 'debt' at great length. In that case, one lady had died in 1963, leaving behind her husband and three sons. Her husband died in 1966, leaving behind his three sons. The lady had taken a demand loan of Rs. 3,000 from the State Bank of India on the security of certain ornaments. The sons paid off the loan amount with interest to the Bank, and claimed return of the gold pledged.
The Bank informed them that it could not return the jewellery in the absence of a succession certificate. The sons made an application for a succession certificate. The High Court, construing the term 'debt' narrowly, held that a certificate could not be granted in respect of the ornaments pledged with the Bank. Thereupon, the petitioner sought leave of the court to withdraw the application, which was allowed.
1. Ranchoddas (in re:), (1976) 78 Born LR 219.
34.30. Recommendation to settle the law.-
In this position, it is desirable to settle the law on the subject. Although, in general, "debt" could be taken as confined to a monetary obligation for a liquidated amount, practical considerations require that the expression "debt" should, for the purposes of sections 214, 370(1) and 381, be defined as including any actionable claim.
We recommend that the law should be amended on the above lines.
Of course, the effect of the proposed amendment would be to extend the restrictive as well as the beneficial provisions of the Act to actionable claims. But that would be the only logical course.
34.31. Gist of the relevant sections summarized.-
It may be mentioned for ready reference that section 370(1) provides that a succession certificate shall not be granted with respect to any "debt" or security to which a right is required by section 212 or section 213 to be established by letters of administration or probate. Section 372(1)(f) provides, inter alia, that an application for succession certificate shall set forth the "debts" and securities in respect to which the certificate is applied for.
Section 381 provides that the succession certificate shall, with respect to the "debts" and securities specified therein, be conclusive as against the persons owing such debts or liable on such securities, and shall afford full indemnity to all persons who in good faith make payment to the person to whom the certificate was granted.