Pinaki Chandra Ghose, J.
An application was filed before the Hon’ble Single Judge praying for revoking the grant made in favour of the respondents and removal of the respondents as executors to the estate of Dharam Singh, since deceased.
It was further prayed that Letters of Administration of the estate of the deceased should be granted in favour of the petitioners or to appoint Joint Receivers to administer the estate of Dharam Singh Suraiya, since deceased. An injunction was also prayed for restraining the respondents from taking any steps or further steps towards the administration of the said estate.
Directions were also prayed on the respondents to hand over all papers, documents and accounts of the estate of Dharam Singh Suraiya, since deceased, to the Administrators and/or Receivers so to be appointed by the Court. Leave was also prayed to take appropriate steps against the respondents for their mismanagement of the estate of the Dharam Singh Suraiya, since deceased.
The said application was dismissed by the Hon’ble Single Judge on 7th July, 2006 after holding that the applicants failed to make out adequate grounds for removal of the executors of the said Will and the subsisting orders sufficiently protected the interest of the applicants.
Being aggrieved and dissatisfied with the said order this appeal has been filed by the appellants.
The facts of the case briefly are as follows:-
Dharam Singh Suraiya, since deceased, made and published his last Will and testament appointing the respondent Nos. 1, 2 and 3 as the executors and trustees of his estate. By the said Will, the said deceased bequeathed 250 shares in Food Specialities Ltd., now known as Nestle (India) Ltd., to each of the appellants. The appellant No.1 is the brother-in-law of the deceased and the appellant No.2 is his sister.
The said deceased died on 4th July, 1972. The probate of the said Will was granted by this Court in favour of the respondents on 11th July, 1977 and all the shares of Nestle were registered in the name of the executors on 21st August, 1978. After learning the said fact, the appellants wrote a letter to the respondents/executors and requested them to furnish relevant details of the said Will including the steps taken by them for obtaining probate of the Will.
On 12th February, 1980 the appellants were informed that the deceased bequeathed 250 shares of Nestle each of them. It was also informed that proper steps were taken by the executors for assessment of the estate duty and would take necessary steps to transfer the said shares to the beneficiaries. The appellants claimed all the benefits accrued in respect of the said shares of Nestle i.e. dividends, bonus shares, right shares etc. from the date of death of the deceased.
The respondents duly informed the appellants that after final assessment of the estate duty steps will be taken by the executors in respect of the said shares. The estate duty was cleared by the respondents/executors on 14th August, 1984.
On 20th February, 1989 the respondents/executors informed the appellants that they had been advised to distribute the legacy, i.e. shares of Nestle in their favour. In these circumstances, on April 2000 the appellants filed a suit against the respondents/executors challenging their authority.
In the said suit, an application being G.A. No. 4891 of 2001 was also filed by the appellants, inter alia, praying for appointment of a Receiver in respect of Bank Accounts, Fixed Deposits and/or other investments made by the deceased. The said application was finally disposed of by an order dated 7th May, 2003 when the Hon’ble Single Judge was pleased to appoint Receiver to take inspection of the documents and take possession of the books of accounts in respect of the estate of the deceased.
Being aggrieved, an appeal was preferred by the respondents/executors before the Hon’ble Divison Bench. The Hon’ble Division Bench by a judgment and order dated 20thFebruary, 2004 modified the order passed by the Hon’ble Single Judge by directing, inter alia, as follows:
“(a) The Receiver appointed shall make an inventory of the books of accounts and initial each page of the accounts produced before him and will score out the blank portion appearing in each page of the said books of account.
(b) After initialing and scoring out the blank portions as indicated above, the Receiver will make a photo copies of said books of accounts and hand-over the same to the respondents/plaintiffs.
(c) The Receiver will appoint an auditor from the panel maintained by this Court and have the accounts audited and submit a copy thereof the appropriate court in a sealed cover. Such audit shall be completed within 3 months from date.
(d) The parties will be at liberty to obtain suitable directions from the appropriate court for obtaining copies of the audit report filed before the Court.
(e) Costs of making photocopies and Auditing the accounts will be paid out of the estate of the deceased at the first instance and thereafter, will be treated as costs in the cause.
(f) After completion of the audit the original books of accounts will be handed-over to the appellant by the Receiver but he will remain in symbolic possession of the same until any further directions that may be given by the appropriate Court.”
It appears to us that pursuant to the said order the Chartered Accountant was appointed to audit the accounts of the said estate and the said Auditor duly filed its report.
Mr. Siddhartha Mitra, learned Advocate appearing on behalf of the appellant drew our attention to the internal page 25 of the said Audit Report which is stated as follows:-
“The beneficiaries of 11,175 shares out of the 12,000 shares held by late Dharam Singh Suraiya were deprived of their proportionate entitlement to the right shares offered since no intimation of such appears to have been sent to the beneficiaries.” In annexure IV of the Report at page 432 of petition, it is stated as on 31st March, 2001, the Executors were holding 68,364 equity shares of “Nestle” in their name.”
According to Mr. Mitra, it would be evident from the said Audit Report that the shares of Nestle had not yet been handed over to the beneficiaries. It is further submitted that the entire dividends received from the shares of Nestle were treated as income of the estate, along with the other income, instead of keeping the said amount in a separate account.
Mr. Mitra submitted that in respect of issuance of right shares in the ratio of 6:5, out of 10,800 Nestle shares only 3,600 shares were accepted at the rate of Rs.12.50/- per share and the balance offers of 7,200 shares were sold at the rate of Rs.8.25/- per share. He further submitted that there was nothing on record to show that the legatees or the beneficiaries were informed of the rights offer thereby denying them the opportunity to participate in the offer.
He also submitted that if reconciliation is made in respect of the accounts it would be found that the executors sold the right shares issued by the Nestile through Mr. R.G. Dhanki without giving any notice to the legatees.
Mr. Mitra further submitted that the Nestle has already been filed its affidavit disclosing the bonus shares and the right shares issued from 1978 to 1996. In the remark column of the said affidavit it has been stated that if a shareholder held 250 shares in the year 1972 and subscribed to all the right shares, the accumulated shares, as on date i.e. 16th November, 2009 would be 15,312 shares. It is also mentioned in the said affidavit that Nestle had not issued any bonus shares or right shares after the year 1996.
He further drew our attention to the letter, dated 16th November, 2009 issued by the Nestle. From the said letter the details of the bonus shares issued and right shares offered by the company to the shareholders for the period from 1972 to till date is as follows:- “……
| Year |
Type of Issue |
Ratioin which bonus shared issued or rights issue offered |
Cumulative No. of shares |
Rights issue offered Per Share (Rs) |
| 1972 |
Not Applicable |
Not Applicable |
250 |
NA |
| 1978 |
Rights Issue* |
6 : 5 |
550 |
12.5 |
| 1980 |
Bonus |
1:1 |
1100 |
NA |
| 1983 |
Bonus |
3:5 |
1760 |
NA |
| 1985 |
Rights Issue |
1: 4 |
2200 |
40 |
| 1986 |
Bonus |
1:1 |
4400 |
NA |
| 1988 |
Rights Issue |
4: 25 |
5104 |
60 |
| 1989 |
Bonus |
3 : 5 |
8166 |
NA |
| 1993 |
Bonus |
1:4 |
10208 |
NA |
| 1996 |
Bonus |
1:2 |
15312 |
NA |
*Includes existing shares disinvested by Nestle Holdings Limited, a non-resident shareholder, in favour of Indian shareholders.
Remarks:
1) For the sake of clarity, alongwith the details, the above statement explains that if a shareholder holds 250 shares in the year 1972 and subscribed to all rights shares, the accumulated shares as on date would be 15312 shares.
2) The Company has not issued any bonus or rights shares after the year 1996.
The above revised information has been verified with the records of the Company and the Honorable High Court may take on record the above submission.”
He further submitted that if a shareholder held 250 shares in the year 1972, the accumulated shares as on date would be 15,312. He also submitted that since legacy is specific the said amount of equity shares of Nestle immediately should be transferred in favour of the appellants. He also submitted that the executors have failed to perform their duties and withhold the shares which should have been transferred in favour of the appellants.
He further submitted that without any authority of law the executors enjoyed the shares and dividends, which ought to be enjoyed by the beneficiaries and do not form part of the residuary estate in the hands of the executors since the estate duty has already been cleared by the executors.
He further submitted that the executors have been administered entire estate of the deceased and all the beneficiaries to the shares have been given their entitlements save and except the appellants herein. It is further submitted that the executors should be removed by the Court on the ground that the executors have acted in a manner which is detrimental to the estate and to evade the rights of the present appellants as beneficiaries.
Mr. Mitra further submitted that they are also entitled to get the dividends in respect of the shares and he placed a chart before us giving the calculation of the Dividends receivable by the appellants in respect of their shares. The chart is set out hereunder:-
“STATEMENT OF DIVIDENDS AS ON NOVEMBER 16, 2010
| YEAR |
NO OF SHARES |
DIV PER SHARE |
AMOUNT |
SUB TOTAL |
| 1972 |
250 |
2.50 |
625.00 |
625.00- |
| 1973 |
250 |
2.00 |
500.00 |
1125.00 |
| 1974 |
250 |
1.70 |
425.00 |
1550.00 |
| 1975 |
250 |
NIL |
NIL |
1550.00 |
| 1976 |
250 |
1.50 |
375 |
1925.00 |
| 1977 |
250 |
2.00 |
500.00 |
2425.00 |
| 1978 |
550 |
2.50 |
1375.00 |
3800.00 LESS 3750@12.5 |
| 1979 |
550 |
2.50 |
1375.00 |
1425.00 |
| 1980 |
1100 |
2.00 |
2200.00 |
3625.00 |
| 1981 |
1100 |
3.50 |
3850.00 |
7475.00 |
| 1982 |
1100 |
4.50 |
4950.00 |
12425.00 |
| 1983 |
1760 |
4.50 |
7920.00 |
20345.00 |
| 1984 |
1760 |
4.00 |
7040.00 |
27385.00 |
| 1985 |
2200 |
4.00 |
8800.00 |
36185.00 LESS 17600 @40 |
| 1986 |
4400 |
3.25 |
14300.00 |
32885.00 |
| 1987 |
4400 |
2.50 |
11000.00 |
43885.00 |
| 1988 |
5104 |
2.50 |
12760.00 |
56645.00 LESS 42240 @ 60 |
| 1989 |
8166.4 |
3.00 |
24499.20 |
38904.20 |
| 1990 |
8166.4 |
2.50 |
20416.00 |
59320.20 |
| 1991 |
8166.4 |
2.75 |
22457.60 |
81777.80 |
| 1992 |
8166.4 |
2.75 |
22457.60 |
104235.40 |
| 1993 |
10208 |
3.00 |
30624.00 |
134859.40 |
| 1994 |
10208 |
5.00 |
51040.00 |
185899.40 |
| 1995 |
10208 |
6.50 |
66352.00 |
252251.40 |
| 1996 |
15312 |
4.50 |
68904.00 |
321155.40 |
| 1997 |
15312 |
6.00 |
91872.00 |
413027.40 |
| 1998 |
15312 |
6.50 |
99528.00 |
512555.40 |
| 1999 |
15312 |
8.00 |
122496.00 |
635051.40 |
| 2000 |
15312 |
14.00 |
214368.00 |
849419.40 |
| 2001 |
15312 |
14.00 |
214368.00 |
1063787.40 |
| 2002 |
15312 |
18.00 |
275616.00 |
1339403.40 |
| 2003 |
15312 |
20.00 |
306240.00 |
1645643.40 |
| 2004 |
15312 |
24.50 |
375144.00 |
2020487.40 |
| 2005 |
15312 |
25.00 |
382800.00 |
2403287.40 |
| 2006 |
15312 |
25.50 |
390456.00 |
2793743.40 |
| 2007 |
15312 |
33.00 |
505296.00 |
3299039.40 |
| 2008 |
15312 |
42.50 |
650760.00 |
3949799.40 |
| 2009 |
15312 |
9.00 |
137808.00 |
4087607.40 |
| 2009 |
15312 |
27.00 |
413424.00 |
4501031.40 |
| 2009 |
15312 |
12.50 |
191400.00 |
4692431.40 |
| 2010 |
15312 |
9.00 |
137808.00 |
4830239.40 |
| 2010 |
15312 |
27.00 |
413424.00 |
5243663.40” |
Mr. Mitra further submitted that since this is a specific legacy the steps have to be taken by the executors to hand-over the said shares along with the accrued interest thereon.
On the contrary, Mr. Dhruba Ghosh, learned Advocate appearing on behalf of the respondents submitted that the question arose in this appeal is whether the legacies which have been given under the Will of the Testator to the appellants are specific legacies or demonstrative legacies?
He drew our attention to Section 142 and 150 of the Indian Succession Act and submitted that the issue in question has not yet been decided since the suit is pending for adjudication of the said question. Until the said question is decided he submitted that no order can be passed in this matter. He further submitted that the application which has been filed by the appellants is only to remove the executors but no argument has been advanced on behalf of the appellants.
He further pointed out that on 20th February, 1989 the executors duly offered its shares to the appellants which was refused by them and further the matter is awaiting for final disposal of the suit which is pending before the Court on the question of specific legacies or demonstrative legacies.
He further submitted that the executors are complying with the order passed by the Court. He further pointed out that the estate is more or less fully administered by the executors except for the claims of the petitioners and the said matter is pending for final adjudication. The present appeal has been filed only to get rid of the present executors without answering the question whether the legacies are specific or demonstrative.
He also submitted that the order is subsisting whereby the respondents were directed to invest the dividends which have been received and not to spend the same. The amount of dividends, has been directed to be kept in a suitable interest bearing fixed deposit in any nationalized bank. There is nothing on record to suggest that such order has been violated by the respondents. The accretions thereto are fully protected. No grounds have been made out by the appellants for revocation of the grant.
It is further pointed out that if it is ultimately held that the legacies are demonstrative in nature, then the interest of the appellants in the entire estate of the deceased would be negligible. He further pointed out that the executors under the Will should not be easily removed until and unless there are compelling circumstances.
In these circumstances he submitted that the appeal should be dismissed.
After hearing the parties, it appears to us that the instant application was filed by the appellant on the ground that the Division Bench earlier in a proceeding given certain directions to the Receiver including the appointment of an Auditor to have the accounts audited, and that the said directions given by the Division Bench have not been duly complied with on behalf of the respondents. The reliance has also been placed on the report of the Auditor in support of the contention that funds have been siphoned off and that proper accounts have not been maintained.
But it appears to us that the question in this matter only with regard to the administration of the estate of the deceased is concerned. In fact, as it appears from the fact that the entire estate in its entirety have been duly administered except the contentious issue between the parties with regard to the 250 shares each of Nestle India Limited bequeathed in favour of the petitioners.
It is also a fact that in the earlier proceeding one of the legatees filed a suit in Bangalore. In the said suit it has been stated that the shares bequeathed under the Will to the legatee were demonstrative in nature. It further appears to us that the appellants earlier also initiated a criminal proceeding against the executors in Bombay. The Bombay High Court has been pleased to quash the said criminal complaint and the Bombay High Court held that the nature of the legacies were demonstrative legacies. In order to resolve the dispute between the parties, the executors had filed an Originating Summon suit before this Court for determination with regard to the nature of bequest made by the testator in favour of the appellants as specific legacies or general legacies or demonstrative legacies. The said Originating Summon was disposed of by a judgment dated 7th August, 1984 holding that the legacies were demonstrative in nature and not specific legacies. The petitioners preferred an appeal against the said judgment passed in the Originating Summon suit. By a judgment dated 11th October, 1999, a Division Bench of this Court was pleased to set aside the judgment on the ground that the disputes raised in the Originating Summon suit could not be decided in a summary proceeding of like nature.
Therefore, it is clear from the facts that the nature of legacy has still remained undecided. In these circumstances, the appellants have also filed a suit for a declaration that the legacies were specific legacies and the said suit is still pending.
Further we make it clear that if the legacy is held to be demonstrative legacy in that case the petitioners would be entitled to only 250 shares each. However, if it is decided that the legacies are specific legacies, the appellants would be entitled to all the accretions thereto. Therefore, it appears to us that till such time the nature of legacy is decided, the appellants’ right in favour of the shares is required to be protected. We further make it clear that the opinion of the Auditors in coming to the conclusion that the dividends received on the said shares have not been properly utilized is incorrect. Since, at that point of time, there was no order passed by the Court restraining the executors from utilizing any fund of the estate for their own purpose. Therefore, it appears to us that the Hon’ble Single Judge on the given facts correctly came to the conclusion that “I do not find that there is any gross irregularity in dealing with the estate of the deceased”.
We have also considered Section 289, 263 and 301 of Indian Succession Act. It appears to us that Section 263, the grant of probate or letters of administration may be revoked, whereas under Section 301, the personnel of the executor or the administrator, as the case may be, may be changed without effecting the grant of probate or letters of administration.
It further appears to us that the appellants have not alleged that the Will was invalid, but is seeking to have the grant revoked on the grounds that the executors have mis-conducted themselves and have not performed their obligations as executors to the Will.
But it also to be taken into account that it is a well settled law that named executors under the Will which will remove unless there is a compelling circumstances and where the executors act contrary to the wishes of the testator and also where his action against the interest of the beneficiaries then and then only the executors may be removed. Therefore, it appears to us that after taking into account all the points that the suit is pending before the Court for determination of the rights of the appellants as to whether legacy is specific or demonstrative that cannot be decided at this stage by the Court. The Hon’ble Single Judge has also examined the allegations with regard to the discrepancy point out from the report of the Auditors by the appellant before him and a proceeding has already been initiated and, therefore, it appears to us that the controversy with regard to the maintenance of accounts and some of the expenditure by the executors cannot be germane or the consequence to remove them at this state. We further find that the subsisting order passed by the Court at the moment sufficiently protect the interest of the appellants. Therefore, we are not in a position to accept the contention of Mr. Mitra appearing on behalf of the appellant since in our opinion the determination of the rights of the appellants has not yet been decided by the Court.
Therefore, until it is decided by the Court the claim as has been put forwarded by the appellants also cannot be stated to be specific. Therefore, we do not find that there is any reason to interfere with the order passed by the Hon’ble Single Judge. We only direct to the respondents that they must keep a proper accounts in respect of said 250 shares each along with the bonus shares and right shares already received and shown by the Nestle and the amounts received out of the said shares as dividends should be kept in a separate account and monthly accounts in respect thereof should be furnished to the appellant until the nomenclature of the legacy is decided in the suit.
With the above observations and the reasons given hereinabove we dispose of this appeal.
Photostat certified copy of this judgment, if applied for, be supplied to the parties.
SHUKLA KABIR (SINHA), J.
I agree.