Heirs Must Repay Ancestors’ Debts From Inherited Property: Telangana HC

The court held that the heirs were under a statutory obligation to satisfy the lawful debts from the inherited estate as well as their own interest in the joint family property, and could not evade liability merely because the borrower has died. The court also made it clear that their separate personal property, acquired by the descendants, could not be proceeded against for such debts.

Justice Alishetty Laxmi Narayana of the High Court was dealing with two petitions filed by V. Yashoda , wife of deceased post master Srinivas Reddy of Jalalpur of Nagireddypet mandal in Kamareddy district.

During his lifetime, Yashoda`s husband was allegedly involved in misappropriation of funds under National Rural Employment Guarantee Scheme to the tune of `14,89,096, and a criminal case was registered against him. The collector’s office took steps to recover the amount under the Revenue Recovery Act, 1864. Yashoda challenged the attachment and proposed auction of ancestral agricultural land belonging to their family.

The contention of the petitioner there was no personal property on the name of her deceased husband. The property that was attached was ancestral. She argued that she and their two sons had rights over the attached ancestral property.

Petitioner`s counsel argued that the pious obligation provision mentioned under the Hindu Succession Act, 1956 about the liability of the heirs on the debt of ancestors, was abolished through the amended Section 6(4) of the Hindu Succession (Amendment) Act, 2005. After the amendment, no court could recognise any right to proceed against a son, grandson or great-grandson for the recovery of any debt due from his father, grandfather or great-grandfather solely on the ground of the pious obligation under the Hindu law.

Further, the petitioner contended that the authorities could recover the amount only to the extent of the deceased's share in the ancestral property and not from the undivided shares that had devolved upon the her and their two sons.

Refuting the petitioner`s contentions, the judge observed that although the doctrine of pious obligation had been abolished, the liability of legal representatives to satisfy the lawful debts of a deceased ancestor out of the inherited estate continues to subsist. Justice Alishetty clarified that the amendment to the 1956 Act did not absolve legal heirs of liability arising from inherited assets, but merely protected them from being personally liable solely on the basis of the erstwhile doctrine of pious obligation.

The judge explained that while the separate personal property of the heirs could not be proceeded against, their inherited interest in the joint family property remained liable for the discharge of lawful debts. It reiterated the settled legal principle that a creditor was entitled to proceed not only against the deceased ancestor's interest but also against the coparcenary interest of the sons, grandsons and great-grandsons in the joint family property where the debt was legally enforceable.

The court noted: “The doctrine of pious obligation thus stands abrogated to the extent that the specified heirs are not liable to satisfy such debts solely on the ground of pious obligation. Thus, now the liability of the legal heirs to discharge debts of their father or ancestor extends only to the extent of the assets inherited by them as per the Mitakshara Law and the same has not been disturbed by the Hindu Succession Act.”

Referring of the Code of Civil Procedure relating to the liability of legal representatives, Justice Alishetty emphasized: “The property of a Hindu, whether it is joint or separate, is liable for the payment of his debts both in his lifetime and after his death. The undivided interest of a coparcener in coparcenary property is always liable for the payment of his debts in his lifetime. His undivided coparcenary interest is also liable after his death, so far it is in the hands of his legal heirs”.

The judge explained that where a father or paternal grandfather or paternal great-grandfather dies leaving behind private debts, then, if the debts are not of an immoral character, the entire joint family property, including his son's undivided interest therein, was liable for the payment of his debts. The separate property of the heir is not liable to pay the personal debts of the ancestor.