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Comparing Joint Property and Separate Property w.r.t Liability for Father's Debts

From ancient times, the ancient Indian literature has been full of evidence of the emphasis placed on the discharge of duty to pay off debt. According to Ancient Indian belief, one is born indebted and has a responsibility to repay the debt. When we talk about the legal duty of a son to pay off the father's debts, it is also important to understand the aspect of moral duty attached to it.

According to ancient texts, the father desired a son not only for spiritual reasons, but also to secure guarantee through the birth of a son for the discharge of his secular liabilities, the most important of which was the liability to pay off one's debts. The non payment of liability affected the debtor's life in this world as well as in the next life.

The importance attached to the paying back of debts stems from the idea that “the soul carries the fruits of the deeds and the burden of the debts into the next life and that decides in what capacity and in which family a person is reborn. If a person fails to pay off his debt, he will be reborn into a life of bondage and slavery. Thus, more than it being a legal obligation, it had a religious aspect attached to it and was considered necessary for the “salvation of the soul.

There is only one way of the debtor being saved from this burden and attaining liberation and that is if the sons, grandsons (sons of sons) and great grandsons (sons of sons of sons) repay his debts. Through this article, we will study the liability of the son w.r.t father's debts in case of joint property as well as separate property and how and to what extent this liability is discharged.

The Liability for Father's Debt

The son is liable to pay off the father's debt after the father's demise, the debt being a just debt, for which a father is competent to alienate family land, as against his sons, means a debt that is genuinely due, that is not immoral or illegal in nature or not contrary to public policy and which has not been incurred as an act of reckless extravagance or wanton waste and will be binding on the sons.

The son will be bound by such liability in cases of- mesne profits, torts committed by the father relating to property, his bills, debt contracted to defend himself in a suit for forgery, defamation etc.

It is to be noted that when we speak of the liability of a “son it also includes a grandson or a great grandson. The three immediate male descendants are bound by the liability and it ceases from the fourth one. “As per the Shastric tenets the liability of all three differs slightly. The son has to pay the debts as if they were contracted by himself, and therefore, he has to pay both the principal amount as well as the interest on it. The grandson has to pay the principal, and need not pay the interest, but a great-grandson need not pay at all, unless he has assets.
The court has observed that the grandson and great grandson's liability is coextensive in nature.[1]

The liability does not extend to any other relative even when the debtor was an undivided member of a coparcenary. When the wife had received a share at the time of partition between her husband and her son, she is also not liable. If the brother is the Karta of the joint family and contracts debts, the doctrine of pious obligation will not apply, and the other family members will only be bound if the debt was incurred for legal necessity or for the benefit of the family.

The extent of liability of the sons is that they are liable only for the father's vyavaharik debts and such liability only binds the undivided share of the sons in the family property and will not extend to their separate property. The nature of the debts is immaterial and the son can be compelled to pay debts from the property which he has inherited from his father. This liability will however, be strictly restricted to what he has inherited.

“Similarly, this liability extends to whosoever inherits the property of the person. Where, in the absence of a male issue, a collateral inherits the property, the liability to pay the debts is fastened on him, to the extent of the inherited property, irrespective of whether the debts were for an illegal or an immoral purpose.

Exemption from Liability

Avyavharik Debts
There are certain debts which do not fall under the liability of the son to pay off on behalf of his father, such debts are called avyavharikam or adharmic debts. Knight J describes 'avyavaharika' as “unusual or not sanctioned by law and attributable to his father's fallings, follies or caprices. These debts are ones which are contracted for purposes not justified under religious tenets or a person's dharma.

Debts taken for immoral or improper or dishonest or illegal purposes or for purposes which amount to a criminal offence fall under this category.
Vrihaspati stated that, “sons shall not be made to pay a debt incurred by their father for spirituous liquor, for idle gifts, for promises made under influence of love or wrath or for suretyship, nor the balance of a fine or toll liquidated in part by their father.

Some examples of avyavaharik debts which do not make the son liable to pay off are:
  • Debt taken to pay fine inflicted for a criminal offence.
  • Debt taken for the purposes of gambling.
  • Debt taken for filing a suit against the son himself to defeat his legitimate rights etc.[2]
  • Payment to woman as a form of bribe to induce her to take one of his sons in adoption.[3]
It has been stated by Lord Dunedin that, “any debt can only be considered illegal when the entire motive for obtaining the money was illegal and not if the father had legally obtained the sum but afterwards misappropriated it. For a debt to be considered illegal two conditions have to be met with:

The debt must be prior in time.
The debt must be prior in fact.

The nature of the debt has to be examined since its inception i.e., when the loan was raised. When receiving money was legal at the time of receipt, the subsequent commission of an offence by the father does not relieve the son of his duty to fulfil the debts. As a result, when the receiving of money was not a crime, a subsequent misappropriation by the father would nonetheless bind the son, unless the misappropriation was done in conditions that made the act criminal.

Therefore, to see whether the father's debt is of the nature that would make the son liable it has to be analysed whether the debt, from its very inception, was of an immoral or illegal character (subsequent dishonesty of father will not exempt the son off liability) and whether “the father's conduct is utterly repugnant to good morals, or is grossly unjust or flagrantly dishonest.

Further the Burden of Proof that the debts were tainted with immorality or illegality and that the creditor was aware of it lies on the son.

Separate Property

The liability to pay off the father's/ grandfather/ great grandfather's debts is not personal in nature. Therefore, it does not extend to separate property. The liability extends to the undivided interest in the coparcenary property but the separate property cannot be bound for the same. The share obtained at the time of partition is not chargeable for payment of the father's debts if the debts were contracted after the son had separated himself by way of a partition. The undivided share can be sold at the creditor's behest (can also be to the extent of the entire property) but only in cases where the debts were incurred for purposes not tainted by immorality or illegality.

In the case of Panna Lal v. Naraini,[4] the court observed that, “the sons were liable for the discharge of their father's debts since they were not tainted with immorality and were contracted before the partition was effected. It also observed that a partition effected soon after taking debts by the father, has to be examined, as to whether it was effected fraudulently, so as to defeat the rights of the creditors, or was a genuine partition. Even if it was a bona fide partition, the sons cannot escape the liability of payment of their father's debts.

When the right to seek partition does not exist with the son when the father is alive, the son's share can be attached and sold for the father's debts. Despite the fact that the father may still be alive, the son's pious obligation to pay his father's debt exists, but it is limited to the son's undivided share of the property.

Present Position
The concept of the son's pious obligations was mainly focused more so on protecting the father's interests and absolving him off his liabilities rather than benefitting the creditor or third parties. Overtime through various decisions of the courts this doctrine has its relevance more so for the protection of the rights of creditors and third parties.

The burden of proof has thus gotten heavier for the sons in order to escape the liability. It has to be proved that the debts were for an immoral or illegal purpose and also that the creditor had notice of the same. Due to this the balance has been tilted in favour of the creditor. “The main aim of the whole exercise now, is not to benefit the debtor or his soul, but the creditor and the whole theory of pious obligations and spiritual or religious benefit to the father is in, fact, reduced to a secular principle of the creditor getting his due during his lifetime, by extending the liability of payment to the debtor's son.

The payment of one's father's debts is no longer a pious obligation, but has been turned into a strict legal liability. Post the 2005 Amendment, the concept of son's pious obligation has been changed and the liability to discharge debts lies with the person inheriting the property, irrespective of his or her gender.

Conclusion
The liability of a son (son/grandson/great grandson) to pay off the father (father/grandfather/great grandfather's) debts has existed as a concept since the ancient times. While it had a religious connotation to it earlier and stemmed from the idea that if a person dies indebted, he leads a life of slavery in his next birth and that his soul never attains salvation, overtime this pious obligation obtained the nature of a legal obligation and was enforced against the son in order to protect the interests of the creditor or any other third party and returning his money.

This liability however, is not personal in its nature and does not extend to the separate property of the sons and can only be extended to their undivided share. When they inherit from the father, the liability to pay off can only be enforced to the extent of what had been inherited from the father and not beyond that. There is still however, a lot of scope for the son's rights to be abused as the father can borrow money for his personal use and not pay, and upon his death the burden for the same will lie on the son.

Additionally, the son is liable for pre partition debts and also, a separation by the son, in between the time of contracting of the debt and its realisation by sale of the property, cannot help the son escape the liability and protect his interest. The only means of escaping the liability for the son is by way of proving that the debt had been an adharmic or avyavaharik debt i.e., the purpose for the debt was an immoral or illegal one and that the creditor was aware of it at the time.

The balance is tilted in favor of the creditor thus, the burden of proof is heavy for the son in order to escape the liability for the father's debts. Post the Amendment however, it is not just the son that has the obligation to discharge off debts, the person inheriting property, whether son or daughter, holds liability.

End-Notes:
  1. Masit Ullah v. Damodar Prasad, AIR 1926 PC 105; Sheo Ram v. Durga, AIR 1928 Ori 378 (FB)
  2. M. Veraghaviah v. M. Chini Veeriah, AIR 1975 AP 350
  3. Sitaram v. Harihar, (1911) ILR 35 Bom 169
  4. Panna Lal v. Naraini, AIR 1952 SC 170

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