Is nominee liable to pay off debt of deceased
Rajesh Kumar Yadav
(Querist) 08 June 2013
This query is : Resolved
My brother expired, he was working as salesman and having part time job as online commodity trading with having his own trading account. Mr XYZ made mutual deal with him for commodity trading for profit purpose and deposited Rs.200000 in his saving bank account. My brother provided to XYZ a valid security cheque for same amount. After death of my brother Mr. XYZ presented the cheque to bank for payment and the cheque got dishonoured.
On the date of death there is small amount of Rs.1000 in his bank account and also small amount in Commodity Account Rs.5000. We are unable to trace the movement of money as per bank statement/passbook.
Now Mr. XYZ claiming to pay the Rs.200000 from Nominee of Bank Account (Wife of my brother) as legal heir.
As per the legal notice Mr. XYZ was given Rs.2 lac to my brother as Loan and that should be pay off by heirs and also claiming under the Sec-138 of Negotiable Instument Act for dishonour of cheque.
As per our knowledge there is no written agreement/contrace of loan and it's repayment schedule.
Please advise, A security cheque is stands as mutual loan agreement (refer the case).
Is nominee lible to pay off the amount of dishonoured cheque/debt of deceased (refer the case)
prabhakar singh
(Expert) 09 June 2013
It is deceased property left behind has to meet debt and not nominee or heir of the deceased.
Guest
(Expert) 09 June 2013
It is a secondary issue, whether nominee or heir is liable to pay or not. The issues at first need be seen (1) whether there is a proof of cheque being in lieu of security or loan; (2) what was the reason of dishonour of cheque, whether due to expiry date or the insufficieny of funds; (3) what were the transactions of commodity exchange made for and on behalf of the drawer of the cheque; (4) what particulars have been shown in the books of account of your brother, i.e., the cashbook or ledger with reference to the cheque; etc.
I hope, being an accounts manager, you can easily understand about the accounts matter pertaining to the cheque, but you have not mentioned in your query any of these aspects.
prabhakar singh
(Expert) 09 June 2013
Dhingra ji!
He has stated that "After death of my brother Mr. XYZ presented the cheque to bank for payment and the cheque got dishonoured."
If XYZ was aware of death then XYZ has committed offence,i think.
It would be hard to prove joint trading in an individual a/c.
Anyway my answer is restricted to what he asked otherwise for consideration as a case there would be a lot of more questions.
Hence i agree with you.
V R SHROFF
(Expert) 09 June 2013
138 do not apply.
Nominee are not liable to pay for dishonoured cheque.
XYZ CANNOT SUCCEED 138.
XYZ can file Civil suit for recovery of dues from legal heirs. [ need strict proof]
Guest
(Expert) 09 June 2013
Prabhakar ji,
I have not challenged your reply. Your reply is perfect, as per the spirit of the query. But the querist on account of his deficient query should not expect appropriate solution to the real problem.
Of course, if XYZ knew about the death of the drawer, he should not have deposited the cheque knowingly. But, he can pretend that he was unaware of the death of the drawer. However, one aspect of the query is intriguing. The querist has mentioned, "Mr XYZ made mutual deal with him for commodity trading for profit purpose" and "My brother provided to XYZ a valid security cheque for same amount." If the querist knew about the mutual deal and the cheque being for the security purpose, he would also have been aware of the transactions and sharing of the profit and loss with XYZ, when the Commodity Exchange issues statements of deals with debits and credits.
The querist has not given full facts for the reason best known to him, as I did not expect such a query from a person of the status of an Accounts manager, if he really desired solution to his problem.
prabhakar singh
(Expert) 09 June 2013
I agree to first three line of answers of Mr.Shroff,but i regret to disagree with fourth line.
To me It is the property(movable or immovable) of deceased in hands of his nominee or legal heirs that is liable to discharge deceased debts.
There is no personal liability on nominee or legal heirs to discharge debts of the deceased.
On disclosure basis deceased has left only Rs.1000 in his bank account and also small amount in Commodity Account Rs.5000.
THEN IF DECEASED HAS NOT LEFT BEHIND ANY OTHER PROPERTY (movable or immovable) then only realization possible through a civil
suit would be that of Rs.6000/00 only.
A criminal case dies with death of accused.
Here no offence was committed as the very cheque was put in for collection after his death.
But there can be civil liability of a debtor even after his death enforceable against properties left behind and not against successors left behind by him.
The way to deal estate of any deceased is common in all civilizations. Out of deceased estate first of all funeral expenditure is met,then debts are discharged and then surplus,if any, is distributed among heirs.
Among hindus there was a rule of pious obligation imposed upon son to discharge debts of father even though father left no property.But by an amendment
in Hindu Succession Act 2005 this rule has been legislated good by with prospective effect.{read s.6(4)}of HSA 2005.
Rajesh Kumar Yadav
(Querist) 09 June 2013
Mr. Dhingra, this is to inform you that (1) There is no written evidence/agreement of loan and no receipt of cheque as it is against payment of loan.
(2) Cheque was dishonoured due to insufficient of fund.
(3) All amount withdrawn in cash from bank in parts
(4) In commodity a/c no amount deposited in that period. Commodity a/c is secondry issue , because XYZ not claiming for commodity a/c, and also we not have evidence to proove the deal of such transaction.
Pls clarify my 2 quairy,
(1) Is the cheque is valid document to proove the debt (refer the section/case)
(2) Is the nominee liable to pay off debt/dishonoured cheque in case of death of deceased.
Rajesh Kumar Yadav
(Querist) 09 June 2013
Mr. V R Shroff, please refer to the court judgement case, for Nominee is not liable to pay off the debts
Rajesh Kumar Yadav
(Querist) 09 June 2013
Mr. Dhingra, pls refer to the Act and section to proove that XYZ committed offence as deposit of cheque after death of deceased although he knows the payee is dead.
Rajesh Kumar Yadav
(Querist) 09 June 2013
Mr. Prabhakar Singh, there is no property in the name of deceased or his wife. Property is in the name of deceased father
prabhakar singh
(Expert) 09 June 2013
If the properties held in name of father are not ancestral in hands of father and the deceased had no coparcenary right in them then only those Rs.6000/=00 left by deceased can be proceeded against by the creditor.
My advice in such situation is that wife or other heirs should not withdraw any money from demat or saving bank of deceased.
Creditor would need to sue depository and bank for which he would require a succession certificate for realization of debt from the estate left by deceased.
If creditor sues wife ,wife may reply she does not possess any property of deceased in her hand hence no suit can proceed against her.
Guest
(Expert) 09 June 2013
About your 2nd query of subsequent post, earlier as well as the latest reply of Shri Prabhakar Singh hold good
I find that your supplementary queries continue to extend. Since it is not your own case, you cannot even request the court to allow you to fight your brother's case by yourself. So, I would like to advise you, it would be better for you to hire some local lawyer and by discussion if you still have any doubt only then you should come to get your doubts clarified. Otherwise none of the experts would like to hold unlimited class sessions just on one query and subsequent supplementary queries.
However, about the dishonoured cheque, it is not yet clear whether the cheque was dated prior to the date of death or after the date of death. Even if xyz knows that your brother is dead, you cannot prove easily that he knew about that. But if the cheque is dated prior to the death the validity of cheque for withdrawal would not be easy to be challenged. But, if the cheque was dated after the date of death, the cheque itself would become invalid.
Rajendra K Goyal
(Expert) 09 June 2013
The experts have viewed in detail. Cheque is a valid document to prove that it was issued for consideration. The consideration was debt anything else is a matter of evidence. Nominee is not liable to pay the debt after death. Legal heirs are liable. date of cheque is an important issue in the matter.
Rajesh Kumar Yadav
(Querist) 09 June 2013
The date of death is 25-Apr-2013, and the cheque date is 10-May-2013.
Guest
(Expert) 09 June 2013
I have already expressed ny views.
Rajendra K Goyal
(Expert) 09 June 2013
The cheque is dated after the death of the drawer, cheque is invalid.
prabhakar singh
(Expert) 09 June 2013
When "The date of death is 25-Apr-2013, and the cheque date is 10-May-2013" then it is invalid and no liability arises under it.
As already told neither nominee nor any legal heir would personally be liable to discharge any debt of deceased even if it gets proved.
malipeddi jaggarao
(Expert) 10 June 2013
While I agree with the advice of Mr.Prabhakar, I would like to throw more light as regards validity of cheque.
1) Cheque is mandate to pay a certain some of money to a certain person on presentation. All mandates will become void the moment the mandate maker is dead.Hence there is no doubt that the cheque is invalid.
2) Banker may return the cheque with different reason as he would not have the information of the death of depositor. This will not extend any validity to a cheque presented after the death of the drawer irrespective of date of cheque whether before the death or after the death. Cheque issue clear. XYZ can not get any benefit out of it. Regarding other things Mr.Prabhakar and others have clarified the doubts.
Sudhir Kumar, Advocate
(Expert) 29 June 2013
Keep on repeating
http://www.lawyersclubindia.com/experts/liability-of-bank-against-cheque-payment-after-death-of-a-c--402801.asp#.Uc7j99jQzmk
http://www.lawyersclubindia.com/experts/is-nominee-liable-to-pay-off-debt-of-deceased-398216.asp#.Uc7j_djQzmk
http://www.lawyersclubindia.com/experts/responsibility-of-bank-towards-withdrawal-from-atm-402806.asp#.Uc7j8tjQzmk
http://www.lawyersclubindia.com/experts/liability-of-bank-against-cheque-payment-after-death-of-a-c--402801.asp
