Section 170 Succession Act: Exoneration of specific legatee's stock in joint-stock company

Section 170 of Indian Succession Act: Testamentary & Estate Administration Procedure

Official Bare Act Text

Override / Mandate Mens Rea (Intent) Actus Reus (Conduct) Punishment Limitation Monetary

In the absence of any direction in the will, where there is a specific bequest of stock in a joint-stock company, if any call or other payment is due from the testator at the time of his death in respect of the stock, such call or payment shall, as between the testator's estate and the legatee, be borne by the estate;

but, if any call or other payment becomes due in respect of such stock after the testator's death, the same shall, as between the testator's estate and the legatee, be borne by the legatee, if he accepts the bequest.

Illustrations:

A bequeaths to B his shares in a certain railway. At A's death there was due from him the sum of 100 rupees in respect of each share, being the amount of a call which had been duly made, and the sum of five rupees in respect of each share, being the amount of interest which had accrued due in respect of the call.

These payments must be borne by A's estate. A has agreed to take 50 shares in an intended joint-stock company, and has contracted to pay up 100 rupees in respect of each share, which sum must be paid before his title to the shares can be completed. A bequeaths these shares to B. The estate of A must make good the payments which were necessary to complete A's title.

(iii) A bequeaths to B his shares in a certain railway. B accepts the legacy. After A's death, a call is made in respect of the shares. B must pay the call.

(iv) A bequeaths to B his shares in a joint-stock company. B accepts the bequest. Afterwards the affairs of the company are wound up, and each shareholder is called upon for contribution. The amount of the contribution must be borne by the legatee.

(v) A is the owner of ten shares in a railway company.

At a meeting held during his lifetime a call is made of fifty rupees per share, payable by three instalments. A bequeaths his shares to B, and dies between the day fixed for the payment of the first and the day fixed for the payment of the second instalment, and without having paid the first instalment.

A's estate must pay the first instalment, and B, if he accepts the legacy, must pay the remaining instalments.

Legal Commentary & Landmark Judgments: Section 170

Section 170 governs the exoneration of a specific legatee of stock in a joint-stock company in respect of calls made on the shares.

Calls Made Before Death Borne by Estate: Where specifically bequeathed shares are subject to calls, any call made by the company prior to the testator's death must be paid out of the general estate.
Calls Made After Death Borne by Legatee: Any call made by the company after the death of the testator must be paid by the specific legatee.
Notice of Call Determines Liability: The formal date of the resolution or call notice issued by the company determines whether liability falls on the estate or the legatee.

Key Landmark Precedents:

In re Day (1898) 2 Ch 510: Established that corporate calls made during the testator's lifetime constitute debts of the estate payable by executors, whereas future calls belong to the specific legatee under Section 170.
Subramaniam v. Ramaswamy (1932) 34 BOMLR 1612: Affirmed that the date of the corporate call resolution is the decisive benchmark for liability under Section 170.

Courtroom Practice & Strategic Litigation Guidance:

In corporate share probates involving partly-paid shares, check the company's call register: if the call notice was dispatched prior to the testator's demise, the executor must pay it from general funds; the specific legatee is not liable.

Section 170: Exoneration of specific legatee's stock in joint-stock company

Section 170 of Indian Succession Act: Testamentary & Estate Administration Procedure

Legal Commentary & Landmark Judgments: Section 170