(1) If the domicile of the deceased was not in 1[India], the application of his moveable property to the payment of his debts is to be regulated by the law of 1[India].
(2) No creditor who has received payment of a part of his debt by virtue of sub-section (1) shall be entitled to share in the proceeds of the immoveable estate of the deceased unless he brings such payment into account for the benefit of the other creditors.
(3) This section shall not apply where the deceased was a Hindu, Muhammadan, Buddhist, Sikh or Jaina or an exempted person.
Illustration:
A dies, having his domicile in a country where instruments under seal have priority over instruments not under seal leaving moveable property to the value of 5,000 rupees, and immoveable property to the value of 10,000 rupees, debts on instruments under seal to the amount of 10,000 rupees, and debts on instruments not under seal to the same mount.
The creditors holding instruments under seal received half of their debts out of the proceeds of the moveable estate.
The proceeds of the immoveable estate are to be applied in payment of the debts on instruments not under seal until one-half of such debts have been discharged.
This will leave 5,000 rupees which are to be distributed rateably amongst all the creditors without distinction, in proportion to the amount which may remain due to them.
Legal Commentary & Landmark Judgments: Section 324
Section 324 applies the rateable payment rule where the deceased was domiciled in India and left property in foreign jurisdictions.
If a foreign bank recovered 40% of its loan by seizing the deceased's overseas flat, the bank cannot claim a dividend from Indian bank accounts under Section 324 until all Indian creditors have also received 40% on their respective debts.