Rule 13 of CPC : Rule 13: Decree in administration-suit.

Explanation using Example

Example 1:

Scenario: Ram, a resident of Mumbai, passes away leaving behind a property and several debts. His heirs file a suit in the court for the administration of his estate.

Application of Rule 13:

1. Preliminary Decree: The court first issues a preliminary decree. This decree orders an accounting of Ram's property and an inquiry into his debts and liabilities.
2. Administration of Property: During the administration process, it is discovered that Ram's property is insufficient to cover all his debts.
3. Secured and Unsecured Creditors: The court follows the rules applicable to insolvent estates to determine the rights of secured and unsecured creditors. For example, a bank holding a mortgage on Ram's house (secured creditor) will have priority over an unsecured creditor like a credit card company.
4. Claims Submission: All creditors, including those with future or contingent claims, are allowed to submit their claims under the preliminary decree. The court then evaluates these claims and decides the distribution of the estate accordingly.

Example 2:

Scenario: Sita, a businesswoman in Delhi, dies leaving behind a business property and various liabilities. Her business partners and family members are in dispute over the administration of her estate.

Application of Rule 13:

1. Preliminary Decree: The court issues a preliminary decree to take an account of Sita's business property and to inquire into her debts and liabilities.
2. Insufficient Property: It is found that Sita's business property is not enough to pay off all her debts.
3. Valuation of Liabilities: The court applies the rules for insolvent estates to value annuities and future or contingent liabilities. For instance, if Sita had a future liability to pay a business partner, the court will determine its present value.
4. Creditors' Rights: Both secured creditors (e.g., a bank with a lien on business equipment) and unsecured creditors (e.g., suppliers) are allowed to make claims. The court ensures that the distribution of the estate follows the legal priorities and rights of these creditors.
5. Final Decree: After all accounts and inquiries are completed, the court passes a final decree directing the distribution of the remaining property among the creditors and heirs as per the established priorities.