Succession Certificate: Acquisition Process & Legal Import

If a person dies intestate, i.e., without making a Will or any testamentary document, a Succession Certificate comes into play to deal with movable estates like bank accounts, FDRs, etc. of the deceased. When the person (legal heir) visits financial institutions like banks and companies, etc. to gain possession of inherited debts and securities occupied by the deceased, they need to prove themselves as the legal heir of the deceased. In the event of not being nominated as a nominee of the deceased and there being no Will, the above institutions do not release the account proceeds without a Succession Certificate.

A Succession Certificate can be issued only in the name of the legal heir/s or legal representative/s of the deceased. In the case of Hindus/Sikhs/Jains, the Hindu Succession Act 1956 is the applicable law governing succession and the procedure is applied as given in the Indian Succession Act 1925.

Succession certificate must not be confused with a Letter of Administration (LoA). The process of obtaining an LoA involves filing a petition at a court of competent civil jurisdiction, with the necessary documents of the deceased.

Purpose/Effect of a Succession Certificate

With a succession certificate, the certificate-holder is empowered to receive all interests/dividends on the securities and negotiate/transfer securities. Thus, payments received and made on account of this certificate and on behalf of the deceased will be legally valid.

• Whether a debt or asset belongs to the deceased is not to be decided on an application of a succession certificate. The case of Srinivasa v. Gopalan brought to the fore that a succession certificate only allows a person to act as a nominee and the Courts are only concerned with the validity of such nomination with a succession certificate application. 
• Grant of succession certificate is conclusive against the debtor even if another person turns out to be the heir of the deceased, as specified by the Paramananda Chary v. Veerappan case. This does not render the certificate invalid.

 

Debts and Securities

Under Section 370 of the Indian Succession Act, a succession certificate can be granted only in respect of debts and securities and not for any other kind of property. For example, a Succession Certificate cannot be granted in respect of ornaments pledged by a deceased with a bank by way of security for the debt which the bank had advanced. It is not a debt due from the bank. Also, it cannot be granted in respect of ornaments kept in a deposit locker in a bank.

Security means:

• Any promissory note, debenture, stock or other security of the Central Government or a State Government;
• Any bond, debenture or annuity charged by Act of Parliament of the United Kingdom on the revenues of India;
• Any stock or debenture of, or share in, a company or other incorporated institution;
• Any debenture or other security for money issued by, or on behalf of, a local authority;
• Any other security which the State Government may, by notification in the Official Gazette, declare to be a security for this Part.

Where to File a petition for Succession Certificate?

The District Judge, within whose jurisdiction the properties are situated or the deceased resided, immediately, before his death, shall have the jurisdiction to try and entertain the Petition. Some high courts in the country have concurrent jurisdiction to try and entertain the dispute, and therefore a petition could be filed either at the High Court or at District Court.

What is the Procedure to obtain a Succession Certificate from Court?

The beneficiary has to approach the District Court or the High Court as the case may be and file a petition for a succession certificate.

• The petition has to be rightly drafted mentioning all the requirements as per the law, like relation of the petitioner with the deceased, details of other surviving legal heirs and beneficiaries, the time, date and place of death, etc.
• Along with the petition, all relevant documents have to be annexed. Thereafter, notices are sent to those who may have an interest in the property of the deceased and the concerned court also ask for publication of general notice for the public in a daily newspaper calling for objections.
• The court also issues notice to the State Government to ascertain if any debts are due to the state against the deceased.
• Thereafter, the court gives sufficient time for any objection to be filed.
• If other legal heirs provide a ‘no–objection certificate’ (NOC) and the court is satisfied, it passes an order to issue a succession certificate to the petitioner. If there is more than one petitioner, then the court may jointly grant them a certificate, but it will not grant more than one certificate for a single asset.
• Apart from lawyer’s fees, courts levy estate duty at the time of granting a Succession Certificate, which varies from state to state. Usually, it is between 2%-3% of the value of the assets.
• In case of no objection, the certificate is usually provided within 45 days.
• In some cases, the court may ask the petitioner to sign an indemnity bond to ensure that no loss occurs on account of misuse or illegal use of the certificate.
• Once you have the certificate, you are authenticated to distribute the assets to the legal heirs as per the succession laws.

Documents required for application of Succession Certificate:

• Document that carries legal heirs and beneficiaries.
• Death certificate.
• Address of the deceased person at the time of death.
• Details of properties, debts, securities and other such assets of the deceased person.
• Rights of the person seeking the succession certificate.
• NOC obtained from other legal heirs.

Validity of a Succession Certificate

A succession certificate granted with the proper court procedure is valid anywhere in India. However, if an Indian representative grants a succession certificate in a foreign country, that certificate will only be valid if stamped in accordance with the Court Fees Act 1870 to have the desired validity in India and as a certificate granted in India.

Succession Certificate, Legal Heir Certificate & Letter of Administration Certificate: Differences

	Succession Certificate	Legal Heir Certificate	Letter of Administration (LoA)
Purpose	Inheriting movable property and other assets	Used by next of kin to get control of pension, tax purposes, bank accounts	Used to get administrative control when no executor is mentioned in the Will.
Issuing authority	Issued by court of competent jurisdiction to legal heir(s)	Issued by Tahsildar of the district	Issued by court of competent jurisdiction to the beneficiary
Applied by	Only legal heirs	Son/daughter/husband/wife/parents	Closest living relative like Spouse/Children/Grandchildren
Fee	3% of the total value of properties	INR 2 for stamp and INR 20 for stamp with affidavit	2.5% of the total value of properties
Effect	Holder of certificate may not be ultimate beneficiary	Holder is entitled to inherit the estate	Grants administration rights over all properties of the deceased.

 

Conclusion 

A certificate-holder does not mean that one is the owner of the securities or the certified legal heir. Law has a separate procedure for that determination. The Succession Certificate only allows the person to act exactly in the manner that a nominee would act. It gives the authority to the holder for distributing the deceased person’s assets and they also have to submit a report of distribution before the court, if the court so directs.