Certificates that facilitate property devolution
Legal Heirship Certificate (LHC), Succession Certificate (SC), Certificate of the Administrator-General and Letters of Administration (LoA) have close relation. They serve a common purpose – they are being used for devolution of some rights on the assets left by a deceased person with a Will or without one, to their legal descendants.
The above said certificates, because of their misleading names, create some confusion in the minds of not only ordinary people but also some learned lawyers also. This write-up intends to bring in some clarity in regard to the basic nature of those certificates governing inheritance and succession.
The bank accounts, property, personal assets and investments that a person leaves behind when he dies are altogether called ‘estate’. When there is a contest in the nature of devolution of the ‘estate’ to the descendants, it is necessary to obtain legal authority from the court or some other authority. Normally, Will is the legal instrument by which a person makes a plan for disposition of his property after his death. When the deceased person leaves no Will or his Will cannot be executed due to some reasons, there comes the role of such a certificate for disposing of his ‘estate’.
What do the terms inheritance & succession mean?
The legal term inheritance refers to the right to succeed to the estate as legal descendants whereas the term succession refers to the process by which the legal heirs acquire the property of the deceased. The term heir, on the other hand, is a descendant who inherits a share of the ‘estate’.
Legal Heirship Certificate (LHC)
Legal Heirship Certificate is issued by the revenue officers of the executive government – in Kerala it is the Tahsildar – based on the enquiry made by his junior revenue official – the Village Officer. No specific application form is prescribed to apply for the certificate. But the application in plain paper should indicate necessary details required for issuing such a certificate and include necessary documents, including the death certificate of the deceased.
The certificate is issued based on local enquiry by the Village Officer and a Gazette notification inviting objections from others against the issue of the certificate. It is being used for claims relating to pension, gratuity and such other service benefits when the deceased had already not selected a nominee for receiving such claims. The certificate can be used for drawing an amount not exceeding Rs five lakh as of now. If the amount to be drawn is more the legal heirs have to approach a civil court to declare them as legal heirs so as to receive such an amount.
The certificate prima facie establishes the relationship the heirs had with the deceased but it is not a conclusive proof for determining the legitimate heirs to any disputed estate. When there is a dispute in regard to the legitimacy of the successor, the only course left for settling the matter is to file a suit in the civil court and get its decision.
Succession Certificate (SC)
A Succession Certificate (SC) on the other hand is granted exclusively in respect of “debts and securities” such as Provident Fund, Bank Deposit, Insurance, Shares etc to which the deceased was entitled to, as per Section 370 read with Section 214 of the Indian Succession Act.
The certificate nevertheless declares who the successors of the property are and the ratio in which they would get their shares, unlike many people think. In application for SC what the court decides is who can apply for such a certificate and what property it is applied to. The court cannot determine any question relating to the title or giving any other incidental relief in an application for SC.
The certificate is issued by the District Court or High Court – both have concurrent jurisdiction to hear and decide a petition. The certificate is issued on miscellaneous proceedings under section 141 of the CPC. The court follows summary trial in proceedings. The contesting parties cannot raise complex contentions in regard to the title of the property. When there are rival contentions from different parties, the contentions have to be settled by an original suit in the civil court.
A petition for certificate should contain the relationship of petitioner with the deceased. The time, date, place of death details should also be mentioned in it and the death certificate and any other documents as the court may require should be attached. Anyone who has prima facie a beneficial interest can apply for the certificate.
The petition should specify each debt and security in detail. The details of all heirs have to be included in the petition. The petition should be a signed and verified one by the plaintiff. It should set forth the following facts:
- The time of the death of the deceased
- Ordinary residence of the deceased at the time of his death
- The family /other near relatives of the deceased and their residence
- The absence of any impediment under any law to the grant of the certificate
- The debt and securities in respect of which the certificate is applied for
A newspaper notification specifying a time frame – usually one and a half month – within which anyone can file objections also, needs to be issued. It roughly takes around 6 – 8 months to receive a Succession Certificate. Some judicial officers issue them within two months.
The question that whether a debt due to the deceased is really due or not is not a matter, which can be decided in an application for a succession certificate. The right of the applicant to the certificate and the question of the existence or non- existence of the debts/securities in respect of the application are the things the court ascertains.
If a Will of the deceased is found to have been in existence during the proceedings the court can dismiss the application for certificate. If the court is satisfied with the facts in the application, it will issue a succession certificate specifying the debts and securities.
The court can ask the applicant of the certificate to furnish security in the form set forth in Schedule VIII of the Indian Succession Act 1925. The certificate empowers the grantee a title to recover the debt due to the deceased and authority to sue for debt recovery. The debtor can pay the debt amount to the certificate holder to get a full discharge.
The certificate grants the applicant only the right to collect the debt but not the right to the debt. A certificate already issued can be revoked when the proceedings were found defective or due to other reasons.
An appeal can be filed about an order on the certificate in the high court but no second appeal is provided for. The certificate, in addition, clothes the parties who are paying the debt to the legatees with due protection. The certificate makes its holder equivalent to a trustee. The District Court declares only the holder’s right to the certificate but not the right to the estate.
Probate of the Will & Letters of Administration
The Probate of the Will and Letters of Administration are issued under the Indian Succession Act 1925. In Kerala, the Indian Succession Rules 1968 issued by the Kerala High Court deal with provisions in regard to both of them.
The above said rules set forth the forms and procedures applicable in Kerala for obtaining contentious or non-contentious proceedings to be followed for obtaining probate and letters of administration.
Probate and Letters of Administration are legal instruments to distribute the estate of the deceased to the legitimate descendants. They authorize the administrator of the Will to close bank accounts, cash investments and sell or transfer property. However, which one of these two instruments is appropriate in each case depends on whether an individual is died with or without a Will, and who is applying for it.
Either a legal heir or a creditor can apply for grant of probate or letters of administration. If the application is a contested one it will turn into a civil suit to be proceeded as per the Civil Procedure Code. The application for probate and letters of administration should set forth all the property and credit which the deceased possessed or entitled to, at the time of his death or were likely to come to his hands.
Probate of the Will
Probate means a certificate that declares the genuinely of the Will. It is issued by the civil court. The Probate is legal confirmation from the Court that the Will is valid. Once the Probate is issued, it means that the Will has been officially registered and the Executor named in the Will is the one with the authority to deal with the estate. The court does not decide the disputes to the title in an application for probate.
A Probate is issued only to the Executor named in the Will or the legatee. When making a Will, one should appoint its Executor. This should be someone the author of the Will reposed trust, and who has the capability of managing a potentially complex process of executing the Will that may take up to one year to complete.
The Executor has the legal power to execute the Will after the author’s death, and can transfer the assets to the beneficiaries named in the Will. Some financial institutions prefer the Executor to obtain a Probate from the appropriate Court before releasing the funds.
Probate is not required now in Kerala. It is still required for the assets left in the presidency towns of Bombay, Calcutta and Madras, under Sections 57 & 213 of the Indian Succession Act. Based on the Sections the Supreme Court holds that a probate will not be required to a Hindu in respect of a will made regarding the immovable properties situate outside the three presidency towns (Clarence Pais & Ors vs Union Of India : AIR 2001 SC 1151).
Letters of Administration
The Letters of Administration are the authority issued by a competent court (District or the High Court) to a right person to administer the distribution of the estate belonged to the deceased in the right proportion to the rightful claimant. When it is necessary to have the letters of administration a Succession Certificate cannot be issued in lieu of it.
The letters of Administration are issued to administer the estate of the deceased on two occasions: when a person ides without leaving a Will and when a person dies leaving a Will but without appointing an executor, or on such other specific situations.
The Letters of Administration is similar to Probate, but is issued to the next of kin of the deceased. When several persons apply the court has discretion to grant it to anyone among them. If nobody applies it can be granted to the creditors of the deceased.
A person who is neither a sapinda of the deceased is not entitled to apply but can oppose an application by a more distant relation. It is sufficient if the court is satisfied that the applicant has a beneficial interest in the property of the deceased. Under Section 254 of the Indian Succession Act, the court can appoint a person other than one who is in ordinary circumstances would be entitled to a grant of administration. He can function as the administrator.
The purpose of letters of administration is to determine who will represent the deceased for the purpose of administering the estate and not to determine the question of inheritance.
Letters of Administration without a Will
If the deceased has not made a Will and thereby not appointed a specific person as the Executor of his estate, his family would have to apply to the court for Letters of Administration to confirm their entitlement and to manage the estate.
If the family members cannot agree which of them would be the best person to deal with the estate and that disagreement leads to a dispute, then the dispute can be settled in a civil suit only by a competent civil court.
The Schedule VII of Indian Succession Act, 1925, contains the form for grant of letters of administration. The Rules mentioned above carry the prescribed application form. An application can be filed after 14 days of death. If no beneficiary applies for the certificate, the court can grant it to the creditor of the deceased.
Letters of Administration with the Will
Letters of Administration might also be issued where there is a valid Will. It can be issued when the Will of the deceased has no executors, no action is taken by the executor or the death of the executor occurred before administering the Will.
It can also be issued when the Executor named in the Will is not applying for a Probate. This could be because the person does not want to act as the executor, or is no longer capable of doing so, or perhaps he might have already died. In such a case, it is common for one of the main beneficiaries in the Will to apply for letters of administration instead. To avoid such a scenario, one can include a substitute executor in the Will, who can step in when the main executor is incapable of managing the estate.
The court normally levies around 3% of value of asset as fee. When the certificate is issued, the grantee has the authority to distribute assets as per the concerned succession law. The grantee will also get the title to recover the debt due by deceased. Any payment of debt made to the grantee will be a legally valid discharge of the debt on the part of the debtor.
Administrator-General can issue a Certificate
The Administrator-General in the state may grant a certificate under the Administrators General Act, 1963 when a person dies leaving assets within the state.
The Administrator General has authority to determine the liabilities payable by the estate and to ascertain, collect, manage and distribute the assets of the estates in accordance with the laws of intestacy to beneficiaries who have proven their relationship to the deceased. He is duty bound to act in accordance with the terms of the will and as per law, under the supervision of the High Court as per the act.
The act says when a person has died leaving assets within the State and the Administrator-General is satisfied that such assets did not at the date of death exceed in the whole ten lakhs rupees in value, he may grant to any person, claiming otherwise than as a creditor to be interested in such assets or in the due administration thereof, a certificate under his hand. Any sum of money deposited in a Government Savings Bank or in any provident fund to which the provisions of the Provident Funds Act, 1925 apply is excluded from this amount of ten lakhs.
Such a certificate entitles the claimant to receive the assets therein mentioned, left by the deceased within the State, to a value not exceeding ten lakh rupees.
Nominee or legal heir gets the assets of the deceased?
When the bank deposit/insurance amount of a deceased person is claimed simultaneously by both the nominee on the one hand, and the legal heir on the other, the laws have no specific provision to differentiate between legitimacy of a nominee and a legal heir in receiving the deposit/insurance amount of the deceased person. This issue, which led to inconsistent decisions by different courts in the yester years, is reasonably well settled now.
Many of the people think that that the nominee of the depositor, after the death of the depositor acquires all his/her rights to the express exclusion of all other persons and, therefore, the legal heir cannot lay any claim to the money in the account or in regard to the articles that might be lying in the bank locker held by their deceased mother.
The legal position in this issue, after numerous twists and turns through contradictory or inconsistent judgments, now reaches a well settled position that a nominee, who need not necessarily be a legal heir, is a trustee of the property of the deceased. Anyone who has no stake in the property even can be made a nominee.
The Banking Regulation Act, 1949, since its amendment in 1983, provides for making payment of a deceased depositor to a valid nominee in its new section 45 ZA to 45 ZF. Similarly, the Banking Companies (Nomination) Rules, 1985 provide for procedure and form of making valid nomination. Several acts in the financial sector such as the companies act, provident fund act, 1925, insurance Act 1978, Mutual fund Regulations, 1956 etc lay down provisions for nomination.
The Section 45ZA (2) of the Banking Regulation Act says, “Notwithstanding anything contained in any other law for the time being in force or in any disposition, whether testamentary or otherwise, in respect of such deposit, where a nomination made in the prescribed manner purports to confer on any person the right to receive the amount to deposit from the banking company, the nominee shall, on the death of the sole depositor or, as the case may be, on the death of all the depositors, become entitled to all the rights of the sole depositor or, as the case may be, of the depositors, in relation to such deposit to the exclusion of all other persons, unless the nomination is varied or cancelled in the prescribed manner”.
In Saraswathi Amma v Padmavathy Amma (1992(2) KLT 276) the court says that a nominee is only a trustee of the legal heirs and the right of the legal heir on the property of the deceased bestowed by succession laws cannot be taken away by nomination.
In Smt Sarabati Devi and another v Smt Usha Devi (1984 AIR 346) the Supreme Court (SC) says the nomination only indicates the hand which is authorized to receive the amount, on the payment of which the insurer gets a valid discharge of liability under the insurance policy. The amount can be claimed by the legal heirs of the assured in accordance with the law of succession in force.
The SC in Ram Chander Talwar & Anr v Devender Kumar Talwar & Ors decided on 6th October 2010 says, the “Section 45ZA(2) merely puts the nominee in the shoes of the depositor after his death and clothes him with the exclusive right to receive the money lying in the account. It gives him all the rights of the depositor so far as the depositor’s account is concerned. But it by no stretch of imagination makes the nominee the owner of the money lying in the account. It needs to be remembered that the Banking Regulation Act is enacted to consolidate and amend the law relating to banking. It is in no way concerned with the question of succession. All the monies receivable by the nominee by virtue of section 45 ZA (2) would, therefore, form part of the estate of the deceased depositor and devolve according to the rule of succession to which the depositor may be governed”.
Therefore, the matter is now well settled. The legal heir is the ultimate rightful owner of the property of a deceased person. A nominee is the person who practically receives and holds such property till the succession of the property is finally decided and settled.
It means that the nominee will receive and hold the property of the deceased till he is legally bound to transfer it to the legal heir. The scheme of nomination ensures the property of the deceased is protected till the legal heir comes to a position of receiving and distributing the rightful shares among them.
Mutation of intestate property
When a person dies intestate without a Will, the property he/she owns will automatically get devolved on to his/her legal heirs. But the revenue authorities do not easily allow the legal heirs to get the property mutated to them as they have a notion that the mutation should only be done after ascertaining that who are the legal heirs.
In Kerala State, the statute that governs the mutation or transfer of registry of immovable property is called the Transfer of Registry Rules, 1966. As per Section 3 of the rules it is the suo motu duty of the Village Officer to initiate action for mutation when he receives the information of death of a land owner. The legal heir can also apply for mutation under Section 4 of the transfer of registry rules.
Now the circular of the Land Revenue Commissioner, Kerala says that the land tax can be collected from anyone who holds the land in possession as the land tax collection does not change the status of title of the property.
The mutation entry in the revenue record is only for fiscal purposes. It does not confer any right, title or interest in favour of a person. The proper proof of ownership of an immovable property is the registered sale deed or an equivalent instrument having legal validity.
The mutation entry in the revenue record has nothing to do with the ownership and they cannot be treated as conclusive evidence of the ownership of the property. The Supreme Court (SC) reaffirmed this position in Jitendra Singh v State of Madhya Pradesh (Citation: LL 2021 SC 430).
In the above judgement, the court referred to the judgment in Balwant Singh v Daulat Singh (D) [(1997) 7 SCC 137] in which the SC considered the effect of mutation. In the case it was held that mutation of property in revenue records neither creates nor extinguishes title to the property, nor has it any presumptive value on title. Such entries are relevant only for the purpose of collecting land revenue.
In Suraj Bhan & Ors. v Financial Commissioner & Ors [ (2007) 6 SCC 186)[ the Supreme court held that revenue records relating to mutation confer no title on the party. Such entries are relevant only for fiscal purpose and substantive rights of title and of ownership of contesting claimants can be decided only by a competent civil Court in appropriate proceedings.
In numerous subsequent cases, various courts reaffirmed the decision and pointed out that entries in the revenue records have only the fiscal purpose of payment of land revenue, and no ownership is conferred on the basis of such entries. The question of title of the property can only be decided by a competent civil court.
Civil court alone can decide disputes on title
Even though the certificates mentioned above deal with legal heirship to a limited extent for easing the receipt of money or transfer of other assets including immovable properties a deceased has left in his name to a beneficiary, the substantive rights of title and of ownership of contesting claimants in regard to an asset cannot be decided based on those certificates or other forms of such validation even by the court. It can only be decided finally by a competent civil court in appropriate civil suit alone.
In other words, these certificates, including the Legal Heirship Certificate, have limited purpose of discharging the amount of money due to the deceased to some beneficiaries having the character of a nominee who steps into the shoes of the deceased for distribution of his assets. But the question regarding actual legal heirs can be decided by a civil court alone and that too in a civil suit of appropriate nature.
Conclusion
The certificates regarding debts, liabilities and securities of the deceased get special importance in inheritance and succession to the descendants because the estate of the deceased that needs to be devolved is arrived at only after discharging his debts, liabilities and other expenses including funeral expenses.
Additional reading
- Indian Succession Act, 1925
- Indian Succession Rules (Kerala), 1968
- The Administrators- General Act, 1963
- The Banking Regulation Act, 1949
- Transfer of Registry Rules, 1966
