What is a Succession Certificate?

The Indian Succession Act governs the rules pertaining to the issuing of a succession certificate. The act defines a succession certificate as a certificate issued by a court to the legal heirs of a deceased to establish the authenticity of the heirs and give them the authority to inherit debts, securities, and other assets of the deceased.

The purpose of a succession certificate is limited in respect of debts and securities such as provident fund, insurance, deposits in banks, shares, or any other security, mostly pertaining to a moveable asset of the deceased. When someone dies intestate or without any will, leaving back their moveable assets, the financial institution/banks before releasing the amount to the legal heirs of the deceased may require a succession certificate.

It’s not always the banks that will require such document, even insurance companies, and Asset Management Companies may require a succession certificate, for transferring or releasing the funds into the names of the legal heirs. The succession certificate acts as a mandate from the court for releasing the funds to the lawful heirs; this way, the financial institutions/companies safeguards itself from unnecessary litigation, and the assets of the deceased are protected as well from any fraudulent transfers. In the case of bank accounts and funds, a nominee is usually appointed; hence a succession certificate might not be needed, but in case a dispute arises, the banks will always require a succession certificate before they release the amount. Also, in cases where the amount involves is substantial, the bank will require a succession certificate.

The succession certificate establishes the legitimacy of the heirs and gives them the authority to access the assets. The succession certificate gives the legal heirs of the deceased the right to inherit his moveable assets, i.e., bank accounts, mutual funds, insurance policies, etc. The scope of the succession certificate is limited just to the movable assets of the deceased. In addition to this, a succession certificate also provides indemnity to all person who owe debts or are liable on securities with regards to all payments made to or dealings had in good faith with a person to whom a certificate as granted. The heirs collect the debt as a trustee. It’s important to understand that it’s the responsibility of the Legal heirs to move a motion in court to obtain a succession certificate. That it’s important to understand that a succession certificate, strictly speaking, does not affect the adjudication of the title of the deceased far less than that of the holder as regards the debts and securities covered thereunder. Its main objective is to facilitate the collection of debts on succession and afford protection to the parties paying debts to the representatives.

In the case of Muthia vs Ramnatham, 1918 MWN 242, it was held that the grant of certificate gives to the grantee (recipient of a grant) a title to recover the debt due to the deceased, and payment to the grantee is a good discharge of the debt.” 
From the above-mentioned case law, we can understand that a succession certificate only gives you a right to recover the debt/moveable assets. The question of whether the debt belonged to the deceased is not a matter to be decided by the succession certificate; for such an issue, you will have to file a separate civil suit.

Is Succession certificate required even if there is a Will?

In most circumstances, if a Will is presented, a succession certificate may not be required as the assets will be dispersed as per the will. A succession certificate is mostly necessary in cases when someone dies intestate. However, it’s the discretion of the financial institution as to whether if they require such a document or not. Indian Banks and financial intuitions have adopted stringent norms and policies for dispersing the movable assets of a deceased in India. This is to protect the assets of the deceased and to make sure the moveable assets do not end up in the wrong hands. Therefore, banks and financial intuitions might require a succession certificate even if there is a registered Will. 

Section 370 of the Indian Succession Act, 1925, specifically provides that a succession certificate shall not be granted with respect to any debt or security in cases where the deceased has left behind a legally binding will, then in such circumstances, a succession certificate cannot be issued as the executor of the will is expected to carry out the functions of distributing the assets as required by him. But in certain states, a Will, along with the succession certificate can be required to transfer the funds. Due to the increase in white-collar crimes in India, especially among NRI’s (Non-resident Indians), most banks in India will not transfer any funds into the names of the legal heirs of the deceased, until they are given a mandate by the courts. 

Alternative to a Succession certificate

In order to obtain a succession certificate, it can take anywhere between 5 to 10 months if the petition is not contested by anyone. The alternative to a succession certificate is a Legal heirship certificate, which may be procured, as an alternative to a succession certificate, for the purpose of establishing an inheritance or aiding in the transfer of moveable assets from the deceased. However, they are not the same. Legal Heirship certificate establishes the relationship of the heirs/successors to the deceased, whereas a succession certificate established the authenticity of the legal heirs and gives them a legal right to inherit the movable assets of the deceased. Succession certificate and a Legal heirship certificate can sometimes serve the same purpose. Both of the documents identify the heirs of the deceased. Legal Heirship Certificate, along with the death certificate, may act as a substitute for the Succession certificate in some cases. It is comparatively easier to obtain a Legal Heirship certificate than a succession certificate; hence a lot of NRIs opt for obtaining the Legal Heirship certificate first before moving a motion in court to obtain the succession certificate. In case any disputes arise between the heirs of the deceased, the revenue officer will not issue a legal heirship certificate and is required to direct the heirs to approach a civil court for the determination of the rightful heirs. In most circumstances, where there is no dispute among the legal heirs, the Legal heirship certificate, along with the death certificate, can work in the same manner as the succession certificate. Only when such documents are not accepted by the banks, the family members move on to apply for the succession certificate. Indian Succession Act does not prescribe a method for obtaining a legal heirship certificate; however, it can be easily issued by revenue officers such as Tehsildars, Revenue Mandal officers or talukdars, in every taluk / sub-divisions of a District. A legal heirship certificate can be issued and relied upon for certain limited purposes only and it’s not conclusive proof, but can be considered as prima facie proof. The only document which is required to obtain the Legal heirship Certificate is the death certificate and any evidence to establish your relationship to the deceased.