Last Updated on October 14, 2020 by Satish Mishra
Delhi High Court decides that Bank lockers cannot be considered as a security in succession cases.
Summary- In this post we will discuss about the Delhi High Court judgment wherein the court decided that a bank Locker does fall under the ambit of securities as per the provisions of The Indian Succession Act, 1925.
Also Read- RBI Notifications regarding Lockers
Introduction
The Indian Succession Act, 1925 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 of the central government or the state government to which the deceased was entitled. Its main objective is to facilitate collection of debts on succession and afford protection to the parties paying debts to the representatives of the deceased person.
A succession certificate may be used in situations where banks, financial and private institutions release funds to the nominee (where such nominee is not the legal beneficiary of the asset) and the nominee refuses to cooperate in distribution of the asset to the legal beneficiary. Similarly, a succession certificate may be useful to prove genuineness of the claimant where the inheritance amount is substantial. Additionally, in certain states, a probate (meaning a copy of the will, if it exists, authenticated by the Court) and a succession certificate are compulsory to transfer the title of an immovable property.
ALSO READ- TRANSFER OF PROPERTY- DISCLOSE ALL LEGAL HEIRS
Facts in brief
IN THE MATTER OF:−
- Narinder Singh Husband of Late Anu Nijhawan
- Gurleen Kaur (Minor 9 years) Daughter of Anu Nijhawan, Through her father 3. Ishpreet Singh (Minor 7 years)
Through her father All Resident at : 144−A, I−Block, Garhwali Mohalla, Laxmi Nagar, Delhi−110092. …………………………………………………. Petitioners
VERSUS
The State……………………………………………………… …Respondent
Also Read- Procedure for settlement of Deceased claims of Locker / Safe Custody Article
the present petition has been filed under section 372 of the Indian Succession Act, 1925 by Narinder Singh, Gurleen SC No. 10/2019 Page No. 1/6 Narinder Singh & Ors. Vs. The State . Kaur and Ishpreet Singh (hereinafter called petitioners), in respect of locker, one Fixed Deposit and amount lying with State Bank of India, Laxmi Nagar, Delhi, pertaining to deceased Smt. Anu Nijhawan, who expired on 19.02.2018. As stated, petitioner no. 1 is the husband of the deceased Smt. Anu Nijhawan, whereas petitioner no. 2 and 3 are minor children of the deceased aged 9 and 7 years respectively and are represented through their father/petitioner no. The petitioner is seeking Succession Certificate in respect of one Locker bearing No. 212 in the name of the deceased with the State Bank of India, Laxmi Nagar Branch, Delhi.
Also Read- Latest Succession Certificate judgments on topic of Locker
Issue involved: The issue in the current case was whether a bank locker of a deceased falls under the ambit of security as per Indian succession act .
Judgements cited:
In Venugopal Loya And Ors. vs Vijayalakshmi Bung And Anr..All it has been held by Hon’ble Andhra Pradesh High Court that no succession certificate can be granted under section 370 of the Indian Succession Act, 1925, to operate a locker as the locker cannot be treated as a debt.
The Orissa High Court, in State Bank v. Satyaban Pathal [1988] stated that “The purposes of a succession certificate is, thus, to grant indemnity to the person who owes the debts or is liable on the securities to pay the debt to the person who gets the certificate or deals with the person with regard to the security.
Findings of the court: After examining the documents on record and referring to various judgments the court primarily referred to the verbatim of section 370 of Indian Succession Act which states that
(1) A succession certificate (hereinafter in this Part referred to as a certificate) shall not be granted under this Part with respect to any debt or security to which a right is required by section 212 or section 213 to be established by letters of administration or probate: Provided that nothing contained in this section shall be deemed to prevent the grant of a certificate to any person claiming to be entitled to the effects of a deceased Indian Christian, or to any part thereof, with respect to any debt or security, by reason that a right thereto can be established by letters of administration under this Act. (2) For the purposes of this Part, “security” means–
(a) any promissory note, debenture, stock or other security of the Central Government or of a State Government;
(b) any bond, debenture, or annuity charged by Act of Parliament 1[of the United Kingdom] on the revenues of India;
(c) any stock or debenture of, or share in, a company or other incorporated institution;
(d) any debenture or other security for money issued by, or on behalf of, a local authority;
(e) any other security which the 2[State Government] may, by notification in the Official Gazette, declare to be a security for the purposes of this Part.”
The Hon’ble court further stated that
Also Read- Succession Case Judgments in Chandigarh Panchkula Mohali
Applying the said meaning to the word used in sections 370 to 381 as regards succession certificate, it can safely be concluded that pledged articles are not debts and, therefore, there is no scope for obtaining a succession certificate in respect of the same.” In view of the above legal position, Succession Certificate cannot be granted to the petitioner in respect of the above Bank Locker. Therefore, issuance of the Succession Certificate with respect to the said Locker is hereby declined.
ALSO READ- DIFFERENCE BETWEEN LEGAL HEIRSHIP AND SUCCESSION CERTIFICATE
Conclusion
It is quite clear from the above given case that the bank locker doesn’t not fall under the ambit of security and thus succession certificate cannot be issued.
ALSO READ- LEGAL HEIR CERTIFICATE PROCESS IN INDIA
This post was written by Yoshita Gwalani
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