The Indian Succession Act 1925, deals with the Succession certificate. The relevant sections are 370 to 390 in Part X of the act.
The Succession certificate is representative in nature. During one’s lifetime one might have lent money or acquired securities. He might have not have recovered those debts or money due under securities, when he was alive. When such a person, a creditor dies, somebody should recover such debts or money from the borrowers, which is generally done by the legal heirs, of the deceased. The law has facilitated this process and section 370 of Indian Succession Act provide for issue of Succession certificate in such cases.
But the issuance of Succession certificate has some limitations. The Succession certificate cannot be granted in respect of any debt or security to which rights have to established by letters of Administration or Probate as per Sections 212, 213 of Indian Succession Act.
As per the section 212, no right to any part of the property of the person who has died without making a Will, can be established in any Court of Law unless letters of administration are obtained from a Court of proper jurisdiction. Similarly no right as an executor can be established in any Court of Law unless a competent jurisdictional court grants probate of Will.
But it should be borne in mind that the Succession certificate does not finally adjudicate as to the legal succession. The certificate simply authorises some person to recover the debts and as stated earlier it is merely representative in nature. All the money recovered and obtained has to be disposed off as per the rights of the persons who are finaly entitled to it. The Succession certificate serves dual purposes, it prevents debts from being time barred, on account of disputes among the legal heirs and helps the borrowers, who can discharge the debts by paying to the representative of the deceased, which provide a valid discharge.At certain times the court will insist on the security from the person to whom certificate is granted as source of indemnity to the persons ultimately entitled for such moneys. The grant of the certificate does not confer any title on the grantee.
The word debt has a wide meaning than generally understood. An amount due under life insurance policy is a debt and succession certificate can be obtained. Likewise amounts under provident fund; bank deposits, are also covered under debts. A share certificate is a security under which money is due and court grants succession certificate. However, in one interesting case (Ranchhoddas Vs Govindadas Banetwala (1976) 78 Bomb LR 219: (1976)) the court held that succession certificate cannot be granted in respect of gold jewels pledged by the deceased in a bank as there was no element of debt in that transaction.
It has been made clear in the Succession Act that no court shall pass a decree against a debtor of the deceased person for payment of debt to a person claiming, on succession, to be entitled to the assets of the deceased person or any part thereof except on production of Succession certificate with the particular debt specified therein.
Any person who has beneficial interest in debt, or security of the deceased can apply for Succession certificate provided he is a major and of sound mind. A guardian appointed under Guardians and Wards Act can also apply for Succession certificate. Any application for Succession certificate has to be made to the district court in accordance with the procedure prescribed by the code of civil procedure.
Succession certificate can also be revoked in some instances; like, the proceedings were defective in nature, the certificate was obtained by making false suggestion or concealing some information, the certificate was obtained by means of untrue allegations, the certificate has become useless, inoperative on account of circumstances that a decree or order made by a court in a suit or other proceedings with respect to the effects of debts and securities specified in the certificate renders it proper that the certificate should be revoked.