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SUCCESSION TO IMMOVABLE PROPERTY IN CASE OF NON-RESIDENT INDIANS AND PEOPLE OF INDIAN ORIGIN
Family Law - II
Submission By:
Submitted To:
10A078
Table of Contents
List of Cases ........................... 5 Introduction . 7 Definition of Non Resident Indians And Persons of Indian Origin.. 8 Basic Concepts of Succession . 11 Position in English Law Regarding Succession to Immovable Property.. 12 Position in India Regarding Succession to Immovable Property . 14 Suggestions .. 18 Indian Judiciary And Rules Regarding Succession . 19 219th Report of the Law Commission of India 21 Relevancy and Adaptability of the Hague Convention, should India be a Party to the 1989 Convention? 21 Conclusion ... 23 Bibliography 24
LIST OF CASES
Maria Luiza Valentina Pereira and Anr. Vs. Jose Paulo Coutinho and Ors., 2009 (1) BomCR 370 Daljit Singh and Anr. v. Yogeshwar Prasad, 2006 (88) DRJ 698 Sankanan Govindan Vs. Lakshmi Bharti, AIR 1974 SC 1764 R. Viswanathan v. Rukn-Ul-Mulk Syed Abdul Wajid, AIR 1963 SC 1 Duncan v Lawson (1889) 41 Ch D 394 Morris (1969) 85 LQR 339 Re Thom (1987) 40 DLR 184 Re Rea [1902] 1 IR 451 Re Collens [1986] 1 All ER 611 Re Hemando, Hemando v Sawtell (1884) 27 Ch D 284 Nelson v Bridport (1846) 8 Beav 547 Studd v Cook (1883) 8 App Cas 577 Bailie v Miller [1914] 1 Ch 511 Balfour v Scott (1793) 6 Bro Parl Cas 550 (1749) Hearle v Greenbank 1 Ves Sen 298 Re Barrie's Estate 240 Iowa 431 Re Caithness (1891) 7 TLR 354 Re Mieallef's Estate [1977] 2 NSWLR 929 Re Berchtold (1923) 1 Ch. 192
INTRODUCTION
The enticements for settling abroad magnetize many Indians to embark on the foreign soil. The number of Non-Resident Indians has been increasing at a decent rate, in almost every jurisdiction abroad. However, these Non-resident Indians keep returning back in body or in soul, to the home soil on account of their love for motherland, family, property and kith & kin. When such NRI returns, the legal problems that are connected to his temporary or permanent return, accompanies him and he seeks for a remedy to such legal problems. This perpetually leads to the import of the foreign law along with the NRI, of the overseas jurisdiction from where he has migrated. This type of situation arises mainly because of two possible causes either there is no remedy available for him under the Indian law or because he finds it easier to import a foreign court decision to India based on an alien law that has no parallel in the Indian jurisdiction. This collision of jurisdictional law that is commonly called as Conflict of laws in the sphere of Private International laws is not yet a developed jurisprudence in India. Numerous issues relating to succession are staring in face of the Indian law due to increase in number of international successions. These have resulted in Hague Convention, 1989 which is an attempt towards unification of private international law rules relating to succession. This project work is concerned with succession to
immovable property associated with the Non-Resident Indians and people of Indian origin. The legal position with regard to succession in England and in India is quite similar only difference being U.K. is a party to the Hague Convention and thus more precise legal solutions available. Absence of any specific legislation has increased the dependency on Courts which are again tied to the limitations of inadequate law.
To be an NRI, it is sufficient that a person of Indian origin establishes that he has permanently or temporarily settled outside India for his business or on account of his employment or for any other purpose which would indicate his intention to stay outside India for an uncertain period. It is not necessary that the NRI should be a citizen of India. It is immaterial that the NRI holds a foreign passport or has shifted to a foreign country.1 Since there is no specific law defining NRIs in relation to succession to property, the definitions under Foreign Exchange Management Act, 1999 (FEMA) has been analyzed.2
Person resident outside India Section 2 (w) of the FEMA Act, 1999 says that Person resident outside India" means a person who is not resident in India. Now section 2 (v) provides definition for person resident in IndiaSection 2 (v) "Person resident in India" means- A person residing in India for more than one hundred and eighty-two days during the course of the preceding financial year but does not include;(A) A person who has gone out of India or who stays outside India, in either case(a) For or on taking up employment outside India, or
1 2
Anil Malhotra and Ranjit Malhotra, Malhotra & Malhotra Associates, Manuptra Newsline, 2008. http://www.femaonline.com/nricorner/nri_defin_def.htm, Accessed on 23/03/10. 3 Foreign Exchange Management (Deposit) Regulations, 2000, Notification No.FEMA 5 /2000-RB dated 3rd May 2000, RESERVE BANK OF INDIA (EXCHANGE CONTROL DEPARTMENT) CENTRAL OFFICE Mumbai 400 001, http://rbidocs.rbi.org.in/rdocs/notification/PDFs/13255.pdf, Accessed on 23/03/10.
Gujarat National Law University (b) For carrying on outside India a business or vocation outside India, or (c) For any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period; (B) A person who has come to or stays in India, in either case, otherwise than(a) For or on taking up employment in India, or (b) For carrying on in India a business or vocation India, or (c) For any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period; (i) Any person or body corporate registered or incorporated in India, (ii) An office, branch or agency in India owned or controlled by a person resident outside India, (iii) An office, branch or agency outside India owned or controlled by a person resident in India.
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Supra note 3 http://www.femaonline.com/nricorner/nri_defin_def.htm, Accessed on 23/03/10. Also see Foreign Exchange Management (Acquisition and transfer of immovable property in India) Regulations, 2000, Notification No.FEMA 21 /2000-RB, 3rd May 2000, RESERVE BANK OF INDIA (EXCHANGE CONTROL DEPARTMENT) CENTRAL OFFICE, http://rbidocs.rbi.org.in/rdocs/notification/PDFs/13271.pdf, Accessed on 23/03/10.
Gujarat National Law University behind conical of definition is to ensure & restrict control of immovable properties in the hands of strictly defined persons of Indian Origin only, for determining the Indian origin herein a PIOs father or grand father's birthplace or Indian citizenship at any time is to be considered unlike earlier other definitions referring to parents or grand parents. Thus we can summarise the definition of NRI as(A) Indian Citizen residing outside India, (B) Foreign Citizen of Indian origin residing outside India (1) (2) who held an Indian Passport at any time ,or who himself or his father or grandfather was a citizen of India.
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Paras Diwan and Peeyushi Diwan, Private International Law Indian and English, (4th ed., Deep and
The term Lex Situs (Latin) refers to the law of the place in which property is situated. The lex domicilii is the Latin term for "law of the domicile" AIR 1963 SC 1
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Gujarat National Law University observed that succession to immovable property is governed by Lex Situs. This was more recently given assent in the case of Daljit Singh and Anr. v. Yogeshwar Prasad10and in Maria Luiza Valentina Pereira and Anr. Vs. Jose Paulo Coutinho and Ors.11 Using this doctrine, and adding NRIs, PIOs and property issues, it gives us a really potent and legal labyrinth of issues. This paper would deal on the aspect of such property issues.
owning land in both Ireland and Victoria. The widow of the deceased was given the property in Victoria as per Victorian statute and the property in Ireland as per Irish Statute. Another decision enforcing the above mentioned doctrine is Re Collens15case where the deceased was intestate and domiciled in Trinidad and Tobago. He left property there and in England. The dispute regarding succession with respect to property in England was decided as per English law. Sir Nicolas Browne did not interpreted the English Statutory provisions but held the principle of Situs.. It is submitted that various criticism has been made against this rule16 and these has been recognized in few English Court decisions17. Main criticism against this rule is made by terming the rule as an historical anomaly from the time before 1926 when intestate succession to land was subject to rules different from intestate succession to personality. Domestic legislation on intestate succession would seem to
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2006 (88) DRJ 698 2009 (1) BomCR 370 Bhushan Tilak Kaul, Conflict of Laws in Respect of Succession by Testamentary Dispositions, Non Resident Indians and Private International Law, ISIL, Hope India Publications, New Delhi, 2008. 13 Duncan v Lawson (1889) 41 Ch D 394 14 [1902] 1 IR 451 15 [1986] 1 All ER 611 16 Morris (1969) 85 LQR 339 17 Re Thom (1987) 40 DLR 184
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Gujarat National Law University be based on the assumption, erroneous in fact, that succession to all the intestate's property will be governed by the same law.
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vi) Revocation A Will relating to immovable property may be revoked by a later valid Will. The validity of testamentary revocation of earlier Will, will be governed by Wills Act 1963.
14
Gujarat National Law University moveable property is regulated by the rules which govern, in France, the succession to the moveable property of an Englishman dying domiciled in France, and the succession to the immoveable property is regulated by the law of 1*[India]. On perusal of this section it is found that, the Indian succession law, first classifies the property of a deceased person into immovable and movable properties and thus accord a statutory status to the succession system followed in the common law countries. It is further submitted that sub section (1) recognizes the principle of Lex Situs and makes it clear that the succession to immovable property will be regulated by the Indian law since it is physically present in India. This principle is also applicable to a foreigner's immovable property in India or, for that matter, of an Indian's property even if he was not of Indian domicile at the time of his death. Application of Lex Situs to immovable property irrespective of the domicile of the deceased person is very much in consonance with the practice of other commonwealth countries in this regard.21 The provisions of sub section (2) deal with movable properties and provide that succession to such property shall be determined by the law of the country (lex domicili) where the property of deceased person is situated. The illustration with this section further clears the application of law. Since this project work is concerned with immovable property, sub section (2) is not being discussed in detail. Returning to the other governing Act, among Hindus the laws relating to succession are codified in the Hindu Succession Act, 1956 (HSA). It is submitted that in cases of intestate succession NR Is are facing a lot of problems from the third party claimants. The HSA unlike the Hindu Marriage Act does not have extraterritorial application. As it has been mentioned earlier the immovable property of Hindu NRIs situated outside India will be governed by his/her domicile. In the cases of intestate succession, natural succession among the category of heirs as per the order of succession will flow as per the Hindu Succession Act. Then, speculation, outsider claims, disputes among heirs and third party rights are endemic.
21
Jayaraj C., Should Indian become Part to The Hague Convention on the Law applicable to the Estates of Deceased persons, Non Resident Indians and the Private International Law, Hope Indian Publication, New Delhi, 2008.
15
Gujarat National Law University The application of HSA in case of NRIs can be summarized into three principles22 (i) If a Hindu is domiciled outside India, succession to his immovable property in India will be governed by HSA. (ii) If a Hindu is domiciled in India, succession to his immovable property outside India shall be governed by the law of the country where the property is situated. (iii) If a Hindu is domiciled outside India, succession to his immovable property outside India shall be governed by Lex domicilli and not by HSA.
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Gujarat National Law University (ii) Formal Validity It is submitted that India has not enacted any statute like the Wills Act 1963, (England). Wills Act was enacted after Hague convention in an attempt to move towards adoption of uniform rules relating to form of testamentary disposition. India has not yet rectified this convention. It is further submitted that some authors24 are of the view that in absence of a specific statute, the general rule enacted in section 5(2) of the Indian Succession Act, 1925 would apply to formal validity of Wills in case of movables. It is important to mention here that sub clause (2) is in respect of movable property and it is unclear whether this rule holds the same in case of Immovable property also. If it does apply than it can be said that Wills executed in India for movable property situated in India will be valid, if they comply with the lex fori. In case of a Will of foreigner domiciled abroad, the formal validity would be determined by the lex domicilii of the testator at the time of his death.
(iii) Material or Essential Validity The legal situation that seems to exist under the Indian Private International Law is that the rules applying to material validity will also be applicable to formal validity. Will made by foreigner will be governed by the lex domicilli i.e law of his domicile at the time of his death.25 (iv) Construction of Wills Provisions relating to construction are available in Chapter VI of the Succession Act, 1925. From sections 74, 75, 82 and 87 it is deduced that the cardinal rule of construction is to give importance to the intent of the person making such Will. If an uncertainty arises with respect to testator's intent, the law with which the deceased had most intimate association would be applied by the Court. This law can either be lex domicilli or law of the place where he made the will. However in case where the testator has mentioned the choice of law regarding construction, then it will be interpreted according to that law only. The court shall try as far as possible to give effect to the intent of the testator (section 87).26
24
Bhushan Tilak Kaul, Conflict of Laws in Respect of Succession by Testamentary Dispositions, Non Resident Indians and Private International Law, ISIL, Hope India Publications, New Delhi, 2008. 25 Ibid 26 Ibid
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Suggestions
Since Hindu succession Act is not applicable outside India, it is suggested that NRls of Hindu origin who have immovable properties in different countries should execute a joint composite Will. Execution of separate Wills for separate immovable properties in different countries should be avoided. Establishing genuineness of multiple Wills is difficult than that of a composite Will. Although it is optional in India, a Non-Resident Indian should register the Will separately in every jurisdiction. It is important to comply with the separate legal
requirements of different countries regarding registration of Will. Appointment of an executor for execution of Will in the jurisdiction where immovable property is situated is also suggested. This will result in helping the beneficiaries by simplifying the division of property in accordance to Will. A written will which is properly witnessed and registered precisely identifies the claimants and heirs. Multiple registration of Will results in seal of finality. Its vital for an NRI to act in advance and make the task of beneficiaries easier, who would be inheriting the property.
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On appeal this aspect of the decision has been confirmed by the Supreme, Court in A.I.R. 1974 SC 1764 though on the question of finding of domicile of the deceased the decision of Kerala High Court has been overruled.
19
Gujarat National Law University of immovable property situated in India arises before an Indian court, the Indian court tends to apply the lex fori, i.e., rules of construction as provided in sections 74 to 111 of the Succession Act. This is deduced not merely from the provisions contained in these sections but also from the general rule laid down in sub-section (I) of section 5 of the Act. The lex fori would apply whether the will was executed in India or elsewhere. The Indian courts have all along taken the view that intention of the testator is to be carried out. But c1ear and unambiguous dispositive words are to be given effect to, and not to be controlled by the so called intention of the testator.
Recent judgments
In Maria Luiza Valentina Pereira and Anr. Vs. Jose Paulo Coutinho and Ors. [2009 (1) BomCR 370] , The Bombay High Court held that rules of private international law, evolved by other countries, cannot be imported
mechanically. Such legal principles vary from country to country and are shaped by distinctive social, economic and political conditions prevalent in those countries. In respect of property situated in Mumbai, Indian Succession Act, 1925 will be applicable. Thus Court upheld the principle of Lex Situs. In case of Daljit Singh and Anr. v. Yogeshwar Prasad
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discussed the case of R. Viswanathan v. Rukn-ul-Mulk Syed Abdul Wajid32 and upheld that in case of succession to immovable property situated in Indian, Indian law will be applicable. Thus the legal principle of Lex situs was upheld.
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Relevancy and adaptability of the Hague convention, should India be a party to the 1989 Convention?
There has been a recommendation by law commission for study of the abovementioned convention in respect of succession to immovable and movable property of deceased persons, so that prospects of its practical application and adaptation in India could be highlighted. It thus becomes important here to discuss some important issues regarding its applicability with respect to immovable property in Indian scenario. On bare perusal of the various sections it is submitted that the Convention
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21
Gujarat National Law University does not distinguish the property into movable and immoveable as done under section 5 of the Indian Succession Act, 1925 and thus the existing legal institutions of succession has been rejected, both in terms of classification of property and the applicable law. The convention also does not recognize the principle of Lex Situs regarding immovable property.34 It reflects mainly the legal institutions prevalent in common law countries. In United States and United Kingdom also there has been a strong opinion by the Specialists that Hague Convention rejects the common law principles regarding Succession.35 Such views have also been expressed against US and UK joining the Convention. It is important to mention here that the Civil law countries which were leading in formulation of the said convention, themselves have not yet signed or ratified it. Only one country i.e. Netherlands, out of the four who signed the Convention, has ratified it. As per this convention a person is allowed to designate the law prevailing at the place of his habitual residence or of his nationality. Therefore if India ratifies this convention then an Indian may designate the law of some other country and the succession will be governed by the same law i.e. either the law of his habitual residence or nationality in relation to his immovable property in India. This will violate the rule of Lex Situs recognized by section 5(1). Thus it can be said that the said Convention is only a hurried attempt to provide the so-called common rules on the issue of succession. Hence the Hague convention should be a matter of study only to obtain an idea as it was the first step taken for unification of laws relating to succession. It is submitted that a specific legislation should be passed after studying the present Indian scenario.
34
Jayaraj C., Should Indian become Part to The Hague Convention on the Law applicable to the Estates of Deceased persons, Non Resident Indians and the Private International Law, Hope Indian Publication, New Delhi, 2008. 35 Ibid
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Conclusion
Even though the number of Indians migrating abroad is increasing each year the multiple problems created by such migration remain unresolved. The want of proper legislation, professional information and advice on Indian law has handicapped the disputes and situations relating to Family Law. The ambiguity regarding the application of law to the property situated in India, in case of NRIs has been cleared by recognition of the principle of Lex Situs. In India the legal principle of Lex Situs have been recognized and enforced by Section 5 of the Indian Succession Act, 1925 and the stand of judiciary have also been made clear by the various judicial pronouncements. Although the law is clear but its inadequate and there are still issues that stare at the face of Indian legal system due to absence of specific legislation for the NRIs and PIO. The judiciary has made its stand clear that the principle of Lex Situs is here to stay. However, absence of any specific legislation has increased the burden on Courts which in turn are taking refuge in the foreign jurisprudence. This need for new family law legislation in case of NRIs has been realized by the Law Commission. Commission has in its report provided few important recommendations regarding the NRI issues relating to Family Law. On perusal of the report it can be deduced that the report presents only a general idea regarding various dark areas. All the present problems faced by the NRIs have been presented without a depth research. In case of succession to immovable property, ratifying The Hague Convention will not be a concrete solution as this convention has its own limitations. A legislation that will be a carbon copy with changed names, of some other Common Law country, also will not be able to provide adequate assistance. Indian has its own unique legal system where religion still plays a vital role in succession related issues. A new legislation is needed for the Non-Resident Indians for whom inheriting or acquiring property in India is a cherished dream. It will be appropriate to conclude in the words of the 18th Law Commission of India, It is important to see what India can do for the NRI and not what the NRI can do for India.
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Bibliography
Books referred:
P M North and JJ Fawcett, Cheshire and Norths Private International Law (LexisNexis Butterworths, London, 13th ed, 1999) Paras Diwan and Peeyushi Diwan, Private International Law Indian and English, (4th ed., Deep and Deep Publications, New Delhi, 1998) Mulla, Hindu Law, Butterworths, India, New Delhi, 2000. Govindraj, V.C. & Jayaraj C., Non Resident Indians and Private International Law, Hope Indian Publication, 2008. Manupatranewsline, Vol. 4, 2008.