Probate Of Will Of Undischarged Insolvent Not Barred Under Indian Succession Act: Bombay High Court

The Bombay High Court has recently held that probate of the Will of a person who died as an undischarged insolvent is not barred under the law and can be sought, even though the estate vests in the Official Assignee for distribution among creditors.

“There is no embargo under the provisions of the Succession Act from seeking probate of the Will of an undischarged insolvent.”

A single-judge bench of Justice Sharmila U. Deshmukh was dealing with a testamentary petition seeking probate of the Will dated April 24, 1997 of Harshad Harilal Choksi, who had been adjudicated insolvent on June 16, 2009 and remained undischarged at the time of his death in February 2010.

The caveator, Ketan Kishoredas Mehta, claiming through a decree-holder creditor, opposed the grant contending that upon insolvency, the estate vested in the Official Assignee and therefore no probate could be granted.

Rejecting this contention, the court held that there is no embargo under the Succession Act on seeking probate in such cases and that the vesting of the estate in the Official Assignee does not preclude the filing of a testamentary petition.

“The estate of the deceased dying as undischarged insolvent vests in the official assignee and the grant of Probate or otherwise has zero impact on the Caveator's right to receive due payment upon his claim being adjudicated by the official assignee.”

It added that under the Presidency Towns Insolvency Act, 1909, the property of an insolvent vests in the Official Assignee for the benefit of creditors.

“The statutory provisions of Insolvency Act makes it clear that though, upon the order of adjudication being passed, the property vests in the Official Assignee, the surplus remaining after the debts of the creditors have been satisfied would constitute the estate of the insolvent.”

The court noted that the executor under the Will can seek probate in respect of the surplus that may remain after discharge of debts.

“It is not that there is no estate of the deceased but by virtue of insolvency, the estate of the deceased vests in the official assignee. The expression used in Section 276(1)(c) of Succession Act is 'assets likely to come to the petitioner's hands.' The surplus remaining upon satisfaction of debts and expenses as per the Insolvency Act would constitute the assets likely to come to the petitioner's hands.”

It further held that the fact that the Official Assignee has not yet completed administration of the estate does not prevent the filing of a testamentary petition.

“As the Official Assignee has not fully administered the estate of the deceased, the surplus cannot be ascertained as of date. However, the same does not mean that the Testamentary Petition cannot be filed for seeking Probate of the Will of the deceased.”

Accordingly, the court held that probate proceedings can continue without affecting the statutory scheme governing distribution of the insolvent's estate among creditors.