���Inheritance�۪ of Immovable Property in India by a Person Resident outside India
Introduction
The Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder (“FEMA”) is an Indian statute relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India.
Section 6(5) of FEMA (Capital Account Transactions) provides that “a person resident outside India may hold, own, transfer or invest in Indian currency, security or any immovable property situated in India if such currency, security or property was acquired, held or owned by such person when he was resident in India or inherited from a person who was resident in India.”
TLH, Advocates & Solicitors has a specialized team of lawyers who, amongst other services, advise on real estate transactions covering various aspects of the transaction such as general corporate advisory, cross border transactions real estate transactions, title due diligence.
As such, general permission has been provided in terms of FEMA to the person resident outside India[1] (“PROI”) to acquire immovable property in India in two circumstances:
- If the PROI had acquired such immovable property during the time when the PROI was himself resident in India in terms of FEMA; or
- If the PROI has acquired such immovable property in inheritance from a person who was resident in India at the time of such inheritance, in terms of FEMA.
While the requirement under clause (a) above is direct, clause (b) requires that the immovable property should have been acquired by PROI from an Indian resident in ‘inheritance’. The question that arises is whether the word ‘inheritance’ means to include only the property inherited by the ancestors to the blood relatives or it may also include any bequeath made by any Indian resident to a third party, outside the blood relation.
Meaning of ‘Inheritance’
The meaning of the term, ‘inheritance’, may be inferred from other sources that are usually relied upon by the courts of law, for example:
- The Cambridge dictionary defines inheritance as “any property received by a person through money or objects that someone gives you when they die”. The foregoing definition provides wide meaning to the term ‘inheritance’ by including any kind of devise of the property upon death of a person irrespective of the relationship between the parties.
- The Advanced Law Lexicon’s dictionary defines the term, 'inheritance' as ‘that which is or is to be inherited: whatever is transmitted by descent or succession; an estate descending to the heir, which has descended to the heir and been cast upon by the operation of law; or which may descend or be inherited. The meaning of the word, however, may be controlled by the context. An inheritance is an estate descended to the heir immediately on the death of the ancestor by virtue of his right, which has descended to the heir immediately on the death of the ancestor by virtue of his right or representation as a descendant. It is cast upon the latter by operation of law.’ In terms of the aforesaid definition, transmission of property by descent or succession is treated as ‘inheritance’. Further, it provides that the estate descending to the heir is also regarded as ‘inheritance’.
In this regard, the High Court of Rajasthan in L.R. of Mishrimal vs. Sukh Lal and Ors[2] observed that: “In Angurbala's case, the question was, about the right of succession to be vesting in the women in 'shebaiti', and in that context it was found, that the word 'heir' cannot normally be limited to issues only. It extended to all persons who were entitled to succeed under the law of inheritance. Suffice it to say, that Hon'ble the Supreme Court was not concerned about the question of right of the person claiming under the will, to be falling within the definition of the term 'heir'. It is not in dispute, that all persons who are entitled to property under the law of inheritance applicable to the deceased would fall within the definition of the term "heir".”
The aforesaid judicial precedent also clarifies that the person claiming under the will and entitled to a property in terms of the law of inheritance shall also be regarded as ‘heir’. It is pertinent to note that the Indian Succession Act, 1925 permits wills to be implemented in favour of third parties.
3. The Black’s Law Dictionary defines the terms 'inheritance' as ‘ Property received from an ancestor under the laws of intestacy. 2. Property that a person receives by bequest or devise.'
The Black’s Law Dictionary provides that any property received in bequest shall be regarded as a property received in inheritance.
In light of the aforesaid, it appears that the meaning to the term ‘inheritance’ is wide enough to include any kind of bequest, legacy or devise irrespective of the relationship between the parties provided that such bequest, legacy, or devise is permitted in terms of the provisions of the Indian Succession Act, 1925.
The views and opinions expressed in this article belong solely to the author and do not reflect the position of TLH, Advocates & Solicitors.
[1] Defined in Section 2(v) of FEMA.
[2] RLW2006(4)Raj2890