‘No - Contest’ or ‘In Terrorem’ Clause in Wills

Last week, the executors of Ratan Tata’s estate filed a petition for probate before the Bombay High Court. In a related development, Mohini Mohan Dutta, a close associate of the late Tata Group Chairman, approached the Court seeking clarification regarding his share under the will. This Petition assumes significance, given that Ratan Tata’s will includes a no-contest clause, stipulating that any beneficiaries who contest the will shall forfeit their entitlement to the estate as per the will. The clarification sought by Mr. Dutta has opened the discourse on legal viability and enforceability of such no-contest clauses in Indian jurisprudence. Moreover, it brings into focus the issue as to whether seeking clarification of the contents of the will constitutes a legal challenge, thereby triggering the forfeiture provision outlined in the will.

A will is regarded as the final testament of a deceased, articulating their wishes for distribution of their estate. However, it is common for beneficiaries to contest the validity of a will in court, leading to protracted legal battles. Naturally, a testator desires that his estate be divided between his beneficiaries, thereby minimizing litigation costs and ensuring an expeditious probate of the estate. Therefore, to bulletproof the testator’s final wishes, many testators incorporate a no-contest clause to preclude beneficiaries from challenging the will’s validity.

A no-contest clause or ‘in terrorem’ (literally meaning ‘in fear’) clause is incorporated in a will to threaten a beneficiary of disinheritance if they are to challenge the validity of a will. The said clause is incorporated with an aim to disincentivize any beneficiary from challenging the validity of the will, thereby allowing the testator to ringfence its will against any future litigation. The primary objective of such a clause is to pressurise beneficiaries into refraining from instituting frivolous or baseless litigations, thereby fulfilling the testator final wishes, and preventing any future disputes.

The inclusion of a no-contest clause is relatively uncommon in India as compared to western jurisdictions, but is certainly also not unheard of. In India, succession is governed by the Indian Succession Act, 1925, the Hindu Succession Act, 1956 and Sharia Law. However, these statutes neither expressly recognize, nor prohibit such no-contest clauses. In addition, the Indian Trusts Act, 1882, which governs private trusts created for a specific identifiable person or purpose, also does not categorically prohibit a no-contest clause. Therefore, owing to a legal vacuum with respect to the recognition or prohibition of a no-contest clause in Indian law, its enforceability is left to judicial discretion on a case-to-case basis. This legal ambiguity underscores a need for clarity in drafting testamentary instruments to ensure the intended outcomes for testators and beneficiaries alike.

In Krishan Lal v. State of Jammu and Kashmir, the Supreme Court held that a statutory right could be waived, provided the waiver serves to protect an individual interest and does not adversely affect public interest. In corroboration, in Bharat Kumar Amritlal Sayani & Anr. v. Jayantilal Kalidas Sayani & Ors., the Calcutta High Court adjudicated an issue where the heirs, after consenting to the grant of probate, retracted from their earlier stance and challenged the will on procedural grounds. Under such circumstances, the Court categorically observed that if the heirs have consented to a no-contest clause in the will, it is legally impermissible to challenge the will subsequently.

Essentially, in the absence of any concrete and specific provision of law governing no-contest clauses, the term 'waiver' generally refers to an intentional relinquishment of a right or an agreement not to assert a right, which the party would otherwise possess and exercise. The essentials of a valid and legally tenable waiver can be enumerated as follows-

a) The deliberate relinquishment of a right;

b) The deliberate relinquishment of an existing legal right, privilege, advantage, or claim that the party otherwise may have enjoyed, i.e., had the waiver not been made;

c) A precise and explicit agreement to refrain from asserting/ exercising a right; and

d) An understanding of the consequences of such a waiver on the part of the parties waiving the right.

However, beneficiaries may launch a contest in two cases, namely - where the challenge has been instituted in good faith and is based on a probable cause. The no-contest clause has often been academically opposed as a clause against public policy, and its use as a means to ‘terrorise’ heirs from instituting litigations has been critiqued. However, there has been a constant conflict between courts of different jurisdictions as to the enforcement of such clauses. On one hand, several courts have not enforced forfeiture of the right to sue as contained in the no-contest clause, given that the will was contested in good faith and upon probable cause, like coercion or fraud, undue influence on the testator, suspicious circumstances surrounding the will’s execution, amongst other grounds. In these cases, the beneficiary was not directed to forfeit its right in the estate willed by the testator. However, there have also been cases wherein despite the litigation being instituted in good faith and upon probable cause, courts have held that these grounds would not excuse a conscious forfeiture of rights.

As far as Indian jurisprudence is concerned, the concept of the no-contest clause is relatively nascent. The concept of exception to the no-contest clause has not been much deliberated by the Indian Courts. However, it is elucidated that the beneficiaries who have waived their right to challenge the content of the will would still be at liberty to approach a court for clarification of clauses contained in the will or for seeking an interpretation of the clauses contained therein. Therefore, to ensure a foolproof method of securing a waiver of the right to challenge a will, the current position of law requires beneficiaries to execute a specific deed of waiver. In such a deed, the terms and conditions of waiver of the right to contest must be expressly mentioned in the will, which can then be signed by parties relinquishing their right. In the absence of a specific deed of waiver explicitly relinquishing such a right, the enforceability of the no-contest clause will be left to judicial interpretation on a case-to-case basis.

Another critical issue for the courts to address is the potential use of the no-contest clause as a tool for disinheriting a testator’s rightful heirs. In jurisdictions where no-contest clause is more commonly employed, the courts have come to a crossroad, where there can be direct conflict between the mandatory right of inheritance with testamentary freedom of the deceased. A no-contest clause is primarily intended to prevent frivolous lawsuits arising from a will. By compelling a beneficiary to waive their right of challenging the will in court, such a clause aims to ensure that the testator's wish of devolving his estate upon persons of his choice is respected above the personal right of the beneficiary of inheritance. Courts must carefully navigate this conflict, balancing the sanctity of testamentary freedom with the need to safeguard the inheritance rights of beneficiaries, particularly in cases where the clause may lead to the disinheritance of those who would otherwise have been entitled to the estate.

The inclusion of a no-contest clause in a will is a powerful and strategic tool designed to prevent legal disputes and ensure the smooth execution of a testator’s wishes. While it can discourage heirs from challenging the will, it also underscores the importance of clear and careful estate planning to minimize conflicts among family members. Across jurisdictions, the validity of a will and enforceability of a no-contest clause hinge upon the existing legal framework, making it crucial for individuals to seek professional legal advice while drafting their wills. Ultimately, the will and the no-contest clause, both serve to provide clarity, protect the testator’s intentions, and preserve family harmony during what can often be an emotionally charged and complex process.

About the authors: Anju Thomas is an Associate Partner and Panistha Bhatt is an Associate at AQUILAW.

Disclaimer: The opinions expressed in this article are those of the author(s). The opinions presented do not necessarily reflect the views of Bar & Bench.

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