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Section 326: Executor or administrator not bound to pay legacies without indemnity

Indian Succession Act • Official Statutory Text & Practice Guide

Statutory Regulation
Legal Standard
Competent Court / Tribunal
Act 1925
Section 325 All 391 Sections of Indian Succession Act Section 327

Legal Commentary & Landmark Judgments: Section 326

Section 326 empowers an executor or administrator to refuse to pay any legacy without receiving a Refund Indemnity from the legatee.

  • Right to Demand Indemnity Bond: If an estate is subject to any contingent liability (e.g. pending litigation, tax reassessments, or guarantee obligations), the executor may refuse to pay any legacy without a refund indemnity.
  • Protection Against Future Creditor Claims: The indemnity bond obligates the legatee to refund the legacy pro rata if future debts emerge against the estate.
  • Prevention of Executor Impoverishment: Protects the personal representative from having to satisfy unforeseen estate liabilities out of his personal pocket.
Key Landmark Precedents:
  • Ranganathan Chettiar v. Periakaruppan Chettiar AIR 1957 SC 815: The Supreme Court affirmed that executors are legally entitled under Section 326 to demand indemnity bonds from legatees where contingent claims or tax liabilities hang over the estate.
  • Navneet Lal v. Gokul (1976) 1 SCC 630: Recognized that Section 326 provides essential risk mitigation for fiduciaries during estate liquidation.
Courtroom Practice & Strategic Litigation Guidance:

Where an income tax reassessment or civil appeal is pending against the deceased, the executor should disburse legacies only upon each legatee executing a registered 'Indemnity and Refund Bond' under Section 326; this guarantees clawback if the tax demand crystallizes.

Section 325 All 391 Sections of Indian Succession Act Section 327