Legal heir but not a nominee..what to do?

Time and again, various courts across the country have had to resolve this highly controversial issue as to who 
shall receive a deceased’s property. And the judgments, I must say, are varying. Some courts have interpreted 
the law as it is, whereas some have gone that extra mile to apply the provisions to the actual intentions of the 
legislative enactments.

Well, no. A nominee is a mere agent. In simple terms, he is only the person entitled to collect the money of the deceased. After collection, the money ought to be distributed among the legal heirs as per succession laws. Let us take up The Insurance Act, 1938 first. Section 39 of the said Act states that:

“The holder of a policy of life insurance on his own life may, when effecting the policy or at any time before the policy matures for payment, nominate the person or persons to whom the money secured by the policy shall be paid in the event of his death: Provided that, where any nominee is a minor, it shall be lawful for the policy- holder to appoint in the prescribed manner any person to receive the money secured by the policy in the event of his death during the minority of the nominee.”

Various judgments, including Kesari Devi v. Dharma Devi AIR 1962 All 355, have been passed upholding the fact that a nominee under the abovementioned section has an absolute right to the insurance amount due on the death of insurer[1]. However, this would mean that section 39 is altering the course of succession laws, even overriding it. These judgments did not critically analyze the legal position.

In Sarbati Devi v. Usha Devi (1984) 1 SCC 424, the Supreme Court upheld that the Allahabad High Court, while deciding the Kesari Devi case, did not correctly interpret the said section. It held that nominees under section 39 of the Insurance Act, 1938 are mere agents to collect the money due. Such money is the property of the assured during his lifetime and upon his death, it shall form a part of his estate as per the succession laws applicable to him.[2]

Recently, in Vishin Khanchandani v. Vidya LachmanDas Khanchandani & Others (2006) 6 SCC 724[3] the Supreme Court held that courts should examine the possible conflict that arises between the right of nominee and the laws of succession.

Section 45-za (2) of The Banking Regulation Act, 1949 states:

“Notwithstanding anything contained in any other law for the time being in force or in any disposition, whether testamentary or otherwise, in respect of such deposit, where a nomination made in the prescribed manner purports to confer on any person the right to receive the amount of deposit from the banking company, the nominee shall, on the death of the sole depositor or, as the case may be, on the death of all the depositors, become entitled to all the rights of the sole depositor or, as the case may be, of the depositors, in relation to such deposit to the exclusion of all other persons, unless the nomination is varied or cancelled in the prescribed manner.”

Section 6(1) of the Government Savings Certificate Act, 1959 states that:

“Notwithstanding anything contained in any law for the time being in force, or in any disposition, testamentary or otherwise in respect of any savings certificate, where a nomination made in the prescribed manner purports to confer on any person the right to receive payment of the sum for the time being due on the savings certificate on the death of the holder thereof and before the maturity of the certificate, or before the certificate having reached maturity has been discharged, the nominee shall, on the death of the holder of the savings certificate, become entitled to the savings certificate and to be paid the sum due thereon to the exclusion of all others.”

The Supreme Court has rejected the logic that these provisions excluded the rights of all persons, including legal heirs, of the deceased depositor to claim any right over the subject amount. It has held such a theory as not only illogical but totally imaginary.[4] These sections should be read to mean that after the death of the depositor, the nominee so appointed shall merely be transferred the exclusive right to receive the money in the account, and not the ownership of the said sum. The Apex Court has further held that the Banking Regulation Act, 1949 was enacted to facilitate the laws related to banking. It does not override the succession laws in any way. Hence, the deceased depositor’s moneys, that is received by the nominee, shall form a part of the deceased’s estate and be devolved as per the applicable succession laws.

Section 61(3) of the Employee Provident Fund Scheme, 1952 states:

“If a member has a family at the time of making a nomination, the nomination shall be in favour of one or more persons belonging to his family. Any nomination made by such member in favour of a person not belonging to his family shall be invalid. Provided that a fresh nomination shall be made by the member on his marriage and any nomination made before such marriage shall be deemed to be invalid.”

This section clearly upholds the principles discussed above.  While deciding on the abovementioned section, the Bombay High Court, in Antonio Joao Fernandes v. APFC Panji Goa 2010(4) LLJ 460, has upheld the principles laid down in Sarabati Devi.[5]

Section 109-A of the Companies Act, 1956 states that:

“Every holder of shares in, or holder of debentures of, a company may, at any time, nominate, in the prescribed manner, a person to whom his shares in, or debentures of, the company shall vest in the event of his death.”

Although the Bombay High Court, in a very recent case[6], has said that the rights of a nominee to the shres of a company overrides the rights of heirs to whom property is bequeathed, such opinion may not hold ground in the light of the Apex Court’s decision in the Sarbati Devi case.

The Apex Court has laid down, through landmark judgments, that nominees should not be entitled to receive the property of the deceased. They should be treated as mere agents who collect the money of the deceased. The money so collected should be disposed of as per the succession laws applicable to the deceased. And correctly so. Laws, when interpreted by the judiciary, should be given a practical and functional approach. More important than the words of the statutes is the intent behind the usage and framing of such words. At the end of the day, if jurisprudence takes a limited version of justice, the very purpose of law is defeated.

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[1] Kesaridevi v. Dharmadevi AIR 1962 All 355; Fauza Singh v. Kuldeep Singh AIR 1978 Delhi 276; Uma Sehgal v. Dwarka Das Sehgal AIR 1982 Del 36

[2] Raballav Dhandaria v. Gangadhar Nath AIR 1956 Cal 275; LIC v. UBI AIR 1970 Cal 513, Muralidhar v. IIBCL AIR 1957 Mad 115, Sarojini v. Pillai AIR 1961 Ker 126; Mohanlal v. Gunvanti Ben AIR 1977 Guj 134

[3] Ramachandra Talwar & Another v. Devendra Talwar & others (2010) 10 SCC 671

[4] Ramachandra Talwar & Another v. Devendra Talwar & others (2010) 10 SCC 671

[5] Nozer Gustad Commissariat v. Central Bank of India and Ors. 1993 MHLJ 228; Om Wati v. Delhi Transport Corporation New Delhi and Ors. 1988 (1) CLR 596 

[6] Harsha Nitin Kokate v. Saraswat Co-Operative Bank (2010) 5 Taxman Com 43 (Bom)

Blossoms From My Childhood Garden

I cannot connect to them on Facebook. I do not shed tears for them every day. Slient was their arrival. Silent was their departure. Equally slient is their existence in my memory. Here is an ode to the people/events that have left behind their footprints in my life.

Faguwari Baba, although I was hardly 3-4 years old, I vividly remember your saffron attire and your long white beard. You always wore a smile on your face. You would visit our homes every year before Holi, asking us for alms. You would sing some melodious tune I couldn’t decipher. You always patted me on the head as I would catch a glimpse of you from behind Ma. I always wanted to go to your lap, to touch your beard. But I was forbidden to do so. That instrument you played, I found it very fascinating. One fine day, you stopped coming. I have never seen you since. Where are you?

Didong, you could hardly read English. But you had preserved all the letters I wrote to you. My New Year would never be complete without making a card for you. I remember the way you had coaxed and cajoled me into piercing my ears. You would smell of sweet lime. Your wrinkled skin always fascinated me. I was not there with you the day you passed away. But with you, I lost something of myself. Things have never been the same. Nobody will ever take me to Thakurbari for that delicious charanamrit.

Murthy Miss, you are my first teacher. You would lovingly call me granny. I still wish to solve the mental sums you gave us. You had punished me for wasting food. I had eaten only the white portions of my bread and left aside the edges. I still follow your principles, Miss. I do not waste food on my plate. They said you have retired and gone back to your native place.

Monalisa, the first friend I had. We would NOT share our lunch when one of us brought something good. I would bully you all the time. We would fight tooth and nails over simple issues. But then, we would cry every time the other was absent. We have never shared the same section or the same bus. But you’re still my best friend. We wrote to each other in College. But then, after that last meeting in Bangalore, you vanished. I always remember your birthday. But I have no telephone number to call you up. You are not on FB. Please come back.

 Gadardihi, that sleepy little hamlet in Bankura. My ‘mamabari’. The day before the visits, Ma would be so cheerful. Packing our huge suitcase with loads of clothes. As a toddler, seeing Ma happy made me happy. As I grew up, I got attached to the place. Those dirt track roads. And the small shop in the vicinity which would sell everything from colorful candies to rice flakes. Best of all, my Uncle’s huge library. I could not reach up to the highest shelves. But then, the very “aroma” of the books, if I may use the wordJ, made me await my trips so eagerly. And then, during my teenage, we suddenly stopped going. Well, I do not understand the nuances of adult relationships and when they turn sour, but I miss my mamabari. All my uncles & aunts. And, Ma Dugga!!

Our ‘Goswami Barir Durga Pujo’. All of us, even distant relatives, relatives of relatives, would come together for those 4 days. Those 4 days Ma would not scold me. I could do everything that was forbidden! No one to chaperon me around!! Aah!! All of us would eat together, in batches. We kids would fight over the ‘banana leaves’ on which we ate. Everybody wanted the greenest one for himself! J And then, the fish! We all wanted the piece with the ‘hole’! J Most of us were growing up in nuclear families. With so many cousins and such a big house to play around, we had the best days of our lives. How I wish I could go there again.

When I see my little one struggling hard to rap her knuckles on my laptop, I wonder whether her childhood will really be as innocent. Changing times, nuclear families..Generations gaping far & wide..Mamas, mashis, buas, cha-chas will all a part of the fairytale world..I would not be surprised if one fine day my daughter asks me, “Mommy, you had them all???? Strange!!” JJ