Contact us   Feedback   Annual Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2015 (6) TMI 86 - BOMBAY HIGH COURT

2015 (6) TMI 86 - BOMBAY HIGH COURT - TMI - Distribution of estate of deceased's investments - Nomination of FDs in favor of Daughter - whether such nominated assets to be excluded from the estate of the deceased - Whether or not the daughter is entitled to file and maintain a caveat in opposition to the probate petition - Whether this caveat must be held to be defective and non-est - Whether 'Will' have supremacy over nomination - Held that:- The decision in Kokate does not consider the decisio .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

mulation, is some sort of ‘super-will’, one that partakes of none of the defining traits of a properly executed will and none of the tests of its validity, one that is never displaced by a later, properly made will that deals with the very same property. Mr. Pai asks that we should place ourselves in the ‘armchair of the nominator’. That, as it happens, is the same furniture used by a testator, and it simply cannot be that the view from that seat depends on the nature of the document before the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. But no will can be so read in evidence without such evidence.

From the fundamental definitions to the decisions cited, it is clear that a nomination only provides the company or the depository a quittance. The nominee continues to hold the securities in trust and as a fiduciary for the claimants under the succession law. Nominations under Sections 109A and 109B of the Companies Act and Bye-Law 9.11 of the Depositories Act, 1996 cannot and do not displace the law of succession, nor .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sions. Kokate is, therefore, per incuriam. - This judgment does not dispose of the Notice of Motion in Salgaonkar or the application in Ghatalia. Those will be considered on their merits in view of the legal position enunciated above. Given that this judgment deals only with a question of law, there is no question of a stay of the judgment. - NOTICE OF MOTION NO. 822 OF 2014 IN SUIT NO. 503 OF 2014, TESTAMENTARY PETITION NO. 457 OF 2014 - Dated:- 31-3-2015 - G.S.Patel, J. For The Plantiff : Sneh .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

) when Mr. Snehal Shah, learned Counsel for the Plaintiff in that matter, urged that the decision of a learned single Judge of this Court in Harsha Nitin Kokate v The Saraswat Cooperative Bank Ltd & Ors. 2010 (112) Bom. LR 2014 was per incuriam and not good law. As a substantially similar issue arose in the second of these cases Nanak Ghatalia v Swati Ghatalia, I invited Mr. Ghatalia, the Petitioner appearing pro-se and Mr. Karl Tamboly, learned Counsel for the Caveatrix, to make their submi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ion No. 822 of 2014 seeks reliefs in respect of his estate described in the list at Exhibit A to the Plaint. Item 9 of that list speaks of investments in Mutual Funds, etc. These are detailed in Exhibit D to the Plaint. This is a list of various investments in Mutual Funds and it shows the name of the nominee in respect of each such investment. Defendants Nos. 5 and 6 seem to be the nominees in respect of the bulk of these mutual fund investments. In their Affidavits in Reply to the Notice of Mo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

it receipt for ₹ 50 lakhs with IDBI Bank. 5. In Ghatalia, probate is sought to the will of one Urmila S. Ghatalia. The Petitioner is one of the deceased s sons. The other son has consented to the grant of probate. The action is opposed by the deceased s daughter. At present, the controversy is only whether or not the daughter is entitled to file and maintain a caveat in opposition to the probate petition or whether this caveat must be held to be defective and non-est. In the course of the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

at he propounds. 6. In both cases, the claims of exclusive rights to and ownership of the investments are founded on the judgment of the learned single Judge in Kokate. That decision was in a Notice of Motion in a Suit in which the plaintiff claimed an interest in certain shares as the heir and legal representative of one Nitin Kokate, the plaintiff s deceased husband. Nitin Kokate had, in his lifetime, made a nomination in respect of these shares in favour of his nephew, the 3rd defendant to th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

anies Act, 1956,( Equivalent to Section 72 of the Companies Act, 2013) and Bye-Law 9.11 under the Depositories Act, 1996, (Incorrectly described in Kokate as Section 9 to the Act.) and found that once a nomination is made, the securities in question: automatically get transferred in the name of the nominee upon the death of the holder of the shares.(Paragraph 6) and, further, that: such nomination carries effect notwithstanding anything contained in a Testamentary Disposition or nominations made .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d be entitled to the shares to the exclusion of the nominee. This is precisely the formulation that Mr. Shah and Mr. Tamboly commend before me today. 8. The plaintiff s counsel in Kokate also placed before the Court the Supreme Court decision in Smt. Sarbati Devi v Smt. Usha Devi,( (1984) 1 SCC 424 : AIR 1984 SC 346) a decision under Section 39 of the Insurance Act. Similarly, attention was also invited to Section 30 of the Maharashtra Cooperative Societies Act, 1960. The Kokate Court held that .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ay v Hindustan Petroleum Corporation,((2001) 8 SCC 143; Kokate, paragraph 22.) and Bharat Coking Coal v Karam Chand Thapar & Bros. ((2003) 1 SCC 6 : 2002 (8) SCALE 388; Kokate, paragraph 23). Then, in paragraphs 24 to 26 of Kokate, the Court concluded: 24. In the light of these judgments Section 109A of the Companies Act is required to be interpreted w ith re - gard to the vesting of the shares of the holder of the shares in the nominee upon his death. The act sets out that the nomination ha .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

entitled to all the rights in the shares excluding all other persons would show expressly the legislative intent. Once all other persons are excluded and only the nominee becomes entitled under the statutory provision to have all the rights in the shares none other can have it. Further Section 9.11 of the Depositories Act 1996 makes the nominee's position superior to even a testamentary disposition. The non-obstante Clause in Section 9.11.7 gives the nomination the effect of the Testamentar .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f all the rights in the shares to such last nominee. 25. A reading of Section 109A of the Companies Act and 9.11 of the Depositories Act makes it abundantly clear that the intent of the nomination is to vest the property in the shares which includes the ownership rights there under in the nominee upon nomination validly made as per the procedure prescribed,, as has been done in this case. These Sections are completely different from Section 39 of the Insurance Act set out (supra) which require a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in the Insurance Policy or the membership rights in the Society upon such nominee. The express legislature intent under Section 109A of the Companies Act and Section 9.11 of the Depositories Act is clear. 26. Since the nomination is shown to be correctly made by her husband who was the holder of the Suit shares, the Plaintiff would have no right to get the shares of her deceased husband sold or to otherwise deal with the same. (Emphasis supplied) 9. Mr. Shah and Mr. Tamboly submit that in arriv .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

xt, but on whether a third line of succession, in addition to testamentary and intestate succession, was contemplated by the statutory provisions before the Kokate court. This, they submit, is not what the previous decisions of the Supreme Court and this High Court say; to the contrary, those decisions make it clear that the submission on behalf of Harsha Kokate were indeed accurate and were the only possible view in law, viz., that a nomination will only serve to discharge the responsibility or .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the protection of the corporate, but, and perhaps more significantly, a testamentary disposition would be wholly defeated by a nomination, even if the will in question is actually made after the nomination and does contain a perfectly legitimate bequest of the very securities in respect of a nomination is made. In other words, a nomination not only becomes a testamentary disposition of sorts but stands on a higher pedestal, and, at the same time, is unguarded by any of the checks, balances and .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

: An Act to provide for regulation of depositories in securities and for matters connected therewith or incidental thereto. When Mr. Shah says, therefore, that this has nothing whatever to do with succession or disposition inter vivos, I believe he is correct. Plainly, the Depositories Act is concerned with the regulation of depositories, i.e., those entities providing depository services, and not in relation to the holders of the securities in such services, or the manner in which those securit .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ith nominations per se. That issue (nomination) is to be found only in Bye-Law 9.11 framed under the Depositories Act; and the purpose of this Bye-Law is made clear in 9.11.7. The relevant Bye-Laws (as also reproduced in Kokate) read: 9.11. TRANSMISSION OF SECURITIES IN THE CASE OF NOMINATION: 9.11.1. In respect of every account, the Beneficial Owner(s) ("Nominating Person(s)") may nominate any person ("Nominee") to whom his securities shall vest in the event of his death in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed with the Participant in accordance with the Business Rules prescribed therefore. The closure of the account by the Nominating Person(s) shall conclusively cancel the nomination. 9.11.5. A Nominee shall not be entitled to exercise any right conferred on Beneficial Owners under these Bye Laws, upon the death of the Nominating Person(s), unless the Nominee follows the procedure prescribed in the Business Rules for being registered as the Beneficial Owner of the securities of the Nominating Perso .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. 9.11.7. Notwithstanding anything contained in any other disposition and/or nominations made by the Nominating Person(s) under any other law for the time being in force, for the purposes of dealing with the securities lying to the credit of deceased Nominating Person( s) in any manner, the Depository shall rely upon the last nomination validly made prior to the demise of the Nominating Person(s). The Depository shall not be liable for any action taken in reliance upon and on the basis of nomina .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

three years. Sub-section (3) of the newly introduced section of the Companies Act, 1956 reads: (3) 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 shares in, or debentures of, the company, where a nomination made in the prescribed manner purports to confer on any person the right to vest the shares in, or debentures of, the company, the nominee shall, on the death of the shareholder or h .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ons. It is not in any sense intended or directed to settled laws of succession or transfer of property, but only the law relating to companies. Therefore, Mr. Shah submits, any provision of the Companies Act must be viewed in context, and there is nothing in this sub-section that can or should be viewed as an amendment sub-silentio of the testamentary and other dispositive laws, ones that concern themselves with the transfers (inter vivos or by inheritance or succession) of all property, includi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

terpretation of statutes. The Supreme Court held: 9. In considering the rival submissions of the learned Counsel and in defining and construing the area and the content of the Act and its provisions, it is necessary to make certain general observations regarding the interpretation of statutes. A statute is best understood if we know the reason for it. The reason for a statute is the safest guide to its interpretation. The words of a statute take their colour from the reason for it. How do we dis .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

eter may proceed ahead. No provision in the statute and no word of the statute may be construed in isolation. Every provision and every word must be looked at generally before any provision or word is attempted to be construed. T he setting and the pattern are important. It is again important to remember that Parliament does not waste its breath unnecessarily. Just as Parliament is not expected to use unnecessary expressions, Parliament is also not expected to express itself unnecessarily. Even .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

context is no less important. For instance, the fact that general words are used in a statute is not in itself a conclusive reason why every case falling literally within them should be governed by that statute, and the context of an Act may well indicate that wide or general words should be given a restrictive meaning (see Halsbury, 4th edn. Vol. 44 para 874). 10. In Attorney General v. H.R.H. Prince Augustus 1957 (1) All ER 49, Viscount Simonds said, My Lords, the contention of the Attorney- G .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

For words, and particularly general words, cannot be read in isolation; their colour and content are derived from their context. So it is that I conceive it to be my right and duty to examine every word of a statute in its context, and I use context in its widest sense which I have already indicated as including not only other enacting provisions of the same statute, but its preamble, the existing state of the law, other statutes i n pari materia , and the mischief which I can, by those and othe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ss Mills v. Municipal Committee, Wardha [1958] 1 SCR 1102 , stated the same proposition: It is also a recognised principle of construction that general words and phrases however wide and comprehensive they may be in their literal sense, must usually be construed as being limited to the actual objects of the Act. 12. In Maunsell v. Olins 1975 (1) All ER 16, Lord Wilberforce observed, ...I am not, myself, able to solve the problem by a simple resort to plain meaning. Most language, and particularl .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t our masters. They are aids to constructions, presumptions or pointers. Not infrequently one rule points in one direction, another in a different direction. In each case we must look at all relevant circumstances and, decide as a matter of judgment what weight to attach to any particular rule . (Emphasis supplied) 15. Mr. Shah submits that if a mere nomination was to effect a full-fledged transfer with all the incidents of ownership, it could not be dependent on the death of the nominator. If t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he nominator could not truck with those shares? Would the nomination, on account of the transfer eo instante, divest the nominator of ownership? If not, then the property in the form of securities would necessarily form part of the nominator s estate on his demise, and it cannot be otherwise. 16. This is evident, Mr. Shah says, when one looks at the accepted definitions of nominee rather than vesting . That definition will tell us whether or not a nominee properly so called can ever acquire the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

title for the benefit of others or who receives and distributes funds for the benefit of others. (Emphasis supplied) It is the third of these definitions that Mr. Shah commends as the correct meaning for our purposes. That definition, he says, makes it clear that the nominee holds title in a fiduciary capacity and none other. Iyer s Judicial Dictionary includes this definition under the entry nomination : (Page 1098) Nominee. It is clearly wide enough to include a transferee of shares who was pa .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nation can ever result in a divesting, Mr. Shah submits. It is merely a matter of convenience for the company or the depository, not for the nominator and certainly it does not transfer ownership to the nominee. The reason for this is that the company or depository should not have to face a legal vacuum till the contesting rights are decided. Vatticherukuru Village Panchayat v Nori Venkatarama Deekshithulu & Ors. (1991 Supp (2) SCC 228) is a decision of vital import to the present discussion .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

In Chamber s Mid-Century Dictionary at p. 1230 defined vesting in the legal sense to settle, secure, or put in fixed right of possession; to endow, to descend, devolve or to take effect, as a right . In Black s Law Dictionary, 5th Ed. 1401, the word, vest , to give an immediate, fixed right of present or future enjoyment, to accrue to, to be fixed, to take effect, to clothe with possession, to deliver full possession of land or of an estate, to give seisin to enfeoff. In Stroud s Judicial Dictio .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

at p. 2939, the word vest , in the absence of a context, is usually taken to mean vest in interest rather than vest in possession . In item 8 to vest , generally means to give the property in . Thus the word vest bears variable colour taking its content from the context in which it came to be used. Take for instance, the land acquired under the Land Acquisition Act. By operation of Sections 16 & 17 thereof, the property so acquired shall vest absolutely in the Government free from all encumb .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he suit on behalf of the court and administer the property on behalf of the ultimate successful party as an officer of the court and he has no personal interest in the property vested thereunder. In Fruit and Vegetable Merchants Union v. Delhi Improvement Trust [1957] SCR 1 the question was whether the Delhi Improvement Trust was vested of the Nazul land belonging to the Government with absolute right, when the property was entrusted under the scheme for construction of the markets etc. It was h .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Devi ((1984) 1 SCC 424 : AIR 1984 SC 346, supra) was placed before the Kokate Court. This was a case under Section 39 of the Insurance Act, 1938. The question, as set out in paragraph 1, was whether a nominee of life insurance policy under that Section, on the death intestate of the assured, would be entitled to the beneficial interest in the amount received under the policy to the exclusion of all the heirs of the assured. The section under consideration contained no non-obstante clause akin t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ehgal s case. The Supreme Court said: 5. ... It is difficult to hold that Section 39 of the Act was intended to act as a third mode of succession provided by the statute. The provision in Sub-section (6) of Section 39 which says that the amount shall be payable to the nominee or nominees does not mean that the amount shall belong to the nominee or nominees. We have to bear in mind here the special care which law and judicial precedents take in the matter of execution and proof of wills, which ha .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he assured to the amount payable under the policy and that his rights would spring up only on the death of the assured. The Delhi High Court having reached that conclusion did not proceed to examine the possibility of an existence of a conflict between the law of succession and the right of the nominee under Section 39 of the Act arising on the death of the assured and in that event which would prevail. We are of the view that the language of Section 39 of the Act is not capable of altering the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

us points . We find it difficult to treat a nominee as being equivalent to an heir or legatee having regard to the clear provisions of Section 39 of the Act. ... (Emphasis supplied) 19. Mr. Shah submits that this decision was on all fours with the case before the Kokate Court and was incorrectly distinguished. What the Kokate Court also did not consider was that Sarbati Devi was also considered by the Supreme Court itself in Shri Vishin N. Khanchandani & Anr. v Vidya Lachmandas Khanchandani .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e benefit of the deceased s legal heirs. Clearly, this was substantially the question in Sarbati Devi. The contention by the appellants in Khanchandani was precisely the same as is taken here by Mr. Pai and Mr. Ghatalia: 4. Feeling aggrieved, the appellants- the nominees of the National Savings Certificates have filed this appeal contending that under Section 6 of the Government Savings Certificates Act, 1959, after the death of the holder they had become entitled to the payment of such saving c .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ively, it was urged that nomination itself amounted to testamentary succession. 20. The statutory provision in question is set out in paragraph 6 of Khanchandani. Section 6(1) of the act in question also contained a non-obstante clause, thus: 6. Nomination by holders of savings certificates. (1) 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 prescribe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ried or cancelled in the prescribed manner. (Emphasis supplied) 21. Section 8 then said that payment made in accordance with the previous sections would discharge the insurer; and then followed Section 8(2), one that is without a comparable parallel in Section 109A and the Depositories Act, 1996: 8. Payment to be a full discharge.- (1) Any payment made in accordance with the foregoing provisions of this Act to a minor or to his parent or guardian or to a nominee or to any other person shall be a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

estate of a holder of a savings certificate may recover his debt or claim out of the sum paid under this Act to any person and remaining in his hands unadministered in the same manner and to the same extent as if the latter had obtained letters of administration to the estate of the deceased. (Emphasis supplied) 22. Mr. Pai and Mr. Ghatalia submit that Khanchandani clearly has no application because the statutory provision there had a failsafe in Section 8(2) that specifically saved the interest .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d quoted at length. These are the same passages I have extracted above. If there was any doubt about this, it is put to rest by paragraphs 11 to 13 in Khanchandani: (Paragraph numbers follow the SCC report.) 11. It is contended on behalf of the appellants that the n on-obstante clause in Section 6 excludes all other persons, including the legal heirs of the deceased holder, to claim any right over the sum paid on account of the National Savings Certificates, to the nominee. There is no doubt tha .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

me of the Act and the objects and reasons for which such an enactment is made has to be kept in mind. 12. The submission made on behalf of the appellants has no substance in view of Sub-section (2) of Section 8 and the Statement of Objects and Reasons necessitating the passing of the Act. Sub-section (1) of Section 8 provides that if any payment is made in accordance with the provisions of the Act to a nominee, the same shall be a full discharge from all further liabilities in respect of the sum .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ased holder of a savings certificate from recovering from the person receiving the same under Section 7; the amount remaining in nominee s hand after deducting the amount of all debts or other demands lawfully paid or discharged by him in due course of administration. In other words though the nominee of the National Savings Certificates has a right to be paid the sum due on such savings certificates after the death of the holder, yet he retains the said amount for the benefit of the persons who .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

garding avoiding delay and expense in making the payment of the amount of the National Savings Certificates, to the nominee of holder, which has been considered to be beneficial both for the holder as also for the post office. Any amount paid to the nominee after valid deductions becomes the estate of the deceased. Such an estate devolves upon all persons who are entitled to succession under law, custom or testament of the deceased holder. In other words, the law laid down by this Court in Sarba .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ving in Section 8(2), placed the entirety of the case on par with Sarbati Devi, a decision that considered Section 39 of the Insurance Act and did not have a provision parallel to Section 8(2) of the Government Savings Certificates Act. Consequently, the argument that a saving provision of that nature is essential and that, in its absence, there is an absolute devolvement to the exclusion of all heirs or legatees, on the nominee is an argument that was expressly raised and rejected by the Suprem .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. The controversy involved in the instant case is no longer r es integra . The nominee is entitled to receive the same, but the amount so received is to be distributed according to the law of succession. In terms of the factual foundation laid in this case, the deceased died on 8.11.1990 leaving behind his mother and widow as his only heirs and legal representatives entitled to succeed. Therefore, on the day when the right of succession opened, the appellant, his widow became entitled to one hal .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

eived are to be distributed according to the Hindu Succession Act, 1956. The State Bank of India is directed to release half of the amount of general provident fund to the appellant now within two months from today along with interest. (Emphasis supplied) 25. Now Shipra Sengupta is a decision of 20th August 2009; Kokate is of 20th April 2010, about eight months later. Shipra Sengupta contains an absolutely unambiguous statement of the law without any qualification on account of this or that stat .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

v. Dharma Devi [AIR 1962 All 355] on which reliance was placed by the High Court in dismissing the appeal before it and the two decisions of the Delhi High Court in S. Fauza Singh v. Kuldip Singh [AIR 1978 Del 276] and Uma Sehgal v. Dwarka Dass Sehgal [AIR 1982 Del 36] in all other decisions cited before us the view taken is that the nominee under Section 39 of the Act is nothing more than an agent to receive the money due under a life insurance policy in the circumstances similar to those in t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e him a First Appeal from an order dismissing a suit in which the plaintiff claimed to be entitled to 50% of the provident fund dues as one of the two nominees of the deceased holder of the provident fund account, his cousin. The deceased s sister, the 3rd defendant to the suit, was the nominee of the remaining 50%. The learned single Judge expressly rejected the argument that the nomination would operate to the exclusion of the legal heir. Both Sarbati Devi and Khanchandani were cited and follo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e Merchants Union), and to which Mr. Tamboly draws attention. Nozer Commissariat was also a decision in relation to an employee s provident fund, and in that decision, Mr. Justice D.R. Dhanuka categorically held that the decision in Sarbati Devi was not limited in any way to claims under the Insurance Act but set a general principle in relation to nominees. Both Nozer Commissariat and Antonio Joao Fernandes preceded Kokate (the latter by about two weeks). Neither was cited nor noticed in Kokate. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

109A of the Companies Act, 1956: 45ZA(2). 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 to 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

exclusive right to receive the money lying in the account. It gives him all the rights of the depositor so far as the depositor's account is concerned. But it by no stretch of imagination makes the nominee the owner of the money lying in the account. It needs to be remembered that the Banking Regulation Act is enacted to consolidate and amend the law relating to banking. It is in no way concerned with the question of succession. All the monies receivable by the nominee by virtue of Section .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

least to Khanchandani, a decision that preceded Kokate by several months. 30. The concept of a nomination has been extensively covered in the decision of a learned single Judge of the Delhi High Court in Leelawati Singh & Anr. v State of Delhi & Ors. (1998 (75) DLT 694) There again, a question of nomination arose in a contested probate action. The learned single Judge not only followed Sarbati Devi but also set out an exhaustive survey of decisions of various courts on this aspect, sayin .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

during his life-time. Has he done anything to divest himself of his right thereto? All he did was to direct that in case of his death the sum should be paid to Aimai. This is in itself a mere mandate the validity of which expires with the death of the mandator. It is true the validity is extended by Statute beyond such death but such statutory extension does not by itself produce any change in the nature of the mandate. The question as to what the recipient is to do with the fund when she has o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

a valid quittance. If the nominee were merely the legatee under the nomination paper considered as a Will then in so much as a Will can be revoked by a later Will even if not communicated to the fund or by some former instrument of revocation or in some cases by marriage of the testator the fund could never be certain whether the person nominated was the person entitled to receive payment, that is, if the nominee is to be regarded as legatee only. True it is that the fund is made safe in respect .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n I conceive why the Provident Fund should wish to introduce so strange a law of inheritance. I do not find in the Statutes anything which renders it obligatory for me to take this view. The object of Section 4, as amended by Act IV of 1903, is to render the fund incapable of attachment in the hands of the nominee for debts due by the subscriber. It is true that the Legislature uses the word vest but that word does not necessarily connote title. A person, in whom the property of another vests, h .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

or trust in favour of the nominee. The nominee would only get the right to receive the amount and he holds the amount for the benefit of the heirs. This was also the view of the Madras High Court in D. Mohanavelu Mudaliar v Indian Insurance & Banking Corporation, Salem & Anr.:( AIR 1957 Mad 115) So far as nomination is concerned we do not see any appreciable difference between the English and American Laws on the one hand, and what obtains in our country. According to the English Law the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

09 decision of a learned single Judge in Ramdas Shivram Sattur v Rameshchandra alias Ramchandra Popatlal Shah & Ors.( 2009 (3) Bom. C. R. 705) This was a decision under Section 30 of the Maharashtra Co-operative Societies Act, 1960. The learned single Judge (A.P. Deshpande, J) held that the purpose of a nomination is to make certain the person to whom the society must look, and not to create an interest in the nominee to the exclusion of those in law entitled to the estate of a deceased memb .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

aspect of the legal effect of nominations under diverse statutes are taken into account. Further, if the purposive approach is to be taken, as it should be in the submission of Mr. Warerkar, who also supports Mr. Shah and Mr. Tamboly, then the preamble to the Indian Succession Act, 1925 should leave no room for doubt, for that is clearly an act to consolidate the Indian law relating to succession. Till then there were very many large and important enactments on the subject, making ascertainment .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Indian Succession Act. The purposes of a will and a nomination are identical, and both serve to disrupt a natural line of succession. Therefore, the same considerations must apply to both. Further, Section 58(2) of the Indian Succession Act specifically excludes from that Act other modes of succession, i.e., it recognizes that other modes of testamentary succession are possible, for it says that Part VI of the Indian Succession Act constitutes the law of India applicable to all cases of testame .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

on the death of the holder, and this is contemplated by Section 58(2) of the Indian Succession Act. The statutory intention, he says, was to avoid disputes between heirs. 33. Mr. Pai also cites the decision of a Division Bench of the Calcutta High Court in Smt. Usha Majumdar v Smt. Smriti Basu,( AIR 1988 Cal 115) which held that a nominee in respect of a provident fund account is exclusively entitled to the amount in that account to the exclusion of the others. It is not possible to accept this .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

o neither. 34. Similarly, I am unable to accept Mr. Pai s submission that the decision of a learned single Judge of the Delhi High Court in Dayagen P. Ltd v Rajendra Dorian Punj & Anr.( [2009] 151 Com Cas 92 (Del)) should be followed. There, the learned single Judge held that the submission that the nominee under Section 109A of the Companies Act, 1956 held merely in trust was negatived on account of the non-obstante clause. The learned single Judge held that legislative intent was to overri .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in the first instance, from the plain meaning of the words. The words vest and nominee are to be seen, he submits, from that statute alone and no other; and the non-obstante clause over-rides every other statutory provision, including the Succession Act. Mr. Ghatalia too cites Dayagen in this behalf.( I am not at this stage considering the remaining submissions made by Mr. Ghatalia, as these are on the merits of his case, one that I am not taking up presently.) He joins Mr. Pai in submitting tha .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

look at others in pari materia, for that would mean that every new statute would have to be read and construed in a bubble of isolation. There is absolutely nothing in any portion of the Companies Act, 1956 or the Depositories Act, 1996 to support the view that Mr. Pai and Mr. Ghatalia commend. 36. I must also note that the argument of a statutory testament was raised before the Supreme Court in Sarbati Devi and was expressly negatived there. To accept it now would be to confine Sarbati Devi to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in Kokate is contrary to, and does not consider any of these. It is, for that reason, per incuriam. 38. The interpretation on Section 109A and Bye-Law 9.11 placed by the Kokate Court does not seem to me to be reconcilable with the explicit decisions of the Supreme Court and of this Court. What was the mischief , if any, sought to be avoided by those two statutes? The succession law is unchanged. There are no further complications on account of testamentary or intestate succession. The nature of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n forever answerable to a raft of succession litigations and an endless slew of claimants under succession law. It allows that liability to move from the company or the depository to the nominee. The company or depository gets a legally valid discharge; but the nominee continues to hold in a fiduciary capacity and is answerable to all claimants under succession law. 39. It cannot be otherwise. The Kokate view generates the very inconsistencies and conflicts that Sarbati Devi and, later, Khanchan .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he nomination a statutory will. Further, testamentary dispositive capacities are not all identical. There are, for instance, restrictions in Mohammedan law on how much can be disposed by will. The so-called statutory testament would oust this personal law entirely, even though there is nothing in either of the corporate statutes to indicate that this was ever the legislative intent. Moreover, nominations when viewed as Kokate would have it, create insoluble problems: no such statutory testament .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of in solemn form . Yet it is said to be a will. Witnesses need not be in the presence of the nominator. Yet it is said to be a will. Witnesses need not act at the instance of the nominator. Yet it is said to be a will. Witnesses need not see the nominator execute the nomination. Yet it is said to be a will. No nomination can be assailed on the ground of importunity, fraud, coercion or undue influence; Section 61 of the Indian Succession Act is wholly defenestrated, as is Section 59. Yet it is s .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ture used by a testator, and it simply cannot be that the view from that seat depends on the nature of the document before the executant. There is no particular form for a will, but there are requirements attendant to its proper making. These do not apply to all nominations: even the requirement of witnesses is a matter of prudence rather than statute. If that be so, no nomination per se requires attestation, and if that be so, it is admissible in evidence under Section 68 of the Evidence Act, 1 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version