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Shakti Yezdani and Another Versus Jayanand Jayant Salgaonkar and Others. & Others

Entitlement to the beneficial ownership of the shares or securities to nominee of a holder of shares or securities - Transfer of shares - Nomination of shares - whether the view taken by the learned Single Judge in the case of Harsha Nitin Kokate v. The Saraswat Cooperative Bank Limited and Others [2010 (4)614 - HIGH COURT OF BOMBAY ] that since the nomination is shown to be correctly made by assessee's husband who was the holder of the Suit shares, the Plaintiff would have no right to get the s .....

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ons seek to exclude all other persons except the nominee. - Section 109B of the Companies Act does not advance the case of the Appellants any further. Section 109B does not suggest that on nomination being made by a deceased shareholder of a Company, his nominee becomes the owner of the shares to the exclusion of all other legal heirs. - In the present case, we find that the provisions of Section 109A and in particular Subsection (3) thereof are not materially different from the provisio .....

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in the case of State of Himachal Pradesh and Others v. Ashwani Kumar and Others [2015 (11)1610 - SUPREME COURT] is of no help to the Appellants. - The nominee does not get absolute title to the property subject matter of the nomination. The reason is by its very nature, when a share holder or a deposit holder or an insurance policy holder or a member of a Cooperative Society makes a nomination during his life time, he does not transfer his interest in favour of the nominee. It is always held .....

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of the Companies Act is not to either provide a mode of succession or to deal with succession. The object of the Section 109A is to ensure that the deceased shareholder is represented by some one as the value of the shares is subject to market forces. Various advantages keep on accruing to shareholders. - We hold that there was no reason to take a view which is contrary to the view taken in the long line of the decisions of the Apex Court on interpretation of provisions regarding nominations .....

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tin R. Shah & Co for Respondent No.1. Shri Santosh D. Raje along with Ms. Madhura Dalvi i/b Rajiv Jadhav for Respondent Nos.4, 6, 7 and 8. Shri Nanak S. Ghatalia, the Appellant in person. Shri Rohan Cama i/b Kalpeshg Joshi Associates for the Respondent. JUDGMENT (PER A.S. OKA, J) THE CONTROVERSY 1. The issue which arises for consideration in this group of Appeals is whether the view taken by the learned Single Judge in the case of Harsha Nitin Kokate v. The Saraswat Cooperative Bank Limited .....

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titled to all the rights in the shares to the exclusion of all other persons. The nominee would be made beneficial owner thereof. Upon such nomination, therefore, all the rights incidental to ownership would follow. This would include the right to transfer the shares, pledge the shares or hold the shares. The specific statutory provision making the nominee entitled to all the rights in the shares excluding all other persons would show expressly the legislative intent. Once all other persons are .....

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es Act. Section 9.11.7 further shows that the last of the nominations would prevail. This shows the revocable nature of the nomination much like a Testamentary Disposition. A nomination can be cancelled by the holder and another nomination can be made. Such later nomination would be relied upon by the Depository Participant. That would be for conferring of 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 .....

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section 30 of the Maharashtra Cooperative Societies Act which allows the Society to transfer the shares of the member which would be valid against any demand made by any other person upon the Society. Hence these provisions are made merely to give a valid discharge to the Insurance Company or the Cooperative Society without vesting the ownership rights in the Insurance Policy or the membership rights in the Society upon such nominee. The express legislature intent under section 109A of the Compa .....

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the Companies Act, 1956 read with the Byelaws under the Depositories Act, 1996 is entitled to the beneficial ownership of the shares or securities subject matter of nomination to the exclusion of all other persons who are entitled to inherit the estate of the holder as per the law of succession? (ii) Whether a nominee of a holder of shares or securities on the basis of the nomination made under the provisions of the Companies Act, 1956 read with the Byelaws under the Depositories Act, 1996 is en .....

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ion made under the provisions of Sections 109A and ByeLaw No.9.11 framed under the Depositories Act, 1996?. 3. When these Appeals were placed before a Division Bench of this Court on 7th September 2015, the following order was passed: 2. It is urged by the learned counsel appearing on behalf of the Appellants that the learned Single Judge, while passing the impugned order, has observed that the Judgment and Order delivered by another learned Single Judge, [Justice Smt. Roshan Dalvi in the matter .....

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mstances, we are of the view that it would be appropriate to place this matter before the Hon'ble Chief Justice so that appropriate orders can be passed. 4. Office to place the matter before the Hon'ble Chief Justice. On the basis of the order dated 7th September 2015, these Appeals were placed before the Hon'ble the Chief Justice. An Administrative Order was passed by the Hon'ble the Chief Justice on 25th April 2016 assigning these Appeals before a Division Bench presided over b .....

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2015 has been preferred by the Petitioner in Testamentary Petition No.457 of 2014. 5. Firstly, a reference to the facts of the case in Suit No.503 of 2014 will be necessary. The said suit has been filed for administration of the estate of late Jayant Shivram Salgaonkar and for other consequential reliefs. The Plaintiff therein and the first nine Defendants therein are the heirs and legal representatives of the late Jayant Shivram Salgaonkar (for short late Jayant ), who died on 20th August 2013 .....

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ticular the shares held by him in M/s.Sumangal Press Private Limited. It is claimed that the second and third Defendants have been appointed as the Executors under the last Will and testament who have filed an Application for grant of probate in respect of the said Will. It is stated that the said Application has been converted into a suit which is still pending. It is contended that by the said Will, a bequest has been made by late Jayant of his share in the properties listed at Item Nos.2, 3, .....

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were made nominees are exclusively vested in them. The fifth and sixth Defendants relied upon the Regulation 29A of Securities and Exchange Board of India (Mutual Fund) Regulations, 1996 apart from Sections 109A and 109B of the Companies Act,1956 (for short Companies Act ). The sixth Defendant claims to be a nominee in respect of a fixed deposit made by late Jayant with IDBI Bank. She claims to be an absolute owner of the fixed deposit on the basis of Section 45ZA of the Banking Regulations Act, .....

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The Respondent in Appeal No.311 of 2015 filed a Caveat. The learned Single Judge in the impugned judgment and order has noted that the Respondent in the Appeal sought to file a Caveat. The learned Single Judge noted that the issue was whether or not the Respondent who is a daughter of the deceased testator is entitled to file and maintain a caveat. The learned Single Judge noted that a settlement was suggested which was nearly reached. The learned Single Judge has noted the only contentious iss .....

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Paragraph 6 of the impugned judgment, the learned Single Judge noted that the claim of the said Appellant of the exclusive rights in respect the investments is founded on the judgment of the learned Single Judge in Kokate's case. He has noted that in Kokate's case, the learned Single Judge considered the provisions of Section 109A of the Companies Act and the Bye-Law No.9.11 framed under the said Act of 1996. THE SUMMARY OF THE SUBMISSIONS MADE BY THE PARTIES 8. The Appellant appearing .....

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11 of 2015 submitted that the learned Single Judge had no jurisdiction to decide the issue which has been decided under the impugned order inasmuch as the jurisdiction of the Testamentary Court dealing with an Application for grant of probate is very limited. He submitted that the jurisdiction is confined to decide the issue of proof of execution, genuineness and validity of the Will set up by the propounder. He urged that the Testamentary Court dealing with a Petition for Probate has no jurisdi .....

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person pointed out that he has filed brief submissions on the issue of nomination in which he has specifically contended that the Caveator/Respondent in the Appeal has never raised a contention that the testamentary disposition will supersede the nomination. We must note here that the Appellant contended that till 10th April 2015, he was not even aware of the impugned judgment and order. Without prejudice to his contention that the learned Single Judge while dealing with the Probate Petition had .....

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er of the shares. He submitted that there is a vesting of shares in the nominee on the death of the owner. The Appellant appearing in person also made analysis of various decisions considered by the learned Single Judge and various decisions which are cited across the bar. We are not reproducing in detail the analysis made by the Appellant appearing in person of the said decisions as we have extensively dealt with the said decisions. He also submitted that the finding that the decision in Kokate .....

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anking Regulations Act, 1949, National Saving Certificates Act, 1959, Employees' Provident Fund and the Miscellaneous Provisions Act, 1952. He submitted that the provisions regarding nomination under none of the said Acts are pari materia with the provisions of the Companies Act. Another issue canvassed by him was that the issue decided by the learned Single Judge could have been considered only at the time of final hearing of the Notice of Motion. He pointed out the order dated 7th May 2014 .....

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erence to a Larger Bench. He submitted that the learned Single Judge has not considered the intention of the legislature while dealing with Section 109A and Section 109B of the Companies Act which were introduced by way of amendment by the Act of 1999. He submitted that the provisions make it clear that the same will override the provisions in relation to the law of intestate and testamentary succession as far as the shares are concerned. He submitted that none of the decisions which are relied .....

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in the said decision. He has taken us through the decision in Kokate's case in support of his contention that the said decision gives a complete effect to the intention of the legislature of incorporating Sections 109A and 109B of the Companies Act. He urged that the provisions of Section 109B will have to be considered along with Section 109A and in particular Subsection (3) of Section 109B of the Companies Act. By inviting our attention to the provisions of Sections 109, 109A and 109B of .....

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ations Act, 1949 dealing with the nomination is completely different from the scheme of the Companies Act. He urged that the provisions of Companies Act dealing with the nomination provide for vesting of shares in nominee and the said provisions override the law of intestate and testamentary succession. On the contrary, the provisions regarding nomination in other Statutes specifically restrict the rights of a nominee. He extensively relied upon a decision of the Delhi High Court in the case of .....

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succession under the Indian Succession Act, 1925 do not apply when the provisions of the testamentary succession as provided in any other law for the time being in force are applicable. He urged that the learned Single Judge has completely overlooked the fact that the provisions of Section 109A and in particular SubSection 3 thereof incorporate a nonobstante clause which specifically provides that it will override the provisions of any other law for the time being in force or in any disposition, .....

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2015 supported the impugned judgment. He relied upon several decisions while referring to the language used by Section 109A and Section 109B of the Companies Act. He pointed out that the nomination would be always subject to the testamentary disposition by holder of shares or debentures. Even the learned counsel for the contesting Respondent in the other Appeal made submissions. THE ISSUE OF PER INCURIAM 13. We have given careful consideration to the submissions. Though the submissions have bee .....

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taken by the learned Single Judge is erroneous, the impugned order will have to be set aside on merits and while doing so, it will not be necessary to go into the question whether the decision in Kokate's case is per incuriam as held by the learned Single Judge. Moreover, we find that before the learned Single Judge as well as this Bench, submissions have been made on merits of the issue. The questions framed in Paragraph No.2 above will squarely arise in the suit subject matter of Appeal N .....

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of the will cannot be decided in the proceedings of probate. That is the well settled law( see the decision of the Apex Court in the cases of Kanwarjit Singh Dhillon v. Hardyal Singh Dhillon (2007)11 SCC 357). Hence, the contention of the Appellant appearing in person that the issue could not have been decided in Testamentary Petition appears to be correct. The issues will certainly arises in Suit No.503 of 2014 in view of the stand taken in the written statement of the concerned Defendants. The .....

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ent of his death. (2) Where the shares in, or debentures of, a company are held by more than one person jointly, the joint holders may together nominate, in the prescribed manner, a person to whom all the rights in the shares or debentures of the company shall vest in the event of death of all the joint holders. (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 .....

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the exclusion of all other persons, unless the nomination is varied or cancelled in the prescribed manner. (4) Where the nominee is a minor, it shall be lawful for the holder of the shares, or holder of debentures, to make the nomination to appoint, in the prescribed manner, any person to become entitled to shares in, or debentures of, the company, in the event of his death, during the minority.] 109B. TRANSMISSION OF SHARES. (1) Any person who becomes a nominee by virtue of the provisions of s .....

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himself, as the case may be, he shall deliver or send to the company a notice in writing signed by him stating that he so elects and such notice shall be accompanied with the death certificate of the deceased shareholder or debenture holder, as the case may be. (3) All the limitations, restrictions and provisions of this Act relating to the right to transfer and the registration of transfers of shares or debentures shall be applicable to any such notice or transfer as aforesaid as if the death o .....

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entitled in respect of it to exercise any right conferred by membership in relation to meetings of the company: Provided that the Board may, at any time, give notice requiring any such person to elect either to be registered himself or to transfer the share or debenture, and if the notice is not complied with within ninety days, the Board may thereafter withhold payment of all dividends, bonuses or other moneys payable in respect of the share or debenture, until the requirements of the notice h .....

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the Business Rules from time to time. 9.11.2. The securities held in such account shall automatically be transferred in the name of the Nominee, upon the death of the Nominating Person, or as the case may be, all the Nominating Persons subject to the other Bye Laws mentioned hereunder. 9.11.3 ... 9.11.4. Beneficial Owner(s) may substitute or cancel a nomination at any time. A valid nomination, substitution or cancellation of nomination shall be dated and duly registered with the Participant in a .....

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ository. 9.11.6. A nominee shall on the death of the Nominating Person(s) be entitled to elect himself to be registered as a Beneficial Owner by delivering a notice in writing to the Depository, along with the certified true copy of the death certificate issued by the competent authority as prescribed under the Business Rules. Subject to scrutiny of such election, the securities in the Account shall be transmitted to the account of the Nominee held with any depository. 9.11.7. Notwithstanding an .....

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nating Person(s). CONSIDERATION OF SUBMISSIONS KOKATE'S CASE 17. Firstly, we propose to deal with the decision of the learned Single Judge in Kokate's case. The said decision is rendered in a Notice of Motion arising out of a suit. The Plaintiff therein was the widow of one Nitin Kokate, who died on 5th July 2007. Her deceased husband held certain shares in Dmat Account with the Depository Participant Cell of the first Defendant in the suit. The husband of the Plaintiff had made a nomina .....

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No.9.11 framed under the Depositories Act, 1996. Section 109A and the ByeLaw No.9.11 are already quoted above. The learned Single Judge considered the decision of the Apex Court in the case of Sarbati Devi dealing with the nomination under Section 39 of the Insurance Act. The learned Single Judge also dealt with the nomination made in accordance with Section 30 of the Maharashtra Cooperative Societies Act, 1960. The learned Single Judge in Kokate's case observed that in case of the nominees .....

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e shares in the nominee upon his death. The act sets out that the nomination has to be made during the life time of the holder as per procedure prescribed by law. If that procedure is followed, the nominee would become entitled to all the rights in the shares to the exclusion of all other persons. The nominee would be made beneficial owner thereof. Upon such nomination, therefore, all the rights incidental to ownership would follow. This would include the right to transfer the shares, pledge the .....

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lause in Section 9.11.7 gives the nomination the effect of the Testamentary Disposition itself. Hence, any other disposition or nomination under any other law stands subject to the nomination made under the Depositories Act. Section 9.11.7 further shows that the last of the nominations would prevail. This shows the revocable nature of the nomination much like a Testamentary Disposition. A nomination can be cancelled by the holder and another nomination can be made. Such later nomination would be .....

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rent from Section 39 of the Insurance Act set out (supra) which require a nomination merely for the payment of the amount under the Life Insurance Policy without confirming any ownership rights in the nominee or under Section 30 of the Maharashtra Cooperative Societies Act which allows the Society to transfer the shares of the member which would be valid against any demand made by any other person upon the Society. Hence these provisions are made merely to give a valid discharge to the Insurance .....

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nt decision of the Apex Court is in the case of Indrani Wahi v. Registrar of Coop. Societies and Others (2016) 6 SCC 440. The Apex Court in the said decision considered the provisions of nomination under Sections 69 and 70 of the West Bengal Cooperative Societies Act, 1983 (for short the West Bengal Act of 1983 ). The Apex Court also considered its own decision in the case of Sarbati Devi which dealt with the nomination under the Life Insurance Act, 1938. After considering Section 79 of the West .....

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e West Bengal Act of 1983. Sections 79 and 80 of the said Act of 1983 appear to be different from the provisions relating to the nomination in the Maharashtra Cooperative Societies Act, 1960. In Paragraphs 19 to 23 of the decision of the Apex Court in the case of Indrani Wahi, the Apex Court concluded as under: 19. In the same manner as is postulated under Section 79 of the 1983 Act, Rule 127 of the 1987 Rules provides, that if a nomination has been made by a member under Section 79, the share o .....

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ta), because the learned Single Judge, as also, the Division Bench of the High Court concluded, that the appellant Indrani Wahi was a member of the family, of the original member Biswa Ranjan Sengupta. This conclusion has not been assailed by the respondents, before this Court. 20. Rule 128 of the 1987 Rules also leads to the same inference. Inasmuch as Rule 128 aforementioned provides, that only in the absence of a nominee, the transfer of the share or interest of the erstwhile member, would be .....

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minee. We hold accordingly. 22. Having recorded the above conclusion, it is imperative for us to deal with the conclusion recorded in para 6 (already extracted above at p. 448fh and p. 449ab) of the judgment of this Court in Usha Ranjan Bhattacharjee case [Usha Ranjan Bhattacharjee v. Abinash Chandra Chakraborty, (1997) 10 SCC 344]. In this behalf, it is necessary to clarify that transfer of share or interest, based on a nomination under Section 79 in favour of the nominee, is with reference to .....

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ive Society to transfer the share or interest of the Society in favour of the appellant Indrani Wahi. It shall however, be open to the other members of the family (presently only the son of Biswa Ranjan Sengupta, Dhruba Jyoti Sengupta; we are informed that his mother Parul Sengupta has died), to pursue his case of succession or inheritance, if he is so advised, in consonance with law. (emphasis added) After issuing the directions to the Cooperative Society to transfer the shares of the deceased .....

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ember. However, those who are claiming inheritance will be entitled to pursue their remedies and claim title in the shares on the basis of inheritance. Thus, the conclusion drawn by the Apex Court was not that the nomination binds the legal representatives of the deceased shareholder or a member of the Society or that it overrides the law of succession. 19. The scope of the nomination governed by Section 30 of the Maharashtra Cooperative Societies Act, 1960 read with the Rule 25 of the Maharasht .....

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Bench in Paragraph 9. Ultimately, in Paragraph 10, the learned Single Judge concluded that by a nomination under Section 30 of the Maharashtra Cooperative Societies Act, 1960, there is no disposition of the properties by the member of the Society and, therefore, the nominee on the demise of the member does not become the owner of the properties in question held by virtue of the membership of the Society. 20. We may note here that Section 80 of the West Bengal Act of 1983 specifically provides t .....

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n 80 of the West Bengal Act of 1983 which mandates that on the death of a member of a Cooperative Society, his share or interest shall be transferred to nominee, the Apex Court did not hold that nomination supersedes the succession or inheritance in accordance with law. 21. In the case of Sarbati Devi, the Apex Court considered the effect of nomination under Section 39 of the Life Insurance Act, 1938. Paragraph 3 of the said decision sets out the question which required consideration. In Paragra .....

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judgments delivered in the year 1978 and in the year 1982. The Act has been in force from the year 1938 and all along almost all the High Courts in India have taken the view that a mere nomination effected under Section 39 does not deprive the heirs of their rights in the amount payable under a life insurance policy. Yet Parliament has not chosen to make any amendment to the Act. In such a situation unless there are strong and compelling reasons to hold that all these decisions are wholly erron .....

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of the Act does not have the effect of conferring on the nominee any beneficial interest in the amount payable under the life insurance policy on the death of the assured. The nomination only indicates the hand which is authorised to receive the amount, on the payment of which the insurer gets a valid discharge of its liability under the policy. The amount, however, can be claimed by the heirs of the assured in accordance with the law of succession governing them. (emphasis added) 22. In the cas .....

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any exempted employee in a provident fund shall not in any way be capable of being assigned or charged and shall not be liable to attachment under any decree or order of any court in respect of any debt or liability incurred by the member or the exempted employee, and neither the official assignee appointed under the Presidency Towns Insolvency Act, 1909 (3 of 1909) nor any receiver appointed under the Provincial Insolvency Act, 1920 (5 of 1920), shall be entitled to have any claim on, any such .....

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t under any decree or order of any court. (3) The provisions of subsection 1 and subsection 2 shall, so far as may be, apply in relation to the pension or any other amount, payable under the Pension Scheme and also in relation to any amount payable under the Insurance Scheme as they apply in relation to any amount payable out of the Fund. (emphasis added) Thereafter, the learned Single Judge proceeded to discuss the meaning of the word vest used in Subsection (2) of Section 10. Apart from referr .....

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of section 10(2) of the 1952 Act as appears to have been done by the High Court of Calcutta. The question to be asked is why the word absolutely hitherto before existing in section 5 of the Employees' Provident Funds Act, 1925 was deliberately omitted by the Amending Act XI of 1946. Was it the intention of the Legislature that even after omission of the said word from the said provision, the nominee must be held to have an absolute right to the provident fund amount lying to the credit of t .....

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t judgment highlighting various meanings of the word vest in the case of The Fruit and Vegetable Merchants' Union v. The Delhi Improvement Trust, AIR 1957 SC 344 and holding that the word vest in the context could mean mere possession for specific purpose without any title was not cited before the Hon'ble High Court of Calcutta. If the various English and Indian cases noticed by Hon'ble Justice Sinha of the Supreme Court in the above-referred judgment are to be considered and applied .....

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tled thereto. Having regard to the facts of this case, the respondent No. 4 is liable to be restrained from collecting the said amount from the former employer of the deceased. It is the duty of this Court to pass appropriate orders so as to safeguard the interest of petitioner minor and pass order of injunction against respondent No. 4 having regard to the above. I am supported in the view which I have taken on interpretation of section 10(2) of the Employees' Provident Funds and Misc. Prov .....

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t considered the effect of nomination under the Government Savings Certificate Act, 1959 and in particular Sections 6 to 8 thereof. The said Sections read thus: 6. Nomination by holders of savings certificates.- 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 .....

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ion (1) shall become void if the nominee predeceases, or where there are two or more nominees all the nominees predecease, the holder of the savings certificate making the nomination. (3) Where the nominee is a minor, it shall be lawful for the holder of the savings certificate making the nomination to appoint in the prescribed manner any person to receive the sum due thereon in the event of his death during the minority of the nominee. (4) A transfer of a savings certificate made in the prescri .....

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our of any person, payment of the sum due thereon shall be made to the nominee. (2) Where the nominee is a minor, payment of the sum due thereon shall be made- (a) in any case where a person has been appointed to receive it under sub::: section (3) of Section 6, to that person, and (b) where there is no such person, to any guardian of the property of the minor appointed by a competent court, or where no such guardian has been so appointed, to either parent of the minor, or where neither parent i .....

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Act, 1925, is not within three months of the death of the holder produced to the prescribed authority, then, if the sum due on the savings certificate does not exceed such limit as may be prescribed, the prescribed authority may pay the same to any person appearing to it to be entitled to receive the sum or to administer the estate of the deceased. (5) Nothing contained in this section shall be deemed to require any person to receive payment of the sum due on a savings certificate before it has .....

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r of a savings certificate from recovering from the person receiving the same under Section 7 the amount remaining in his hands after deducting the amount of all debts or other demands lawfully paid or discharged by him in due course of administration. (3) Any creditor or claimant against the 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 .....

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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 other persons. Referring to subsection (3) of Section 6, the learned counsel submitted that in case where the nominee is a minor, the holder of the savings certificate has a right to make the nomination to appoint in the prescribed manner any person to receive the sum due thereon in the event of his death during the minori .....

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was placed upon subsections (3) and (4) of Section 7. He also tried to distinguish the verdict of this Court in Sarbati Devi v. Usha Devi [(1984) 1 SCC 424 : 1984 SCC (Tax) 59] by pointing out the difference of the language and phraseology in Section 6 of the Act and Section 39 of the Insurance Act. According to him the words, 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 other persons .....

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ayable on the death of the assured may be expressed to be payable to a third party and the third party is then prima facie merely the agent for the time being of the legal owner and has his authority to receive the policy money and to give a good discharge; but he generally has no right to sue the insurers in his own name. The question has been raised whether the third party's authority to receive the policy money is terminated by the death of the assured; it seems, however, that unless and .....

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ct only makes the provisions regarding avoiding delay and expense in making the payment of the amount of the National Savings Certificates, to the nominee of the 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 l .....

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e case of Antonio Joao Fernandes v. The Assistant Provident Fund Commissioner and Others 2010(3) All MR 599, the learned Single Judge of this Court had an occasion to consider the provisions of Subsection (2) of Section 10 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 and in particular the meaning of the expression vests used in the said provisions. The learned Single Judge followed the view taken in the case of Nozer Gustad Commissariat. 25. Now we come to the dec .....

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ng 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 exc .....

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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 45ZA( 2) would, therefore, form part of the estate of the deceased depositor and devolve according to the rule of succession to which the depositor may be governed. 6. We find that the High Court has rightly rejected the appellant's claim relying upon the decision o .....

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th a nonobstante clause which seeks to override any other law for the time being in force or any disposition whether testamentary or otherwise in respect of such deposit, where a nomination has been made in the prescribed manner. Though the word vest is not used in Subsection (2) of Section 45ZA, it provides that a nominee on the death of the sole depositor or as the case may be, on the death of all the depositors becomes entitled to all rights as the sole depositor in relation to such deposit t .....

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ition, whether testamentary or otherwise, the Apex Court held that the nominee does not become the owner of the money lying in the account. 27. Coming back to the decision in the case of Vishin N. Khanchandani and Another, as stated earlier, the Apex Court interpreted Section 6 of the Government Savings Certificates Act, 1959. We have already quoted Section 6 of the said Act. As pointed out earlier, even Subsection (1) of Section 6 starts with a similar nonobstante clause. The submission of the .....

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te clause as distinguished from Section 39 of the Life Insurance Act. Ultimately, in Paragraph 13, the Apex Court observed that though the phraseology used in Section 39 of the Life Insurance Act, 1938 is different from the phraseology used in Section 6 of the Government Savings Certificates Act, 1959, the effect of both the provisions is the same and that is how in Paragraph 13 in the case of Vishin N. Khanchandani and Another, the Apex Court held thus: 13. In the light of what has been noticed .....

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he 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 Sarbati Devi case [(1984) 1 SCC 424 : 1984 SCC (Tax) 59] holds the field and is equally applicable to the nominee becoming entitled to the payment of the amount on account of National Savings Certificates received by him under Section 6 read with Secti .....

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There is no material difference between Subsection (3) of Section 109A of the Companies Act and Subsection (1) of Section 6 of the Government Savings Certificates Act, 1959 as well as Subsection (2) of Section 45ZA of the Banking Regulation Act, 1949 which have been interpreted by the Apex Court as aforesaid. The said provisions start with nonobstante clause and seek to provide that nomination will override the disposition whether testamentary or otherwise. The said provisions seek to exclude al .....

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agraph 15 thereof which reads thus: 15. There is also another aspect which may legitimately be kept in view. People in arranging their affairs are entitled to rely on a decision of the highest court which appears to have prevailed for considerable length of time and it would require some exceptional reason to justify its reversal when such reversal is likely to create serious embarrassment for those who had acted on the faith of what seemed to be the settled law. Where the meaning of a statute i .....

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upon another decision of the Apex Court in the case of State of Himachal Pradesh and Others v. Ashwani Kumar and Others 2015(12) Scale 619. Paragraph 22 of the said decision relied upon reads thus: 22. We make it clear that to maintain certainty in the judicial decision, we have to restrain from interfering with the decision of the High Court which has stood for a long period on the principle of stare decisis. However, the said principle will be applicable where the meaning of the Statute is amb .....

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949 is also similar to Subsection (2) of Section 109B. The same is the case with Byelaw 9.11 of the Depositories Act,1996. Even assuming that the format of the nomination requires attestation as required by a will under the Indian Succession Act,1925, the nomination does not become a testamentary disposition. Therefore, the decision of the Apex Court in the case of State of Himachal Pradesh and Others v. Ashwani Kumar and Others is of no help to the Appellants. 33. Reliance is placed on Sub-Sect .....

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the provisions of this Part shall constitute the law of [India] applicable to all cases of testamentary succession. Sections 109A was not on the Statute Book when the Indian Succession Act,1925 came into force. We do not see how the said provision will help the Appellants. 34. The provisions relating to nominations under the various Enactments have been consistently interpreted by the Apex Court by holding that the nominee does not get absolute title to the property subject matter of the nominat .....

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omination are protected till the legal representatives of the deceased take appropriate steps. None of the provisions of the aforesaid Statutes providing for nominations deal with the succession, testamentary or nontestamentary. As observed by the Apex Court, the legislative intention is not to provide a third kind of succession. In Sarbati Devi, the Apex Court held in paragraph 5 which reads thus: …...But the summary of the relevant provisions of Section 39 given above establishes clearl .....

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succession which is styled as a statutory testament in para 16 of the decision of the Delhi High Court in Uma Sehgal case [AIR 1982 Del 36 : ILR (1981) 2 Del 315] . If Section 39 of the Act is contrasted with Section 38 of the Act which provides for transfer or assignment of the rights under a policy, the tenuous character of the right of a nominee would become more pronounced. It is difficult to hold that Section 39 of the Act was intended to act as a third mode of succession provided by the st .....

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elaxed even where wills are registered. (emphasis added) The object of the provisions of the Companies Act is not to either provide a mode of succession or to deal with succession. The object of the Section 109A is to ensure that the deceased shareholder is represented by some one as the value of the shares is subject to market forces. Various advantages keep on accruing to shareholders. For example, allotment of Bonus shares. There are general meetings held of the Companies in which a sharehold .....

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view. The provisions of the Companies Act including Sections 109A and 109B, in the light of the object of the said Enactment, do not warrant any such departure. The so called vesting under Section 109A does not create a third mode of succession. It is not intended to create a third mode of succession. The Companies Act has nothing to do with the law of succession. We have gone through every decision and material relied upon by the Appellants to which we have not made a specific reference in thi .....

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estion at the time of hearing of the Notice of Motion which was not a question of jurisdiction. From the impugned order, it appears that the Appellants in Appeal No.313 of 2015 were fully aware as to the controversy before the learned Single Judge and in fact, the submissions have been made on merits of the issue. Hence, the said contention cannot be accepted. 37. As regards the Appeal No.311 of 2015, it arises out of a Testamentary Petition. The Appellant appearing in person is right in contend .....

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