Nominee vs legal heir
MOHAN ILAYARAJA
(Querist) 24 August 2011
This query is : Resolved
Dear Experts,
This query is for my academic knowledge
X is a married male without any children.
Y is the wife of X
R is the mother of X
S is the father of X
X is working as a Manager in a private company and in his records he entered his father and Mother ie. R & S as his nominee before marriage.
X also taken an Insurance Policy and Entered R & S as his Nominee before marriage.
Now X died in an accident and Y got legal heir certificate from competent authority including R as legal heirs.
The doubt is now who has the right to claim the monetary benefits of X lying before the Company and Insurance.
and Please differentiate the meaning between Nominee and Legal Heirs.
ajay sethi
(Expert) 24 August 2011
nomineee is a trustee . although as per nomination R and S are entitled to get insurance benefits they are trustees .
whatever assets X had shall be distributed amont legal heirs ie Y and R and S as X died without leaving any will
Sachin Bhatia
(Expert) 24 August 2011
The Supreme Court (SC) has clarified the nominee of a depositor in a bank does not get ownership of the money in the account after death of the depositor. The nominee gets exclusive right to receive the money lying in the account. It gives him all the right of the depositor as far as the depositor's account is concerned, according to Section 45ZA of the Banking Regulation Act. But the banking law is not concerned with the succession. The money in the account will form part of the estate of the deceased depositor and devolve according to the rules of succession. In this case, Ram Chander vs Devender Kumar, one son was the nominee of his mother. After her death, he claimed he was the owner of the money in the account, to exclusion of his brother. The same rule will apply to government savings and other investments.
Sachin Bhatia
(Expert) 24 August 2011
Ram Chander Talwar & another Vs. Devender Kumar Talwar & others
Indian Succession Act, 1925 - Sections 4, 6, 7, 8(2) and 278; Banking Regulation Act, 1949 - Sections 45ZA; Banking Companies (Nomination) Rules, 1985 - Rule 2(1)-The money lying deposited in the account of the original depositor should be distributed among the claimants in accordance with the Succession Act of the respective community and the nominee cannot claim any absolute right over it. Section 45ZA(2) merely puts the nominee in the shoes of the depositor after his death and clothes him with the 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.Supreme Court of India
Supreme Court of India
Civil Appeal NOS.1684 OF 2004
Hon'ble Judge(s): AFTAB ALAM, R.M. LODHA
Date of Judgment: October 06, 2010
Ram Chander Talwar & another Vs. Devender Kumar Talwar & others
O R D E R
AFTAB ALAM, J.
Heard counsel appearing for the appellants.
Appellant no.1, who was the nominee in the bank account held by his deceased mother claims full rights over the money lying in the account, to the exclusion of the respondent who is none else than his full brother. The claim is based on section 45 ZA of the Banking Regulation Act, which according to him, makes the nominee of the depositor the sole beneficiary, vested with all the rights of sole depositor. Mr. Swetank Shantanu, counsel appearing for the appellants, strenuously argued that by virtue of sub-section 2 of section 45 ZA, the nominee of the depositor, after the death of the depositor acquires all his/her rights to the express exclusion of all other persons and, therefore, the respondent can not lay any claim to the money in the account or in regard to the articles that might be lying in the bank locker held by their deceased mother.
The submission is quite fallacious and is based on a complete misconception of the provision of the Act. Sub-section 2 of the 45ZA, reads as follows:-
45ZA xxx xxx xxx xxx
(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 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.
xxx xxx xxx xx (emphasis added)
Section 45ZA(2) merely puts the nominee in the shoes of the depositor after his death and clothes him with the 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 45 ZA(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.
We find that the High Court has rightly rejected the appellant's claim relying upon the decision of this Court in V.N. Khanchandani & Anr. v. V.L. Khanchandani & Anr., (2000) 6 SCC 724. The provision under Section 6(1) of the Government Saving Certificate Act, 1959 is materially and substantially the same as the provision of Section 45ZA(2) of the Banking Regulation Act, 1949, and the decision in V.N. Khanchandani applies with full force to the facts of this case.
We find no merit in this appeal. It is, accordingly, dismissed.
Guest
(Expert) 25 August 2011
well done for your efforts to enlighting the same.
prabhakar singh
(Expert) 25 August 2011
none can disagree with Mr Bhatia.A well explained exhaustive answer with no room for any more explanation.
Guest
(Expert) 25 August 2011
Dear Experts,
I would like to request all of the experts to review their replies in the context of the liability of payment on the part of the Insurance company to the nominees at the time of claim in real scenario (notwithstanding any court order).
The question arises, can the Insurance company refuse claim of the nominees on death of the insured, if the records of the company do not show hiership link with any one else (may be wife of the insured) unless legal hiership certificate is produced or any court order is produced before the company before disbursal?
I AM OF THE VIEW THAT OBSERVATION OF MR. AJAY SETHI IS CORRECT. MAY THE FATHER AND MOTHERS BE THE TRUSTEE, THE WIFE HAD TO CLAIM HER SHARE FROM THE NOMINEES (not Insurance Company). BUT, IF THEY REFUSE TO PAY, SHE WOULD HAVE TO CLAIM THROUGH COURT OF LAW UNDER THE PROVISIONS OF THE INDIAN SUCCESSION ACT, 1925.
Rule 2(1) of the Banking Companies (Nomination) Rules, 1985, does not indicate that the amount should be distributed among the claimants in accordance with the Succession Act. The provision can apply where no nomination exists.
MOREOVER, Section 45ZA(2) clearly provides that the nominee becomes entitled to all the rights of the sole depositor, unless the nomination is varied or cancelled. The said section states, as under:
EXTRACT of S.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 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.
According to this situation, the reply of Mr. Ajay Sethi seems to be correct.
IT WOULD BE VERY KIND OF YOU IF YOU VERY KINDLY GIVE YOUR VIEWS ON MY OPINION.
prabhakar singh
(Expert) 25 August 2011
"The question arises, can the Insurance company refuse claim of the nominees on death of the insured, if the records of the company do not show hiership link with any one else (may be wife of the insured) unless legal hiership certificate is produced or any court order is produced before the company before disbursal?"
A 1 word answer is NO.
"I AM OF THE VIEW THAT OBSERVATION OF MR. AJAY SETHI IS CORRECT."
Answer " how you conclude any of us differ"??
I concur you and yet say agreed with Mr. Bhatia.
MOHAN ILAYARAJA
(Querist) 25 August 2011
Dear Experts,
Hearty Thanks to all for your kind response and clarified my doubts along with case laws.
Advocate Rajkumarlaxman
(Expert) 25 August 2011
