There has been always some ambiguity on the rights of the Nominee and legal heir. In case of the demise of the owner, who shall be the rightful successor for the property of the deceased? Nominee or the legal heirs?

A division bench (two-judge bench) of the Bombay High Court, comprising of The Honorable Justice Oak and The Honorable Justice Sayed, in Shakti Yezdaniand Ors. Vs. Jayanand Jayant Salgaonkar and Ors. has upheld the rights of successors over nominees and has settled the controversy regarding the rights of legal heirs as opposed to nominees. The court stated that the nominees are appointed to ensure that the subject matter of the nomination is protected,until the actual legal heirs take the right steps, such as obtaining probate of the will of the deceased or letters of administration or applying for succession certificate, to claim their rights over the assets of the deceased.

The Bombay High Court`s ruling on nominee`s rights

The Bombay High Court took into account the various provisions of law governing the nomination of shares under the Companies Act, 1956, (1956 Act),the succession laws governing the estate of a deceased as per the Indian Succession Act, 1925 and the bye-laws under the Depositories Act, 1996 and held that the provisions relating to nomination do not override the law in relation to testamentary or intestate succession and vesting under Section 109 A (of Companies Act,1956) does not create a third mode of succession. The Bombay High Court observed that the provisions relating to nominations have beenconsistently interpreted as only giving a temporary controlling right to the nominees, for interim management of the affairs.

Importance of Will:

Therefore it is amply important to write a Will which supersedes the nominations and to make things clear and simple. It is recommended the beneficiary of the Will and nominations should be in sync to avoid any kind of disagreements within the family.