Nominee Entitled To Bank Deposits After Account Holder's Death But Money Would Be Subject To Succession Laws: Allahabad HC

A bench of Justice Shekhar B. Saraf and Justice Vipin Chandra Dixit observed this while dealing with a writ plea filed by Manoj Kumar Sharma, who claimed that, as the nominee, he was entitled to receive the money from the Fixed Deposit Receipts (FDRs) of his late mother in accordance with Section 45ZA of the Banking Regulation Act, 1949 [Nomination for payment of depositors' money].

The division bench referred to a co-ordinate bench Judgment in the case of Cdr. Vineet Kumar Sharma vs. Union of India and 3 others 2024, in which the HC relied upon the Supreme Court's judgment in the case of Ram Chander Talwar and another vs. Devender Kumar Talwar and others 2010.

For context, in Ram Chander Talwar case, the Top Court had held that all the monies receivable by the nominee by virtue of Section 45-ZA(2) of the 1949 Act 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.

“Section 45-ZA(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…,” the top court had observed. (emphasis supplied)

Relying on this Supreme Court ruling, in the Vineet Kumar Sharma case, the High Court observed that the nominee alone remains entitled to receive money from the bank notwithstanding any disposition, whether testamentary or otherwise. However, the right to receive money from the Bank is distinct from the right to succeed in that money.

The petitioner had moved the HC seeking the release of the amounts in the FDR accounts (maintained in Bank of Baroda) of his mother (who died February 8, 2020) in his favour, as a nominee and a legal heir, claiming that he is entitled to receive the money as per Section 45ZA of the 1949 Act.

Importantly, his succession suit before the Civil Judge (Senior Division)/F.T.C., Moradabad, was dismissed on the ground that another suit was pending for cancellation of the alleged will of the petitioner's mother.

On the other hand, the counsel appearing on behalf of private respondents and the State submitted that Section 45ZA of the 1949 Act, though it gives the nominee a right to receive the money from the bank, the provision can't overrule the laws of succession.

Thus, it was contended that even if the money is required to be given to the petitioner, the same would have to be held by the petitioner in trust for the legal heirs of the deceased.

In view of these submissions and considering the Supreme Court and High Court judgments, the Court opined that the petitioner has a right to obtain the money from the bank as he is a nominee. However, the court added, the money he received would be subject to the succession laws, and the heirs of the deceased would have a right to the said amount.

Further, upon the undertaking given by the counsel on behalf of the petitioner that he shall hold the money in trust and shall be liable to make payment to the legal heirs if and when decided by the courts of law, the Court directed the Bank of Baroda to release the amounts lying in FDRs in favour of petitioner within three weeks.

In turn, the petitioner was directed to file an affidavit before the Bank of Baroda stating that the money he is receiving is held in trust and that he undertakes to pay the same to the legal heirs as and when decided.

With this, the petition was disposed of.

Appearances

Counsel for Petitioner: Ram Lal Mishra

Counsel for Respondent: A.S.G.I., Anadi Krishna Narayana, Harish Kumar Yadav, Ishan Shishu, Sandeep Kumar Singh

Case title - Manoj Kumar Sharma vs. Union Of India And Another

Case citation:

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