Nominee Can Obtain Money Lying In Deceased Depositor’s Bank Account But Money Received Would Be Subject To Succession Laws: Allahabad HC
The Allahabad High Court clarified that the nominee has a right to obtain money from the depositor’s bank account after the depositor's death but the money received would be subject to the succession laws and the heirs of the deceased would have a right to the said amount.
The High Court was considering a Writ Petition for issuance of a direction in the nature of Mandamus directing the respondent No.2 to release the FDR Accounts in favour of petitioner-son as being a nominee and a legal heir.
The Division Bench comprising Justice Shekhar B. Saraf & Justice Vipin Chandra Dixit said, “....petitioner has a right to obtain the money from the bank as he is a nominee.”
In this matter, the Petitioner’s mother died in the year 2020. Before her death, she was the owner of several properties as well as owner of several FDRs at the Bank of Baroda. In all these FDRs the petitioner was named as a nominee. The petitioner had also filed a succession suit but the same was dismissed on the ground that there was another suit pending for cancellation of the alleged will of the petitioner's mother. It was his case, that the petitioner being the nominee, he is entitled to receive the money in the FDRs as per Section 45ZA of the Banking Regulation Act, 1949.
Reliance was also placed upon Paragraph 2 of Circular letter No.RB12004-05/490 issued in the year 2005 which mentions that the in the case of deposit accounts where the depositor had utilized the nomination facility and made a valid nomination or where the account was opened with the survivorship clause, the payment of the balance in the deposit account to the survivor(s)/nominee of a deceased deposit account holder represents a valid discharge of the bank's liability.
However, it was the case of the Respondents that Section 45ZA of the Banking Regulation Act cannot overrule the laws of succession and, therefore, 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.
Reliance was placed upon the judgment of the co-ordinate Bench in Cdr. Vineet Kumar Sharma Vs. Union of India and 3 others (2024:AHC:12018-DB) wherein it has been affirmed that by virtue of Section 45-ZA (2) of the Act, the nominee alone remains entitled to receive the money from the bank notwithstanding any disposition whether testamentary or otherwise. The right to receive the money from the Bank is distinct and different from the right to succeed to that money. In Cdr. Vineet Kumar Sharma Case (Supra) reliance was placed upon the judgment of the Supreme Court in Chander Talwar and another Vs. Devender Kumar Talwar and others, (2010) 10 SCC 671 wherein it has been observed that the monies receivable by the nominee by virtue of Section 45-ZA(2) would form part of the estate of the deceased depositor and devolve according to the rule of succession to which the depositor may be governed.
Upon analysis of the catena of Supreme Court judgments and the judgment delivered by the co-ordinate Bench, the Bench held that the petitioner has a right to obtain the money from the bank as he is a nominee. “However, we are of the view that this money which is received by the petitioner would be subject to the succession laws and the heirs of the deceased would have a right to the said amount in accordance with law”, it added.
The Petitioner’s Counsel gave an undertaking 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 in accordance with law.
“In light of the same, the Bank of Baroda is directed to release the amounts lying in FDRs in favour of petitioner within a period of three weeks from date. The petitioner is directed to file an affidavit before Bank of Baroda that money being received by him is being held by him in trust and undertakes to make payment of the same to the legal heirs as and when decided”, the Bench ordered.
Cause Title: Manoj Kumar Sharma v. Union Of India And Another [Neutral Citation- 2024:AHC:177835-DB]
Appearance:
Petitioner: Advocate Ram Lal Mishra
Respondent: A.S.G.I. Anadi Krishna Narayana, Advocates Harish Kumar Yadav,Ishan Shishu & Sandeep Kumar Singh