The Supreme Court recently in Shakti Yezdani v. Jayanand Jayant Salgaonkar, (Judgment dated December 14, 2023 in Civil Appeal No. 7107 of 2017) held that the Bombay High Court took the correct view in Shakti Yezdani v. Jayanand Jayant Salgaonkar, (2016 SCC OnLine Bom 9834) that the law of succession supersedes a ‘nomination’ under the Companies Act, 1956 and Depositories Act, 1996 and explained the effect of such ‘nomination’.
Facts:
In this matter, the deceased had executed a will specifying devolution of his estate upon his successors. Apart from the properties in the will, the testator had certain fixed deposits (FDs) and mutual fund investments (MFs) in respect of which some of the Respondents were made nominees. After the passing of the testator:
Single Bench of the Bombay High Court:
The Single Judge of the Bombay High Court held that inter alia the nominee continues to hold the shares/securities in fiduciary capacity and is answerable to all claims in succession law. Further, that the decision in Harsha Nitin Kokate v. The Sarswat Co-operative Bank Limited, ((2010) SCC OnLine Bom 615) is per incuriam.
Division Bench of the Bombay High Court:
Thereafter, an appeal was filed before the Division Bench of the Bombay High Court and it held in Shakti Yezdani (supra) that:
Findings of the Supreme Court:
The Hon’ble Supreme Court held that the Division Bench of the Bombay High Court was correct and that:
Author`s View:
In light of the above, the authors believe that the dust has settled on the issue regarding ‘nomination’ versus succession law. It is imperative for persons to specifically include shares/securities in their will to ensure proper devolution of such assets among their legal heir(s). This shall provide much needed clarity for persons engaged or seeking to commence succession planning for themselves.
Please find a copy of the judgement here.
This update has been contributed by Ranjit Shetty (Senior Partner) and Yuvraj Choksy (Principal Associate).
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