DELHI: Generally, a nominee is appointed for movable property such as bank accounts, fixed deposits with banks/companies, shares, insurance, mutual fund, employees’ provident fund etc. In case of immovable properties, the concept of nominee is not that important or we can say it is irrelevant except of course, in case of co-operative housing societies and equity shares in case of movable property.
A nominee, in case of all the aforesaid movable properties except equity shares, is a mere trustee entitled to receive the money/proceeds receivable by a deceased person on behalf of his/her legal heirs. Nomination made under Insurance act, or as per guidelines of RBI require a nominee to act as a custodian of the property of the deceased person on behalf of the legal heirs or recipient(s) as per the “Will” of the deceased person. The same doctrine applies for other movable properties such as public provident fund, mutual funds and others where the nominee plays the role of a trustee rather than the owner.
However, nomination made under Companies Act, 1956 is different. Under Section 109A of the Companies Act, 1956 the nominee is entitled to become the rightful owner of shares if the nomination has been made as prescribed by law. Right of a nominee under this act is exclusive and excludes all other persons even the legal heirs, if a “Will” made subsequent to the nomination, does not state otherwise.
Under Section 30 of Maharashtra Co-operative Societies Act, 1960, upon death of a member of a society his/her shares are transferred to the nominee, but such transfer does not imply transfer of the property contained under the shares of the society. The nominee is merely a trustee for the deceased person’s estate.
In case of self acquired property, after the death of the owner, a “Will” or in absence of “Will” legal heirship determines the vesting of the deceased person’s property. In case of inherited property rights of “Successors” of the deceased person overrides all other modes including “Will” as because all members of the immediate family are entitled to get equal share of the property. In case of joint ownership of self acquired property, the surviving owner becomes the sole owner after death of the other co-owner.
In the context of the foregoing, it can be safely concluded that mere nomination for property (Movable or Immovable) is not sufficient. For devolution and vesting of property after death of the owner, as per his/her wishes it is advisable to make a “Will” besides “nominations”.