Right of Nominee to receive money of deceased

Learned Counsel for the appellant also placed reliance on a Division Bench judgment of the Delhi
High Court in Ashok Chand Aggarwala v. Delhi Administration and Ors. (1998) VII AD (Delhi) 639.
This case related to the Delhi Co- operative Societies Act. The High Court while following Sarbati Devi
case (supra) held that it is well settled that mere nomination made in favour of a particular person does
not have the effect of conferring on the nominee any beneficial interest in property after the death of the
person concerned. The nomination indicates the hand which is authorized to receive the amount or
manage the property. The property or the amount, as the case may be, can be claimed by the heirs of the
deceased, in accordance with the law of succession, governing them.Equivalent Citation: 2009(6)ALT15(SC), 2009(6)BomCR117, JT2009(10)SC680, (2009)8MLJ423, 2009(II)OLR(SC)695,
2009(11)SCALE552, (2009)10SCC680
IN THE SUPREME COURT OF INDIA
Civil Appeal No. 809 of 2002
Decided On: 20.08.2009
Appellants: Shipra Sengupta
Vs.
Respondent: Mridul Sengupta and Ors.
Hon'ble Judges: Dalveer Bhandari and Mukundakam Sharma, JJ.


1. This appeal is directed against the judgment dated 12.9.2000 passed by the High Court of Madhya
Pradesh at Jabalpur in Miscellaneous Civil Case No. 1209 of 1998.
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2. The appellant is the wife of Late Shri Shyamal Sengupta who was a Head Clerk in the State Bank of
India, Bhopal, Madhya Pradesh. He was initially an employee of the Imperial Bank of India and after
constitution of the State Bank of India under the State Bank of India Act, 1955, the business of the
Imperial Bank of India was taken over by the State Bank of India as per the provisions of the State Bank
of India Act, 1955. Shyamal Sengupta died issueless on 8.11.1990 at Bhopal. He left behind him his
widow Smt. Shipra Sengupta, his mother Niharbala Sengupta, his brothers Pushpal Sengupta and Mirdul
Sengupta.
3. It may be pertinent to mention that Shyamal Sengupta was unmarried at the time when he joined the
service of the bank and he nominated his mother as his nominee.
4. The appellant herein Smt. Shipra Sengupta filed an application under Section 372 of the Indian
Succession Act, 1956, in which she claimed that she was entitled to her share of insurance, gratuity,
public provident fund etc. etc. According to the appellant, her claim was based on the principle that any
nomination made by Shyamal Sengupta prior to his marriage would automatically stand cancelled after
his marriage.
5. The appellant submitted that after the death of her husband both, she and mother of the deceased
Niharbala Sengupta, were Class-I heirs under the schedule of the Hindu Succession Act, 1956 and
consequently she was, therefore, equally entitled to succeed to the property along with her mother-in-law
Niharbala Sengupta.
6. The Trial Court granted succession certificate to the appellant and the mother of the deceased in
respect of total amount of life insurance, gratuity, public provident fund and general provident fund due to
Shyamal Sengupta. The Trial Court held that both of them shall be entitled to half share in the aforesaid
amounts due to Shyamal Sengupta from different heads. As to rest of the items mentioned in paragraph 6
of the application, the Trial Court held that the appellant alone was entitled to a succession certificate.
7. In an appeal jointly filed by the mother of the deceased Niharbala Sengupta and brother of the
deceased Pushpal Sengupta, the Appellate Court rejected the contention of the applicants that on
account of nomination made in favour of Niharbala Sengupta, in respect of the aforesaid items, the
appellant Smt. Shipra Sengupta would not get any share in the amount credited or payable to Shyamal
Sengupta. The learned District Judge held that the nomination did not confer any beneficial interest in the
amount due towards life insurance, gratuity, public provident fund and general provident fund.
8. The learned District Judge relied on the decision of this Court in Smt. Sarbati Devi and Anr. v. Smt.
Usha Devi MANU/SC/0231/1983 : (1984) 1 SCC 424 and on Om Wati v. Delhi Transport
Corporation, New Delhi and Ors. 1988 Lab. I.C. 500 and modified the order of the Civil Judge in respect
of other items holding that the mother of the deceased Niharbala Sengupta being the Class-I heir under
the Hindu Succession Act, 1956 was equally entitled to the half share along with the appellant Smt.
Shipra Sengupta. Accordingly, the learned District Judge modified the order passed by the Civil Judge
and directed him to issue succession certificate in accordance with the modifications made by him in the
order of the Civil Judge.
9. Niharbala Sengupta and Pushpal Sengupta, aggrieved by the order of the District Judge, filed a Civil
Revision before the High Court. During the pendency of the said civil revision, Niharbala Sengupta died
and her other son Mirdul Sengupta was substituted in her place on the basis of an alleged Will executed
by her prior to her death in favour of Mirdul Sengupta. The Will expressly dealt with the amount to which
she was entitled to receive as a consequence of grant of a succession certificate.
10. Pushpal Sengupta did not challenge the Will by which he was affected. Therefore, the position that
emerged was that the court must presume for the purpose of this revision that the Will is validly executed
in favour of Mirdul Sengupta.
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11. In the impugned judgment, the High Court relied on the judgment of Sarbati Devi (supra) and
observed that the nomination did not confer any beneficial interest on the nominee. The High Court
passed the following order:
(i) The amount of General Provident Fund deposited in the name of Shyamal Sengupta declaring that
Mirdul Sengupta shall be entitled to entire sum due to Shyamal Sengupta together with interest to which
he is entitled as per rules of deposit by the Bank till he is paid in full.
(ii) So far as rest of the items mentioned in paragraph 6(a) of the application under Section 372 are
concerned it is declared that after the death of Niharbala Sengupta, Mirdul Sengupta is entitled to
succession certificate along with Shipra Sengupta. Both of them shall be entitled to 1/2 share each as
directed by the District Judge.
(iii) The Civil Judge shall also direct non-applicant No. 2 or any other authority to pay the interest on the
amount mentioned in paragraph 2 till that is paid to them at the usual rate of 9% from the date of death of
Shyamal Sengupta or the usual rate available to the depositor/subscriber whichever is less.
12. The appellant, aggrieved by the impugned judgment of the High Court, preferred this appeal. The
following questions have been raised by the appellant in this appeal:
I. Whether nomination of mother by a member of a Provident fund governed by the Imperial Bank of India
Employees' Provident Fund Rules before his marriage confers ownership on the nominee and destroys
right of succession of the widow under Succession Act?
II. Whether nomination only indicates the hand which is authorized to receive the amount on the payment
of which trustees of the provident fund get a valid discharge?
III. Whether the provident fund can be claimed by the heirs of the member of the provident fund in
accordance with the law of succession governing them?
IV. Whether it was proper for the High Court to rely upon a forged and fabricated Will which was not even
signed by Niharbala?
V. Whether it was proper for the High Court to accept the alleged Will on record in its revisional
Jurisdiction, in absence of any application to that effect?
VI. Whether the High Court was entitled to take Will on record without giving fresh opportunity to lead
evidence on it?
VII. Whether the High Court was right in interpreting and relying upon Section 3(2) of Provident Fund Act,
1925?
13. The appellant submitted that according to the settled legal position crystallized by the judgment of
Sarbati Devi (supra), the principle of law is that the nomination is only the hand which accepts the
amount and a nomination does not confer any beneficial interest in the nominee.
14. In Sarbati Devi (supra), this Court has laid down that a mere nomination does not have the effect of
conferring to the nominee any beneficial interest in the amount payable under the life insurance policy, on
death of the insurer. The nomination only indicates the hand which is authorized to receive the amount on
payment of which the insurer gets a valid discharge of its liability under the policy. The amount, however,
can be claimed by the heirs of the assured in accordance with the law of succession.
15. The appellant also placed reliance on the judgment of this Court in Vishin N. Khanchandani and
Anr. v. Vidya Lachmandas Khanchandani and Anr. MANU/SC/0509/2000 : (2000) 6 SCC 724,
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wherein this Court held that the law laid down in Sarbati Devi (supra) holds the field and is equally
applicable to the nominee becoming entitled to the payment of the amount on account of National
Savings Certificates received by him under Section 6 read with Section 7 of the Act who in turn is liable to
return the amount to those in whose favour the law creates a beneficial interest, subject to the provisions
of Sub-section (2) of Section 8 of the Act.
16. Learned Counsel for the appellant also placed reliance on a Division Bench judgment of the Delhi
High Court in Ashok Chand Aggarwala v. Delhi Administration and Ors. (1998) VII AD (Delhi) 639.
This case related to the Delhi Co- operative Societies Act. The High Court while following Sarbati Devi
case (supra) held that it is well settled that mere nomination made in favour of a particular person does
not have the effect of conferring on the nominee any beneficial interest in property after the death of the
person concerned. The nomination indicates the hand which is authorized to receive the amount or
manage the property. The property or the amount, as the case may be, can be claimed by the heirs of the
deceased, in accordance with the law of succession, governing them.
17. The controversy involved in the instant case is no longer res integra. The nominee is entitled to
receive the same, but the amount so received is to be distributed according to the law of succession.
18. In terms of the factual foundation laid in this case, the deceased died on 8.11.1990 leaving behind his
mother and widow as his only heirs and legal representatives entitled to succeed. Therefore, on the day
when the right of succession opened, the appellant, his widow became entitled to one half of the amount
of the general provident fund, the other half going to the mother and on her death, the other surviving son
getting the same.
19. In view of the clear legal position, it is made abundantly clear that the amount in any head can be
received by the nominee, but the amount can be claimed by the heirs of the deceased in accordance with
law of succession governing them. In other words, nomination does not confer any beneficial interest on
the nominee. In the instant case amounts so received are to be distributed according to the Hindu
Succession Act, 1956. The State Bank of India is directed to release half of the amount of general
provident fund to the appellant now within two months from today along with interest.
20. The appeal filed by the appellant is accordingly allowed and disposed of, leaving the parties to bear
their own costs.

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