Showing posts with label nominee. Show all posts
Showing posts with label nominee. Show all posts

Sunday, 4 April 2021

Whether nomination made by an employee can be treated as his will and curtail the right of legal heirs to claim a share in his service benefits?

 The purpose of taking a nomination by an employer is to relieve itself of the obligation to pay the benefits, irrespective of the right of a person who is entitled in law to the Fund. Nomination, in law, cannot be construed as a “Will” of the employee and cannot be treated as a testamentary disposition of the deceased employee with an intent to bestow the benefits on the heirs. Every employee has a right in law to decide how his movable assets should be treated and disbursed in the event of his death

and nomination cannot circumscribe the legal rights of disposition of the assets. The purpose of nomination is only to benefit a custodian so as to enable him to know how and to whom he has to hand over the assets, protecting him from litigations and multiplicity of cases from different people, claiming to be successors to the interest of the employee. Thus,

the liability of the employer / custodian is discharged by disbursing the funds to the ‘nominee’ and thereafter if there is an inter-se disputes between the lawful heirs, they could resort to appropriate remedies for identification of their shares. The concept of appointing a nominee therefore is only to ensure that the amounts are disbursed at the earliest to the nominee and this becomes significant as there may be occasions where it may take time for the legal heirs to resolve their disputes and in the meantime the trustee / Custodian Company or any other Institution may go into liquidation or any other contingency may arise making it difficult to realize the retiral and other dues.


 Whenever provident fund amount is

disbursed the custodian of the fund is anxious to have a good

discharge against all claims from whomsoever claiming

through the member. The Rules nowhere provide that the

nomination is to be construed as a will by the member. If a

nomination is to be taken as a final disposition made by the

member as to how it should be taken by his heir on his death, it

would lead to anomalies, because till the member dies, the

nominee acquires no right to claim the amount. The legal right

of a member to decide from time to time as to how his assets

should be taken consequent to his death, cannot be frozen by a

nomination given, as part of his service conditions. His legal

rights about disposition of his assets cannot be circumscribed

by such nomination, 11 he is to execute a “Will” later on,

contrary to the nomination that has been made earlier, the

terms and conditions of the ‘will’ alone can prevail, and so far

as the trustees of the fund are concerned, their obligation will

be fully discharged by paying it to the nominee, who will in turn

be liable to hand over the funds to the persons entitled to as per

the ‘Will’. In case of intestate succession, the nominee is bound

to hand over the amounts to the heirs of the deceased. The main

purpose of nomination is intended to benefit

 the custodianstrustees

of the fund to know as to how or to whom they should

hand over the amounts and need not make themselves

answerable to multiplicity of claims from different persons

claiming to succeed to the interests of the deceased member. If

there is no nomination, the custodian of the fund cannot decide

as to who are the lawful heirs to succeed and they will have to

wait for a Court order to be produced, and unless finality is

reached, therein, the disbursement of the fund will be delayed

Funds, like the provident fund, in the case of State or other

public institutions, may be sufficiently safe-guarded even if

there is to be a delay in disbursement. But in cases of other

institutions, if the amounts are not immediately disbursed on

the basis of nomination, and before proceedings in Court are

over, if for any reasons, the Companies or institutions are

liquidated, the contributions made by a member of such bodies,

will not enure to the benefit of the legal heirs till finality is

reached in Court proceedings unless the amount is deposited in

Court at the earliest stage. The concept of nomination has been

thought of to achieve the disbursement of the amounts at the

earliest point of time to the nominee, who will be answerable to

claims made by those who are entitled to the amount lawfully.

 IN THE HIGH COURT OF DELHI AT NEW DELHI


W.P.(C) 6701/2018 and C.M. Nos.25451/2018, 41307/2019 and

11129/2020

SUMAN KUMARI @ SUMAN SINGH  Vs  NAND KISHOR & ORS 

CORAM: HON'BLE MS. JUSTICE JYOTI SINGH

Pronounced on: 06.11.2020

Print Page