VERY IMPORTANT POINT
Nominee specified in the National Savings Certificate, on the death of its holder, does not becomes entitled to the sum due under the certificate to the exclusion of all other persons. Any amount paid to the nominee after valid deductions becomes the estate of the deceased. Such an estate devolves upon all persons who are entitled to succession under law, custom or testament of the deceased holder.

Headnote:Government Savings Certificates Act, 1959-Sections 6, 7 and 8-Nominee s entitlement to sum due under certificate-Nominee not entitled to sum due under certificate to the exclusion of legal heirs-Any amount paid to nominee, after valid deductions, becomes estate of deceased-Such estate devolves upon all persons who are entitled to succession under law, custom or testament of deceased holder-Legal heirs not entitled to directly receive amounts due under certificate-Nominees entitled to receive sum due-Amounts received by nominee shall be payable to legal heirs after deduction of amounts of debts or other demands lawfully paid or discharged, if any.
       Sub-section (1) of Section 8 provides that if any payment is made in accordance with the provisions of the Act to a nominee, the same shall be a full discharge from all further liabilities in respect of the sum so paid. Section 7 of the Act provides that after the death of the holder of the savings certificates payment of sum shall be made to the nominee, if any, and sub-section (1) of Section 8 declares that such payment shall be a full discharge from all further liabilities in respect of the sum so paid. However, sub-section (2) of Section 8 specifies that the payment made to the nominee under sub-section (1) shall not preclude any executor or administrator or the legal representative of the deceased holder of a savings certificate from recovering from the person receiving the same under Section 7; the amount remaining in nominee s hand after deducting the amount of all debts or other demands lawfully paid or discharged by him in due course of administration. In other words though the nominee of the national savings certificates has a right to be paid the sum due on such savings certificates after the death of the holder, yet he retains the said amount for the benefit of the persons who are entitled to it under the law of succession applicable in the case, however, subject to the exception of deductions mentioned in the sub-section. (Para 12)
       It is apparent that though language and phraseology of Section 6 of the Act is different than the one used in Section 39 of the Insurance Act, yet, the effect of both the provisions is the same. The Act only makes the provisions regarding avoiding delay and expense in making the payment of the amount of the national savings certificates, to the nominee of holder, which has been considered to be beneficial both for the holder as also for the post office. Any amount paid to the nominee after valid deductions becomes the estate of the deceased. Such an estate devolves upon all persons who are entitled to succession under law, custom or testament of the deceased holder. In other words, the law laid down by this Court in Sarbati Devi s case holds 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 law creates beneficial interest, subject to the provisions of sub-section (2) of Section 8 of the Act. (Para 13)
       Appeal is allowed with a direction that the succession certificates shall be issued in favour of the respondents in respect of debts detailed in Annexures A and B to the application filed in the Court of Civil Judge, Senior Division, Thane subject to their payment of necessary court fees and estate duty certificate. The respondents would, however, not be entitled to directly receive the amounts payable on account of debts payable under National Savings Certificates at Sl. Nos. 17 to 26 in Annexure A and Sl. Nos. 1 to 4 in Annexure B. The appellants are held entitled to receive the sum due on the aforesaid national savings certificates in which they are the nominees upon furnishing the undertaking in terms of sub-section (2) of Section 8 of the Act in the Court of Civil Judge, Senior Division, Thane. The amount received by the appellants on account of the national savings certificates in which they are nominees shall be payable to the respondents after deduction of the amounts of debts or other demands lawfully paid or discharged, if any. (Para 14)

JUDGMENT

Sethi, J.-Leave granted.

2. Whether the nominee specified in the National Savings Certificate, on the death of its holder, becomes entitled to the sum due under the certificate to the exclusion of all other persons?, or whether the amount of the certificate can be retained by him for the benefit of the legal heirs of the deceased - is the sole question required to be adjudicated by us in this appeal by special leave.

3. The present dispute is with respect to the savings certificates, the holder of which was Lachmandas Naraindas Khanchandani. Appellant No. 1 is the brother, appellant No. 2 the step brother, the respondent No. 1 is the widow and respondent No. 2 is the daughter of the deceased-holder. The deceased was serving in the Income Tax Department and has left behind debts consisting of National Savings Certificates, amounts in Compulsory Deposit Schemes, Post Office Cumulative Time Deposit Scheme and Pass Book Post Office Savings Bank. The respondent No. 1 filed a petition under Section 370 of the Indian Succession Act, 1925 for the grant of succession certificate in respect of debts and securities left by the aforesaid deceased in the Court of Civil Judge, Senior Division, Thane. The appellants contested the claim with respect to such national savings certificates in which they had been mentioned as nominees of the deceased. The court of Civil Judge, Senior Division, Thane held that the respondents - plaintiffs were entitled to the grant of succession certificate in respect of the debts mentioned in Schedules A and B to the application excluding the National Savings Certificates enumerated at Sl. Nos. 17 to 21 in Schedule A and Compulsory Deposit Scheme mentioned at Sl. Nos. 1 to 4 in Schedule B. It was further held that the appellants herein were not entitled to the delivery from the respondents of the National Savings Certificates and Passbook Post Office Savings Bank in respect of which they had been nominated by the deceased. The Civil Judge while issuing the succession certificate in favour of the respondents-plaintiffs to the extent indicated hereinabove held them entitled to get the amount of the said debts with accrued interest thereon subject to their furnishing necessary court-fee stamp, Estate Duty Certificate and the security to the extent of the assets. Not satisfied with the orders of the Civil Judge, the respondents herein filed First Appeal No. 849 of 1982 in the High Court of Bombay praying for setting aside that portion of the order of the Civil Judge by which their claim with regard to the National Savings Certificates, in respect of which the appellants were the nominees, had been disallowed. The High Court allowed the appeal and directed the issuance of succession certificate in favour of the respondents in respect of debts not only mentioned in Sl. Nos. 1 to 16 in Annexure A and Sl. Nos. 2, 3, 5 and 6 in Annexure B but also in respect of the debts mentioned at Sl. Nos. 17 to 26 in Annexure A and Sl. Nos. 1 and 4 in Annexure B. It was further directed that the respondents shall be entitled to equal share in the amounts which were due on securities listed in Annexures A and B to the application/plaint on payment of necessary court fees stamps and furnishing estate duty certificate. As there was no other claimant, the court, held that there was no necessity to furnish any security.

4. Feeling aggrieved, the appellants -the nominees of the National Savings Certificates have filed this appeal contending that under Section 6 of the Government Savings Certificates Act, 1959, after the death of the holder they had become entitled to the payment of such Saving Certificates in which they were nominees, to the exclusion of all other persons including the respondents and entitled to utilise the aforesaid amounts in the manner they like. It is contended that by their nomination, the holder of the National Savings Certificates, namely, Shri Lachmandas Naraindas Khanchandani has diverted the normal

Click Here to Read the rest of this document

2000 Supreme(SC) 1346

Cases Referred (6)