IN THE HIGH COURT OF JUDICATURE AT MADRAS
KRISHNAN RAMASAMY, J.
M. Balasubramaniam - Appellant
Versus
Rajalakshmi - Respondent
A.Nos. 4663 & 4664 of 2021 & O.A.No. 807 of 2021 in C.S.No. 362 of 2021
Decided On : 30-09-2022
Banking Regulation Act - Partition Suit - Section 45-ZA(2) of the Banking Regulation Act, 1949, Section 8 of the Hindu Succession Act, 1956, Section 19 of the Hindu Succession Act, 1925, Chapter IX of the Indian Trust Act, 1882 - The court held that the nominees of the fixed deposits are entitled to receive the deposits in trust on behalf of themselves and other legal heirs. The nominees do not have absolute ownership over the deposits and are bound to distribute the monies to all the beneficiaries of the trust. The court also discussed the legal principles related to nominations and the rights of nominees in various Supreme Court decisions. The court granted interim relief directing the respondents to furnish details of the deposits and to deposit 3/5th share of the monies already withdrawn from the deposits before the court.
Fact of the Case:
The applicants, legal heirs of late Mr. Maruthai Chettiar, filed a suit seeking partition of fixed deposits made by the deceased. The respondents, who were nominees of the deposits, claimed absolute ownership over the deposits. The court analyzed the cause of action, the rights of legal heirs, and the dispute over the entitlement to the deposits.
Finding of the Court:
The court found that the nominees were holding the fixed deposits in trust for themselves and other legal heirs. The court held that the nominees do not have absolute ownership over the deposits and are bound to distribute the monies to all the beneficiaries of the trust. The court also granted interim relief directing the respondents to furnish details of the deposits and to deposit 3/5th share of the monies already withdrawn from the deposits before the court.
Issues: The main issues were the entitlement of the legal heirs to the fixed deposits, the rights of nominees, and the cause of action for the partition suit.
Ratio Decidendi: The court interpreted the provisions of the Banking Regulation Act, Hindu Succession Act, and Indian Trust Act to determine the rights of the nominees and legal heirs. The court also relied on Supreme Court decisions to establish the legal principles related to nominations and the rights of nominees.
Final Decision: The court granted interim relief directing the respondents to furnish details of the deposits and to deposit 3/5th share of the monies already withdrawn from the deposits before the court.
JUDGMENT
1. These applications have been filed seeking for the following reliefs:-
a) for a direction to the respondents, their men, agents, employees, agents, servants, managers, permitted assigns, successors in interest and all other persons claiming through or under them or otherwise howsoever, to furnish details of the deposits, fixed deposits etc. including bank account number, fixed deposit details, date of the fixed deposits, withdrawals, adjustments, if any, etc. are made by and in the name of late Mr.P.M.Maruthai Chettiar, pending disposal of the suit;
b) for a direction to the respondents 1 to 7, their men, agents, employees, agents, servants, managers, permitted assigns, successors in interest and all other persons claiming through or under them or otherwise howsoever, to deposit 3/5th (1/5th for each of the legal heirs) of the monies already withdrawn by them from the deposits of late Mr.P.M.Maruthai Chettiar into this Hon'ble Court, as detailed in the Schedule to the Plaint and the affidavit, pending disposal of the suit;
c) for an interim injunction restraining the respondents 1 to 7, by themselves, their partners, men, servants, agents, representatives, assigns, successors in interest, licensees and/or all other persons acting on their behalf, from in any manner using/disbursing/distributing/appropriating the amounts of monies already withdrawn by them from the fixed deposits, made by late Maruthai Chettiar, as detailed in the schedule to the plaint and the affidavit, pending disposal of the suit.
2. The brief facts of the case are as follows:-
2.1. The applicants and 1st respondent are the sons and daughter of late Mr.Maruthai Chettiar, who passed away on 07.10.2019. The respondents 2 & 3 are the sons of 1st respondent and the respondents 4 to 7 are the surviving legal heirs of the predeceased daughter of late Mrs.Jeevarathinam. The respondents 8 to 10 are the Banks who are formal parties in the present suit.
2.2. Mr.Maruthai Chettiar passed away intestate on 07.10.2019 and had some fixed deposits with the respondents 8 to 10 Banks to the tune of Rs.4,27,83,583/-. The respondents 1 to 3 were appointed as the nominees of the said fixed deposits. Immediately upon the death of late Mr.Maruthai Chettiar, the respondents 1 to 3 approached the respondents 8 to 10 Banks for withdrawing the monies. Against such attempt by the respondents 1 to 3, the applicants herein filed a bare injunction suit before the City Civil Court, Chennai, in O.S.No.7775 of 2019. The learned Judge, VIII Assistant City Civil Court, Chennai, also granted an interim order of status quo on 25.10.2019, restraining the respondents 8 to 10 from releasing the deposit amounts to the respondents 1 to 3. Subsequently, the said order was vacated on 03.12.2019 after observing that the applicants are entitled to the amounts and that the respondents 1 to 3 only acted as Trustees of monies. Subsequently, the respondents 1 to 3 withdrew all the monies lying before the respondents 8 to 10 banks on 18.10.2019 and 19.10.2019 for themselves and they have not distributed the same to other legal heirs. In the light of the withdrawals made by the respondents 1 to 3, the suit filed in O.S.No.7775 of 2019 has virtually become infructuous and hence, the applicants/plaintiffs have withdrawn the said suit on 23.06.2022.
2.3. The present suit has been filed by the applicants seeking for partition of the fixed deposits which is more fully described in the suit schedule and to hand over 3/5th share amounting to Rs.2,56,70,150/- being the applicants' share together and to render true and proper accounts of all the fixed deposits which stood in the name of Late Mr.Maruthai Chettiar as on date of his death and for permanent injunction to restrain the defendants from disbursing the monies already withdrawn by them.
3. Mr.R. Parthasarathy for M/s. Durga V. Bhatt, learned counsel appearing for the applicants would contend that the present suit is filed for partitio
Nominees of a deceased do not acquire ownership over deposited funds; their role involves managing distribution among legal heirs according to succession laws.
The main legal point established in the judgment is the interpretation of Res-judicata, Order 2 Rule 2 CPC, and the entitlement of heirs under the Hindu Succession Act in a partition suit.
The court affirmed that a succession certificate grants legal heirs entitlement to deceased's bank deposits, overriding nominee claims under the Banking Regulation Act.
A will must be executed and attested as per legal requirements to be valid, and a nominee under the Life Insurance Act does not have absolute rights over the benefits but holds them in trust for the ....
A nominee does not gain absolute ownership of assets but is obligated to account to legal heirs, and the suit for mandatory injunction is maintainable without being barred by law.
Nomination in insurance does not confer absolute rights over terminal benefits, which pertain to legal heirs under succession laws.
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