Legal Brief: Lokpal Defines Jurisdictional Scope in University Case, as Centre Overhauls Banking Nomination Framework

In a week of significant legal developments, the Lokpal of India has reasserted the precise boundaries of its jurisdiction, while the Central Government has introduced substantial reforms to the nomination rules governing banking assets. These distinct events, one in administrative law and the other in financial regulation, carry important implications for public accountability and estate planning, respectively.

The Lokpal dismissed a complaint against a university official, citing a lack of jurisdiction over state-level public servants. Concurrently, the Ministry of Finance has notified key provisions of the Banking Laws (Amendment) Act, 2025, which will come into force on November 1, 2025, expanding nomination options for bank account holders, safe custody clients, and locker hirers.

Lokpal Reinforces Jurisdictional Limits Under the 2013 Act

The Lokpal of India has dismissed a complaint against the Vice Chancellor of Sathyabama University, Chennai, providing a crucial clarification on the scope of its authority under the Lokpal and Lokayuktas Act, 2013. The decision underscores the statutory distinction between public servants under the control of the Central Government versus those under state control.

The complaint, dated October 4, 2025, levelled serious allegations against the Vice Chancellor, including misuse of authority by enforcing gender segregation in classrooms. The complainant argued that this policy constituted gender discrimination and caused significant mental distress to students. Furthermore, it was alleged that the university administration intimidated students and their parents who protested the policy, threatening them with academic repercussions, such as being barred from examinations.

The matter was adjudicated by a full Bench of the Lokpal, comprising Justice L. Narayana Swamy, Justice Sanjay Yadav, Justice Ritu Raj Awasthi, and Shri Pankaj Kumar.

The Jurisdictional Question

While the Registry of the Lokpal noted several procedural deficiencies in the complaint, the Bench opted to address the foundational issue of jurisdiction. The Lokpal observed that even if the complainant were given an opportunity to rectify the procedural defects, the core issue would remain outside its purview.

The crux of the decision rested on the interpretation of Section 14 of the Lokpal and Lokayuktas Act, 2013. This section delineates the categories of public servants against whom the Lokpal can inquire. The Bench held that the officials of Sathyabama University, including the Vice Chancellor, are public servants functioning under the control of the State of Tamil Nadu. Consequently, they do not fall within the definition of public servants covered by the central anti-corruption ombudsman.

The order explicitly stated: “As the public servants are working under the control of the State or for the State, they do not come within the ambit of Section 14 of the Lokpal and Lokayuktas Act, 2013.”

This finding effectively bars the Lokpal from investigating complaints against a vast number of officials associated with state-run or state-regulated entities, reinforcing the federal structure envisioned in the Act. The appropriate forum for such grievances would be the State Lokayukta or other relevant state-level authorities.

In its final disposition, the Lokpal closed the complaint as being beyond its jurisdiction, while granting the complainant the liberty to pursue their remedies before the appropriate forum. This decision serves as an important precedent, guiding future complainants to direct their grievances to the correct quasi-judicial body and preventing the Lokpal from being inundated with matters outside its statutory mandate.

Centre Notifies Sweeping Changes to Banking Nomination Rules

In a parallel development with wide-ranging implications for millions of banking customers, the Central Government has notified the enforcement of key amendments to banking nomination laws. Through a notification from the Ministry of Finance, Sections 10, 11, 12, and 13 of the Banking Laws (Amendment) Act, 2025, are set to come into effect on November 1, 2025. These changes fundamentally alter the nomination framework for bank deposits, articles in safe custody, and bank lockers, offering greater flexibility and clarity for asset holders.

The amendments primarily impact the Banking Regulation Act, 1949, introducing provisions for multiple and successive nominees.

Expanded Nomination for Bank Deposits

Section 10 of the Amending Act overhauls Section 45ZA of the Banking Regulation Act, 1949. Previously, a depositor could nominate only a single person to receive the deposit amount upon their death. The amendment revolutionizes this by substituting the words "one person" with “one or more persons not exceeding four, either successively or simultaneously” .

This change empowers depositors in two significant ways:

1. Simultaneous Nomination: A depositor can now nominate up to four individuals to receive the deposit amount, provided they specify the percentage share for each nominee. This is facilitated by the introduction of Section 45ZA(1B).

2. Successive Nomination: A depositor can also create a hierarchy of nominees. The newly added Section 45ZA(1A) clarifies that in such cases, only one nominee will be recognized at a time, based on a pre-defined order of priority.

Modernizing Safe Custody and Locker Nominations

The reforms extend beyond deposits. Section 11 of the Amending Act modifies Section 45ZC of the 1949 Act, which pertains to articles left in a bank's safe custody. Similar to the changes for deposits, a customer can now nominate "one or more persons not exceeding four, successively," to receive the articles upon their death.

Section 12 introduces a significant update to Section 45ZE, which governs bank lockers. The amended provision expands the scope to cover both sole and joint hirers. The new sub-section (1) states: “Where one or more individuals hire a locker from a banking company... [they] may nominate one or more persons not exceeding four, successively, to whom, in the event of the death of the sole hirer or the death of all the hirers, the banking company may give access to the locker and liberty to remove the contents of the locker.” This amendment addresses long-standing ambiguities, especially concerning joint lockers, and provides a clear mechanism for post-mortem access.

The New Framework for Successive Nominations

To ensure the smooth implementation of successive nominations, Section 13 of the Amending Act inserts a new Section 45ZG into the Banking Regulation Act, 1949. This section establishes a clear priority mechanism: * The nomination for the first nominee becomes effective if they survive the original asset holder(s). * If the first nominee has predeceased the asset holder, the nomination for the second nominee becomes effective, and so on down the line. * If no priority order is specified in the nomination form, the sequence in which the names appear will be considered the order of priority.

Crucially, sub-section (3) of 45ZG clarifies that these priority rules do not apply to the simultaneous nominations made for bank deposits under Section 45ZA(1).

Legal and Practical Implications

The Lokpal's order serves as a vital jurisprudential marker, delineating the separation of powers between central and state anti-corruption bodies. It reinforces the principle that the Lokpal is not an all-encompassing ombudsman but one with a jurisdiction specifically defined by Parliament. For legal practitioners, this highlights the importance of advising clients to approach the correct forum to avoid procedural dismissal.

Meanwhile, the banking law amendments represent a significant step towards modernizing financial estate planning. The ability to appoint multiple and successive nominees will likely reduce succession-related disputes and simplify the process of transmitting assets to legal heirs. Lawyers advising on wills, trusts, and estates will need to familiarize themselves with these new provisions to provide comprehensive counsel to their clients. Banks, in turn, will need to update their internal systems, processes, and nomination forms to comply with the new framework by the November 1, 2025 deadline.