Nomination in company securities does not override succession, and probate courts cannot decide title disputes over nominated assets.

Nomination under Section 109A of the Companies Act, 1956 and the depository bye-laws was held to operate as a mechanism for transmission and receipt of securities vis-a -vis the company or depository, but not to confer beneficial ownership or absolute title against heirs or a valid will. The Court applied the settled position that such nomination provisions do not create a separate line of succession or displace testamentary or intestate devolution. It also held that probate jurisdiction is limited to proof and validity of the will, so the effect of nomination could not be decided in the probate proceeding, though it could be examined in a civil suit where succession rights are directly in issue.

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Issues: (i) Whether a nomination under Section 109A of the Companies Act, 1956 and Bye-Law No. 9.11 of the Depositories Act, 1996 confers beneficial ownership or absolute title in the nominee to the exclusion of heirs and testamentary succession. (ii) Whether a testamentary court can decide the effect of nomination while considering a probate petition.

Issue (i): Whether a nomination under Section 109A of the Companies Act, 1956 and Bye-Law No. 9.11 of the Depositories Act, 1996 confers beneficial ownership or absolute title in the nominee to the exclusion of heirs and testamentary succession.

Analysis: The provisions were read with the settled law on nominations under other enactments, including insurance, banking, provident fund and savings certificate legislation. The non obstante language in the nomination provisions was held to secure transmission and enable the nominee to receive and deal with the property vis-a -vis the company or depository, but not to create a new line of succession or defeat the rights of heirs under the law of succession. The Court held that the Companies Act is not concerned with succession and that the words used in Section 109A do not displace testamentary or intestate devolution.

Conclusion: The nominee does not become the absolute owner to the exclusion of heirs or a valid testamentary disposition; the answer is against the appellant on this issue.

Issue (ii): Whether a testamentary court can decide the effect of nomination while considering a probate petition.

Analysis: The jurisdiction in probate proceedings is confined to proof, genuineness and validity of the will. Title disputes over the testator's assets do not arise for adjudication in such proceedings. The nomination issue, therefore, could not properly be decided in the testamentary petition, though it could arise in the civil suit where succession claims were directly in controversy.

Conclusion: The nomination issue could not be gone into in the probate proceeding; the answer is in favour of the appellant on this issue.

Final Conclusion: The Court upheld the view that nomination under the Companies Act does not override succession, but set aside the impugned order insofar as it was applied in the probate proceeding, while maintaining it in the civil suit.

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