TaxTMI 
TaxTMI 
TaxTMI 
2000 (8) TMI 77
X X X X Extracts X X X X
X X X X Extracts X X X X
....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. 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 the 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 the 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 serial Nos. 17 to 21 in Schedule A and Compulsory Deposit Scheme mentioned at serial 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 Pass Book, Post Office Savings Bank in r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....reinafter referred to as "the Act") was enacted to make certain provisions in respect of Government savings certificates. The Act applies to such class of savings certificates as the Central Government may, by notification, in the Official Gazette, specify in that behalf. The Act was applied to the National Savings Certificates by notifications issued with respect to various issues of such certificates. It is not disputed that the National Savings Certificates in dispute are governed by the provisions of the Act. To appreciate the rival contentions urged at the Bar, it is necessary to examine the provisions of the Act particularly sections 6, 7 and 8, which provide as under : "6. Nomination by holders of savings certificates.---(1) Notwithstanding anything contained in any law for the time being in force, or in any disposition, testamentary or otherwise in respect of any savings certificate, where a nomination made in the prescribed manner purports to confer on any person the right to receive payment of the sum for the time being due on the savings certificate on the death of the holder thereof and before the maturity of the certificate, or before the certificate having reached....
X X X X Extracts X X X X
X X X X Extracts X X X X
....it as may be prescribed, the prescribed authority may pay the same to any person appearing to it to be entitled to receive the sum or to administer the estate of the deceased. (5) Nothing contained in this section shall be deemed to require any person to receive payment of the sum due on a savings certificate before it has reached maturity or otherwise than in accordance with the terms of the savings certificate. 8. Payment to be a full discharge.--(1) Any payment made in accordance with the foregoing provisions of this Act to a minor or to his parent or guardian or to a nominee or to any other person shall be a full discharge from all further liability in respect of the sum so paid. (2) Nothing in sub-section (1) shall be deemed to preclude any executor or administrator or other representative of a deceased holder of a savings certificate from recovering from the person receiving the same under section 7 the amount remaining in his hands after deducting the amount of all debts or other demands lawfully paid or discharged by him in due course of administration. (3) Any creditor or claimant against the estate of a holder of a savings certificate may recover his debt or claim....
X X X X Extracts X X X X
X X X X Extracts X X X X
....m regarding insurance policy, is summarised in Halsbury's Laws of England (fourth edition), volume 25, para. 579, as under : "Position of third party.---The policy money payable on the death of the assured may be expressed to be payable to a third party and the third party is then prima facie merely the agent for the time being of the legal owner and has his authority to receive the policy money and to give a good discharge ; but he generally has no right to sue the insurers in his own name. The question has been raised whether the third party's authority to receive the policy money is terminated by the death of the assured; it seems, however, that unless and until they are otherwise directed by the assured's personal representatives the insurers may pay the money to the third party and get a good discharge from him." Various High Courts in India in different cases, namely, Ramballav Dhandhania v. Gangadhar Nathmall [1956] 26 Comp Cas (Ins.) 83 ; AIR 1956 Cal 275, Life Insurance Corporation of India v. United Bank of India Ltd., AIR 1970 Cal 213 1971] 41 Comp Cas 603, Mohanavelu (D.) Mudaliar v. Indian Insurance and Banking Corporation Ltd. [1957] 27 Comp Cas (Ins.) 47 ; AIR 19....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ted Bank of India Ltd. [1971] 41 Comp Cas 603 (Cal), Matin v. Mahomed Matin, AIR 1922 Lahore 145 and Kesari Devi v. Dharma Devi, AIR 1962 All 355 ; [1963] 33 Comp Cas 93. The court expressed its dissent from the Calcutta decision on the ground that that decision had not considered sub-section (6) of section 39 of the Act. The Lahore case was one decided before the Act came into force. The distinguishing features of Kesari Devi's case, AIR 1962 All 355 ; [1963] 33 Comp Cas 93 are already mentioned. Otherwise there is not much discussion in this case about the effect of section 39 of the Act. We have carefully gone through the judgment of the Delhi High Court in Smt. Uma Sehgal v. Dwarka Dass Sehgal AIR 1982 Delhi 36 ; [1983] 54 Comp Cas 842. In this case, the High Court of Delhi clearly came to the conclusion that the nominee had no right in the lifetime of the assured to the amount payable under the policy and that his rights would spring up only on the death of the assured. The Delhi High Court having reached that conclusion did not proceed to examine the possibility of an existence of a conflict between the law of succession and the right of the nominee under section 39 of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n shall be paid to the person so nominated. It cannot be contended that the nominee under section 44 will receive the money not as owner but as an agent on behalf of someone else, vide B. M. Mundkur v. Life Insurance Corporation of India [1977] 47 Comp Cas 19 ; AIR 1977 Mad 72. Thus, the nominee excludes the legal heirs'." The court further held that the Delhi High Court commited mistake in not properly appreciating the judgment in B. M. Mundkur v. Life once Corporation of India [1977] 47 Comp Cas 19 ; AIR 1977 Mad 72. The court found that the reasons given by the Delhi High Court were not tenable. It was held that a mere nomination made under section 39 of the Insurance Act did not have the effect of conferring on the nominee any beneficial interest in the amount payable under the insurance policy on the death of the assured. The nomination only indicated the hand which was authorised to receive the amount on the payment of which the insurer got a valid discharge of its liability under the policy. The policy holder continued to have interest in the policy during his lifetime and the nominee acquired no sort of interest in the policy during the lifetime of the policy holder. On t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....receiving the same under section 7 ; the amount remaining in the 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. In the Statement of Objects and Reasons of the Act, it is stated: "The Post Office National Savings Certificates Ordinance, 1944 (42 of 1944), issued under section 72 of the Ninth Schedule to the Government of India Act, 1935, as originally enacted and continued in force by virtue of the provisions of the India and Burma (Emergency Provisions) Act, 1940 (3 and 4 Geo. 6, Ch. 33) regulate the sale and discharge of National Savings Certificates issued through the Post Office. Suggestions have been made from time to time that as the production of legal proof of succession involves considerable delay and expen....