Most unfortunate thing to happen to a woman is to become a WIDOW. Still worst is that she is not NOMINEE in LIC / GIC Policies, P.F., P.P.F., Bank Account / FDRs and other welfare laws and DDA / Society flats, etc. and – or the deceased spouse has not even made his “REGISTERED WILL”. Though legally nominee receives money as ‘Trustee” as opposed to a beneficiary, yet in most cases, nominees are reluctant to hand over money to wife and family due to one reason or other. The widow has to fight a legal battle to get the money due to her.
2. Most people in India believe that nominee is rightful person to receive and keep money. But the position in law is otherwise. An attempt has been made to explain the law of nomination under various Acts/ Schemes such as: Insurance Act, 1938, Employees Provident Fund Scheme, 1952. Payment of Gratuity Act, 1972, Public Provident Fund Act, Companies Act 1956 and Rules, laws concerning DDA / Societies flats, etc.
3. Nomination under the Insurance Act 1938
3.1 A nominee is the person named in the proposal form to whom the Insurer (LIC /GIC) pays the assured sum in case of death of the assured.
3.2 Nominees is a trustee who receives the money due under the policy for the benefit of the legal heirs of the deceased. In other words, the fact that a person happens to be mentioned as nominee by the person insured, does not give him the TITLE to the insurance money.
3.3 The position of the nominee was finally settled by the Supreme Court in the case of Sarbati Devi Vs. Usha Devi (AIR 1984, SC-346). In this case, a person insured his life and appointed his wife Usha Devi as nominee to receive the sum assured on his death. Sometimes later he dies, leaving behind his wife, son Ashok Kumar and mother Sarbati Devi as his nearest legal heirs. On the strength of the nomination, Usha Devi claimed absolute right to the sum assured to the exclusion of the other two heirs i.e. the son and the mother of the deceased. The Supreme Court dismissed her claim holding “a mere nomination made under Section 39 does not confer on the nominee any beneficial interest in the amount payable under the life insurance policies on the death of the insured.” The Court further observed that the nomination only indicates the hand, which is authorized to receive the amount. The amount, however, can be claimed by the heirs of the assured in accordance with the Law of succession governing them.
4. Nomination and Labour Welfare Laws Para 61 of the employees Provident Fund Scheme, 1952 and Section 6 of the Payment of gratuity Act, 1972 deal with the procedure for nomination to the respective funds. The right of nomination is restricted, i.e. in the case of an employee having no family, the nomination can be made in favour of any person. However, as soon as there is a member in the family, the nomination in favour of an outsider becomes void and fresh nomination in favour of any member of the family has to be made. Also it is pertinent to note that while an employee has family, nomination in favour of an outsider (including Mother, Sister and Brother) is void.
5. Public Provident Fund Act, 1968 Section 8 of the Act says that all amount standing in the credit shall go to nominee (whether a member of family or not). Where there is no nomination, the amount shall be payable to his legal heirs. It is advisable to nominate wife as nominee in PPF Account in case one is married. In case account has been opened before marriage, nomination to be changed in favour of wife as and when one gets married.
6. Nomination and the Societies Flats The legal position of a nominee remains the same under the property law. After Sarbati Devi’s case (AIR 1984 SC -346) the law is clear on the principle that the nominee is a mere trustee with whom the Society can initially or prima facie deal. And after the death of a member, all the heirs of whom a share in the said Society has been bequeathed, will have the right to succession to the property and the nominee cannot exclude the heirs. If Society rules permit, make wife as co-allottee and – or nominee in the Society flats and make and register the Will in spouse’s favour. DDA LdDO/MCD/Municipalities insist for Registered Will for mutation.
7. Law on Transfer of Shares on Demise A ‘nominee’ under the Companies Act, 1956 as amended, has all the rights of ownership. Accordingly, it is necessary that wife should be made a nominee (Section 109A) in all shares, bonds, debentures, etc.
8. Following conclusion can be drawn from above discussion:
1. Nominate the spouse as Nominee in all documents and make and register Will making the spouse as beneficiary. However, this is subject to the relationship between the spouse.
2. Nomination does not affect the title to the money secured by policy – schemes, fund or property. It only provides a mode of payment in particular person who is the nominee.
3. In spite of such a nomination, the policy holder or owner of the fund or the property retains complete power of disposition which he can exercise either by transfer or assignment which operates during his lifetime or by a REGISTERED WILL which operates only subsequent to his death.
4. The rightful claimants to the sum under a policy or scheme or the share in the property as the case may, are the LEGAL HEIRS OF THE DECEASED, AND NOT THE NOMINEES.
5. In order that the amount under the policy or the welfare schemes or a share in the society or flat falls due to the desired person (spouse), it is necessary to bequeath it by way of REGISTERED WILL. A WILL alone puts into effect the wishes to the testator after his death.
6. Nominate your spouse or any other person whom you wish to give shares / debentures, etc.
7. Making WILL is a simple affair. However, it requires will / desire to make a WILL which is lacking in most people.
hi i worked in a company for 15 years and left my job in 2010 and igot settlement for P.F and received SCHEME Certificate for EMPLOYEES PENSION SCHEME 1995. Now i reached the age of 58. But my wife not living with me so i nominated my mother as nominee but Scheme Certificate my wife name is mentioned as nominee in 2010.me and wife separated with mutual consent. Now my application for pension is rejected by EPFO saying submit wife aadhar card for grant the pension. one help in this matter how to get my pension.
My husband died making me nominee of our flat in a cooperative society. Can I make my daughter nominee as I am now 74 years old
My husband died nominating me his wife for his flat.Now I am 74 years can I nominate my daughter for the same. Is it. possible according to cooperative society norms
Hello my husbnd died in 11FEB 2015,and he joined his job before my marrige in icici lombard ltd and company makes his insurance policy and my husbnd makes his elder brother his nominee,i married in 2010 and my son is 3years old,now i want to know that can i claim for this insurance amount and iam i legal heir for this insurannce amount,even my inlaws dont want to give me my and my son share plz help me and suggest me right way
Same issue is withe ..plzz help me 🙏🙏🙏🙏..what happened with your case.
The position of the nominee was decided by the Supreme Court in the case of Sarbati Devi Vs. Usha Devi (AIR 1984, SC-346). In this case, a person insured his life and appointed his wife Usha Devi as nominee to receive the sum assured on his death. Sometimes later he dies, leaving behind his wife, son Ashok Kumar and mother Sarbati Devi as his nearest legal heirs. On the strength of the nomination, Usha Devi claimed absolute right to the sum assured to the exclusion of the other two heirs i.e. the son and the mother of the deceased. The Supreme Court dismissed her claim holding “a mere nomination made under Section 39 does not confer on the nominee any beneficial interest in the amount payable under the life insurance policies on the death of the insured.” The Court further observed that the nomination only indicates the hand, which is authorized to receive the amount. The amount, however, can be claimed by the heirs of the assured in accordance with the Law of succession governing them.
Since you & yr son are legal heirs of yr husband, you will definitely get your share. Please consult any good advocate with reference to the SC decision. Thanks.
really helpful article ….. Can anybody suggest a lawyer related to property matters also insurance policy matters for getting justice because the case is my widow sister cheated by her in-laws in property and insurance policies and she has 2 months old daughter (She is not nominee in property and insurance)
Just wanted to know whether husband has a right over wife’s PF balance in case of her death.
Go for joint accounts with spouse
in all investments except for PPF where you should nominate the spouse.
Same can be done for shares and property.
This question of nominee claiming the dues will arise only when joint holders have bid good bye to this world.
Any comments please?
In spite of such a nomination, the policy holder or owner of the fund or the property retains complete power of disposition which he can exercise either by transfer or assignment which operates during his lifetime or by a REGISTERED WILL which operates only subsequent to his death.
if nominee is one and by will, the owner passes the fund to other..then who will receive the amount????
Would the author kindly clarify the position of nominee vis a vis legal heirs, in regard to other assets such as holding in mutual funds, Govt. Schemes such as securities, bonds, post office deposits, etc.? This would help people to decide on whom to nominate in respect of most of the commonly held assets.
I also dont understand why there cannot be uniformity in respect of the rights of nominees/legal heirs to different type of assets owned by people.
Good to know these vital but lesser known facts. May I get clarification on the following:
1. Most banks suggest to open “Either or Survivor” accounts,besides nomination. Both the persons are husband and wife while nomination is in favour of either a son or daughter.
2. Demat accounts are jointly held by husband and wife , besides nomination in favour of a son or daughter ?
What happens when one of the two holders dies,in the 2 scenarios mentioned above ? Who is legally entitled to get the money/shares? Can it be claimed by the nominee also?
Also whether a registered will is required or preferable ?
3. Flats/immovable property held in joint names viz. husband and wife.
What happens when one of the two holders dies,in the above case? Who is legally entitled to get the immovable property? Can it be claimed by some other member of the family say son or daughter also?
Also whether a registered will is required or preferable ?
Excellently written in a very lucid manner
It’s a extremely good and helpful article.