Narayani Amma vs Saraswathy Amma

Shamsuddin, J.—Plaintiffs is O.S. No. 302 of 1982 on the file of Addl. Sub Court, Ernakulam, are the Appellants. The suit is for declaration and recovery of money.

1st Plaintiff is the wife of one P.N. Gopalan Nair and the other Plaintiffs are his children. Gopalan Nair died intestate on 12-6-1978. He had a fixed deposit for Rs. 15,000/- for five years in the Union Bank of India, Muvattupuzha Branch, and by way of Savings Bank Account Rs. 500/- with the same bank. He had another fixed deposit of Rs. 12,000/- for 5 years in the Muvattupuzha Branch of the Ernakulam District Co-operative Bank. In respect of the fixed deposit amount of Rs. 12,000/- in the Muvattupuzha Branch of the Ernakulam District Co-operative Bank, Sri, Gopalan Nair had made a nomination in favour of the 1st Defendant.

In this appeal, we are only concerned with the question whether the nomination of the 1st Defendant will disentitle the Plaintiffs from claiming

right to the amount deposited in the Muvattupuzha Branch of the Ernakulam District Co-operative Bank The trial court held that such a nomination would deprive the legal heirs of their right to the said amount and the nominee would be entitled to the said amount.

Learned Counsel for the Appellants challenged the above finding of the trial court. I had occasion to consider a similar question in P.J. Thomas v. P.O. Poulose A.S. No. 139 of 1984. In that case I have held that such a nomination would not deprive the legal heirs of their right to claim the amount and that the only consequence of such a nomination is that the bank is discharged of its liabilities, if the amount was paid to the nominee.

The Supreme Court had occasion to consider the question of nomination u/s 39 of the Insurance Act in Smt. Sarbati Devi and Another Vs. Smt. Usha Devi, . Dealing with the question the Supreme Court observed as follows:

A mere nomination made u/s 39 does not have the effect of conferring on the nominee any beneficial interest in the amount payable under the life insurance policy on the death of the assured. The nomination only indicates the hand which is authorised to receive the amount, on the payment of which the insurer gets a valid discharge of its liability under the policy. The amount however, can be claimed by the heirs of the assured in accordance with the law of succession governing them.

The Supreme Court overruled two decisions of the Delhi High Court in Section Fauze Singh v. Kuldip Singh AIR 1982 Del. 276 and in Mrs. Uma Sehgal v. Dwaraka Dass Sehgal AIR 1982 Del. 36, which took a contrary view.

The court below has relied on a passage from Sheldon''s Practice and Law of Banking, 10th Edition which occurs at page 167:

A nomination must be in writing in the prescribed form, signed by the nominator in the presence of a witness who must also sign, and-must be sent to the Director of Savings for registration during the life time of the nominator. A nomination is revoked by the death of the nominee, the marriage of the nominator or the registration of the subsequent nomination. It may also be revoked by notification in writing to the Director of Savings. A nomination is not affected by any will. Such a nomination provides one of the rare example in English Law whereby a person can make a testamentary disposition otherwise than by will

Reference may also be made to the following observation at page 234:

Difficulties sometimes arise when the legal representatives of a deceased joint account holder intervene and claim to have an interest in the joint account. It would appear, however, that apart from express agreement the ordinary principle of a joint debt applies, and that the banker is entitled to pay the surviving party the balance on satisfactory proof of death. There does not appear to be any judicial decision on the point, but if this ruling is correct then a banker is justified in refusing to pay any attention to claims made by the deceased''s legal representatives. There is no reason to doubt but that the same ruling holds good even though the deceased has attempted to deal with the account in his will. As to whether the survivor is the beneficial owner of the balance, is another question, and is a matter to be settled between him and the legal representatives. Meanwhile, he holds that part of the balance provided by the deceased as trustee for the latter''s estate.

Whatever be the position in English Law the view that has been taken by the Indian Courts is such a nomination will not deprive the legal representative of their right to claim the amount.

In Krushanadas Nagindas Bhate Vs. Bhagwandas Ranchhoddas and Others, the question was considered by a Division Bench of the Bombay High Court. The Bombay High Court relied on the decisions on the Privy Counsel in Guran Bitta v. Rani Bitta AIR. 1928 PC 172 and in AIR 1945 10 (Privy Council) which took the view that a deposit by a Hindu of his own money in a bank in the joint names of himself and wife, and on the terms that it was to be payable to either of the survivor, will amount to a gift by him to his wife. According to Privy Council there is a resulting trust in favour of the legal heirs in the absence of proof of a contrary intention, there being no presumption of an intended advancement in favour of his wife. In Guran Bitta''s case (supra), it was observed:

The rule however is not confined to assets in the joint names of the deceased man and his wife. It is conceded that it is of universal application whatever the property and whatever the relationship. It was common ground, therefore, before their Lordships that it was for Respondent to establish a contrary intention. If he succeeded in doing so he kept the assets standing in the joint names of the deceased and himself. If not, those assets must be included in the partible property.

The principle laid down in the above decisions is applicable to nomination in favour of a person also.

Learned Counsel for the Respondent however contended that in the instant case, there is indication to show that the deceased intended that the amount should go to the 1st Defendant. He laid considerable reliance, in this context, on the observation of the Privy Council in Guran Bitta''s case (supra) that there would be a resulting trust in favour of the legal heirs in the absence of a contrary intention. Learned Counsel also drew my attention to the averments in paragraph 12 of the written statement. 1st Defendant has averred that deceased Gopalan Nair never intended to give anything from out of the plaint amount to the Plaintiff and that the said Gopalan Nair nominated him as the person entitled to get the amount. He also relied on the evidence of P.W. 1 in the cross-examination that in 1955 Gopalan Nair left his wife and children and started to live with his sister and contended that this is a strong circumstance to indicate that deceased Gopalan Nair intended to benefit the first Defendant only. In my view these circumstances are not sufficient to come to the conclusion that the deceased had intention to deprive of his wife and children any right to this amount on his death and intended to benefit the 1st Defendant. It follows that the finding of the court below that the Plaintiffs are not entitled to the amount in deposit in the Muvattupuzha Branch of the Ernakulam District Co-operative Bank, by reason of the nomination, cannot be sustained and that it has to be held that the Plaintiffs are entitled to the said amount.

In the result, the appeal is allowed to the extend indicated above. There will be no order as to costs.