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Judgment
R.L. Khurana, J.—This regular second appeal at the instance of the plaintiffs against the judgment and decree dated 16-2-2000 of the learned District Judge, Shimla, reversing the Judgment and decree dated 8-9-1998 of the learned Sub-Judge 1st Class (2), Shimla, has been admitted for hearing on the following substantial question of law:--
"Whether the nominee named in the Savings Certificates is entitled in his own right to the amount of such certificates to the exclusion of other legal heirs of the deceased holder of the Savings Certificates?"
Briefly stated, the facts of the present case are these. Plaintiff No. 1 is the widow, plaintiffs Nos. 2 and 3 are the sons while plaintiffs Nos. 4 and 5 are the daughters of one Shri Kedar Nath Bhoil. Defendant No. 1 is the sister of the said Shri Kedar Nath Bhoil, who has died on 26-3-1993.
The abovenamed Shri Kedar Nath Bholl during his life time on 14-5-1991 had purchased seven "Kisan Vikas Patra" worth rupees ten thousand each. While purchasing such saving certificates, he had nominated his two sisters, Smt. Sukarma Bhardwaj (defendant No. 1) and Smt. Archane Sood as his nominees as entitled to receive the amount of the certificates in equal shares. The saving certificates, however, remained in possession of the deceased Kedar Nath and thereafter in possession of the plaintiffs.
After the death of Shri Kedar Nath Bhoil, the plaintiffs approached the defendant No. 2 for encashment of the Saving Certificates. However, defendant No. 2 refused to encash the certificates and make the payment to the plaintiffs on the ground that the payment could be made only to the nominees named in the certificates. The plaintiffs then approached defendant No. 1 and Smt. Archana Sood, the named nominees for getting the saving certificates encashed and to pay the amount thereof to the plaintiffs. While Smt. Archana Sood authorised plaintiff No. 1 to receive her share of the Saving Certificates, defendant No. 1 refused to oblige the plaintiffs. She asserted that being the nominee she was entitled to receive half of the amount of the Saving Certificates to the exclusion of the plaintiffs.
The plaintiffs, therefore, filed a suit for declaration to the effect that they being the natural legal heirs of the deceased Kedar Nath Bhoil are entitled to receive the balance amount payable under the Saving Certificates comprising of Kisan Vikas Patra Nos. OOCC 313979 to 313985 dated 14-5-1991 notwithstanding the nomination in favour of defendant No. 1. They also sought permanent injunction for restraining defendant No. 2 from making payment in respect of the above certificates in favour of defendant No. 1. They further sought mandatory injunction for directing defendant No. 2 to make the payment of the certificates to the plaintiffs.
Defendant No. 1 while resisting the suit pleaded that on having been duly nominated as one of the nominees, she was entitled to receive half of the amount under the saving certificates to the exclusion of the plaintiffs in view of the provisions contained in Section 6 of the Government Savings Certificates Act, 1959.
Defendant No. 2 also pleaded that the plaintiffs were not entitled to receive the amount in view of Section 6 of the Government Savings Certificates Act, 1959.
The learned trial Court following the ratio laid down by the Hon''ble Apex Court in Smt. Sarbati Devi and Another Vs. Smt. Usha Devi, and by this Court in Damyanti Dhawan v. H. P. University ILR (1988) H P 212 came to the conclusion that the plaintiffs were entitled to receive the amount of the Savings Certificates being Class-I, natural legal heirs of the deceased Kedar Nath Bhoil. The suit of the plaintiffs for declaration and injunction as prayed for was, therefore, decreed.
Defendant No. 1, feeling aggrieved by and being dissatisfied with the Judgment and decree of the learned trial Court went up in appeal before the learned District Judge, being Civil Appeal No. 182-S/13 of 1998. The learned District Judge allowed the appeal of defendant No. 1, set aside the judgment and decree of the learned trial Court and dismissed the suit of the plaintiffs. The learned District Judge came to the conclusion that Section 6, Government Savings Certificates, 1959, operates as a rule of succession in favour of the nominee, if the holder of the Government Savings Certificate dies before realising the amount due on such certificate. The learned District Judge in para 12 of his judgment has observed and held as under :--
"Section 6 of the Government Savings Certificates Act, however, starts with non obstante clause. It says that notwithstanding anything contained in any law for the time being in force or in any disposition testamentary or otherwise, in respect of any savings certificates, where a nomination made in the prescribed manner purports to confer upon 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 maturity has been discharged, the nominee shall, on the death of the holder of savings certificate, become entitled to the savings certificate and to be paid the sum due thereon to the exclusion of all other persons, unless the nomination is varied or cancelled in the prescribed manner. The provision not only says that the nominee shall be entitled to receive the money due on the certificates, to which the Act applied, but also excludes all other persons, which implies the heirs of the holder of the certificates or the beneficiaries under the Will, if any, made by him. Furthermore, Section 7, on account of non obstante words supersedes the law of succession and disposition meaning thereby that the money belongs to the nominee, in the event of the holder of the certificates dying before receiving the same. In other words, Section 6 operates as rule of succession in favour of the nominee, if the holder of the Government Savings Certificates dies before realizing the amount due on such certificates. For the foregoing reasons, the point has been answered in the affirmative."
A similar contention was raised before the Hon''ble Apex Court by the nominee named in the Shri Vishin N. Kanchandani and Another Vs. Vidya Lachmandas Khanchandani and Another,
Repelling the contention raised on behalf of the nominees/appellants, the Hon''ble Apex Court held (Para 12 of AIR) :--
"The submission made on behalf of the appellants has no substance in view of subsection (2) of Section 8 and the Statement of Objects and Reasons necessitating the passing of the Act. Sub-section (1) of Section 8 provides that if any payment is made in accordance with the provisions of the Act to a nominee, the same shall be a full discharge from all further liabilities in respect of the sum so paid. Section 7 of the Act provides that after the death of the holder of the savings certificates, payment of the sum shall be made to the nominee, if any and Sub-section (1) of Section 8 declares that such payment shall be a full discharge from all further liabilities in respect of the sum so paid. However, Sub-section (2) of Section 8 specifies that the payment made to the nominee under Sub-section (1) shall not preclude any executor or administrator or the legal representative of the deceased holder of a savings certificate from recovering from the person receiving the same u/s 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 the due course of administration. In other words though the nominee of the National Saving 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 subsection."
It was further held (Para 13 of AIR) :
"In the light of what has been noticed hereinabove, it Is apparent that though the language and phraseology of Section 6 of the Act is different from the one used in Section 39 of the Insurance Act, yet, the effect of both the provisions is the same. The Act only makes the provisions regarding avoiding delay and expense in making the payment of the amount of the National Savings Certificates, to the nominee of the holder, which has been considered to be beneficial both for the holder as also for the post office. Any amount paid to the nominee after valid deductions becomes the estate of the deceased. Such an estate devolves upon all persons who are entitled to succession under law, custom or testament of the deceased holder. In other words, the law laid down by this Court in Sarbati Devi''s case holds the field and is equally applicable to the nominee becoming entitled to the payment of the amount on account of National Savings Certificates received by him u/s 6 read with Section 7 of the Act who in turn is liable to return the amount to those in whose favour the law creates a beneficial Interest, subject to the provisions of Sub-section (2) of Section 8 of the Act."
In view of the abovesaid position, it is held that the plaintiffs are not entitled to receive the amount of the Certificates directly from defendant No. 2. The defendant No. 1 is entitled to receive such amount as nominee upon furnishing an undertaking in terms of Sub-section (2) of Section 8 of the Government Savings Certificates Act, 1959 before the learned trial Court. The amount so received by defendant No. 1 on account of Kisan Vikas Patras in which she is the nominee of the deceased Kedar Nath Bhoil shall be payable to the plaintiffs after deduction of the amounts of debts or other demands lawfully paid or discharged, if any, by defendant No. 1 In due course of administration, The substantial question of law formulated in the present appeal is answered accordingly.
As a result, the present appeal is partly allowed and the judgment and decree of the Courts below are modified to the extent indicated above. Parties to bear their own costs.