Definition:

- A nominee as defined in the Black’s Law dictionary, is a trustee

who holds an asset on behalf of the asset owner. The connection
between the asset owner and the nominee is that of a principal and
an agent. The parties have a fiduciary relationship in which the
agent works on behalf of the principal in the best interests of the
principal.
- Nomination is primarily meant to keep property from becoming
uninhabited until succession issues are handled. Nomination is
merely a means to an end. The rationale behind having a nominee
is to have a person, who, in the event of death, will become a
guardian of the assets and distribute it to the legal heirs.

The position of law as of now regarding Nomination: Principles

1. A nominee is just a trustee towards the organisation.

2. The beneficiaries of the property are the legal heirs of the
deceased.
3. That the purpose of nomination is to transfer on the amounts
that are held by any authority which are provided for these
investments.

For example,
Wx-----------------[X]----------------Br (nominee)--------------WBr
- In this case X and Br dies, a dispute arose between Wx and WBr
as to who should inherit X's property. Now asper the above
discussed principles, Wx should get the property as nominee never
gets ownership rights over the property, therefore the inheritance
rights can be created.

Case: Sarbati Devi v. Usha Devi, 1984, SC

The most important judgment of the Supreme Court on the position
of a nominee in the context of a life insurance policy is Sarbati Devi
v. Usha Devi. The Supreme Court held in this case that a
nomination made under section 39 of the Insurance Act 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. Consequently, it was also held that the amount can
be claimed by the heirs of the assured in accordance with the law of
succession governing them.

Similar issue was raised before the Supreme Court in Shakti

Yezdani & Anr. v. Jayanand Jayant Salgaonkar & Ors The
dispute in this case centered on the distribution of certain assets of
Jayant Salgaonkar (“Testator”). The Testator had executed a will
making provisions for the devolution of his estates by nominating
successors. The Supreme Court judgment has finally put the
debate to rest by holding that being a nominee in a share/securities
does not entitle the person to inherit it by default.

The Court also held that provisions relating to the nomination for
shares of the company under Section 72 of the 2013 Act, and the
relevant provisions in the Depositories Act, 1996 (“Depositories
Act”), cannot override the rules of succession under the Indian
Succession Act, 1925, or the personal laws of succession
applicable to the deceased shareholder.

On Nomination under Various Legislations

The Apex Court observed that the Courts were consistent while
interpreting provisions relating to nominations. A nomination did not
guarantee the nominee absolute ownership of the subject property,
meaning that a nomination did not imply the exclusion of the legal
heirs.

Does "vest" always implies creation of ownership rights:

The Appellants argued that the term “vest” in Section 72 of the 2013
Act and Byelaw 9.11.1 under the Depositories Act indicates the
intent to bestow ownership of securities upon the nominee after the
shareholder’s death.
The mere use of the term in a statute did not confer absolute title
over the subject matter; hence, it was essential to interpret the term
“vest” in Section 109A of the 1956 Act along logical lines. The
vesting of the assets in the nominee under the 1956 Act/2013
Act and the Depositories Act serves only a limited purpose—to
enable the Company to deal with securities in the immediate
aftermath of the shareholder’s death and to avoid uncertainty
regarding the holder of the securities.
Other Statutes:
1. Fixed deposits: Vide notification dated June 09, 2005, RBI has
notified that in case of deposit accounts where the depositor had
utilized the nomination facility and made a valid nomination clause,
the payment of the balance in the deposit account to the nominee of
a deceased deposit account holder represents a valid discharge of
the bank's liability provided that nominee would be receiving the
payment from the bank as a trustee of the legal heirs of the
deceased depositor, i.e., such payment to him shall not affect the
right or claim which any person may have against the nominee to
whom the payment is made. In case where the deceased depositor
had not made any nomination, the repayment is made to the legal
heirs.
2. Employees Provident Fund: Employee provident fund, the
nominee inherits the funds, according to EPF rules, one needs to
appoint his family member as nominee unless he has no family,
then only he can appoint someone else. If he acquires a family his
old nomination becomes invalid and he needs to make new
nomination.

The succession of Self-Acquired Property

The rules governing the succession of Self-Acquired Property of the
deceased varies based on the gender of the deceased. However,
the same rules apply to all Hindus regardless of whether
Dayabhaga Law or Mitakshara Law governs them.

For male Hindus, there are four categories of legal heirs: Class I
heirs, Class II heirs, agnates, and cognates. The Schedule of the
Hindu Succession Act, 1956 specifies Class I heirs and Class II
heirs. An agnate is a person who is (i) neither a Class I heir nor a
Class II heir, but (ii) is a descendant of the deceased through a pure
male line. A cognate is a person who is (i) neither a Class I heir nor
a Class II heir, but (ii) is a descendant of the deceased through a
line consisting of both males and females. The order of intestate
succession in self-acquired property is as follows:

1. Class I Heirs: If any Class I heir[s] exist, they get the

deceased's whole Self-Acquired Property. If more than one
such heir exists, they both get equal shares. The deceased's
 wife, sons, daughters, and mother are notable Class I
heirs. However, the father of the deceased is not a Class I
heir.
2. Class II Heirs: If not a single Class I heir exists, the whole
Self-Acquired Property of the deceased goes to the Class II
heirs. The deceased's father, brothers, and sisters are
notable Class II heirs. If the father is alive, he takes the
whole property. If he isn't alive, then the brothers and
sisters take the property in equal shares.
3. Agnates: If there are no Class I and Class II heirs, the
deceased's agnates take the whole of the Self-Acquired
Property.
4. Cognates: If there are no Class I and Class II heirs, the
deceased's cognates take the whole of the Self-Acquired
Property.

A different set of rules applies to female Hindus. For female Hindus,

the order of intestate succession for legal heirs is: (i) sons,
daughters, and husband; (ii) heirs of the husband; (iii) parents; (iv)
heirs of the father; and (vi) heirs of the mother. Each category is
preferred to the later ones, in that order of preference. All heirs of
the same class get equal shares of the property.

Position of Illegitimate Children

The intestate succession of an illegitimate child is only through his
mother. An illegitimate child's share in intestate succession is
restricted to his mother and not his father.