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2010 (10) TMI 80 - SC - Companies LawProvisions relating to certain operations of banking companies The claim is based on section 45ZA of the Banking Regulation Act, 1949, which according to him, makes the nominee of the depositor the sole beneficiary, vested with all the rights of the sole depositor.
Issues:
Interpretation of section 45ZA of the Banking Regulation Act, 1949 regarding the rights of a nominee in a deceased depositor's bank account. Analysis: The appellant, as the nominee in the bank account of his deceased mother, claimed full rights over the money in the account, excluding his brother, the respondent. The appellant relied on section 45ZA of the Banking Regulation Act, 1949, arguing that the nominee becomes the sole beneficiary with all the rights of the depositor after the depositor's death. However, the Court clarified that while the nominee acquires the rights of the depositor, it does not make the nominee the owner of the money in the account. The Act is not concerned with succession, and the money received by the nominee forms part of the deceased depositor's estate, subject to succession laws. The Court emphasized that section 45ZA(2) only places the nominee in the position of the depositor after the depositor's death, granting the nominee exclusive rights to receive the money in the account. The nominee does not become the owner of the funds but merely steps into the shoes of the deceased depositor for the purpose of handling the account. The Court highlighted that the nominee's rights are limited to the account and do not extend to ownership of the funds, which remain part of the deceased's estate. In dismissing the appeal, the Court referenced a previous decision (Vishin N. Khanchandani v. Vidya Lachmandas Khanchandani) that dealt with a similar provision under the Government Saving Certificate Act, 1959. The Court found that the provision in question was materially similar to section 45ZA(2) of the Banking Regulation Act, 1949, and applied the precedent to the current case. The Court affirmed the High Court's decision to reject the appellant's claim, stating that the nominee's rights do not confer ownership of the funds but rather pertain to handling the account after the depositor's demise.
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