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TMI Blog2010 (4) TMI 614X X X X Extracts X X X X X X X X Extracts X X X X ..... with the same. - NOTICE OF MOTION NO. 2351 OF 2008 IN SUIT NO. 1972 OF 2008 - - - Dated:- 20-4-2010 - SMT. ROSHAN DALVI, J. A.K. Maheshwari for the Plaintiff. Ms. Shyama Parkar and H.S. Shreepad Murthy for the Respondent. JUDGMENT 1. The Plaintiff married one Nitin Kokate on 3-12-2004. Her husband expired on 5-7-2007. Nitin Kokate held certain shares in D-mat Account with the Depository Participant Cell of Defendant No. 1. Her husband executed a nomination in the prescribed form following the prescribed procedure set out by the Depository Participant, Defendant No. 1 Bank in favour of the Defendant No. 3, his nephew on 11-7-2006. The Plaintiff claims an interest in the said shares as his heir and legal representative. She claims to have them sold. 2. This Suit is not concerned with the reason why she claims the sale of the shares. The Plaintiff must show her legal right, title and interest in those shares. If that is shown, the Plaintiff would be entitled to sell or transfer those shares or to hold them as her own. 3. The Defendant No. 3 claims right, title and interest in the shares pursuant to the nomination executed in his favour. The nominat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ........." It can be seen from the aforesaid provision that nomination is required to be made in the prescribed manner. Upon such nomination the shares would vest in the nominee in the event of the death of the holder. Further upon it being made in the prescribed manner the nominee would become entitled to all the rights in the shares of the Company to the exclusion of all other persons. That is the effect of vesting the shares in the nominee. 5. Mr. Maheshwari drew my attention to the Depositories Act, 1996. Section 9.11 thereof relates to transmission of securities in the case of nomination. Section 9.11 runs thus : "9.11 Transmission of Securities in the case of Nominaion : 9.11.1 In respect of every account, the Beneficial Owners ) ("Nominating Person(s)") may nominate any person ("Nominee") to whom his securities shall vest in the event of his death in the manner prescribed under the Business Rules from time to time. 9.11.2 The securities held in such account shall automatically be transferred in the name of the Nominee, upon the death of the Nominating Person, or as the case may be, all the Nominating Persons subject to the other Bye Laws mentioned hereunde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to scrutinise the election and nomination of the nominee registered with it. Such nomination carries effect notwithstanding anything contained in a Testamentary Disposition or nominations made under any other law dealing with the Securities. The last of the many nominations would be valid. 7. Under the said section the holders of the shares would nominate any person in whom the securities would vest in the event of his death. This nomination has to be made in the manner prescribed under the Business Rules. 8. It can be seen that since all the shares are held in Demat form with the Depository Participant and the portfolio of the holder may change each day. Hence one nomination is specifically required to be made as provided in the aforesaid legislation. The nomination would have the effect of vesting in the nominee complete title in the shares. He would be entitled to elect to be registered as a beneficial owner of the shares or he would have the right to transfer the shares. These are inter alia the rights of every shareholder of a listed Companies. These rights show that the vesting of the shares is upon the death of the shareholder provided only that the nomination is m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Maharashtra Co-operative Societies Act is similar for nominees in respect of shares in a Housing Society. Section 30 of The Maharashtra Co-operative Societies Act runs thus : "30. (1) On the death of a member of a society, the society shall transfer the share or interest of the deceased member to a person or persons nominated in accordance with the rules or, if no person has been so nominated, to such person as may appear to the committee to be the heir or legal representative of the deceased member : Provided that, such nominee, heir or legal representative, as the case may be, is duly admitted as a member of the society : Provided further that, nothing in this sub-section or in section 22 shall prevent a minor or a person of unsound mind from acquiring by inheritance or otherwise, any share or interest of a deceased member in a Society. (2)....... (3)....... (4) All transfers and payments duly made by a society in accordance with the provisions of this section, shall be valid and effectual against any demand made upon the society by any other person." Hence in a Co-operative Society also the shares of the member can be simplicitor transferred to the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mprovement Trust AIR 1957 SC 344 at page 353 holds that the word "Vest" can be used differently upon considering the English Law. 19. It is observed that the word "Vest" is a word of variable import even under Indian Statutes. The illustrations given in the judgment are the Insolvency Act which provides that the property vests in the Receiver. Such vesting is held to be temporary and only for the purpose of management of the properties of the insolvent for payment of his debts after distributing his assets. Consequently, the Receiver would have no interest of his own in the property vested in him. The vesting under the Land Acquisition Act is shown to be different. Under that Act the property would vest "absolutely in the Government free from all encumbrances". Hence upon such vesting the property acquired becomes the property of the Government without any conditions or limitation either as to its title or possession. Consequently, it is held at page 353 runs thus : "It would thus appear that the word "vest" has not got a fixed connotation, meaning in all cases that the property is owned by the person or the authority in whom it vests. It may vest in title, or it may vest i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt the right, title and interest of the Coke oven plant which is vested in the Central Government under the Coking Coal Mines (Nationalisation) Act, 1972 was considered. In that case the Appeal of the Company, in which the right, title and interest of the owners of the plants were to have vested under the aforesaid legislation, was dismissed holding that pursuant to the legislation the right, title and interest could not stand transferred to the Government Company since no infraction by the title holders was seen. 24. In the light of these judgments section 109A of the Companies Act is required to be interpreted with regard to the vesting of the shares of the holder of the shares in the nominee upon his death. The act sets out that the nomination has to be made during the life time of the holder as per procedure prescribed by law. If that procedure is followed, the nominee would become entitled to all the rights in the shares to the exclusion of all other persons. The nominee would be made beneficial owner thereof. Upon such nomination, therefore, all the rights incidental to ownership would follow. This would include the right to transfer the shares, pledge the shares or hold ..... X X X X Extracts X X X X X X X X Extracts X X X X
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