Think of it like a family drama where a loved one has passed away, and everyone wonders, “Who truly gets their inheritance?” This drama has played out in real life as legal heirs and nominees have clashed over assets like shares, insurance, and other investments. The Supreme Court has finally set the record straight, delivering a ruling that reads like the twist in a movie.
The Story So Far
1. The "Nominee" Mystery: Nominees are appointed to inherit assets like shares or insurance after the owner’s death. Many believed this meant they’d get full ownership, bypassing the family heirs.
2. The Setup – Legal Heirs Hold the True Claim: Under Indian law, it was actually always intended that legal heirs get ownership, with nominees simply acting as temporary holders or trustees. But confusion arose when, in cases like Harsha Nitin Kokate, the Bombay High Court initially sided with nominees as full owners.
3. The Conflict Intensifies: In later cases, the courts disagreed, emphasizing that legal heirs still hold the ultimate claim. Confusion hit new heights until the matter landed in the Supreme Court.
The Plot Twist: Supreme Court's Final Verdict
1. Nominees Are Trustees, Not Owners: The Supreme Court ruled nominees are not true heirs—they hold assets temporarily until passed to the rightful heirs.
2. Life Insurance and EPF: This isn’t just for shares; life insurance and employee provident funds (EPF) work the same. Nominees hold these funds in trust, while legal heirs are the real owners.
3. A Company’s "Temporary Holder" Clause: The law’s terms like "vesting" mean only that companies can transfer shares to a nominee for simplicity, but it doesn’t grant permanent ownership.
4. Heirs Keep Their Rights: From insurance policies to joint stock holdings, legal heirs still get their rightful share, no matter who the nominee is.
The Climax
If you want a nominee to own your assets, a will is the only way to ensure it. This ruling settles it: while nominees can hold assets, they don’t replace the family’s inheritance rights. The curtain has closed on the nominee vs. heir debate, with the Supreme Court ruling that only succession laws truly hold the power!