ORDER
Shafi Parkar, J.
1. The short question which arises in this appeal is, whether a nominee of a National Saving Certificate is entitled for beneficial interest in the amount due thereon on the death of the holder of the certificate or said amount would ensure for the benefit of the heirs of the deceased-owner.
2. The facts leading to the present controversy, briefly stated, are as follow:
The appellants are the mother and daughter, who are respectively the widow and the daughter of the deceased Lachhmandas Khanchandani. Appellant No. 1 filed Misc. Civil Application in the Court of the Civil Judge, Senior Division, Thane on 18th January 1980 for grant of succession certificate in respect of the securities left by the deceased. The said securities in respect of which the succession certificate was claimed were listed in Annexure 'A' and Annexure 'B' of Exhibit 'A' to the application. The said application was later on converted into Special Civil Suit No. 72 of 1980 in which appellant No. 2, the daughter of the deceased and of the plaintiff was arraigned as defendant No. 1. The defendant Nos. 2 and 3 are the real and step brothers respectively of the deceased Lachhmandas Khanchandani. There are 26 National Saving Certificates of value of different amounts which are listed in Annexure 'A' to the plaint and 6 National Saving Certificates and other Government securities are listed in Annexure 'B' to the plaint. The trial Court decreed the suit and directed the issue of succession certificate in favour of the appellant No. 1-original plaintiff in respect of the Government securities, excluding the securities mentioned at Serial Nos. 17 to 26 in Annexure 'A* of the plaint and the Government securities other than those mentioned at Serial Nos. 1 and 4 in Annexure 'B' of the plaint. The National Saving Certificates at Sr. Nos. 17 to 26 in Annexure 'A' and Sr. Nos. 1 and 4 in Annexure 'B' were nominated in favour of either respondent Nos. 1 or 2 i.e. Original Defendant Nos. 2 and 3 who are the brothers of the deceased. While disallowing the plaintiff's claim with regard to the aforesaid National Saving Certificates in respect of which the nomination was issued by the deceased in favour of his brothers respondent Nos. 1 and 2, the trial Court by its Judgment and Order dated 29th June 1982, held that the plaintiff was not entitled for the amounts under those National Saving Certificates by virtue of section 6 of the Government Saving Certificate Act, 1959. The said order has been challenged by the appellants in this Appeal.
3. Mr. Thorat the learned advocate appearing on behalf of the appellants contended that the respondents, though were the nominees in respect of the National Saving Certificates at ST. Nos. 17 to 26 in 'Annexure 'A' and at Sr. Nos. 1 and 4 in Annexure 'B', yet they are not entitled to beneficial interest in the amount due on those Certificates as they are not the heirs of the deceased. According to him when the holder of the National Saving Certificates died, the said amount became part of the estate of the deceased to which his heirs alone are entitled. According to him the respondents, as nominees, are entitled only to receive the amount but ultimately the said amount has to be paid to the heirs of the deceased. Mr. Thorat placed reliance on the Judgement of the Supreme Court in the case of Smt. Sarbati Devi and another v. Smt. Usha Devi, reported in : [1984]1SCR992 in which it was held that the nominee of L.I.C. Policy is not entitled to the beneficial interest in the amount of the Policy.
4. Mr. Kapse, the learned advocate appearing for respondent No. 1, contended that the trial Court was right in excluding the aforesaid securities in view of section 6 of the Government Saving Certificates Act, 1959 which commences with non obstante clause. The said provision is made notwithstanding anything contained in any law which would include the law of succession. He, therefore, submits that the Judgment of the Supreme Court in respect of the amount due under the L.I.C. Policy would not be applicable in respect of National Saving Certificates.
5. Section 6 of the Government Saving Certificates Act, 1959 reads asfollows:-
'6. Nomination by holders of savings Certificates.---(1) Notwithstanding anything contained in any law for the time being in force,or in any disposition, testamentary or otherwise in respect of anysavings certificate, where a nomination made in the prescribedmanner purports to confer on any person the right to receivepayment of the sum for the time being due on the savingscertificate on the death of the holder thereof and before thematurity of the certificate, or before the certificate having reachedmaturity has been discharged, the nominee shall, on the death ofthe holder of the savings certificate, become entitled to the savingsCertificate and to be paid the sum due thereon to the exclusionof all other persons, unless the nomination is varied or cancelledin the prescribed manner.'
6. It is no doubt true that section 39 of the L.I.C. Act, which was being considered by the Supreme Court in the Sarbati Devi's case (supra), is not worded in non obstante terms like section 6 of the above Act with which we are concerned in this appeal. However, the reasoning given by the Supreme Court for holding the nominees of L.I.C. Policies to be the persons entitled only to receive the amount without any beneficial interest would, in my view, be equally applicable to National Saving Certificates. There is no doubt that if the policy holder survives the period of policy, it is he who is entitled to receive the amount and not the nominee. Similarly it is open for the policy holder to change the nomination. The nominee is entitled to receive the amount only in case he fulfills two conditions i.e. (i) the nominee does not predecease the holder of the policy and survives the period of policy and (ii) the holder of the policy dies before the policy becomes due for payment.The reference may be made to the observation of the Supreme Court appearing in paragraph 5 of the Judgment where it is observed as follows:
'5. ..... But the summary of the relevant provisions of Section 39 given above establishes clearly that the policy holder continues to hold interest in the policy during his lifetime and the nominee acquires no sort of interest in the policy during the lifetime of the policy holder. If that is so, on the death of the policy holder the amount payable under the policy becomes part of his estate which is governed by the law of succession applicable to him. Such succession may be testamentary or intestate. There is no warrant for the position that section 39 of the Act operates as a third kind of succession which is styled as a statutory testament in paragraph 16 of the Decision of the Delhi High Court in Mrs. Uma Sehgal's case (supra). If section 39 of the Act is contrasted with section 38 of the Act which provides for transfer or assignment of the rights under a policy, the tenuous character of the right of a nominee would become more pronounced. It is difficult to hold that section 39 of the Act was intended to act as a third mode of succession provided by the statute. The provision in sub-section (6) of section 39 which says that the amount shall be payable to the nominee or nominees does not mean that the amount shall belong to the nominee or nominees. We have to bear in mind here the special care which law and judicial precedents take in the matter of execution and proof of Wills which have the effect of diverting the estate from the ordinary course of intestate succession and that the rigour of the rules governing the testamentary succession is not relaxed even where Wills are registered.'
7. From the aforesaid observations of the Supreme Court it is very clear that the entitlement to receive the payment due under the Government Securities like National Saving Certificate as in the case of L.I.C Policies would not create beneficial interest in favour of the nominees. The amount due under the National Saving Certificates shall form part of the state of the deceased and, therefore, will be governed by the law of succession. The only right given to the nominees of the National Saving Certificates is that they are entitled to receive the amount and, in turn, shall be liable to return the amount to those in whose favour law creates beneficial interest.
8. There are two modes of disposition of property , one by transfer inter vivos and the other by succession. Transfer inter vivos can be either for consideration, which amount to sale, or without consideration i.e. by gift. In the absence of transfer inter vivos the property devolves on the heirs by succession either by testate or intestate succession. Unless the nomination can be said to amount to a disposition by Will the amount due on the National Savings Certificates should devolve on the heirs by intestate succession. Since the conditions of nomination cannot be equated to the requirements of a Will as held by the Supreme Court in the above cited case the amount due on the said certificates has to devolve on the heirs of the holder after his death. The nominees in the circumstances are entitled to receive the amount as trustees for the heirs of the holder and are bound to pay the same to the heirs. The right to receive the amount due on the certificates given to the nominees under section 6 of the Government Savings Certificates Act, 1959 would, therefore, only discharge the liability of the Government for payment of the amount due on the National Saving Certificates. The pay-merit to the nominees does not create any beneficial interest in their favour in respect of the amount. The use of the non-obstante clause in section 6 of the Act, therefore, in my view, would not make any difference as the use of those words do not appear to have been intended to change the existing law of succession or to introduce a new mode of succession, but only to facilitate payment of the amount due on the National Saving Certificate without production of succession certificate. If the legislative intention had been to change or to introduce a new mode of succession, in respect of National Saving Certificates it would have been done so more explicitly and expressly.
9. In that view of the matter, the appellants are entitled for succession certificate in respect of the debts listed at Sr. Nos. 17 to 26 in Annexure 'A' and Sr. Nos. 1 and 4 in Annexure 'B' to the plaint also. There is no dispute that the appellants alone are the heirs under the personal law i.e. as per section 8 of the Hindu Succession Act, 1956 and are entitled to equal share in the estate of the deceased as they fall under Class-I of the Schedule under section 8 of the said Act. The appellants, no doubt, exclude the respondents from the heirship as the latter are specified in Class-II of the Schedule who succeed only in case there is no heir of Class-I, like the appellants. The appeal is thus entitled to proceed.
10.In the result, I allow this appeal and direct the issue of the succession certificate in favour of the appellants in respect of debts not only mentioned at Sr. Nos. 1 to 16 in Annexure 'A' and Sr. Nos. 2,3,5 and 6 in Annexure 'B' but also in respect of the debts mentioned at Sr. Nos. 17 to 26 in Annexure 'A' and Sr. Nos. 1 and 4 in Annexure 'B' as well . The appellants shall be entitled to equal share in the amounts which are due on securities listed in Annexure 'A' and 'B' to the plaint on payment of necessary Court-fee Stamps and furnishing Estate Duty Certificate. As there is no other claimant there is no need to furnish any security.
11. The appeal is allowed accordingly and Spl. Civil Suit No. 72 of 1980 is decreed. In the circumstances of the case there will be no order as to costs.
12. Appeal allowed.