SHAKTI YEZDANI & ANR. versus JAYANAND JAYANT SALGAONKAR & ORS.

SHAKTI YEZDANI & ANR. versus JAYANAND JAYANT SALGAONKAR & ORS.

Nomination under Section 109A of the Companies Act, 1956 and Bye-law 9.11 of the Depositories Act, 1996 does not confer absolute beneficial ownership of shares or securities on the nominee to the exclusion of legal heirs; the vesting and non-obstante language must be read in context and operate for the limited purpose of enabling companies/depositories to deal with the securities immediately after the holder's death and to protect them from multiplicity of claims, but succession to the securities remains governed by the applicable succession laws.

Parties
Appellants: Shakti Yezdani & Anr.; Respondents: Jayanand Jayant Salgaonkar & Ors.
Jurisdiction
India
Judgment Date
14 December 2023
Procedural Posture
Civil Appeal / Final Judgment
Outcome
Appeal dismissed
Legal Topics
Nomination of Shares, Nominee Rights, Vesting of Securities, Non Obstante Clause, Interaction Between Nomination and Law of Succession
Company Law Succession Law Securities Law Statutory Interpretation Nomination of Shares Nominee Rights Vesting of Securities Non Obstante Clause +1 more

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Parties

Shakti Yezdani & Anr.

Appellants

Jayanand Jayant Salgaonkar & Ors.

Respondents

Procedural Posture

Civil Appeal / Final Judgment

Legal Issues

  1. 1 Whether a nominee appointed under Section 109A Companies Act, 1956 read with the Bye-laws under the Depositories Act, 1996 is entitled to beneficial ownership of shares/securities to the exclusion of persons entitled under succession law
  2. 2 Whether a nominee holds shares/securities absolutely or in trust/for the legal representatives entitled under succession law
  3. 3 Whether a testamentary bequest under the Indian Succession Act, 1925 in respect of shares/securities supersedes nomination under Section 109A and Bye-law 9.11

Ratio Decidendi

Nomination under Section 109A of the Companies Act, 1956 and Bye-law 9.11 of the Depositories Act, 1996 does not confer absolute beneficial ownership of shares or securities on the nominee to the exclusion of legal heirs; the vesting and non-obstante language must be read in context and operate for the limited purpose of enabling companies/depositories to deal with the securities immediately after the holder's death and to protect them from multiplicity of claims, but succession to the securities remains governed by the applicable succession laws.

Court Disposition

Appeal dismissed

Orders

  • Appeal dismissed without any order on cost