Nominations Under Indian Law: Clarifying the Legal Position on Succession and Ownership

Estate Planning & Succession Series

Series 2 | Article 1

Prompted by a Misleading WhatsApp Message

In recent times, a message has been widely circulated across social media platforms and housing society groups, claiming that:

“Nominee of Deceased Member is Absolutely Entitled for Ownership by Transfer in Co-operative Society… No Legal Heirship, No Court Order or Succession Certificate is Required.”

This message, referencing an alleged Supreme Court ruling, goes on to assert that once a nomination is registered, the nominee becomes the absolute owner of the asset to the exclusion of all legal heirs. However, such messages are not only misleading but legally inaccurate. They create a false sense of finality and legal entitlement around the concept of nomination. In fact, the Supreme Court of India has explicitly clarified that nomination is not a mode of succession.

This article aims to:

• Explain the legal nature of nominations under Indian law,

• Distinguish nominations from succession,

• Debunk common myths (including those circulating via such WhatsApp messages),

• Discuss the law laid down in Shakti Yezdani vs. Jayanand Jayant Salgaonkar [(2024) 4 SCC 642], and

• Provide practical guidance on effective estate planning.

What Is a Nomination?

A nomination is a facility provided under various statutes that allows the holder of an asset—such as a bank account, insurance policy, flat in a housing society, or shares in a company—to appoint an individual to receive the asset upon their death.

The nominee, however, is not a beneficiary in the legal sense. The nominee merely acts as a trustee or custodian who facilitates the transmission of the asset, pending determination of the rightful successor under succession law or testamentary documents such as a Will.

The Legal Position: Nomination Is Not Ownership

The misconception that a nominee automatically becomes the owner of the asset has been authoritatively dispelled by the Supreme Court in several cases. Most recently, in Shakti Yezdani v. Jayanand Jayant Salgaonkar (2024) 4 SCC 642, the Supreme Court held that the nomination made in favour of a person under the provisions of the Companies Act or other statutes does not override the law of succession... The nominee only holds the asset in trust for the legal heirs.

This principle has been reiterated in earlier rulings such as:

• Sarbati Devi vs. Usha Devi [(1984) 1 SCC 424]

• Ram Chander Talwar vs. Devender Kumar Talwar [(2010) 10 SCC 671]

In essence, nomination does not confer ownership. It is a mechanism for temporary custody, not a mode of succession.

How It Works for Different Types of Assets

Movable Assets (Bank Accounts, Shares, Insurance Policies)

Nominations ensure that financial institutions have a person with whom they can deal and release funds without delay. However, the final entitlement of these funds must be determined in accordance with succession laws or the deceased’s Will.

Immovable Property (Flats in Housing Societies)

Under many State Co-operative Societies Acts (e.g., Maharashtra Co-operative Societies Act), societies are required to transfer the share certificates in favour of the nominee. However, such a transfer does not confer ownership rights. The nominee holds the property in trust until legal title is established by succession or probate.

Addressing the Misleading WhatsApp Message

Let us now revisit and correct the claims made in the viral message:

WhatsApp Message Claim	Legal Reality
"Nominee is absolutely entitled to ownership"	❌ No. The Nominee is a trustee, not the owner.
"No succession certificate or court order required"	❌ Misleading. These may not be needed for transfer by the institution, but are essential to establish legal ownership.
"Legal heirs have no claim if nomination exists"	❌ Incorrect. Legal heirs retain the right to claim their share through succession.
"Transfer to nominee is automatic and conclusive"	❌ Only for administrative purposes. Ownership still needs to be established through succession.

The legal position is clear: a nominee is not the heir, and nomination does not exclude the rights of legal heirs under succession law.

Practical Implications: What Should You Do?

Prepare a Will

This remains the most reliable way to ensure your assets are distributed according to your wishes. It is advisable to approach a lawyer to ensure that your Will is both legally sound and drafted with clarity.

Update Nominations

Ensure nominations are consistent with the Will, but do not rely on them as substitutes for proper estate planning.

Educate Family Members

Make sure your heirs understand the difference between a nominee and a legal heir to avoid disputes.

Seek Legal Advice

Professional guidance is essential when planning your estate, especially when multiple heirs or valuable assets are involved. Since this article is written by a lawyer, it may be good form but wrong to leave this one out.

Conclusion: Nomination Is Not Succession

Nominations serve a limited but useful administrative function. They are not substitutes for succession planning, nor do they create ownership rights. Relying solely on nominations—without a valid Will or understanding of succession law—can lead to unnecessary disputes and litigation.

The Supreme Court, through Shakti Yezdani and earlier judgments, has settled this issue with clarity. It is now up to individuals and institutions to follow the law—and not the myths.

Need assistance with estate planning or writing a Will? Our team can help you structure your affairs clearly, legally, and in line with your family’s needs.

About the Author

Pranay Mangharam is a founding member of MZD Legal Consultancy.  He leads the firm's private client; technology; and transaction advisory practices. Pranay advises high-net-worth individuals, closely held businesses, and family offices on a range of private matters including their investments, succession planning, transborder holdings, etc. He can be contacted at pranay@mzdlegal.in and +91-9960066868.

About MZD Legal Consultancy

MZD Legal Consultancy is a boutique law firm in Mumbai, India. The firm was established in 2011 and comprises professionally qualified lawyers with varied levels of experience and expertise in specific practice areas. To know more, click here www.mzdlegal.in