A nominee is only a caretaker of the assets who will hold the asset as a trustee and will be legally bound to transfer it to the legal heirs
My brother passed away in March 2016 leaving me, one brother and sister as legal heirs. It came to our knowledge that my brother had nominated the REC (Rural Electrification Corp. Ltd) Capital Gains Bonds (from proceeds of selling his property) to third parties, without our knowledge. The bonds matured in 2019. As legal heirs to enforce our rights, what is the line of action we should take against these third parties? Also, if my sister is not interested in a legal case, can I proceed singly against these third parties by taking her NOC?
We are assuming that your brother died intestate, which means without leaving behind a will. In such a case, the property of your deceased brother will devolve upon his class I heirs as per the Hindu Succession Act, 1956. In case there are no class I heirs of the deceased, his property will devolve upon class II heirs. In your situation, as informed by you, the only legal heirs are yourself, your brother and your sister, who will have equal rights over the deceased brother’s property.
Also note that normally a nominee is a trustee, and not the owner of the assets. In other words, a nominee is only a caretaker of the assets who will hold the asset as a trustee and will be legally bound to transfer it to the legal heirs. Having said so, in certain cases such as insurance, a nominee may be entitled to the insured amount. Therefore, it is advised you may first obtain a succession certificate and thereafter put a claim against the third parties in the court having competent jurisdiction.
For your further query, after taking a no objection certificate or affidavit from your sister recording that she authorizes and has no objection for you to proceed against the third parties, you may proceed against the third parties and also inform REC not to transfer the amount to the nominee on record.
One also needs to ascertain whether your sister will merely give her no objection for you to proceed against the third parties or she intends to release her rights, title and interest from the estate of the deceased brother. A suitable document should be prepared after considering the aforesaid fact.
Aradhana Bhansali is partner, Rajani Associates. Queries and views at firstname.lastname@example.org