Comparison between Nominee and Legal Heir
The Islamic law of inheritance formed a unique and dynamic chapter in the history of mankind. It proved a landmark in the annals of legal and social reform. Since its principles are based on divine knowledge and wisdom and not on human knowledge and conjecture, it is far from any remote possibility of any defect or shortcoming.123 But the statutory law is the conjectures of human being, there are a lot of mistakes in it. So, personal law can not be violated by the statutory law.
The previous two chapters made a clear concept of nominee and legal heir. Now question is that between these two, legal heir and nominee, who is superior. What is the status of nominee and legal heir under both the statutory law and the Muslim personal law? Are they same in the light of Islamic law and statutory law? To answer this question there are many opinions given by the scholars.
4.2 Who is Superior in Statutory Laws
As is known to all that if there arises any contradiction between statutory law and personal law, the statutory law will prevail. Personal laws will have lower status in the presence of the statutory laws on the same issue. In personal laws there is no direct concept of nomination. It is said in Muslim law that all the heirs have the right on the property of the deceased person. Never any heir can be excluded from his/her right of inheritance.
According to the statutory laws the nominee is superior to the legal heir. It has been noticed from a long since that in bank deposit or insurance policy amount or provident fund the nominee receives the whole portion of the nominated property124 if there is no specific portion referred to the nominee in the declaration of the nomination paper. Only the university provident funds provide that in the presence of the family of the very subscriber no nominee out of the family members will get the nominated money.125 From the University provident fund rules it has been learnt that the legal heir is superior to the nominee. In the Rajshahi University Act there is a lacuna that the predeceased daughters’ children will be excluded from the pension money because in this Act it is said that the family of a subscriber will consist of widow/widows, children, predeceased son’s widow or widows and children.
The Provident Fund Act provides that the nominee will receive the amount, she/he (they) exclude(s) all other persons viz- legal heirs. This Act upholds the nominee’s superiority. Government Savings Banks Act and Cooperatives Societies Act also provide same thing like provident fund. But, it is not correct. All the Acts provide that nominee will receive the money and no succession law will be applicable there in this ground. Our jurists interpret it as nominee will be the absolute beneficiary of the deposited money to him or her. To avoid this interpretation, we may interpret it as follows.
To receive the money does not mean that the nominee will be the absolute beneficiary of it. Now question may arise why the Acts contain the provision of nomination. The reason may be behind that if the provision is not contained in the Act, then all the legal heirs have to go to the concerned authority for receiving the amount. The very authority will face a lot of problems to pay the money. To whom the authority pays it. To save the authority from a huge problem this provision is basically included in the Acts.
4.3 Who is Superior in the Muslim Personal Law
It is aforesaid about the nomination under Muslim law.126 In Muslim law the legal heirs have the absolute right over the deceased’s property. But when a person makes any will according to the Quran and Sunnah over that property, the legal heirs have no right. Again if any person makes Hiba (gift), also over that property no heir can claim the ownership. Though some say that nomination means to make gift to the nominee,127 it has been criticized as in the case of the gift the gifted property must be transferred immediately, there is no condition but in the case of nomination, there is a condition that if the subscriber died only then the nominee will get the nominated money. So nomination does not amount to a gift. In Islamic law all the heirs are determined by the Quran. If any heir is deprived, it must be the direct violation of the Quranic verses. Allah said: Allah has allotted for the heirs, according to the degree of relation they have to the deceased and their degree of dependency on him. Therefore, do not transgress or violate them.128
Bangladesh adopted the Muslim Personal Law (Shariat) Application Act, 1937129which provides for the application of Muslim Personal Law in all matters relating to Muslim Family Affairs. In a case, Justice Mustafa Kamal130 has quoted section 2 of the said Act, which is as follows:
Let the will and testament be fair and free of any type of harm, without depriving some rightful heirs from all, or part of their share, or adding to the fixed portion that Allah ordained for some heirs. Indeed, whoever does this, will have disputed with Allah concerning His decision and division.131
In the case of nomination it is noticed that the nominated money is neither the property of a gift nor the property of a will. So, no legal heirs can be excluded by the nominee from their right of inheritance. In the light of Quran and the above judgment, we can reach in a decision that in Islamic law the legal heirs are superior to the nominee. Nominee can never exclude the legal heirs. If so done by the nominee through the statutory laws it will be a gross violation of Muslim law of succession. The status of the legal heir can not be demolished by the nominee. Nominee is none but a mere executor of the nominated property.
The High Court of Karachi in Pakistan observed that, nominee in a life insurance policy has an absolute right over the amount of the benefits.132 But the decision of the High Court of Karachi was overruled by the Supreme Court of Pakistan inAmatol Habi vs Musarrat Parveen.133 In this case it was held that the nomination in a policy does not constitute a gift or a bequest, and, therefore, nomination shall not deprive the legal heir of the nominator who may be entitled there to benefits under the law of the Mirath as applicable. Under Islamic law, a nominee should act as a trustee and is under an obligation to receive the benefits over the policy on behalf of the heirs of the deceased and distribute the benefits among the heirs of the deceased in accordance with the principles of Mirath and Wasiyah. The nominee in a life insurance contract is not an absolute beneficiary but a mere trustee and the nominee may only receive a portion of the benefits if he or she is one of the legal heirs of the deceased policy holders.
The nomination shall constitute neither a gift nor an ownership over the benefits of the policy or deposit but only mere trust in which the nominee is under an obligation to receive the benefits from the policy or deposit and distribute them among the legal heirs of the deceased person.134 If the nominee is given an opportunity to enrich him/her under the policy/deposit absolutely this may deprive the legal heirs of the policyholder and is contrary to the principles of al-Mirath.135
From the Qur’anic injunctions136 and further illustrations it is submitted that a nominee is a trustee, and, therefore, a nominee because of nomination shall not have any right to benefit trust, but he should be under an obligation to hold the trust properly and render it back to the right beneficiary accordingly without demanding any interest over the trust.137 Relying on the above arguments and authorities from the Holy Qur’an, it is said that nominee is inferior to legal heirs.138
Mohd. Masum Billah139 says that in an insurance policy [or bank deposit or provident fund] a nomination is necessary regardless of whether the nominee is among the legal heirs of the nominator or from outside for the purpose of future security of the benefits over the policy and also for the fair distribution of the benefits among the right beneficiary.
4.4 The Status of Nominee and Legal Heir in Bangladesh
Almost all the Muslims of Bangladesh are governed by the Hanafi law of Sunni school. The inheritance of them is also governed by this law except some cases where the statutory laws intervene to the Muslim law of Succession. But there is no law specifically regarding nomination that nominee is the absolute beneficiary of the deposited amount. To study the Bangladeshi law of nomination in different statutes it can be said that nominee is superior to legal heir in Bangladesh. In all cases bank, insurance, cooperatives society, provident fund, the nominee receives the money from the concerned institution and he/she enjoys it absolutely. The same law governs the bank deposit of India and Bangladesh and till 2008 the insurance company of both the countries is also governed by the same law, but it is a matter of sorrow that though India has developed the idea through case-laws but Bangladesh has nothing to go ahead in this matter. The reason being we are not aware about our rights and no case law in this regard was reported. We are busy to meet up the hunger which law gives which rights and which law curtails which rights is not our headache. The government passes law in the parliament for their own benefit. If any person goes to the court, the ruling must come. But there is none till today who has gone to the court on this issue. Any person can be the nominee of the subscriber, whether he is a legal heir or not. All the laws of Bangladesh provide that there will be a nominee to take the advantage from the concerned authority on the death of the subscriber. But only the University Provident Funds of Bangladesh respect the legal heir. They provide that in the presence of the subscriber’s family no person out of the family members will be the nominee. Through interviewing the insured companies’ officer, it is learnt that some insurance companies of Bangladesh verbally take the step in this regard that no policyholder can nominate any person except the wife or husband or children of the policyholder if they are present. In the absence of them, parents of the policyholder will be the nominee. If there is none among them, the siblings will be the nominee through the oath of affirmation of both the sides. If any subscriber appoints his/her parents or siblings as nominee before marriage, some companies oblige the policyholder to change the nominee after the marriage of him/her. But it is oral, no hard and fast rule is made in Bangladesh regarding this issue.
4.5 The Status of Nominee and Legal Heir under Foreign Laws
Almost all the countries of the world that are not under the Muslim law provide that the nominee is superior to the legal heir. England, Australia, as well as India are of the same view with regard to the legal position of nominee. By virtue of S. 166(1) of The Insurance Act, 1996 of Malaysia, the nominee in a policy would be regarded as an absolute beneficiary, but the nominee may be appointed among some limited persons related to the policyholder. Only the spouse or child and in the absence of these two, the parents, of the policy holder may be appointed as a nominee.140 S. 167 of The Insurance Act 1996 of Malaysia provides that the nominee shall not be the sole beneficiary over the policy but a mere executor.141 It clearly provides the position of a nominee nominated by a Muslim policyholder in an insurance policy.142 To the same effect in 1973, the National Council forMuslim Religious Affairs, Malaysia issued a Fatwa on succession and will, in which it was related that in a life policy, a nominee is nothing more than a trustee whose obligation is to receive the benefits over the policy and distribute them among the beneficiary of the policy holder according to the principle of al–Mirathand al–Wasiyah.143
Most people in India believe that nominee is a rightful person to receive and keep money. But the position in law is otherwise. A nominee is the person named in the proposal form to whom the Insured company or provident fund pays the assured sum in case of death of the assured.144 Though legally nominee receives money as ‘Trustee” as opposed to a beneficiary, yet in most cases, nominees are reluctant to hand over money to wife and family due to one reason or other.145 Nomination and Labor Welfare Laws Para 61 of the employees Provident Fund Scheme, 1952 and Section 6 of the Payment of Gratuity Act, 1972 of India like the University provident funds of Bangladesh provides that the right of nomination is restricted, i.e. in the case of an employee having no family, the nomination can be made in favor of any person. However, as soon as there is a member in the family, the nomination in favor of an outsider becomes void and fresh nomination in favor of any member of the family has to be made. Also it is pertinent to note that while an employee has family, nomination in favor of an outsider (including Mother, Sister and Brother) is void.146 But Section 8 of the Public Provident Fund Act, 1968 of India says that all amount standing in the credit shall go to nominee whether a member of family or not. Where there is no nomination, the amount shall be payable to his legal heirs.147
The Supreme Court held that a mere nomination made under Section 39 does not confer on the nominee any beneficial interest in the amount payable under the life insurance policies on the death of the insured. The Court further observed that the nomination only indicates the hand, which is authorized to receive the amount.148
Of India, Gujarat High Court in Atmaram Mohanlal Panchal v. Gunavantibenheld that a nominee is merely a receiver of the policy amount and does not get any title to the policy amount.149
The Hon’ble High Court of Bombay in Harsha Nitin Kokate Vs. The Saraswat Co-op. Bank Limited & Others,150 (2010) held as follows:
“A reading of Section 109A of the Companies Act and 9.11 of the Depositories Act makes it abundantly clear that the intent of the nomination is to vest the property in the shares which includes the ownership rights thereunder in the nominee upon nomination validly made as per the procedure prescribed,, as has been done in this case. These Sections are completely different from Section 39 of the Insurance Act which require a nomination merely for the payment of the amount under the Life Insurance Policy without confirming any ownership rights in the nominee or under Section 30 of the Maharashtra Cooperative Societies Act which allows the Society to transfer the shares of the member which would be valid against any demand made by any other person upon the Society. Hence these provisions are made merely to give a valid discharge to the Insurance Company or the Cooperative Society without vesting the ownership rights in the Insurance Policy or the membership rights in the Society upon such nominee…”
The world view about nominee is totally different from the Malaysia’s view and some court’s decision of India. In India recently some courts have made different ooinion in different cases on the demand of the parties. Recently the Indian Supreme Court in Shipra Sengupta vs. Mridul Sengupta & Others151 case decided on 20/08/2009 held that –
“In view of the clear legal position, it is made abundantly clear that the amount in any head can be received by the nominee, but the amount can be claimed by the heirs of the deceased in accordance with law of succession governing them. In other words, nomination does not confer any beneficial interest on the nominee. In the instant case amounts so received are to be distributed according to the Hindu Succession Act, 1956.” It is notable that in this case dispute was between widow and mother of diseased who was a bank employee and since he had joined the service before his marriage, he had nominated his mother as nominee. His widow filed an application under section 372 of the Indian Succession Act, 1956, in which she claimed that she was entitled to her share of insurance, gratuity, public provident fund etc. etc. Her claim was based on the principle that any nomination made by her husband prior to his marriage would be automatically cancelled after his marriage…”
The different High Courts and the Supreme Court of India provide the ruling on the issue that whether the nominee or legal heir is superior, even after that there exist the problem on this matter. Supreme Court has given the Ruling in 2009 that the nominated money will be distributed among the heirs under the Hindu Succession Act, 1956 and Bombay High Court in 2010 ruled that nominee will be the absolute beneficiary. How it is possible? In same country there exist two systems on the same ground. So it can be said that India is in haphazard situation on this issue. After passing the Insurance Act, 1996, only Malaysia is in standing point of view to this issue.
In the statutory laws, never the legal heir will be superior to the nominee at this level in which stage Bangladesh is running its activities until there is enacted a new law or any ruling from the Supreme Court is provided with this regard. It is the gross violation of Muslim law of succession that in the presence of the Quranic heirs, non heir person will take the whole property. As we are Muslim so we should be aware about the matter and to make the people aware on this issue. Muslim law of succession is the most excellent law of the world, there is no doubt in this matter. Rumsey, the European annotator of the book Sirajiyya observes,152
“The Muhammedan law of inheritance comprises beyond question the most refined and elaborate system of rules for the devolution of property that is known to the civilized world”.
If this Quranic law is violated thus making the statutory law, what the consequent of other laws will be is unknown.