In Bangladesh the concept of nomination is not a new one. From the British India to date this system is continued in Bangladesh. This system has been developed through the development of the banking system. The banking business is increasing day by day. Once the saving system in bank was invented and it is seamed that from then the nomination system has been going on for receiving the deposited money from the bank when a depositor dies. If there is no nomination system in the bank deposit, the dependants (wife/children) have to get the court order in their favor proving no other heirs are there to claim the deposited money in case of non-survival.
Next when the insurance industries developed then the nomination system is also brought before the scholars. At one time it was a practice under Common law that a person nominated as a beneficiary under a policy had no right to claim from the depositor as there was no privities between the nominee and the depositor. In the later phases, the attitude towards this issue has been changed, and the nominee whose name is included in the proposal form would be regarded as an absolute beneficiary.172
However, in Indian subcontinent at first in 1873 the nomination system got the legal shape through the Government Savings Banks Act, 1873.173 This Act actually deals with the nomination under the saving bank system. When the provident fund system started to run then the new problem was arisen how the money of a deceased subscriber will be enjoyed by his/her dependants. The new Act is passed regarding the provident fund containing the nomination system in 1925.174 When the insurance industries begun to develop, again a new question was arisen regarding the policy money on the death of the policyholder who will be the receiver of the insured money. To solve the problem, the Insurance Act, 1938 is passed containing the provision of nomination. In 2010 the present Government passed an Act named the Insurance Act, 2010 repealing the previous Act containing the same provision regarding the nomination system. In the post office there is a process for saving the money. There also arises the same question on the savings money. So the Post Office National Saving Certificates Ordinance, 1944,175was passed in 1944. In 2011 the Co-operative Society Act, 2001176 was passed containing a provision regarding the provision of nomination. After gaining independence, to run the Public University there was passed the separate Act for each University. The Dhaka University Order 1973 and the Rajshahi University Act, 1973 contain the same provision regarding the nomination system to maintain the University Provident fund. It may be very clear to the all about the nomination system if any practical issue is discussed in this study. As in the abovementioned chapters the concept of nominee and legal heir, and the position of the nominee and legal heir under the statutory laws and Muslim law of succession have been discussed.
6.2 Practical Approaches of the Study
The nomination system is being changed from era to era. In the first era the notion was that nominee has no right over the nominated property. In the later this is changed and it is developed that nominee is the absolute beneficiary. There are several case laws regarding this notion in different countries. In ReEngelbach’s State, Libbetts v. Engelbach, daughter nominated her father as a beneficiary in a life policy. The court held that the father is an absolute beneficiary under the policy. Similarly, in Re Schebsman Deceased, the court declared the nominee as an absolute beneficiary. The principle in Re Schebsman has been followed by the Supreme Court of New South Wales in Cathe’s v Commissioner ofStamp Duties in which the husband nominated his wife in a life policy and she absolutely received the benefits from the policy upon the demise of her husband under the court’s order that the wife of the deceased is an absolute beneficiary.177At present there are several countries that have passed Acts to preserve the interest of the legal heirs. In the western countries the above concept of nomination is present. Their law of succession is determined through the will, if there is a will to describe that who are the legal heirs, nominee has no right over the deposited property but if there is no will, the nominee is the absolute beneficiary. In Bangladesh there is no scope to determine the legal heir through the will. So the concept of the above case is upheld in Bangladesh. There are several laws which are aforementioned to maintain the nomination system like other countries. But there is no country except Malaysia, which pass the Act maintaining the nomination system without violating the Muslim Shariah law of succession.
In Malaysia the Insurance Act was passed in 1996, by virtue of ss. 165 and 166 of which the nominee in a policy would be regarded as an absolute beneficiary but the nominee may be appointed only the spouse or child and in the absence of these two, the parents of the policyholder but this provision is applicable only for the non-Muslim policyholder. In that very Act s.167 provides that the nominee of a Muslim policyholder is regarded as a mere executor who may not be an absolute beneficiary.178 The concept of nomination is being changed in India. The Indian Supreme Court ruled that a nominee may not necessarily be the beneficiary of a deceased persons proceeds, a nominee is simply a custodian for most assets, except in case of equities.179 Here some practical cases are studied through the question got from the people by interviewing.
6.2.1 Case Study
If any person asks, “What are the rights of a nominee over an asset? Does it become his/her when the owner dies?” Then the very questioner will be counter-asked that about the nomination of which country, he/she wants to know.
This system is different from country to country. In Bangladesh perspective the answer of the above question is that the nominee is the absolute beneficiary of the deposited asset. And he/she becomes the owner of the property.
In India perspective the answer may be two types. Some courts say that the nominee is not an absolute beneficiary. A nominee is like a trustee who basically takes care of the assets left behind by the owner and is obliged under the law to distribute them among the legal heirs of the deceased. He cannot assume ownership by virtue of the death of the original owner unless he is a legal heir. And even then, he will have to get a succession certificate from the court stating this fact. If there is a will, it has to be duly authenticated probated, in legal parlance by the court.180 Other courts say that the nominee is the absolute beneficiary of the asset.
In the western countries if there is no will regarding the deposited money to any person except the nominee, the nominee will be the absolute beneficiary and owner of the nominated asset. In Malaysia if the policyholder (in case of insurance) is a Muslim the nominated property will be distributed among the legal heirs after receiving the money from the insurance authority by the nominee.
It is noticeable that the same law governs the insurance company of Bangladesh and India they have developed it but Bangladesh there is no development in this system.
6.2.2 Case Study-1
In a case the question was as follows-
“I want to know that my mother’s mother (Nani) died and left money in her bank account and she made the nomination of her bank account and I am the nominee, but I am not her legal heir because she has four children. In such case as a nominee am I the owner of the money?”
If this case is occurred in Bangladesh, the nominee is the absolute beneficiary under the Government Savings Banks Act, 1873. The legal heirs will be excluded by the nominee though he is not a legal heir of his Nani.
In Indian perspective it is difficult to solve the problem because, there, the several high courts have ruled differently on this issue. In a case the Calcutta high court on 22.02.2007 ruled that the nominee cannot be the sole claimant of the insured sum in the presence of other dependants. The nominee can only withdraw the insured sum but he/she is not its sole owner. After withdrawal of the amount, the nominee is legally bound to distribute the amount among all the legal heirs.181
6.2.3 Case Study-2
“What is the validity of the nomination made by a husband in favor of his wife before their divorce if the husband dies after divorce without changing his nomination? The deceased husband also left Children.”
In Bangladesh the wife is the absolute owner of the property whether she is a divorcee or not, it is not a major fact. In Bangladesh all the laws regarding the nomination provides that nominee may not be the legal heir but he/she is the absolute beneficiary except the University provident fund, the University provident fund provides that in the presence of the subscriber’s family, none will get the pension money. In the family the divorcee is not a member, so she is not entitled to receive the money.
In India, various courts’ decisions have upheld that a divorce decree in no way affects the rights of a divorced spouse to be the beneficiary of the other spouse’s life insurance policy. A nominee is only meant to sign a valid discharge on the part of the legal heirs of the insured. So, in case a wife who has been designated as a nominee under the life insurance policy gets a decree of divorce from the husband (the insured) and the nomination is not changed, then she is still entitled to the proceeds of the claim. Also, such a nominee can give a valid discharge of the death claim to the life insurance company. The legal heirs of the deceased, however, can contest the ownership of the claim proceeds.182
6.2.4 Case Study-3
Another question was asked,
“My father had nominated me for his Bank saving account and died of heart attack, I’ve the original copy of the nomination form but now the bank is asking for my other 3 brothers’ signatures and making my case more complicated and not transferring my fathers fund to my account. Are my brothers’ signatures required?”183
If it happens in Bangladesh, whether the requirement of the authority is wrong or right, it is difficult to say because the laws of the nomination do not support requirement. But for more security the demand of the authority can be considered. All the laws of Bangladesh regarding nomination provide that only the nominee will receive the deposited money. No succession law will be applicable in this regard. So it can be said that the legal heirs have not to submit their consent to the authority because they have no right over the nominated property. The authority can do one thing that when they deliver the money to the nominee can take a security bond as in future none can demand the insured money.184
In India the High Court of several provinces and the Supreme Court has declared that the nominee is a mere custodian of the deposited money and after receiving the money the nominee is legally bound to distribute the property among the legal heirs of the deceased, there the authority can ask the nominee to take signature of other legal heirs of the deceased. If this happens in Company of India the authority can not require the signature of the other legal heirs because the Company Act it is provided that-
Notwithstanding anything contained in any other law for the time being in force or in any disposition, whether testamentary or otherwise, in respect of such shares in, or debentures of, the company, where a nomination made in the prescribed manner purports to confer on any person the right to vest the shares in, or debentures of, the company, the nominee shall, on the death of the shareholder or holder of debentures of the company or, as the case may be, on the death of the joint holders become entitled to all the rights in the shares or debentures of the company or, as the case may be, all the joint holders, in relation to such shares in, or debentures of the company to the exclusion of all other persons, unless the nomination is varied or cancelled in the prescribed manner.
6.3 Present Status of Nominee in Bangladesh
In Bangladesh the statutory laws are upheld and the Muslim law of succession is violated by the statutory laws. At present the nominee is superior to the legal heir. From the above observation it is clear that in the presence of a nominee the legal heir has no right of enjoyment of the deposited money, it may be in saving bank account or provident fund or post office or insurance policy. We are in the middle age of the nomination system. To date we have not been able to deny the British. India and other countries that were the colonies of the British have overcome the British system but Bangladesh is under the colonial system and from 1873, more than a century Bangladesh violates the Muslim personal law of succession. The English nomination system is existed in Bangladesh which is contradictory with the Muslim personal law.
From the British India period in Bangladesh the Muslim law of inheritance has been violated through various statutory laws. Which statutory laws violate Muslim law; laws relating to nomination system are some of them. In Pakistan period the then Government also passed law contradictory with the Muslim Shariah law. From studying the history it is seamed that actually the Pakistan state was emerged for the Muslims and to protect their rights and for running the state activities according to Shariah law. But in practical approach is showed that the Government did not do so, moreover the government ran the state activities in using their own benefit. After gaining independence of Bangladesh, from 1971 to today the country has been ruled by various governments. Some of them had taken the steps to Islamize the country thus those very governments included theBismillahir Rahmanir Rahim in the constitution and inserted a new article to recognize the Islam as a state religion and from the history it is known that about the last of 1980s the then government promulgated a rule declaring that it is sin to worship with flower-offering to the Shahid Minar and to draw the Alpana(picture) in various festivals. But it is a matter of sorrow that they were only busy to do those things which help them to take the public sentiment in favor of them. They never ran the country according to their speech. If so, they did not amend the laws which are against the Muslim shariah law. The present government has enacted a new law regarding the insurance industry to repeal the Insurance Act, 1938, but there is no change in the nomination clause. The same provision is taken only translated it from English to Bengali. Now my humble suggestions to the Government and policyholders are as follows:
- As Bangladesh is a Muslim community based country, no laws of Bangladesh should be contradictory with the Muslim personal law. In this regard the government should amend those laws that are contradictory to the Muslim personal law.
- The Government should amend the laws regarding nomination system as soon as possible to uphold the Muslim personal law because the nomination system is fully contradictory with the Muslim law of succession. Another thing is that the same law exists in India and Bangladesh, if in India the system of nomination is changed our Government should amend the law to keep balance.
- Besides the nomination system is a curse for the widow and the minor dependants of the deceased. Most unfortunate thing to happen to a woman is to become a widow and a child is to become parentless. Still worst is if she or the child is not nominee in Policies, Provident Fund, Bank Account and other welfare laws and Co-operative Society etc. In India, 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. The widow has to fight a legal battle to get the money due to her.185And the minor has to sit on the road. It is a common phenomenon in our country. To remove this bad system the Government should enact a new Act or amend the existing law regarding the nomination system.
- The parliament has the power to repeal or enact the laws. Section 56 of the Insurance Act, 2010, read as “Nomination by policy-holder (1) The policy-holder of life insurance on his/her own life may, when effecting the policy or at any time before the policy matures for payment, nominate the person or persons to whom the money secured by the policy shall be paid in the event of his/her death.”
- There is no law which defines the word nominee, the Government should insert the definition of the nominee in the General Clauses Act or in any Act which provides an acceptable definition of it.
- Not only under the Insurance Act but under all Acts relating to the nomination system, the nomination entails payment by the concerned authority to the nominee to obtain a complete discharge. Once the amount under the Policy is paid to the nominee, the nominee would hold it in Trust or the Estate because under the above mentioned Acts, there are no legislative provisions that the nominee would obtain any other right. But in Bangladesh the practice is that the nominee is the absolute beneficiary and he/she (nominee) excludes all other legal heirs of the deceased which is absolutely against the Muslim law of succession. The Muslim law of succession provides that according to the law of inheritance the property of the deceased will be distributed among his/her legal heirs after deducting the payment of debt and funeral expenses and will, if any.186So the government should amend these heinous Acts which are against the Muslim law of succession.
- The policy makers should follow other countries’ law who follow the Muslim Sharia law of succession regarding the nomination system.
- The government should take a policy that if the nominee is not the legal heir he/she will be a legatee of the nominated property, if so, both the legal heir and the nominee will not be victimized. For saving the nominee’s interest the above thing is must. By doing so, the government can save the nominee’s interest because when a nominee does not get any benefit from the nominated property; he/she can deny receiving the money from the authority or can unnecessarily delay receiving the money and sometimes may corrupt to be benefited from the nominated money.
- The government should find outthe way of protecting the legal heirs’ right of inheritance from the nomination.
- The government should advertise the nomination system to make the people conscious about the issue as if the depositor did not nominate a person who is not a legal heir. At present most of the people who appoint the nominee they don’t know well and also not aware about the nomination system. Most of the depositors appoint the relative (not a legal heir) who is educated and know the system of nomination because they believe that if he/she is the nominee, the dears will be benefited and not to be harassed by the concerned authority. But reality is that when the depositor died then the very nominee is reluctant to handover the money to the dependants of the deceased.
- The persons who know the nomination system well should aware the people about it and make the movement against the policy makers to amend the existing laws regarding the nomination system.
- The scholars should discuss with the legislative bodies and policy makers about the bad effect of this very cruel system and should write in papers on this issue.
In very recent the Muslim law has lost its Constitutional Status. Before the 15thAmendment of the Bangladesh Constitution, Preamble and article 8 of it provide that the fundamental principles of state will be absolute trust and faith in the Almighty Allah, nationalism, democracy and socialism meaning economic and social justice. Also article 8(1A) provides that Absolute trust and faith in the Almighty Allah shall be the basis of all actions.187 Though the Constitutional Status of Muslim law has been lost but the statutory status of it has yet been present. Bangladesh adopted the Muslim Personal Law (Shariat) Application Act, 1937188which provides for the application of Muslim Personal Law in all matters relating to Muslim Family Affairs. A reference may be made to the case of Hefzur Rahman Vs Shamsun Nahar Begum,189 in which a question of maintenance of a divorced Muslim woman was decided by the Appellate Division of the Supreme Court of Bangladesh. Justice Mustafa Kamal (then a Judge of the Appellate Division) has quoted, in his judgment, section 2 of the Muslim Personal Law (Shariat) Application Act, 1937, 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.
So in Bangladesh the laws against the Muslim law of succession can not be prevailed. If so it will be contradiction with the existing law and also will be the violation of the Muslim law of succession. Besides the Muslim law of succession is the ordinance of Allah Himself. So it can not be violated by the statutory law. Because the Fara’id (inheritance) is Allah’s set limits. What Allah has allotted for the heirs, according to the degree of relation they have that fixed share to the deceased, and their degree of dependency on him. Therefore, do not transgress or violate them.190 And whosoever disobeys Allah and His Messenger, and transgresses His (set) limits, He will cast him into the Fire, to abide therein; and he shall have a disgraceful torment.191 This is because he changed what Allah has ordained and disputed with His judgment. Indeed, this is the behavior of those who do not agree with what Allah has decided and divided, and this is why Allah punishes them with humiliation in the eternal, painful torment.
Therefore the nominee can not exclude the legal heirs. And nominee can never be superior to the legal heir.