Nominee or heir: Who is entitled to receive the money of the deceased?

Currently, the legal provisions concerning the nominee to a bank account are regulated by the Bank Company Act 1991. According to this law, if any person is named as a nominee by an account holder, the bank's obligation is to disburse money to that nominee, notwithstanding anything contained in any other law, will, or succession.

Generally, there is an assumption among the people that if any person appoints anyone as their nominee to the bank account, the nominated person will be entitled to the whole amount deposited in the said account after the demise of the account holder. 

This is because of the Government Savings Banks Act of 1873, wherein a nominee is treated as an absolute owner of the deposited money in the event of the death of the depositor, depriving rights of the legal heirs. 

In many cases, people appoint their beloved ones as nominees to their bank accounts instead of their legal heirs, ignoring successors and blood relations, thinking that this nomination will work as their will and the nominated person will be the absolute owner in their absence. 

Moreover, financial institutions also distribute money to the nominee of the deceased account holder, relying on the general assumption that whenever an account holder leaves any amount in the bank account, such amount will go to the nominee directly.

However, the scenario changed in 2016 when a Division Bench of the High Court Division of the Supreme Court of Bangladesh in Civil Revision No. 1682 of 2015, regarding the ultimate ownership of the deposit of the deceased shonchoypotro holder, observed that the nominee is merely a trustee, whose obligation would be to distribute the money of the deceased account holder among his or her legal heirs. 

This observation of the Apex Court of the country spread widely through newspapers and social media, without asserting the exact implication of the Court's observation, which led to a chaotic situation. 

General people, account holders, depositors, bankers, and even many legal practitioners initially thought that the nominee would not receive money from the bank; rather the successors of the deceased account holder would be eligible to receive money from the bank. 

Apart from this, many people tried to obtain a succession certificate to establish their rights and submitted it to the bank, claiming they are entitled to receive money instead of the nominee. 

Thus, the question arises, has the relevant section of the Bank Company Act 1991 become redundant? And how can a bank go beyond the direction of the account holder and how should they deal with such a situation?

Generally, the bank has no legal requirement to pay the legal heirs, where a nominee is available. A bank's duty is to follow the instructions and directions of the account holder. Section 103 of the Bank Company Act 1991 overrides the laws of succession and directs banks to pay the account holder's nominee. 

The plain reading of this provision of law clearly states that after the death of the individual depositor or joint depositors, any person or persons nominated as nominees to any bank account shall attain all the rights that the said individual depositor or the joint depositors had on that deposit, and every other person shall be deprived of those rights notwithstanding anything contained in any law or any will or any kind of documentation regarding the allotment of properties. 

The words "any kind of documentation regarding the allotment of properties" are used in the broader sense and include succession certificates. Thus, in the presence of a nominee in any bank account, no heir can claim any money from the bank, and the bank is under an obligation to pay the money to that nominated person only.

This law further specifies that when a banking company has made distributions in accordance with this section, all its obligations in respect of such deposits shall be deemed fulfilled. 

Consequently, a bank will be discharged from its responsibility concerning these deposits when it pays the person the account holder nominates. Moreover, this section mentions in its proviso that the right or claim of another person against the person(s) to whom the bank has paid the deposited money shall not be prejudicial to the provision of this section. 

Accordingly, if the heirs or any other person have any claim against such money, they may institute legal proceedings against such nominees to recover their rights. 

Now, let's come to the point of how the decision in Civil Revision No. 1682 of 2015 maintains consistency and relevancy with the provisions of the Banking Companies Act 1991. Actually, this observation of the Apex Court of Bangladesh insofar as it holds the position that a nominee is a trustee for the money of the legal heirs is the correct proposition of law, though it is still sub-judice in the Appellate Division of the Supreme Court of Bangladesh. 

It reiterates the provision of the Muslim Personal Law Act, 1937, wherein the legal heir's ownership over the deceased account's money has been spelled out, as well as reinforces the proposition that the bank is under an obligation to pay the nominee, who will then, as trustee, deal with the deposit in the appropriate manner. 

It can be explained in the way that the issue of the nominee of a bank account comprises two aspects. Namely, the duty of the bank and the duty of the nominee. The bank's duty is to pay money to the nominee, and the nominee's responsibility is to act as a trustee of such funds and to distribute them as per succession. 

Therefore, the concerned Judgment and Order in Civil Revision No. 1682 of 2015 does not in any manner affect the liability of the bank to pay the money to the nominee, and the fact that a nominee is a trustee for the legal heirs does not mean that the bank is prevented from paying the deposits to the nominee.

Thus, if the account holder nominates someone in any bank account, after the demise of such a person the duty of a bank is to hand over the deceased account's money to the nominee, whose responsibility is to allocate the money among the legal heirs. 

If the nominee does not perform their obligation, the legal heirs have the liberty to institute legal proceedings against them to recover their rights. The duty of distributing the money among the legal heirs is not shifted to the bank. Once the bank makes the disbursement to the nominee, it has fulfilled its obligation. 

Similarly, a financial institution is not usually obliged to distribute money in accordance with the succession certificate. If the account holder did not appoint any person in their account, the scope of obtaining a succession certificate and submitting it to the bank becomes relevant. Only in such cases can a bank accept a succession certificate and distribute money according to it.

Muhammad Arifur Rahman is a Corporate Legal Practitioner.

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.