Chambers of Ishaan Garg
Ch. No. 217, Western Wing, District & Sessions Court, Tis Hazari, New Delhi, Delhi 110054
+91 8851742417, +91 8800386163
Case Title:
Shakti Yezdani & Anr. V Jayanand Jayant Salgaonkar & Ors(2023 SC)
The Hon'ble Supreme Court has held that the nomination process under the Companies Act, 1956 (pari materia Companies Act, 2013) does not override succession laws. It is beyond the scope of the company's affairs to facilitate succession planning of the shareholder. In case of a Will, it is upon the administrator or executor under the Indian Succession Act, 1925, or in case of intestate succession, the laws of succession to determine the line of succession.
The Bench comprising Hon'ble Justice Hrishikesh Roy and Hon'ble Justice Pankaj Mithal, has held that, “Additionally, there is a complex layer of commercial considerations that are to be taken into account while dealing with the issue of nomination pertaining to companies or until legal heirs are able to sufficiently establish their right of succession to the company. Therefore, offering a discharge to the entity once the nominee is in picture is quite distinct from granting ownership of securities to nominees instead of the legal heirs. Nomination process therefore does not override the succession laws. Simply said, there is no third mode of succession that the scheme of the Companies Act, 1956 (pari materia provisions in Companies Act, 2013) and Depositories Act, 1996 aims or intends to provide.”
