Court Rules Nomination Does Not Override Inheritance Laws, Declares Plaintiff's Entitlement to 1/4th Share in Deceased's Estate
In a landmark judgment delivered on March 27, 2026, the Delhi High Court reinforced the principle that nomination of securities under the Companies Act does not supersede the rights of legal heirs under inheritance laws. The case, involving the estate of the late Mr. Abhey Kumar Oswal, highlighted significant issues of inheritance concerning corporate shareholding.
Presiding over the case, Justice Vikas Mahajan ruled in favor of Pankaj Oswal, the eldest son of the deceased, affirming his status as a Class-I legal heir and his entitlement to a 1/4th share in the estate, including shares in Oswal Agro Mills Limited (OAML) and Oswal Greentech Limited (OGL). The court emphasized that the nomination under Section 72 of the Companies Act, 2013, serves only procedural purposes and does not confer absolute ownership to the nominee, in this case, Aruna Oswal, the deceased's wife.
The court dismissed the defense’s arguments that an oral family settlement disinherited the plaintiff, stating that such settlements amount to an oral 'Will', which is not permissible under the Indian Succession Act, 1925. The judgment clarified that Hindus can only execute a 'Will' in writing, duly signed and attested by two witnesses unless it is a privileged 'Will' under specific conditions applicable to soldiers, sailors, or airmen.
Justice Mahajan highlighted the Supreme Court’s stance in similar cases, notably "Shakti Yezdani v. Jayanand Jayant Salgaonkar," which established that nominations do not grant ownership of securities, as succession is governed by inheritance laws. The ruling aligns with the consistent interpretation that nomination under various statutes, including the Companies Act, does not affect the legal heirs' rights.
This decision marks a significant precedent, ensuring that inheritance rights are protected against claims based solely on nominations. It underscores the court's commitment to upholding statutory succession rights, providing clarity and stability in inheritance matters involving substantial corporate assets.
Bottom Line:
Nomination under Section 72 of the Companies Act, 2013 does not confer absolute ownership of securities to the nominee, as the succession of the property is governed by the laws of inheritance.
Statutory provision(s): Companies Act, 2013 Section 72, Indian Succession Act, 1925 Section 63, Civil Procedure Code, 1908 Order XII Rule 6, Hindu Succession Act, 1956 Section 8
Pankaj Oswal v. Aruna Oswal, (Delhi) : Law Finder Doc id # 2874459
