Let me share a unique query received from one of the readers. Very rarely an issue has been raised regarding the system followed by banks in case a claim is received from a nominee / legal heirs for settlement of claim in respect of missing persons. Basically the reader has sought details on behalf of a widow whose husband has disappeared some ten years ago. Her missing husband has left a substantial amount in his savings bank account and fixed deposit schemes of the bank. In the backdrop of this query let’s look at the procedure of claiming the amount of a missing person. But, first, we will have a look at the aspect of nomination in a bank account.
What is nomination facility?
Nomination means that an account holder should nominate aperson to whom the money lying in his/her account should go in the event ofhis/her death. Nomination can be made in account opening form itself or on aseparate form indicating the name and address of the nominee.
In others words, it is the right conferred upon the holderof a bank account to appoint one or more persons who will be entitled toreceive monies upon the death of the account holder.
Nomination facility is available to accountholders operatingcurrent accounts, savings bank accounts and all types of term deposit accounts,safe deposit lockers or safe custody of articles. It can be made in existing ornew accounts and can be cancelled or changed subsequently by the depositors.
Why should one have nomination in his/her bank account? Is it mandatory?
Nomination is optional. But, it is advisable to makenomination in accounts as it is intended to facilitate expeditious settlementof claims in the accounts of deceased depositors and to minimise hardshipcaused to the family members on the death of the depositors.
Precisely explained, in the event of death of an account orlocker holder, the bank can release the account proceeds or contents to thenominee without insisting upon a succession certificate, letter ofadministration or court order.
Can nomination be made in favour of minor?
Yes. If nomination is made in favour of a minor, details ofthe guardian of the minor also need to be mentioned in the nomination form. Theguardian should be an adult who will get the amounts in the account on behalfof the minor in case of death of the account holder till the nominee attainsmajority.
Can multiple nominations be made by an account holder?
Only one nominee can be appointed in case of bank accounts.However, banks allow appointment of different nominees for different accountsin the same bank. Separate nominations forms are required to be submitted inthis case.
What about the rights of other legal heirs when a nomineereceives the monies from the deceased accountholder’s account?
Even as the bank releases the payment in favour of thenominee, the rights of other legal heirs don’t vanish. To elaborate, thenominee actually receives the payment from the bank on behalf of all legalheirs including him. He is bound to pay other legal heirs their respectiveshares. In case he does not, the other legal heirs can take appropriate legalaction against the nominee.
How monies in missing person’s account can be claimed by nominee or legal heirs?
For claiming the amount by the legal heirs or a nominee, themissing person should be declared dead. In other words, there should be a legaldeclaration about death in absentia or presumption of death of the missingperson. As per the provisions of Section 108 of the Indian Evidence Act,presumption of death can be raised only after a lapse of seven years from thedate of his/her being reported. As such, the nominee / legal heirs have toraise an express presumption of death of the subscriber under Section 107/108of the Indian Evidence Act before a competent court. If the court presumes thathe/she is dead, then the claim in respect of a missing person can be settled onthe basis of the same.
Banks may settle such claims of the missing person preferredafter seven years of recorded / registered date of missing (as per FIR) underSection 108 of the Indian Evidence Act, 1872, supplemented by a non-traceablereport from the police authorities (not below the rank of Superintendent ofPolice) and an indemnity from the claimant(s), without insisting on thejudgment of the court regarding presumption of death of the missing person.
However, claims, in respect of missing persons suspicious ofwillful disappearance to evade trial for some criminal offence, shall not besettled without court orders.