Karnataka High Court
M/S Consumer Care Society vs The Union Of India Rep By Its Secy on 1 December, 2010
Equivalent citations: AIR 2011 KARNATAKA 46, 2011 (1) AIR KANT HCR 498, 2011 (1) AIR KAR R 498, (2011) 3 KANT LJ 344, (2011) 103 ALLINDCAS 647 (KAR), (2011) 103 CORLA 1.2 SN
Author: S.N.Satyanarayana
Bench: S.N.Satyanarayana
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IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 1*" DAY OF DECEMBER 2010
BEFORE
'I'H'f3. H(_)N'BI,1.+: IVER.JU'S'I.'ICE1 s.N.sAtYANARA.Y}31S%{&e:"',;~ "
VVRIT psrrmow No.8s25/2005 (GM1gi{E:s)V V," 1%
BETWEEN
M/s.Consumer Care Society,' V
A society registered under the K.afnataka'--. . V ''
Societies Registration Act, 1960, . "
With registration No.388[94-95," "
Having its regd., officeya-..._t _ , V V
No.1/A, 2nd Main, 36th Cross,
81" Biock, Jayanagar, . V '
Barigaiore 560 082...
RGILDY its
Petitioner
(by Sri.Sh_N' ¥{11t'i£o.E'i'L7t1ir1.hy <31 KUI'llEi}"]
E .. _ Uiiion of India
V , V' « R(:.pE.by~itS:..Secretary,
" -. Mifizifitfji of Financcz,
North--_B1ock,Rajpat11,
New'{)e1hi 110 001.
_ T,'t"1e Genera} Ma1'.1.a1ger.
Reserve Bank of India,
A Nr1i;'>athur1gaRoa(.i,
Bzirigalorc 560 001 .
{£3
14;.
"E
it irrationzii' ~
3. M/s.Canara Bank,
Rep.by its Chairman,
1112, J.C.Road,
Bangaiore 560 002.
4. M/s.Syndicate Bank, _
Rep.by its Chairman, : ''
Head Ofiice, Manipal.
5. M/s.State Bank of India; _V
Rep.by its Chairman,
St.Marks Road, '
Bangaiore 560 001"; ' Respondents
(by Sri.N.Devadas, ASG foi" it VA '
M/s.King &.Partridge--,~.Advs--.fo»r R28 _
Sn'.B.S.Sha'nkaranarayatna;.¢AdV'V.for
sr1.K.Pra1;as;é:;' Adv"fo17_R4, _ "
Sri.As}f1okb_f--{a:1*ii'3heLiiij;-- .,Ac1y far*~ R53. '
This 'isg"fii_ed_ under Articles 226 & 227 of
the Constitotion-of to declare the provisions of
Sections I2«).:!"of the Banking Regulation Act.
1949_ix'asaA. being-~ .._VV1:in(:onstitutiona1, illegal, arbitrary and
t' having been heard and reserved for
ordeafs, thishday the Court pronounced the following:
ORDER
This writ petition was initially filed as a public litigation seeking declaration that the provisionmofl . 45--ZA(1) and (2) of the Banking 'R__egul_atioi'_i unconstitutional, illegal, arbitrary this petition was initially iristiiiitca'-.. [email protected];1tei5'est litigation subsequently by order"-ziiated of the Division Bench of this tliis; treated as W.P (amass). '
2. 'registered under the Iiarriateikallfljocietiesiilfiegilstraiionhfictlvhas filed this petition to espo1isel?thle:..cau,sex'tifllsviibstantial number of its members who have either de'pos'ited--"or in the normal course deposit commercial banks under term g_de;5osits/fixed,:lt}eposits and have exercised the option of aifipointingajnolniinee to receive such deposits in the event of li._gtheirldea't_h vunder Section 45~ZA[1) and (2) of the Banking A i~,l_"RAAegi1~lation Act, 1949 ('Act for short). 'WV./Q
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3. The petitioner contends that the aforesaid provision tend to abrogate or nullify the law of succession and/or inheritance as may be applicable and also imposes prohibition against nomination of more than one nominee for the said depositor. Though initially" * V' was to the provisions of 45--ZA(i) .and--..(2},--'_:atlVl4tf1.e"tin1ef_of, it arguments of this petition the alppearing petitioner would concede thatlheiwill give upli1is"':.ch'ailehge * it regarding the validity and correclt11ess_.pof tiie~..pro).;ision of Section 45--ZA(1), which 'deals of nomination to only one person. to ;reprelseni;._l'the'deposit. He would confined, his 1=espect_ to the legality, validity and correctness ¢:£psee:io::p'.a5':-2,}; (2) of the Act, which according him, on the death' of depositor substitute the nominee to .l"exercise5.--_'gul1lVthe rightswlof the depositor with respect to the deposit which will take away the right of the lega-i__heirs~ afrailable to them under the Law of Succession. It is further contended that though the aforesaid Drjovision of law was introduced by way of amendment to the Banking Regulation Act, 1949 in the year 1985 by Act an No.1/1984, which has come into force from 29.3.1985 with an intention to protect the interest of the depositors in case of their death to release the same in favour of their riorninee without much delay and legal hassle so far as A' the amount deposited by the deceased personlin would restrict and take away the heirs available to them under law of' succession andlijnheritanpce. The said Section 45--ZA reads as"u.n"der:w H "45Z.A. Nomination" ~.;f_or payment depoVsito'rs' money --- (1) Where aldlcleposithslpiheldilbyl apbanking company to the credits-efone persons, the depositor the: ease" _rriay.._._.1:§e, all the depositors 'lvl'..'tog_e'therL'inay _' nominate in the prescribed rnanner_;*o_n'e.'person to whom in the event of-..the deat1':_V"ofz_'~~'Lhe sole depositor or the d§§éatl1.of a1l"i:~h_e depositors, the amount of deposit . . A V uI"i'lE.1l,3."'be returnedmbyl the banking company. H '- :l.{'2~}' anything contained in any other'. law; for the time being in force or in any dispo__s1tion, whether testamentary or otherwise, in by I respect of such deposit, where a nomination made 'bind the prescribed manner purports to confer on 1 any person the right to receive the amount of E/W1'
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deposit from the banking company, the nominee shall, on the death of the sole depositor, or, as the case may be, on the death of all the depositors, become entitled to all the rights of the sole depositor or, as the case may be, of depositors, in relation to such deposit to exclusion of all other persons, unless"-._the=. L"
nomination is varied or car1cel.1ed inédithe it prescribed manner.
(3) Where the nominee is 'a._rninor, it sh_ali~.:.'be.
lawful for the depositor maki4ngdth_e nomination to appoint in the presc1'i.bed .'rnannerV»aay'person'"to receive the amount ofdciepoisvift» theAA.eifent of his deathl'duri;n-g tire: inihori-ty Of'1".'i'i'i3"V1]()II11'].'1€€). {4} Paynient baiiliingcompany in accordance with th"e.._provvision's_ofitlfiis section shall constitute a; full. discfiargel to" the banking company of its ' A "liability in respectlloi' the deposit:
lxthat nothing contained in this sub- section effect the right or claim which any person may have against the person to whom any it .. , paynient is made under this section."
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5. In this proceedings, the contesting respondents namely respondents 1 and 2 entered appearance t_'firo_'u_:gi1_ their counsel and filed their statement together.A"eo11tfeii}iing----- A- that the amended Banking Reguiatio_n...Ae_t, respectve-V_ to Section 45-zA(1) and (2) is intiitodtjicciii to, interest of the depositors an.d"it*is similar to Section..V3C} of 2 S' Insurance Act, 1938, Section Initlia Act, 1963 and Sections 6,v Savings Certificates Act, 195E:3,~-- provide for appointment ofto wiii have to be Paid in 313 ';V'5?11{'-it or unit hoider.
Both th~% c'oLntend.e(:'ethat the provision under chaliengedtbreiéng "said provisions the validity of whichiarepp upheld' bytthie Apex Court in the matter of Vishin .fiN.Kh'ancii'andani --vsH~wdVidya Lachmandas Khanchandani, A"1~efiairiéec:.:ffinifi'{:>;ooo) 6 sec 724 upholding the validity of Sections 8 of Government Savings Certificates Act, foiiovvirig the judgment rendered by the Apex Court in .rn'atter of Smtsarbati Devi mvsw Usha Devi, reported in .. 3 -
(1984) 1 SCC 424, wherein the validity of Section 39 of Life Insurance Act, 1938 regarding nomination is upheld.
6. Therefore, both the respondents contended provisions of Section 45~ZA(2) being similar to * two provisions clearly restricts itself _ to. the right" 'ofjvnoiniéneeie-V_V uh' to receive the deposit amount in the ieventiof the death depositor and does not either create an'ivndepeni;ient~ri.ght to him or that the said nominee :su.hstit.o.'ted:vto the place of depositor thereby allovwririg Ahinigailllé rights available to the depositor with._regard.~~to..such take away the right of this "others having claim over the said asset to ezlcerclise the "
.V V" EP1"ea,ifd.¢_ the Clotnisel for petitioner and respondents. impugned provision Section 45--ZA{2} of Act-,~ clearly seen that the entire Section 45vZA deals w"i'tht'non1inat;ion for payment of depositors money in of their death and each of the clause 1 to 4 deals different category of deposits. Clause 1 deals with 1 deposits held by banking company, clause 2 deals ___with I deposit made by individuals, clause 3 deals with t;1~e_::'c.ase where the nominee is a minor and clause 4 deaiis ~ right of banking institution to c1ai1JI1,_f_uii di'sct1altge""of'.its.v iiabihzty by following the nomination'-._as 1 to 3 above. Whiie reading Sectiail 4b2--'Z.J'X' broviso to the said Section shall be read along with each the aforesaid Section 452A. it n S S "Provided this sub-
section orgciaim which any person'may;gha{f€e the"person to whom any payment' is this "section."
8. If (2) is read with the proviso the seg_Iiie...wouId* to" rest all the questions and doubts I V petitioner so far as the abrogation of the rights Aof:thf'e depositors pursuant to clause {2} of the _ aforesaid,.__'S€etion. If the said clause (2) of Section 45--ZA is proviso it ciearly indicates that the right of the cyriominee is subject to the right or claim which any person "*1