Holding

The nominee’s right to receive payment under s.6 is subject to s.8(2); the amount must be held for the benefit of the legal heirs and paid to them after lawful deductions.

Summary

The deceased holder of several National Savings Certificates (NSC) died, and his widow and daughter sought a succession certificate under s.370 of the Indian Succession Act for the debts and securities, including the NSCs where the deceased had nominated his brother and step‑brother as nominees. The trial court excluded the NSCs from the succession certificate, the Bombay High Court reversed that decision, and the nominees appealed to the Supreme Court. The Court examined the non‑obstante clause in s.6 of the Government Savings Certificate Act, 1959 and held that, although the nominee is entitled to receive payment of the NSC amount, s.8(2) requires the nominee to retain the sum for the benefit of the legal heirs and to pay it to them after deducting lawful debts. Consequently, the nominee must furnish an undertaking under s.8(2) and the amount is payable to the respondents after such deductions. The appeal was allowed, directing issuance of succession certificates to the respondents and confirming the nominees’ limited right to receive the NSC sums.

Issues considered

Whether the nominee of a National Savings Certificate, by virtue of the non‑obstante clause in s.6 of the Government Savings Certificate Act, 1959, becomes the absolute owner of the certificate proceeds to the exclusion of legal heirs.
Whether the amount paid to the nominee must be retained for the benefit of the heirs in accordance with s.8(2) of the Act.

Legislation cited

Code of Civil Procedure, 1908s. 60
Government Savings Certificate Act, 1959s. 6, s. 7, s. 8
Indian Succession Act, 1925s. 370

Subjects

nominationgovernment savings certificate actsuccessionnon‑obstante clauselegal heirsNational Savings Certificatessuccession certificatestatutory interpretation

Judgment

SHRI VISHIN N. KHANCHANDANI AND ANR. A
v.
VIDYA LACHMANDAS KHANCHANDANI AND ANR.

AUGUST 16, 2000

[K.T. THOMAS AND R.P. SETHI, JJ.] B

Government Savings Certificate Act, 1959 :

Ss.8(2), 6 and 7-National Savings Certificates-Nominee of-Held, has
a right to be paid the .rnm due on such savings certificates after death of
holder-But he retains the said amount for benefit o.fpersons entitled to it under
c
law o.f succession, subject to provisions o.f sub-section (2) of s.8.

Interpretation of Statute :

Non-obstante clause in a statut<'ry provision-Interpretation of-Ex-
plained. D

Respondent no. 1, on the death of her husband filed a petition under
s.370 of the Indian Succession Act, 1925 for grant of succession certificate
in respect of debts and securities left by the deceased. The appellants, the
brother and the step brother of the deceased, contested the claim with E
respect to such national savings certificates in which they had been men-
tioned as nominees of the deceased. The Civil Judge held that the respond-
ents were entitled to succession certif~ate in respect of the debts men-
_tioned in Schedules A and B to the application excluding the National
Savings Certificates and Compulsory Deposit Scheme, in which the appel-
lants had been nominated. That part of the order by which the respond- F
ents' claim with regard to the National Savings Certificates was disallowed
was challenged by the respondents in an appeal before the IDgh Court
which allowed the claim. Aggrieved, the nominees filed the present appeal.

It was contended for the appellants that in view of the non-obstante
G
clause in s.6 of the Act, after death of the deceased-holder, they became
entitled to the sum paid on account of the National Savings Certificates in
which they were nominees, to the exclusion of all other persons including
the legal heirs.

Allowing the appeal, the Court H
415
416 SUPREME COURT REPORTS [2000] SUPP. 2 S.C.R.
A HELD : 1. Though under s.6 of the Government Savings Certificate
Act, 1959, the nominee of the National Savings Certificates has a right to
be paid the sum due on such savings certificates after the death of the
holder, yet, in view of sub-section (2) of s.8 and the Statement of Objects
and Reasons of the Act, he retains the said amount for the benefit of the
persons who are entitled to it under the law of succession applicable in the
B
case, however, subject to the exception of deductions mentioned in the sub-
section. [426-B; CJ

2:1. There is no doubt that by non-obstante clause the Legislature
devices means which are usually applied to give overriding effect to certain
c provisions over some contrary provisions that may be found either in the
same enactment or some other statute. Such a clause is used to avoid the
operation and effect of all contrary provisions. The phrase is equivalent to
showing that the Act shall be no impediment to the measure intended. To
attract the applicability of the phrase, the whole of the section, the scheme
of the Act and the objects and reasons for which such an enactment is
D
made has to be kept in mind. [425-E-F]

2.2. Though language and phraseology of Section 6 of the Govern-
ment Savings Certificate Act, 1959 is different than the one used in Section
39 of the Insurance Act, yet, the effect of both the provisions is the same.
E The 1959 Act only makes the provisions regarding avoiding delay and
expense in making the payment of the amount of the National Savings
Certificates, to the nominee of holder, which has been considered to be
beneficial both for the holder as also for the post office. Any amount paid
to the nominee after valid deductions becomes the estate of the deceased.
Such an estate devolves upon all persons who are entitled to succession
F •
under law, custom or testament of the deceased holder. The law laid down
by this Court in Sarbati Devi's case* holds the field and is equally applica-
ble to the nominee becoming entitled to the payment of the amount on
account of National Savings Certificates received by him under section 6
read with Section 7 of the Act who in turn is liable to return the amount to
G those, in whose favour law creates beneficial interest, subject to the provi·
sions of sub-section (2) of Section 8 of the Act. [426-F-H; 427-A]

Smt. Sarbati Devi & Am: v. Smt. Usha Devi, [1984] 1 SCC 424, relied
on.

H Ramballav Dhandhania v. Gangadhar Nathmall, AIR (1956) Cal. 275;

~'.)
VJSHIN N. KHANCHANDANI r. VIDYA LACHMANDAS KHANCHANDANI [SEIB!, J.J 417
Life Insurance Corporation of India v. United Bank of India Ltd., AIR (1970) A
Cal. 213; D. Mohanavetu Mudaliar v. Indian Insurance and Banking Corpora-
tion Ltd., Salem AIR (1957) Mad. 115; Sarojini Amma v. Neelakanta Pillai,
AIR (1961) Kerala 126; Atmaram Mohanlal Panchal v. Gunvantiben, AIR
(1977) Guj. 134; Malli Dei v. Kanchan Prava Dei, AIR (1973) Orissa 83,
Lakshmi Amma v. Saguna Bhagath, ILR (1973) Kant 827; Kesari Devi v. B
Dhamw Devi, AIR (1962) All 355; S. Fauza Singh v. Kuldip Singh, AIR
(1978) Delhi 276 and Uma Sehgal v. Dwarka Dass Sehgal, AIR (1982) Delhi
36 and B.M. Mundkur v. Life Insurance Corporation of India, AIR (1977)
Mad. 72, referred to.

3. The appellants are entitled to receive the sum due on the National C
Savings Certificates in which they are the nominees, upon furnishing the
undertaking in terms of sub-section (2) of s.8 of the Government Savings
Certificate Act, 1959. The amount so received by them shall be payable to
the respondents after deduction of the amounts of debts or other demands
lawfully paid or discharged. [427-C; DJ
D
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 4538 of 2000.

From the Judgment and Order dated 20.3.99 of the Bombay High Court
in F.A. No. 849 of 1982.

Sanjay K. Kaul and Rakesh Batra for Mis. L.P. Aggarwalla & Co. for the E
Appellants.

S. Ravindra Bhat, Naveen R. Nath, Ms. Hitu Arora, and V.N. Raghupathy
for the Respondents.

The Judgment of the Court was delivered by
F

SETHI, J. Leave granted.

Whether the nominee specified in the National Savings Certificate, on
the death of its holder, becomes entitled to the sum due under the certificate
G
to the exclusion of all other persons, or whether the amount of the certificate
can be retained by him for the benefit of the legal heirs of the deceased- is the
sole question required to be adjudicated by us in this appeal by special leave.

The present dispute is with respect to the savings certificates, the holder
of which was Lachmandas Naraindas Khanchandani. Appellant No.I is the H
418 SUPREME COURT REPORTS [2000] SUPP. 2 S.C.R.
A brother, appellant No.2 the step brother, the respondent No. I is the widow and
respondent No.2 is the daughter of the deceased- holder. The deceased was
serving in the Income Tax Department and has left behind debts consisting of
National Savings Certificates, amounts in Compulsory Deposit Schemes, Post
Office Cumulative Time Deposit Scheme and Pass Book Post Office Savings
Bank. The respondent No. I filed a petition under Section 370 of the Indian
B
Succession Act, 1925 for the grant of succession certificate in respect of debts
and securities left by the aforesaid deceased in the Court of Civil Judge, Senior
Division, Thane. The appellants contested the claim with respect to such
National Savings Certificates in which they had been mentioned as nominees
of the deceased. The Court of Civil Judge, Senior Division, Thane held that the
c respondents-plaintiffs were entitled to the grant of succession certificate in
respect of the debts mentioned in Schedules A and B to the application exclud-
ing the National Savings Certificates enumerated at SI.Nos. I? to 21 in Sched-
ule A and Compulsory Deposit Scheme mentioned at SI.Nos. I to 4 in Schedule
B. It was further held that the appellants herein were not entitled to the delivery
D from the respondents of the National Savings Certificates and Pass book Post
Office Savings Bank in respect of which they had been nominated by the
deceased. The Civil Judge while issuing the succession certificate in favour of
the respondents-plaintiffs to the extent indicated hereinabove held them enti-
tled to get the amount of the said debts with accrued interest thereon subject
to their furnishing necessary Court-fee stamp, Estate Duty Certificate and the
E security to the extent of the asset5. Not satisfied with the orders of the Civil
Judge, the respondents herein filed First Appeal No.849 of 1982 in the High
Court of Bombay praying for setting aside that portion of the order of the Civil
Judge by which their claim with regard to the National Savings Certificates,
in respect of which the appellants were the nominees, had been disallowed. The
F High Court allowed the appeal and directed the issuance of succession certifi-
cate in favour of the respondents in respect of debts not only mentioned in
SI.Nos. I to 16 in Annexure A and Sl.Nos.2,3,5 and 6 in Annexure B but also
in respect of the debts mentioned at Sl.Nos.17 to 26 in Annexure A and
SI.Nos. I and 4 in Anncxure B. It was further directed that the respondents shall
. be entitled to equal share in the amounts which were due on securities listed
G in Annexures A and B to the ~pplication/plaint on payment of necessary court
fees stamps and furnishing estate duty certificate. As there was no other
claimant, the Court held that there was no necessity to furnish any security.

Feeling aggreived, the appellants- the nominees of the National Savings
H Certificates have filed this appeal contending that under Section 6 of the
VISHIN N. KHANCHANDANI "· VIDYA LACHMANDAS KHANCHANDANI [SETHI, J.] 419
Government Savings Certificates Act, 1959, after the death of the holder they A
had become entitled to the payment of such Saving Certificates in which they
were nominees, to the exclusion of all other persons including the respondents
and entitled to utilise the aforesaid amounts in the manner they like. It is
contended that by their nomination, the holder of the National Savings Certifi-
cates, namely, Shri Lachmandas Naraindas Khanchandani has diverted the
B
normal course of succession. According to them Section 6 provides another
mode of succession, to the exclusion or testamentary and non-testamentary
successions. Alternatively, it was urged that nomination itself amounted to
testamentary succession.

The Government Savings Certificate Act, 1959 (being Act No.46 of C
1959) (hereinafter referred to as "the Act") was enacted to make certain
provisions in respect of the Government Savings Certificates. The Act applies
to such class of savings certificates as the Central Government may, by noti-
fication, in the official gazette, specify in that behalf. The Act was applied to
the National Savings Certificates by notifications issued with respect to various
issues of such certificates. It is not disputed that the National Savings Certifi- D
cates in dispute arc governed by the provisions of the Act.

To appreciate the rival contentions urged at the Bar, it is necessary to
examine the provisions of the Act particularly Sections 6, 7 and 8 which
provide as under:
E
"6. Nomination by holders of savings certificates.- (1) Notwithstand-
ing anything contained in any law for the time being in force, or in any
disposing, testamentary or otherwise in respect of any savings certifi-
cate, where a nomination made in the prescribed manner purports to
confer on any person the right to receive payment of the sum for the
time being due on the savings certificate on the death of the holder
F
thereof and before the maturity of 1he certificate, or before the certifi-
cate having reached maturity has been discharged, the nominee shall,
on the death of the holder of the savings certificate, become entitled
to the savings certificate and to be paid the sum due thereon to the
exclusion of all other persons, unless the nomination is varied or G
cancelled in the prescribed manner.

(2) Any nomination referred to in sub-section (l) shall become void
if the nominee predeceases, or where there are two or more nominees
all the nominees predecease, the holder of the savings certificate
making the nomination. H
420 SUPREME COURT REPORTS [2000] SUPP. 2 S.C.R.
A (3) Where the nominee is a minor, it shall be lawful for the holder of
the savings certificate making the nomination to appoint in the pre-
scribed manner any person to receive the sum due thereon in the event
of his death during the minority of the nominee.

(4) A transfer of a savings certificate is held by or on behalf of any
B perso11 as a pledgee or by way of security for any purpose, such holding
shall 11ot have the effect of cancelling a nomination but the right of the
nominee shall be subject to the right of the person so holdi11g it.

7. Payment on death of holder: (I) if the holder of savings certificate
dies and there is in force at the time of his death a nomination in favour
c of any person, payment of the sum due thereon shall be made to the
nominee.

(2) Where the nominee is a minor, payment of the sum due thereon
shall be made-
D (a) in any case where a person has been appointed to receive it
under sub-section (3) of Section 6, to that person, and

(b) where there is no such person, to any guardian of the property
of the minor appointed by a competent Court or where on such
guardian has been so appointed, to either parent of the minor, or
E where neither p~ent is alive, to any other guardian of the minor.

(3) Where the sum due on a savings certificate is payable to two or
more nominees, and either or any of them dies, the sum shall be paid
to the surviving nominee or nominees.

F (4) If a person dies and is at the time of his death the holderof a savings
certificate and there is no nomination in force at the time of his death
and probate of his will or letters of administration of his estate or a
succession certificate granted under the Indian Succession Act, 1925,
is not within three months of the death of the holder produced to the
G prescribed authority, then, if the sum due on the savings certificates
does not exceed such limit as may be prescribed, the prescribed
authority may pay the same to any person appearing to it to be entitled
to receive the sum or to administer the estate of the deceased.

(5) Nothing contained in this section shall be deemed to require any
H person to receive payment of the sum due on a savings certificate
VISHIN N. KHANCHANDANI "· VIDYA LACHMANDAS KHANCHANDANI [SETHI, J.] 421
before it has reached maturity or otherwise than in accordance with the A
terms of the savings certificate.

8. Payment to be a full dishcarge -( 1) Any payment made in accord-
ance with the foregoing provisions of this Act to a minor or to his
parent or guardian or to a nominee or to any other person shall be a

- full discharge from all further liability in respect of the sum so paid.

(2) Nothing in sub-section (I) shall be deemed to preclude any execu-
B

tor or administrator or other representative of a deceased holder of a
savings certificate from recovering from the person receiving the same
under section 7 the amount remaining in his hands after deducting the
amount of all debts or other demands lawfully paid or discharged by
c
him in due course of administration.

(3) Any creditor or claimant against the estate of a holder of a savings
certificate may recover his debt or claim out of the sum paid under this
Act to any person and remaining in his hands unadministered in the D
same manner and to the same extent as if the latter had obtained letters
of administration to the estate of the deceased."

Mr. Sanjay K. Kaul, Sr.Advocate appearing for the appellants submitted
that Section 6 of the Act very unambiguously provides that notwithstanding
anything contained in any law for the time being in force or in any disposition E
testamentary or otherwise in respect of any savings certificate where a nomi-
nation is made, the nominee shall, on the death of the holder of the savings
certificate, become entitled to the savings certificate and to be paid the sum due
thereon to the exclusion of all other persons. Referring to sub-section (3) of
Section 6, the learned counsel submitted that in case where the nominee is a
F
minor, the holder of the savings certificate has a right to make the nomination
to appoint in the prescribed manner any person to receive the sum due thereon
in the event of his death during the minority of the nominee. It is contended
that if the intention was not to entitle the nominee to be paid and to retain the
sum due on such National Savings Certificates, there was no necessity of
making a provision as has been incorporated in sub-section (3) of Section 6. G
Section 7 was also relied upon to urge that after the death of the holder, the
nominee becomes entitled to the payment of the sum due without there being
any further obligation upon him. In support of such an argument further
reliance was placed upon sub-sections (3) and (4) of Section 7. He also tried
to distinguish the verdict of this Court in Smt. Sarbati Devi & Am: v. Smt. Usha H
422 SUPREME COURT REPORTS (2000] SUPP. 2 S.C.R.

A Devi, [1984] 1 SCC 424, by pointing out the difference of the language and
phraseology in Section 6 of the Act and Section 39 of the Insurance Act.
According to him the words, "on the death of the holder of the savings
certificate, become entitled to the savings certificate and to be paid the sum due
thereon to the exclusion of all other persons", appearing in Section 6 of the Act
have not been incorporated in Section 39 of the Insurance Act suggesting that
B
the legislature had intended to make the nominee absolute owner of the value
of the certificates.

The law in force in England on the position of a nominee who has been
treated to be a third party in relation to a claim regarding insurance policy, is
C summarised in Halsbury's Laws of England (Fourth Edition), Vol.25, para 579
as under:

"Position of third party. -The policy money payable on the death of
the assured may be expressed to be payable to a third party and the
third party is then pri111a .facie merely the agent for the time being of
D the legal owner and has his authority to receive the policy money and
to give a good discharge; but he generally has no right to sue the
insurers in his own name. The question has been raised whether the
third party's authority to receive the.policy money is terminated by the
death of the assured; it seems, however, that unless and until they are
otherwise directed by the assured's personal representatives the insur-
E
ers may pay the money to the third party and get a good discharge from
him."

Various High Courts m India in different cases, namely, Ramballl!V
Dhwu/hania v. Gangad!zar Nat!zmall, AIR ( 1956) Cal. 275, L(fe Insurance
F Cmporation of India v. United Bank of India Ltd., AIR ( 1970) Cal 213, D.
Mohanavelu Mudaliar v. Indian Insurance and Banking Co1poratirm Ltd.,
Salem, AIR (1957) Mad 115, Sarojini Amma v. Neelakanta Pillai, AIR (1961)
Kerala 126, At111aram Mohan/al Panchal v. Gunvantiben, AIR (1977) Guj. 134,
Malli Dei v. Kanchan Prava Dei, AIR (1973) Orissa 83, Lakshmi Amma v.
Saguna B!zagalh, !LR (1973) Kant 827, have taken a view that the nominee
G under Section 39 of the Insurance Act is nothing more than an agent to receive
the money due under the life insurance policy. The money as such received
remains the property of the assured during his life time and on his death forms
part of his estate subject to the law of succession applicable to him. Allahabad
High Court in Kesari Devi v. Dharma Devi. AIR (1962) All 355 and Delhi High
H Court in S.Fauza Singh v. Ku/dip Singh, AIR ( l 978) Delhi 276 and Uma
VISHIN N. KHANCHANDANI v. VIDYA LACHMANDAS KHANCHANDANI [SETHI, J.) 423
Sehgal v. Dwarka Dass Sehgal, AIR (1982) Delhi 36 had, however, taken a A
different view. While dealing with the view taken by Allahabad and Delhi High

- Courts, this Court in Sarbati Devi's case (supra) has held:

"As observed in the Full Bench decision of the Allahabad High Court
in Raja Ram v. Mata Prasad, AIR (1972) All 167 which has inter-
preted Section 39 of the Act correctly, the judgment of that High Court B
in Kesari Devi case related to a different set of facts. In K~sari Devi
case the dispute arose regarding the person who was entitled to the
succession certificate in respect of the amount payable under a life
insurance policy which had been taken out by the assured between the
widow of the assured and the widow of the nominee under Section 39 c
of the Act. On going through the judgment in Kesari Devi case we feel
that the Couri in that case paid little heed to the earlier judicial
precedents of its own Court. The decision of the.Full Bench in Raja
Ram case set at rest all doubts which might have been created by
Kesari Devi case about the true import of Section 39 of the Act in so
far as the High Court of Allahabad was concerned.
D

In Fauza Singh case there is reference only to three cases - - L(fe
Insurance Corporation pf India v. United Bank of India, Matin v.
Mahomed Matin, AIR (1922) Lah. 145 and Kesari Devi case. The
Court expressed its dissent from the Calcutta decision on the ground E
that that decision had not consi\lered sub-section (6) of Section 39 of
the Act. The Lahore case was· one decided before the Act came into
force. The distinguishing features of Kesari Devi case are already
mentioned. Otherwise there is not much discussion in this case about
the effect of Section 39 of the Act.
F
We have carefully gone through the judgment of the Delhi High Court
in Uma Sehgal case. In this case the High Court of Delhi clearly came
to the conclusion that the nominee had no right in the lifetime of the
assured to the amount payable under the policy and that his rights
would spring up only on the death of the assured. The Delhi High
G
Court having reached that conclusion did not proceed to examine the
possibility of an existence of a conflict between the law of succession
and the right of the nominee under Section 39 of the Act arising on the
death of the assured and in that event which would prevail. We arc of
the view that the language of Section 39 of the Act is not capable of
altering the course of succession under law. The second error conunit- H
424 SC'PREME COURT REPORTS [2000] SUPP. 2 S.C.R.

A ted by the Delhi High Court in this case is the reliance placed by it on
the effect of the amendment of Section 60( !)(kb) of the Code of Ci vii
Procedure, 1908 providing that all moneys payable under a policy of
...
insurance on the life of the judgment debtor shall be exempt from
attachment by his creditors. The High Court equated a nominee to the
heirs and legatees of the assured and proceeded to hold that the
8
nominee succeeded to the estate with all 'plus and minus points'. We
find it difficult to treat a nominee as being equivalent to an heir or
legatee having regard to the clear provisions of Section 39 of the Act.
The exemption of the moneys payable under a life insurance policy
under the amended Section 60 of the Code of Civil Procedure instead
c of 'devaluing' the earlier decisions which upheld the right of a creditor
of the estate of the assured to attach the amount payable under the life
insurance policv recognises such a right in such creditor which he
could have exercised but for the amendment. It is because it was
attached the Code of Civil Procedure exempted it from attachment in
furtherance of the policy of Parliament in making the amendment. The
D
Delhi High Court has committed another error in appreciating the two
decisions of the Madras High Court in Karuppa Gounder v.
Palaniammal, AIR (1963) Mad 245 at para 13 and in B.M. Mundkur
v. Life Insurance Corporation of India, AIR (1977) Mad 72. The
relevant part of the decisions of the Delhi High Court in Uma Sehgal
E case reads thus: (AIR P.40, paras 10, 11)

"10. In Karuppa Gounder v. Palaniamma, K had nominated his wife
in the insurance policy. K died. It was held that in virtue of the
nomination, the mother of K was not entitled to any portion of the
insurance amount.
F
11. I am in respectful agreement with these views, because they accord
with ti1e law and reason. They are supported by Section 44(2) of the
Act. It provides that the commission payable to an insurance agent
shall after his death, continue to be payable to his heirs, but if the agent
G had nominated any person the commission shall be paid to the person
so nominated. It cannot be contended that the nominee under Section
44 will receive the money not as owner but as an agent on behalf of
someone else, vide B.M. Mwzdkur v. Life Insurance Co17Joration.
Thus, the nominee excludes the legal heirs."

H The Court further held that Delhi High Court conunitted mistake in not
VISHIN N. KHANCHANDANI '· VIDYA LACHMANDAS KHANCHANDANI [SETHI, J.] 425
rroperly appreciating the judgment in B.M. Mundkur V. Life Insurance Corpo- A
ration of India, AIR (1977) Mad. 72. The Court found that the reasons given
by the Delhi High Court were not tenable. It was held that a mere nomination
made under Section 39 of the Insurance Act did not have the effect of confer-
ring on the nominee any beneficial interest in the amount ·payable under the
insurance policy on the death of the assured. The nomination only indicated
B
the hand which was authorised to receive the amount on the payment'~f which
the insurer got a valid discharge of its liability under the policy. The policy
holder continued to have interest in the policy during his lifetime and the
nominee acquired no sort of interest in the policy during the lifetime of the
policy holder. On the death of the policy holder, the amount payable under the
policy became part of his estate which was governed by the law of succession c
applicable to him. Such succession may be testamentary or intestate. Section
39 did not operate as a third kind of succession which could- be. styled as a
statutory testament. A nominee could not be treated as being equivalent to an
heir or legatee. The amount of interest under the policy could, therefore, be
claimed by the. heirs of the assured m accordance with law of succession D
governing them.

It is contended on behalf of the appellants that the non obstante clause
in Section 6 excludes all other persons, including the legal heirs of the deceased
holder, to claim any right over the sum paid on account of the National Savings
Certificates, to the nominee. There is no doubt that by non-obstante clause the E
Legislature devices n.eans which are usually applied to give overriding effect
to certain provisions over some contrary provisions that may be found either
in the same enactment or some other statute. In other words such a clause is
used to avoid the operation and effect of all contrary provisions. The phrase
"is equivalent lo showing that the Act shall be no impediment to measure
intended. To attract the applicability of the phrase, the whole of the section, the F
scheme of the Act and the objects and reasons for which such an enactment
is made has to be kept in mind.

The submission made on behalf of the appellants has no substance in
view of sub-section (2) of Section 8 and the Statement of Objects and Reasons
G
necessitating the passing of the Act. Sub-section(!) of Section 8 provides that
if any payment is made in accordance with the provisions of the Act to a
nominee, the same shall be a full discharge from all further liabilities in respect
of the sum so paid. Section 7 of the Act provides that after the death of the
holder of the savings certificates payment of the sum shall be made to the
nominee, if any, an<l sub-section (I) of Section 8 declares that such paym~nt H

\
426 SUPREME COURT REPORTS [2000] SUPP. 2 S.C.R.
A shall be a full discharge from all further liabilities in respect of the su·m so paid.
However, sub-section (2) of Section 8 specifies that the payment made to the
nominee under sub-section ( 1) shall not preclude any executor or administrator
or the legal representative of the deceased holder of a savings certificate from
recovering from the person receiving the same under Section 7; the amount
remaining in nominee's hand after deducting the amount of all debts or other
B
demands lawfully paid or discharged by him in due course of administration.
In other words though the nominee of the National Savings Ccertificates has
a right to be paid the sum due on such savings certificates after the death of
the holder, yet he retains the said amount for the benefit of the persons who
are entitled to it under the law of succession applicable in the case, however,
c subject to the exception of deductions mentioned in the sub-section. In the
Statement of Objects and Reasons of the Act it is stated:

"The Post Office National Savings Certificate Ordinance, 1944 (42 of
1944 ), issued under Section 72 of the Ninth Schedule to the Govern-
ment of India Act, 1935, as originally enacted and continued in force
D by virtue of the provisions of the India and Burma (Emergency Pro-
visions) Act, 1940 (3 and 4 Geo. 6, Ch. 33) regulates the sale and
discharge of National Savings Certificates issued through the Post
Office. Suggestions have been made from time to time that as the
production of legal proof of succession involves considerable delay
E and expense, the holders of savings certificates may be allowed the
right to nmninate one or more persons to receive the amounts due in
re~pect of such certificates in the event of their death without the
production qfsuccession certificate or other proof of title. In seeking
to amend that Ordinance for the above purpose, opportunity is taken
to replace it by an Act of Parliament." (emphasis supplied) -
F
In the light of what has been noticed hereinabove, it is apparent that
though language and phraseology of Section 6 of the Act is different than the
one used in Section 39 of the Insurance Act, yet, the effect of both the
provisions is the same. The Act only makes the provisions regarding avoiding
delay and expense in making the payment of the amount of the National
G Savings Certificates, to the nominee of holder, which has been considered to
be beneficial both for the holder as also for the post office. Any amount paid
to the nominee after valid deductions becomes the estate of the deceased. Such
an estate devolves upon all persons who arc entitled to succession under law,
custom or testament of the deceased holder. In other words, the law laid down
H by this Court in Sarbati Devi's case holds field and is equally applicable to the

)
VISHIN N. KHANCHANDANI "· VIDYA LACHMANDAS KHANCHANDANI [SETHI, J.] 427
nominee becoming entitled to the payment of the amount on account of Na- A
tional Savings Certificates received by him under Section 6 read with Section
7 of the Act who in turn is liable to return the amount to those, in whose favour
law creates beneficial interest, subject to the provisions of sub-section (2) of
Section 8 of the Act

Under the circumstances, this appeal is allowed with a direction that the B
succession certificates shall be issued in favour of the respondents in respect
of debts detailed in Annexures A and B to the application filed in the Court
of Civil Judge, Senior Division, Thane subject to their payment of necessary
court fees and Etate Duty Certificate. The respondents would, however, not be
entitled to directly receive the amounts payable on account of debts payable c
under National Savings Certificates at Sl.Nos.17 to 26 in Annexure A and
Sl.Nos.l to 4 in Annexure B, The appellants are held entitled to receive the sum
due on the aforesaid National Savings Certificates in which they are the
nominees upon furnishing the undertaking in terms of sub-section (2) of Sec-
tion 8 of the Act in the Court of Civil Judge, Senior Division, Thane. The
amount received by the appellants on account of the National Savings Certifi- D
cates in which they are nominees shall be payable to the respondents after
deduction of the amounts of debts or other demands lawfully paid or discharge,
if any. Costs made easy.

R.P, Appeal allowed.

\