If you are stuck in such a situation, here is what to do.

Mr. Om Prakash, a resident of Nagpur, had purchased shares in a company called “Stellar Tech Solutions Ltd.” during his lifetime. He designated his younger son, Mr. Sunil Prakash, as the nominee for these shares. This was done without informing his wife, Mrs. Gita Prakash, or his elder son, Mr. Ramesh Prakash. After Mr. Om Prakash passed away in early 2023, Sunil used the death certificate to have the shares transferred directly into his Demat account. Mr. Om Prakash had left a Will, but it made no mention of these specific shares.

When Ramesh discovered the transfer and requested his rightful 50% portion as a legal heir, Sunil refused to part with the shares, claiming that his status as a nominee made him the sole owner. This has led to a significant family dispute, with Ramesh and his mother seeking legal recourse to claim their inheritance.

Advice in such cases

• Gather all relevant documents immediately. This includes the deceased’s death certificate, proof of your status as a legal heir (like an Aadhar card or birth certificate), any details of the shares in question, and a copy of the Will, if one exists.
• Send a formal Legal Notice to the nominee through a lawyer. This notice should clearly state your claim as a legal heir and demand the transfer of your rightful portion of the assets. This is often the first step before initiating court proceedings.
• Do not engage in aggressive or threatening communication with the family member. Keep all interactions formal and documented, preferably in writing (emails, messages).
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think
• Obtain a succession certificate or letter of administration from the appropriate court. This document legally establishes the rights of the legal heirs to the deceased’s assets.

Applicable Sections of Law

This situation is primarily governed by civil law, specifically the laws of succession and company law, not criminal law. The key legal principle is that a nominee is merely a trustee or a custodian on behalf of the legal heirs.

• The Companies Act, 2013 (Section 72): This section deals with the power to nominate. While it facilitates the transfer of shares to the nominee upon the shareholder’s death to avoid procedural delays, it does not grant the nominee ownership over the asset. The nominee holds the shares in trust for the legal heirs.
• The Indian Succession Act, 1925: This Act governs the devolution of property. If there is no Will (intestate succession) or if the Will is silent about a particular asset, the property is divided among the legal heirs as per the rules laid out in the Act.
• The Hindu Succession Act, 1956: For Hindus, this act specifies the Class I heirs (which includes the widow, sons, daughters, etc.) who have the primary right to the deceased’s property in the absence of a Will.
• Bharatiya Nyaya Sanhita (BNS): While this is a civil dispute, if it can be proven that the nominee acted with dishonest intent to misappropriate the property, a complaint for Criminal Breach of Trust could potentially be filed. However, the primary remedy remains in the civil courts.

If you are the complainant

• Your first step should be to send a well-drafted Legal Notice to the nominee, demanding your share. This notice should cite the relevant Supreme Court judgments that have clarified the nominee’s role as a trustee.
• If the nominee does not comply, you must file a civil suit for partition and rendition of accounts in the appropriate court. This suit will seek a court order to divide the shares among all legal heirs.
• Simultaneously, you may need to apply for a succession certificate from the court, which will formally establish your legal right to inherit the property.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think
• You can also write to the company’s Registrar and Transfer Agent (RTA), informing them of the dispute and providing a copy of the legal notice. This may prevent the nominee from selling the shares while the matter is sub-judice.

If you are the victim

• As a legal heir being denied your rightful inheritance, you are the victim of a civil wrong. Your rights are protected under the succession laws of India.
• Do not feel helpless. The law is very clear on this point. Numerous Supreme Court judgments have affirmed that a nominee does not become the owner of the property.
• Act swiftly. The longer you wait, the higher the risk that the nominee might sell the shares or create other complications.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think
• Keep a record of all communication with the nominee. This will serve as crucial evidence in court to show that you made attempts for an amicable settlement before resorting to legal action.

How the police behave in such cases

The police generally have a very limited role in such matters as they are civil in nature. If you approach a police station, they will likely advise you to seek remedy in a civil court. They will not register an FIR for a property dispute unless there are clear elements of a criminal offence like criminal breach of trust, cheating, or forgery. Even if they do register a complaint, they will emphasize that the ownership and partition issues can only be decided by a civil court.

FAQs people normally have

• Does a nominee become the owner of the shares?
  No. The Supreme Court of India has repeatedly held that a nominee is only a custodian who holds the assets in trust for the legal heirs. The nomination process is merely to simplify the transfer from the company to the nominee, who must then distribute it to the rightful heirs.
• What if my grandfather had mentioned the shares in his Will and given them to the nominee?
  If the Will explicitly bequeaths the shares to the nominee, then the Will takes precedence over the laws of succession. In that case, the nominee would become the rightful owner. In this scenario, the Will was silent on the shares.
• Can we file a criminal case against the brother?
  A criminal case for criminal breach of trust can be explored if there is evidence of dishonest intent. However, the burden of proof is high, and the primary and most effective remedy is to file a civil suit for partition.
• What is the first document I need to get?
  The most important initial documents are the death certificate of the deceased and a Legal Heir Certificate (or Surviving Member Certificate) issued by the local revenue authority (like the Tehsildar’s office).

What evidence is required?

• Death certificate of the original shareholder.
• Legal Heir Certificate or a Succession Certificate from a court.
• Documents proving the deceased owned the shares (e.g., old share certificates, Demat account statements).
• Copy of the Will, if any. If no Will exists, an affidavit stating the same.
• Proof of your identity and relationship with the deceased.
• Copies of the legal notice sent to the nominee and any replies received.
• Any other communication (emails, messages) with the nominee regarding the dispute.

How long will the investigation take?

Since this is a civil matter, there is no “investigation” in the police sense. The process is one of litigation in a civil court. A suit for partition can be a lengthy process. It can take anywhere from a couple of years to much longer, depending on the complexity of the case, the court’s workload, and the tactics employed by the opposing party. However, filing for an injunction early in the case can prevent the nominee from selling the shares while the case is ongoing.

Advocate Sudhir Rao, Supreme Court of India