Banks cannot release deceased depositor’s funds to nominees while heirs’ succession disputes remain pending.

The petitioner, widow of Late Md. Abdul Wahid, sought a writ directing Punjab National Bank to transfer approximately Rs. 24 lakhs lying in the deceased’s savings and fixed-deposit accounts to her bank account, claiming entitlement as his nominated nominee.

The deceased had nominated the petitioner in the relevant bank records.

The deceased’s children through his first wife instituted Succession Certificate Case No. 1 of 2023 before the Sub-Judge, Barsoi, Katihar, impleading the petitioner and her daughter as parties. That proceeding, concerning the deceased’s legal heirs and entitlement to the amounts, was pending when the writ petition was filed.

The Bank declined to transfer the funds because of the pending succession dispute.

1. Whether the High Court, in writ jurisdiction, should direct the Bank to transfer the deceased’s deposits to the petitioner merely because she was recorded as the nominee, when a succession proceeding concerning the legal heirs was pending before the competent civil court.

2. Whether the Bank’s refusal to transfer the amounts, pending adjudication of the succession dispute, violated any fundamental right or principle of natural justice of the petitioner.

The Court applied the principle that disputes concerning succession, legal heirship, and entitlement to the estate of a deceased person must be adjudicated by the competent civil court and cannot ordinarily be conclusively determined in writ jurisdiction.

It further held that where a genuine intra-family succession dispute is pending and the concerned claimants are parties to that proceeding, the Bank cannot safely transfer the deceased’s funds to one claimant until the competent court determines the entitlement.

Although the petitioner relied on an RBI circular concerning payment to nominees, the Court did not finally adjudicate the legal effect or scope of that circular in view of the pending succession proceedings.

The Court found it admitted that the deceased’s children from his first marriage had instituted a succession case and that the petitioner and her daughter had been impleaded therein.

Since the dispute involved competing family claims and required a declaration regarding the deceased’s legal heirs, the Court held that the Bank was justified in withholding transfer of the deposits pending the civil court’s determination.

The matter was therefore not treated as a simple case of enforcement of a nominee’s claim, but as a disputed succession matter unsuitable for final resolution through a writ petition.

The Court also found no infringement of the petitioner’s fundamental rights or violation of natural justice arising from the Bank’s inaction.

The Court issued no direction to the Bank to transfer the amounts.

It clarified that the dismissal would not prevent the petitioner from claiming the funds before the competent authority or court if she was ultimately found entitled in accordance with law.