Legal heirs cannot be excluded from claiming securities against nominee due to the Non-Obstante clause: SC

The Supreme Court (SC) ruled that the legal heirs’ legitimate claim to the securities, against the nominee, is not precluded by the non-obstante clause under Section 109A(3) of the Companies Act, 1956 and bye-law 9.11.7 of the Depositories Act, 1996 and opined that the vesting of securities in favour of the nominee “is for a limited purpose”, that is, to avoid confusion with regard to the legal formalities required to be undertaken upon the death of a shareholder. The SC further held that, succession laws cannot be overridden by the nomination process under the Companies Act, 1956 (pari materia Companies Act, 2013).