Companies Act, 2013 ; Section 72- Upon the holder’s death, the nominee would not get an absolute title to the subject matter of nomination, and those would apply to the Companies Act, 1956 (pari materia provisions in Companies Act, 2013) and the Depositories Act, 1996 as well – The legislative intent of creating a scheme of nomination under the Companies Act, 1956 in our opinion is not intended to grant absolute rights of ownership in favour of the nominee merely because the provision contains three elements i.e., the term ‘vest’, a non-obstante clause and the phrase ‘to the exclusion of others’, which are absent in other legislations, that also provide for nomination – The use of the word ‘vest’ does not by itself, confer ownership of the shares/securities in question, to the nominee. The vesting of the shares/securities in the nominee under the Companies Act, 1956 and the Depositories Act, 1996 is only for a limited purpose, i.e., to enable the Company to deal with the securities thereof, in the immediate aftermath of the shareholder’s death and to avoid uncertainty as to the holder of the securities, which could hamper the smooth functioning of the affairs of the company – Use of the non-obstante clause, serves a singular purpose of allowing the company to vest the shares upon the nominee to the exclusion of any other person, for the purpose of discharge of its liability against diverse claims by the legal heirs of the deceased shareholder. This arrangement is until the legal heirs have settled the affairs of the testator and are ready to register the transmission of shares, by due process of succession law.(Para 29-47)
Interpretation of Statutes – General words and phrases used in a statute, regardless of their wide ambit, must be interpreted taking into account the objects of the statute. The clauses & sections within a statute are not to be read in isolation, but their textual interpretation is determined by the scheme of the entire statute. Notably, a non-obstante clause is to be considered on the basis of the context within which it is used. (Para 37)
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