Nominee or legal heir: who gets the money?

Key points

• A nominee collects; the heirs own. Nomination "is merely made to confer a right to collect the money or to receive the money" (2025 SCMR 601, para 4, following PLD 1974 SC 185).
• A nomination is not a gift and not a will, so it cannot change who inherits or how much (2025 SCMR 601, para 4).
• For company shares the law says it outright: the nominee protects the legal heirs' interest "as a trustee" and helps transfer the shares to them under the Islamic law of inheritance (Companies Act 2017, section 79(1)).
• Under the Provident Funds Act the nominee has "the exclusive right to receive the amount and nothing more"; the Act does not make him the owner (PLD 1974 SC 185).
• A nominee who keeps everything can be taken to court. In the 2025 case the heirs' decree stood, and the Supreme Court said "some fraud was played" to deprive them (2025 SCMR 601, para 5).

Nominee vs legal heir: the short answer

A nominee is the person a saver names on a form to receive the money after his or her death. Many families treat that name as the new owner. The Supreme Court does not. In Matloob v. Taj Din (2025 SCMR 601), decided on 15 January 2025, it called it "a settled principle of law that nomination is merely made to confer a right to collect the money or to receive the money and it does not operate either as a gift or as a will; therefore, it cannot deprive the other heirs of the nominator who may be entitled thereto under the law of succession applicable to the deceased." (para 4).

In plain words: the nominee is the collector, the legal heirs are the owners. Who the heirs are, and how much each one gets, is decided by the law of inheritance that applies to the deceased, not by the name on the form.

A farming society, 1948: how a nomination became a land claim

The land in the case was allotted in 1948 to a member of a co-operative farming society, who had named a nominee. Both the member and his nominee died in 1962. The nominee's brother was then entered in the society's record as the next nominee, and in 1991 he obtained a sale deed and a mutation of the land in his own name (2025 SCMR 601, para 2).

The member's heirs sued. The trial court dismissed their suit in 1997, the appellate court decreed it in 2000, and the Lahore High Court dismissed the brother's revision in 2016 (para 2). The brother then asked the Supreme Court for leave to appeal.

What the Supreme Court decided in January 2025

A bench of Irfan Saadat Khan and Shahid Bilal Hassan, JJ refused leave on 15 January 2025. The order, written by Shahid Bilal Hassan, J, put the question as "whether a nominee can substitute an heir(s) after the death of a Member of a Society" (para 4).

It read section 27 of the Co-operative Societies Act 1925, whose second proviso says the "nominee, heir or legal representative shall distribute the amount received by him among the heirs of the deceased", and held that the member's share and interest "established in the Society would devolve upon his legal heirs" (para 4). It added that the brother, born in 1953, could not claim a membership granted in 1948, and that the facts showed "some fraud was played" to deprive the legal heirs (para 5).

Not new: the Supreme Court has said it since 1974

The 2025 order rests on Mst. Amtul Habib v. Mst. Musarrat Parveen, PLD 1974 SC 185, decided on 21 January 1974 by a bench led by Chief Justice Hamoodur Rahman. That case was about a provident fund and a co-operative society. The Court held that the nomination "merely confers a right to collect the money", that "the nominee thus collects as a trustee for the benefit of all persons entitled to inherit", and that section 5 of the Provident Funds Act "neither vests the amount in the nominee nor declares hi to be the owner thereof. It merely gives him the exclusive right to receive the amount and nothing more."

The 2025 order says this view "was continuously upheld by this Court" (para 4). The Supreme Court applied the same idea to National Savings Certificates in 2004 SCMR 1219 (a nomination in the certificate form "could not override" the Islamic law of succession) and to a benevolent fund and group insurance in 2005 SCMR 512, where the deceased's mother, who was the nominee, was held not entitled to the money exclusively.

Shares: the Companies Act calls the nominee a trustee

For company shares the rule is written into the statute. Section 79(1) of the Companies Act 2017 lets a member file a nomination "conferring on a person the right to protect the interest of the legal heirs in the shares of the deceased in the event of his death, as a trustee and to facilitate the transfer of shares to the legal heirs of the deceased subject to succession to be determined under the Islamic law of inheritance" (for non-Muslim members, under their own law).

The nominee is treated as a member only until the shares reach the legal heirs (section 79(2)), and only a spouse, father, mother, brother, sister, son or daughter can be named (section 79(3)).

If you are the nominee, or an heir: what to do

If you are the nominee: collect the money the way the bank, fund or company requires, then give each legal heir the share the law of inheritance gives. If you are also an heir, you keep your own share, not the rest.

If you are an heir and the nominee keeps everything: ask for your share, and if that fails, go to court. In the 2025 case the heirs won a decree, and the Supreme Court left it in place. In Punjab, legal heirs can apply to NADRA for a succession certificate (Punjab Letters of Administration and Succession Certificates Act 2021, section 3); where the heirs disagree, NADRA declines and the matter goes to the court under the Succession Act 1925 (section 5(b)).

And if you want one person to get more after your death, a nominee form will not do it: a nomination is not a gift and not a will (2025 SCMR 601, para 4). Our explainers on gifts (hiba) and on wills (wasiyat) set out what the law allows.

For law students and lawyers

PLD 1974 SC 185 (provident fund, section 5 of the Provident Funds Act 1925; co-operative society, section 27) is applied in 2025 SCMR 601 to a co-operative farming society and stated as a settled principle: nomination confers a right to collect, not title. Section 79 of the Companies Act 2017 writes the trustee position into the law for shares.

Two limits. Insurance has been decided both ways: 2005 SCMR 512 (Supreme Court) treated a benevolent fund and group insurance as part of the deceased's estate, while PLD 2024 Sindh 89 (decided 15 June 2023) held that the group insurance proceeds in that case were not part of the estate, so no succession certificate was needed. And a benefit the deceased could not claim in his lifetime is not part of his estate at all (PLD 2024 Sindh 89).

The case at a glance

Facts

Land in a co-operative farming society was allotted to a member in 1948, who named a nominee. Both died in 1962. The nominee's brother was entered as the next nominee and in 1991 got a sale deed and a mutation in his own name. The member's heirs sued: their suit was dismissed in 1997, decreed on appeal in 2000, and the brother's revision was dismissed by the Lahore High Court in 2016.

The question

Can a nominee, or the nominee's successor, take a deceased member's share in place of the member's legal heirs?

What the Court held

No. A nomination only confers a right to collect; it is not a gift or a will and cannot deprive the heirs. The member's share devolves upon his legal heirs. Leave to appeal was refused on 15 January 2025.

Why

Section 27 of the Co-operative Societies Act 1925 lets a society pay a nominee but obliges the nominee to distribute the amount among the heirs. The Supreme Court has held since PLD 1974 SC 185 that a nomination gives a right to receive, not ownership. The brother, born in 1953, could not claim a 1948 membership, and the record showed fraud (paras 4 and 5).

Limits

It does not decide every kind of payment: insurance has been decided both ways, and a benefit the deceased could not claim in his lifetime is not part of the estate. It does not change the share the law of inheritance gives each heir. It does not stop a society from paying the nominee: the duty to share falls on the person who receives the money.

In the Court’s words

“All these facts establish that some fraud was played”

2025 SCMR 601, para 5

The law it relies on

What this does not mean

• It does not mean the nominee gets nothing. If the nominee is also a legal heir (a son, a daughter, a wife), he or she keeps their own share under the law of inheritance.
• It does not set the shares. How much each heir gets depends on the law of inheritance that applies to the deceased; the nomination changes none of it.
• It does not cover every payment. Insurance has been decided both ways (2005 SCMR 512; PLD 2024 Sindh 89), and a benefit the deceased could not claim in his lifetime is not part of his estate (PLD 2024 Sindh 89).
• It does not stop a bank, fund, company or society from paying the nominee. Under section 27(3) of the Co-operative Societies Act a society that pays its nominee is protected; the duty to share falls on the person who receives the money.

Questions people ask

Sources

• Matloob and others v. Taj Din (deceased) through Legal Heirs and others, 2025 SCMR 601 (Supreme Court of Pakistan, 15 January 2025), paras 2, 4, 5, 6
  A nomination only confers a right to collect; it is not a gift or a will and cannot deprive the heirs; the deceased member's share devolves upon his legal heirs; fraud found; leave refused. verified against full text
• Mst. Amtul Habib and others v. Mst. Musarrat Parveen and others, PLD 1974 SC 185 (Supreme Court of Pakistan, 21 January 1974)
  Nomination under section 5 of the Provident Funds Act and section 27 of the Co-operative Societies Act confers a right to collect, not ownership; the nominee collects as a trustee for all who inherit. verified against full text
• Malik Safdar Ali Khan and another v. Public-at-Large and others, 2004 SCMR 1219 (Supreme Court of Pakistan, 22 January 2004)
  A nomination in a National Savings Certificates form could not override the Islamic law of succession. headnote read in the FAI archive
• Mst. Ameeran Khatoon v. Mst. Shamim Akhtar and others, 2005 SCMR 512 (Supreme Court of Pakistan, 30 December 2004)
  Benevolent fund and group insurance amounts devolved upon the heirs as the deceased's estate; the mother, who was the nominee, was not exclusively entitled. headnote read in the FAI archive
• Mst. Nusrat Fareed v. Haji Ahmed Mujahid and others, PLD 2024 Sindh 89 (Sindh High Court, 15 June 2023)
  Group insurance proceeds in that case were not part of the deceased's estate; a benefit the deceased could not claim in his lifetime is not inheritable. headnote read in the FAI archive
• Companies Act, 2017, Section 79 text checked in FAI Statute Search, 27 October 2026
• Provident Funds Act, 1925, Section 5 text checked in FAI Statute Search, 27 October 2026
• Punjab Letters of Administration and Succession Certificates Act, 2021, Sections 2, 3, 5 and 10 text checked in FAI Statute Search, 27 October 2026 Punjab Code

Every quote and section above is traced to the full judgment or statute text by an automatic check that runs on every update.

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