Nomination is a device by which the person nominated substitutes the original holder of the rights, in the event of his death. Whether it transfers ownership to the nominee has been a question; the answer to which is nomination only gives the nominee the right to be substituted for the original holder without bestowing the right of ownership to the exclusion of others, who would have been legally entitled to it. The legal heirs remain entitled to the property and the nominee, on the death of the person nominating, holds the property in trust for the legal heirs till it is transferred to them.

While the debtor or the person from whom the original owner was to get the value on the strength of the agreement, arrangement or instrument is duly discharged by giving it to the nominee or the joint holder, the persons entitled to it under law are not divested of their entitlement. As a result, the position of a nominee is akin to that of a trustee holding the property in trust for the legal beneficiaries.