Andhra Pradesh High Court - Amravati

Ganapathy Harshini Naidu vs Union Of India on 26 April, 2023

        THE HON'BLE SRI JUSTICE RAVI CHEEMALAPATI

                    WRIT PETITION NO.4348 OF 2023

ORDER:

The present Writ Petition is filed by the petitioners seeking the

following relief:

"..... declaring the action of the respondents withholding premium amounts after death of the policy holder total amount of Rs.33,19,500/- as per the branch manager letter dated 28.07.2021 nearly including loan debt, the premium amounts to the petitioners as illegal and arbitrary..."

2. The case of the petitioner herein is that the 1st petitioner is

studying final year B.tech in Tamilnadu State, 2nd petitioner is

studying 1st year B.tech at Ongole and 3rd petitioner is housewife

and nominee of the insurance policy taken by her husband.

Pursuant to the death of 3rd petitioner's husband, the petitioners

claimed the policy amount and in spite of repeated requests made

by the petitioners for payment of policy amount, the Manager of

the LIC, Guntur Branch addressed the letter dated 28.07.2021, duly

stating that Succession Certificate is required for payment of the

policy amount. As such, present writ petition has been filed.

3. To the said writ petition, the respondent nos.2&3 filed their

counter denying the averments interalia contending that, 3rd

petitioner approached the 3rd respondent's branch in person and

informed that her husband (Venkata Naga Pradeep Kumar) who is

the policy holder has been murdered on 04.08.2020 and further

informed that the 3rd petitioner got divorced with her husband

(Venkata Naga Pradeep Kumar) on 28.12.2018 on the grounds of

mutual consent and further during the said conversation, the 3rd

petitioner specifically stated that the 3rd petitioner is having some

serious disputes with her mother-in-law. In view of the said facts,

the 3rd respondent suggested the 3rd petitioner to produce proper

succession certificate from approaching competent Court and no

objection undertaking affidavit from her mother-in-law.

4. Heard Sri Nagaraju Pullagura, learned Counsel for the

petitioners and Sri Sreedhar Veliveti, learned Standing Counsel for

respondents.

5. Learned Counsel for the petitioners in elaboration to what

has been stated in the affidavit contended that, once the policy

holder mentions nominee name, the corporation has to pay the

amount to the nominee and no succession certificate is required by

virtue of Section 39 of amended Insurance Act, 2015 and has

drawn the attention of this court to the said provision. In support of

his contentions, learned counsel for the petitioners relied on the

judgment of this court in WP.No.19310/2021 and has drawn the

attention of this Court to the same. Accordingly, prayed to allow the

writ petition.

6. On the other hand, learned Standing Counsel for the

respondents contended that, the 3rd petitioner herself informed the

3rd respondent that she is a divorcee and has disputes with her

mother-in-law and in view of that, the respondents have rightly

directed them to obtain succession certificate in order to pay the

policy amount which is justified and the petitioners have not made

out any case warranting the interference of this court and

accordingly prayed to dismiss the writ petition.

7. In reply to the above submission, learned Counsel for the

petitioners submitted that, 3rd petitioner's mother-in-law has issued

a legal notice stating that she has no claim on the amount paid by

the corporation subsequent to the death of her son and the said

legal notice has been placed on record and has drawn the attention

of this court and prayed to pass appropriate orders in that regard.

8. Perused the record.

9 It is not the case of the respondent corporation that a claim

has been made by the mother of the deceased i.e., mother-in-law

of the nominee to the corporation claiming the policy amount.

Further, in the legal notice issued on behalf of the mother-in-law, it

was categorically stated that she has no claim on the policy

amount. No doubt, as per Section 39 of the Act, the mere

nomination only indicates the hand which is authorized to receive

the amount, on the payment of which the insurer gets a valid

discharge of its liability under the policy. The amount, however, can

be claimed by the heirs of the assured in accordance with law of

succession governing them.

10. Section 39 of the Insurance Laws (Amended) Act, 2015

reads as follows:

"39. Nomination by policyholder. --(1) The holder of a policy of life insurance on his own life may, when effecting the policy or at any time before the policy matures for payment, nominate the person or persons to whom the money secured by the policy shall be paid in the event of his death: Provided that, where any nominee is a minor, it shall be lawful for the policyholder to appoint any person in the manner laid down by the insurer, to receive the money secured by the policy in the event of his death during the minority of the nominee. (2) Any such nomination in order to be effectual shall, unless it is incorporated in the text of the policy itself, be made by an endorsement on the policy communicated to the insurer and registered by him in the records relating to the policy and any such nomination may at any time before the policy matures for payment be cancelled or changed by an endorsement or a further endorsement or a will, as the case may be, but unless notice in writing of any such cancellation or change has been delivered to the insurer, the insurer shall not be liable for any payment under the policy made bona fide by him to a nominee mentioned in the text of the policy or registered in records of the insurer.

(3) The insurer shall furnish to the policyholder a written acknowledgement of having registered a nomination or a cancellation or change thereof, and may charge such fee as may be specified by regulations for registering such cancellation or change.

(4) A transfer or assignment of a policy made in accordance with section 38 shall automatically cancel a nomination:

Provided that the assignment of a policy to the insurer who bears the risk on the policy at the time of the assignment, in consideration of a loan granted by that insurer on the security of the policy within its surrender value, or its reassignment on repayment of the loan shall not cancel a nomination, but shall affect the rights of the nominee only to the extent of the insurer's interest in the policy:

Provided further that the transfer or assignment of a policy, whether wholly or in part, in consideration of a loan advanced by the transferee or assignee to the policyholder, shall not cancel the nomination but shall affect the rights of the nominee only to the extent of the interest of the transferee or assignee, as the case may be, in the policy:

Provided also that the nomination, which has been automatically cancelled consequent upon the transfer or assignment, the same nomination shall stand automatically revived when the policy is reassigned by the assignee or retransferred by the transferee in favour of the policyholder on repayment of loan other than on a security of policy to the insurer.

(5) Where the policy matures for payment during the lifetime of the person whose life is insured or where the nominee or, if there are more nominees than one, all the nominees die before the policy matures for payment, the amount secured by the policy shall be payable to the policyholder or his heirs or legal representatives or the holder of a succession certificate, as the case may be.

(6) Where the nominee or if there are more nominees than one, a nominee or nominees survive the person whose life is insured, the amount secured by the policy shall be payable to such survivor or survivors.

(7) Subject to the other provisions of this section, where the holder of a policy of insurance on his own life nominates his parents, or his spouse, or his children, or his spouse and children, or any of them, the nominee or nominees shall be beneficially entitled to the amount payable by the insurer to him or them under sub-section (6) unless it is proved that the holder of the policy, having regard to the nature of his title to the policy, could not have conferred any such beneficial title on the nominee.

(8) Subject as aforesaid, where the nominee, or if there are more nominees than one, a nominee or nominees, to whom sub-section (7) applies, die after the person whose life is insured but before the amount secured by the policy is paid, the

amount secured by the policy, or so much of the amount secured by the policy as represents the share of the nominee or nominees so dying (as the case may be), shall be payable to the heirs or legal representatives of the nominee or nominees or the holder of a succession certificate, as the case may be, and they shall be beneficially entitled to such amount. (9) Nothing in sub-sections (7) and (8) shall operate to destroy or impede the right of any creditor to be paid out of the proceeds of any policy of life insurance.

(10) The provisions of sub-sections (7) and (8) shall apply to all policies of life insurance maturing for payment after the commencement of the Insurance Laws (Amendment) Act, 2015 (5 of 2015).

(11) Where a policyholder dies after the maturity of the policy but the proceeds and benefit of his policy has not been made to him because of his death, in such a case, his nominee shall be entitled to the proceeds and benefit of his policy. (12) The provisions of this section shall not apply to any policy of life insurance to which section 6 of the Married Women's Property Act, 1874 (3 of 1874), applies or has at any time applied:

Provided that where a nomination made whether before or after the commencement of the Insurance Laws (Amendment) Act, 2015 (5 of 2015), in favour of the wife of the person who has insured his life or of his wife and children or any of them is expressed, whether or not on the face of the policy, as being made under this section, the said section 6 shall be deemed not to apply or not to have applied to the policy."

11. The judgment relied by the learned counsel for the

petitioners in WP.No.19310/2021 reads as follows:

"...11. A careful perusal of sub-section (7) of Section 39 would indicate that the words "beneficially entitled" are employed for the first time in sub-section (7) of the amended Section 39 which we do not find in the original Section 39. In my considered view, the legislative intendment is manifestly clear from the words "beneficially entitled" which means the nominee or nominees shall receive the insurance amount on the death of policyholder in his/their own interest in exclusion of other heirs. My view gets fortified from the interpretation given to the

words "beneficially entitled" in the treatise "The LawLexicon" by renowned author Sri P.Ramanatha Ayyar in his second edition (Reprint 2010). The words "beneficially entitled" are defined as follows: "Beneficially entitled to possession" does not mean entitled and deriving a benefit from possession, but beneficially entitled in the sense of being entitled for one's own benefit, if there is any benefit to be derived from the estate, and not simply as trustee for others (Per COTTON, L.J., Re Jones, 53 LJ Ch. 811) (a) The above narration pellucidly tells that a person who is authorized to be beneficially entitled to an estate means he will be entitled for his own benefit.It otherwise stipulates that the said person excludes the others from the 13 enjoyment of such estate. When this meaning is imported to Section 9(7) of the amended Act, it gives an understanding that the registered nominee or nominees after the death of the policyholder shall receive the insurance amount for his/their beneficial enjoyment in exclusion of other heirs. This legal aspect is no more res integra.

16. The above being the law, the facts of the case are that admittedly Ramesh Babu, the son of petitioner, who obtained the insurance policies, died on 04.06.2021, as is evident from the copy of Death Certificate issued by the Greater Hyderabad Municipal Corporation, filed along with material papers in the writ petition, and as such the two insurance policies shall be deemed to have matured on the date of his death. Admittedly, he died after the amendment to Section 39 of Insurance Act, 1938 came into force. In that view, the law prevailing on the date of maturity of insurance policies would be applicable to this case, meaning thereby, the 1st respondent, the wife of the deceased, who is shown as nominee in the two policies, shall be beneficially entitled to receive the policy amounts in exclusion of the other heirs. Ergo, this writ petition is not maintainable..."