Delhi High Court

Maya Devi vs Director General Of Posts (Pli) ... on 5 August, 2014

*      IN THE HIGH COURT OF DELHI AT NEW DELHI
+      W.P.(C) 4063/2014
       MAYA DEVI                                         ..... Petitioner
                          Through:     Mr. D.S. Kauntae, Advocate.

                          versus

       DIRECTOR GENERAL OF POSTS
       (PLI) DEPARTMENT & ORS.             ..... Respondents
                     Through: Ms. Barkha Babbar, Adv. for UOI.

       CORAM:
       HON'BLE MR. JUSTICE KAILASH GAMBHIR
       HON'BLE MR. JUSTICE NAJMI WAZIRI
                    ORDER

       %            05.08.2014


KAILASH GAMBHIR, J.(Oral)

1. By this Writ Petition filed by Smt. Maya Devi, the petitioner seeks

direction in the nature of certiorari to set aside the impugned order dated

4th April, 2014 passed by respondent No.2 which as per petitioner is

illegal and contrary to the Hindu Succession Act, 1956 read with Section

39(5) of the Insurance Act, 1938. The petitioner also seeks a direction to

the respondents to take all necessary steps to remit the insurance amount

expeditiously, along with yearly bonus money, in favour of the petitioner,

pursuant to her son's demise.

2. The learned counsel for the petitioner submits that the petitioner's

son viz. Mandeep Singh, while in service as a Sepoy in the Indian Army,

took a postal life insurance policy for which a monthly premium of

Rs.1,245/- was to be deducted from his salary. The date of maturity of

the policy was 26th September, 2028. However, before the policy could

mature the son died in harness, at his parental house on 5th August, 2011.

The learned counsel for the petitioner submits that in the proposal filled

by the son of the petitioner, he had nominated his father Sh. Attar Singh

to be entitled to receive the insurance amount; the father died on 25th

January, 2012, thereafter the present petitioner, his widow by a

representation dated 9th March, 2012 requested the insurer to be

considered as the only person entitled to receive the insurance amount.

The learned counsel further submits that the respondents, in a most

arbitrary and illegal manner rejected her request and instead required her

to first obtain a succession certificate and held out to her that it on the

basis of the succession certificate alone, the amount could be disbursed

by them. The counsel further submits that due to the ill advise given to

the petitioner, she filed an application for the issuance of succession

certificate under Section 372 of the Indian Succession Act before the

court of learned Civil Judge (SD), Charkhi Dadri, District Bhiwani, but

the said petition was withdrawn by her so as to approach the appropriate

legal forum to seek the release of the said insurance amount. The counsel

further submits that the petitioner served a legal notice under Section 80

of Code of Civil Procedure, 1908 to the respondents but the same did not

lead any fruitful results.

3. One of the main contentions of the counsel for the petitioner is that

under the terms of insurance policy, there are two conditions for the

settlement of early death claims. Under Rule 53 of POIF Rules, 2011

when the death of insurer takes place before the completion of three years

from the date of acceptance of policy, the matter will be investigated

thoroughly to find out as to whether the insurer had suppressed any

material information which otherwise would not have allowed the

proposer/ assured to be eligible for PLI/RPLI and it should also be

enquired whether the insured was suffering from any disease prior to the

taking of the policy. The second condition is under Rule 36(6)(e) which

envisages that where the policy matures for payment during the life time

of the person whose life is insured or where the nominee or, if there are

more than one nominees, all the nominees die before the policy matures

for payment, the amount secured by the policy shall be payable to the

policy holder or his heirs or the legal representatives of the holder of a

succession certificate. The submission of the counsel for the petitioner is

that the case of the petitioner is not governed by either of the said rules

and the petitioner being the only legal heir after the death of her husband

is entitled to the amount of the said insurance policy which was taken by

her son.

4. This contention is strongly refuted by Ms. Barkha Babbar, who

appears on behalf of the respondents on advance notice. Learned counsel

submits that the respondents cannot release the insurance amount in the

absence of succession certificate as the widow of the son of the petitioner

is equally entitled to the insurance amount as she is also a Class I legal

heir. Counsel also submits that even as per the Will left by Mandeep

Singh, the deceased son of the petitioner, he had nominated his widow to

be one of the beneficiaries of his pensionary/ retiral benefits.

5. Indisputably, the son of the petitioner had died before the tenure of

the policy was to mature. This is also not in dispute that he had

nominated his father as his nominee to be entitled to get the said

insurance amount. But unfortunately, he had also died on 25th January,

2012 before the respondents could release the said amount in his favour.

The petitioner is the widow of Sh. Attar Singh, but it is also an admitted

fact that the widow of son of the petitioner, who is daughter-in-law of the

petitioner is also alive. The petitioner as well as the widow of son of the

petitioner are Class I legal heirs. Therefore, under the Succession Act,

both are entitled to the estate left by the deceased son of the petitioner.

The issue with regard to the rights of the nominee was authoritatively

settled in the case of Smt. Sarabati Devi & Anr. vs. Smt. Usha Devi:

1984 AIR 346, where the Hon'ble Supreme Court took a view that mere

nomination made under Section 39 of the Insurance Act does not have the

effect of conferring on the nominee any beneficial interest in the amount

payable under the life insurance policy on the death of the insured. The

nomination only indicates the hand which is authorised to receive amount

on the payment of which the insurer gets valid discharge of its liability

under the policy. It further held that the amount, however, can be

claimed by the heirs of the insured in accordance with the Law of

Succession governing the same. The relevant paras of the said Judgment

are reproduced as under:-

"We shall now proceed to analyse the provisions of Section 39 of the Act. The said Section provides that a 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. If the nominee is a minor, the policy holder may appoint any person to receive the money in the event of his

death during the minority of the nominee. That means that if the policy holder is alive when the policy matures for payment he alone will receive payment of the money due under the policy and not the nominee. Any such nomination may at any time before the policy matures for payment be cancelled or changed, but before such cancellation or change is notified to the insurer if he makes the payment bon fide to the nominee already registered with him, the insurer gets a valid discharge. Such power of cancellation of or effecting a change in the nomination implies that the nominee has no right to the amount during the lifetime of the assured. If the policy is transferred or assigned Under Section 38 of the Act, the nomination automatically lapses. If the nominee or where there are nominees more than one all the nominees die before the policy matures for payment the money due under the policy is payable to the heirs or legal representatives or the holder of a succession certificate. It is not necessary to refer to Sub-section (7) of Section 39 of the Act here. But the summary of the relevant provisions of Section 39 given above establishes clearly that the policy holder continues to hold interest in the policy during his lifetime and the nominee acquires no sort of interest in the policy during the lifetime of the policy holder. If that is so, on the death of the policy holder the amount payable under the policy becomes part of his estate which is governed by the law of succession applicable to him. Such succession may be testamentary or intestate. There is no warrant for the position that Section 39 of the Act operates as a third kind of succession which is styled as a 'statutory testament' in paragraph 16 of the decision of the Delhi High Court in Mrs. Uma Sehgal's case (supra). If Section 39 of the Act is contrasted with Section 38 of the Act which provides for transfer or assignment of the rights under a policy, the tenuous character of the right of a nominee would become more pronounced. It is difficult to hold that Section 39 of the Act was intended to act as a third mode of succession

provided by the statute. The provision in Sub-section (6) of Section 39 which says that the amount shall be payable to the nominee or nominees does not mean that the amount shall belong to the nominee or nominees. We have to bear in mind here the special care which law and judicial precedents take in the matter of execution and proof of wills, which have the effect of diverting the estate from the ordinary course of intestate succession and that the rigour of the rules governing the testamentary succession is not relaxed even where wills are registered."

6. On perusal of copy of the insurance policy placed on record, this

Court finds that the nomination of the father of the deceased Sh. Attar

Singh was also under Section 39 of the Insurance Act, 1938. Had Attar

Singh been alive, he as a nominee would have received the insurance

amount not to his own benefit alone but to the benefit of all the legal heirs

of the deceased. With the death of Attar Singh the position would not

change. After his death now the petitioner and the widow of the deceased

son of the petitioner are Class I legal heirs and therefore, in our view both

of them are legally entitled to the estate left by the deceased. The

respondents are, therefore, correct in their decision in requiring the

petitioner to obtain a succession certificate and then to process the claim

for the release of the said postal insurance amount.