Karnataka High Court
Smt Annapurna D/O Sharad Patange After ... vs Kavita W/O Kantesh Khandagale on 22 January, 2025
Author: Hanchate Sanjeevkumar
Bench: Hanchate Sanjeevkumar
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RFA No. 100004 of 2025
IN THE HIGH COURT OF KARNATAKA,
R
DHARWAD BENCH
DATED THIS THE 22ND DAY OF JANUARY, 2025
BEFORE
THE HON'BLE MR. JUSTICE HANCHATE SANJEEVKUMAR
REGULAR FIRST APPEAL NO. 100004 OF 2025
BETWEEN:
SMT ANNAPURNA,
D/O. SHARAD PATANGE
AFTER MARRIAGE
SMT. ANNAPURNA,
W/O. KANTESH KHANDAGALE,
AGE. 45 YEARS, OCC. HOUSEHOLD WORK,
R/O. H.NO. 386, VENGURLA ROAD,
SULAGA (U),
TQ. AND DIST. BELAGAVI 590001
...APPELLANT
Digitally signed by (BY SRI. AVINASH BANAKAR, ADVOCATE)
MALLIKARJUN
RUDRAYYA KALMATH
Location: HIGH
COURT OF
KARNATAKA AND:
1. KAVITA,
W/O. KANTESH KHANDAGALE
AGE. 45 YEARS, OCC. HOUSEHOLD WORK,
R/O. PLOT NO. 159, VINAYAK COLONY,
3RD CROSS, SHAHU NAGAR,
BELAGAVI,
TQ. AND DIST. BELAGAVI 590001.
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RFA No. 100004 of 2025
2. PRANAV S/O. KANTESH KHANDAGALE
AGE. 23 YEARS, OCC. STUDENT,
R/O. PLOT NO. 159, VINAYAK COLONY,
3RD CROSS, SHAHU NAGAR,
BELAGAVI,
TQ. AND DIST. BELAGAVI 590001.
3. THE GENERAL MANAGER
ADITYA BIRLA SUN LIFE INSURANCE CO. LTD.
4. KASBEKAR METGUD CLINIC
REP. BY DR. BASAVARAJ H. METGUD,
SHIVAJI NAGAR, BELAGAVI,
TQ. AND DIST.BELAGAVI 590001.
...RESPONDENTS
THIS RFA IS FILED UNDER SECTION 96 READ WITH
ORDER 41 RULE 1 OF CPC., PRAYING TO, SET ASIDE THE
JUDGMENT AND DECREE DATED 25.11.2024 PASSED BY THE
COURT OF PRINCIPAL SENIOR CIVIL JUDGE AND CHIEF
JUDICIAL MAGISTRATE, BELAGAVI IN OS NO. 247/2022 AND
DISMISS THE SUIT OF THE PLAINTIFFS, IN THE INTEREST OF
JUSTICE AND EQUTIY.
THIS APPEAL, COMING ON FOR ADMISSION, THIS DAY,
JUDGMENT WAS DELIVERED THEREIN AS UNDER:
CORAM: THE HON'BLE MR. JUSTICE HANCHATE SANJEEVKUMAR
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RFA No. 100004 of 2025
ORAL JUDGMENT
(PER: THE HON'BLE MR. JUSTICE HANCHATE SANJEEVKUMAR)
Though this appeal is listed for admission, with consent of
learned counsel for the parties, it is taken up for final disposal.
2. This appeal is filed by the appellant, who has filed
I.A No.V under Order I Rule 10(2) R/w Section 151 of the Code
of Civil Procedure, 1908 (hereinafter referred to as the 'CPC')
for impleading Smt.Annapurna W/o Kantesh Khandagale as
plaintiff No.3 in O.S No.247/2022 (P & SC No.27/2021), which
is rejected and against the decree passed in the suit for
issuance of succession certificate as per Section 372 of the
Indian Succession Act, 1925 (hereinafter referred to as the
'Act'), the present appeal is filed.
3. The respondent Nos.1 and 2 have filed petition in
P & SC No.27/2021. Later on, it was converted into O.S
No.247/2022 under Section 372 of the Act, seeking succession
certificate to facilitate them to receive amount payable to
Kantesh (hereinafter referred to as the 'deceased'), on the
ground that they are wife and son of deceased. It was pleaded
that the marriage of plaintiff No.1 was solemnized on
01.12.2000 and plaintiff No.2 is the only son of deceased and
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plaintiff No.1. The said Kantesh died on 25.05.2021. Therefore,
plaintiffs/petitioners filed petition for seeking succession
certificate to claim the estate of the deceased. Later, it was
converted into O.S.No.247/2022, since the respondent
No.3/Insurance Company has intended to contest the petition,
therefore, the said petition came to be contested. Hence, it was
converted as suit.
4. During pendency of petition before the Trial Court,
the appellant filed I.A.No.V under Order I Rule 10(2) R/w
Section 151 of the CPC, praying to implead her as plaintiff
No.3. The deceased Kantesh, during his life time, has
purchased Insurance Policy by making the appellant as a
nominee. Therefore, the appellant by contending being a
nominee is legally eligible to receive the policy amount.
Therefore, filed an application for impleadment. The said
application was rejected by the Trial Court. Thereafter,
considering the evidence on record, the Trial Court has decreed
O.S.No.247/2022 by decreeing suit filed under Section 372 of
the Act and granted issuance of succession certificate in favour
of respondent Nos.1 and 2.
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5. The appellant, who was unsuccessful in getting
impleading herself in the suit, has preferred the present appeal
challenging the said order of grant of succession certificate in
favour of respondent Nos.1 and 2. This Court has allowed the
application in I.A.No.2/2025 seeking permission to prosecute
the appeal.
6. Learned counsel for the appellant submitted that
the appellant is a nominee made by deceased while purchasing
insurance policy with respondent No.3. Therefore, the appellant
is legally and lawfully eligible to receive the said policy amount,
but not by respondent Nos.1 and 2. He places reliance on
Section 39(7)(8) of the Insurance Act, 1938. Therefore,
submitted that since the appellant is the only nominee in the
policy as nominated by deceased, therefore, the appellant alone
is entitled to receive amount of the insurance policy. Hence,
submitted that if succession certificate is granted as per order
of the Trial Court, then it would be difficult for the appellant for
receiving amount under policy. Hence, prays to allow the
appeal and set aside the order passed by the Trial Court.
7. The appellant was a nominee, when deceased
purchased insurance policy from respondent No.3. Just because
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the deceased has made the appellant as nominee, that does
not defeat law of succession, when other legal heirs are having
right to claim estate of deceased. The purpose of making
nomination is to discharge the initial burden of the
banker/insurance institution to pay the amount to the nominee
without keeping themselves. But, just because nominee is
made that does not create any disentitlement by other legal
heirs as per their right vested under the law of succession.
8. In this regard, Hon'ble Supreme Court in the case
of Smt. Sarabati Devi and Another V/s Smt. Usha Devi
1984, 1 SCC 424 has laid down principle of law by interpreting
Section 13 of the incidence Act at paragraph Nos.5, 8 and 10.
5. 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
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changed, but before such cancellation or
change is notified to the insurer if he makes the
payment bona 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 Uma Sehgal case [AIR 1982 Del 36 :
ILR (1981) 2 Del 315] . 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
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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.
8. We have carefully gone through the
judgment of the Delhi High Court in Uma
Sehgal case [AIR 1982 Del 36 : ILR (1981) 2
Del 315] . In this case the High Court of Delhi
clearly came to the conclusion that the
nominee had no right in the lifetime of the
assured to the amount payable under the policy
and that his rights would spring up only on the
death of the assured. The Delhi High Court
having reached that conclusion did not proceed
to examine the possibility of an existence of a
conflict between the law of succession and the
right of the nominee under Section 39 of the
Act arising on the death of the assured and in
that event which would prevail. We are of the
view that the language of Section 39 of the Act
is not capable of altering the course of
succession under law. The second error
committed by the Delhi High Court in this case
is the reliance placed by it on the effect of the
amendment of Section 60(1)(kb) of the Code of
Civil Procedure, 1908 providing that all moneys
payable under a policy of insurance on the life
of the judgment debtor shall be exempt from
attachment by his creditors. The High Court
equated a nominee to the heirs and legatees of
the assured and proceeded to hold that the
nominee succeeded to the estate with all 'plus
and minus points'. We find it difficult to treat a
nominee as being equivalent to an heir or
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legatee having regard to the clear provisions of
Section 39 of the Act. The exemption of the
moneys payable under a life insurance policy
under the amended Section 60 of the Code of
Civil Procedure instead of 'devaluing' the earlier
decisions which upheld the right of a creditor of
the estate of the assured to attach the amount
payable under the life insurance policy
recognises such a right in such creditor which
he could have exercised but for the
amendment. It is because it was attached the
Code of Civil Procedure exempted it from
attachment in furtherance of the policy of
Parliament in making the amendment. The
Delhi High Court has committed another error
in appreciating the two decisions of the Madras
High Court in Karuppa
Gounder v. Palaniammal [AIR 1963 Mad 245
at para 13 : (1963) 1 MLJ 86 : ILR (1963) Mad
434] and in B.M. Mundkur v. Life Insurance
Corporation of India [AIR 1977 Mad 72 :
47 Com Cas 19 : (1977) 1 MLJ 59 : ILR
(1975) 3 Mad 336] . The relevant part of the
decision of the Delhi High Court in Uma Sehgal
case [AIR 1982 Del 36 : ILR (1981) 2 Del 315]
reads thus: (AIR p. 40, paras 10, 11)
10.In Karuppa Gounder v. Palaniamma [AIR
1963 Mad 245 at para 13 : (1963) 1 MLJ 86 :
ILR (1963) Mad 434] , K had nominated his
wife in the insurance policy. K died. It was held
that in virtue of the nomination, the mother
of K was not entitled to any portion of the
insurance amount.
11. I am in respectful agreement with these
views, because they accord with the law and
reason. They are supported by Section 44(2) of
the Act. It provides that the commission
payable to an insurance agent shall after his
death, continue to be payable to his heirs, but
if the agent had nominated any person the
commission shall be paid to the person so
nominated. It cannot be contended that the
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nominee under Section 44 will receive the
money not as owner but as an agent on behalf
of someone else, vide B.M. Mundkur v. Life
Insurance Corporation [AIR 1977 Mad 72 : 47
Com Cas 19 : (1977) 1 MLJ 59 : ILR (1975) 3
Mad 336] . Thus, the nominee excludes the
legal heirs.
10. It is obvious from the above passage
that the above case has no bearing on the
meaning of Section 39 of the Act. The fact of
nomination was treated in that case as a piece
of evidence in support of the finding that the
policy was not a joint family asset but the
separate property of the coparcener concerned.
No right based on the ground that one party
was entitled to succeed to the estate of the
deceased in preference to the other or along
with the other under the provisions of the
Hindu Succession Act was asserted in that
case. The next error committed by the Delhi
High Court is in drawing an analogy between
Section 39 and Section 44(2) of the Act
thinking that the Madras High Court had done
so in B.M. Mundkur case [AIR 1977 Mad 72 :
47 Com Cas 19 : (1977) 1 MLJ 59 : ILR (1975)
3 Mad 336] . In B.M. Mundkur case [AIR 1977
Mad 72 : 47 Com Cas 19 : (1977) 1 MLJ 59 :
ILR (1975) 3 Mad 336] the High Court of
Madras instead of drawing an analogy between
Section 39 and Section 44(2) of the Act
actually contrasts them as can be seen from
the following passage:
". . .There are vital differences between the
nomination contemplated under Section 39 of
the Act and nomination contemplated under the
proviso to Section 44(2) of the Act. In the first
place, the sum assured, with which alone
Section 39 was concerned, was to be paid in
the event of the death of the assured under the
terms of the contract entered into between the
insurer and the assured and consequently it
was the contractual right which remained
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vested in the insured with reference to which
the nomination happened to be made. It should
be pointed out that the nomination as well as
the liability on the part of the insurer to pay the
sum assured become effective simultaneously,
namely, at the moment of the death of the
assured. So long as he was alive, the money
was not payable to him, in the case of a whole
life policy, and equally, having regard to the
language of Section 39(1) of the Act, the
nominee's right to receive the money arose
only on the death of the assured. Section 39
itself did not deal with the title to the money
assured, which was to be paid by the insurer to
the nominee who was bound to give discharge
to the insurer. It was in this context that the
Court took the view that the title remained with
the estate of the deceased and, therefore, with
the heirs of the deceased, that the nomination
did not in any way affect the title and that it
merely clothed the nominee with the right to
receive the amount from the insurer. (AIR 1977
Mad 77, para 10-A)
11. On the other hand, the provisions and
purport of Section 44 of the Act are different.
In the first place, under Section 44(1) it was a
statutory right conferred on the agent to
receive the commission on the renewal
premium, notwithstanding the termination of
the agreement between the agent and the
insurer, which provided for the payment of
such commission on the renewal premium. The
statute also prescribed the qualification which
rendered the agent eligible to receive
commission on such renewal premium. Section
44(1) provides for the payment of the
commission to the agent during his lifetime
only and does not contemplate the contingency
of his death and the commission being paid to
anybody even after his death. It is Section
44(2) which deals with the payment of
commission to the heirs of deceased for so long
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as such commission would have been payable
had such insurance agent been alive. Thus it
was not the general law of inheritance which
conferred title on the heirs of the deceased
insurance agent to receive the commission on
the renewal premium, but it was only the
particular statutory provision, namely, Section
44(2) which conferred the right on the heirs of
the deceased agent to receive the commission
on the renewal premium. In other words, the
right of the heirs to receive the commission on
renewal premium does not arise under any law
of succession and it is a right directly conferred
on the heirs by Section 44(2) of the Act, even
though who the heirs of the deceased insurance
agent are will have to be ascertained under the
law of succession applicable to him. Thus the
statute which conferred such a right on the
heirs is certainly competent to provide for an
exception in certain cases and take away such
a right from the heirs; and the proviso which
has been introduced by the Government of
India Notification 1962 has done exactly this in
taking away the right of the heirs conferred
under the main part of Section 44(2), in the
event of the agent, during his lifetime, making
a nomination in favour of a particular person
and not cancelling or altering that nomination
subsequently. If the statute itself was
competent to confer such a right for the first
time on the heirs of the deceased agent, it is
indisputable that the statute could take away
that right under stated circumstances. . . ."
(AIR 1977 Mad 77, para 11)
9. Therefore, just because of facility of nomination is
made that does not defeat the rights of the legal heirs to claim
their right in respect of estate of deceased, as the right of the
other legal heirs is as per law of succession. Just because,
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nomination is made during lifetime of deceased, that does not
amount to divesting of title after death of deceased. After death
of deceased, whatever the estate/amount is there, it is
devolved to the legal heirs of deceased as per governing law of
inheritance. Therefore, there is no merit in the contention taken
by the appellant that just because the appellant is made as
nominee than, she alone is entitled to receive the entire
amount depriving the right of other legal heirs. Therefore, the
appeal is liable to be dismissed having no merits to consider
the case. Therefore, the appeal is dismissed.
10. However, liberty is reserved to the appellant to
make claim as per law of succession/law of inheritance as per
law.
Sd/-
(HANCHATE SANJEEVKUMAR)
JUDGE
PMP-Para 1 to 7
RKM-Para 8 to end
ct-cmu
