Prasanna Narendran vs The Insurance Ombudsman
2025 Latest Caselaw 3483 Ker

Kerala High Court

Prasanna Narendran vs The Insurance Ombudsman on 14 August, 2025

WA NO.675/2025                    1



                                            2025:KER:61164

         IN THE HIGH COURT OF KERALA AT ERNAKULAM

                           PRESENT

  THE HONOURABLE MR.JUSTICE SUSHRUT ARVIND DHARMADHIKARI
                              &
        THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M.
THURSDAY, THE 14TH DAY OF AUGUST 2025 / 23RD SRAVANA, 1947

                     WA NO.675 OF 2025

         ARISING OUT OF THE JUDGMENT DATED 13.03.2025 IN
        WP(C) NO.11185/2024 OF HIGH COURT OF KERALA
APPELLANTS/PETITIONERS:

    1    PRASANNA NARENDRAN
         AGED 81 YEARS
         W/O NARENDRAN, RESIDING AT PADMA VIHAR,
         CONVENT ROAD, BURNACHERRY, KANNUR, PIN - 670013

    2    SRI NARAYAN CHANDRASEKHAR
         AGED 54 YEARS
         S/O CHANDRASEKHAR, RESIDING AT 'REMONA',
         RAMADEVI MANDIR LANE, PUNKUNNAM,
         THRISSUR, PIN - 680002


         BY ADVS.
         SRI.T.C.SURESH MENON
         SRI.B.DEEPAK


RESPONDENTS/RESPONDENTS:

    1    THE INSURANCE OMBUDSMAN
         OFFICE OF THE INSURANCE OMBUDSMAN, 2ND FLOOR,
         PULINAT BUILDING, OPPOSITE COCHIN SHIPYARD,
         M.G. ROAD, ERNAKULAM, PIN - 682015

    2    THE RELIANCE LIFE INSURANCE
         KANNUR BRANCH, REPRESENTED BY ITS BRANCH MANAGER,
         KANNUR, PIN - 670001
 WA NO.675/2025                           2



                                                        2025:KER:61164



    3          NISHA MANOMOHAN
               D/O O.C.MANOMOHAN, RESIDING AT SAHANA,
               BEHIND CHOVA WATER TANK, MELE CHOVA,
               KANNUR, PIN - 670006

    4          ADDL.R4:

               REVANTH SANDEEP
               S/O: LATE.SANDEEP NARENDRAN, SAHANA, CHOVVA P O,
               CHOVVA, KANNUR, KERALA 670006 UID: 3705-2896-2279
               REP.BY MOTHER, NISHA MANOMOHANAN AGED: 51
               W/O LATE SANDEEP NARENDRAN, D/O: MANOMOHANAN O C,
               SAHANA, CHOVVA PO, KANNUR, KERALA 670006
               UID:8900-2195-9550.

               ADDL.R4 IMPLEADED AS PER ORDER DATED 9/06/2025 IN
               I.A.1/2025 IN W.A.NO.675/2025.


               BY ADVS.
               SRI.ATUL SOHAN, R3 & R4
               SMT.R.REJI (ATTINGAL)
               SMT.SREEJA SOHAN K.
               SRI.K.V.SOHAN
               SMT.RAKHI RAMACHANDRAN, R2



        THIS    WRIT      APPEAL   HAVING    BEEN   FINALLY   HEARD   ON
07.08.2025,        THE     COURT    ON   14.08.2025    DELIVERED      THE
FOLLOWING:
 WA NO.675/2025                              3



                                                                2025:KER:61164


                                  JUDGMENT

Dated this the 14th day of August, 2025

Syam Kumar V.M., J.

This appeal is filed challenging the judgment dated

13.03.2025 of the learned Single Judge in W.P.(C) No.11185 of

2024. Appellants are the petitioners in the Writ Petition.

2. The dispute concerns the rival claims under a Life

Insurance Policy issued by the 2 nd respondent Company to late

Sandeep Narendran. The entitlement to receive the amount of

Rs.6,69,534.70, due under the relevant policy, is contested by the

1st appellant, mother and the 3rd respondent, wife of the Life Assured

(LA). The 1st respondent, Ombudsman, before whom the mother

had taken the dispute, had dismissed her complaint vide Ext.P3

Award and directed the insurer to pay the amount to the legal heirs

of the LA, as identified and established by the appropriate authority.

The said award of the Ombudsman was challenged by the mother

as the 1st appellant and her son-in-law as the 2 nd appellant by filing

the Writ Petition. The following prayers were sought in the W.P. :

"(i) Call for the records leading to the passing of Ext.P3 by the 1 st

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respondent Ombudsman and quash the same by the issue of a writ of

certiorari or other appropriate writ, order or direction ;

ii) issue a writ in the nature of mandamus directing the 2 nd respondent to release the benefits due under Ext.P1 policy vide, No.17157426 with Client ID No.00764240 to the nominee, who is none other than the 1st petitioner ;

iii) to declare that the 2nd respondent cannot delay the disbursement of the benefits due under Ext.P1 policy to the nominee under the cover of rival claim or any dispute ;

iv) issue a writ in the nature of mandamus directing the 2 nd respondent to pay interest at the rate of 15% from the date of claim till the disbursement of the benefits due under Ext.P1 policy ;

v) dispense with the filing of translation of vernacular documents ;

and

vi) issue such other writ, order or direction as this Honourable Court deems fit and proper in the circumstances of the case."

3. The learned Single Judge allowed the Writ Petition and,

inter alia, referring to the principles of the Hindu Succession Act,

1956, directed the 2nd respondent to transfer the assured amount

under the policy in equal shares to the 1 st appellant-mother and the

3rd respondent-wife. Aggrieved by the same, the appellant's mother

and her son-in-law have preferred this Writ Appeal.

4. Heard Sri.T.C.Suresh Menon, Advocate for the appellants,

Smt.Rakhi Ramachandran, Advocate for the 2 nd respondent and

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Sri.Atul Sohan for respondents 3 and 4.

5. An impleading petition numbered as I.A.No.1 of 2025 has

been filed by the 3rd respondent, wife, seeking to implead her minor

son, Revanth Sandeep, as the Additional respondent No.4 in the

party array. The said I.A. is heard and allowed.

6. It is contended by the learned counsel for the appellants

that the learned Single Judge erred in ignoring the mandates of

Section 39 (7) of the Insurance Act, 1938 as it stands now after the

amendment of 2015. As per the said provision, the status of the 1 st

appellant-mother stands altered from that of a 'receiver/collector

nominee' to that of a 'beneficial nominee'. The change as effected

by the amendment is that the amount under the policy would be now

payable to the nominee who is beneficially entitled if the LA is no

more, and only in the absence of such nominee would it become

payable to the legal heirs. The learned Single Judge overlooked the

said change that had been carried out by the amendment to Section

39(5) of the Act. Contending that Ext.P1 policy reflects the 1 st

appellant-mother as the nominee who is beneficially entitled, he

submits that the learned Single Judge failed to see that the

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Ombudsman had erroneously considered the matter without taking

into account the amendment to the relevant provision of the

Insurance Act. Placing reliance on the decision in Shweta Singh

Huria and others v. Santosh Huria and another (2021 KHC

4386), it is contended that with the introduction of Section 39 (7) of

the Act, a nominee has a beneficial interest in the amount payable

under the policy on the death of the assured, and he no longer

remains a mere 'receiver nominee'. The learned Single Judge

committed a grave mistake in deciding the lis under the precepts of

the Hindu Succession Act instead of deciding the same under the

Insurance Act, which is the applicable statute. The learned Single

Judge had also overlooked Section 39(7) and should have

concluded that there is no scope for an inter-party dispute when the

statute stipulates that the nominee is beneficially entitled to the

amount due under the policy. He thus prayed for setting aside the

judgment of the learned Single Judge, quash Ext.P3 award and

direct the 2nd respondent Insurance Company to release the benefits

under the policy to the 1st appellant. A direction to the 2nd

respondent insurer to pay interest @ 15% on delayed payment is

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also sought, placing reliance on the dictum laid down by the Madras

High Court in Amirthavalli Mohan and another v. Life Insurance

Corporation of India, Madras and another [1995 KHC 2144].

7. Per contra, the learned counsel for the 3rd respondent

submits that the 3rd respondent and her minor son Ravanth

Sandeep are the beneficiary legal heirs and that they are governed

by the Hindu Succession Act. The 1st appellant-mother is a class

one heir along with the wife and the son of the LA. It is contended

that all the averments in the Writ Petition and the Writ Appeal are

manipulations by the 2nd appellant, who is the son-in-law of the 1st

appellant has absolutely no right to intermeddle in the subject

matter. Reliance is also placed by the learned counsel on the dictum

laid down by the Allahabad High Court in Smt.Kusum v. Anand

Kumar and 3 others [2025 SCC OnLine All 2646] and it is

contended that Section 39 (7) of the Insurance Act has to be

interpreted to hold that the beneficial nominee cannot be said to be

the owner of the money out of the proceeds of the policy. The

learned counsel for the 3rd respondent thus seeks a dismissal of the

Writ Appeal.

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8. We have heard both sides in detail. Whether after the

amendment to Section 39 of the Insurance Act, 1938 and the

inclusion of the stipulation therein that the nominee shall be

beneficially entitled to the amounts payable by the insurer, has the

effect of excluding the successors/legal heirs from realising amounts

under the policy, is the moot question that comes up for

consideration in this W.A. Nomination is dealt with comprehensively

in Section 39 of the Insurance Act, 1938. It 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 acknowledgment 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

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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,

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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."

Section 39 (7) has been variously interpreted by different High

Courts. In Shweta Singh Huria's case, the Delhi High Court, after

considering the judgment in the case of Sarbati Devi v. Usha Devi

[(1984) 1 SCC 424], carved out a difference between a beneficiary

nominee and a collector nominee to hold that, before the

amendment in the Insurance Act, the nominee was only a 'collector

nominee'. However, after the amendment, the nominee became a

'beneficiary nominee' to the exclusion of others. The Andhra

Pradesh High Court in the case of Mallela Manimala v. Mallela

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Lakshmi Padmavathi and others [2023 SCC Online AP 459],

considered the amended Section 39(7) and noted the extent of

change brought about by the amendment, stating that after the

amendment of Section 39, a beneficial nominee takes the insurance

amount after the demise of the holder of the policy for his beneficial

enjoyment in exclusion of other legal heirs. The High Court of

Madras in K.R.Sakthi Murugeswari v. The Divisional Manager,

Life Insurance Corporation of India and others [2023 SCC

OnLine Mad 8397] held that a beneficiary nominee under the

amended Section 39 (7) would be entitled to the amounts.

9. A different view has been adopted by the High Court of

Karnataka in the case of Neelavva v. Chandravva and others

[2025 SCC OnLine Kar 1945], wherein it was held that Section 39,

as amended, does not intend to override the provisions of law

relating to succession. Taking note of the dictum laid down by the

Supreme Court in Shakti Yezdani and another v. Jayanand

Jayant Salgaonkar and others [(2024) 4 SCC 642], it was

concluded that the expression "beneficial interest" appearing in

Section 39(7) and "beneficial title" appearing in Section 39(8) should

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be interpreted to say that such nominees or their legal

representatives recognized in Sections 39(7) and 39 (8) will get

beneficial title over the benefits flowing from the insurance policy if

the testamentary and non-testamentary heirs do not get claim the

benefits flowing from the insurance policy. It was explained that if

under the unamended provision, the nominee had an obligation to

distribute the benefits flowing from the policy to the legal heirs,

under Section 39(7), as it stands amended, there is no such

obligation as long as there is no claim by the legal heirs. In the

absence of any claim by the legal heirs, the title vests in the

beneficiary nominee. However, if there is a claim by the legal heirs,

then the nominee's claim has to yield to the personal law governing

succession. The High Court of Madhya Pradesh, while considering

the same question in Arun Kumar Singh v. Jaya w/o.Chetan

Singh Chouhan and others [2022 SCC Online MP 5948] has held

that the nominee under the amended Section 39(7) would not be an

absolute beneficial nominee, and the rights of the successors can

be claimed in accordance with the law of succession governing

them.

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10. We have also had the benefit of perusing the erudite

judgment rendered by the Allahabad High Court, on the same

subject in Smt.Kusum (supra), which inter alia discusses at length

the above-referred precedents and draws parallels between Section

39(7) of the Insurance Act with Section 45-ZA (2) of the Banking

Regulation Act. After referring to the dictum laid down by the

Hon'ble Supreme Court in Ram Chander Talwar and another v.

Devender Kumar Talwar and others [(2010) 10 SCC 671] it has

been pithily concluded by the Allahabad High Court in Smt.Kusum

(supra) as follows:

"i. Section 39(7) of the Insurance Act which is pari materia to Section 45-ZA(2) and was incorporated to achieve similar objective having been interpreted in Ram Chander Talwar (supra) to hold that the nominee cannot be held to be the owner of the money lying in the account. Section 39(7) also has to be interpreted to hold that the beneficial nominee cannot be said to be the owner of the money out of the proceeds of policy.

ii. In view of the similar provision being interpreted in the case of Shakti Yezdani (supra), it has to be held that the nominee would not unsettle the rights of the legal heirs by virtue of the respective succession Act.

Iii. On harmonious interpretation of the two provisions i.e., Insurance Act and Hindu Succession Act, the rights conferred by Hindu Succession Act will prevail over the rights claimed by the nominee under Section 39(7) of the Insurance Act, the succession Act being specific to succession in contradiction to the Insurance Act which is general...."

11. After giving our earnest consideration to the different

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viewpoints expressed by the various High Courts on the subject, we

find ourselves more aligned with the views expressed by the High

Court of Karnataka in Neelavva's case (supra), High Court of

Madhya Pradesh in Arun Kumar Singh (supra) and the Allahabad

High Court in Smt.Kusum (supra) for the reasons elaborated

hereunder.

12. Insurance aims to cover the risk of the family of the

policyholder. In the absence of the policyholder, the insurance policy

must provide succor to the family members. When there is a conflict

between the rights of a nominee, as laid down under the amended

Insurance Act, on the one hand, and the rights of the successors

under the relevant Succession statute, the same must be

reconciled. The term 'beneficially entitled', as used in Section 39 (7),

conveys that the nominee/s specified therein, ie., parents, spouse or

children, either as a group or individually, if nominated by the policy

holder, will have the right to receive and retain the insurance

proceeds for their own benefit. Now, if this is done, overlooking the

provisions of the relevant succession statute, the same may

prejudicially affect the rights of successors who are left out from

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nomination. A harmonious interpretation of these two statutes,

which appear to be in conflict, must be attempted and arrived at.

[See, The Life Insurance Corporation of India v. D.J. Bahadur

and others [(1981) 1 SCC 315]; KSL and Industries Ltd v.

M/s.Arihant Threads Ltd [(2008) 9 SCC 763]. As by now it is well

crystallised that the nomination process cannot override the

succession laws [See Shakti Yezdani (supra)]. Section 39 (7) of the

Insurance Act, 1938, thus cannot be held to possess any overriding

effect over the personal laws relating to succession. The personal

laws passed by the Parliament, which provide a particular mode of

succession, which at times may run contrary to the nomination, as

long as not amended, must hold sway over the nomination in the

insurance policy. The Insurance Act, being a general statute, cannot

override the mandates of the relevant Succession Act.

Nevertheless, in the absence of any claim by the legal heirs, the just

and most equitable interpretation that could be applied is that the

title vests in the beneficiary nominee as nominated in the policy.

However, if there is a claim by the legal heirs, then the nominee's

claim has to yield to the personal law governing succession.

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13. Having concluded so, we now proceed to consider the

correctness of the finding arrived at by the learned Single Judge in

the impugned judgment. We note that the learned Single Judge had

concluded that in order to avoid another round of litigation and to

bring a quietus to the matter, the learned Single Judge had, by

referring to Section 8 read with the schedule of the Hindu

Succession Act, 1956, directed that the respondent No.2 Insurance

Company shall pay the insured amount to both appellant No.1 and

respondent No.3 in equal shares. This, it was concluded by the

learned Single Judge, would do complete justice to both sides. We

note that while exercising jurisdiction under Article 226, it may not

be fit or proper for this Court to decide on questions concerning the

devolution of shares among legal heirs under the Hindu Succession

Act. It is always desirable, nay necessary, that such questions be

left to the appropriate authorities/courts having jurisdiction in the

matter. We accordingly, set aside the judgment of the learned

Single Judge to the extent it finds that the amounts due under the

relevant policy are to be shared equally among the appellant No.1

and respondent No.3.

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Accordingly, this Writ Appeal is disposed of directing the

2nd respondent to transfer/deposit the amounts due under the

relevant policy to a joint fixed deposit account drawn in the names of

the appellant No.1 and the 3rd respondent in a Nationalised Bank. It

shall be retained so earning due interest till the respective shares of

the legal heirs are finalised as per the applicable law. It shall be

open to the parties to take appropriate legal steps in the said

direction and to realise the amounts once their due shares are

finalised.

Sd/-

SUSHRUT ARVIND DHARMADHIKARI JUDGE

Sd/-

SYAM KUMAR V.M. JUDGE csl