Madhya Pradesh High Court

Arun Kumar Singh vs Smt. Jaya Singh on 22 September, 2022

Author: Anjuli Palo

1 C.R No.38/2021p

IN THE HIGH COURT OF MADHYA PRADESH
AT JABALPUR
BEFORE
HON'BLE SMT. JUSTICE ANJULI PALO
ON THE 22nd SEPTEMBER, 2022

CIVIL REVISION No. 38 of 2021

Between:-

ARUN KUMAR SINGH S/O SHRI P.S.
CHOUHAN, AGED ABOUT 72 YEARS, R/O B-
11SURENDRA VIHAR COLONY
BAGMUGALIA NEAR ASHIMA MALL
HOSHANGABAD ROAD BHOPAL MP
(MADHYA PRADESH)

.....APPLICANT
(BY SHRI ANKIT SAXENA, ADVOCATE
WITH SHRI GAURAV TIWARI, ADVOCATE)

AND

1. SMT. JAYA SINGH W/O SHRI CHETAN
SINGH CHOUHAN, AGED ABOUT 38
YEARS, R/O GALI NO.6 PATEL COLONY
NAKA CHANDVADINI LASKAR GWALIOR
MP (MADHYA PRADESH)
2. PUBLIC AT LARGE NOT MENTION
(MADHYA PRADESH)
3. MANAGER AXIS BANK CORPORATE
OFFICE BOMBAY DYING MILLS
2 C.R No.38/2021p

COMPOUND BUDHKAR MARG WORLI
(MAHARASHTRA)
4. MANAGER AXIS BANK HEAD OFFICE
TRISHUL 3RD FLOOR BEHIND
SAMARTHESHWAR TEMPLE NEAR VIDHI
GARDEN ELLIS BRIDGE (MADHYA
PRADESH)
5. MANAGING DIRECTOR KOTAK
MAHENDRA (OLD MUTUAL LIFE
INSURANCE LIMITED) KOTAK TOWER
7TH FLOOR ZONE 4 BUILDING NO. 21
INFINITY PARK OF WESTERN EXPRESS
HIGHWAY GOREGAON MULUND LINK
ROAD MALAD (MAHARASHTRA)
6. BRANCH MANAGER KOTAK
MAHENDRA (OLD MUTUAL LIFE
INSURANCE LIMITED) BRANCH OFFICE
2ND FLOOR VNV PLAZA BUILDING NO. 6
MP NAGAR ZONE 2 (MADHYA PRADESH)
7. BRANCH MANAGER KOTAK
MAHENDRA BANK MP NAGAR ZONE 1
BRANCH (MADHYA PRADESH)
8. BRANCH MANAGER AXIS BANK
LIMITED 2ND FLOOR PLOT NO. OX13
ZONE 1 NEAR ICICI BANK (MADHYA
PRADESH)
9. ABHISHEK SINGH S/O SHRI ARUN
KUMAR SINGH B-11 SURENDRA VIHAR
COLONY BAGMUGALIA NEAR ASHIMA
MALL (MADHYA PRADESH)
3 C.R No.38/2021p

.....RESPONDENTS

(BY SHRI SURESH AGRAWAL, ADVOCATE
WITH SHRI M.P.SINGH, ADVOCATE
(CAVEAT))

...............................................................................................
Reserved on :- 04.08.2022

Passed on :-
...............................................................................................

This revision coming on for final hearing at motion stage this day, the
court passed the following:

ORDER

This revision has been preferred by petitioner/respondent no.8

against the order dated 02.12.2020 passed by 3 rd ADJ, Bhopal in

M.C.A.No.48/2019 whereby order passed by 5 th Civil Judge Class-I,

Bhopal in M.J.C. Succession Case No.74/17 on 27.04.2019 was

affirmed.

2. Facts of the case are that the petitioner is the father of late

Shri Chetan Singh Chouhan who died on 17.05.2017. He was employed

on the post of Manager in Kotak Mahendra Old Mutual Life Insurance

Ltd., Bhopal. He had purchased life insurance policy and nominated his

father's name. As per the amended provisions of year 2015 in Insurance

(Amended) Act, 2015, the concept of Beneficial Nominee was

introduced under Section 39(7). It was alleged that as per the

amendment, the parents, spouse and children have been put under the

heading of "Beneficial Nominee". The policy taken by deceased son of

petitioner is governed by the aforesaid provisions.

3. It is further alleged by the petitioner that alongwith his

deceased son, he had jointly applied for house loan valued about Rs.

9,50,000/-. The bank passed it in their favour for Rs.8,50,000/-. The

petitioner continued to repay all the installments. Deceased did not pay

any EMI nor made any investment in the loan repaid so far. After his

death, his wife filed false complaints at various forums to victimize him

and his family so that they may give up their clams in respect of house

jointly purchased by the petitioner and his son. After the death of his

son, his wife respondent no.1 sent a letter to Kotak Life Insurance

Company to release of amount of death benefit under the policy No.

ED000120NTR000419 which was declined on the grounds that the

petitioner is the sole nominee. Then respondent no.1 has filed an

application under Section 372 of Indian Succession Act, 1925 to issue a

succession certificate in her favour which was partly allowed by the

trial Court then the petitioner preferred miscellaneous civil appeal

No.48/2019.

4. The learned appellate Court also dismissed the said appeal

by affirming the order passed by learned trial Court holding that the

respondent no.1 is a widow of deceased. She is entitled to get all the

benefits under Section 8 of Hindu Succession Act because she is his

legal heir. Only on the basis of nomination, petitioner and respondent

no.9 cannot claim any benefit as nominee.

5. The petitioner has alleged that he was sole nominee in the

insurance policy of his son which amounts to will of the deceased. As

per section 39 of Insurance Act, 1938, he can exclusively claim over

the death benefits of his son. Section 39 of Insurance Act, is statutory

and overriding declaration of right and entitlement of claim after the

death of insured. Hence, impugned orders are liable to be set aside.

6. Learned counsel for the applicant placed reliance in the

case of Smt. Shweta Singh Huria & Ors Vs. Smt. Santosh Huria &

Anr. decided by the High Court of Delhi on 18 May, 2021.

7. Insurance (Amended) Act, 2015 came into effect from

26.12.2014. Since the policies in question matured after the 2015

Amendment came into force, thus, it is necessary to reproduce para 16

of the case of Smt. Shweta Singh Huria & Ors (supra), which reads as

under:

By virtue of sub-Section (7), where the holder of insurance policy, in his lifetime nominates his parents or spouse or children or any of them, the nominee(s) shall be beneficially entitled to the amount payable by the insurer, 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. Learned counsel for the appellant submitted that provision

of amended section 39 are applicable in this case. Thus, beneficial

nominee has to be entitled for the benefits under the insurance policies

to the exclusion of any other legal heir, who is not a nominee. But

according to this Court nomination is only for the benefit of the

insurer so that he gets a valid discharge of its liability under the policy

and is not embroiled in the litigation interse the legal heirs of the

insured.

9. In the case of Smt. Shweta Singh Huria & Ors (supra) the

relationship between the parties was; appellant no.1 is the daughter-in-

law of the respondents herein and the widow of late Shri Vineet Huria,

appellant no.2 and 3 are minor son and daughter of appellant no.1 and

grand children of respondent no.1. Appellant no.1 had received

Rs.2,48,53,000/- as well as the amounts under two policies from ICICI

Bank wherein the deceased husband was the policy holder.

Respondent no.1 can claim 1/4th share of the amount under the said

policy as a class-I heir of the deceased on the ground that mere

nomination of applicant no.1 could not defeat her right under the law

of succession then the Supreme Court discussed the opinion of other

Courts and also discussed the Law Commission's view and held in

para 31 as under:

As is evident from a reading of the recommendations of the Law Commission, a distinction was carved out between 'beneficiary nominee' and 'collector nominee' and Section 39 of

the Insurance Act, 1938 was amended accordingly, adding sub-section (7). Beneficiary nominee means a nominee who was entitled to receive the entire proceeds under an insurance policy and a collector nominee means a nominee other than a beneficiary nominee. Keeping this distinction in mind, sub- section (7) of Section 39 was carefully and cautiously drafted and the works used by the legislature are 'beneficial interest'.

In the end, that appeal filed by the appellants was allowed and

case was disposed of with a direction that the trial Court shall decide

the issue uninfluenced by any observations made by the Supreme

Court.

10. In the present case, both the learned Courts below passed the

orders in favour of respondents. Learned counsel for the respondents

placed reliance in the case of Shipra Sengupta Vs. Mridul Sengupta

& Ors reported in 2009 (10) SCC 680 in which it was directed that

amount be distributed according to the Hindu Succession Act, 1956. In

a case of Chaini Devi Vs. General Public S.B. Civil Misc. Appeal

No. 2302/2018 decided on 11.03.2019 by Rajasthan High Court it was

held that amount can be claimed by heirs of the deceased in

accordance with law of succession governing them. In other words,

nomination does not confer any beneficial interest on the nominee and

in para 20 of the judgment it was held that respondents are entitled to

receive the amounts in question which were payable to the deceased

by virtue of succession certificate granted by Civil Court under

Section 372 of Indian Succession Act.

11. In the judgment of Sarbati Devi Vs. Usha Devi reported in

(1984) 1 SCC 424 it was also considered. In the said decision, the

Supreme Court held that nomination would not confer any beneficial

interest on the nominee and it is a mere authorization to receive the

insurance amount, which can be claimed by the legal heirs of the

assured in accordance with law of succession, governing the parties.

The judgment has been followed successively by various High Courts

in a long line of cases, holding that mere nomination effected under

Section 39 shall not deprive the legal heirs to the amount under the

Insurance Policies. Relevant paras of Sarbati Devi (supra) are as

under:-

5.***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 and the nominee acquires no sort of interest I the policy during the lifetime of the policy-holder. It 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 para 16 of the decision of the Delhi High Court in Uma Sehgal case (AIR 1982 Del 36 : ILR (1981) 2 Del 315)***

*** 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 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***

12. The preposition of law laid down by the Supreme Court in

Sarbati Devi (supra) cannot be disputed and is a binding dictum. The

Supreme Court held that nomination would not confer any beneficial

interest on the nominee under and insurance policy and a nominee is

only an authorized hand to receive the insurance amount, which is

subject to be disbursement amongst the legal heirs under the law of

succession, governing the parties.

13. The Act has been in force from the year 1938 and all along

almost all the High Courts in India have taken the view that a mere

nomination effected under Section 39 does not deprive the heirs of their

rights in the amount payable under a life insurance policy. Parliament

has not chosen to make any amendment to the Act. In such situation