Madras High Court
S.Snehaa vs The Manager (E & Os) on 19 April, 2022
W.P.No.9636 of 2022
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated: 19.04.2022
CORAM:
THE HONOURABLE MR.JUSTICE D.KRISHNAKUMAR
W.P.No.9636 of 2022
and
W.M.P.No.9377 of 2022
S.Snehaa ... Petitioner
Vs.
1.The Manager (E & OS),
M/s.Life Insurance Corporation
of India,
Chennai Divisional Officer,
C-47, II Avenue,
Anna Nagar Plaza, Anna Nagar,
Chennai – 600 040.
2.Jayanthi ... Respondents
Prayer: Writ petition filed under Article 226 of the Constitution of
India seeking to issue a Writ of Mandamus, directing the 1st respondent
herein to disburse the petitioner's share in her father's family pension
vide pension I.D.No.770100752 on the file of 1st respondent, the
forthwith petitioner representation dated 01.07.2021.
Page 1 of 16
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W.P.No.9636 of 2022
For Petitioner : Mr.T.Padmanabhan
ORDER
The relief sought for in the writ petition is for a Mandamus
seeking direction to the 1st respondent herein to disburse the
petitioner's share in her father's family pension vide pension
ID.No.770100752 on the file of 1st respondent, the forthwith petitioner
representation dated 01.07.2021.
2. According to the learned counsel for the petitioner, the
petitioner's father was a retired employee, who served as Development
Officer for more than thirty (30) years in the 1st respondent insurance
corporation. The petitioner married the 2nd respondent on 01.11.1989
and blessed with two children. The 2nd respondent insisting the
petitioner's father to delegate the property rights and title to her and she
obtained major portions of the property in her name. Thereafter, the
petitioner's father died on 24.04.2021 leaving behind the petitioner,
mother of the petitioner and the 2nd respondent and her children as his
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W.P.No.9636 of 2022
legal heirs. It is pertinent to note that the petitioner alone perform the
funeral ceremonies of the deceased father. Further, the petitioner filed
the succession OP before this Court in O.P.D.No.60662 of 2021 for
succession certificate, which is pending for numbering. The second
respondent approached the first petitioner and applied for pension and
other benefits, without adding the names of the petitioner and her
mother as legal heirs of the deceased. At this stage, the petitioner came
to know that the 1st respondent without any notice to the petitioner, has
made ready to disburse the pensionary benefits to the 2nd respondent.
Hence, the present writ petition has been filed for the aforesaid prayer.
4. In an identical circumstances, this Court elaborately consider
the similar issues related to the payment of pensionary benefits, which
has to be adjudicated only by this Court and I have passed an order in
W.P.No.2934 of 2010 dated 16.12.2021 (DKKJ). The relevant portion
of the said order is extracted as follows.
10. Let this Court considers the decisions with regard to
disbursement of terminal benefits of the deceased in case of
interse dispute between the nominees and legal heirs.
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W.P.No.9636 of 2022
11. The question whether the nominee appointed under
Section 39 of the Life Insurance Act, 1938 gets absolute
right to amount due under life insurance policy on death of
assured, came up for consideration before the Hon'ble
Supreme Court in Sarabati Devi & Another Vs. Usha Devi
(CDJ 1983 SC 144 : 1984 AIR SC 346) wherein the
Hon'ble Supreme Court has held as follows:
“4. At the out set it should be mentioned that
except the decision of the Allahabad High Court in
Kesari Devi v. Dharma Devi on which reliance was
placed by the High Court in dismissing the appeal
before it and the two decisions of the Delhi High
Court in S. Fauza Singh v. Kuldip Singh & Ors.
And Mrs. Uma Sehgal & Anr. v. Dwarka Dass
Sehgal & Ors in all other decisions cited before us
the view taken is that the nominee under section 39
of the Act is nothing more than an agent to receive
the money due under a life insurance policy in the
circumstances similar to those in the present case
and that the money remains the property of the
assured during his lifetime and on his death forms
part of his estate subject to the law of succession
applicable to him. The cases which have taken the
above view are Ramballav DhanJhania v.
Gangadhar Nathmall. Life Insurance Corporation
of India v. United Bank of India Ltd. & Anr., D.
Mohanaeelu Muldaliar & Anr. v. Indian Insurance
and Banking Corporation Ltd. Salem & Anr.,
Sarojini Amma v. Neelakanta Pillai Atmaram
Mohanlal Panchal v. Gunavantiben & Ors., Malli
Dei and Lakshmi Amma Anr. v. Sagnna Bhagath &
Ors., Since there is a conflict of judicial opinion on
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W.P.No.9636 of 2022
the question involved in this case it is necessary to
examine the above cases at some length. The law in
force in England on the above question is
summarised in Halsbury's Laws of England (Fourth
Edition), Vol. 25, Para 579 thus :
"579. Position of third party, The policy money
payable on the death of the assured may be
expressed to be payable to a third party and the
third party is then prima facie merely the agent for
the time being of the legal owner and has his
authority to receive the policy money and to give a
good discharge; but he generally has no right to
sue the insurers in his own name. The question has
been raised whether the third party's authority to
receive the policy money is terminated by the death
of the assured; it seems, however, that unless and
until they are otherwise directed by the assured's
personal representatives the insurers may pay the
money to the third party and get a good discharge
from him."
.....
12. Moreover there is one other strong
circumstance in this case which dissuades us from
taking a view contrary to the decisions of all other
High Courts and accepting the view expressed by
the Delhi High Court in the two recent judgments
delivered in the year 1978 and in the year 1982.
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. Yet Parliament has not chosen to make any
amendment to the Act. In such a situation unless
there are strong and compelling reasons to hold that
all these decisions are wholly erroneous, the Court
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W.P.No.9636 of 2022
should be slow to take a different view. The reasons
given by the Delhi High Court are unconvincing.
We, therefore, hold that the judgments of the Delhi
High Court in Fauja Singh's case (supra) and in
Mrs. Uma Sehgal's case (supra) do not lay down
the law correctly. They are, therefore, overruled.
We approve the views expressed by the other High
Courts on the meaning of section 39 of the Act
and hold that a mere nomination made under
section 39 of the 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 assured. The
nomination only indicates the hand which is
authorised 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 the law of succession governing
them. (emphasis supplied)
13. In view of the above conclusion, the judgments
and decrees of the High Court, the first appellate
court and the trial court are liable to be set aside.
They are accordingly set aside. Since it is not
disputed that the plaintiffs are under the law of
succession governing them each entitled to 1/3
share in the estate of the deceased, it is hereby
declared that each of the plaintiffs is entitled to
1/3rd share in the amount received under the
insurance policies in question and the interest
which may have been earned by its investment. The
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W.P.No.9636 of 2022
suit stands decreed accordingly.”
12. In Vishin N.Khandchandani v. Vidya Lachmandas
Khanchandani [CDJ 2000 SC 353], the question whether
the nominee specified in the National Savings Certificate, on
the death of its holder, becomes entitled to the sum due
under the certificate to the exclusion of all other persons ?
Or whether the amount of the certificate can be retained by
him for the benefit of the legal heirs of the deceased? came
up for consideration before the Hon'ble Supreme Court and
it was held as under:
“ 9. It is contended on behalf of the appellants that
the non obstante clause in Section 6 excludes all
other persons, including the legal heirs of the
deceased holder, to claim any right over the sum
paid on account of the national savings certificates,
to the nominee. There is no doubt that by non-
obstante clause the Legislature devices means
which are usually applied to give overriding effect
to certain provisions over some contrary provisions
that may be found either in the same enactment or
some other statute. In other words such a clause is
used to avoid the operation and effect of all
contrary provisions. The phrase is equivalent to
showing that the Act shall be no impediment to
measure intended. To attract the applicability of the
phrase, the whole of the section, the scheme of the
Act and the objects and reasons for which such an
enactment is made has to be kept in mind.
10. The submission made on behalf of the
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W.P.No.9636 of 2022
appellants has no substance in view of sub-section
(2) of Section 8 and the Statement of Objects and
Reasons necessitating the passing of the Act. Sub-
section (1) of Section 8 provides that if any
payment is made in accordance with the provisions
of the Act to a nominee, the same shall be a full
discharge from all further liabilities in respect of
the sum so paid. Section 7 of the Act provides that
after the death of the holder of the savings
certificates payment of the sum shall be made to the
nominee, if any, and sub-section (1) of Section 8
declares that such payment shall be a full discharge
from all further liabilities in respect of the sum so
paid. However, sub-section (2) of Section 8
specifies that the payment made to the nominee
under sub-section (1) shall not preclude any
executor or administrator or the legal representative
of the deceased holder of a savings certificate from
recovering from the person receiving the same
under Section 7; the amount remaining in
nominee's hand after deducting the amount of all
debts or other demands lawfully paid or discharged
by him in due course of administration. In other
words though the nominee of the national savings
certificates has a right to be paid the sum due on
such savings certificates after the death of the
holder, yet he retains the said amount for the
benefit of the persons who are entitled to it under
the law of succession applicable in the case,
however, subject to the exception of deductions
mentioned in the sub-section. In the Statement of
Objects and Reasons of the Act it is stated:
"The Post Office National Savings Certificate
Ordinance,1944 (42 of 1944), issued under Section
72 of the Ninth Schedule to the Government of
India Act, 1935, as originally enacted and
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W.P.No.9636 of 2022
continued in force by virtue of the provisions of the
India and Burma (Emergency Provisions) Act, 1940
(3 and 4 Geo. 6, Ch. 33) regulates the sale and
discharge of National Savings Certificates issued
through the Post Office. Suggestions have been
made from time to time that as the production of
legal proof of succession involves considerable
delay and expense, the holders of savings
certificates may be allowed the right to nominate
one or more persons to receive the amounts due in
respect of such certificates in the event of their
death without the production of succession
certificate or other proof of title. In seeking to
amend that Ordinance for the above purpose,
opportunity is taken to replace it by an Act of
Parliament." (emphasis supplied)
11. In the light of what has been noticed herein
above, it is apparent that though language and
phraseology of Section 6 of the Act is different than
the one used in Section 39 of the Insurance Act,
yet, the effect of both the provisions is the same.
The Act only makes the provisions regarding
avoiding delay and expense in making the payment
of the amount of the national savings certificates,
to the nominee of holder, which has been
considered to be beneficial both for the holder as
also for the post office. Any amount paid to the
nominee after valid deductions or becomes the
estate of the deceased. Such an estate devolves
upon all persons who are entitled to succession
under law, custom or testament of the deceased
holder. In other words, the law laid down by this
Court in Sarbati Devi's case holds field and is
equally applicable to the nominee becoming
entitled to the payment of the amount on account
of national savings certificates received by him
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W.P.No.9636 of 2022
under Section 6 read with Section 7 of the Act
who in turn is liable to return the amount to
those, in whose favour law creates beneficial
interest, subject to the provisions of sub-section
(2) of Section 8 of the Act. (emphasis supplied)
12. Under the circumstances this appeal is allowed
with a direction that the succession certificates
shall be issued in favour of the respondents in
respect of debts detailed in Annexures A and B to
the application filed in the Court of Civil Judge,
Senior Division, Thane subject to their payment of
necessary court fees and estate duty certificate. The
respondents would, however, not be entitled to
directly receive the amounts payable on account of
debts payable under National Savings Certificates
at Sl.Nos.17 to 26 in Annexure A and Sl.Nos.1 to 4
in Annexure B. The appellants are held entitled to
receive the sum due on the aforesaid national
savings certificates in which they are the nominees
upon furnishing the undertaking in terms of sub-
section (2) of Section 8 of the Act in the court of
Civil Judge, Senior Division, Thane. The amount
received by the appellants on account of the
national savings certificates in which they are
nominees shall be payable to the respondents after
deduction of the amounts of debts or other
demands lawfully paid or discharged, if any. Costs
made easy.”
13. A learned Single Judge of this Court in the decision in
Vidyaa Hari Iyer v. M/s.Sundaram Finance Limited [CDJ
2020 MHC 4925], by following the ratio laid down in
Sarabati Devi's case (cited supra) and Vishin
N.Khandchandani's case (cited supra), has observed as
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W.P.No.9636 of 2022
follows:
“17. As far as Section 45ZA of the Banking
Regulation Act is concerned, the above section
indicate that the amount shall be paid to the
nominee. It is also to be noted that Section 45ZD
makes it clear that when there is an Order or a
certificate or other authority from a Court obtained
relating to such article is produced before the bank,
the bank shall take due note of such decree, Order,
certificate or other authority. Therefore, it cannot
be said that even after the succession certificate is
granted by the competent Court is produced before
the bank, they cannot ignore the same merely on
the basis of Section 45ZA of the Banking
Regulations Act. Even though 45ZA contained
non obstante clause, the Apex Court in Vishin N.
Khanchandani Vs. Vidya Lachamandas
Khanchandani reported in 2000 (6) SCC 724 in
para 11 has categorically held that though the
over riding effect of non obstante clause to attract
the applicability of the phrase, the whole of the
section, the scheme of the Act and the objects and
reasons for which such an enactment is made
have to kept in mind, as the nominee has to be
treated as a trustee and he is entitled to receive
the amount only and he has to pay the amount to
the persons who are entitled under law of
succession. Therefore, when the succession
certificate already granted, the object of the
Indian Succession Act has to be given
importance. Accordingly, the contention that only
the nominee alone as per section 45ZA of the
Banking Regulations Act is entitled to receive the
money even after succession certificate is
granted, cannot be countenanced. Therefore,
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merely because a suit has been filed at a later point
of time at the instance of the nominee, despite the
succession certificate has been produced, the same
has no relevance to decide this application. If at all
the second respondent in the event of succeeding in
the suit in O.S.No.5683 of 2019, to realise the
amount, this Court is of the view that some security
has to be offered by the applicant herein. The
learned counsel for the applicant Mr.Mohan
submitted that in C.S.No.899 of 2017 already 1/4th
share of the applicant has been declared and
preliminary decree is already passed and charge
may be created in respect of the above 1/4th share
of the applicant towards the deposit amount till the
interpleader suit is decided.” (emphasis supplied)
14. The Hon'ble Supreme Court in Sarabati Devi's case
(cited supra) held that nomination only indicated the hand
which is authorized to receive the amount, on the payment
of which the insurer get a valid discharge of its liability
under the policy and the amount, however, can be claimed
by the heirs of the assured in accordance with the Law of
Succession governing them. The decision of this Court in
Vidyaa Hari Iyer's case cited supra emphasis the dictum
that the nominee has to be treated as a trustee and he is
entitled to receive the amount only and he has to pay the
amount to the persons who are entitled under Law of
Succession.
15. It is not in dispute that the writ petitioners as well as the
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W.P.No.9636 of 2022
respondents 3 and 4 are Class-I Legal Heirs of the deceased.
But the fourth respondent / mother of the petitioner has
disputed the said fact. The grievance of the petitioners is that
the respondents 3 and 4, being the parents of the deceased
as well as nominees appointed by the deceased, are making
attempts to withdraw the entire terminal benefits of the
deceased, except the amount of Group Insurance amount of
Rs.7,00,000/- and the respondents 3 and 4 are entitled only
to their respective share as per nomination. Though the
deceased late H.Jayachandran had nominated his parents,
namely the respondents 3 and 4 as nominees, in view of the
above settled legal position, the legal heirs of the deceased
employee alone are entitled for their respective shares and
the nominee cannot have any absolute right to claim the
amount of the deceased.
16. In view of the above settled legal position in the
decisions cited supra, the dispute with regard to claiming the
benefits of the deceased has to be agitated only before the
competent Civil Court. Therefore, it is open to either of the
parties to approach the Civil Court and based on the Civil
Court decree, the parties can approach the respondent 1 and
2 to claim their shares. However, in order to protect the
interest of parties in the interregnum, this Court directs the
respondent 1 and 2 / Life Insurance Corporation to deposit
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W.P.No.9636 of 2022
the terminal and other benefits except Group Insurance
Amount of the deceased Late H.Jayachandran, in any one of
the Nationalized Banks till obtaining of decree from the
competent Civil Court. The respondents 1 and 2 shall also
intimate to the petitioners as well as the contesting
respondents / respondents 3 and 4, by furnishing the details
as regards the deposit of amounts in nationalised bank.
17. The Writ Petition stands disposed of with the above
directions. No costs. Consequently, connected miscellaneous
petitions are also closed.
5. The aforesaid order of this Court held that the parties
concerned have to approach the Civil Court to claim the respective
shares. Further, the aforesaid order has been passed by following the
decision of the Hon'ble Supreme Court of India. Therefore, this Court
cannot entertain this writ petition. Liberty is hereby granted to the
petitioner to seek her remedy before the concerned Court.
6. In the light of the decisions of the Hon'ble Supreme Court of
India as well as this Court, the writ petition stands dismissed with the
above liberty. No costs. Consequently, connected miscellaneous
petition is closed.
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19.04.2022
Index:Yes/No
Internet:Yes/No
ata/mst
To
The Manager (E & OS),
Life Insurance Corporation of India,
Chennai Divisional Officer,
C-47, II Avenue, Anna Nagar Plaza, Anna Nagar,
Chennai – 600 040.
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W.P.No.9636 of 2022
D. KRISHNAKUMAR, J.
ata/mst
W.P.No.9636 of 2022
19.04.2022
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