Madras High Court
S.Saranya vs The Divisional Manager on 10 February, 2025
Author: J.Nisha Banu
Bench: J.Nisha Banu
WA(MD). No.273 of 2025
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
Date : 10/02/2025
CORAM
THE HONOURABLE Mrs. JUSTICE J.NISHA BANU
AND
THE HONOURABLE Mrs. JUSTICE L.VICTORIA GOWRI
WA(MD). No.273 of 2025
and CMP(MD) No.1941 of 2025
S.Saranya ... Appellant
Vs
1.The Divisional Manager,
Life Insurance Corporation of India
Divisional Office, Sellur
Madurai 625 002.
2.The Manager
Life Insurance Corporation of India
Divisional Office, Sellur
Madurai 625 002.
3.The Branch Manager,
Life Insurance Corporation of India,
Thirunagar Branch, Madurai.
4.Suseendran ... Respondents
PRAYER :- Writ Appeal filed under Clause 15 of Letters patent against
the order of this Court dated 12.12.2024 in WP(MD). No. 18770/2019.
1/10
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WA(MD). No.273 of 2025
For Appellant : Mr.K.Appadurai
For Respondents : Mr.D.Shanmugaraja Sethupathi
for R1 to R3
No appearance for R4
JUDGMENT
(Judgment of the Court was delivered by J.NISHA BANU, J.)
The writ appeal is directed against the order of the writ Court dated
12.12.2024 in WP(MD) No.19770/2019, in and by the said order, the
claim towards insurance amount for the writ petitioner/appellant was
negatived by the writ Court.
2. The writ petitioner is the appellant herein.
3. The writ petition has been filed for a mandamus for
disbursement of the share of the life insurance amount to the appellant.
The appellant claims that being the legal heir of the deceased husband,
she is entitled to receive the insurance claim. However, the writ Court
has dismissed the petition holding that as per Sections 38 and 39 of the
Insurance Act 1938, (hereinafter referred to as, 'the Act') the nominee is
entitled to claim the amount. Accordingly, the writ Court held that the 4 th
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respondent, who is the father of the deceased and the nominee, is entitled
to claim the amount. Challenging the same, the appellant is before this
Court with this appeal.
4. It is the submission of the learned counsel for the appellant that
though the 4th respondent is the nominee, the appellant, being the wife
and her minor daughter of the appellant are the legal heirs of the
deceased and hence, they are entitled to claim their share. However, the
writ Court, without considering the claim of the legal heirs, directed the
respondent corporation to disburse the amount in favour of the 4th
respondent. In order to substantiate his contention, he has relied on a
decision of the Hon'ble Supreme Court in Sarbati Devi and another v.
Usha Devi [1984 (1) SCC 424] and contended that as per the decision,
the nominee can only receive the amount, however, the legal heirs can
claim the amount through succession.
5. We have considered the rival submissions and perused the
materials available on record.
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6. In Sarbati Devi's case cite supra, in Paragraph No.12, it has been
held thus:
“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
should be slow to take a different view. The reasons
given by the Delhi High Court are unconvincing. We,
there-fore, hold that the judgments of the Delhi High
Court in Fauza Singh case and in Uma Sehgal case 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
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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.”
7. In yet another decision in Shipra Sengupta v. Mridhul
Sengupta and others [(2009) 10 SCC 680], wherein, by placing reliance
on Sarbati Devi, the Hon'ble Supreme Court had held thus:
“14. In Sarbati Devi (supra), this Court has laid
down that a mere nomination does not have the effect of
conferring to the nominee any beneficial interest in the
amount payable under the life insurance policy, on death
of the insurer. The nomination only indicates the hand
which is authorized to receive the amount on 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.
15. The appellant also placed reliance on the
judgment of this Court in Vishin N. Khanchandani &
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Another v. Vidya Lachmandas Khanchandani & Another
(2000) 6 SCC 724, wherein this Court held that the law
laid down in Sarbati Devi (supra) holds the 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 under Section 6
read with Section 7 of the Act who in turn is liable to
return the amount to those in whose favour the law
creates a beneficial interest, subject to the provisions of
sub- section (2) of Section 8 of the Act.
16. Learned counsel for the appellant also placed
reliance on a Division Bench judgment of the Delhi High
Court in Ashok Chand Aggarwala v. Delhi
Administration & Others (1998) VII AD (Delhi) 639.
This case related to the Delhi Co- operative Societies
Act. The High Court while following Sarbati Devi case
(supra) held that it is well settled that mere nomination
made in favour of a particular person does not have the
effect of conferring on the nominee any beneficial
interest in property after the death of the person
concerned. The nomination indicates the hand which is
authorized to receive the amount or manage the property.
The property or the amount, as the case may be, can be
claimed by the heirs of the deceased, in accordance with
the law of succession, governing them.
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17. The controversy involved in the instant case is
no longer res integra. The nominee is entitled to receive
the same, but the amount so received is to be distributed
according to the law of succession.
18. In terms of the factual foundation laid in this
case, the deceased died on 8.11.1990 leaving behind his
mother and widow as his only heirs and legal
representatives entitled to succeed. Therefore, on the day
when the right of succession opened, the appellant, his
widow became entitled to one half of the amount of the
general provident fund, the other half going to the
mother and on her death, the other surviving son getting
the same.
19. In view of the clear legal position, it is made
abundantly clear that the amount in any head can be
received by the nominee, but the amount can be claimed
by the 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. In
the instant case amounts so received are to be distributed
according to the Hindu Succession Act, 1956. The State
Bank of India is directed to release half of the amount of
general provident fund to the appellant now within two
months from today along with interest.
20. The appeal filed by the appellant is
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accordingly allowed and disposed of, leaving the parties
to bear their own costs.”
7. The facts in Sengupta's case squarely applicable to the facts of
the present case. In Sengupta's case also, the appellant's husband
nominated his mother before the marriage with the appellant therein.
When her husband died and the appellant, who has raised the principle
that any nomination made by Shyamal Sengupta prior to his marriage
would automatically stand cancelled after his marriage, the Hon'ble
Supreme Court had held that the nominee is entitled to receive the
amount, however, the legal heirs can claim the amount in accordance
with the law of succession.
8. The issue in the present case is no longer res integra. The
decision cited supra is squarely applicable to the facts of the present case.
In view of the categorical pronouncements of the Hon'ble Supreme
Court, which holds the field, this Court is of the view that mere
nomination does not have the effect of conferring the nominee any
beneficial interest in the amount payable under the life insurance policy
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on the death of the assured. Therefore, though the nominee is entitled to
receive the same, the amount so received is to be distributed according to
the law of succession. It is therefore clear that nomination does not
confer any beneficial interest on the nominee. In the instant case also, the
nominee can receive the amount. However, the amount so received is to
be distributed according to the Hindu Succession Act, 1956.
8. The writ appeal is allowed to the extent indicated above.
Consequently connected Miscellaneous Petition is closed. No costs.
[J.N.B.,J] [L.V.G.,J]
10.02.2025
NCC : Yes/No
Index : Yes/No
RR
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J.NISHA BANU, J
AND
L.VICTORIA GOWRI J.
RR
ORDER
IN
Date : 10/02/2025
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