LexSMT. SARABATI DEVI. & ANR. versus SMT. USHA DEVI
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SMT. sARABATI DEVI. & ANR.
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SMT; USHA DEVI
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December 6, 1983
(E. S. VENKATARAMIAH AND R. B .. MISRA, JJ,)
Insurance Act, 1938 (Act IV of 193/f), Section 39-Assured of a .life
insurance pO/icy dies intestate leaving be}iind him his mother, his widow, and a·ton,
bUt for the purpose of Section 39 has nominated hjs widow alone- Whether ,he
nqminee of a life insurance policy, on the. assured dying intestate would become
entitled to the beneficial interest in th'e amount received llnder the policy to the
· e:xcl~sion of the heirs o{ the assuP.ed.
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The appellants being n1other and son of. one Jagmohan Swarup who
was governed by the Hindu Sqceession .Act, 1956 and who died intestate
on June 15, 1967 filed Civil Suit No. 122 of 1970 on the file of the first
Additional Civil Judge, Dehradun for' a declaration to the effect that they
were together entitled t.o 2/3rCl share .of the amount due a~d -payal?le under
the insurance policies though the deceased assured has nominated the res-
. pondent his widow as the person· to whom the amounts were payable. The
respondent contested the suit claiming that she has the .absolute right to the
amounts to the exclusion of· her son and ·her mother-in-law. The suit was
dismissed. The First Appeal before the Dt. Judge, Dehradun and the Second
Appeal before the HiQh .. Court were dismissed. I-Jenee the appeal after obtain-
.ing sp~cial leave of the Court.
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Allowing the appeal, the Court,
HELD :· l.1 A mere nomination made undc:r Section 39 of the Insurance
Act, 1938 docs not h~ve the effect of conferting .ori the nominee any ~neficfal
interest in the' amount payaJ:>le under the life insurance.policy on the death of
·the accused. The nomination only indicates the hand which is authorised to
receive the amount, on the, payment of which the i asurer gets a valid discharge
~fits liability under the policy .. The amount, however, can be claimed b)- the
heirs of the assur"ed ia accordance-with the law of :;uccession ·governing them.
(1009G, 1004 B·D]
1.2 An analysis of the provisions of Section 39 of· the Act clearly estab-
lished. that the policy holder continues to hold inter~st in the policy during
his life tir'!1e and the nominee acquires no sort of interest· in the policy during
the life time of the holder. lf.that is so, on the death of the policyholder "the
amount payable .under the policy becomes part of his estate whiCh is governed
by the law of succession applicable to hin1, Such ~,uccession may be "testomen·
tarY or ilitesfate. The tenuous character of the right of a nominee becomes
more·pfonounce.d 'w_hen one contrasts the provisions of Section 39 with that of
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SARBATI DEVI v. USHA DE\'! (Venkatoramiah, J.)
993'
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-5ecti0n' 38. ,-Section 39 of the Act was not intended to act as a third mi:)de of
su~ession providCd by the stature and i.ncorrectly st); led as ~'stat.uiory ·te~t!· . .:·
m0nt ... by the Delhi High Court. (998 C-EJ
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1.3 Tho language of Section 39 of the Act is neither capable of -alteria.g·
thC·course or"succession under la\v nor can be said to have equa.ted a nominee
to an heir or legatee. [999Fj
S. Fauza Singh v. Ku/dip Singh & Ors .. AIR 1978 Delhi 276; Mrs. Uma.
Sehgal & Anr. v. Dwarka Dass Sehgal and Ors. AIR 1982 Delhi 36; overuled.
Rama Bha//av D)randhania v. Gangadhar Nathmall AIR 1966 Ca'l. 275; ·
"D. Mohananardu Mudaliar and Anr. v. Indian lnSurance and Bankinll Corporation _
, Ltd., Salem and Anr. Alll"1957 Madras 115; Sarojini Anu11a v. Neelakanta Pillai
AIR 1961 Kerala 126, Life insurance Cvr.PoratiOll Pf India v. United Bank of
India Ltd. & Anr. AIR 1970 Cal. 413; RajilRam ·v. Mata Prasad and Anr. AIR
1972 All.167; Ma//idei and Anr. v. Kanchan Prana Dei ,AIR 1973 Orissa 83; ·
Lakshmi A1nn1a and Anr~ v .. Saguna Bhagathi & Ors. IL~ 1973 Karnataka. 827; -·
Atmaran1 Mohan/al Panchal 'v. Guna1·antiben and Ors. AlR 1977.Gujara.t 134 ~
approved.
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Karuppa Gounder & Ors. v. Palaniammal & Ors. AIR 1.963 Ivfadras 245;."
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B. M'. Mundkur v. Life J11sura11ce Corporation oflndia and Ors. AIR ,977 Mad.
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72, discussed and distinguished.
CIVIL APPELLATE. JURlSDlCTI0'1: Civil Appeal No. 96of1972 .
From.the Judgment. and Order dated 23rd December, 1971 of
the High Court of Judicature !II 'Allahabad in Second Appeal No.
3082 of 1971.
Yogeshwar Piasad, Mrs. Rani Chh~bra a11d S. K. Bagga for the
. Appellants.
B. R. Agarwa/a, R.H. Pancholi and Ms. VijayaExcerpt shown. Read the full judgment & AI analysis in Lexace.