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2015 DIGILAW 112 (ORI)

Sailabala Barik v. Divisional Manager, Life Insurance Corporation of India

2015-02-20

BISWANATH RATH

body2015
JUDGMENT : Biswanath Rath, J. This writ petition is filed by the petitioners for declaring the letter dated 29.09.2007 as bad in law and as a consequence thereof directing the opposite party no.1 to disburse the sum involved in three Insurance Policies bearing Nos. 586332130, 581117244 and S581317558 and further declaring that the opposite party no.4 is not entitled to receive any sum assured under the above three policies. 2. The case of the petitioner as born out in the writ petition is that the petitioner no.1 got married to one Nimai Charan Barik on th March, 1996, her husband died on 11th July, 2007 while continuing as a Government servant. It is alleged that the petitioner no.1’s husband during his life time opened three different policies with opposite party no.1 bearing numbers 586332130, 581117244 and S-581317558. Policy no. 581117244 is lying with opposite party no.2. Similarly, other two policies are lying with opposite party no.3 but opposite party no.1 being Head of the Organization is accountable for release of the amount involved in all the above three polices. The further case of the petitioner no.1 is that after the death of her husband she has come to know that all the policies bearing name of the opposite party no.4 as nominee. Petitioner alleged that even though the opposite party no.4 stood as nominee but he is not entitled to the amount involved in the said policies. Therefore, it is alleged that even though opposite party no.4 is not successor to the policy holder yet the said nominee is trying to grab the amount involved in all the three above policies. The petitioner disclosed that the opposite party no.4 happens to be the elder brother of petitioner no.1’s husband, who is working as a teacher in the local M.E. School. After coming to know that the amount involved in the above policies are likely to be grabbed by the opposite party no.4, the petitioner no.1 submitted a representation before the opposite party no.1 on 24.09.2007. In response to the said representation the opposite party no.3 vide letter dated 29.09.2007 intimated her that the policy bearing number 586332130 has got valid nominee in favour of opposite party no.4 and as a consequence of which the amount involved in the policy following the conditions therein cannot be released in their favour. 3. In response to the said representation the opposite party no.3 vide letter dated 29.09.2007 intimated her that the policy bearing number 586332130 has got valid nominee in favour of opposite party no.4 and as a consequence of which the amount involved in the policy following the conditions therein cannot be released in their favour. 3. The petitioner no.1 approached opposite party no.1 personally and tried to convince him, but the opposite party no.1 is not in a mood to be convinced. The petitioners claimed that they are the successors of the policy holder and therefore they are only entitled to the same. In referring to Sub-section 6 of Section 39 of the Insurance Act, 1938, even though the provision contains that the amount involved in the policy shall be payable to the nominee but it does not mean that the amount belongs to nominee. It is, therefore, contended that the refusal by the opposite party no.3 to the request of the petitioner no.1 is illegal. The petitioners further contended that after the death of the husband of the petitioner no.1, they have been driven out by the in-laws from the in-laws house including the opposite party no.4 and the petitioners are compelled to spend their time in the petitioner no.1’s paternal home. 4. It is on these premises, the petitioners’ claimed to release the amount involved in the policies in their favour by declaring the communication vide Annexure-2 is illegal. 5. The opposite party no.3 on its appearance submitted that the policy is a contract document having certain conditions. In view of the provisions contained in Sub-section(6) of Section 39 of the Insurance Act, 1938, a policy holder is bound to have a nominee in such contracts. In view of the specific clause contained in the contract, the Insurance Authority has no other option than to release the amount in favour of the opposite party no.4. Besides from the narration in the case, it appears that there is some dispute in between the petitioners and the opposite party no.4, which matter cannot brought in a writ for considering the release of amount involved in policy. Therefore, the opposite party no.3 contended that there is no illegality in the communication under Annexure-2 and the writ petition since involved disputed question of fact, should be dismissed. 6. Therefore, the opposite party no.3 contended that there is no illegality in the communication under Annexure-2 and the writ petition since involved disputed question of fact, should be dismissed. 6. Even though the notice is made sufficient as against the opposite party no.4 and the opposite party no.4 has appeared previously through a counsel, none appeared for opposite party no.4 to represent at the time of hearing of the case and as such I am constrained to decide the matter in absence of opposite party no.4. 7. Before proceeding to deal with the case at hand, it is necessary here to go through the policy conditions as provided under Sub-section (6) of Section 39 of The Insurance Act, 1938, which reads as follows:- Sub-section(6) of Section 39 reads as follows:- xx xxxxxx “(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.” xx xxxxxx In view of above, there is no doubt that the amount involved in the policies can only be released in favour of the nominee. Question involves in the present case is whether nominee is entitled to the money involved in the policies? There is no denial to the fact that the opposite party no.4 was the nominee in all the policies and as nominee he may be maximum the custodian of the amount involved. Question as to successors in interest if entitled to such amount has been tested in the Hon’ble Apex Court and the Hon’ble Apex Court in deciding such a dispute in case of Smt. Sarbati Devi and another vrs. Smt. Uasha Devi, A.I.R. 1984 Supreme Court 346 in paragraph-12 held as follows:- xx xxxxxx “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. 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, therefore, hold that the judgments of the Delhi High Court in Fauja Singh’s case (AIR 1978 Delhi 276) (supra) and in Mrs. Uma Shgal’s case (AIR 1982 Delhi 36) (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 authorized 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.” xx xxxx xx This High Court also while deciding a case in similar situation in the case of Satyabhama Behera vrs. Divisional Manager, Life Insurance Corporation of India and others, 94(2002) CLT 247 following the ratio by Hon’ble Apex Court supra directed the parties to appear before the Insurance Corporation for receiving the amount involved as successors to the deceased. Another Division Bench of this Court in the case of Smt. Bhanumati Behera vrs. The Life Insurance Corporation Limited, Sambalpur Division and others, 2002(I) OLR 200 taking note of the decision reported in the case of Smt. Sarbati Devi and another (supra) has come to hold that it is only successors of the deceased entitled to the amount involved in the Insurance Policy. The nominee is only custodian of the amount and that does not mean the amount belong to the nominee or nominees. 8. The nominee is only custodian of the amount and that does not mean the amount belong to the nominee or nominees. 8. Thus, in view of the provision as contained in Sub-section(6) of Section 39 of The Insurance Act, 1938, the decision already settled by Hon’ble Apex Court as well as this Court in the cases referred to hereinabove, law is settled that the nominee is only the custodian of the amount involved in the Insurance Policies and the successors of the policy holder can be the persons entitled to the amount involved in the policies. Under the facts involved in the present case, I have no hesitation in allowing the writ petition and for which while setting aside the letter dated 29.09.2007 vide Annexure-2 to the writ petition, I direct both the nominee-opposite party no.4 as well as the petitioners to appear before the Insurance Company with their identification and the amount may be released by the Insurance Company in favour of the petitioners in presence of the nominee. 9. The writ petition succeeds to the extent directed above. However, there shall be no order as to costs.