TMI Blog1983 (12) TMI 319X X X X Extracts X X X X X X X X Extracts X X X X ..... two insurance policies for ₹ 10,000 each and had nominated under section 39 of the Act his wife Usha Devi as the person to whom the amount was payable after his death. On the basis of the said nomination, she claimed absolute right to the amounts payable under the two policies to the exclusion of her son and her mother-in-law. Thereupon Sarabati Devi and Alok Kumar (minor) represented by his next friend Atma Ram who was the father of Jag Mohan Swarup filed a suit in Civil Suit No. 122 of 1970 on the file of the Ist Additional Civil Judge. Dehradun for a declaration to the effect that they were together entitled to 2/3rd share of the amount due and payable under the insurance policies referred to above. Usha Devi, the defendant resisted the suit. Her contention was that on the death of the assured, she as his nominee became absolutely entitled to the amounts due under the insurance policies by virtue of section 39 of the Act The trial court dismissed the suit. The first appeal filed by the plaintiffs against the decree of the trial court was dismissed by the District Judge, Dehradun. The second appeal filed by them against the judgment of the District Judge before the High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extent of the insurer's interest in the policy. (5) Where the policy matures for payment during the lifetime of the person whose life is insured or where the nominee or, if there are more nominees than one, all the nominees die before the policy matures for payment, the amount secured by the policy shall be payable to the policy-holder or his heirs or legal representatives or the holder of a succession certificate, as the case may be. (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. (7) The provisions of this section shall not apply to any policy of life insurance to which section 6 of the Married Women's Property Act, 1874 applies or has at any time applied : Provided that where a nomination made whether before or after the commencement of the Insurance (Amendment) Act, 1946, in favour of the wife of the person who has insured his life or of his wife and children or any of them is expressed, whether or not on the face of the policy, as being made under this section the said section 6 shall be deemed not t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y or at any time before the policy matures for payment nominate the person or persons to whom the money secured by the policy shall be paid in the event of his death. If the nominee is a minor, the policy holder may appoint any person to receive the money in the event of his death during the minority of the nominee. That means that if the policy holder is alive when the policy matures for payment he alone will receive payment of the money due under the policy and not the nominee. Any such nomination may at any time before the policy matures for payment be cancelled or changed, but before such cancellation or change is notified to the insurer if he makes the payment bon fide to the nominee already registered with him, the insurer gets a valid discharge. Such power of cancellation of or effecting a change in the nomination implies that the nominee has no right to the amount during the lifetime of the assured. If the policy is transferred or assigned under section 38 of the Act, the nomination automatically lapses. If the nominee or where there are nominees more than one all the nominees die before the policy matures for payment the money due under the policy is payable to the heirs o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra) we feel that the Court in that case paid little heed to the earlier judicial precedents of its own Court. The decision of the Full Bench in Raja Ram's case (supra) set at rest all doubts which might have been created by Kesari Devi's case (supra) about the true import of section 39 of the Act in so far as the High Court of Allahabad was concerned. In Fauja Singh's case (supra) there is reference only two three cases-Life Insurance Corporation of India v. United Bank of India Ltd. (supra), Matin v. Mahomed Matin and Kesari Devi's case (supra). The Court expressed its dissent from the Calcutta decision on the ground that decision had not considered sub-section (6) of section 39 of the Act. The Lahore case was one decided before the Act came into force. The distinguishing features of Kesari Devi's case (supra) are already mentioned. Otherwise there is not much discussion in this case about the effect of section 39 of the Act. We have carefully gone through the judgment of the Delhi High Court in Mrs. Uma Sehgal's (case) supra. In this case of the High Court of Delhi clearly came to the conclusion that the nominee had no right in the lifetime of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw and reason. They are supported by S. 44 (2) of the Act. It provides that the commission payable to an insurance agent shall after his death, continue to be payable to his heirs, but if the agent has nominated any person the commission shall be paid to the person so nominated. It cannot be contended that the nominee u/s 44 will receive the money not as owner but as an agent on behalf of someone else vide B.M. Mundkur v. Life Insurance Corporation, AIR 1977 Mad. 72. Thus, the nominee excludes the legal heirs. Two mistakes committed by the Delhi High Court in the above passage are these. In Karuppa Gounder's case (supra), the question was whether the amount payable under the insurance policy in question was joint family property or separate property of the assured. In that connection, the High Court of Madras observed thus: But where a coparcener has effected insurance upon his own life, though he might have received the premia from out of the funds which he might have received from the joint family, it does not follow that the joint family insured the life of the member or paid the premia in relation thereto. It is undeniable that a member of a coparcenary may with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the nominee's right to receive the money arose only on the death of the assured, Section 39 itself did not deal with the title to the money assured, which was to be paid by the insurer to the nominee who was bound to give discharge to the insurer. It was in this context that the Court took the view that the title remained with the estate of the deceased, and therefore, with the heirs of the deceased, that the nomination did not in any way affect the title and that it merely clothed the nominee with the right to receive the amount from the insurer. 12. On the other hand, the provisions and purport of Section 44 of the Act are different. In the first place under Section 44(1) it was a statutory right conferred on the agent to receive the commission on the renewal premium notwithstanding the termination of the agreement between the agent and the insurer, which provided for the payment of such commission on the renewal premium. The statute also prescribed the qualification which rendered the agent eligible to receive commission on such renewal premium. Section 44(1) provides for the payment of the commission to the agent during his lifetime only and does not contemplate the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pelling 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 (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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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