TMI Blog1981 (4) TMI 268X X X X Extracts X X X X X X X X Extracts X X X X ..... s, (B)that he was the nominee, and (E)that he was the beneficiary. The learned Sub-Judge dismissed the suit on February 18, 1974. He held that the source of premium is of no concern, but Dwarka Dass being the nominee was entitled to receive the amount in his own right absolutely and was neither a trustee nor an agent of the legal heirs. He was the beneficiary. Hence, this appeal. (2) It may be noticed that if the contention of Uma Sehgal were to prevail, then she was required to surrender 1/3rd share of Mrs. Vidya Wati in the last of the policies and her suit could be decreed only after excluding that share. However, the sole question that has been debated is about the position of the nominee. Cases almost overwhelming in number have taken the view that a nominee is nothing but a person who receives the payment on behalf of the heirs of the assured. The cases referred to are- Amardas v. Dadu Dayalu Mahasabha, , Ramballav Dhandhania v Gangadhar Nathmall, , D. Mohanvelu Mudaliar and another v. Indian Insurance and Banking Corporation Ltd.; Salem, , Mahadara Brahamma v. Kandula Venkataramana Rao and another, Air 1957 A.P. 757 (4), Smt. Shanti Devi v. Ramlal, , Sarojini Amma v. N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the insurer and registered by him in the records relating to the policy and any such nomination may at any time before the policy matures for payment be cancelled or changed by an endorsement or a further endorsement or a will, as the case may be, but unless notice in writing of any such cancellation or change has been delivered to the insurer, the insurer shall not be liable for any payment under the policy made bona fide by him to a nominee mentioned in the text of the policy or registered in records of the insurer. (3) The insurer shall furnish to the policyholder a written acknowledgement of having registered a nomination or a cancellation or change thereof, and may charge a fee not exceeding one rupee for registering such cancellation or change. (4) A transfer or assignment of a policy made in accordance with section 38 shall automatically cancel a nomination : Provided that the assignment of a policy to the insurer who bears the risk on the policy at the time of the assignment, in consideration of a loan granted by that insurer on the security of the policy within its surrender value, or its reassignment on repayment of the loan shall not cancel a nomination but shall a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d propositions that emerge from the aforesaid enactments are: (1) The holder of a policy of life insurance on his own life may at any time nominate a person or persons (including a minor) to whom the money secured shall be paid in the event of his death. (2) If the nominee is a minor, then the policy-holder may appoint any person to receive the money in case the assured dies before the nominee minor comes of age. (3)(a) Nomination can be cancelled or changed at any time before the policy matures for payment by (i) an endorsement, or (ii) will, or (iii) transfer or assignment, (b) Where the will is followed by nomination, the nomination will have the effect of making the will ineffective (D. Mohonvelu Mudaliar (supra). (4) The policy amount shall be payable : (A) Where policy matures for payment during the life time of the assured, to such assured; (B) Where the policy matures upon the death of the assured- (1) to the nominees if one is alive; and (2) to the assured's heirs, or legal representatives or the holders of a succession certificate, where (a) the sole nominee has or (b) all the nominees have died before the policy matured for payment. (5) Section 39 does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inated, he cannot give a valid discharge during his minority and to meet this situation, what is provided is not an alternative or additional nominee but an appointment of a person merely to receive the money. Such appointee is the statutory agent or receiver for the minor. The use of different expressions points to the conclusion that the nominee was not intended to be a person merely to collect the sum due. That was the view taken in Kesari Devi v. Dharma Devi, (DB). In that case the nominee died shortly after the assured did and before he could receive the money. The widow of the assured applied for a succession certificate. The widow of the nominee opposed and with success. It was held : (1) The nominee is not a trustee for or an agent of the legal representatives of the assured ; (2) The money is payable to the nominee and not to the estate of the deceased ; (3) Section 39 does nowhere lay down that the nominee is under any liability to account to any person for the money received by him. The insurer must pay to him and he is free to deal with it in any manner he likes. (10) In Karuppa Gounder and others v. Palaniammal and others, had nominated his wife in the insu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstrued not upon their own but with the aid of some Scottish and English decisions which, to my humble mind, had long ceased to be relevant. So, a Full Bench of the Kerala High Court in Sarojini Amma v. Neelakanta Pillai, , (FB), did not discuss the provisions of section 39 and simply agreed with the decisions in Ramballav Dhandania v.Gangadhar Nathmall, , and D.Mohanvelu Mudaliar v. Indian Insurance and Banking Corporation Ltd., , and In re Baron Kensington : Earl of Longford v. Baron Kensington, (1902) 1 Ch. D. 203 (22), and observed that a nomination only gives a bare right to collect the policy money on the death of the assured. It will be referring to Ramballav (supra) and Mohanvelu (supra) a little later. But Kensington (supra) has nothing to do with insurance. The court in fact meant to refer to In re A Policy No. 6402 of the Scottish Equitable Life Assurance Society, (1902) I Ch. D. 282 (23). In that case, one A in 1850 took out a policy on his own life for behalf of B , entitling B, her executors, administrators and assigns to receive the policy money on the death of A. A married B in 1852. B died in 1870 but A continued to pay the premium till he died in 1900. It was hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it say that the policyholder shall be deemed, to have con.stituted himself into a trustee for his legal heirs? It is not possible to presume that he could have intended no beneficiaries other than his legal heirs whether there be any or not and whether he liked them or not? The limited question in these two Full Bench cases was whether the creditors of the deceased could pursue the amount in the hands of the nominee. The simple answer then before the amendment of the Code of Civil Procedure was that they could, not because after death the estate of the deceased continues to vest in the deceased but because like all heirs the legatees the nominee succeeds to the estate with all its plus and minus points. However, after the -amendment in the Code of Civil Procedure all such decisions appear to have been devalued. (16) Now, to the Division Bench decisions. In D. Mohanvelu Mudaliar and another v. Indian Insurance and Banking Corporation Ltd., Salem and another, took out a policy and nominated his wife S as the person entitled to receive the moneys under the policy in case of his death. The Bank obtained a decree on 8-11-1948 and attached the policy. D died on 23-7-49 S died on 26-7- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver, it was' observed that all that the nominee acquires in a policy of insurance is a personal right to collect the money secured by the policy without the question of the title thereto being settled. Mr. Behl urged and correctly that the observations are obiter and although they are entitled to great respect, yet do not bind as the obiter of the Supreme Court does. I may here quote what B. N. Banerjee has said in this connection in his Law of Insurance, 3rd Edition, (1980), page 391 :- THE current view, however, is to hold the nominee not merely a trustee or a collector of the insurance policy amount but as a real person entitled to the same. Such a view, which is obviously the correct view, has come from the High Court of Delhi in S. Fauja Singh v. Kuldip Singh . (19) Out of the Single Bench cases, I will begin with Amar Das v. Dadu Dayalu, . There was nomination followed by a will in favor of the nominee. In probate proceeding a question arose whether any court-fee was payable on the insurance amount. It was held that it was. The money payable under the policy should be treated as testators assets because policy holder continues to be the owner up to the end of his life ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agree with the conclusion, but not with the reason. (22) In Life Insurance Corporation of India v. United Bank of India Ltd. and another, , it was argued and correctly that the nominee acquires title to the money after the policy matures and if he dies after the money had become payable to him, it will be paid to his heirs and legal representatives --it will go to thee nominee's estate. This argument was rejected on the ground that subjection (5) of section 39 was superfluous and because sub-section (6) confirms that the nominee does not acquire any title to the money. How come ? Not because the statute but because the judicial precedents have said so. As a matter of fact, the observations were obiter because the Court had found that it was not a case of life insurance. (23) In Naldi Dei and another v. Kanchan Prama Dei , it was held that nominee is merely a trustee on behalf of all the heirs. The emphasis is on ''payable in sub-section (6) of section 39, and sub-section (1) does not say that the nominee acquires title to the amount to the exclusion of all the heirs. I have already commented that 'payable' makes no difference in determination of the right ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
