Amended provisions of Section 39 of the Insurance Act establish that nominees have independent rights over insurance proceeds, necessitating adjudication of any will claims in proper legal proceedings.

JUDGMENT :

The present set of Writ Appeals, under Clause 15 of the LETTERS PATENT , have been preferred against the judgment and order, dated 22.11.2022, passed by the learned single Judge in W.P.No.26730 of 2021.

2. However, for purposes of convenience, facts mentioned in W.A.No.1072 of 2022 are being referred to.

3. The Petitioner - Karanam Sirisha, respondent no.1 in the present writ appeal, is the wife of late Karanam Rahul, who had insured himself heavily and obtained as many as six insurance policies from the Life Insurance Corporation of India, HDFC Life Insurance Company Limited and Max Life Insurance Axis Bank Limited.

4. The husband of the petitioner/respondent No.1 herein, however, in tragic circumstances, was murdered, and therefore, the issue which arose was with regard to the receipt of the insurance amount. In some of the policies obtained by the deceased, the mother of the deceased was nominated as a beneficial nominee, whereas in some, it was his father. Amounts covered under as many as four policies have since been encashed, leaving behind two major policies, both of which cumulatively amount to approximately Rs.11.50 Crores, which are still unpaid.

5. It is in that context and background that a writ petition vide W.P.No.26730 of 2021 came to be filed by the respondent No.1 herein, who is the wife of the deceased, seeking a mandamus to the official respondents not to release the benefits covered under the various policies in favour of the appellants, who are stated to be nominees in the said insurance policies.

6. Section 39 of the INSURANCE ACT , 1938, after its amendment, deals with the nomination by the policyholder, which envisages that in the event of the death of the policyholder of the life insurance policy, the sum assured would be paid to the person registered as a nominee, and that such a payment would be valid discharge for the insurance company.

According to the amended provisions of Section 39 , and in particular sub-section (7) and sub-section (8) thereof, the nominee reflected in the insurance policy is not just an agent or trustee of the legal heirs of the policyholder, but is conferred with an independent beneficial right over the money, which is covered under the policy.

7. The learned single Judge, in his judgment and order impugned, followed the principle to that extent, which was otherwise covered by a judgment of the Delhi High Court rendered in the case of Shweta Singh Huria and others Vs. Santosh Huria and another , [ AIR 2021 DEL 121 ]

8. On the basis of the amended provisions of Section 39 of the Act, 1938, undoubtedly, according to the learned single Judge, the money covered under the policies of insurance would go in the present case to the mother who was the beneficial nominee or to the father as such nominee.

9. However, the learned single Judge, with reference to Section 39 (2) of the amended provisions of the Act, 1938, observed that the nomination of a person in the insurance policy could be changed at any time before the policy matured for payment or could be changed or cancelled by an endorsement or a further endorsement or a Will as the case may be.

Observing that the petitioner had set up a case of a Will in her favour by her deceased husband, the learned single Judge held that the Will would have to be proved in appropriate proceedings and that the insurers would have to avail the orders of the competent Court in relation to the said Will.

10. It is in those circumstances that the learned single Judge proceeded to direct Respondent No.1, 5, and 6 in the writ petition i.e., the Insurance Regulatory Development Authority, HDFC Life Insurance Company Limited, and Max Lif