A mere nomination made under Section 39 of the Insurance Act does not confer any beneficial interest in the amount payable under the life insurance policy to the nominee.

JUDGMENT :

R.K. Patra, J. - The short question that arises for consideration in this writ petition is whether a non-nominee can claim any share in the insured amount vis-à-vis a nominee mentioned in the insurance policy.

2. The petitioner has filed this writ petition seeking for a direction the authorities of the Life Insurance Corporation of India (opposite parties 1 and 2) to settle the L.I.C. claim of her deceased son-Soumendra Kumar Behera in her favour and her daughter-in-law (Opposite party No. 3)-widow of the deceased-Soumendra.

3. The petitioner's case is that her son-Soumendra while working as Assistant Teacher opened a L.I.C. policy bearing number 581307998 on 20.12.1994 underthe monthly salary savings scheme. In the policy, the petitioner was declared to a nominee u/s 39 of the Insurance Act, 1938 (Annexure-1). The petitioner's son-Soumendra married to opposite party No. 3 in the year 1996 and both of them were leading a happy conjugal life as husband and wife till his death which occurred on 26.7.1998. Soon after her son's death, the petitioner requested the Branch Manager, Life Insurance Corporation of India, Bhadrak (opposite party No. 2) to settle the L.I.C. claim in accordance with the policy. On receipt of the claim, the opposite party No. 2 asked her in letter dated 3.8.1998 (Annexure-2) to submit documents mentioned therein. The petitioner accordingly duly submitted the required documents on 12.9.1998. According to the petitioner, under the terms and conditions of the policy, the petitioner being the nominee under the policy and her daughter-in-law (opposite party No. 3), widow of late Soumendra are entitled to the claim but the authorities of the L.I.C., instead of settling the claim promptly are sitting over the matter without any legal justification.

4. When this case was called for hearing on 5.3.2002, Shri S.P. Mishra, learned counsel for the L.I.C., brought to our notice that opposite party No. 3 has filed a petition u/s 372 of the Indian Succession Act, 1925 in the Court of the CivilJudge (Senior Division), Bhadrak (Succession Misc, Case No. 8 of 1999) in respect of the insurance policy in question praying that the certificate may be granted to her and the opposite party No. 2 therein (writ petitioner). We accordingly called for the records from the Court of the Civil Judge which are made available to us.

5. It may stated that the question whether a person who was not nominated u/s 39 of the Insurance Act, 1938 would be entitled to receive the amount due under the life insurance policy is no more Respondent integra in view of the decision of the Supreme Court in Smt. Sarbati Devi and Another Vs. Smt. Usha Devi, In that case, the Supreme Court held that the policy holder continues to hold interest in the policy during his life time and the nominee does not acquire any interest in the policy during the life time of the policy holder. On the death of the policy holder the amount payable under the policy becomes part of his estate which is governed by the law of succession applicable to him. Such succession may be testamentary of intestate and Section 39 of the Act does not operate as a third kind of succession. The provisions contained in Sub-section 6 of Section 39 which states that the amount shall be payable to the nominee or nominees does not mean that the amount shall belong to the nominee or nominees. Having held so, the Court in paragraph 12 of the judgment succinctly laid down the law as under:

"… a mere nomination made u/s 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."

A Bench of this