Nominees of life insurance policies function as trustees, not automatic beneficiaries; the 2015 amendment to the Insurance Act does not retroactively alter rights for policies where the policyholder died before the amendment.

JUDGMENT :

KRISHNA S. DIXIT, J.

This Intra-Court Appeal is directed against a learned Single Judge's order dated 01.02.204 whereby private Respondents' WP(C) No.18802 of 2023 having been favoured, relief has been granted to them in the following words:

"In such view of the matter, this Court directs the Opposite Party Nos.1 to 3 to disburse the death claim amount in favour of the Petitioners, if the said amount has not yet been disbursed in favour of the nominee. Learned Civil Judge (Sr. Dvn.), Dhenkanal is also directed to dispose of the Execution Case No.07 of 2014 as expeditiously as possible preferably within a period of three months from the date of presentation of this order.‛

2. Learned Counsel appearing for the Appellant vehemently argues that the impugned order is liable to be voided for the following reasons:

(i) The private Respondents have suppressed the fact of they having obtained an ex parte decree against the LIC & the Appellant in Civil Suit No. 356 of 2011, have put the judgment & decree dated 05.04.2014 in enforcement vide Execution Case No. 7 of 2024; however, they have suppressed the same and thus no relief could have been granted to them on account of culpable conduct.

(ii) Appellant’s son, who is none other than the husband of private Respondent No.1 and also the father of private Respondent No.2, had nominated both the Appellant & the Respondent No.1 as the nominees separately in two different LIC policies; Appellant has received Rs.9,48,229/-, being the nominee in one policy, whereas Respondent No.1, being the widow, has received Rs.5,34,867/-, being the nominee in the other policy. That being the position, impugned order of the kind could not have been made for payment of all the policy money to her only.

(iii) Although the Appellant happens to be the sole nominee in one policy and the 1st Respondent happens to be the sole nominee in the other, are entitled to retain the maturity value on the death of policy holder, in view of 2015 Amendment to Section 39 of the Insurance Act, 1938; this aspect having not been adverted to by the learned Single Judge, the impugned order is unsustainable.

(iv) Appellant’s wife being the mother died subsequent to the death of policy holder; she being one of the Class-I heirs, is entitled to 1/3rd share in the insurance amount, 2/3rds collectively going to private Respondents. This contention, he advances, after telling that an application is moved seeking recall of the decree.

3. Learned Senior Advocate appearing Respondent Nos.1 & 2 resists the Appeal making submission in justification of the impugned order and the reasons on which it has been constructed. He tells the Court that there is no conflict between decree of the Civil Court & the impugned order and therefore, the contention of suppression does not hold water; Appellant being the father was only the nominee, has no title to the insurance money, and that he holds it in trust for the Respondents; even otherwise he is not a Class-I heir under the Hindu Succession Act, 1955; what learned Single Judge has done by passing the impugned order, has brought about a just result and therefore, interference of this Court is not warranted.

4. Having heard learned counsel for the parties and having perused the Appeal papers, we decline indulgence in the matter with certain observations and for the following reasons:

4.1. AS TO FOUNDATIONAL FACTS

(i) Appellant happens to be the father of Insurer, namely, Chakradhar Sahu; Respondent No.1 happens to be the widow of Insurer; Respondent No.2 happens to be the son of Insurer. We are told at the Bar that the Insurer has a mentally challenged brother residing with Appellant. Chakradhar had bought as many as eight (8) LIC Policies; Appellant was the nominee in respect of six (6) of them, whereas 1st Respondent was th