BHANUMATI BEHERA Vs. LIFE INSURANCE CORPORATION

JUDGEMENT

(1.) IN this application under Articles 226 and 227 of the Constitution of India, the petitioner has prayed for a direction to the opposite parties 1 to 3 to pay her the amount payable under the life insurance policies effected by her late husband.

(2.) THE petitioner's case is that she married to one Ashok Kumar Behera on 14.7.1994 and to her misfortune, he died on 7.9.1994. After such untimately death of her husband, she wrote to the Branch Manager. L. I. C. of India, Panposh branch stating that she as the legally married wife of deceased Ashok Kumar Behera is entitled to receive the sum assured under the two L.I.C. policies bearing Nos. 582525241 and 582525242 but there was no response from the concerned authority. Apprehending that the concerned authorities might settle the claim in favour of opp. party No. 4 who is the mother of her deceased husband, she has approached this Court with the present application. Opposite parties 1 to 3 have filed counter affidavit. They have averred that late Ashok Kumar Behera took the aforesaid two life insurance policies, each for a sum of Rs. 25,000/ -. Both the policies commenced from 6.11.1993 and were in force at the time of the death of the policy holder. Their case is that in both the policies the policy holder mentioned the name of his mother (opp. party No. 4) to be the nominee. According to them they are under obligation to pay the sum assured to the nominee only if the claim is admissible. If the petitioner claims to be Class -1 legal heir of the deceased policy holder, she can claim the insured amount in accordance with the law of succession governing them. At this stage, disbursement of the sum assured to the petitioner does not arise.

(3.) THE short question that arises for consideration in this case is whether the petitioner is entitled to receive the amount due under the life insurance policies when her husband had not nominated her. Section 39 of the Insurance Act, 1938 (hereinafterreferred to as 'the Act') provides, inter alias, that the holder of the policy of life insurance on his own life may, when effecting the policy 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. There seemed to be serious conflict raging between different High Courts in the matter of interpretation of Section 39 of the Act some High Courts had taken the view that under Section 39, nominee is nothing more than an agent to receive the money due under the life insurance policy and that the money remains the property of the assured during his life time and on his death it forms part of his estate subject to the law of succession applicable to him. Some High Courts ruled to the contrary by stating that by virtue of nomination made by the policy holder, the amount shall be payable to the nominee. The entire controversy on the subject came to be resolved by the Supreme Court in Smt. Sarbati Devi v. Smt. Usha Devi, A.I.R. 1984 SC 346. The apex 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 on 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 or intestate and Section 39 of the Act does not operate as a third kind of succession. The provision 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 :