THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY Writ Petition No.900 of 2004 (Dated : 12-06-2012) Between: T.Sree Devi W/o late T.Paramkusham R/o H.No.9-85, Shanthi Nagar, Dilsukhnagar, Hyderabad …Petitioner A n d Life Insurance Corporation of India Rep. by its Branch Manager, Mehdipatnam and another …Respondents THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY Writ Petition No.900 of 2004 ORDER: The petitioner claims to be widow of T.Paramkusham, who died on 19-10-2004. He was a binder in Government Printing Press. During his lifetime, he took policy-bearing No.641486268. He nominated his sister T.Rama Devi-2nd respondent as nominee for the policy obtained by him. According to the petitioner, one Ravi Kumar, who is the brother-in-law of T.Paramkusham is responsible for getting the name of the 2nd respondent included as a nominee in the policy. 2. The petitioner submitted representation dated 19-01-2005 to the 1st respondent not to disburse the amount to the nominee-2nd respondent relatable to policy obtained by her husband till the dispute between her and the nominee-2nd respondent is settled. As the 2nd respondent being a nominee of the policy is making efforts to receive the policy amount and appropriate the same for herself, the petitioner approached this Court invoking jurisdiction under Article 226 of the Constitution of India seeking the following relief:- “ Therefore, it is prayed that the Hon’ble Court may be pleased to issue an appropriate writ, order or direction, especially one in the nature of WRIT OF MANDAMUS declaring the action of the 1st respondent in trying to disburse the assured amount of Policy bearing No.641486268 of late Paramkusham to the 2nd respondent basing on the nomination as illegal, arbitrary, malafide, high handed and consequently direct the 1st respondent to pay the assured sum to the petitioner in the interests of justice and pass all necessary orders for the said purpose.” 3. Heard learned counsel appearing for the petitioner and perused the material brought on record. 4. Learned counsel appearing for the petitioner submits that one T.Ravi Kumar got included the name of the 2nd respondent in the policy taken by T.Paramkusham and even otherwise the 2nd respondent cannot appropriate the policy amount for herself and she has to account for the money received under the policy to the legal representatives of T.Paramkusham. The petitioner being widow of the policyholder-T.Paramkusham is entitled to receive the policy amount. It is also submitted by the learned counsel that the 1st respondent is to be directed to withhold the payment of money to the 2nd respondent. In support of her contentions, reliance has been placed on the judgment of Supreme Court in Sarbati Devi v. Usha Devi[1] and judgment of this Court in L.I.C of India rep. by the Divisional Manager, Hyderabad v. Nirmala Adi Reddy and others[2]. In Sarbati Devi’s case ( 1 supra), the Supreme Court held that the legal heirs of the assured are entitled to claim the amount in accordance with the succession law governing them and that the nominee of the life insurance policy under Section 39 of the Insurance Act, 1938 (“the Act”, for brevity) is not entitled to appropriate the same. Nomination only indicates the hand, which is authorized to receive the amount on 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. Para (12) of the judgment need to be noted and it is thus:- “ Moreover there is one other strong circumstance in this case which dissuades us from taking a view contrary to the decisions of all other High Courts and accepting the view expressed by the Delhi High Court in the two recent judgments delivered in the year 1978 and in the year 1982. The Act has been in force from the year 1938 and all along almost all the High Courts in India have taken the view that a mere nomination effected under Section 39 does not deprive the heirs of their rights in the amount payable under a life insurance policy. Yet Parliament has not chosen to make any amendment to the Act. In such a situation unless there are strong and compelling reasons to hold that all these decisions are wholly erroneous, the Court should be slow to take a different view. The reasons given by the Delhi High Court are unconvincing. We, therefore, hold that the judgments of the Delhi High Court in Fauja Singh’s case (AIR 1978 Delhi 276) (supra) and in Mrs.Uma Sehgal’s case (AIR 1982 Delhi 36) (supra) do not lay down the law correctly. They are, therefore, overruled. We approve the views expressed by the other High Courts on the meaning of Section 39 of the Act and hold that a mere nomination made under Section 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 authorized 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.” 5. In Nirmala Adi Reddy’s case (2nd supra), a learned Single Judge of this Court held that the policy amount payable on the death of the assured forms part of his estate and devolves according to the general law of succession and it cannot be diverted by reason of the nomination made under Section 39 of the Act. 6. The above-referred two decisions arise out of a civil suit between the nominee and the legal representatives of the assured. Section 39 of the Act need to be noted and it reads as hereunder:- “Nomination by policy‑holder 39. (1) The holder of a 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: Provided that, where any nominee is a minor, it shall be lawful for the policy holder to appoint in the prescribed manner any person to receive the money secured by the policy in the event of his death during the minority of the nominee. (2) Any such nomination in order to be effectual shall, unless it is incorporated in the text of the policy itself, be made by an endorsement on the policy communicated 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 policy‑holder a written acknowledgment of having registered a nomination or a cancellation 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 rats 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 affect the rights of the nominee only to the extent of the insurer's interest in the policy. (5) Where the policy matures for payment during the lifetime of the person whose life is insured or where the nominee or, if there are more nominees than one, all the nominees die before the policy- holder or his heirs or legal representatives or the holder of a succession certificate, as the case may be. (6) Where the nominee or, if there are more nominees than one, a nominee or nominees survive the person whose life is insured, the amount secured by the policy shall be payable to such survivor or survivors. (7) The provisions of this section shall not apply to any policy of life insurance to which section 6 of the Married Women's Property Act, 1874 (3 of 1874), applies or has at any time applied: Provided that where a nomination made whether before or after the commencement of the Insurance (Amendment) Act, 1946 (VII of 1946), in favour of the wife of the person who has insured his life or of his wife and children or any of them is expressed, whether or not on the face of the policy as being made under this section, the said section 6 shall be deemed not to apply or not to have applied to the policy.” A plain reading of the provisions of Section 39 of the Act indicates in case of death of the policyholder, the sum assured shall be paid to the nominee. Payment of assured amount to the nominee gets a valid discharge to the insurer. 7. I have gone through the copy of the policy, which finds place at page No.9, wherein the name of the 2nd respondent has been shown as nominee of the policy. What circumstances made the assured to put the name of the 2nd respondent as nominee was known to the assured only. Be that as it may, there is an obligation on the part of the insurer to pay the amount to the nominee under the provisions of law. No mandamus can be issued to the insurance company to act in violation of the provisions of Section 39 of the Act. If the petitioner has any claim, she can as well approach the civil Court and establish her right. 8. Accordingly, the Writ Petition is dismissed. No costs. _____________________ B.SESHASAYANA REDDY, J Dt.12-06-2012 RAR [1] 1984-AIR (SC)-0-346 [2] 1984 (2) ALT 135