Married Women'S Property Act

Married Women’s Property Act, 1874.?

Section 6. Insurance by husband for benefit of wife. —3[(1) A policy of insurance effected by any married man on his own life, and expressed on the face of it to be for the benefit of his wife, or of his wife and children, or any of them, shall ensure and be deemed to be a trust for the benefit of his wife, or of his wife and children, or any of them, according to the interest so expressed, and shall not, so long any object of the trust remains, be subject to the control of the husbands or to his creditors, or form part of his estate. When the sum secured by the policy becomes payable, it shall, unless special trustees are duly appointed to receive and hold the same, be paid to the Official Trustee of the 4[State] in which the office at which the insurance was effected is situated, and shall be received and held by him upon the trusts expressed in the policy, or such of them as are then existing. And in reference to such sum he shall stand in the same position in all respects as if he had been duly appointed trustee thereof by a High Court, under Act No. 17 of 1864 5[to constitute an Office of Official Trustee], Section 10. Nothing herein contained shall operate to destroy or impede the right of any creditor to be paid out of the proceeds of any policy of assurance which may have been effected with intent to defraud creditors. 6 [(2) Notwithstanding anything contained in section 2, the provisions of sub-section (1) shall apply in the case of any policy of insurance such as is referred to therein which effected— (a) by any Hindu, Muhammedan, Sikh or Jain — (i) in Madras, after the thirty-first day of December, 1913, or (ii) in any other territory to which this Act extended immediately before the commencement of the Married Women’s Property (Extension) Act, 1959 (61 of 1959), after the first day of April, 1923, or (iii) in any territory to which this Act extends on and from the commencement of the Married Women’s Property (Extension) Act, 1959 (61 of 1959), (b) by a Buddhist in any territory to which this Act extends, on or after the commencement of the Married Women’s Property (Extension) Act, 1959 (61 of 1959):?

Provided that nothing herein contained shall affect any right or liability which has accrued or been incurred under any decree of a competent Court passed — (i) before the first day of April, 1923, in any case to which sub-clause (i) or sub-clause (ii) of Clause (a) applies ; or (ii) before the commencement of the Married Women’s Property (Extension) Act, 1959, in any case to which sub-clause (iii) of Clause (a) or Clause (b) applies.

According to Marrried women's Poperty act 1874, Section 6

??????????????????????????????A Policy of Insurance, effected by any Married Man on his Won life, and expressed on the face of it , to befor the Benefit of :

His wife

His wife and children

Any of them

Any of two are assured and be deemed to be a Trust for the Benefitnof :

His wife

His wife and Children

Any of them

According to?the Section 6 of act 1874 Any Trust is cread in that law subject to the contol of :

The Life Assurede ,or

His Creditor. , or

Form Part of His Estate.

The Term: 'children', In the act refers to the sons and daughter, both Natural and Adopted.?

The Term : 'Mared man', includes a widower or a Divorced Man..

According to Act married man can leave His Inheritance to His Dependents . Also , The cat provides statutory Pirvileges to the Dependent yhrough which , they can seek higher Amount of protection , in case of Any Disput for the claim, on the Death of the life-Assured.

Eligibility for a policy under Married women's propert act

Any Married Womed man , who wants to safeguard the intersts of his Dependents, wife, and children; can purchase this scheme.

A Divorcee or widoer can also purchase the scheme , seeking protection for his children.

Beneficiaries:

According to law Beneficiary?under the mwp Act

Only the wife

Any one or more children

Wife , and Any one or more chidren jointly.

Note :

If the Individual decides to provide the benefit to Two or more persons. then , In this case, Equal or Un-Equal Shares could be given to the Beneficiaries.

NON-MOHAMMEDAN:

The Individual can form a Trust , in the Name of his wife , or in the name of his children. The Individual has the Freedom , to dicide , as to whether . Hevwishes to provide benefit to all of his children or only some , people who are Names, are memtioned in the Trust, will only be entitled to the benefits.

The Individual can provide the name?of?the Beneficiaries, who will be entitled to the claim . the Benefits will be shared by the Beneficiaries,?jontly or the survivors or the survivor among them. In this case , only the surviving Benficary or Beneficiaries will be entitled the Claim.

He can mention, the name of the Beneficiaries, who will be entitled to , either equal , or Un-Equal shares; 1/3,2/3 and so on . in case , the Beneficiaries die before the policy become a claim , then, their share will go to their legal Representatives.

He can make a trust int name of his wife and chidren, as a class . In the case, the benfit will go?to woman, who becomes a widow , on death of the life-Assured . and all of his Children.

According to act only married man can effect an Insurance.

LOAN:

No Loan can be granted , under a married women's property act.

Propposer had , while apponting the trustees, unless specifically authorised the trustees, to obtain loan on the policy. The Trustees cannot surrender the policy. The trustees cannot surrender the policy.

Addendum to insrance company:

Under MWP Act He has to submit an Addendum to the Insurance Company.

Note

Addendum - An item of additional material added at the rnd of a book or docment.

An Insurance addendum wouls add or remove what is included in coverageof an insurance policy.

Appointment of the Trustess:

The Life-Assured has to appoint a Trustee .?

Individual need not appoint an Individual Trustee; He also option of appointing corporate Trustee,as well.

The life-Assured may reserve the power, to revoke the Appointment of Trustee, and appoint Another one.

In case, he wishes to change the trustees in Future, he need to add a provision for the same, in the Addendum.

The Trustees hold the policy-money, for the Beneficiary.

Some point in MWP Act

1 Short title:- This Act may be called the Married Women's Property Act, 1874

2 Extent and application:- 1 [It extends to the whole of India except the State of Jammu and Kashmir .] 2 But nothing herein contained applies to any married woman who at the time of her marriage professed the Hindu, Muhammadan, Buddhist, Sikh or Jaina religion, or whose husband, at the time of such marriage, professed any of those religions. And the 3 [State Government] may from time to time, by order, either retrospectively from the passing of this Act or prospectively, exempt from the operation of all or any of the provisions of this Act the members of any race, sect or tribe, or part of a race, sect or tribe, to whom it may consider it impossible or inexpedient to apply such provisions. The 3 [State Government] may also revoke any such order, but not so that the revocation shall have any retrospective effect. All orders and revocations under this section shall be published in the official Gazette. 4 [***]

3 Commencement- Repealed by the Repealing Act, 1876.

4 Married women's earnings to be their separate property The wages and earnings of any married woman acquired or gained by her after the passing of this Act, in any employment, occupation or trade carried on by her and not by her husband, and also any money or other property so acquired by her through the exercise of any literary, artistic or scientific skill, and all savings from and investments of such wages, earnings and property, shall be deemed to be her separate property, and her receipts alone shall be good discharges for such wages, earnings and property

5 Married woman may effect policy of insurance :- Any married woman may effect a policy of insurance on her own behalf and independently of her husband; and the same and all benefit thereof, if expressed on the face of it to be so effected, shall ensure as her separate property, and the contract evidenced by such policy shall be as valid as if made with an unmarried woman.

6 Insurance by husband for benefit of wife :- 5 [

(1) ] A policy of insurance effected by any married man on his own life, and expressed on the face of it to be for the benefit of his wife, or of his wife and children, or any of them, shall endure and be deemed to be a trust for the benefit of his wife, or of his wife and children, or any of them, according to the interest so expressed, and shall not, so long as any object of the trust remains, be subject to the control of the husband., or to his creditors, or form part of his estate. When the sum secured by the policy becomes payable, it shall, unless special trustees are duly appointed to receive and hold the same, be paid to the Official Trustee of the 6 [State] in which the office at which the insurance was effected is situate, and shall be received and held by him upon the trusts expressed in the policy, or such of them as are then existing. And in reference to such sum he shall stand in the same position in all respects as if he had been duly appointed trustee thereof by a High Court, under Act No. XVII of 1864 7 [to constitute an office of Official Trustee], section 10. Nothing herein contained shall operate to destroy or impede the right of any creditor to be paid out of the proceeds of any policy of assurance which may have been effected with intent to defraud creditors.

8 [(2) Notwithstanding anything contained in section 2, the provisions of sub-section (1) shall apply in the case of any policy of insurance such as is referred to therein which is effected-

(a) by any Hindu, Muhammadan, Sikh or Jain-

(i) in Madras, after the thirty-first day of December, 1913, or

(ii) in any other territory to which this Act extended immediately before the commencement of the Married Women's Property (Extension) Act 1959, after the first day of April, 1923, or

(iii) in any territory to which this Act extends on and from the commencement of the Married Women's Property (Extension) Act, 1959, on or after such commencement;

(b) by a Buddhist in any territory to which this Act extends, on or after the commencement of the Married Women's Property (Extension) Act, 1959:

Provided that nothing herein contained shall affect any right or liability which has accrued or been incurred under any decree of a competent court passed-

(i) before the first day of April, 1923, in any case to which sub-clause ( i ) or sub-clause (ii) of clause (a) applies; or

(ii) before the commencement of the Married Women's Property (Extension) Act, 1959 (61 of 1959), in any case to which sub-clause (iii) of clause (a) or clause (b) applies.]

7 Married women may take legal proceedings :- A married woman may maintain a suit in her own name for the recovery of property of any description which, by force of the said Indian Succession Act, 18658, (10 of 1865) or of this Act, is her separate property; and she shall have, in her own name, the same remedies, both civil and criminal, against all persons, for the protection and security of such property, as if she were unmarried, and she shall be liable to such suits, processes and orders in respect of such property as she would be liable to if she were unmarried.

8 Wife's liability for postnuptial debts :- If a married woman (whether married before or after the first day of January, 1866) possesses separate property, and if any person enters into a contract with her with reference to such property, or on the faith that her obligation arising out of such contract will be satisfied out of her separate property, such person shall be entitled to sue her, and, to the extent of her separate property, to recover against her whatever he might have recovered in such suit had she been unmarried at the date of the contract and continued unmarried at the execution of the decree: 9 [ Provided that nothing herein contained shall-

(a) entitle such person to recover anything by attachment and sale or otherwise out of any property which has been transferred to a woman or for her benefit on condition that she shall have no power during her marriage to transfer or charge the same or her beneficial interest therein, as

(b) affect the liability of a husband for debts contracted by his wife's agency expressed or implied.]

9 Husband not liable for wife's antenuptial debts :- A husband married after the thirty-first day of December, 1865 shall not by reason only of such marriage be liable to the debts of his wife contracted before marriage, but the wife shall be liable to be sued for, and shall, to the extent of her separate property, be liable to satisfy such debts as if she had continued unmarried: Proviso .- Provided that nothing contained in this section shall 10 [***] invalidate any contract into which a husband may, before the passing of this Act, have entered in consideration of his wife's antenuptial debts.

10 Extent of husband's liability for wife's breach of trust or devastation Where a woman is a trustee, executrix or, either before or after marriage, her husband shall not, unless he acts or intermeddles in the trust or administration, be liable for any breach of trust committed by her, or for any misapplication, loss or damage to the estate of the deceased caused or made by her, or for any loss to such estate arising from her neglect to get in any part of the property of the deceased.

Court Case in MWP Act

Calcutta High Court Life Insurance Corporation Of ... vs United Bank Of India Ltd. And Anr. on 13 March, 1970 Equivalent citations: AIR 1970 Cal 513, 1971 41 CompCas 603 Cal Author: S Mukherjea Bench: B Mitra, S Mukherjea JUDGMENT S.K. Mukherjea, J. 1. The question which has to be decided in this appeal is whether a nominee under a life insurance policy can validly assign the claim in respect of the policy after the holder of the policy dies but before the policy matures. It also raises a larger question namely whether a nominee can assign the claim under the policy or surrender the policy at all. 2. One Narayan Chandra Ghosh, a person considerably advanced in age, took out a policy of insurance on January 24, 1947, by payment of a single premium of Rupees 15,000/-. Under the policy a sum of Rs. 33,000/- was payable on January 17, 1978 to the assured or his nominees, executors, administrators or other representatives-in-interest as the case might be. It is not without significance that the moneys payable under the policy were payable not on the death of the assured but at a fixed date. Moreover, as only one single premium was payable there was no question of premiums ceasing to be payable on the death of the assured. The policy contained the following clause: "1. Surrender value. After one year from the within mentioned date of commencement of Assurance this policy will acquire a cash surrender value payable on the surrender of the policy provided there be no legal impediment. The amount of such surrender value will vary with the duration of the policy but will be not less than 80 per cent of the within mentioned single premium." 3. The assured nominated one Nitish Chandra Ghosh, his younger son as his nominee, under Section 39 of the Insurance Act. Soon thereafter, the assured died intestate on August 25, 1952, leaving his widow and two sons, as his heirs and legal representatives. 4. As the" policy did not mature on the death of the assured the nominee did not prefer any claim under it. In 1957 the nominee, in order to obtain a loan from the United Bank of India Ltd. by pledging the policy made enquiries of the Life Insurance Corporation of India as to what surrender value the policy had acquired. By a letter dated December 23, 1957 the Life Insurance Corporation of India hereinafter referred to as the insurer, intimated to the United Bank of India Ltd. that the surrender value of the policy was Rs. 12012/-. Immediately thereafter the nominee assigned the policy to the Bank by way of pledge and secured a loan of Rupees 10,000/- on interest. By a letter dated November 5, 1958 the Bank notified to the insurer that the policy had been assigned to the Bank for valuable consideration and the Bank was the beneficiary of the policy. By a letter dated November 26, 1958 the insurer intimated to the Bank that the assignment had been duly registered. Thereafter by another letter dated December 2, 1958 the insurer made it clear that in registering the notice of the assignment it had not accepted any responsibility for the validity of the assignment and that the policy is payable only on the expiry of the period, i. e. on 17th January, 1978. By another letter dated April 5, 1960 the insurer pointed out that the legal validity of the assignment in favour of the Bank "is not free from doubt" and the matter was, therefore, being referred for legal opinion. By a letter dated December 17, 1960 the insurer, presumably on the basis of legal opinion it had received, wrote: "Sri Nitish Chandra Ghosh is the nominee under Section 39 of the Insurance Act and nothing more. A nomination of the policy under Section 39 of the Insurance Act gives the right to collect the money only; policy money does not vest in the nominee by mere nomination. We are afraid, therefore, that the assignment made by the nominee is not legally valid and your right to surrender the policy on the basis of assignment is doubtful. Please note in this connection that we simply registered the assignment without expressing any opinion as to the legal validity." 5. It appears from an endorsement on the policy that on December 26, 1957 the nominee purported to assign his right, tide and interest in the policy to the United Bank of India Ltd. On the failure of the nominee to repay the loan with interest the Bank brought an action against the nominee Nitish Chandra Ghosh, the defendant No. 1 for Rs. 10,741/- and against the Life Insurance Corporation of India, the defendant No. 2, as the assignee of the policy for Rs. 12,012/- i. e. the surrender value of the policy. The defendant No. 1 did not contest the suit. He gave evidence and submitted to an instalment decree. The suit was, therefore, contested only by the defendant No. 2. On July 5, 1966 the learned Judge passed a decree against the defendant No. 1 for a sum of Rs. 10,741/- with interest, payable in certain instalments. The decree also provided that in the event of the decretal dues not being paid by the defendant No. 1 in terms of the decree the plaintiff would be entitled to realise from the defendant No. 2 the balance of the decretal sum. It was further provided by the decree that the sum paid to the plaintiff by the defendant No. 2 under the decree should be treated as a loan to be deducted with interest thereon at the rate of 6 per cent per annum from the moneys payable under the policy on the stipulated date i. e. 17th January, 1978. 6. From this decree the defendant No. 2, the Life Insurance Corporation of India, has come up in appeal. The issues on which the parties went to trial were: (i) Did the defendant No. 1 have any right, title or interest to assign or pledge the policy forming the subject-matter of the suit in favour of the plaintiff? (ii)??If?so,??has??the??plaintiff?any?right?to surrender the insurance policy? Strictly??speaking,??neither??of??these??issues arises?on?the pleadings read in the context of the insurance policy. 7.??Although it appears, from?the policy that the assured proposed to the insurer to effect an assurance on his life, it is abundantly clear from the terms and conditions of the policy that the policy did not effect a contract of insurance upon human life. It did not, because neither the payment of the sum secured on the policy nor the payment of premiums depended on the duration of any kind of human life. The insurance is not, therefore a life insurance within the meaning of Sub-section (11) of 8. The holder of the policy purported to nominate a nominee under Section 39 of of the Insurance Act. Under that section only the holder of a policy of life insurance can nominate a person or persons to whom the money secured by the policy shall be paid in the event of his death. As the policy is not a life insurance policy the purported nomination is not a nomination under 9. It was said in course of argument that the parties treated the policy as a life insurance policy at the trial and therefore in the appeal we ought not to treat it as anything else. When the court is invited to give effect to a statutory provision which applies only to life insurance and the case to which it is sought to be applied is patently not a case of life insurance, I do not think there is any principle of law under which the court is obliged to shut its eyes and misapply the statute. The parties cannot by their failure to raise an objection to the applicability of a statutory provision compel the court to apply the provision to a case to which it is not applicable. 10. There is also no averment in the plaint that the policy was surrendered or sought to be surrendered nor is there any evidence in that behalf. It is one thing to enquire what the surrender value of a policy is and quite a different thing to surrender it. In the absence of any pleading or evidence of surrender, the question as to whether the assignee of the nominee had any right to surrender the policy assumes a purely academic character, 11. The case could have been disposed of on either of these points. That was not done because the parties tacitly assumed that the policy was a life insurance policy; they also assumed that the policy was surrendered or sought to be surrendered by the plaintiff that is to say, the assignee from the nominee. It must be conceded that a nominee can validly surrender or assign a policy only if he has a title to the moneys payable under it, or in other words, only if he is a beneficiary of the policy. If the right of the nominee is merely a right to collect the moneys from the insurer, such a right cannot confer any title. It is, therefore, necessary to examine the precise nature of the interest of a nominee in the contemplation of Section 39 of the Insurance Act. 12. Sub-section (1) of Section 39 provides that the holder of a policy of life insurance on his own life may nominate the person to whom the money secured by the policy shall be paid in the event of his death. It is not without significance that the subsection speaks of the transaction of payment and not of any right, title or interest in the money which is payable. In saying that the money shall be paid to the nominee, the sub-section underlines the obligation of the insurer to pay to the nominee and not the right of the nominee to receive payment, though the obligation and the right are the obverse and reverse of the same transaction. It scrupulously avoids the use of any word implying proprietary right, title or interest such as 'vest', 'transfer' or 'assign'. Sub-section (2) of Section 39 provides that nomination may at any time before the policy matures for payment be cancelled by an endorsement or a will. The sub-section therefore clearly indicates that the nominee does not acquire any title to the money by virtue of the nomination because if he did, he could not have been divested of his right, title or interest by any unilateral act on the part of the holder of the policy who nominated him. Sub-section (4) of Section 39 provides that a transfer or assignment of a policy shall automatically cancel a nomination. It goes without saying that if the nominee had acquired any title by nomination, the policy-holder could not have assigned the policy without his concurrence, far less could the nomination have stood cancelled automatically by reason of assignment or transfer. Sub-section (5) provides that 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 matures for payment, the amount secured by the policy shall be payable to the policy-holder or his heirs or legal representatives or the holder of a succession certificate as the case may be. Here again, there is clear indication that the nominee docs not acquire any title to the money, because if he did, his heirs and not the heirs of the deceased policy-holder should have been entitled to the money when the policy matures. An interesting but specula-live argument was addressed to us by Mr. Somenath Chatterjee. He argued that although the sub-section says that the money shall be payable to the heirs and legal representatives of the deceased policy-holder if the nominee dies before the policy matures, it does not say that the money will be payable to the heirs of the policy-holder if the nominee dies after the policy matures. It is, therefore, implied that in a situation where the nominee dies after the policy matures the money will be payable not to the heirs and legal representatives of the policy-holder but to the heirs and legal representatives of the nominee or in other words the money will go to the nominee's estate. He contended that although in the scheme of Section 39 the nominee does not acquire any title to the money before the policy matures, he docs so after the policy matures on the death of the policy-holder. In my opinion, the argument is untenable. There is good reason for thinking that Sub-section (5) was introduced ex abundanti cautela. The first limb of the sub-section prescribed that if the policy matures during the lifetime of the policy-holder the money shall be payable to him. This provision is clearly redundant because Sub-section (1) of Section 39 has already provided that the money will be payable to the nominee only in the event of the policy holder's death. The other limb of the sub-section which enjoins payment to the heirs and legal representatives of the policy-holder if the nominee dies before the policy matures may very well be also treated as superfluous. In my opinion, the legal position should have remained the same even if Sub-section (5) were not in the statute. Sub-section (6) or Section 39 confirms that the nominee does not acquire any title to the money when the policy matures on the death of the policy-holder. It provides that 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. The sub-section contemplates that the money will not be payable jointly to the surviving nominee and the heirs and legal representatives of the deceased nominee but to the surviving nominee alone. If the money had vested in the nominees, the estate of the deceased nominee should have shared in the proceeds of the policy. On a consideration of Sub-sections (.1), (2), (4), (5) and (6) of Section 39 the proposition clearly emerges that the proceeds of the policy do not vest in the nominee though they are payable to the nominee in the event of the death of the holder of the policy. They do not, by virtue of nomination under Section 39 alone, become a part of the nominee's estate before or after the policy matures. 13. Nomination under Section 39, like a testamentary disposition speaks only after death but the analogy ends there. No title to the policy moneys passes in praesenti or in future by nomination. If the title passed to the nominee on the death of the policy-holder his legal status would have been indistinguishable from that of an assignee, or a legatee, the assignment or legacy taking effect on the death of the policy-holder. The subject of assignment is dealt with not by Section 39 but by Section 38 of the Insurance Act. Mr. Chatterjee relied on a passage in Halsbury's Laws of England, Third Edition, Vol. 4 Article 996 where it is said: "Legal choses in action are those which can be recovered or enforced by action at law, as, for instance, a debt, a bill of exchange, or a claim on a policy of insurance." On this basis he argued that the right of the nominee to payment of moneys payable under the policy is a chose in action and as such is assignable. In footnote (p) to the paragraph cited by Mr. Chatterjee it is said: "In the Supreme Court of Judicature Act 1873 Section 25(6) the expression 'legal chose in action' was employed with a special peculiar meaning. That subsection is repealed by the Law of Property Act 1925 and re-enacted by Section 136 of the Act, the phrase 'legal thing in action' being used." It is unnecessary for our present purpose to go into the technicalities of the concept of a chose in action. Under the Indian Law, an actionable claim is no doubt transferable but it is transferable only by the person who has a title to the property in respect of which the claim lies. The position is the same in English Law. Nemo dat quod non habet, no one gives what he does not possess. If the nominee has no title to the policy money he can neither surrender the policy nor can he transfer by assignment any right, title or interest in the moneys payable under the policy. In the contemplation of the statute, the right of a nominee is a mere right to collect the proceeds of the policy and the right has been given only to obviate the inconvenience of obtaining representation to the estate of the deceased policy-holder or a succession certificate. 14. Judicial precedents also do not support the contention that the nominee has any title to the moneys payable under the policy or that they become a part of his estate. In Krishna Lal v. Pramila Bala Dasi , a case decided before the Insurance Act came into force, the insurer was to pay to the wife of the insured, as his nominee, a certain sum payable under the policy. Negativing the claim of the wife that she was beneficially, entitled to the money, the Bench which was presided over by Rankin, C. J. held that the money was a part of the estate of the deceased policy-holder and, therefore, the creditors of the policy-holder's heirs could proceed against the policy money in execution of the decree passed against them. C. C. Ghose, J. who delivered the leading judgment in that case strongly relied on the decision in Cleaver v. Mutual Reserve Fund Life Association, (1892) 1 QBD 147 where under the policy the money was payable to the insurer's wife, if living, otherwise, to his legal representative. In that case, Lord Esher, M. R. observed: "The husband might have altered the destination of the money at any time and might have dealt with it by will or settlement. I think that apart from any statute, no interest would have passed to the wife by reason merely of being named in the policy." This case has a peculiar relevance to the facts of this appeal because here, the policy not being a life insurance policy, Section 39 under which the nomination was made, has no application. The nomination must, therefore, be treated as one de hors Section 39 of the Insurance Act as in . Later decisions of this Court and other courts agree that the rights of a nominee under Section 39 are no larger. 15. In Ramballav v. Gangadhar, , P. B. Mukharji, J. held that a nominee who is nominated under Section 39 of the Insurance Act does not become the owner of the money payable to him under the policy and the nomination only indicates the person who should receive the money should the owner die. All that Sub-section (6) of Section 39 of the Insurance Act does is to confer on the nominee the right to receive the insurance money as between the insurance company and such nominee but it does not provide for the title or ownership of that money in general. The decision of P. B. Mukharji, J. was relied on in a Bench decision of the Madras High Court in D. M. Mudaliar v. Indian Insurance and Banking Corporation Ltd., . The court held that nominee as payee is nothing more than an agent to receive the money, which money remains the property of the assured and at his disposal during his lifetime and on his death forms part of his estate. The result is that the nominee takes no beneficial interest in it. Ramaswami, J. in course of his judgment said: "There are thus important differences between a nomination and an assignment which can be summed up as follows: An assignment of life policy passes to the assignee the right to the insurance money, even though the assignor's interest in the life has ceased before the date of assignment. The life policy forms part of the estate of the assured and may be dealt with at his absolute discretion, sold, charged, settled, etc. Once an assignment is made it cannot be cancelled at the option of the assignor. It creates a vested right in the assignee who no doubt takes it subject to the equities in the case of assignor, because the assignee cannot have a better title than his assignor, On the other hand, a nomination unless there is a special clause inserted to make it irrevocable, does not deprive the policy-holder of his rights, privileges, options and benefits under the policy including the right to alter the beneficiary." 16. Elsewhere he says: "A nominee is entitled to receive policy moneys only. There is no statutory trust created by Section 39 in favour of the nominee, nor is he conferred as the nominee under Section 5 of the Provident Funds Act 1925, with the right to receive the moneys absolutely. "The nominee being only given the right to receive money after the death of the assured, he can neither surrender the policy nor have it converted to be paid up." 17. Similar views were expressed on the nature of the rights of a nominee nominated under Section 39 of the Insurance Act in M. Brahmamma v. K. Venkataramana Rao, AIR 1957 Andh Pra 757 where Chandra Reddy, J. observed: "A reading of the relevant provisions of the section can only lead to the conclusion that the holder of a policy continues to have interest in the policy notwithstanding the nomination effected in regard to the policy. It does not divest him of the rights in the policy and he retains disposing power over it. Under Sub-sections (2) and (4) it is competent for the holder of the policy to bequeath to somebody or make an assignment of it and this automatically cancels the nomination which implies that a nominee has no vested right in the document. In fact, under Sub-section (5), if the policy-holder survives the nominee, the money is payable to the holder himself and not to the heirs or the legal representatives of the nominee which would not be the case if the nominee had acquired any vested interest in the policy. Therefore, the title does not pass to the nominee by reason of the nomination.'' 18. In Shanti Devi v. Shri Ram Lal, the holder of a decree against the assured put his decree into execution after the assured died and attached the money due under his insurance policy. The widow of the assured made an application for the release of the insurance money which had been attached upon the ground that she had been nominated under Section 39 of the Insurance Act to receive the money. The executing court held inter alia that mere nomination did not create any interest in favour of the nominee and the money still continued to be the property of the assured and was, therefore, liable to attachment as a part of the estate of the deceased. In that view of the matter her objection was dismissed. The widow preferred an appeal. The Appellate Court held that merely because the appellant was nominated to receive the money from the insurance company she did not become the owner of the money; the nomination only dispensed with the necessity of obtaining a succession certificate. The appeal was, therefore, dismissed. The appellant preferred a second appeal to the High Court which was also dismissed. In course of his judgment the learned Judge who spoke for the Court observed at page 572 of the Report: "If the nomination is made only under Section 39 it is not an assignment but merely gives the right to the nominee to receive the assured amount without creating any interest in the nominee." 19. Mr. Chatterjee relied on a Bench decision of the Allahabad High Court in Kesari Devi v. Dharma Devi, . There the insurance money was payable 'to the assured, his nominees, executors, administrators, assigns or other representatives as the case may be'. The assured nominated his brother Mannulal under Section 39 of the Insurance Act as his nominee. Shortly thereafter the assured died leaving his widow Sm. Kesari Devi as his heir and legal representative. Before he could collect the insurance moneys, the nominee died leaving his widow Sm. Dharma Devi as his heir and legal representative. She applied for a succession certificate in respect of insurance moneys. Her application was contested by Sm. Kesari Devi, who claimed that she was entitled to the succession certificate as the heir of the assured. The learned District Judge granted the succession certificate to the nominee's widow. Kesari Devi as the heir and the legal representative of the assured appealed to the High Court. The appeal was dismissed. In course of his judgment Desai, C. J. said:"Under the insurance policy the money became payable to Mannulal; this means that the company was bound to pay to him. Since he died before it could be paid to him it must be paid to his heir or representative, i. e. to the respondent. It must be paid in such a manner as to amount to payment to him. It is only if it is paid into his estate that it can be said to be paid to him, and the respondent is the person who indisputably represents it. If it had been paid to him as it ought to have been on his death it would have gone to the respondent as part of his estate and the respondent must be placed in the position in which she would then have been." I am unable to agree with the learned Chief Justice. The nominee's right is the right to receive the money only. Section 39 does not confer on him any title to the money. The right to receive is a personal and not a heritable right. The right is not in the nature of any title to the money and, therefore, the money when receivable or received by the nominee does not become a part of his estate. No doubt, if the nominee had been alive he could have validly laid claim to payment of the money, but on his death his heirs and legal representatives should not have successfully claimed the money as part of the nominee's estate. The learned Chief Justice said that the company must pay the money to him, that is to say, to the nominee'. I agree. But when he says 'if he has died in the meanwhile it is payable to his estate, I respectfully disagree. The money is payable to the nominee as receiver of the money but it does not become part of his estate. In so far as the learned Judges of the Allahabad High Court held in that case that insurance moneys payable to a nominee under Section 39 of the Insurance Act becomes a part of the nominee's estate, I am unable to agree. In my opinion, in the facts of that case, on the death of the nominee the insurance money became payable to the heirs or legal representatives of the assured and, therefore, to the appellant Sm. Kesari Devi. The ratio of the Allahabad decision, runs counter to the ratio of the decisions of the Calcutta High Court, Madras High Court, Andhra Pradesh High Court and of the Allahabad High Court itself to which reference has already been made. 20. Mr. Chatterjee in course of his argument contended that the nominee who is a son of the deceased policy-holder is a beneficiary within the meaning of Section 6 of the Married Women's Property Act 1874 and as such he has an absolute and indefeasible title to the money. He was, therefore, legally competent to assign the policy. This is a case neither made in the plaint nor argued at the trial. No mention of it is to be found in the grounds of appeal. The policy is embodied in a printed form. Some of the printed clauses are patently inapplicable to the contract of insurance evidenced by the policy. No doubt, the words "children's endowment" appear at the top of the policy in print. Be that as it may, nowhere is there any indication that the policy is taken out for the benefit of any son of the policy-holder nor is the name of any beneficiary indicated in the policy. All that the assured has done is to have nominated Nitish Chandra Ghosh, under Section 39 of the Insurance Act as his nominee to whom the money is payable. In the plaint it is expressly stated that the nominee assigned his right, title and interest as nominee and not as a beneficiary. In any event, Section 6 of the Married Women's Property Act 1874 applies only to life insurance policies and not to policies of any other description. As the policy in the present case is not a life insurance policy the section can have no application. 21. In the view we have taken we must hold neither the defendant No. 1 nor the plaintiff as his assignee was or entitled to surrender the policy and the surrender, if any, of which there is no evidence, is invalid. If a nominee cannot validly surrender the policy, his assignee cannot do so either. The assignment by the nominee of his right, title and interest in the policy in favour of the plaintiff is also invalid. He has assigned nothing. We are not only unable to uphold the judgment of the learned trial Judge on merits but we are also of opinion that the learned Judge was not justified in passing a decree directing the defendant No. 2 to pay certain sums of money to the plaintiff and treat the payments as loans. It is nobody's case that any application was made for any loan or that the appellant Life Insurance Corporation is obliged to grant any loan in the facts and circumstances of this case. The learned Judge has passed a decree on the basis that the policy has been validly surrendered and the claim under it validly assigned by the nominee to the defendant Bank and yet at the same time has treated the policy as subsisting and the insurance moneys payable when the policy matures. It is only on that basis that the direction to treat the moneys recoverable from the appellant under the decree as a loan can be explained. It seems to us that there is no warrant for such an order either in the contract of insurance or in the statute. 22. It only remains for us to pronounce the order. The appeal succeeds. The decree of the learned Judge against the appellant, the Life Insurance Corporation of India is set aside and the suit is dismissed as against the said Life Insurance Corporation of India. The respondent No. 1 the United Bank of India, will pay the appellant's costs of the appeal and of the trial. B.C. Mitra, J.

23. I agree with the judgment and order made by my learned brother but would like to add a few words of my own. The respondent No. 2 is the nominee of an Endowment insurance policy which was taken out by his father who died on August 25, 1952. The appointment of the nominee was made under Section 39 of the Insurance Act, 1938, (hereinafter referred to as the Act.) The policy was single premium policy, the premium being Rupees 15,015. The sum assured was Rs. 33,000 payable on January 17, 1978, on expiry of the endowment period of 31 years. 24. The nominee purported to assign the policy in favour of the respondent No. 1 who filed the suit for recovery of a loan. The question is if the respondent No. 2 as the nominee of the policy had the right to assign the claim under the policy, to the respondent No. 1 so as to enable the latter to obtain a decree against the appellant for recovery of the money due on the policy. On a plain reading of Sub-sections (5) and (6) of Section 39 of the Act it is clear to me that the only right which a nominee of an insurance policy has is the right to collect and receive the money, if he is alive at the date of maturity and if the policy-holder is dead at that time. If the policy-holder is alive when the policy matures, the nominee has no right whatsoever and the amount secured by the policy is payable to the policy-holder, and if he is dead and the nominee is also dead to his heirs or legal representatives or the holder of a succession certificate. Under Sub-section (6) of Section 39 of the Act if there are more than one nominee, and one or more of such nominees survive the assured, the amount secured by the policy would be payable to the survivor or survivors of the nominees. This position makes it amply clear that a nominee has no proprietary interest in the money payable under the policy. He does not by any means become the owner or proprietor of the sum assured. If he did, the sum assured would have become payable, in a case where there are more than one nominees one of whom survives the other, to the surviving nominee and the heirs and legal representatives of the deceased. But that is not what the statute prescribes. Under the statute, upon the death of a nominee where there are more than one the sum assured becomes payable to the survivor or survivors of the nominees. This provision makes it clear that the only right which a nominee has is a right to receive and to collect the money, and if he dies this right passes not to his heirs and legal representatives but to the survivor or survivors of the nominees, where there are more than one. The right which a nominee has is not a heritable interest so as to enable the heirs and legal representatives of a deceased nominee to claim and enforce such a right. 25. This position has been clearly stated by P. B. Mukharji J. in which was followed by the Division Bench of the Madras High Court in . I respectfully agree with the views expressed in these two decisions and I do not agree with the contrary views expressed in the Bench Division of the Allahabad High Court . In my opinion a nominee under Section 39 of the Act takes no beneficial interest in the sum assured, and he had no right to assign the policy so as to enable the assignee to recover the money due under the policy and appropriate the same. 26. Assignment under Section 38 and nomination under Section 39 of the Act are two entirely different concepts altogether. The assignment of the policy confers upon the assignee the benefits under the policy, and by virtue of the assignment he is the only person who is entitled to such benefit. But a nominee under Section 39 of the Act is not entitled to any benefit under the policy at all. As I said earlier his only right is to receive and collect the money upon maturity of the policy, provided that the policy-holder is dead at the time of such maturity. While a nominee has no right whatsoever by virtue of nomination, if the policy-holder is alive at the time when the policy matures for payment, the assignee under Section 38 is the only person entitled to the benefit of the policy even though the assured is alive at the maturity of the policy. To hold that a nominee is entitled to assign and transfer his rights by virtue of the nomination, would be equating his position to that of an assignee and this in my view will be entirely contrary to the provisions in the statute. 27. The next question is if the policy could be surrendered by the respondent No. 2 as the nominee or by the respondent No. 1 as the assignee of the nominee. In my view the respondent No. 2 as the nominee had no right to surrender the policy, and the respondent No. 1 could have no better or higher right than the respondent No. 1 had. But quite apart from the question of the right of the respondent to surrender the policy, there is nothing on record to show that the policy was ever surrendered. By a letter December 23, 1957 the appellant had informed the respondent No. 1 of the surrender value of the policy, no doubt on inquiry made in that behalf. But there is no evidence that the policy was ever surrendered or that intimation of such surrender was given by cither of the respondents to the appellant. There is no averment in the plaint that the policy was ever surrendered by either of the respondents and no evidence was tendered on behalf of the respondent No. 1 that there was a surrender of the policy. Even assuming that the assignment of the policy by the respondent No. 2 to the respondent No. 1 is a valid and lawful assignment, which in our view, it is not, the respondent No. 1 would have no cause of action against the appellant until surrender of the policy. And in this case such a surrender has neither been pleaded nor proved. Counsel for the respondent No. 1 contended that the parties proceeded on the basis of a surrender. I cannot accept this contention. In order to succeed in this suit the respondent No. 1 is bound not only to establish a valid and lawful assignment of the policy in his favour but must also prove a surrender of the policy, and in my view it has failed to prove either. 28. For these reasons this appeal must succeed and I concur in the order made by my learned brother.

Supreme Court of India Smt. Sarabati Devi & Anr vs Smt. Usha Devi on 6 December, 1983 Equivalent citations: 1984 AIR 346, 1984 SCR (1) 992 Author: E Venkataramiah Bench: Venkataramiah, E.S. (J)??????PETITIONER: SMT. SARABATI DEVI & ANR.????Vs. RESPONDENT: SMT. USHA DEVI DATE OF JUDGMENT06/12/1983 BENCH: VENKATARAMIAH, E.S. (J) BENCH: VENKATARAMIAH, E.S. (J) MISRA, R.B. (J) CITATION: 1984 AIR?346??????1984 SCR?(1) 992 1984 SCC?(1) 424????1983 SCALE?(2)869 CITATOR INFO : RF?????1986 SC1863?(49) ACT: Insurance Act,?1938 (Act?IV?of?1938),?Section?39Assured of?a life?insurance policy?dies intestate leaving behind him?his mother,?his widow,?and a?son, but for the purpose of?Section 39 has nominated his widow alone-Whether the nominee of a life insurance policy, on the assured dying intestate would?become entitled?to the beneficial interest in the?amount received under the policy to the exclusion of the heirs of the assured. HEADNOTE:???The appellants?being mother?and son?of one?Jagmohan Swarup who?was governed?by the?Hindu Succession Act, 1956 and who died intestate on June 15, 1967 filed Civil Suit No. 122 of 1970 on the file of the first Additional Civil Judge, Dehradun for?a declaration?to the?effect that?they?were together entitled?to 2/3rd?share of?the?amount?due?and payable under?the insurance?policies though?the?deceased assured has nominated the respondent his widow as the person to whom?the amounts?were payable. The respondent contested the suit?claiming that?she has?the absolute?right to the amounts to?the exclusion?of her son and her mother-in-law. The suit?was dismissed.?The First?Appeal before?the?Dt. Judge, Dehradun?and the Second Appeal before the High Court were dismissed.?Hence the?appeal after?obtaining?special leave of the Court.???Allowing the appeal, the Court, ^???HELD: 1.1?A mere?nomination made?under Section 39 of the?Insurance?Act,?1938?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 accused. 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. [1009G, 1004 B-D]???1.2 An?analysis of the provisions of Section 39 of the Act clearly?established that the policy holder continues to hold interest?in the?policy during?his life?time and the nominee acquires?no sort?of interest?in the policy during the life?time of the holder. If that is so, on the death of the policyholder 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. The?tenuous?character?of?the right?of??a?nominee?becomes?more?pronounced?when?one contrasts the provisions of Section 39 with that of 993 Section 38. Section 39 of the Act was not intended to act as a third?mode of?succession provided?by?the?stature?and incorrectly styled?as "statutory?testament" by?the?Delhi High Court. [998 C-E]???1.3 The?language of?Section 39?of the Act is neither capable of?altering the?course of succession under law nor can be said to have equated a nominee to an heir or legatee. [999F]???S. Fauza?Singh v.?Kuldip Singh?& Ors. AIR 1978 Delhi 276; Mrs.?Uma Sehgal?& Anr. v. Dwarka Dass Sehgal and Ors. AIR 1982 Delhi 36; overruled. Rama Bhallav?Dhandhania v. Gangadhar Nathmall AIR 1966 Cal.?275;?D.?Mohananardu?Mudaliar?and?Anr.?v.?Indian Insurance and?Banking Corporation?Ltd., Salem and Anr. AIR 1957 Madras 115; Sarojini Amma v. Neelakanta Pillai AIR 1961 Kerala 126,?Life Insurance?Corporation of?India v. United Bank of?India Ltd.?& Anr.?AIR 1970?Cal. 413; Raja Ram v. Mata Prasad and Anr. AIR 1972 All. 167; Mallidei and Anr. v. Kanchan Prana?Dei AIR 1973 Orissa 83; Lakshmi Amma and Anr. v. Saguna?Bhagathi &?Ors. ILR?1973 Karnataka 827; Atmaram Mohanlal Panchal?v. Gunavantiben?and Ors. AIR 1977 Gujarat 134 approved. Karuppa Gounder?& Ors.?v. Palaniammal & Ors. AIR 1963 Madras 245;?B. M.?Mundkur v. Life Insurance Corporation of India?and??Ors.?AIR??1977??Mad.??72,??discussed??and distinguished. JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 96 of 1972. From the Judgment and Order dated 23rd December, 1971 of the High Court of Judicature at Allahabad in Second Appeal No. 3082 of 1971. Yogeshwar Prasad, Mrs. Rani Chhabra and S. K. Bagga for the Appellants. B. R. Agarwala, R. H. Pancholi and Ms. Vijayalakshmi Menon for the Respondent. The Judgment of the Court was delivered by VENKATRAMIAH, J. The short question which arises for consideration in this appeal by special leave is whether a nominee of a life insurance policy under section 39 of the Insurance Act, 1938 (Act No. IV of 1938) (hereinafter referred to as 'the Act') on the assured dying intestate would become entitled to the beneficial interest in the amount received under the policy to the exclusion of the heirs of the assured. The facts leading to this appeal are these: One Jag Mohan Swarup who was governed by the Hindu Succession Act, 1956 died intestate on June 15, 1967 leaving behind his son, Alok Kumar (plaintiff No. 2), his widow Usha Devi (defendant) and his mother Sarbati Devi (plaintiff No. 1) as his heirs. He had during his lifetime taken out two insurance policies for Rs. 10,000 each and had nominated under section 39 of the Act his wife Usha Devi as the person to whom the amount was payable after his death. On the basis of the said nomination, she claimed absolute right to the amounts payable under the two policies to the exclusion of her son and her mother-in-law. Thereupon Sarabati Devi and Alok Kumar (minor) represented by his next friend Atma Ram who was the father of Jag Mohan Swarup filed a suit in Civil Suit No. 122 of 1970 on the file of the Ist Additional Civil Judge. Dehradun for a declaration to the effect that they were together entitled to 2/3rd share of the amount due and payable under the insurance policies referred to above. Usha Devi, the defendant resisted the suit. Her contention was that on the death of the assured, she as his nominee became absolutely entitled to the amounts due under the insurance policies by virtue of section 39 of the Act The trial court dismissed the suit. The first appeal filed by the plaintiffs against the decree of the trial court was dismissed by the District Judge, Dehradun. The second appeal filed by them against the judgment of the District Judge before the High Court of Allahabad was dismissed in limine under Rule 11, Order 41 of the Civil Procedure Code. The plaintiffs have filed this appeal after obtaining special leave under Article 136 of the Constitution. The only question which requires to be decided in this case is whether a nominee under section 39 of the Act gets an absolute right to the amount due under a life insurance policy on the death of the assured. Section 39 of the Act reads: 39. Domination by policy-holder.- (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 acknowledgement of having registered a nomination or a cancellation or 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 risk 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 matures for payment, the amount secured by the policy shall be payable to 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 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, 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." At the out set it should be mentioned that except the decision of the Allahabad High Court in Kesari Devi v. Dharma Devi on which reliance was placed by the High Court in dismissing the appeal before it and the two decisions of the Delhi High Court in S. Fauza Singh v. Kuldip Singh & Ors. and Mrs. Uma Sehgal & Anr. v. Dwarka Dass Sehgal & Ors in all other decisions cited before us the view taken is that the nominee under section 39 of the Act is nothing more than an agent to receive the money due under a life insurance policy in the circumstances similar to those in the present case and that the money remains the property of the assured during his lifetime and on his death forms part of his estate subject to the law of succession applicable to him. The cases which have taken the above view are Ramballav DhanJhania v. Gangadhar Nathmall. Life Insurance Corporation of India v. United Bank of India Ltd. & Anr., D. Mohanaeelu Muldaliar & Anr. v. Indian Insurance and Banking Corporation Ltd. Salem & Anr., Sarojini Amma v. Neelakanta Pillai Atmaram Mohanlal Panchal v. Gunavantiben & Ors., Malli Dei and Lakshmi Amma Anr. v. Sagnna Bhagath & Ors., Since there is a conflict of judicial opinion on the question involved in this case it is necessary to examine the above cases at some length. The law in force in England on the above question is summarised in Halsbury's Laws of England (Fourth Edition), Vol. 25, Para 579 thus : "579. Position of third party, The policy money payable on the death of the assured may be expressed to be payable to a third party and the third party is then prima facie merely the agent for the time being of the legal owner and has his authority to receive the policy money and to give a good discharge; but he generally has no right to sue the insurers in his own name. The question has been raised whether the third party's authority to receive the policy money is terminated by the death of the assured; it seems, however, that unless and until they are otherwise directed by the assured's personal representatives the insurers may pay the money to the third party and get a good discharge from him." We shall now proceed to analyse the provisions of section 39 of the Act. The said section provides that a 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. If the nominee is a minor, the policy holder may appoint any person to receive the money in the event of his death during the minority of the nominee. That means that if the policy holder is alive when the policy matures for payment he alone will receive payment of the money due under the policy and not the nominee. Any such nomination may at any time before the policy matures for payment be cancelled or changed, but before such cancellation or change is notified to the insurer if he makes the payment bon fide to the nominee already registered with him, the insurer gets a valid discharge. Such power of cancellation of or effecting a change in the nomination implies that the nominee has no right to the amount during the lifetime of the assured. If the policy is transferred or assigned under section 38 of the Act, the nomination automatically lapses. If the nominee or where there are nominees more than one all the nominees die before the policy matures for payment the money due under the policy is payable to the heirs or legal representatives or the holder of a succession certificate. It is not necessary to refer to sub-section (7) of section 39 of the Act here. But the summary of the relevant provisions of section 39 given above establishes clearly that the policy holder continues to hold interest in the policy during his lifetime and the nominee acquires no sort of interest in the policy during the lifetime of the policy holder. If that is so, 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. There is no warrant for the position that section 39 of the Act operates as a third kind of succession which is styled as a 'statutory testament' in paragraph 16 of the decision of the Delhi High Court in Mrs. Uma Sehgal's case (supra). If section 39 of the Act is contrasted with section 38 of the Act which provides for transfer or assignment of the rights under a policy, the tenous character of the right of a nominee would become more pronounced. It is difficult to hold that section 39 of the Act was intended to act as a third mode of succession provided by the statute. The provision in sub-section (6) of section 39 which says that the amount shall be payable to the nominee or nominees does not mean that the amount shall belong to the nominee or nominees. We have to bear in mind here the special care which law and judicial precedents take in the matter of execution and proof of wills which have the effect of diverting the estate from the ordinary course of intestate succession and that the rigour of the rules governing the testamentary succession is not relaxed even where wills are registered. As observed in the Full Bench decision of the Allahabad High Court in Raja Ram v. Mata Prasad & Anr. which has interpreted section 39 of the Act correctly, the judgment of that High Court in Kesari Devi's case (supra) related to a different set of facts. In Kesari Devi's case (supra) the dispute arose regarding the person who was entitled to the succession certificate in respect of the amount payable under a life insurance policy which had been taken out by the assured between the widow of the assured and the widow of the nominee under section 39 of the Act. On going through the judgment in Kesari Devi's case (supra) we feel that the Court in that case paid little heed to the earlier judicial precedents of its own Court. The decision of the Full Bench in Raja Ram's case (supra) set at rest all doubts which might have been created by Kesari Devi's case (supra) about the true import of section 39 of the Act in so far as the High Court of Allahabad was concerned. In Fauja Singh's case (supra) there is reference only two three cases-Life Insurance Corporation of India v. United Bank of India Ltd. (supra), Matin v. Mahomed Matin and Kesari Devi's case (supra). The Court expressed its dissent from the Calcutta decision on the ground that decision had not considered sub-section (6) of section 39 of the Act. The Lahore case was one decided before the Act came into force. The distinguishing features of Kesari Devi's case (supra) are already mentioned. Otherwise there is not much discussion in this case about the effect of section 39 of the Act. We have carefully gone through the judgment of the Delhi High Court in Mrs. Uma Sehgal's (case) supra. In this case of the High Court of Delhi clearly came to the conclusion that the nominee had no right in the lifetime of the assured to the amount payable under the policy and that his rights would spring up only on the death of the assured. The Delhi High Court having reached that conclusion did not proceed to examine the possibility of an existence of a conflict between the law of succession and the right of the nominee under section 39 of the Act arising on the death of the assured and in that event which would prevail. We are of the view that the language of section 39 of the Act is not capable of altering the course of succession under law. The second error committed by the Delhi High Court in this case is the reliance placed by it on the effect of the amendment of section 60(1) (kb) of the Code of Civil Procedure, 1908 providing that all moneys payable under a policy of insurance on the life of the judgment debtor shall be exempt from attachment by his creditors. The High Court equated a nominee to the heirs and legatees of the assured and proceeded to hold that the nominee succeeded to the estate with all plus and minus points'. We find it difficult to treat a nominee as being equivalent to an heir or legatee having regard to the clear provisions of section 39 of the Act. The exemption of the moneys payable under a life insurance policy under the amended section 60 of the Code of Civil Procedure instead of 'devaluing' the earlier decisions which upheld the right of a creditor of the estate of the assured to attach the amount payable under the life insurance policy recognises such a right in such creditor which he could have exercised but for the amendment. It is because it was attachable the Code of Civil Procedure exempted it from attachment in furtherance of the policy of Parliament in making the amendment. The Delhi High Court has committed another error in appreciating the two decisions of the Madras High Court in Karuppa Gounder & Ors. v. Palaniammal & Ors. and in B.M. Mundkur v. Life Insurance Corporation of India & Ors. The relevant part of the decision of the Delhi High Court in Mrs. Uma Sehgal's case (supra) reads thus: 10. "In Karuppa Gounder v. Palaniammal, AIR 1963 Mad. 245 (para 13), K had nominated his wife in the insurance policy. K died. It was held that in virtue of the nomination, the mother of K was not entitled to any portion of the insurance amount. 11. I am in respectful agreement with these views, because they accord with the law and reason. They are supported by S. 44 (2) of the Act. It provides that the commission payable to an insurance agent shall after his death, continue to be payable to his heirs, but if the agent has nominated any person the commission shall be paid to the person so nominated. It cannot be contended that the nominee u/s 44 will receive the money not as owner but as an agent on behalf of someone else vide B.M. Mundkur v. Life Insurance Corporation, AIR 1977 Mad. 72. Thus, the nominee excludes the legal heirs." Two mistakes committed by the Delhi High Court in the above passage are these. In Karuppa Gounder's case (supra), the question was whether the amount payable under the insurance policy in question was joint family property or separate property of the assured. In that connection, the High Court of Madras observed thus: "But where a coparcener has effected insurance upon his own life, though he might have received the premia from out of the funds which he might have received from the joint family, it does not follow that the joint family insured the life of the member or paid the premia in relation thereto. It is undeniable that a member of a coparcenary may with the moneys which he might receive from the coparcenary effect an insurance upon his own life for the benefit of the members of his immediate family. His intention to do so and to keep the property as his separate property would be manifested if he makes a nomination in favour of his wife or children as the case may be. It would therefore appear that no general proposition can be advanced in the matter of the insurance policy of a member of a coparcenary and that each case must be dealt with in accordance with the circumstances surrounding it." It is obvious from the above passage that the above case has no bearing on the meaning of section 39 of the Act. The fact of nomination was treated in that case as a piece of evidence in support of the finding that the policy was not a joint family asset but the separate property of the coparcener concerned. No right based on the ground that one party was entitled to succeed to the estate of the deceased in preference to the other or along with the other under the provisions of the Hindu Succession Act was asserted in that case. The next error committed by the Delhi High Court is in drawing an analogy between section 39 and section 44(2) of the Act thinking that the Madras High Court had done so in B. M. Mundkur's case (supra). In B.M. Mundkur's case (supra), the High Court of Madras instead of drawing an analogy between section 39 and section 44(2) of the Act actually contrasts them as can be seen from the following passage: "There are vital differences between the nomination contemplated under Section 39 of the Act and the nomination contemplated under the proviso to Section 44(2) of the Act. In the first place, the sum assured, with which alone Sec. 39 was concerned, was to be paid in the event of the death of the assured under the terms of the contract entered into between the insurer and the assured and consequently it was the contractual right which remained vested in the insured with reference to which the nomination happened to be made. It should be pointed out that the nomination as well as the liability on the part of the insurer to pay the sum assured become effective simultaneously, namely, at the moment of the death of the assured. So long as he was alive, the money was not payable to him, in the case of a whole life policy, and equally, having regard to the language of Section 39(1) of the Act, the nominee's right to receive the money arose only on the death of the assured, Section 39 itself did not deal with the title to the money assured, which was to be paid by the insurer to the nominee who was bound to give discharge to the insurer. It was in this context that the Court took the view that the title remained with the estate of the deceased, and therefore, with the heirs of the deceased, that the nomination did not in any way affect the title and that it merely clothed the nominee with the right to receive the amount from the insurer. 12. On the other hand, the provisions and purport of Section 44 of the Act are different. In the first place under Section 44(1) it was a statutory right conferred on the agent to receive the commission on the renewal premium notwithstanding the termination of the agreement between the agent and the insurer, which provided for the payment of such commission on the renewal premium. The statute also prescribed the qualification which rendered the agent eligible to receive commission on such renewal premium. Section 44(1) provides for the payment of the commission to the agent during his lifetime only and does not contemplate the contingency of his death and the commission being paid to anybody even after his death. It is S. 44(2) which deals with the payment of commission to the heirs of deceased for so long as such insurance agent been alive. Thus it was not the general law of inheritance which conferred title on the heirs of the deceased insurance agent to receive the commission on the renewal premium, but it was only the particular statutory provision, namely, Section 44(2) which conferred the right on the heirs of the deceased agent to receive the commission on the renewal premium. In other words, the right of the heirs to receive the commission on renewal premium does not arise under any law of succession and it is a right directly conferred on the heirs by Section 44(2) of the Act, even though who the heirs of the deceased insurance agent are will have to be ascertained under the law of succession applicable to him. Thus the statute which conferred such a right on the heirs is certainly competent to provide for an exception in certain cases and take away such a right from the heirs; and the proviso which has been introduced by the Government of India notification 1962 has done exactly this in taking away the right of the heirs conferred under the main part of Section 44(2), in the event of the agent, during his lifetime, making a nomination in favour of a particular person and not cancelling or altering that nomination subsequently. If the statute itself was competent to donfer such a right for the first time on the heirs of the deceased agent it is indisputable that the statute could take away that right under stated circumstances." The reasons given by the Delhi High Court in this case in support of its view are not tenable. 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 (supra) and in Mrs. Uma Sehgal's case (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 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. In view of the above conclusion, the judgments and decrees of the High Court, the first appellate court and the trial court are liable to be set aside. They are accordingly set aside. Since it is not disputed that the plaintiffs are under the law of succession governing them each entitled to 1/3 share in the estate of the deceased, it is hereby declared that each of the plaintiffs is entitled to 1/3rd share in the amount received under the insurance policies in question and the interest which may have been earned by its investment. The suit stands decreed accordingly. Parties shall, however, bear their own costs throughout. S.R.?????????????????????Appeal allowed.

Note :

Court cast taken from

Indian Kanoon - https://indiankanoon.org/doc/34755

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