Case Note & Summary
The dispute arose from the death of Jag Mohan Swarup, who died intestate on June 15, 1967, leaving behind his widow Usha Devi, his mother Sarabati Devi, and his son Alok Kumar. Jag Mohan had taken out two life insurance policies and nominated Usha Devi as the beneficiary. Following his death, Sarabati Devi and Alok Kumar filed a suit claiming a share of the insurance proceeds, arguing that the nomination did not confer absolute rights to Usha Devi. The trial court dismissed their suit, a decision upheld by the District Judge and the High Court. The Supreme Court, upon appeal, examined whether the nominee under Section 39 of the Insurance Act, 1938, had an absolute right to the insurance proceeds. The Court held that a mere nomination does not confer beneficial interest; the nominee is merely an agent to receive the amount, which remains part of the deceased's estate and is subject to the law of succession. The Court overruled previous conflicting judgments and declared that the plaintiffs were entitled to a share of the insurance proceeds, thus allowing the appeal and decreeing the suit in favor of the plaintiffs. The parties were directed to bear their own costs throughout.
Headnote
A) Insurance Law - Nominee's Rights - Nominee does not acquire beneficial interest - Insurance Act, 1938, Section 39 - A mere nomination under Section 39 does not confer beneficial interest in the amount payable under a life insurance policy on the death of the assured; it merely indicates the hand authorized to receive the amount, which can be claimed by the heirs according to the law of succession. Held that the nomination does not alter the course of succession under law (Paras 1.1-1.3).
Issue of Consideration
Whether a nominee of a life insurance policy under Section 39 of the Insurance Act, 1938, on the assured dying intestate, becomes entitled to the beneficial interest in the amount received under the policy to the exclusion of the heirs of the assured.
Final Decision
The Supreme Court allowed the appeal, declaring that the plaintiffs are entitled to 1/3rd share in the amount received under the insurance policies, setting aside the previous judgments.
Law Points
- Nomination under Insurance Act
- beneficial interest
- law of succession
- intestate succession
- rights of heirs
