Case Note & Summary
The writ petitions arose from Special Civil Suit No. 2 of 2022 filed by the widow and son of deceased Pravin Maloo seeking partition of suit properties, including maturity amounts of life insurance policies. The deceased died on 7 September 2021. The petitioners—two daughters and mother of the deceased—were defendants in that suit and claimed as nominees under the insurance policies and under a Will dated 19 April 2018. The trial court rejected their applications for withdrawal of amounts deposited by insurance companies, leading to two writ petitions challenging orders dated 21 March 2023 passed below Exhibit-395 and Exhibit-387 respectively. The main legal issue was whether Section 39(7) of the Insurance Act, 1938, introduced by the 2015 amendment, makes a nominee the beneficial owner of policy amounts to the exclusion of legal heirs, overriding the law of succession under Section 8 of the Hindu Succession Act, 1956. Petitioners argued that being Class-I heirs they were entitled to equal shares and that as nominees under Section 39(7) they were beneficially entitled to withdraw the amounts. Respondents contended that the Supreme Court in Sarbati Devi v. Usha Devi and Shakti Yezdani v. Jayanand Jayant Salgaonkar had settled that a nominee is merely a collector to distribute according to succession law. The High Court considered divergent High Court views: Rajasthan High Court in Ramgopal v. General Public stated that after 2015 amendment the nominee alone gets the amount; Delhi High Court in Shweta Singh Huria v. Santosh Huria distinguished beneficiary nominee and collector nominee. The court noted the trial court had not dealt with the Section 39(7) issue. The provided excerpt does not include the final operative order; the petitions were heard finally on 2 July 2025 and judgment pronounced on 18 July 2025.
Headnote
A) Insurance Law - Nominee's Beneficial Interest - Section 39(7) Insurance Act, 1938 - Post-2015 amendment introduced beneficial entitlement for nominees; question whether this overrides law of succession. Petitioners contended nominee becomes absolute beneficiary; respondents relied on Sarbati Devi and Shakti Yezdani that nominee holds in trust for legal heirs. Court considered divergent High Court views without expressing final decision in provided excerpt (Paras 4,6,7,8). B) Succession Law - Will and Class-I Heirs - Section 8 of Hindu Succession Act, 1956 - Dispute over validity of Will dated 19/4/2018 executed by deceased in favor of Defendants 1 and 2; parties are Class-I heirs entitled to equal share. Trial court rejected withdrawal based on Will and succession law; issue of Will validity is matter of evidence to be decided by trial court. Petitioners sought interim withdrawal of insurance amounts (Paras 5,6).
Issue of Consideration
Whether the trial court's orders rejecting withdrawal of insurance policy amounts were sustainable under Section 39(7) of the Insurance Act, 1938 and Section 8 of the Hindu Succession Act, 1956; whether Section 38(7)/39(7) of the Insurance Act overrides the law of succession applicable to the parties.
Law Points
- Section 39(7) of Insurance Act
- 1938 makes nominee beneficially entitled to policy amount after 2015 amendment
- Nominee may not override law of succession
- Class-I heirs under Hindu Succession Act
- 1956 entitled to equal share
- Will validity subject to evidence
- Trial court must consider Section 39(7) while deciding withdrawal applications
