Beneficiary Nominee Validly Nominated U/S. 39(7) Insurance Act Entitled To Claim Entire Policy Amount: Madras High Court
The Madras High Court directed LIC to disburse the entire amount to the nominee and wash off its hands from any dispute.
The Madras High Court, in a writ petition filed by a mother seeking to restrain the Life Insurance Corporation of India (LIC) from disbursing her deceased son’s policy amount to his wife, who was the nominated beneficiary, held that the nominated beneficiary was entitled to claim the entire insured amount as her own.
A Single Bench of Justice D. Bharatha Chakravarthy held that “…when there is a beneficiary nominee, who is validly nominated as per Section 39(7), she will be entitled to make a claim for the entire amount.”
The Petitioner was represented by Advocate Rita Chandrasekar, while Advocate S.P. Chockalingam represented the Respondents.
Brief Facts
The Petitioner is the mother of the deceased policyholder, who had listed Respondent No. 2, the wife, as the nominee. As the mother, the petitioner is a Class-I legal heir along with Respondent No. 2 and her daughter, each entitled to 1/3rd share of the deceased's estate. The Petitioner filed this writ seeking to restrain Respondent No.1, Life Insurance Corporation of India, from disbursing the entire policy amount to Respondent No.2, irrespective of the fact that she had been named the nominee beneficiary.
The Respondent No.1, LIC, contended that, in view of Section 39 of the Insurance Act, 1938 (Insurance Act), she was the beneficiary nominated by the policyholder and, therefore, entitled to receive the entire amount as the beneficiary nominee.
Respondent No. 2 submitted that she had no objection to granting a 1/3rd share of the amount due to the Petitioner and releasing the remaining 2/3rd share to herself, which would include the share of the minor daughter.
Reasoning of the Court
The to the decision of the Andhra Pradesh High Court in Mallela Manimala v. Mallela Lakshmi Padmavathi (2023) where it had been held that the beneficiary nominee would be entitled for the amount as if her own and would not receive the amount as in the case of a 'collecting nominee', who only receives in trust to be distributed to all the legal heirs.
The Court observed, “…when there is a beneficiary nominee, who is validly nominated as per Section 39(7), she will be entitled to make a claim for the entire amount. It is also clear that the liability of the Insurance Company is to disburse the amount to the beneficiary or collector nominee as the case may be.”
In view of the submission of Respondent No.2 that 1/3rd of the amount would be given to the Petitioner, the Court said, “When the beneficiary nominee, who is arrayed as the second respondent herself in this Court, has categorically made a submission that 1/3rd of the amount shall be given to the petitioner and that she will receive the 2/3rd amount, there is no question of pressing into service the law laid down with reference to Section 39 of the Insurance Act, 1938..”
The Court, therefore, disposed of the writ petition with a direction to Respondent No. 1 to disburse the entire amount due under the policy, with 1/3rd of the said amount to be disbursed to the Petitioner, and 2/3rd of the said amount to be disbursed to the Respondent No.2.
Cause Title: A. Devika v. Senior Branch Manager, Life Insurance Corporation of India (Neutral Citation No:2025:MHC:589)
Appearance:
Petitioner: Advocates Rita Chandrasekar, R. Meenakshi
Respondents: Advocates S. P. Chockalingam, S. Kasirajan
