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Mamta Sen Vs. Life Insurance Corporation of India - Court Judgment

LegalCrystal Citation
SubjectInsurance
CourtKolkata High Court
Decided On
Case NumberC.O. No. 1599 of 1981
Judge
Reported inAIR1981Cal283,85CWN1012
ActsInsurance Act, 1938 - Section 39 and 39(2); ;Succession Act, 1925 - Section 214
AppellantMamta Sen
RespondentLife Insurance Corporation of India
Appellant AdvocateShymal Sen and ;Subrata Kr. Basu, Advs.
Respondent AdvocateR.C. Deb, ;Umesh Ch. Banerjee, ;A. Ganguly and ;G. Chandra, Advs.
DispositionRevision allowed
Cases ReferredRamballav v. Ganga
Excerpt:
- .....(air 1937 cal 423) and krishnalal v. promilabala dasi, (air 1928 cal 518) (supra) to mean that the policy money was a debt for the recovery of which succession certificate would be necessary, but failed to take note of the change in the legal position introduced by section 39. in the case of tulsi debya, the claimant for the succession certificate was the widow of the policy holder who however was not the nominee. in such circumstances she was held entitled to the grant of a succession certificate. in krishnalal v. pramila-bala also it was held that a person simply nominated by an assured in his policy of life insurance for receiving the money due under it has no trust created in his favour and cannot sue on the contract. these cases were decided before the insurance act came into force......
Judgment:

B.C. Chakrabarti, J.

1. This is a revisional application at the instance of the plaintiff and is directed against an order dated May 5, 1981 passed in T. S. No. 674 of 1977 now pending in the 7th Bench of the City Civil Court at Calcutta.

2. The petitioner instituted the suit principally for a declaration that she is entitled to the full value including bonus in respect of a life insurance policy. Facts so far asthey are relevant for our present purposes are not disputed. Indrajit Sen, since deceased, was the holder of the life insurance policy and, the petitioner is the nominee of the policy holder. The policy holder having died on March 5, 1974, she lodged a claim for payment of the amount due under the policy. Initially the Life Insurance Corporation, the opposite party herein issued a discharge voucher to the petitioner for being duly filled in and returned to the Corporation. This was done but the Corporation thereafter agreed to pay only the paid up value of the policy on the ground that the assured had suppressed material information and made certain misslatements. The petitioner was therefore constrained to file the suit.

3. The opposite party is contesting the suit by filing a written statement. Amongst various objections raised by the opposite party, one was to the effect that the relief claimed in the suit was barred under Section 214 of the Indian Succession Act. Issue No. 1 framed in the suit refers to this objection and this issue was heard as a preliminary issue and disposed of by the impugned order.

4. Upon a consideration of the relevant provisions of Section 214 of the Indian Succession Act and Section 39 of the Insurance Act, and the various authorities cited by the parties the learned Judge, held that Section 39 of the Insurance Act cannot override the provisions of Section 214 of the Succession Act and that therefore the petitioner was required to obtain a succession certificate in order to sustain her claim in the suit. The issue was thus disposed of.

5. Dissatisfied with the decision aforesaid, the petitioner has preferred the present revisional application. Mr. Sen appearing in support of the application, contended that Section 214 of the Indian Succession Act can have no application in this case because the petitioner did not base her claim on succession but laid her claim in her capacity of nominee named in the policy. It is also contended by him that in view of the clear and specific provisions contained in Section 39 of the Insurance Act, production of a succession certificate cannot be insisted upon for sustaining such a claim or nomination. Mr. Banerjee in opposing the application on the other hand argued that there was a relationship of debtor and creditor between the person from whom the money is claimed and the deceased at the time of the lat-ter's death and as such Section 214 of the Succession Act would be applicable, and the Court would be incompetent to pass adecree for the recovery of the debt in the absence of a succession certificate.

6. For a proper appreciation of the rival contentions, it is necessary to refer to the provisions of the two sections in some details. Sub-section (1) of Section 39 of the Insurance Act provides that 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. Sub-section (2) provides that a 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 and duly communicated to the insurer and registered by him in the records relating to the policy. It also enables cancellation or successive charges in the nomination to be effected in the like manner and further provides that unless such change or cancellation is not duly notified, the insurer shall not be liable for any payment made bona fide to a nominee registered in the records of the insurer. Subsection (4) provides that a transfer or assignment of a policy made in accordance with Section 38 shall automatically cancel a nomination. Sub-section (5) lays down that where the policy matures for payment, during the lifetime of the insured or where the nominee or 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. Sub-section (6) says that where the nominee survives the person whose life is insured, the amount secured by the policy shall be payable to such survivor.

7. Section 214 of the Indian Succession Act enjoins proof of representative title a condition precedent to recovery through Courts of debts from debtors of deceased persons. It enjoins that no Court shall pass a decree against a debtor of a deceased to a person claiming on succession except on production of a Succession Certificate or probate or letters of administration.

8. The various provisions of Section 39 therefore make it abundantly clear that the nominee has the right to receive payment though he does not thereby acquire any title to the money, for, if it were so, his heirs would have been entitled to the money and not the heirs of the deceased had he been dead when the policy matures. Sub-section (5) provides otherwise. Judicial pronouncements iprior to the enactment of the Insurance Act, also support the view that the nominee does not acquire any tille to the money payable under the policy or that the same become a part of the nominee's estate. (See KrishnaJal v. Promilabala Dasi, 32 Cal WN 634 : (AIR 1928 Cal 518); Tulsi Debya v. Bibhuti Bhu-san, 41 Cal WN 985 : (AIR 1937 Cal 423)). Jn the absence of statutory recognition of nominee's right to receive the money, prior to the enactment of provisions as in Section 39, it was then necessarily held that a nominee by virtue of the nomination would not be entitled to sustain any claim to the money. But by virtue of Section 39 the nominee is now given a statutory right to receive payment. This is not the right of a person acquiring title to the money but a right flowing from his status as a nominee.

9. In Ramballav v. Gangadhar, : AIR1956Cal275 , it has been held that Sub-section (6) of Section 39 confers on the nominee the right to receive the insurance money and that the statute merely provides an expeditious discharge of the liability of the Insurance Company by providing that so far as the Insurance Company is concerned the money is payable to the nominee and it need not look to the legal representatives of the assured. The same view was taken in the case of D. M. Mudaliar v. I. I. & B. Corporation, : AIR1957Mad115 , where it has been held that the payee or the nominee is nothing more than an agent to receive the money. This view was also approved in the case of L. I. C. v. United Bank, : AIR1970Cal513 .

10. Learned Judge in the trial Court considered and relied on the decisions in the case of Tulsi Debya v. Bibhuti Bhusan, (AIR 1937 Cal 423) and Krishnalal v. Promilabala Dasi, (AIR 1928 Cal 518) (supra) to mean that the policy money was a debt for the recovery of which succession certificate would be necessary, but failed to take note of the change in the legal position introduced by Section 39. In the case of Tulsi Debya, the claimant for the succession certificate was the widow of the policy holder who however was not the nominee. In such circumstances she was held entitled to the grant of a succession certificate. In Krishnalal v. Pramila-bala also it was held that a person simply nominated by an assured in his policy of life insurance for receiving the money due under it has no trust created in his favour and cannot sue on the contract. These cases were decided before the Insurance Act came into force. They have no longer any relevance except for the purpose of showing that the nominee does not become the owner of the money payable under the polity but that it forms part of the assets of the deceased. After the enactment of the Insurance Act, the position is given a statutory sanction and Section 39 of the Act further provides, that the nominee, is entitled to receive payment of the money in his capacity of nominee.

11. In the case of Shanti Debi v. Ramlal, : AIR1958All569 , the lower 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 and that the nomination only dispensed with the necessity of obtaining a succession certificate. On such view the lower appellate Court dismissed the appeal. The appellant preferred a second appeal to the High Court which too was dismissed. This decision therefore implicdly holds that the nominee, in order to collect the money, need not obtain a succession certificate. In the case of Ramballav v. Ganga-dhar, : AIR1956Cal275 (supra) also it is observed that Section 39(6) provides an expeditious discharge of the liability of Insurance Company by providing that the money is payable to the nominee. The Insurance Company need not look to the legal representatives of the assured before making the payment.

12. Upon a consideration of the authorities and the relevant provisions of Section 39 of the Insurance Act, we are of the opinion that the nominee under a policy of life insurance nomination in whose favour had been recorded in terms of Sub-section (2) is entitled to receive payment as such nominee and he need not obtain a succession certificate for the purpose.

13. Mr. Banerjee's contention that the relation between the Insurance Company and the deceased at the time of his death being that of debtor and creditor, a succession certificate becomes obligatory under Section 214 of the Indian Succession Act, is not tenable in law, Section 214 provides that no Court shall pass a decree against a debtor of a deceased person for payment of his debt to a person 'claiming on succession' to be entitled to the effects of the deceased person or to any part thereof, except on the production by the person so claiming, of a succession certificate or probate or letters of administration. In order to attract the provisions of this section, the person claiming must be a person claiming to be entitled to the effects of the deceased 'on succession'. We have already indicated what the rights of the nominee are. The nominee is not entitled to ask to be entitled to the effects of the deceased on succession. She claims not as heir to the deceased but as nominee under the policy. Such a claim is tenable and for the enforcement of such a claim, by suit if need be, she cannot be compelled to obtain a succession certificate. The law does not require her to do so. If the nominee is required to obtain a succession certificate then the very purpose of nomination becomes nugatory. That apart, there may be situations when the nominee may not be legally entitled to ask for a succession certificate. Take for instance, the case of nomination in favour of a total stranger, not falling in the line of succession to the deceased. If such a nominee is required to obtain a succession certificate, he could never get it. If the law is that he must obtain a succession certificate in order to be entitled to the relief that would mean that the nomination becomes ineffective and meaningless for all practical purpose. That is neither the intention nor the purport of the law as contemplated by Section 39 of the Insurance Act. There is no question of Section 39 overriding Section 214 of the Indian Succession Act, as the learned trial Judge seems to think. Section 214 in the facts of the case, is clearly inapplicable.

14. Such being the position, we hold that the learned Judge in the Court below, by the order impugned has refused to exercise his jurisdiction in proceeding with the suit upon a clear misconception of the legal position as indicated hereinbefore. Such an order was clearly wrong and must be set aside.

15. The revisional application therefore succeeds and is hereby allowed. The impugned order is set aside.

16. Let the hearing of the suit be expedited and this order be communicated to the Court below forthwith.

17. There will be no order as to costs.

Anil K. Sen, J.

18. I agree.


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