R.Saranya vs. The Manager, Life Insurance Corporation of India - (High Court of Madras) (09 Dec 2020)

A nominee is only a Trustee holding the amount on behalf of the actual beneficiaries and does not have any vested right or interest in the same

MANU/TN/6613/2020

Civil

In facts of present case, during the life time of the deceased Ramakrishnan, he had taken two insurance policies with the first Respondent. He had been paying the premium till his death. As the first Petitioner is inexperienced and was not well-educated, her husband had appointed the second Respondent, who is his paternal uncle's son, as nominee in the said policies. However, after the death of the first Petitioner's husband, the second Respondent is trying to appropriate the entire insurance amount taking advantage of the nomination made in his favour. Though a legal notice was issued to the first Respondent, the first respondent has not yet settled the amount in favour of the Petitioners. Petitioner has sought for a writ of mandamus, to direct the first Respondent to release the insured amount under two Policy proportionately in favour of the Petitioners.

It is a well settled principle that, a nominee is only a Trustee holding the amount on behalf of the actual beneficiaries and does not have any vested right or interest in the same. Already the first Petitioner has lost her husband and is struggling with her minor children, if the above amounts are not released in her favour and the second respondent is allowed to appropriate the same, she will be put to serious prejudice. Therefore, the above writ petition has been filed seeking a direction to the first Respondent to release the amount directly in favour of the beneficiaries i.e. the Petitioners.

The prayer of the Petitioners has been resisted by the first Respondent by filing a counter affidavit contending that, they have not acted anything detrimental to the interest of the beneficiaries and has not shown any undue haste in releasing the amounts under the policies.

As held by the Hon'ble Apex Court in Smt. Sarbati Devi and another vs. Smt.Usha Devi, when the nominee is only an authorised person to receive the amount and distribute in accordance with the law of succession, the second respondent, who is a nominee, cannot have any right over the said amount.

It is also not in dispute that the Petitioners, under the law of succession, which governs them, are entitled to an equal share in the estate of the deceased. The Policy amount receivable is a part of the estate of the deceased and the Petitioners are entitled to equal share.

The second Respondent, is only a nominee, who is authorised to receive the insurance amount in trust and distribute among the legal heirs as per law of succession. The Petitioners have specifically alleged that the second Respondent is attempting to deny the lawful entitlement of the Petitioners. Therefore, it would be appropriate to direct the first Respondent to directly release the amount in favour of the Petitioners.

The writ petition is allowed directing the first Respondent to release the insurance amount payable under the Policy taken in the name of the deceased, directly to the Petitioners and also the mother-in-law of the first Petitioner.

Tags : INSURANCE AMOUNT PAYMENT DIRECTION