Nominee Vs. Legal Heir – Section 39 -Insurance Act, 1938 (Amended in 2015)
At the time of taking life insurance policies, the deceased was bachelor and nominated his mother as nominee to the benefits.
In the meanwhile, he had married and had a son before he died on 20.12.2019. However, there was no change in the nomination till his death.
The widow and minor of insured filed suit against mother for benefits of policies. The suit was decreed.
Thus, the right of nominee under Section 39 of the Insurance Act vis-à-vis right of a heir under personal law has come up for decision.
HELD that the 190th Report of the Law Commission of India (Chapter VII Nominations) had recommended amendment of section 39 of IA in para 7.1.14 of the Report and made distinction between “beneficiary nominee” and the “collector nominee”. Thus, the Law Commission did not accept the suggestion to exclude the legal representatives from succession in the event of nomination. However, the amended provision does not incorporate the clause to declare the nature of the nominee.
In view of the recommendations of Law Commission, amendment of Section 39 of the Insurance Act, 1938 in 2015 and various judgments, the High Court of Karnataka has noted various aspects in para 39 of the judgment and called for their consideration and imperative need to make position clear for the benefits of the stake holders, to avoid conflicting views of the Courts creating confusion leading to multiplicity of litigation and cause for delay in disposal of cases.
Section 39 of the 1938 Act does not override the Hindu Succession Act, the appellant – mother & nominee cannot claim absolute ownership over the benefits as other heirs of deceased have also filed claim over the same of the policies.
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Judgment dated 20.2.2025 of the Karnataka High Court at Dharwad Bench in RFA No.100471 of 2023 of Smt. Neelavva @ Neelamma Vs. Smt. Chandravva @ Chandrakala
