Section 39(7) of Insurance Act – If overrides succession law

Plaintiffs – Respondent Nos.1 and 2 filed suit for partition of properties including maturity amount of life insurance policies of late Pravin Maloo who died on 7.9.2021.  The plaintiffs challenged the Will propounded by Defendant Nos.1 and 2.

Plaintiff No.1 is the widow and Plaintiff No.2 is the son of deceased.  Defendant Nos.1 and 2 are daughters and Defendant No.3 is the mother of Pravin.

Defendant Nos.1 and 2 daughters are nominees of total 23 policies. 

The trial Court rejected the applications for withdrawal of insurance amount as per Section 39(7) and other amounts on the basis of Will & Section 8 of the Hindu Succession Act.

In that context, the issue was whether Section 38(7) overrides the succession laws.

HELD that there is a presumption in favour of nominee under section 39(7) for conferment of beneficial title unless proved otherwise.  In case where the maturity amount of insurance policy is self-acquired property of a Hindu, it is his sole discretion to dispose of the self-acquired property.  It shall be subject to the law of succession applicable to the parties.  In case such nomination is consistent with the law of succession, the nominee shall be entitled to the insurance complaint in exclusion of other legal heirs of the insured.  However, the trial Court did not consider the provisions of sub-sections (7), (8) and also sub-section (9) of section 39 of the Act.  The matter was remanded.