Rights Conferred By Hindu Succession Act Prevail Over Rights Claimed By Nominee U/S 39(7) Of Insurance Act: Allahabad High Court

The Allahabad High Court has held that Hindu Succession Act, 1956 prevails over the Insurance Act, 1938 as the rights guaranteed to the successor under the former cannot be defeated by the rights guaranteed to the nominee under the latter enactment.While dealing with the claim of the mother-nominee over the insurance money of her deceased daughter against the rights of the daughter of the deceased, Justice Pankaj Bhatia held,“On harmonious interpretation of the two provisions i.e. Insurance Act and Hindu Succession Act, the rights conferred by Hindu Succession Act will prevail over the rights claimed by the nominee under Section 39(7) of the Insurance Act, the succession act being specific to succession in contradiction to the Insurance Act which is general.”Section 39 of Insurance Act, 1938 relates to nomination by policyholder. Sub-section (7) of Section 39, as amended in 2015, provides that where a nominee has been mentioned in the insurance policy by the policy holder, the nominee shall be entitled to receive the sum from the insurer upon death of the insured. Sub-section (8) provides that where the nominee dies after the death of the insured but before the insurance amount is disbursed, such amount shall be disbursed to the heirs of the nominee or holder of the succession certificate. Sub-sections (7) and (8) of Section 39 are applicable to policies maturing after the commencement of the Insurance Laws (Amendment) Act, 2015. Section 15 of the Hindu Succession Act, 1956 provides the general rule for succession in case of female Hindus. Section 15(1)(a) states that the property of the female Hindu dying intestate shall devolve firstly on her sons/ daughters and the husband. After the children and the husband, come the heirs of the husband and then the father and mother of the deceased. Factual BackgroundPetitioner claimed that she had taken 15 insurance policies in the name of her daughter while she was unmarried with petitioner as the nominee. After marriage, petitioner's daughter died 11month's after giving birth to her daughter. Respondent No. 1, husband of deceased filed a civil suit claiming entitlement to the claims under the insurance policies under the Indian Succession Act. Petitioner alleged that since she was not made a party to the suit till it was disposed of, she approached the High Court where she was relegated to remedy of civil revision. In civil revision, it was directed that insurance money from the 15 policies be removed from the succession certificate awarded to the husband and be kept in the form of Fix Deposit Receipts in the name of the daughter of the deceased till she turns 18. This order was challenged by the petitioner on grounds that as per Section 39(7) read with Section 39(8) of the Insurance Act petitioner, being the nominee, was entitled to the insurance claims. However, it was not denied that the daughter was entitled to succession to the deceased's estates. High Court VerdictThe Court the amendment was done in Section 39 of Insurance Act in 2015 to bring the insurance companies at par with Section 45-ZA of the Banking Regulation Act so as to discharge the insurance companies from their burden of payment of the amount to the nominee. Section 45-ZA(2) is pari materia with Section 39(7) of the Insurance Act, noted the Court. In Ram Chander Talwar & Anr. v. Devender Kumar Talwar & Ors., the Apex Court held that by virtue of Section 45-ZA(2) of the Banking Regulation Act, the nominee will not be entitled to the money lying the account of the holder. The money will devolve in accordance with the succession law. “Thus, the pari materia provision contained in Section 39(7) of the Insurance Act cannot be interpreted in contradiction to the interpretation of the pari materia provision contained in Section 45-ZA(2) of the Banking Regulation Act and thus, on that count the submission of counsel for the petitioner merits rejection,” held Justice Bhatia. Thereafter, the Court considered Section 15 of the Hindu Succession Act, 1956 and observed that “on the one hand, the benefits arising out of an insurance policy which are estate of the deceased which have to be divided and paid to the successors in terms of the provisions of the Hindu Laws, however, the beneficial nominee claims the payment of the estate to the exclusion of the heirs as flow from the Hindu Succession Act.”The Court relied on Supreme Court judgments in KSL and Industries Limited v. Arihant Threads Limited and Ors., Managing Director, Chhattisgarh State Co- Operative Bank Maryadit v. Zila Sahkari Kendriya Bank Maryadit and Ors. and Interplay Between Arbitration Agreements Under Arbitration and Conciliation Act 1996 and Stamp Act, 1889 to hold that Courts must look at interpreting two provisions operating in the same field harmoniously and in case of any difference, general law must give way to special law operating in the field. The Court further relied on Life Insurance Corporation of India v. D.J. Bahadur and Ors....

Rights Conferred By Hindu Succession Act Prevail Over Rights Claimed By Nominee U/S 39(7) Of Insurance Act: Allahabad High Court

Upasna Agrawal

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