Insurance Company Only Liable To Disburse Amount To Beneficiary Or Collector Nominee, Need Not Get Into Dispute Of Legal Heirs: Madras HC

The Madras High Court has recently held that while disbursing the amount under an insurance policy, the Insurance company was only expected to disburse the amount to the beneficiary nominee or collector nominee named in the policy and need not go into any dispute regarding the legal heirs. Relying on an earlier order of the Madras High Court, Justice Bharatha Chakravarthy noted that when a person has been named a beneficiary nominee in the policy, they would be entitled to make a claim for the entire amount of the policy unlike a collecting nominee, who receives the amount in trust to be distributed to all legal heirs. “It is also clear that the liability of the Insurance Company is to disburse the amount to the beneficiary or collector nominee as the case may be. It is also expressly held in the said-judgment, the Insurance Company does not get into the area of dispute and the Company washes of its hands by handing over the sum assured to the nominee,” the court said. The court was hearing a plea by the mother of the deceased [policy holder] to restrain the Life Insurance Corporation (LIC) from disbursing the amount in the policy to the wife of the deceased pending disposal of a criminal proceedings. The mother had argued that merely because her son had nominated his wife, the entire amount of the policy need not be paid to the wife and their child. The mother argued that she was a Class-I legal heir of her son along with his wife and child and therefore she was entitled to 1/3rd share in the estate of her deceased son. She had also raised allegations against the daughter-in-law in connection with her son's death. While LIC did not dispute the existence of the policy, it opposed the prayer sought for by the mother. LIC argued that as per Section 39 of the Insurance Act, the wife was the beneficiary nominee who was nominated by the policy holder. Thus, it was submitted that upon the death of the policy holder, his wife, the beneficiary nominee, would be entitled to receive the sum as her own. The wife informed the court that she had no objection in granting 1/3rd share of the amount to the mother and in getting the remaining 2/3rd share including the share of the minor daughter. The court, noting that the wife has herself agreed to give 1/3rd share in the amount to the mother, was inclined to dispose the plea. The court directed the parties to submit the relevant documents to the LIC within 2 weeks and directed that the entire claim be processed and disbursed within 8 weeks. Counsel for Petitioner: Ms. Rita Chandrasekar for Ms. R. Meenakshi Counsel for Respondents: Mr. SP. Chockalingam, Mr. S. Kasirajan Case Title: A Devika v. The Senior Branch Manager and Another Citation: 2025 LiveLaw (Mad) 99 Case No: W.P.No.29882 of 2023Click Here To Read/Download The Judgment

Insurance Company Only Liable To Disburse Amount To Beneficiary Or Collector Nominee, Need Not Get Into Dispute Of Legal Heirs: Madras HC

Upasana Sajeev

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