IN THE HIGH COURT OF ORISSA AT CUTTACK

W.P.(C) No.41538 of 2023

In the matter of an application under Article 226 and 227

of the Constitution of India, 1950.

………………

Snigdha Patnaik @

Mohanty

….

Petitioner

-versus-

General Manager, Circle

Office, Canara Bank, BBSR &

Others

…. Opposite Parties

For Petitioner : M/s. D.K. Mohapatra, Advocate

For Opp. Parties : M/s. B. Udgata, Advocate

(Opp. Party No.2)

Mr. B. Bhuyan, Sr. Advocate

(Opp. Party No.3 (b)

PRESENT:

THE HONBLE MR.JUSTICE BIRAJA PRASANNA SATAPATHY

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Date of Hearing: 28.11.2025 and Date of Judgment: 20.01.2026

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Biraja Prasanna Satapathy, J.

1. The present Writ Petition has been filed inter alia

with the following prayer:

Under above circumstances, it is therefore prayed

that your lordship may kindly be gracious enough to

admit the writ application and issue Rule NISI calling

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upon the Opp. Parties No.1 & 2 and direct them to

release the settlement of death claims and terminal

benefits as well as other deposits dues of the

deceased husband – Sri Subhransu Mohanty payable

to the Petitioner as entitled to get from the Bank, being

legally married wife of the deceased husband and

thereby quashing the letter dated 30.11.2023 issued

by the Divisional Manager, Canara Bank under

Annexure-6 for the interest of justice.

And any other order/orders, direction/directions

may be issued so as to give complete relief to the

Petitioner;

And for which act of kindness, the Petitioner shall as

in duty bound ever pray.

2. Learned counsel appearing for the Petitioner

contended that Petitioner is the legal married wife of late

Subhransu Mohanty, the marriage having been taken

place as per Hindu rites and customs on 06.07.2014. It

is also contended that out of the wedlock of the Petitioner

with late Subharansu Mohanty, Petitioner was blessed

with a daughter.

2.1. However, seeking a Decree for dissolution of the

marriage, Petitioner’s late husband moved the learned

Judge, Family Court, Bhubaneswar in C.P. No.634 of

2015. On being noticed in the aforesaid proceeding,

Petitioner duly appeared and made an application for

grant of interim maintenance under Section 24 of the

Hindu Marriage Act. The said application was allowed by

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the learned Family Judge and deceased husband of the

Petitioner was directed to pay interim maintenance of

Rs.10, 200/- w.e.f 09.08.2016. Learned Family Judge

also directed for payment of Rs.3, 000/- towards cost of

the litigation vide order dt.18.11.2017 under Annexure-2.

2.2. Learned counsel appearing for the Petitioner

contended that during pendency of the proceeding,

Petitioner’s husband however died on 18.09.2023. On

such death of her husband, Petitioner moved an

application before the learned Family Judge inter alia with

a prayer to drop the proceeding in C.P. No.634 of 2015.

The said application was allowed by the learned Family

Judge vide order dt.11.10.2023 under Annexure-3 series.

Order dt.11.10.2023 was never assailed also.

2.3. It is contended that since Petitioner’s late husband

was working under the Opp. Party-Bank, on the death of

her husband on 18.09.2023, Petitioner made an

application on 21.09.2023 under Annexure-4, inter alia

with a prayer to release all the death benefits as due to the

deceased employee in her favour. As no action was taken

on such application of the Petitioner, Petitioner again

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made another application on 12.12.2023 enclosing therein

the Death Certificate of her husband as well as the order

passed by the learned Family Judge on 11.10.2023,

wherein the Proceeding filed by the deceased husband in

C.P. No.634 of 2015 was treated as dropped.

2.4. Learned counsel appearing for the Petitioner

contended that vide the impugned letter dt.30.11.2023

under Annexure-6, when Petitioner was intimated that

terminal benefit of her late husband will be dealt with as

per the provision of the Nomination Rules of the

Bank/RBI/Government, on the ground that the deceased

employee had registered his mother as a nominee,

challenging such communication of the bank, so issued

under Annexure-6, the present Writ Petition was filed.

2.5. It is contended that this Court while issuing notice

of the matter vide order dt.20.12.2023, passed an interim

order to the effect that no further action, pursuant to

Annexure-6 be taken without leave of the Court till the

next date. However, vide order dt.19.02.2024; the Writ

Petition was disposed of inter alia directing the Opp.

Party-Bank to take a decision on the claim raised by the

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Petitioner to get the terminal benefit of her deceased

husband.

2.6. It is contended that since by the time the Writ

Petition was disposed of finally vide order dt.19.02.2024,

the nominee/Opp. Party No.3 had already died on

13.01.2024, an interim application was filed seeking

intervention, as order dt.19.02.2024 has been passed

against a dead person. However, this Court while taking

up the matter in I.A. Nos.11945 of 2024 and 13297 of

2024 passed an order on dt. 01.10.2024, by directing the

bank not to disburse the amount in question without

leave of the Court.

2.7. It is contended that ultimately vide order

dt.07.05.2025, this Court was pleased to recall order

dt.19.02.2024. However, interim order passed on

01.10.2024 was allowed to continue. It is also contended

that vide order dt.17.07.2025, this Court passed an order

directing the Opp. Party-Bank to release the residue

amount of Rs.9,33,420/- in favour of the present

Petitioner, as the terminal benefit as due to the deceased

employee to the extent of Rs.40,74,577.26p. was already

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credited to the account of the nominee/deceased-Opp.

party No.3 by the bank, after adjustment of loan liability of

the deceased employee to the tune of Rs.22,16,158.31p.

2.8. Learned Counsel appearing for the Petitioner

contended that since Petitioner is the legal married wife of

the deceased employee, in view of the provisions contained

under Section 8 of the Hindu Succession Act, Petitioner is

entitled to get the terminal benefits as due to the deceased

employee. Section 8 of the Act reads as follows:

8. General rules of succession in the

case of males.—

The property of a male Hindu dying intestate

shall devolve according to the provisions of

this Chapter—

(a)firstly, upon the heirs, being the relatives

specified in class I of the Schedule

;(b)secondly, if there is no heir of class I, then

upon the heirs, being the relatives specified in

class II of the Schedule;

(c)thirdly, if there is no heir of any of the two

classes, then upon the agnates of the deceased;

and

(d)lastly, if there is no agnate, then upon the

cognates of the deceased.

2.9. It is contended that as provided under Section 8(a) of

the Hindu Succession Act, 1956 (hereinafter referred as

“the Act”), the property of a male Hindu, dying intestate

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shall devolve firstly, upon the heirs, being the relatives

specified in Class-I of the Schedule. It is contended that

Petitioner being the wife and a Class-I heir of the

deceased-employee, in view of the provisions contained

under Section 8(a) of the Act, Petitioner only became

eligible and entitled to get all the terminal benefits as due

to the deceased employee.

2.10. But the Opp. Party-bank without proper

appreciation of the status of the Petitioner and the

provision contained under sec 8(a) of the Act, issued the

impugned communication under Annexure-6, indicating

therein that the amount will be released in favour of the

nominee as per nomination Rules. Accordingly, it is

contended that Opp. Party-Bank be directed to release all

the terminal benefits as due to the deceased employee

with quashing of Annexure-6 in favour of the petitioner.

3. Mr. B.N. Udgata, learned counsel appearing for the

Opp. Party-Bank on the other hand made his submission

basing on the stand taken in the counter affidavit so

filed.

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3.1. It is contended that the deceased-employee while

serving under the Bank had nominated his mother

Susama Mohanty-deceased Opp. Party No.3, as the

nominee. After the death of the deceased employee on

18.09.2023, the bank after adjusting the loan liability of

the deceased-employee to the tune of Rs.22, 16,158.31p.

credited a sum of Rs.40,74,577.26p to the account of the

nominee Opp. Party No.3.

3.2 The terminal benefit of the deceased employee though

was calculated at Rs.62,90,735.57p, but after adjustment

of the loan liability to the tune of Rs.22,16,158.31p,

amount to the tune of Rs.40,74,577.26p. was credited to

the account of Opp. Party No.3, lying with the Opp.

Party- Bank. Opp. Party No.3 prior to her death on

13.01.2024, had already withdrawn an amount of Rs.6,

70,000/- from out of the deposit made by the Bank.

However, in view of the interim order passed by this

Court on 01.10.2024, no further amount has been

released from the said account.

3.3 It is further contended that in terms of order

dt.19.02.2024 so passed by this court and prior to its

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recalling vide order dt.07.05.2025, the bank vide order

dt.10.01.2025 under Annexure-A to the counter affidavit,

held the Petitioner eligible to receive the remaining

service benefits to the tune of Rs.9,33,450.20p. towards

full and final settlement of the claim in favour of the

Petitioner.

3.4 It is also contended that pursuant to the order

passed by this Court on 17.07.2025, the aforesaid

amount of Rs.9,33,450.20p. had already been released in

favour of the Petitioner. However, out of the total amount

credited to the account of the deceased-Opp. Party No. 3

to the tune of Rs.40,74,577.26p., after withdrawal of a

sum of Rs.6,70,000/- by the deceased Opp. Party No.3,

prior to the death, the balance amount is lying in the

account of the said deceased-Opp. Party No.3 and it has

not been released in anybody’s favour as yet.

3.5. It is however contended that since Opp. Party No.3

was nominated by the deceased-employee, in terms of the

provisions governing the field, the terminal benefit of the

deceased-employee was credited to the account of

deceased Opp. party No.3 and no fault can be found with

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such action of the bank. However, it is contended that

the bank will take further action with regard to release of

the amount, so lying in the account of deceased Opp.

Party. No.3. as will be decided by this Court.

4. Because of the death of the Opp. Party No.3 and in

consideration of the application filed by the Petitioner,

Opp. Party No.3(a) to 3(c) were substituted vide order

dt.28.11.2025 of this Court.

5. Mr. Bibekananda Bhuyan, learned Sr. Counsel

appearing for Opp. party No.3 (b), however made his

submission basing on the stand taken in the counter

affidavit so filed.

5.1. Learned Sr. Counsel appearing for Opp. Party

No.3(b) contended that deceased Opp. Party No.3 being

the nominee of the deceased-employee, the terminal

benefit as due to the deceased employee was rightly

credited to her account by the bank to the tune of

Rs.40,74,577.26p. with due adjustment of the loan

liability to the tune of Rs.22,16,158.31p.

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5.2 It is however contended that since after such credit of

the amount to the account of deceased-Opp. party No.3,

she died on 13.01.2024, in view of the provisions

contained under Sections 14 & 15 of the Hindu

Succession Act, Opp. Party No.3 (a) to 3(c) became

eligible and entitled to get the amount lying in the

account of deceased Opp. Party. No.3.

5.3 It is contended that since after credit of the amount

to the account of the deceased-Opp. Party No.3, she died

on 13.01.2024, in view of the provisions contained under

Section 14, the said property of deceased Opp. party

No.3, became her absolute property. Section 14(1) of the

Act reads as follows:

14. Property of a female Hindu to be her absolute property.—

(1)Any property possessed by a female Hindu,

whether acquired before or after the commencement

of this Act, shall be held by her as full owner thereof

and not as a limited owner. Explanation.—In this

sub-section, “property” includes both movable and

immovable property acquired by a female Hindu by

inheritance or devise, or at a partition, or in lieu of

maintenance or arrears of maintenance, or by gift

from any person, whether a relative or not, before, at

or after her marriage, or by her own skill or exertion,

or by purchase or by prescription, or in any other

manner whatsoever, and also any such property held

by her as stridhana immediately before the

commencement of this Act.

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5.4. It is further contended that since deceased-Opp.

Party No.3 after being credited with the amount by the

Bank, died on 13.01.2024 and she became the absolute

owner of the property, in terms of Sec 14(1) of the Act, in

view of the provisions contained under Section 15 (1) of

the Act, Opp. Party No.3 (a) to 3(c) became eligible and

entitled to get the benefit of the said property. Section

15(1) (a) of the Act reads as follows:

15. General rules of succession in the case of

female Hindus.—

(1)The property of a female Hindu dying intestate

shall devolve according to the rules set out in section

16,—

(a)firstly, upon the sons and daughters (including the

children of any pre-deceased son or daughter) and

the husband;

5.5. Reliance was also placed to the provisions contained

under Section 16 of the Act. Placing reliance on the said

provision, it is contended that order of succession among

the heirs referred to in Section 15 of the Act, shall be,

and the distribution of the intestate property among

those heirs, shall take place according to the Rules so

provided under Section 16 of the Act. It is accordingly

contended that the amount so credited to the account of

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deceased-Opp. Party No.3, being the absolute property of

the said deceased-Opp. Party No.3, Opp. Party No.3(a) to

3(c) are eligible and entitled to get the benefit and

Petitioner has got no right over the said property.

5.6. Learned Sr. Counsel appearing for Opp. Party

No.3(b) made further submission placing reliance on the

provisions contained under Section 39 (7), (8) & (10) of

the Insurance Act, 1938. Placing reliance on the

provisions contained under Section 39(7) of the Act, it is

contended that Opp. Party No.3 being the nominee,

nominated by the deceased-employee, she shall be the

beneficiary entitled to the amount payable by the insurer

to him.

5.7. Similarly, placing reliance on the provisions

contained under Section 39(8) of the Act, it is contended

that after credit of the benefits to the account of

deceased-Opp. party No.3, since she died on 13.01.2024,

the amount secured by the Policy as the share of the

nominee, shall be payable to the heirs of all the legal

representatives of the nominee. Opp. party Nos.3 (a) to

3(c) being the legal heirs of deceased Opp. Party No.3, in

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view of the provisions contained under Section 39(8) of

the Act, they are eligible and entitled to get the benefit of

the property so belong to deceased-Opp. Party No.3. It is

also contended that provisions contained under sub-

section 7 & 8 of Sec 39 of the Act, in view of the

provisions contained under sub-section 10, shall apply to

all policies of Life Insurance, maturing for payment, after

the commencement of Insurance Laws (Amendment) Act,

2015.

5.8. Learned Sr. Counsel accordingly contended that

since prior to the death of the deceased-Opp. Party No.3

on 13.01.2024, the terminal benefit as due to the

deceased-employee, had already been credited to the

account of the deceased Opp. Party No.3, in view of the

provisions contained under Sections 14, 15 & 16 of the

Hindu Succession Act read with Section 39(7), (8) & (10)

of the Insurance Amendment Act 2015, Opp. Party No.3

(a) to 3(c) being the legal heirs of the nominee, are eligible

and entitled to get the amount so lying in the account of

deceased-Opp. Party No.3. In support of his submission,

learned Sr. Counsel relied on the following decisions:

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1. Shweta Singh Huria and Others Versus

Santosh Huria and Another, 2021 SCC OnLine Del

2492

2. K.R. Sakthi Murugeswari Vs. Divisional

Manager Divisional Office, Life Insurance

Corporation of India & Others. (2023 SCC Online

Mad 8397:(2023) 2 writ LR 725: (2023) 6 Mad LJ

263:2023) 5 LW 405: (2023) 6 CTC 624)

5.9. Hon’ble Delhi High Court in the case of Shewta

Singh Huria in paragraphs-28,31 & 33 has held as

follows:

28. However, the contention of the Appellant is that Section 39 of the

Insurance Act, 1938 was amended by The Insurance Laws

(Amendment) Act, 2015 which has come into force w.e.f 26.12.2014

and by virtue of amended sub-section (7) of Section 39, nominee has

a beneficial interest in the amount payable under the Life Insurance

Policy, on the death of the assured and no longer remains a mere

receiver nominee, whose rights under the unamended Section were

subject to rights and claims of the legal heirs under the law of

succession.

31. As is evident from a reading of the recommendations of the Law

Commission, a distinction was carved out between ‘beneficiary

nominee’ and ‘collector nominee’ and Section 39 of the Insurance Act,

1938 was amended accordingly, adding sub-Section (7). Beneficiary

nominee means a nominee who was entitled to receive the entire

proceeds under an insurance policy and a collector nominee means a

nominee other than a beneficiary nominee. Keeping this distinction in

mind, sub-section (7) of Section 39 was carefully and cautiously

drafted and the words used by the legislature are ‘beneficial interest’.

xxx xxx xxx

33. In the present case, Appellants had specifically flagged the issue

of applicability of the amendment to Section 39 on the ground that

Late Shri Vineet Huria died on 11.07.2018 and the policy had

matured after the Amendment to Section 39, came into force. It was

thus incumbent upon the Trial Court to have considered and

examined the issue, once the same was raised and highlighted by the

Appellants and taken a decision accordingly, with respect to the

benefits accruing under the insurance policies, in question.

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5.10 Hon’ble Madras High Court in the case of

K.R. Sakthi Murugeswari in paragraphs-5, 6 & 7

has held as follows:

5. There is no serious dispute on the facts of the case and therefore,

the facts does not require any reiteration. The law as it stood before

the coming into force of the Amendment Act, 2015, was that the

nominee merely receives the assured sum from the Insurance

Company in his or her capacity as a collector nominee and insofar as

the claim over the sum assured, the parties are relegated back to the

personal law which governs them. Therefore, in many cases, the

collector nominee merely retains the amount in trust, subject to

working out the final claim between the parties before the competent

Court. An amendment was brought to the Insurance Act, 1938 in the

year 2015. By virtue of this amendment, the line that was drawn

between a beneficiary nominee and collector nominee stood almost

obliterated. The nominee about whom Section 39 of the Insurance

Act, 1938, talks about is considered to be a beneficiary nominee and

the concept of collector nominee has been done away with. To

properly understand the position of law, it will be appropriate to

extract Sub Sections 7 to 10 of Section 39 of the Insurance Act, 1938,

hereunder:

“39. Nomination by Policy holder:—

(1)…

(7). Subject to the other provisions of this section, where the holder of

a policy of insurance on his own life nominates his parents, or his

spouse, or his children, or his spouse and children, or any of them,

the nominee or nominees shall be beneficially entitled to the amount

payable by the insurer to him or them under sub-section (6) unless it

is proved that the holder of the policy, having regard to the nature of

his title to the policy, could not have conferred any such beneficial

title on the nominee.

(8) Subject as aforesaid, where the nominee, or if there are more

nominees than one, a nominee or nominees, to whom sub-section (7)

applies, die after the person whose life is insured but before the

amount secured by the policy is paid, the amount secured by the

policy, or so much of the amount secured by the policy as represents

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the share of the nominee or nominees so dying (as the case may be),

shall be payable to the heirs or legal representatives of the nominee

or nominees or the holder of a succession certificate, as the case may

be, and they shall be beneficially entitled to such amount.

(9) Nothing in sub-sections (7) and (8) shall operate to destroy or

impede the right of any creditor to be paid out of the proceeds of any

policy of life insurance.

(10) The provisions of sub-sections (7) and

(8) shall apply to all policies of life insurance maturing for payment

after the commencement of the Insurance Laws (Amendment) Act,

2015.

…..”

6. The above change that was brought in through the 2015

Amendment Act was dealt with by the Delhi High Court in the case

of Shweta Singh Huria v. Santhosh Huria, AIR 2021 Del 121. The

relevant portions in the Judgment are extracted hereunder:

“18. It was submitted that amendment to Section 39 was made

pursuant to 190

th Report of the Law Commission, wherein the

judgment in Sarbati Devi v. Usha Devi, (1984) 1 SCC 424 was also

considered. In the said decision, the Supreme Court held that

nomination would not confer any beneficial interest on the nominee

and it is a mere authorization to receive the insurance amount, which

can be claimed by the legal heirs of the assured in accordance with

law of succession, governing the parties. The judgment has been

followed successively by various High Courts in a long line of cases,

holding that mere nomination effected under Section 39 shall not

deprive the legal heirs to the amount under the Insurance Policies.

However, as per Ms. Gambhir, the said judgments would be of no

avail to Respondent No. 1 as the said decisions are based on the

unamended Section 39, while the present case relates to policies

which have matured in 2018, post the 2015 Amendment.

19. Learned counsel for the Appellants relied upon the judgment of

Rajasthan High Court in Ramgopal v. General Public, S.B. Civil Misc.

Appeal No. 27/2018 decided on 05.04.2019, wherein according to

her, judgment in Sarbati Devi (supra) was distinguished in view of

the 2015 Amendment and Court held that wherever the provisions of

amended section 39 will be applicable, beneficial nominee shall be

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entitled to the benefits under the insurance policies, to the exclusion

of any other legal heir, who is not a nominee.

20. Per contra, Mr. Rakesh Wadhwa learned counsel for Respondent

No. 1 opposed the appeal and submitted that the partial decree has

been rightly passed by the Trial Court on an application under

Order XII Rule 6 CPC. Drawing the attention of the Court to the said

provision, learned counsel argued that based on admission of facts

in the pleadings or otherwise, orally or in writing, it is open to the

Court, at any stage of the suit, without waiting for determination of

any other question between the parties, to make such order or give a

judgment, having regard to the admissions. Appellant No. 1 admitted

in the written statement that she had received a sum of Rs.

2,48,53,000/- as well as money under two policies as a nominee of

the deceased. Being the mother, Respondent No. 1 is a Class-I legal

heir and entitled to 1/4

th share and there is no infirmity in the order

of the Trial Court, as the admissions were clear and unambiguous.

21. It is argued that reliance of the Appellants on the Insurance Act,

1938 as amended by Insurance Laws (Amendment) Act, 2015 is

misplaced in view of the settled law that a nominee does not have an

absolute right over the estate of the deceased, as nomination is not a

‘Will’. Several Courts have held from time to time that a nominee in

an insurance policy only acts as a receiver on behalf of the legal

heirs of the deceased policy holder and once the money is received

by the nominee, disbursement under the policy, has to follow the

testamentary disposition under the law of succession, which cannot

be overridden by the Insurance Act, 1938, even after the said

amendment. No judgment has been cited by the counsel for the

Appellants which denies a legal heir the right to claim the amounts

payable under the Insurance Policy and on the contrary it has been

held that a policy holder continues to hold interest in the policy

during his lifetime and the nominee acquires no interest during the

lifetime of a policy holder. On the death of a policy holder, the

amount payable under the policy becomes a part of his estate and

will be disbursed in accordance with the law of succession, either

testamentary or intestate. Nomination is only for the benefit of the

insurer so that he gets a valid discharge of its liability under the

policy and is not embroiled in the litigations inter-se the legal heirs of

the insured. Reliance was placed by Mr. Wadhwa on the following

judgments to support his contentions.

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i. Smt. Sarbati Devi v. Smt. Usha Devi (1984) 1 SCC ii. Shipra

Sengupta v. Mridul Sen Gupta, (2009) 10 SCC 680.

ii. Shipra Sengupta v. Mridul Sen Gupta, (2009) 10 SCC 680 : (AIR

Online 2009 SC 408).

iii. Shakti Yezdani v. Jayanand Jayant Salgaonkar Appeal No. 313

of 2015 decided by Bombay High Court on 01.12.2016.

iv. Smt. Rampali v. The State Govt. of NCT of Delhi FOA No.

184/2017 decided by Hon'ble High Court of Delhi on 24.04.2017.

v. Khushboo Gupta v. The Life Insurance Corporation of India CWJC

No. 12012 of 2018 : (AIR Online 2019 Pat 1526) decided on

25.09.2019.

vi. Oswal Greentech Ltd. v. Mr. Pankaj Oswal CA No. 410 of 2018

decided by National Company Law Appellate Tribunal, Delhi on

14.11.2019.

vii. S. Shafeek v. State of Kerala, 2020 SCC OnLine Ker 636.

viii. Smt. Ramayee v. the Principal Comptroller of Defence. W.P. (MD).

No. 18544 of 2016 decided on 17.02.2020.”

27. The proposition of law laid down by the Supreme Court

in Sarbati Devi (supra) and relied upon by counsel for the

Respondent cannot be disputed and is a binding dictum. The

Supreme Court held that nomination would not confer any beneficial

interest on the nominee under an insurance policy and a nominee is

only an authorized hand to receive the insurance amount, which is

subject to be disbursement amongst the legal heirs under the law of

succession, governing the parties. In fact, the said judgment has

been followed subsequently in a long line of judgments not only by

this Court but different High Courts from time to time. Relevant paras

of Sarbati Devi (supra) are as under:—

“5. We shall now proceed to analyse the provisions of Section 39 of

the Act. The said section provides that a holder of a policy of life

insurance on his own life may when effecting the policy or at any

time before the policy matures for payment nominate the person or

persons to whom the money secured by the policy shall be paid in

the event of his death. If the nominee is a minor, the policy-holder

may appoint any person to receive the money in the event of his

death during the minority of the nominee. That means that if the

policy-holder is alive when the policy matures for payment he alone

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will receive payment of the money due under the policy and not the

nominee. Any such nomination may at any time before the policy

matures for payment be cancelled or changed, but before such

cancellation or change is notified to the insurer if he makes the

payment bona fide to the nominee already registered with him, the

Patna High Court CWJC No. 12012 of 2018 dated 25-09-2019

insurer gets a valid discharge. Such power of cancellation of or

effecting a change in the nomination implies that the nominee has no

right to the amount during the lifetime of the assured. If the policy is

transferred or assigned under Section 38 of the Act, the nomination

automatically lapses. If the nominee or where there are nominees

more than one all the nominees die before the policy matures for

payment the money due under the policy is payable to the heirs or

legal representatives or the holder of a succession certificate. It is not

necessary to refer to sub-section (7) of Section 39 of the Act here. But

the summary of the relevant provisions of Section 39 given above

establishes clearly that the policy-holder continues to hold interest in

the policy during his lifetime and the nominee acquires no sort of

interest in the policy during the lifetime of the policy-holder. If that is

so, on the death of the policy-holder the amount payable under the

policy becomes part of his estate which is governed by the law of

succession applicable to him. Such succession may be testamentary

or intestate. There is no warrant for the position that Section 39 of

the Act operates as a third kind of succession which is styled as a

‘statutory testament’ in para 16 of the decision of the Delhi High

Court in Uma Sehgal case, [AIR 1982 Del 36 : ILR (1981) 2 Del 315].

If Section 39 of the Act is contrasted with Section 38 of the Act which

provides for transfer or assignment of the rights under a policy, the

tenuous character of the right of a nominee would become more

pronounced. It is difficult to hold that Section 39 of the Act was

intended to act as a third mode of succession provided by the

statute. The provision in sub-section (6) of Section 39 which says that

the amount shall be payable to the nominee or nominees does not

mean that the amount shall belong to the nominee or nominees. We

have to bear in mind here the special care which law and judicial

precedents take in the matter of execution and proof of wills which

have the effect of diverting the estate from the ordinary course of

intestate succession and that the rigour of the rules Patna High Court

CWJC No. 12012 of 2018 : (AIR Online 2019 Pat 1526) dated 25-09-

// 21 //

Page 21 of 48

2019 governing the testamentary succession is not relaxed even

where wills are registered.

xxx xxx xxx

8. We have carefully gone through the judgment of the Delhi High

Court in Uma Sehgal case, [AIR 1982 Del 36 : ILR (1981) 2 Del 315].

In this case the High Court of Delhi clearly came to the conclusion

that the nominee had no right in the lifetime of the assured to the

amount payable under the policy and that his rights would spring up

only on the death of the assured. The Delhi High Court having

reached that conclusion did not proceed to examine the possibility of

an existence of a conflict between the law of succession and the right

of the nominee under Section 39 of the Act arising on the death of the

assured and in that event which would prevail. We are of the view

that the language of Section 39 of the Act is not capable of altering

the course of succession under law. The second error committed by

the Delhi High Court in this case is the reliance placed by it on the

effect of the amendment of Section 60(1)(kb) of the Civil Procedure

Code, 1908 providing that all moneys payable under a policy of

insurance on the life of the judgment debtor shall be exempt from

attachment by his creditors. The High Court equated a nominee to

the heirs and legatees of the assured and proceeded to hold that the

nominee succeeded to the estate with all ‘plus and minus points’. We

find it difficult to treat a nominee as being equivalent to an heir or

legatee having regard to the clear provisions of Section 39 of the Act.

The exemption of the moneys payable under a life insurance policy

under the amended Section 60 of the Code of Civil Procedure instead

of ‘devaluing’ the earlier decisions which upheld the right of a

creditor of the estate of the assured to attach Patna High Court

CWJC No. 12012 of 2018 dated 25-09-2019 the amount payable

under the life insurance policy recognises such a right in such

creditor which he could have exercised but for the amendment. It is

because it was attached the Code of Civil Procedure exempted it from

attachment in furtherance of the policy of Parliament in making the

amendment. The Delhi High Court has committed another error in

appreciating the two decisions of the Madras High Court in Karuppa

Gounder v. Palaniamma, [AIR 1963 Mad 245 at para 13 : (1963) 1

Mad LJ 86 : ILR 1963 Mad 434] and in B.M. Mundkur v. Life

Insurance Corporation of India, [AIR 1977 Mad 72 : 47 Comp Cas 19

: (1977) 1 Mad LJ 59 : ILR (1975) 3 Mad 336]. The relevant part of

// 22 //

Page 22 of 48

the decision of the Delhi High Court in Uma Sehgal case, [AIR 1982

Del 36 : ILR (1981) 2 Del 315] reads thus : (AIR p. 40, paras 10, 11)

“10. In Karuppa Gounder v. Palaniamma, [AIR 1963 Mad 245 at

para 13 : (1963) 1 Mad LJ 86 : ILR 1963 Mad 434], K had nominated

his wife in the insurance policy. K died. It was held that in virtue of

the nomination, the mother of K was not entitled to any portion of the

insurance amount.

xxx xxx xxx

12. Moreover there is one other strong circumstance in this case

which dissuades us from taking a view contrary to the decisions of

all other High Courts and accepting the view expressed by the Delhi

High Court in the two recent judgments delivered in the year 1978

and in the year 1982. The Act has been in force from the year 1938

and all along almost all the High Courts in India have taken the view

that a mere nomination effected under Section 39 does not deprive

the heirs of their rights in the amount payable under a life insurance

policy. Yet Parliament has not chosen to make any amendment to the

Act. In such a situation unless there are strong and compelling

reasons to hold that all these decisions are wholly erroneous, the

Court should be slow to take a different view. The reasons given by

the Delhi High Court are unconvincing. We, therefore, hold that the

judgments of the Delhi High Court in Fauza Singh case, [AIR 1978

Del 276] and in Uma Sehgal case, [AIR 1982 Del 36 : ILR (1981) 2

Del 315] do not lay down the law correctly. They are, therefore,

overruled. We approve the views expressed by the other High Courts

on the meaning of Section 39 of the Act and hold that a mere

nomination made under Section 39 of the Act does not have the effect

of conferring on the nominee any beneficial interest in the amount

payable under the life insurance policy on the death of the assured.

The nomination only indicates the hand which is authorised to

receive the amount, on the payment of which the Patna High Court

CWJC No. 12012 of 2018 dated 25-09-2019 insurer gets a valid

discharge of its liability under the policy. The amount, however, can

be claimed by the heirs of the assured in accordance with the law of

succession governing them.”

28. However, the contention of the Appellant is that Section 39 of

the Insurance Act, 1938 was amended by The Insurance Laws

(Amendment) Act, 2015 which has come into force w.e.f 26.12.2014

// 23 //

Page 23 of 48

and by virtue of amended subsection (7) of Section 39, nominee has

a beneficial interest in the amount payable under the Life Insurance

Policy, on the death of the assured and no longer remains a mere

receiver nominee, whose rights under the unamended Section were

subject to rights and claims of the legal heirs under the law of

succession.

29. In order to appreciate the legal nodus that arises, it is imperative

to compare and contrast relevant provisions of the unamended and

amended Sections 39, respectively, which are extracted hereunder

for ready reference:—

Unamended Section 39:—

“39. Nomination by policy-holder.—(1) The holder of a policy of life

insurance on his own life may, when effecting the policy or at any

time before the policy matures for payment, nominate the person or

persons to whom the money secured by the policy shall be paid in

the event of his death.

(6) Where the nominee or if there are more nominees than one, a

nominee or nominees survive the person whose life is insured, the

amount secured by the policy shall be payable to such survivor or

survivors.

(7) The provisions of this section shall not apply to any policy of life

insurance to which Section 6 of the Married Women's Property Act,

1874 applies or has at any time applied:

Amended Section 39:

39. (1) The holder of a policy of life insurance on his own life may,

when effecting the policy or at any time before the policy matures for

payment, nominate the person or persons to whom the money

secured by the policy shall be paid in the event of his death.

(6) Where the nominee or if there are more nominees than one, a

nominee or nominees survive the person whose life is insured, the

amount secured by the policy shall be payable to such survivor or

survivors.

(7) Subject to the other provisions of this section, where the holder of

a policy of insurance on his own life nominates his parents, or his

spouse, or his children, or his spouse and children, or any of them,

the nominee or nominees shall be beneficially entitled to the amount

payable by the insurer to him or them under subsection (6) unless it

// 24 //

Page 24 of 48

is proved that the holder of the policy, having regard to the nature of

his title to the policy, could not have conferred any such beneficial

title on the nominee.

(10) The provisions of sub-sections (7) and (8) shall apply to all

policies of life insurance maturing for payment after the

commencement of the Insurance Laws (Amendment) Act, 2015.

(11) Where a policyholder dies after the maturity of the policy but the

proceeds and benefit of his policy has not been made to him because

of his death, in such a case, his nominee shall be entitled to the

proceeds and benefit of his policy.

30. Section 39 was amended by the amending Act No. 5 of 2015 and

was pursuant to the recommendations of 190

th Report of the Law

Commission of India, relevant passages from which are as under:—

The Law Commission's views:—

7.1.12 There appears to be a consensus of sorts on the need for

drawing a clear distinction between a beneficial nominee and a

collector nominee. It is not possible to agree to the suggestion made

by some of the insurers that in all cases the payment to the nominee

would tantamount to a full discharge of the insurer's liability under

the policy and that unless the contrary is expressed, the nominee

would be the beneficial nominee. Although it is true that this is the

law in USA, Canada and South Africa, the social realities of our

country where the death of a sole breadwinner of the family

immediately throws the remaining family into hardship cannot be

lost sight of. To deny, in such instance, the right of the legal

representatives to the policy amount on the basis that the nominee is

a different person seems harsh. On the other hand, what appears

reasonable is to give an option to the policyholder to clearly express

whether the nominee will collect the money on behalf of the legal

representatives (in other words such nominee will be the collector

nominee) or whether the nominee will be the absolute owner of the

monies in which case such nominee will be the beneficial nominee.

Public interest and the peculiar social realities in India cannot permit

the adoption of the procedures followed in Canada, USA or South

Africa. The Commission is not agreeable to the suggestion that a

provision similar to S. 45 ZA as in the Banking Regulation Act,

1949 should be adopted.

// 25 //

Page 25 of 48

7.1.13 The suggestion that a proviso be added to make the

nomination effectual for the nominee to receive the policy money in

case the policyholder dies after the maturity of the policy but before it

can be encashed, has also been welcomed by the responses, and is

hereby recommended.

Final recommendations of the Law Commission in regard to Section

39:

7.1.14 After considering all the responses and reexamining the entire

issue, the final recommendations of the Law Commission regard to s.

39 may be summarised as under:

(a) A clear distinction be made in the provision itself between a

beneficial nominee and a collector nominee.

(b) It is not possible to agree to the suggestion made by some of the

insurers that in all cases the payment to the nominee would

tantamount to a full discharge of the insurer's liability under the

policy and that unless the contrary is expressed, the nominee would

be the beneficial nominee.

(c) An option be given to the policyholder to clearly express whether

the nominee will collect the money on behalf of the legal

representatives (in other words such nominee will be the collector

nominee) or whether the nominee will be the absolute owner of the

monies in which case such nominee will be the beneficial nominee.

(d) A proviso be added to make the nomination effectual for the

nominee to receive the policy money in case the policyholder dies

after the maturity of the policy but before it can be encashed.

Suggested Amendment of Section 39:—

“7.1.15 To give effect to the above recommendations, the Law

Commission is of the view that s. 39 be recast as follows:

xxx xxx xxx

(7) Subject to the other provisions of this section, where the holder of

a policy of insurance on his own life nominates his parents, or his

spouse, or his children, or his spouse and children, or any of them,

the nominee or nominees shall be beneficially entitled to the amount

payable by the insurer to him or them under sub-section (6) unless it

is proved that the holder of the policy, having regard to the nature of

his title to the policy, could not have conferred any such beneficial

title on the nominee.

// 26 //

Page 26 of 48

(8) Subject as aforesaid, where the nominee, or if there are more

nominees than one, a nominee or nominees, to whom sub-section (7)

applies, die after the person whose life is insured but before the

amount secured by the policy is paid, the amount secured by the

policy, or so much of the amount secured by the policy as represents

the share of the nominee or nominees so dying (as the case may be),

shall be payable to the heirs or legal representatives of the nominee

or nominees or the holder of a succession certificate, as the case may

be, and they shall be beneficially entitled to such amount.

xxx xxx xxx

(10) The provisions of sub-sections (7), (8) and (9) shall apply to all

policies of life insurance maturing for payment after the

commencement of this Act.

(11) Every policyholder shall have an option to indicate in clear terms

whether the person or persons being nominated by the policyholder

is/are a beneficiary nominee(s) or a collector nominee(s).

Provided where the policyholder fails to indicate whether the person

being nominated is a beneficiary nominee or a collector nominee it

will be deemed that the person nominated is a beneficiary nominee.

Explanation : For the purposes of this sub-section the expression

“beneficiary nominee” means a nominee who is entitled to receive the

entire proceeds payable under a policy of insurance subject to other

provisions of this Act and the expression “collector nominee” means a

nominee other than a beneficiary nominee.”

31. As is evident from a reading of the recommendations of the Law

Commission, a distinction was carved out between ‘beneficiary

nominee’ and ‘collector nominee’ and Section 39 of the Insurance Act,

1938 was amended accordingly, adding sub-Section (7). Beneficiary

nominee means a nominee who was entitled to receive the entire

proceeds under an insurance policy and a collector nominee means a

nominee other than a beneficiary nominee. Keeping this distinction in

mind, sub-section (7) of Section 39 was carefully and cautiously

drafted and the words used by the legislature are ‘beneficial

interest’.

7. A careful reading of the above Judgment brings to light the fact

that the dictum of the Hon'ble Apex Court in Sarbati Devi case to the

effect that a mere nomination would not confer any beneficial interest

on the nominee under an insurance policy, has undergone a change

by virtue of the amendment that was brought in by the Parliament to

// 27 //

Page 27 of 48

Section 39 of the Insurance Act, 1938. Before this amendment was

brought in, the Law Commission had also submitted its views and

the Law Commission wanted to specifically carve out the distinction

between the beneficiary nominee and the collector nominee.

However, when the legislature amended Section 39 of the Insurance

Act, 1938 and brought in Sub Sections 7 and 8, the very concept of

collector nominee has been done away with. This was taken into

consideration by the Delhi High Court and considering the facts and

circumstances of that case, the nominee, who was appointed under

the Policy was held to be a beneficiary nominee and was hence,

entitled to appropriate the entire sum assured.

6. To the submission made by the learned Sr. Counsel

appearing for Opp. Party No.3(b), learned counsel

appearing for the Petitioner made further submission,

contending inter alia that in view of the provisions

contained under Section 8 of the Hindu Succession Act,

Petitioner being the legal married wife of the deceased-

employee and being a Class-I heir of the said deceased

under Sec 8(a) of the Act, Petitioner is only eligible and

entitled to get all the benefits as due to the deceased

employee.

6.1. In support of his submission, reliance was placed to

following decision of the Hon’ble Apex Court.

1. Shakti Yezdani and others Vs. Jayanand

Jayant Salgaonkar and Others Civil Appeal

No.7107 of 2017, decided on 14.12.2023.

2. Sarabati Devi and Others Vs. Usha Devi,

(1984) 1 SCC 424.

// 28 //

Page 28 of 48

3. Ram Chander Talwar v. Devender

Kumar Talwar, (2010) 10 SCC 671

6.2. Hon’ble Apex Court in the case of Shakti

Yezdani in paragraphs 11, 12,14,38,40,42,44,45 & 46

has held as follows:

11. To appreciate the precise ratio in Kokate (supra),

the following two paragraphs of the Kokate judgment

were extracted by the Division Bench:

xxx xxx xxx

25. A reading of Section 109A of the Companies Act and bye-

law 9.11 of the Depositories Act makes it abundantly clear that

the intent of the nomination is to vest the property in the shares

which includes the ownership rights thereunder in the nominee

upon nomination validly made as per the procedure prescribed,

as has been done in this case. These Sections are completely

different from Section 39 of the Insurance Act set out (supra)

which require a nomination merely for the payment of the

amount under the Life Insurance Policy without confirming any

ownership rights in the nominee or Under Section 30 of the

Maharashtra Cooperative Societies Act which allows the Society

to transfer the shares of the member which would be valid

against any demand made by any other person upon the

Society. Hence these provisions are made merely to give a valid

discharge to the Insurance Company or the Co-operative Society

without vesting the ownership rights in the Insurance Policy or

the membership rights in the Society upon such nominee. The

express legislature Intent Under Section 109A of the Companies

Act and Section 9.11 of the Depositories Act is clear.

12. xxx xxx xxx

Adverting to and Interpreting the pari materia provisions relating

to nominations under various statutes, the Division Bench felt

that the consistent view in the various judgments of the Supreme

Court and the Bombay High Court must be followed and those do

not warrant any departure. It was expressly opined that the so-

called 'vesting' Under Section 109A of the Companies Act, 1956

does not create a third mode of succession and the provisions are

not intended to create another mode of succession. In fact, the

Companies Act, 1956 has nothing to do with the law of

succession. Accordingly, the Division Bench declared that the

nominee of a holder of a share or securities is not entitled to the

beneficial ownership of the shares or securities which are the

subject matter of nomination to the exclusion of all other persons

who are entitled to inherit the estates of the holders as per the

law of succession. Answering the third question, the Division

// 29 //

Page 29 of 48

Bench held that a bequest made in a Will executed in

accordance with the Indian Succession Act, 1925 In respect

of shares or securities of the deceased, supersedes the

nomination made under the provision of Section 109A of

Companies Act and Bye-law 9.11 framed under the Depositories

Act, 1996. The bench accordingly ruled that an incorrect view

was taken in Kokate (supra).

xxx xxx xxx

14. Looking at the provisions relating to nominations under

different statutory enactments and the way the Courts have

interpreted those to the effect that the nominee does not get

absolute title to the property which is the subject matter of

nomination, the Division Bench interpreting the provisions under

S.109A & S. 109B Companies Act, 1956 declared that they do

not override the law in relation to testamentary or intestate

succession. The judgment in Kokate (supra) was declared to be

incorrect as it failed to consider the law laid down in

Khanchandani(supra) and Talwar (supra) as these cases

preceded Kokate (supra).

NO THIRD LINE OF SUCCESSION CONTEMPLATED UNDER

COMPANIES ACT

xxx xxx xxx

38. As per Bye-law 9.11.7 of the Depositories Act, 1996, the non

obstante Clause confers overriding effect to the nomination over any

other disposition/nomination for the purposes of dealing with the

securities lying to the credit of deceased nominating person(s) in any

manner. Therefore, the purpose of invoking such a non obstante

Clause is clearly delineated and limited to the extent of enabling the

depository to deal with the securities, in the immediate aftermath of

the securities holder's death, The upshot of the above discussion is

that the non-obstante Clause in both Section 109A(3) of the

Companies Act, 1956 & Bye-law 9.11.7 of the Depositories Act,

1996 cannot be held to exclude the legal heirs from their rightful

claim over the securities, against the nominee

xxx xxx xxx

40. In Sarbati Devi (supra) this Court held that nomination Under

Section 39 of the Life Insurance Act, 1938 does not contemplate a

third line of succession styled as a 'statutory testament and any

amount paid to a nominee on the policy holder's death forms a part

of the estate of the deceased policy holder and devolves upon

his/her heirs, as per testamentary or intestate succession. Further,

in Ram Chander Talwar (supra), while discussing the rights of a

nominee of a deceased depositor (Section 45-ZA(2) Banking

Regulation Act, 1949), this Court concluded that the right to receive

the money lying in the depositor's account was to be conferred on the

nominee but the nominee would not become the owner of such

deposits. The said deposit is a part of the deceased depositor's

// 30 //

Page 30 of 48

estate and is subject to the laws of succession that governs the

depositor.

42. Therefore, the argument by the Appellants of nomination as a

'statutory testament not be countenanced simply because the

Companies Act, 1956 does not deal with ccession nor does it override

the laws of succession. It is beyond the scope of the company's

affairs to facilitate succession planning of the shareholder. In case of

a will. is upon the administrator or executor under the Indian

Succession Act, 1925, or in case of intestate succession, the laws of

succession to determine the line of succession.

44. An individual dealing with estate planning or succession laws

understands. nomination to take effect in a particular manner and

expects the implication to be no different for devolution of securities

per se. Therefore, an interpretation otherwise would inevitably lead

to confusion and possibly complexities, in the succession process,

something that ought to be eschewed. At this stage, it would be

prudent to note the significance of a settled principle of law. In

Shanker Raju v. Union of India MANU/SC/0009/2011: (2011) 2 SCC

132, the Court held:

10. It is a settled principle of law that a judgment, which

has held the field for a long time, should not be unsettled.

The doctrine of stare decisis is expressed in the maxim stare

decisis et non quieta movere, which means "to stand by

decisions and not to disturb what is settled". Lord Coke

aptly described this in his classic English version as "those

things which have been so often adjudged ought to rest in

peace". The underlying logic of this doctrine is to maintain

consistency and avoid uncertainty. The guiding philosophy

is that a view which has held the field for a long time should

not be disturbed only because another view is possible.

45. The vesting of securities in favour of the nominee contemplated

Under Section 109A of the Companies Act 1956 (pari materia Section

72 of Companies Act, 2013) & Bye-Law 9.11.1 of Depositories Act ,

1996 is for a limited purpose ie., to ensure that there exists no

confusion pertaining to legal formalities that are to be undertaken upon

the death of the holder and by extension, to protect the subject matter

of nomination from any protracted litigation until the legal

representatives of the deceased holder are able to take appropriate

steps. The object of introduction of nomination facility vide the

Companies (Amendment) Act, 1999 was only to provide an impetus to

the investment climate and ease the cumbersome process of obtaining

various letters of succession, from different authorities upon the

shareholder's death.

46 Additionally, there is a complex layer of commercial considerations

that are to be taken into account while dealing with the issue of

nomination pertaining to companies or until legal heirs are able to

sufficiently establish their right of succession to the company.

Therefore, offering a discharge to the entity once the nominee is in

picture is quit distinct from granting ownership of securities to

nominees instead of the legal heirs. Nomination process therefore does

// 31 //

Page 31 of 48

not override the succession laws. Simply said, there is no third mode

of succession that the scheme of the Companies Act, 1956(pari materia

provisions in Companies Act, 2013) and Depositories Act, 1996 aims or

intends to provide.

6.3. Hon’ble Apex Court in the case of Sarabti Devi in

paragraphs 4,5,8,10,11 & 12 has held as follows:

4. At the outset it should be mentioned that except the

decision of the Allahabad High Court in Kesari Devi v. Dharma

Devi [AIR 1962 All 355 : 1962 All LJ 265] on which reliance

was placed by the High Court in dismissing the appeal before

it and the two decisions of the Delhi High Court in S. Fauza

Singh v. Kuldip Singh [AIR 1978 Del 276] and Uma

Sehgal v. Dwarka Dass Sehgal [AIR 1982 Del 36 : ILR (1981) 2

Del 315] in all other decisions cited before us the view taken is

that the nominee under Section 39 of the Act is nothing more

than an agent to receive the money due under a life insurance

policy in the circumstances similar to those in the present

case and that the money remains the property of the assured

during his lifetime and on his death forms part of his estate

subject to the law of succession applicable to him. The cases

which have taken the above view are Ramballav

Dhandhania v. Gangadhar Nathmall [AIR 1956 Cal 275] ; Life

Insurance Corporation of India v. United Bank of India Ltd [AIR

1970 Cal 513] ; D. Mohanavelu Mudaliar v. Indian Insurance

and Banking Corporation Ltd., Salem [AIR 1957 Mad 115 :

(1956) 1 LLJ 498 : (1955-56) 9 FJR 160] ; Sarojini

Amma v. Neelakanta Pillai [AIR 1961 Ker 126 : (1961) 31 Com

Cas 86 : 1960 KLT 1319] ; Atmaram Mohanlal

Panchal v. Gunvantiben [AIR 1977 Guj 134 : 18 GLR 668]

; Malli Dei v. Kanchan Prava Dei [AIR 1973 Ori 83]

and Lakshmi Amma v. Saguna Bhagath [ILR 1973 Kant 827] .

Since there is a conflict of judicial opinion on the question

involved in this case it is necessary to examine the above cases

at some length. The law in force in England on the above

question is summarised in Halsbury's Laws of England (4th

Edn.), Vol. 25, para 579 thus:

“579. Position of third party.—The policy money payable on the

death of the assured may be expressed to be payable to a third

party and the third party is then prima facie merely the agent

for the time being of the legal owner and has his authority to

receive the policy money and to give a good discharge; but he

generally has no right to sue the insurers in his own name.

The question has been raised whether the third party's

authority to receive the policy money is terminated by the

death of the assured; it seems, however, that unless and until

they are otherwise directed by the assured's personal

representatives the insurers may pay the money to the third

party and get a good discharge from him.”

// 32 //

Page 32 of 48

5. We shall now proceed to analyse the provisions of Section

39 of the Act. The said section provides that a holder of a

policy of life insurance on his own life may when effecting the

policy or at any time before the policy matures for payment

nominate the person or persons to whom the money secured

by the policy shall be paid in the event of his death. If the

nominee is a minor, the policy-holder may appoint any person

to receive the money in the event of his death during the

minority of the nominee. That means that if the policy-holder

is alive when the policy matures for payment he alone will

receive payment of the money due under the policy and not the

nominee. Any such nomination may at any time before the

policy matures for payment be cancelled or changed, but

before such cancellation or change is notified to the insurer if

he makes the payment bona fide to the nominee already

registered with him, the insurer gets a valid discharge. Such

power of cancellation of or effecting a change in the

nomination implies that the nominee has no right to the

amount during the lifetime of the assured. If the policy is

transferred or assigned under Section 38 of the Act, the

nomination automatically lapses. If the nominee or where

there are nominees more than one all the nominees die before

the policy matures for payment the money due under the

policy is payable to the heirs or legal representatives or the

holder of a succession certificate. It is not necessary to refer to

sub-section (7) of Section 39 of the Act here. But the summary

of the relevant provisions of Section 39 given above establishes

clearly that the policy-holder continues to hold interest in the

policy during his lifetime and the nominee acquires no sort of

interest in the policy during the lifetime of the policy-holder. If

that is so, on the death of the policy-holder the amount

payable under the policy becomes part of his estate which is

governed by the law of succession applicable to him. Such

succession may be testamentary or intestate. There is no

warrant for the position that Section 39 of the Act operates as

a third kind of succession which is styled as a ‘statutory

testament’ in para 16 of the decision of the Delhi High Court

in Uma Sehgal case [AIR 1982 Del 36 : ILR (1981) 2 Del 315] .

If Section 39 of the Act is contrasted with Section 38 of the Act

which provides for transfer or assignment of the rights under a

policy, the tenuous character of the right of a nominee would

become more pronounced. It is difficult to hold that Section 39

of the Act was intended to act as a third mode of succession

provided by the statute. The provision in sub-section (6) of

Section 39 which says that the amount shall be payable to the

nominee or nominees does not mean that the amount shall

belong to the nominee or nominees. We have to bear in mind

here the special care which law and judicial precedents take in

the matter of execution and proof of wills which have the effect

of diverting the estate from the ordinary course of intestate

succession and that the rigour of the rules governing the

testamentary succession is not relaxed even where wills are

registered.

xxx xxx xxx

// 33 //

Page 33 of 48

8. We have carefully gone through the judgment of the Delhi

High Court in Uma Sehgal case [AIR 1982 Del 36 : ILR (1981) 2

Del 315] . In this case the High Court of Delhi clearly came to

the conclusion that the nominee had no right in the lifetime of

the assured to the amount payable under the policy and that

his rights would spring up only on the death of the assured.

The Delhi High Court having reached that conclusion did not

proceed to examine the possibility of an existence of a conflict

between the law of succession and the right of the nominee

under Section 39 of the Act arising on the death of the assured

and in that event which would prevail. We are of the view that

the language of Section 39 of the Act is not capable of altering

the course of succession under law. The second error

committed by the Delhi High Court in this case is the reliance

placed by it on the effect of the amendment of Section 60(1)(kb)

of the Code of Civil Procedure, 1908 providing that all moneys

payable under a policy of insurance on the life of the judgment

debtor shall be exempt from attachment by his creditors. The

High Court equated a nominee to the heirs and legatees of the

assured and proceeded to hold that the nominee succeeded to

the estate with all ‘plus and minus points’. We find it difficult

to treat a nominee as being equivalent to an heir or legatee

having regard to the clear provisions of Section 39 of the Act.

The exemption of the moneys payable under a life insurance

policy under the amended Section 60 of the Code of Civil

Procedure instead of ‘devaluing’ the earlier decisions which

upheld the right of a creditor of the estate of the assured to

attach the amount payable under the life insurance policy

recognises such a right in such creditor which he could have

exercised but for the amendment. It is because it was attached

the Code of Civil Procedure exempted it from attachment in

furtherance of the policy of Parliament in making the

amendment. The Delhi High Court has committed another

error in appreciating the two decisions of the Madras High

Court in Karuppa Gounder v. Palaniamma [AIR 1963 Mad 245

at para 13 : (1963) 1 MLJ 86 : ILR (1963) Mad 434] and

in B.M. Mundkur v. Life Insurance Corporation of India [AIR

1977 Mad 72 : 47 Com Cas 19 : (1977) 1 MLJ 59 : ILR (1975) 3

Mad 336] . The relevant part of the decision of the Delhi High

Court in Uma Sehgal case [AIR 1982 Del 36 : ILR (1981) 2 Del

315] reads thus: (AIR p. 40, paras 10, 11)

“10. In Karuppa Gounder v. Palaniamma [AIR 1963 Mad 245 at

para 13 : (1963) 1 MLJ 86 : ILR (1963) Mad 434] , K had

nominated his wife in the insurance policy. K died. It was held

that in virtue of the nomination, the mother of K was not

entitled to any portion of the insurance amount.

11. I am in respectful agreement with these views, because

they accord with the law and reason. They are supported by

Section 44(2) of the Act. It provides that the commission

payable to an insurance agent shall after his death, continue

to be payable to his heirs, but if the agent had nominated any

person the commission shall be paid to the person so

nominated. It cannot be contended that the nominee under

Section 44 will receive the money not as owner but as an agent

// 34 //

Page 34 of 48

on behalf of someone else, vide B.M. Mundkur v. Life Insurance

Corporation [AIR 1977 Mad 72 : 47 Com Cas 19 : (1977) 1 MLJ

59 : ILR (1975) 3 Mad 336] . Thus, the nominee excludes the

legal heirs.”

xxx xxx xxx xxx

10. It is obvious from the above passage that the above case

has no bearing on the meaning of Section 39 of the Act. The

fact of nomination was treated in that case as a piece of

evidence in support of the finding that the policy was not a

joint family asset but the separate property of the coparcener

concerned. No right based on the ground that one party was

entitled to succeed to the estate of the deceased in preference

to the other or along with the other under the provisions of the

Hindu Succession Act was asserted in that case. The next

error committed by the Delhi High Court is in drawing an

analogy between Section 39 and Section 44(2) of the Act

thinking that the Madras High Court had done so in B.M.

Mundkur case [AIR 1977 Mad 72 : 47 Com Cas 19 : (1977) 1

MLJ 59 : ILR (1975) 3 Mad 336] . In B.M. Mundkur case [AIR

1977 Mad 72 : 47 Com Cas 19 : (1977) 1 MLJ 59 : ILR (1975) 3

Mad 336] the High Court of Madras instead of drawing an

analogy between Section 39 and Section 44(2) of the Act

actually contrasts them as can be seen from the following

passage:

“. . .There are vital differences between the nomination

contemplated under Section 39 of the Act and nomination

contemplated under the proviso to Section 44(2) of the Act. In

the first place, the sum assured, with which alone Section 39

was concerned, was to be paid in the event of the death of the

assured under the terms of the contract entered into between

the insurer and the assured and consequently it was the

contractual right which remained vested in the insured with

reference to which the nomination happened to be made. It

should be pointed out that the nomination as well as the

liability on the part of the insurer to pay the sum assured

become effective simultaneously, namely, at the moment of the

death of the assured. So long as he was alive, the money was

not payable to him, in the case of a whole life policy, and

equally, having regard to the language of Section 39(1) of the

Act, the nominee's right to receive the money arose only on the

death of the assured. Section 39 itself did not deal with the

title to the money assured, which was to be paid by the insurer

to the nominee who was bound to give discharge to the

insurer. It was in this context that the Court took the view that

the title remained with the estate of the deceased and,

therefore, with the heirs of the deceased, that the nomination

did not in any way affect the title and that it merely clothed

the nominee with the right to receive the amount from the

insurer. (AIR 1977 Mad 77, para 10-A)

11. On the other hand, the provisions and purport of Section

44 of the Act are different. In the first place, under Section

44(1) it was a statutory right conferred on the agent to receive

the commission on the renewal premium, notwithstanding the

// 35 //

Page 35 of 48

termination of the agreement between the agent and the

insurer, which provided for the payment of such commission

on the renewal premium. The statute also prescribed the

qualification which rendered the agent eligible to receive

commission on such renewal premium. Section 44(1) provides

for the payment of the commission to the agent during his

lifetime only and does not contemplate the contingency of his

death and the commission being paid to anybody even after

his death. It is Section 44(2) which deals with the payment of

commission to the heirs of deceased for so long as such

commission would have been payable had such insurance

agent been alive. Thus it was not the general law of inheritance

which conferred title on the heirs of the deceased insurance

agent to receive the commission on the renewal premium, but

it was only the particular statutory provision, namely, Section

44(2) which conferred the right on the heirs of the deceased

agent to receive the commission on the renewal premium. In

other words, the right of the heirs to receive the commission

on renewal premium does not arise under any law of

succession and it is a right directly conferred on the heirs by

Section 44(2) of the Act, even though who the heirs of the

deceased insurance agent are will have to be ascertained

under the law of succession applicable to him. Thus the

statute which conferred such a right on the heirs is certainly

competent to provide for an exception in certain cases and

take away such a right from the heirs; and the proviso which

has been introduced by the Government of India Notification

1962 has done exactly this in taking away the right of the

heirs conferred under the main part of Section 44(2), in the

event of the agent, during his lifetime, making a nomination in

favour of a particular person and not cancelling or altering

that nomination subsequently. If the statute itself was

competent to confer such a right for the first time on the heirs

of the deceased agent, it is indisputable that the statute could

take away that right under stated circumstances. . . .” (AIR

1977 Mad 77, para 11)

12. Moreover there is one other strong circumstance in this

case which dissuades us from taking a view contrary to the

decisions of all other High Courts and accepting the view

expressed by the Delhi High Court in the two recent judgments

delivered in the year 1978 and in the year 1982. The Act has

been in force from the year 1938 and all along almost all the

High Courts in India have taken the view that a mere

nomination effected under Section 39 does not deprive the

heirs of their rights in the amount payable under a life

insurance policy. Yet Parliament has not chosen to make any

amendment to the Act. In such a situation unless there are

strong and compelling reasons to hold that all these decisions

are wholly erroneous, the Court should be slow to take a

different view. The reasons given by the Delhi High Court are

unconvincing. We, therefore, hold that the judgments of the

Delhi High Court in Fauza Singh case [AIR 1978 Del 276] and

in Uma Sehgal case [AIR 1982 Del 36 : ILR (1981) 2 Del 315]

do not lay down the law correctly. They are, therefore,

// 36 //

Page 36 of 48

overruled. We approve the views expressed by the other High

Courts on the meaning of Section 39 of the Act and hold that a

mere nomination made under Section 39 of the Act does not

have the effect of conferring on the nominee any beneficial

interest in the amount payable under the life insurance policy

on the death of the assured. The nomination only indicates the

hand which is authorised to receive the amount, on the

payment of which the insurer gets a valid discharge of its

liability under the policy. The amount, however, can be

claimed by the heirs of the assured in accordance with the law

of succession governing them.

6.5. Hon’ble Apex Court in the case of Ram Chander

Talwar in paragraphs-3, 4, 5 & 6 has held as follows:

3. The submission is quite fallacious and is based on a complete

misconception of the provision of the Act.

4. Sub-section (2) of Section 45-ZA, reads as follows:

“45-ZA. ***

(2) Notwithstanding anything contained in any other law for the time

being in force or in any disposition, whether testamentary or

otherwise, in respect of such deposit, where a nomination made in

the prescribed manner purports to confer on any person the right to

receive the amount of deposit from the banking company, the

nominee shall, on the death of the sole depositor or, as the case may

be, on the death of all the depositors, become entitled to all the rights

of the sole depositor or, as the case may be, of the depositors, in

relation to such deposit to the exclusion of all other persons, unless

the nomination is varied or cancelled in the prescribed manner.”

(emphasis added)

5. Section 45-ZA(2) merely puts the nominee in the shoes of the

depositor after his death and clothes him with the exclusive right to

receive the money lying in the account. It gives him all the rights of

the depositor so far as the depositor's account is concerned. But it by

no stretch of imagination makes the nominee the owner of the money

lying in the account. It needs to be remembered that the Banking

Regulation Act is enacted to consolidate and amend the law relating

to banking. It is in no way concerned with the question of succession.

All the monies receivable by the nominee by virtue of Section 45-ZA(2)

would, therefore, form part of the estate of the deceased depositor

// 37 //

Page 37 of 48

and devolve according to the rule of succession to which the

depositor may be governed.

6. We find that the High Court has rightly rejected the appellant's

claim relying upon the decision of this Court in Vishin N.

Khanchandani v. Vidya Lachmandas Khanchandani [(2000) 6 SCC

724] . The provision under Section 6(1) of the Government Savings

Certificates Act, 1959 is materially and substantially the same as

the provision of Section 45-ZA(2) of the Banking Regulation Act,

1949, and the decision in Vishin N. Khanchandani [(2000) 6 SCC

724] applies with full force to the facts of this case.

6.6. Further, reliance was also placed to a decision of

the High Court of Karnatak, Dharwad Bench in the case

of Smt. Annapurna Vs. Kavita and others , Regular

First Appeal No.100004 of 2025 decided on 22.01.2025.

Hon’ble Karnataka High Court in paragraps- 7 to 9 of the

judgment has held as follows:

7. The appellant was a nominee, when deceased

purchased insurance policy from respondent No.3. Just

because the deceased has made the appellant as nominee,

that does not defeat law of succession, when other legal

heirs are having right to claim estate of deceased. The

purpose of making nomination is to discharge the initial

burden of the banker/insurance institution to pay the

amount to the nominee without keeping themselves. But,

just because nominee is made that does not create any

disentitlement by other legal heirs as per their right vested

under the law of succession.

8. In this regard, Hon’ble Supreme Court in the case of

Smt. Sarabati Devi and Another V/s Smt. Usha Devi

1984, 1 SCC 424 has laid down principle of law by

interpreting Section 13 of the incidence Act at paragraph

Nos.5, 8 and 10.

5. We shall now proceed to analyse the provisions

of Section 39 of the Act. The said section provides

that a holder of a policy of life insurance on his own

life may when effecting the policy or at any time

before the policy matures for payment nominate the

// 38 //

Page 38 of 48

person or persons to whom the money secured by

the policy shall be paid in the event of his death. If

the nominee is a minor, the policy-holder may

appoint any person to receive the money in the

event of his death during the minority of the

nominee. That means that if the policy-holder is

alive when the policy matures for payment he alone

will receive payment of the money due under the

policy and not the nominee. Any such nomination

may at any time before the policy matures for

payment be cancelled or changed, but before such

cancellation or change is notified to the insurer if he

makes the payment bona fide to the nominee

already registered with him, the insurer gets a valid

discharge. Such power of cancellation of or effecting

a change in the nomination implies that the nominee

has no right to the amount during the lifetime of the

assured. If the policy is transferred or assigned

under Section 38 of the Act, the nomination

automatically lapses. If the nominee or where there

are nominees more than one all the nominees die

before the policy matures for payment the money

due under the policy is payable to the heirs or legal

representatives or the holder of a succession

certificate. It is not necessary to refer to subsection

(7) of Section 39 of the Act here. But the summary of

the relevant provisions of Section 39 given above

establishes clearly that the policy-holder continues

to hold interest in the policy during his lifetime and

the nominee acquires no sort of interest in the policy

during the lifetime of the policy-holder. If that is so,

on the death of the policy-holder the amount

payable under the policy becomes part of his estate

which is governed by the law of succession

applicable to him. Such succession may be

testamentary or intestate. There is no warrant for

the position that Section 39 of the Act operates as a

third kind of succession which is styled as a

‘statutory testament’ in paragraph 16 of the

decision of the Delhi High Court in Uma Sehgal case

[AIR 1982 Del 36 : ILR (1981) 2 Del 315] . If Section

39 of the Act is contrasted with Section 38 of the Act

which provides for transfer or assignment of the

rights under a policy, the tenuous character of the

right of a nominee would become more pronounced.

It is difficult to hold that Section 39 of the Act was

intended to act as a third mode of succession

provided by the statute. The provision in sub-section

(6) of Section 39 which says that the amount shall

be payable to the nominee or nominees does not

mean that the amount shall belong to the nominee

or nominees. We have to bear in mind here the

special care which law and judicial precedents take

in the matter of execution and proof of wills which

// 39 //

Page 39 of 48

have the effect of diverting the estate from the

ordinary course of intestate succession and that the

rigour of the rules governing the testamentary

succession is not relaxed even where wills are

registered.

8. We have carefully gone through the judgment of

the Delhi High Court in Uma Sehgal case [AIR 1982

Del 36 : ILR (1981) 2 Del 315] . In this case the High

Court of Delhi clearly came to the conclusion that

the nominee had no right in the lifetime of the

assured to the amount payable under the policy

and that his rights would spring up only on the

death of the assured. The Delhi High Court having

reached that conclusion did not proceed to examine

the possibility of an existence of a conflict between

the law of succession and the right of the nominee

under Section 39 of the Act arising on the death of

the assured and in that event which would prevail.

We are of the view that the language of Section 39

of the Act is not capable of altering the course of

succession under law. The second error committed

by the Delhi High Court in this case is the reliance

placed by it on the effect of the amendment of

Section 60(1)(kb) of the Code of Civil Procedure,

1908 providing that all moneys payable under a

policy of insurance on the life of the judgment debtor

shall be exempt from attachment by his creditors.

The High Court equated a nominee to the heirs and

legatees of the assured and proceeded to hold that

the nominee succeeded to the estate with all ‘plus

and minus points’. We find it difficult to treat a

nominee as being equivalent to an heir or legatee

having regard to the clear provisions of Section 39 of

the Act. The exemption of the moneys payable

under a life insurance policy under the amended

Section 60 of the Code of Civil Procedure instead of

‘devaluing’ the earlier decisions which upheld the

right of a creditor of the estate of the assured to

attach the amount payable under the life insurance

policy recognises such a right in such creditor which

he could have exercised but for the amendment. It is

because it was attached the Code of Civil Procedure

exempted it from attachment in furtherance of the

policy of Parliament in making the amendment. The

Delhi High Court has committed another error in

appreciating the two decisions of the Madras High

Court in Karuppa Gounder v. Palaniammal [AIR

1963 Mad 245 at para 13 : (1963) 1 MLJ 86 : ILR

(1963) Mad 434] and in B.M. Mundkur v. Life

Insurance Corporation of India [AIR 1977 Mad 72 :

47 Com Cas 19 : (1977) 1 MLJ 59 : ILR (1975) 3

Mad 336] . The relevant part of the decision of the

Delhi High Court in Uma Sehgal case [AIR 1982 Del

// 40 //

Page 40 of 48

36 : ILR (1981) 2 Del 315] reads thus: (AIR p. 40,

paras 10, 11) 10.In Karuppa Gounder v.

Palaniamma [AIR 1963 Mad 245 at para 13 : (1963)

1 MLJ 86 : ILR (1963) Mad 434] , K had nominated

his wife in the insurance policy. K died. It was held

that in virtue of the nomination, the mother of K was

not entitled to any portion of the insurance amount.

11. I am in respectful agreement with these views,

because they accord with the law and reason. They

are supported by Section 44(2) of the Act. It provides

that the commission payable to an insurance agent

shall after his death, continue to be payable to his

heirs, but if the agent had nominated any person

the commission shall be paid to the person so

nominated. It cannot be contended that the nominee

under Section 44 will receive the money not as

owner but as an agent on behalf of someone else,

vide B.M. Mundkur v. Life Insurance Corporation

[AIR 1977 Mad 72 : 47 Com Cas 19 : (1977) 1 MLJ

59 : ILR (1975) 3 Mad 336] . Thus, the nominee

excludes the legal heirs.

10.In Karuppa Gounder v. Palaniamma [AIR 1963

Mad 245 at para 13 : (1963) 1 MLJ 86 : ILR (1963)

Mad 434] , K had nominated his wife in the

insurance policy. K died. It was held that in virtue of

the nomination, the mother of K was not entitled to

any portion of the insurance amount.

11. I am in respectful agreement with these views,

because they accord with the law and reason. They

are supported by Section 44(2) of the Act. It provides

that the commission payable to an insurance agent

shall after his death, continue to be payable to his

heirs, but if the agent had nominated any person

the commission shall be paid to the person so

nominated. It cannot be contended that the nominee

under Section 44 will receive the money not as

owner but as an agent on behalf of someone else,

vide B.M. Mundkur v. Life Insurance Corporation

[AIR 1977 Mad 72 : 47 Com Cas 19 : (1977) 1 MLJ

59 : ILR (1975) 3 Mad 336] . Thus, the nominee

excludes the legal heirs

10. It is obvious from the above passage that the

above case has no bearing on the meaning of

Section 39 of the Act. The fact of nomination was

treated in that case as a piece of evidence in

support of the finding that the policy was not a joint

family asset but the separate property of the

coparcener concerned. No right based on the ground

that one party was entitled to succeed to the estate

of the deceased in preference to the other or along

with the other under the provisions of the Hindu

// 41 //

Page 41 of 48

Succession Act was asserted in that case. The next

error committed by the Delhi High Court is in

drawing an analogy between Section 39 and

Section 44(2) of the Act thinking that the Madras

High Court had done so in B.M. Mundkur case [AIR

1977 Mad 72 : 47 Com Cas 19 : (1977) 1 MLJ 59 :

ILR (1975) 3 Mad 336] . In B.M. Mundkur case [AIR

1977 Mad 72 : 47 Com Cas 19 : (1977) 1 MLJ 59 :

ILR (1975) 3 Mad 336] the High Court of Madras

instead of drawing an analogy between Section 39

and Section 44(2) of the Act actually contrasts them

as can be seen from the following passage: “. .

.There are vital differences between the nomination

contemplated under Section 39 of the Act and

nomination contemplated under the proviso to

Section 44(2) of the Act. In the first place, the sum

assured, with which alone Section 39 was

concerned, was to be paid in the event of the death

of the assured under the terms of the contract

entered into between the insurer and the assured

and consequently it was the contractual right which

remained vested in the insured with reference to

which the nomination happened to be made. It

should be pointed out that the nomination as well

as the liability on the part of the insurer to pay the

sum assured become effective simultaneously,

namely, at the moment of the death of the assured.

So long as he was alive, the money was not

payable to him, in the case of a whole life policy,

and equally, having regard to the language of

Section 39(1) of the Act, the nominee's right to

receive the money arose only on the death of the

assured. Section 39 itself did not deal with the title

to the money assured, which was to be paid by the

insurer to the nominee who was bound to give

discharge to the insurer. It was in this context that

the Court took the view that the title remained with

the estate of the deceased and, therefore, with the

heirs of the deceased, that the nomination did not in

any way affect the title and that it merely clothed

the nominee with the right to receive the amount

from the insurer. (AIR 1977 Mad 77, para 10-A) 11.

On the other hand, the provisions and purport of

Section 44 of the Act are different. In the first place,

under Section 44(1) it was a statutory right

conferred on the agent to receive the commission on

the renewal premium, notwithstanding the

termination of the agreement between the agent and

the insurer, which provided for the payment of such

commission on the renewal premium. The statute

also prescribed the qualification which rendered the

agent eligible to receive commission on such

renewal premium. Section 44(1) provides for the

payment of the commission to the agent during his

// 42 //

Page 42 of 48

lifetime only and does not contemplate the

contingency of his death and the commission being

paid to anybody even after his death. It is Section

44(2) which deals with the payment of commission

to the heirs of deceased for so long as such

commission would have been payable had such

insurance agent been alive. Thus it was not the

general law of inheritance which conferred title on

the heirs of the deceased insurance agent to receive

the commission on the renewal premium, but it was

only the particular statutory provision, namely,

Section 44(2) which conferred the right on the heirs

of the deceased agent to receive the commission on

the renewal premium. In other words, the right of

the heirs to receive the commission on renewal

premium does not arise under any law of

succession and it is a right directly conferred on the

heirs by Section 44(2) of the Act, even though who

the heirs of the deceased insurance agent are will

have to be ascertained under the law of succession

applicable to him. Thus the statute which conferred

such a right on the heirs is certainly competent to

provide for an exception in certain cases and take

away such a right from the heirs; and the proviso

which has been introduced by the Government of

India Notification 1962 has done exactly this in

taking away the right of the heirs conferred under

the main part of Section 44(2), in the event of the

agent, during his lifetime, making a nomination in

favour of a particular person and not cancelling or

altering that nomination subsequently. If the statute

itself was competent to confer such a right for the

first time on the heirs of the deceased agent, it is

indisputable that the statute could take away that

right under stated circumstances. . . .” (AIR 1977

Mad 77, para 11)

9. Therefore, just because of facility of nomination is made

that does not defeat the rights of the legal heirs to claim

their right in respect of estate of deceased, as the right of

the other legal heirs is as per law of succession. Just

because nomination is made during lifetime of deceased,

that does not amount to divesting of title after death of

deceased. After death of deceased, whatever the

estate/amount is there, it is devolved to the legal heirs of

deceased as per governing law of inheritance. Therefore,

there is no merit in the contention taken by the appellant

that just because the appellant is made as nominee than,

she alone is entitled to receive the entire amount depriving

the right of other legal heirs. Therefore, the appeal is liable

to be dismissed having no merits to consider the case.

Therefore, the appeal is dismissed.

// 43 //

Page 43 of 48

6.7. Placing reliance on the aforesaid decisions, more

particularly, the decision in the case of Shakti Yezdani

so cited supra and the decision in the case of Smt.

Annapurna, learned counsel appearing for the Petitioner

contended that even after amendment of the Insurance Act

in the year 2015, more particularly, the provisions

contained under Section 39 of the Act, nomination is

subject to the claims of the heirs, assured under the Law

of Succession. It is contended that in view of the

provisions under Section 8 of the Hindu Succession Act,

Petitioner being the wife of the deceased-employee and

being a Class-I heir, she is eligible and entitled to get the

benefit as due to the deceased employee.

7. Having heard learned counsel appearing for the

parties and considering the submission made, this Court

finds that Petitioner is the legal married wife of the

deceased employee, who was serving with the Opp. Party-

Bank. Even though the deceased-employee moved an

application seeking a Decree of Divorce in C.P. No.634 of

2015, but it is not disputed that prior to disposal of the

matter with passing of any decree, the deceased employee

// 44 //

Page 44 of 48

died on 18.09.2023. On such death of the deceased

employee on 18.09.2023, the proceeding was dropped vide

order dt.11.02.2023 of the learned Family Judge vide

order issued under Annexure-3 series.

7.1. As found and which is not disputed, on such death

of the deceased-employee and deceased Opp. Party No.3

being the nominee of the said employee, the bank after

calculating the terminal benefit of the deceased employee

to the tune of Rs.62,90,737.57p. and after adjusting loan

amount to the tune of Rs.22,16,158.31p., credited the

balance amount of Rs.40,74,577.26p to the account of

deceased Opp. Party No.3. Prior to her death on

13.01.2024, out of the amount so credited to the tune of

Rs.40,74,577.26, deceased-Opp. Party No.3 had

withdrawn an amount of Rs.6,70,000/-. The residue

amount as due to the deceased employee to the tune of

Rs.9,33,450.20p. has been released in favour of the

present Petitioner in terms of the order passed by the

bank on 10.01.2025 under Annexure-A coupled with the

order passed by this Court on 17.07.2025. After

withdrawal of a sum of Rs.6,70,000/- from out of the

// 45 //

Page 45 of 48

credited amount of Rs.40,74,577.26p., the balance

amount lies in the account of deceased-Opp. Party No.3

lying with the bank, and the same has not yet been

disbursed in anybody’s favour.

7.2. This Court after going through the provisions

contained under Section 8 of the Hindu Succession

Act, vis-à-vis Sections 14, 15 & 16 of the said Act, is of the

view that Petitioner being the wife of the deceased

employee and she being a Class-I heir, her interest over

the property of the deceased in terms of the provision

contained under Section 14 of the Act, will come first and

she is eligible and entitled to get the benefit, as due to the

deceased- employee.

7.3. Hon’ble Apex Court in the case of Shakti Yezdani as

cited supra has also taken similar view. Even though

Opp. party No.3 was the nominee of the deceased

employee, but in view of the provisions contained under

Section 8 of the Hindu Succession Act and the decision in

the case of Shakti Yezdani, so followed by the High Court

of Karnataka, in the case of Smt. Annapurna as cited

supra, this Court is of the view that Petitioner is only

// 46 //

Page 46 of 48

eligible and entitled to get the benefit as due to the

deceased-employee. Deceased Opp. Party No. 3 cannot

take the benefit of the wrong committed by the Opp. Party-

bank in crediting the benefits as due to the deceased

employee to her account prior to her death on 13.1.2024

and consequentially the same will not flow in favour of

Opp. Party Nos. 3(a) to 3(c) in terms of the provision

contained under Section 14 & 15 of the Act.

7.4. This Court is unable to accept the contention of the

learned Sr. Counsel appearing for Opp. Party No.3 (b) with

regard to the eligibility of Opp. party No.3 (a) to 3(c) to get

the benefit in terms of the provisions contained under

Sections 14, 15 & 16 of the Hindu Succession Act r/w

Section 39(7), (8) & (10) of the Insurance Act, 1938, so

amended in the year 2015.

7.5. In view of the decision in the case of Shakti Yezdani

so cited supra and the decision of the Karnataka High

Court in the case of Smt. Annapurna and the provision

contained under Section 8 of the Act, this Court is

unable to accept the contention of the learned Sr. Counsel

appearing for Opp. Party No.3(b), with regard to the

// 47 //

Page 47 of 48

entitlement of Opp. Party No.3(a) to 3(c) to get the benefit

of the amount credited to the account of deceased-Opp.

Party No.3 by the Opp. Party-bank, being the nominee of

the deceased employee.

7.6. It is also the view of this Court that the decision

relied on by the learned Sr. Counsel appearing on behalf of

Opp. party No.3 (b) on the face of the decision in the case

of Shakti Yezdani, are not good law.

7.7. In view of the aforesaid analysis, this Court while

quashing the impugned communication dt.12.12.2023 so

issued by the Opp. Party-bank under Annexure-6, directs

Opp. Party-bank to release the amount lying in the

account of deceased-Opp. Party No.3 by debiting the

amount with drawn by the deceased Opp. Party No.3 prior

to her death to the tune of Rs.6, 70,000/- from out of the

total credited amount of Rs. 40, 74,577.26p. in favour of

the Petitioner.

7.8. The amount already withdrawn by the deceased Opp.

party No.3, as per the considered view of this Court, may

not be claimed by the Petitioner, as the amount in

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question, prior to passing of the interim order, had already

been withdrawn by deceased Opp. Party No.3.

7.9. This Court directs Opp. Party-Bank to release the

amount to the tune of Rs.34, 04,577.26p. along with

accrued interest if any in favour of the Petitioner within a

period of 4 (four) weeks from the date of receipt of this

order.

7.10. The Writ Petition accordingly stands disposed of.

(Biraja Prasanna Satapathy)

Judge

Orissa High Court, Cuttack

Dated the 20

th January, 2026 /Sangita