State Consumer Disputes Redressal Commission
Lic & Anr. vs Smt.Indra Devi & Anr. on 15 November, 2006
BEFORE THE STATE CONSUMER DISPUTES REDRESSAL COMMISSION,
BEFORE THE STATE CONSUMER DISPUTES
REDRESSAL COMMISSION,
RAJASTHAN, JAIPUR
Appeal
No.326/2006
Life Insurance
Corporation V/s Smt.Indira Devi
Of India &
anr. Agrawal & anr.
15.11.2006
Honble Mr.Justice Sunil Kumar Garg,
President
Shri T.P.Gupta, Member
Smt.Vimla Sethia, Member Mr.R.K.Sharma for the appellants.
Mr.O.P.Gupta for the respondent no.1 Mr.Vinod Gupta for the respondent no.2.
Per Honble Mr.Justice Sunil Kumar Garg, President This appeal under section 15 of the Consumer Protection Act, 1986 (hereinafter referred to as the Act of 1986) has been filed by the appellants-LIC (opposite party no.1 and 2) against the order dated 10.1.2006 passed by the learned District Forum, Karauli in case no.6/2001 by which the complaint filed by the complainant-respondent no.1 under section 12 of the Act of 1986 was allowed in the manner that the appellants were directed to pay to the complainant respondent no.1 the entire payment and benefits of two insurance policies of deceased-Mahesh Chand Gupta alongwith interest @ 8.5% and further, a sum of Rs.5000/- as amount of compensation and cost of litigation.
2. The necessary facts giving rise to this appeal are as follows:
The complainant respondent no.1 had filed a complaint before the District Forum, Karauli on 20.1.2001 against the present appellants (opposite party nos.1 and 2 in the original complaint) and respondent no.2 (opposite party no.3 in the original complaint) stating inter-alia that her husband Mahesh Chand Gupta (hereinafter referred to as the deceased) had taken two insurance policies from the appellants. The first insurance policy bearing no.190731343 for Rs.15,000/- was taken on 28.3.1993 and the second insurance policy bearing no.191348379 for Rs.25,000/- was taken on 28.8.1997. It was further stated in the complaint that the deceased had died on 4.8.1999 and after the death of deceased, the complainant-respondent no.1 preferred a claim before the appellants in capacity as wife of the deceased. The further case of the complainant respondent no.1 was that through letter dated 27.11.1999, she had made a request to the appellants that since her husband-deceased had died on 4.8.1999, therefore, payment in respect of the above two policies in question of deceased be made to her and in that letter, it was made clear that when the above two policies in question were taken by the deceased, she was not wife of the deceased and she had married with the deceased on 4.2.1999 i.e. after issuance of policies in question and therefore, amount of the above two policies in question of deceased be made to her as she was legally wedded wife of the deceased on the date of his death i.e. on 4.8.1999. The appellants have sent a reply to the complainant respondent no.1 through letter dated 10.1.2000 stating that since in respect of the above two policies in question of deceased, nomination has been made in the name of Govind Prasad Gupta (respondent no.2), therefore, she was not entitled to claim any amount in respect of above two policies of deceased and it was further made clear that the payment was being made to respondent no.2 Govind Prasad Gupta as he was nominated by the deceased. It was further stated in the complaint that on 24.5.2000, a succession certificate was issued by the court in favour of the complainant respondent no.1. When the payment in respect of the above two policies in question of deceased was not made by the appellants to the complainant respondent no.1, she preferred this complaint.
A reply was filed by the appellants on 10.4.2001 admitting the facts that the above two policies in question were taken by the deceased and in these policies, the nomination was made by the deceased in favour of respondent no.2 Govind Prasad Gupta. It was further replied that since in respect of two policies in question, the complainant respondent no.1 was not nominee of the deceased, therefore, amount was not payable to her and through letter dated 10.1.2000 addressed to the complainant respondent no.1, it was made clear that since respondent no.2 Govind Prasad Gupta was made nominee by the deceased, therefore, payment was being made to him.
It was further replied that as per the provisions of Section 39 of the Insurance Act, 1938, the payment has been made to the respondent no.2 Govind Prasad Gupta on 30.3.2000 as he was nominee of the deceased. Hence, it was prayed that the complaint be dismissed.
A separate reply was filed by the respondent no.2 Govind Prasad Gupta on 29.1.2002 in which it was stated that since he was nominee of the deceased, therefore, he was entitled to receive the amount of the policies in question of deceased. It was further replied that the matter in question should be decided by the civil court and not by the District Forum. Hence, it was prayed that the complaint be dismissed.
After hearing the parties, the learned District Forum, Karauli through order dated 10.1.2006 allowed the complaint of the complainant respondent no.1 in the manner as indicated above holding inter-alia:-
(i) That there was no dispute on the point that in respect of two policies in question of deceased, the respondent no.2 Govind Prasad Gupta was nominee.
(ii) That there was also no dispute on the point that payment in respect of two policies in question of deceased has been made by the appellants to respondent no.2 Govind Prasad Gupta being nominee of the deceased.
(iii) That rejection of the claim of the complainant respondent no.1 being wife of the deceased and making payment to respondent no.2 as nominee of deceased, was wrong one and by doing so, the appellants have committed deficiency in service.
(iv) That the appellants were required to conduct proceedings under section 47 of the Insurance Act, 1938, but they did not do so and ignored the provisions of Section 47 of the Insurance Act, 1938.
(v) That the amount, which has been received by the respondent no.2 from the appellants, had been received in capacity as trustee and he had also committed breach of the trust by not making payment to the legal heir of deceased i.e. complainant respondent no.1.
Aggrieved from the said order dated 10.1.2006 passed by the learned District Forum, Karauli, the appellants have preferred this appeal.
3. In this appeal, the main contention of the learned counsel for the appellants is that since the respondent no.2 was nominee of the deceased in respect of the above two policies in question, therefore, by making payment to him, no illegality or irregularity has been committed by the appellants and the findings of the learned District Forum directing the appellants to again make payment to the complainant respondent no.1 are wholly erroneous, illegal and perverse one, as according to section 39 of the Insurance Act, 1938, amount of policy would be paid to the person nominated by policy holder as nominee in the event of his death and the same was done in this case. It was further submitted that respondent no.2 being nominee was legally authorized to receive the amount and since payment has been made by the appellants to him, therefore, that would amount to valid discharge of the liability under the policies in question and from that point of view also, the impugned order of the learned District Forum could not be sustained.
4. On the other hand, the learned counsel appearing for the respondent no.1-complainant has supported the impugned order of the learned District Forum.
5. The learned counsel appearing for the respondent no.2 has submitted that since the respondent no.2 was nominee, therefore, he was rightly given the amount in respect of two policies in question of deceased and the complainant respondent no.1 was not entitled to any amount in respect of two policies in question of deceased.
6. We have heard the learned counsel appearing for the appellants and the learned counsel appearing for the respondents and gone through the entire materials available on record.
7. There is no dispute on the point that the above two policies in question were taken by the deceased from the appellants and in both the policies, the name of respondent no.2 Govind Prasad Gupta was mentioned by deceased as his nominee.
8. There is also no dispute on the point that at the time when the above two policies in question were taken by the deceased, the deceased was unmarried one and according to the complainant-respondent no.1, deceased had married with her on 4.2.1999 meaning thereby after issuance of the policies in question.
9. There is also no dispute on the point that the deceased had died on 4.8.1999.
10. There is also no dispute on the point that before releasing the amount to the respondent no.2 Govind Prasad Gupta being nominee of deceased, the appellants have received a letter dated 27.11.1999 from the complainant respondent no.1 by which the claim was preferred by the complainant respondent no.1 in respect of two policies in question of deceased and there is also no dispute on the point that on that letter, a reply was sent by the appellants to the complainant respondent no.1 through letter dated 10.1.2000 stating that since nomination was made in favour of respondent no.2, therefore, she was not entitled to claim any amount and it was further made clear that payment was being made to respondent no.2 Govind Prasad Gupta being nominee of deceased and there is also no dispute on the point that payment has been made by the appellants to the respondent no.2 on 30.3.2000.
11. The question for consideration is whether in the facts and circumstances just narrated above, the findings of the learned District Forum could be sustained or not or whether repudiation of claim of the complainant respondent no.1 by the appellants was justified or not.
12. Before proceeding further, legal position in respect of nominee may be discussed here.
Nominee
13. A nominee or the beneficiary is the person for whose benefit the assured purports to have taken out the policy. But no title in a policy can be conferred by simply mentioning a certain person on the face of it as beneficiary.
14. Prior to the enactment of the Insurance Act, 1938, the position regarding assignment and transfer of insurance policies was the same as that, in England. Even with the enactment of the Insurance Act, 1938, the legal position of a nominee remains more or less the same as contemplated in sections 132 and 135 of the Transfer of Property Act, 1882 except to the extent specified in section 39 of Insurance Act, 1938.
15. Sub-section (1) of Section 39 of the Insurance Act, 1938 gives right to a policy holder to nominate a person, before the policy matures for payment, to whom the money is to be paid in the event of the death of the policy holder.
16. Section 39 of the Act of 1938 provides only for an expeditious discharge of the liability of the insurer by providing that so far as the insurer is concerned the money is payable to the nominee and it need not took to the legal representatives of the deceased insured. Sub-section (6) of Section 39 of the Insurance Act, 1938 confers right on the nominee to receive the insurance money but it does not provide for the title or ownership of that money. It does no more than make the nominee a receiver to receive the money from the insurer without deciding the question of title. Sub-section (6) does not say that the amount shall belong to the nominee, but that it shall be payable to such nominee.
17. Prior to the decision of Honble Supreme Court in Sarbati Devi V/s Usha Devi (AIR 1984 SC 346), there were conflicting decisions of different High Courts, but they have been set at rest in the above mentioned case of Sarbati Devi (supra). In the case of Sarbati Devi (supra), Usha Devi, nominee of her husbands policies claimed absolute right to the sum assured to the exclusion of the two other legal heirs of the insured, namely, his son and mother and dismissing her claim, the Honble Supreme Court held that a nomination made under section 39 of the Insurance Act, 1938 only indicates the hand which is authorized to receive the amount on the payment of which the insurer gets a valid discharge of its liability under the policy and that the amount can be claimed by the heirs of the assured in accordance with the law of succession governing them. The language of section 39 is not capable of altering the course of succession under the law.
18. Thus, it could be concluded that the nominee holds the money in trust for the benefit of the legal representatives. In other words, nominee has a bare right to collect the money due on a policy and to give a valid discharge to the insurer, but the nominee is not the owner of the money which has to be made over to the legal representatives of the assured as the nominee acts only as a receiver.
19. In view of the above, the position of respondent no.2 Govind Prasad Gupta in the present case is that of a receiver or trustee and the amount, which has been received by him from the appellants in respect of two policies in question of deceased, has to be paid by him to the legal heirs of the deceased.
20. Since the payment had already been made by the appellants to the respondent no.2 Govind Prasad Gupta, nominee of the deceased, therefore, appellants could not be compelled to again make payment to the complainant respondent no.1 as if the appellants have made payment to the nominee of deceased, namely, respondent no.2 Govind Prasad Gupta, it cannot be said that any illegality or irregularity has been committed by the appellants in doing so.
21. Furthermore, as per the letter dated 27.11.1999 written by the complainant-respondent no.1 to the appellants, it is very much clear that when the policies in question were taken by the deceased, the complainant respondent no.1 was not wife of the deceased and she had married with the deceased on 4.2.1999 meaning thereby after issuance of the policies in question and since respondent no.2 Govind Prasad Gupta was nominated as nominee by the deceased, therefore, in such a situation, if payment had been made by the appellants to the respondent no.2 being nominee of the deceased, no illegality or irregularity has been committed by the appellants in doing so and in such a case, there was no need to make compliance of the provisions of Section 47 of the Insurance Act, 1938.
22. For the reasons stated above, since the payment had already been made by the appellants to the respondent no.2 Govind Prasad Gupta, nominee of the deceased, therefore, they have discharged their liability under the policies in question and they cannot again be compelled to make payment to the complainant respondent no.1 and thus, the impugned order of the learned District Forum, Karauli dated 10.1.2006 directing the appellants to again make payment in respect of two policies in question of deceased to the complainant respondent no.1 cannot be sustained and liable to be quashed and set aside.
Liability of respondent no.2 Govind Prasad Gupta, nominee of deceased
23. The respondent no.2 Govind Prasad Gupta was nominee of the deceased and the appellants have already made payment to him and since as per Section 8 of Hindu Succession Act, 1956, he was not class-I heir of deceased, therefore, he will hold that amount, which he had received from the appellants, as trustee or receiver and he will refund that amount to those who would be declared as legal heirs of the deceased by the competent civil court.
24. Since the marriage of complainant respondent no.1 with the deceased had taken place after issuance of the policies in question and before death as alleged by the complainant respondent no.1, therefore, in such a case, authority from the competent civil court on the point that she was the only legal heir of the deceased is required and that has to be proved by adducing evidence and that is possible before competent civil court.
25. Therefore, complainant respondent no.1 is directed to approach the competent civil court for declaring legal heirs of deceased by making respondent no.2 as party and on declaration as legal heir of deceased by the competent civil court, she would be entitled to receive the amount from the respondent no.2 Govind Prasad Gupta, which he had received from the appellants, alongwith interest at the rate of 6% p.a. In view of the discussion made above, this appeal deserves to be allowed and it is accordingly allowed in the following manner:-
(i) That the impugned order dated 10.1.1996 passed by the learned District Forum, Karauli directing the appellants to again make payment in respect of two policies in question of deceased to the complainant respondent no.1 is quashed and set aside.
(ii) That now the appellants-LIC are not required to pay any amount under the policies in question to the complainant-respondent no.1 as they have already discharged their liability by making payment to the respondent no.2 Govind Prasad Gupta, nominee of deceased.
(iii) That the respondent no.2-Govind Prasad Gupta will hold the amount, which he had received from the appellants, as trustee or receiver and he will refund that amount to those who would be declared as legal heirs of the deceased by the competent civil court.
(iv) That the complainant respondent no.1 is directed to approach the competent civil court for declaring legal heirs of deceased by making respondent no.2 as party and on declaration as legal heir of deceased by the competent civil court, she would be entitled to receive the amount from the respondent no.2 Govind Prasad Gupta, which he had received from the appellants, alongwith interest at the rate of 6% p.a.
(v) That the impugned order of the learned District Forum, Karauli dated 10.1.2006 stands modified accordingly with the observations and directions as indicated above.
(Smt.Vimla Sethia)(T.P.Gupta) (Justice Sunil Kumar Garg) Member Member President