Kerala High Court
Prasanna Narendran vs The Insurance Ombudsman on 14 August, 2025
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IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE SUSHRUT ARVIND DHARMADHIKARI
&
THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M.
THURSDAY, THE 14TH DAY OF AUGUST 2025 / 23RD SRAVANA, 1947
WA NO.675 OF 2025
ARISING OUT OF THE JUDGMENT DATED 13.03.2025 IN
WP(C) NO.11185/2024 OF HIGH COURT OF KERALA
APPELLANTS/PETITIONERS:
1 PRASANNA NARENDRAN
AGED 81 YEARS
W/O NARENDRAN, RESIDING AT PADMA VIHAR,
CONVENT ROAD, BURNACHERRY, KANNUR, PIN - 670013
2 SRI NARAYAN CHANDRASEKHAR
AGED 54 YEARS
S/O CHANDRASEKHAR, RESIDING AT 'REMONA',
RAMADEVI MANDIR LANE, PUNKUNNAM,
THRISSUR, PIN - 680002
BY ADVS.
SRI.T.C.SURESH MENON
SRI.B.DEEPAK
RESPONDENTS/RESPONDENTS:
1 THE INSURANCE OMBUDSMAN
OFFICE OF THE INSURANCE OMBUDSMAN, 2ND FLOOR,
PULINAT BUILDING, OPPOSITE COCHIN SHIPYARD,
M.G. ROAD, ERNAKULAM, PIN - 682015
2 THE RELIANCE LIFE INSURANCE
KANNUR BRANCH, REPRESENTED BY ITS BRANCH MANAGER,
KANNUR, PIN - 670001
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3 NISHA MANOMOHAN
D/O O.C.MANOMOHAN, RESIDING AT SAHANA,
BEHIND CHOVA WATER TANK, MELE CHOVA,
KANNUR, PIN - 670006
4 ADDL.R4:
REVANTH SANDEEP
S/O: LATE.SANDEEP NARENDRAN, SAHANA, CHOVVA P O,
CHOVVA, KANNUR, KERALA 670006 UID: 3705-2896-2279
REP.BY MOTHER, NISHA MANOMOHANAN AGED: 51
W/O LATE SANDEEP NARENDRAN, D/O: MANOMOHANAN O C,
SAHANA, CHOVVA PO, KANNUR, KERALA 670006
UID:8900-2195-9550.
ADDL.R4 IMPLEADED AS PER ORDER DATED 9/06/2025 IN
I.A.1/2025 IN W.A.NO.675/2025.
BY ADVS.
SRI.ATUL SOHAN, R3 & R4
SMT.R.REJI (ATTINGAL)
SMT.SREEJA SOHAN K.
SRI.K.V.SOHAN
SMT.RAKHI RAMACHANDRAN, R2
THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON
07.08.2025, THE COURT ON 14.08.2025 DELIVERED THE
FOLLOWING:
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JUDGMENT
Dated this the 14th day of August, 2025 Syam Kumar V.M., J.
This appeal is filed challenging the judgment dated 13.03.2025 of the learned Single Judge in W.P.(C) No.11185 of 2024. Appellants are the petitioners in the Writ Petition.
2. The dispute concerns the rival claims under a Life Insurance Policy issued by the 2 nd respondent Company to late Sandeep Narendran. The entitlement to receive the amount of Rs.6,69,534.70, due under the relevant policy, is contested by the 1st appellant, mother and the 3rd respondent, wife of the Life Assured (LA). The 1st respondent, Ombudsman, before whom the mother had taken the dispute, had dismissed her complaint vide Ext.P3 Award and directed the insurer to pay the amount to the legal heirs of the LA, as identified and established by the appropriate authority. The said award of the Ombudsman was challenged by the mother as the 1st appellant and her son-in-law as the 2 nd appellant by filing the Writ Petition. The following prayers were sought in the W.P. :
"(i) Call for the records leading to the passing of Ext.P3 by the 1 st WA NO.675/2025 4 2025:KER:61164 respondent Ombudsman and quash the same by the issue of a writ of certiorari or other appropriate writ, order or direction ;
ii) issue a writ in the nature of mandamus directing the 2 nd respondent to release the benefits due under Ext.P1 policy vide, No.17157426 with Client ID No.00764240 to the nominee, who is none other than the 1st petitioner ;
iii) to declare that the 2nd respondent cannot delay the disbursement of the benefits due under Ext.P1 policy to the nominee under the cover of rival claim or any dispute ;
iv) issue a writ in the nature of mandamus directing the 2 nd respondent to pay interest at the rate of 15% from the date of claim till the disbursement of the benefits due under Ext.P1 policy ;
v) dispense with the filing of translation of vernacular documents ;
and
vi) issue such other writ, order or direction as this Honourable Court deems fit and proper in the circumstances of the case."
3. The learned Single Judge allowed the Writ Petition and, inter alia, referring to the principles of the Hindu Succession Act, 1956, directed the 2nd respondent to transfer the assured amount under the policy in equal shares to the 1 st appellant-mother and the 3rd respondent-wife. Aggrieved by the same, the appellant's mother and her son-in-law have preferred this Writ Appeal.
4. Heard Sri.T.C.Suresh Menon, Advocate for the appellants, Smt.Rakhi Ramachandran, Advocate for the 2 nd respondent and WA NO.675/2025 5 2025:KER:61164 Sri.Atul Sohan for respondents 3 and 4.
5. An impleading petition numbered as I.A.No.1 of 2025 has been filed by the 3rd respondent, wife, seeking to implead her minor son, Revanth Sandeep, as the Additional respondent No.4 in the party array. The said I.A. is heard and allowed.
6. It is contended by the learned counsel for the appellants that the learned Single Judge erred in ignoring the mandates of Section 39 (7) of the Insurance Act, 1938 as it stands now after the amendment of 2015. As per the said provision, the status of the 1 st appellant-mother stands altered from that of a 'receiver/collector nominee' to that of a 'beneficial nominee'. The change as effected by the amendment is that the amount under the policy would be now payable to the nominee who is beneficially entitled if the LA is no more, and only in the absence of such nominee would it become payable to the legal heirs. The learned Single Judge overlooked the said change that had been carried out by the amendment to Section 39(5) of the Act. Contending that Ext.P1 policy reflects the 1 st appellant-mother as the nominee who is beneficially entitled, he submits that the learned Single Judge failed to see that the WA NO.675/2025 6 2025:KER:61164 Ombudsman had erroneously considered the matter without taking into account the amendment to the relevant provision of the Insurance Act. Placing reliance on the decision in Shweta Singh Huria and others v. Santosh Huria and another (2021 KHC 4386), it is contended that with the introduction of Section 39 (7) of the Act, a nominee has a beneficial interest in the amount payable under the policy on the death of the assured, and he no longer remains a mere 'receiver nominee'. The learned Single Judge committed a grave mistake in deciding the lis under the precepts of the Hindu Succession Act instead of deciding the same under the Insurance Act, which is the applicable statute. The learned Single Judge had also overlooked Section 39(7) and should have concluded that there is no scope for an inter-party dispute when the statute stipulates that the nominee is beneficially entitled to the amount due under the policy. He thus prayed for setting aside the judgment of the learned Single Judge, quash Ext.P3 award and direct the 2nd respondent Insurance Company to release the benefits under the policy to the 1st appellant. A direction to the 2nd respondent insurer to pay interest @ 15% on delayed payment is WA NO.675/2025 7 2025:KER:61164 also sought, placing reliance on the dictum laid down by the Madras High Court in Amirthavalli Mohan and another v. Life Insurance Corporation of India, Madras and another [1995 KHC 2144].
7. Per contra, the learned counsel for the 3rd respondent submits that the 3rd respondent and her minor son Ravanth Sandeep are the beneficiary legal heirs and that they are governed by the Hindu Succession Act. The 1st appellant-mother is a class one heir along with the wife and the son of the LA. It is contended that all the averments in the Writ Petition and the Writ Appeal are manipulations by the 2nd appellant, who is the son-in-law of the 1st appellant has absolutely no right to intermeddle in the subject matter. Reliance is also placed by the learned counsel on the dictum laid down by the Allahabad High Court in Smt.Kusum v. Anand Kumar and 3 others [2025 SCC OnLine All 2646] and it is contended that Section 39 (7) of the Insurance Act has to be interpreted to hold that the beneficial nominee cannot be said to be the owner of the money out of the proceeds of the policy. The learned counsel for the 3rd respondent thus seeks a dismissal of the Writ Appeal.
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8. We have heard both sides in detail. Whether after the amendment to Section 39 of the Insurance Act, 1938 and the inclusion of the stipulation therein that the nominee shall be beneficially entitled to the amounts payable by the insurer, has the effect of excluding the successors/legal heirs from realising amounts under the policy, is the moot question that comes up for consideration in this W.A. Nomination is dealt with comprehensively in Section 39 of the Insurance Act, 1938. It reads as follows:
"39. Nomination by policyholder. --(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:
Provided that, where any nominee is a minor, it shall be lawful for the policyholder to appoint any person in the manner laid down by the insurer, to receive the money secured by the policy in the event of his death during the minority of the nominee.
(2) Any such nomination in order to be effectual shall, unless it is incorporated in the text of the policy itself, be made by an endorsement on the policy communicated to the insurer and registered by him in the records relating to the policy and any such nomination may at any time before the policy matures for payment be cancelled or changed by an endorsement or a further endorsement or a will, as the case may be, but unless notice in writing of any such cancellation or change has been delivered to the insurer, the insurer shall not be liable for any payment under the policy made bona fide by him to a nominee mentioned in the text of the policy or registered in records of the insurer.
(3) The insurer shall furnish to the policyholder a written acknowledgment of having registered a nomination or a cancellation or change thereof, and may charge such fee as may be specified by regulations for registering such cancellation or change.
(4) A transfer or assignment of a policy made in WA NO.675/2025 9 2025:KER:61164 accordance with section 38 shall automatically cancel a nomination: Provided that the assignment of a policy to the insurer who bears the risk on the policy at the time of the assignment, in consideration of a loan granted by that insurer on the security of the policy within its surrender value, or its reassignment on repayment of the loan shall not cancel a nomination, but shall affect the rights of the nominee only to the extent of the insurer's interest in the policy: Provided further that the transfer or assignment of a policy, whether wholly or in part, in consideration of a loan advanced by the transferee or assignee to the policyholder, shall not cancel the nomination but shall affect the rights of the nominee only to the extent of the interest of the transferee or assignee, as the case may be, in the policy: Provided also that the nomination, which has been automatically cancelled consequent upon the transfer or assignment, the same nomination shall stand automatically revived when the policy is reassigned by the assignee or retransferred by the transferee in favour of the policyholder on repayment of loan other than on a security of policy to the insurer.
(5) Where the policy matures for payment during the lifetime of the person whose life is insured or where the nominee or, if there are more nominees than one, all the nominees die before the policy matures for payment, the amount secured by the policy shall be payable to the policyholder or his heirs or legal representatives or the holder of a succession certificate, as the case may be.
(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 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 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, WA NO.675/2025 10 2025:KER:61164 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 (5 of 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.
(12) 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 (3 of 1874), applies or has at any time applied: Provided that where a nomination made whether before or after the commencement of the Insurance Laws (Amendment) Act, 2015 (5 of 2015), in favour of the wife of the person who has insured his life or of his wife and children or any of them is expressed, whether or not on the face of the policy, as being made under this section, the said section 6 shall be deemed not to apply or not to have applied to the policy."
Section 39 (7) has been variously interpreted by different High Courts. In Shweta Singh Huria's case, the Delhi High Court, after considering the judgment in the case of Sarbati Devi v. Usha Devi [(1984) 1 SCC 424], carved out a difference between a beneficiary nominee and a collector nominee to hold that, before the amendment in the Insurance Act, the nominee was only a 'collector nominee'. However, after the amendment, the nominee became a 'beneficiary nominee' to the exclusion of others. The Andhra Pradesh High Court in the case of Mallela Manimala v. Mallela WA NO.675/2025 11 2025:KER:61164 Lakshmi Padmavathi and others [2023 SCC Online AP 459], considered the amended Section 39(7) and noted the extent of change brought about by the amendment, stating that after the amendment of Section 39, a beneficial nominee takes the insurance amount after the demise of the holder of the policy for his beneficial enjoyment in exclusion of other legal heirs. The High Court of Madras in K.R.Sakthi Murugeswari v. The Divisional Manager, Life Insurance Corporation of India and others [2023 SCC OnLine Mad 8397] held that a beneficiary nominee under the amended Section 39 (7) would be entitled to the amounts.
9. A different view has been adopted by the High Court of Karnataka in the case of Neelavva v. Chandravva and others [2025 SCC OnLine Kar 1945], wherein it was held that Section 39, as amended, does not intend to override the provisions of law relating to succession. Taking note of the dictum laid down by the Supreme Court in Shakti Yezdani and another v. Jayanand Jayant Salgaonkar and others [(2024) 4 SCC 642], it was concluded that the expression "beneficial interest" appearing in Section 39(7) and "beneficial title" appearing in Section 39(8) should WA NO.675/2025 12 2025:KER:61164 be interpreted to say that such nominees or their legal representatives recognized in Sections 39(7) and 39 (8) will get beneficial title over the benefits flowing from the insurance policy if the testamentary and non-testamentary heirs do not get claim the benefits flowing from the insurance policy. It was explained that if under the unamended provision, the nominee had an obligation to distribute the benefits flowing from the policy to the legal heirs, under Section 39(7), as it stands amended, there is no such obligation as long as there is no claim by the legal heirs. In the absence of any claim by the legal heirs, the title vests in the beneficiary nominee. However, if there is a claim by the legal heirs, then the nominee's claim has to yield to the personal law governing succession. The High Court of Madhya Pradesh, while considering the same question in Arun Kumar Singh v. Jaya w/o.Chetan Singh Chouhan and others [2022 SCC Online MP 5948] has held that the nominee under the amended Section 39(7) would not be an absolute beneficial nominee, and the rights of the successors can be claimed in accordance with the law of succession governing them.
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10. We have also had the benefit of perusing the erudite judgment rendered by the Allahabad High Court, on the same subject in Smt.Kusum (supra), which inter alia discusses at length the above-referred precedents and draws parallels between Section 39(7) of the Insurance Act with Section 45-ZA (2) of the Banking Regulation Act. After referring to the dictum laid down by the Hon'ble Supreme Court in Ram Chander Talwar and another v. Devender Kumar Talwar and others [(2010) 10 SCC 671] it has been pithily concluded by the Allahabad High Court in Smt.Kusum (supra) as follows:
"i. Section 39(7) of the Insurance Act which is pari materia to Section 45-ZA(2) and was incorporated to achieve similar objective having been interpreted in Ram Chander Talwar (supra) to hold that the nominee cannot be held to be the owner of the money lying in the account. Section 39(7) also has to be interpreted to hold that the beneficial nominee cannot be said to be the owner of the money out of the proceeds of policy.
ii. In view of the similar provision being interpreted in the case of Shakti Yezdani (supra), it has to be held that the nominee would not unsettle the rights of the legal heirs by virtue of the respective succession Act.
Iii. On harmonious interpretation of the two provisions i.e., Insurance Act and Hindu Succession Act, the rights conferred by Hindu Succession Act will prevail over the rights claimed by the nominee under Section 39(7) of the Insurance Act, the succession Act being specific to succession in contradiction to the Insurance Act which is general...."
11. After giving our earnest consideration to the different WA NO.675/2025 14 2025:KER:61164 viewpoints expressed by the various High Courts on the subject, we find ourselves more aligned with the views expressed by the High Court of Karnataka in Neelavva's case (supra), High Court of Madhya Pradesh in Arun Kumar Singh (supra) and the Allahabad High Court in Smt.Kusum (supra) for the reasons elaborated hereunder.
12. Insurance aims to cover the risk of the family of the policyholder. In the absence of the policyholder, the insurance policy must provide succor to the family members. When there is a conflict between the rights of a nominee, as laid down under the amended Insurance Act, on the one hand, and the rights of the successors under the relevant Succession statute, the same must be reconciled. The term 'beneficially entitled', as used in Section 39 (7), conveys that the nominee/s specified therein, ie., parents, spouse or children, either as a group or individually, if nominated by the policy holder, will have the right to receive and retain the insurance proceeds for their own benefit. Now, if this is done, overlooking the provisions of the relevant succession statute, the same may prejudicially affect the rights of successors who are left out from WA NO.675/2025 15 2025:KER:61164 nomination. A harmonious interpretation of these two statutes, which appear to be in conflict, must be attempted and arrived at. [See, The Life Insurance Corporation of India v. D.J. Bahadur and others [(1981) 1 SCC 315]; KSL and Industries Ltd v. M/s.Arihant Threads Ltd [(2008) 9 SCC 763]. As by now it is well crystallised that the nomination process cannot override the succession laws [See Shakti Yezdani (supra)]. Section 39 (7) of the Insurance Act, 1938, thus cannot be held to possess any overriding effect over the personal laws relating to succession. The personal laws passed by the Parliament, which provide a particular mode of succession, which at times may run contrary to the nomination, as long as not amended, must hold sway over the nomination in the insurance policy. The Insurance Act, being a general statute, cannot override the mandates of the relevant Succession Act. Nevertheless, in the absence of any claim by the legal heirs, the just and most equitable interpretation that could be applied is that the title vests in the beneficiary nominee as nominated in the policy. However, if there is a claim by the legal heirs, then the nominee's claim has to yield to the personal law governing succession. WA NO.675/2025 16
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13. Having concluded so, we now proceed to consider the correctness of the finding arrived at by the learned Single Judge in the impugned judgment. We note that the learned Single Judge had concluded that in order to avoid another round of litigation and to bring a quietus to the matter, the learned Single Judge had, by referring to Section 8 read with the schedule of the Hindu Succession Act, 1956, directed that the respondent No.2 Insurance Company shall pay the insured amount to both appellant No.1 and respondent No.3 in equal shares. This, it was concluded by the learned Single Judge, would do complete justice to both sides. We note that while exercising jurisdiction under Article 226, it may not be fit or proper for this Court to decide on questions concerning the devolution of shares among legal heirs under the Hindu Succession Act. It is always desirable, nay necessary, that such questions be left to the appropriate authorities/courts having jurisdiction in the matter. We accordingly, set aside the judgment of the learned Single Judge to the extent it finds that the amounts due under the relevant policy are to be shared equally among the appellant No.1 and respondent No.3.
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2025:KER:61164 Accordingly, this Writ Appeal is disposed of directing the 2nd respondent to transfer/deposit the amounts due under the relevant policy to a joint fixed deposit account drawn in the names of the appellant No.1 and the 3rd respondent in a Nationalised Bank. It shall be retained so earning due interest till the respective shares of the legal heirs are finalised as per the applicable law. It shall be open to the parties to take appropriate legal steps in the said direction and to realise the amounts once their due shares are finalised.
Sd/-
SUSHRUT ARVIND DHARMADHIKARI JUDGE Sd/-
SYAM KUMAR V.M. JUDGE csl