State Consumer Disputes Redressal Commission
Gurpreet Kaur vs Life Insurance Company Of India on 26 February, 2026
1
STATE CONSUMER DISPUTES REDRESSAL COMMISSION
U.T., CHANDIGARH
[ADDITIONAL BENCH]
Appeal No. : 238 of 2025
Date of Institution : 31.07.2025
Date of Decision : 26.02.2026
Gurpreet Kaur wife of Late Rajamrinder Singh, H.No.350, Village Beed
Ghaggar, PO Chandimandir, District Panchkula, Haryana-134107
(Also on behalf of her minor son-Anantraj Singh aged 3 years)
Both Class-1 Legal Heirs of Late Rajamrinder Singh
....Appellants/Complainants
Versus
1. Life Insurance Company of India, Divisional Office, Unit-2,
Jeevan Prakash Building, Sector 17-B, Chandigarh-160017,
through its Chairman, Director/Authorized Signatory
2. Shri Mangalam Ramasubramanian Kumar, Chairperson, Life
Insurance Company of India, Divisional Office, Unit-2, Jeevan
Prakash Building, Sector 17-B, Chandigarh-160017
3. Sh. Satnam Singh father of deceased Rajamrinder Singh, R/o
Village & Post Office Amrala, Tehsil Khamano, District Fatehgarh
Sahib
4. Smt. Kulwant Kaur W/o Sh. Satnam Singh R/o Village & Post
Office Amrala, Tehsil Khamano, District Fatehgarh Sahib
....Respondents/Opposite Parties
BEFORE: MRS. PADMA PANDEY, PRESIDING MEMBER
SH. RAJESH K. ARYA, MEMBER ARGUED BY :-
Sh. Deepak Aggarwal, for the appellant(s) Sh. Deepak Arora, Advocate for respondents No.1 & 2 Sh. Paramjit Batta, Advocate for respondents No.3 & 4 PER PADMA PANDEY, PRESIDING MEMBER The instant appeal has been filed by the complainants (appellants herein) for setting aside order dated 23.05.2025 vide which their consumer complaint bearing No.746 of 2022 has been dismissed 2 by District Consumer Disputes Redressal Commission-I, U.T., Chandigarh (hereinafter to be referred as 'District Commission'). 2] In nutshell, the case of the appellant(s)/complainant(s) before the District Commission was that her husband since deceased Rajamrinder Singh had purchased three life insurance policies in his name from the respondents/opposite parties No.1 & 2 in order to secure himself as well as his family members and one renewal payment receipt dated 04.02.2022 was attached as Exhibit C-1. The appellant/complainant being wife and Master Anantraj Singh, being son of Late Rajamrinder Singh are the Class-1 legal heirs and as per the information derived from her husband, the assured amount was payable to his legal heirs in case of his death. However, he unfortunately died on 24.02.2022 (Exhibit C-2). When the appellant/ complainant approached the respondents/opposite parties No.1 & 2 in April 2022 for payment of ₹3,98,790/-, ₹7,28,024/- and ₹6,38,674/-, they lingered on the matter and later informed her that she was not the nominee. Upon seeking information under the Right to Information Act, 2005, she was informed vide letter dated 01.08.2022 (Exhibit C-3) that the death claim had already been paid to the nominees i.e. the father and mother of Late Rajamrinder Singh (OP No.3 & 4). It was, thus, revealed that the respondents/opposite parties No.1 & 2 illegally released the amount to the nominees, who were only trustees, ignoring the rights of the legal heirs despite being aware from the death certificate that the appellant/complainant-Gurpreet Kaur is the wife of the deceased, thereby violating the provisions of the Hindu Succession Act, 1956.
3] On the other hand, while contesting the consumer complaint, the respondents/opposite parties No.1 & 2 pleaded in their reply that though the appellants/complainants are wife and son of the deceased and Class I legal heirs as claimed, the payment was legally 3 payable to the nominee in the policies, which had already been released and the Corporation had no concern with the claim of any other person as it was a matter between the alleged legal heirs and the nominees. It was further pleaded that the liability of the Corporation stood discharged once payment was made to the nominee named by the Life Assured and that, as per law, the nominee is trustee of the money qua the legal heirs; therefore, if the appellants/complainants had any claim over the policy amounts, it lay only against the nominees who received the same in terms of Section 39(6), (7), (8) of the Insurance Laws (Amendment) Act, 2015 and not against the Corporation. It was denied that the amount was payable to the alleged legal heirs and it was stated that the appellants/complainants never approached them prior to release of payment rather the appellant/complainant herself admitted that she approached the respondents/opposite parties only after the claim amounts had been released to the respective nominees.
4] Respondents/opposite parties No.3 & 4 also contested the consumer complaint and pleaded that the LIC had already released the payment under the polices in issue to the nominee made in the policies in accordance with law and this fact was well in the knowledge of the appellant/complainant and the same had been intentionally kept concealed by her.
5] The parties led evidence in support of their respective cases before the District Commission.
6] The District Commission after going through the material available on record dismissed the consumer complaint as stated above.
7] Now in appeal, to assail the order of the District Commission dismissing the consumer complaint, it has been stated by the appellant(s)/complainant(s) that the District Commission wrongly 4 relegated the appellant(s) to appropriate Court of law observing that the present dispute is in between the complainants being legal heirs & nominees; that instead of deciding the case on merits despite the complaint having been instituted on 23.08.2022 and decided on 23.05.2025 after about 2 years and 9 months, when pleadings were complete, evidence had been adduced and written arguments filed, in view of the law laid down by the Hon'ble Supreme Court of India in Amar Ujala Papers Ltd. Vs. State Bank of India. It has further been contended that the judgment of the Hon'ble National Commission in Life Insurance Corporation of India Vs. Deepika Dahiya & 2 Ors., decided on 19.07.2023, is per incuriam to the law laid down by the Hon'ble Supreme Court of India in Sarbati Devi Vs. Usha Devi, AIR 1984 SC 346 and that even after the 2015 amendment to Section 39 of the Insurance Act 1938, the Hon'ble Supreme Court in Shreya Vidyarthi (Dead) through LRs Vs. Ashok Vidyarthi & Ors., (2015) 16 SCC 46 reiterated and relied upon Sarbati Devi Vs. Usha Devi. It has further been stated that the Hon'ble National Consumer Disputes Redressal Commission, New Delhi in Smt. Kanti Devi Vs. The Oriental Insurance Company Ltd., 2011 SCC Online NCDRC 243 and the Hon'ble High Court of Andhra Pradesh in LIC, Hyderabad Vs. Nirmala Adi Reddy & Ors., AIR 1985 AP 58 have also followed Sarbati Devi Vs. Usha Devi (supra), giving precedence to legal heirs over nominees; yet the District Commission wrongly relied upon Section 39(6), (7) and (8) of the Insurance Act, 1938 to hold that the liability of the Insurance Company stood discharged. It has further been stated that when the amounts under the policies were released to the nominees, LIC was in possession of the death certificate of Late Rajamrinder Singh clearly mentioning the appellant as wife and Class I legal heir yet no steps were taken to intimate her, which shows that respondents No.1 & 2 acted in connivance with the nominees and the amounts could have 5 been proportionately refunded to the Class I legal heirs; hence, the impugned order is liable to be set aside.
8] On the other hand, on behalf of respondents No.1 & 2 - LIC, it has been argued that the payments were legally released in favour of the nominees and as per law liability of LIC stands discharged once the payment is made to the nominee named by the Life Assured. It has further been contended that as per law, nominee is trustee of money qua the legal heirs and if the appellants have any claim over the amount in policies, it is only against the nominees who have received the same from LIC as per provisions of Section 39(6) of the Insurance Act, 1938. Lastly prayer for dismissal of the appeal has been made by respondents No.1 & 2 - LIC.
9] Similarly, on behalf of respondents No.3 & 4, it has been argued that the present appeal is neither maintainable nor entertain- able for the reason that the appellant has intentionally and deliberately kept concealed material facts from this Commission about the filing of Civil Suit before the Learned District Court, Mohali for the same relief as claimed in the complaint. It has further been contended that the appellant had availed two remedies for the same relief at the same time, which is not permissible under law. It has further been contended that the impugned order passed by the District Commission is well reasoned and unassailable because there is no ambiguity in it and does not suffer from any error. It has further been contended that LIC has already released the payment under the policies to the nominees made under the same in accordance with law, which fact was well within the knowledge of the appellant at the time of filing the complaint but the same was intentionally kept concealed by her and as such, the present appeal is liable to be dismissed. 10] Having given our thoughtful consideration to the rival submissions of the parties, perused the impugned order, the material 6 available on record and the written arguments very carefully, we find no merit in the grounds raised in the present appeal, which is liable to be dismissed for the reasons to be recorded hereinafter. 11] The core issue is not the inter se entitlement between the legal heirs and the nominees but whether respondents No.1 & 2 - LIC were legally justified in releasing the policy amounts to the nominees named in the policies and whether their liability stood discharged upon such payment. The District Commission has rightly relied upon Section 39(6), (7) and (8) of the Insurance Act, 1938 (as amended by the Insurance Laws (Amendment) Act, 2015), which specifically provides that where the holder of a policy nominates his parents, spouse or children, such nominee(s) shall be beneficially entitled to the amount payable by the insurer and once payment is made to such nominee(s), the insurer's liability stands discharged. The legislative intent behind the 2015 amendment was precisely to clarify and expand the rights of specified nominees and to statutorily protect insurers who act in accordance with the nomination recorded in the policy document. In the present case, it is an admitted position that the nominees under the policies were respondents No.3 & 4 and that the insured amount was paid to them strictly in terms of the nomination clause; therefore, the act of respondents No.1 & 2 - LIC cannot be termed illegal or deficient in service. 12] Further the contention of the appellant that earlier precedents such as Sarbati Devi Vs. Usha Devi (supra), AIR 1984 SC 346 govern the field does not advance her case in the peculiar facts of the present matter, because that judgment was rendered in the context of the unamended Section 39 of the Insurance Act, 1938, when the nominee was treated merely as a trustee and not as a beneficially entitled recipient in specified categories. After the statutory amendment in 2015, sub-section (7) expressly confers 7 beneficial entitlement upon specified nominees, thereby altering the legal position to that extent. The reliance placed upon decisions such as Smt. Kanti Devi Vs. The Oriental Insurance Company Ltd., 2011 SCC Online NCDRC 243 and LIC, Hyderabad Vs. Nirmala Adi Reddy & Ors., AIR 1985 AP 58 is also misplaced and therefore cannot override the clear mandate of the amended provision. The District Commission was, thus, justified in holding that once payment had been made to the duly recorded nominees, the liability of LIC stood discharged and any dispute regarding ultimate entitlement to the amount would be a matter between the legal heirs and the nominees to be adjudicated by a competent Civil Court.
13] Moreover, the plea raised by the appellant that the District Commission ought to have decided the matter on merits instead of relegating the parties to an appropriate Court of law is untenable because the dispute essentially involves adjudication of succession rights and competing claims between legal heirs and nominees, which entails detailed examination of evidence and declaration of civil rights beyond the limited summary jurisdiction of the Consumer Commission.
14] The further allegation of the appellant w.r.t. connivance or collusion on the part of LIC is wholly unsubstantiated and based on conjectures as mere possession of the death certificate mentioning the wife's name does not override a valid nomination nor impose upon the insurer an obligation to withhold payment contrary to the policy terms. In these circumstances, we find that the impugned order is well reasoned, based on correct appreciation of statutory provisions and settled principles and does not suffer from any illegality or perversity warranting interference in appellate jurisdiction. Consequently, the grounds raised in the present appeal are devoid of merit and the appeal deserves dismissal.
815] For the reasons recorded above, the appeal, being devoid of merit, is dismissed with no order as to costs.
16] Pending application(s), if any, in this appeal also stands dismissed having been rendered infructuous.
17] Certified copies of this order be sent to the parties free of charge.
18] The original record of CC/746/2022 (in safe custody) alongwith copy of this order be sent to the District Commission concerned forthwith.
19] File be consigned to Record Room after completion. Pronounced 26.02.2026 (PADMA PANDEY) PRESIDING MEMBER (RAJESH K. ARYA) MEMBER Ad 9