Aquila Kamal vs Oriental Fire and General Insurance Co. Ltd. and Another

S.H.A. Raza, J.—Aquila Kamal widow of late Kamal Ahmad, who claims that her maiden name was Aquila Bano and was married to Kamal Ahmad on 25.4.1976, by means of this writ petition, has prayed for the issuance of a writ in the nature of mandamus commanding the Oriental Fire and General Insurance Co. Ltd. and its Divisional Manager to pay the amount due to her under policy bearing No. 22117/G1/52/83/00017, The said policy was personal accident policy for a sum of Rs. 50,000/-. It was averred that the husband of the petitioner had taken the aforesaid policy in his name and the petitioner was nominated as the nominee in the said policy. In the said policy after the word ''nominee'', the name of the petitioner was mentioned as Aquila Kamal, wife of the insured.

Besides the above, late Kamal Ahmad, the husband of the petitioner, also got himself insured with another policy No. 52332252 with Life Insurance Corporation of India, in which the petitioner was nominated by Kamal Ahmad in her maiden name Aquila Bano. On 25.2.1984, the petitioner''s husband met with an accident and expired on 13.3.1984. Whereupon the petitioner being the nominee staked her claim before the Divisional Manager, Oriental Fire and General Insurance Co. Ltd. well within a fortnight from the date of the demise of her husband.

By means of letter dated 4.3.1986, opposite party No. 2 informed the petitioner that her claim had met with the approval subject to the submission of succession certificate from the judicial authorities. Petitioner informed the Divisional Manager of the said Insurance Company that her late husband had made a nomination in her favour in two policies mentioned above and in one policy in which the insurer was Life Insurance Corporation of India, the payment had already been made to her. She requested that the payment should be made to her without insisting on the production of succession certificate.

In its letter dated 31.3.1986, the Divisional Manager stated that in the policy pertaining to L.I.C. of India insured nominated Aquila Bano. The petitioner was asked to explain as to whether said Aquila Bano was another claimant or there were two claimants, for the reason that in the Oriental Fire and General Insurance Co. Ltd.''s policy, the insured nominated Aquila Kamal. On 4.4.1986, the petitioner informed the Divisional Manager that when her late husband took up the policy with the Life Insurance Corporation, insurer looked into nikahnama of the petitioner in which her name was entered as Aquila Bano and for that reason her late husband nominated her in the name of Aquila Bano. But, as after the marriage, surname of her husband was added to the name of the petitioner, hence in the policy in question, her husband nominated her in the name of Aquila Kamal. She had clearly stated in her application that the petitioner was only claimant for the policy in question. In that regard she also produced before the Divisional Manager, opposite party No. 2, a photostat copy of her nikahnama.

In the counter-affidavit, it was stated that Head Office of the Insurance Company has sent instructions to the effect that a nominee was not entitled for being paid the insurance amount until and unless a succession certificate was produced, before them. It was also stated that u/s 39 of the Insurance Act, 1938, the settled position of law was that until and unless the succession certificate was furnished, no payment could be made particularly on the basis of nomination. It was also indicated that it did not stand to reason as to why the nomination was made in the maiden name of the petitioner after the marriage. It was also stated that Section 39 is not applicable in the present case, inasmuch as the policy has been issued under category of miscellaneous insurance business as defined u/s 2(13-B) of the Act. Sections 38 and 39 of the Act refer to assignment or transfer in respect of the policy of Life Insurance and do not apply to personal accident Insurance Policy. It was also indicated that there was no statutory protection to the nominees in respect of the policies issued under miscellaneous insurance business. Hence, the petitioner was not entitled to be paid insurance amount on the basis of nomination made in the accident policy.

As far as the contention of the respondents that the policy in question was issued under category of miscellaneous insurance business as defined in Section 2 (13-B) of the Act is concerned, it is totally misconceived. Even a bare perusal of Section 2 (13-B) of the Insurance Act would reveal that the policy was never issued under category of miscellaneous insurance business as defined u/s 2(13-B) of the Act. The policy in question is a personal accident policy, which is covered by Sections 38 and 39 of the Act. As far as the other contentious points are concerned the same have been settled by various pronouncements of the High Court as well as Hon''ble Supreme Court.

In the case of Shanti Devi Vs. Shri Ram Lal, , a Division Bench of this court indicated :

In our view, inasmuch as the wife was not made beneficiary ab initio this policy was not ''effected'' by the husband for the benefit of his wife and the mere fact mat he made a subsequent nomination such as he was empowered to make and did make u/s 39 of the Insurance Act does not make this policy a policy to which Section 6(1) of the Married Women''s Property Act applies because of such nomination. In our view, the equitable and beneficial interest, whether immediate or contingent, must be created at the very inception of the policy. It must be created ab initio in the wife or the children or any of them if it is to attract Section 6(1) of the Married Women''s Property Act, otherwise if a trust is to be created later in favour of any person after the policy has been ''effected'', then it cannot be created u/s 6(1) of the Married Women''s Property Act but must be created as any other trust is created.

It was further indicated :

Section 6( 1) clearly shows that the policy has to be ''effected'' for the benefit of his wife. The language is not that a policy effected for the benefit of another person may be considered to have been effected for the benefit of the wife by a subsequent nomination. The making of a subsequent nomination in favour of the wife is merely authorising her to receive the money and is not the ''effecting'' of a policy for her benefit. A policy cannot be effected twice.

In the present case, equitable and beneficial interest, whether immediate or contingent, was created at the very inception of the policy, hence it can be safely said that in accordance with the provisions of Section 6(1) of the Married Women''s Property Act, a policy has been ''effected'' for the benefit of the petitioner.

The aforesaid case came up for consideration in another case before a Division Bench of Calcutta High Court in Mamata Sen v. L.I.C. of India 1982 ACJ 505 (Calcutta), wherein it was observed :

In the case of Shanti Devi Vs. Shri Ram Lal, , the lower Appellate Court held that merely because the appellant was nominated to receive the money from the Insurance Company, she did not become the owner of the money and that the nomination only dispensed with the necessity of obtaining a succession certificate. On such view the lower Appellate Court dismissed the appeal. The appellant preferred a second appeal to the High Court which too was dismissed. This decision, therefore, impliedly holds that the nominee, in order to collect the money, need not obtain a succession certificate. In the case of Ramballav Dhandhania Vs. Gangadhar Nathmall, , also it is observed that Section 39(6) provides an expeditious discharge of the liability of Insurance Company by providing that the money is payable to the nominee. The Insurance Company need not look to the legal representatives of the assured before making the payment.

It was further indicated :

Upon a consideration of the authorities and the relevant provisions of Section 39 of the Insurance Act, we are of the opinion that the nominee under a policy of Life Insurance, nomination in whose favour had been recorded in terms of Sub-section (2) is entitled to receive payment as such nominee and he need not obtain a succession certificate for the purpose.

It was further observed :

She claims not as heir to the deceased but as nominee under the policy. Such a claim is tenable and for the enforcement of such a claim, by suit if need be, she cannot be compelled to obtain a succession certificate. If the nominee is required to obtain a succession certificate then the very purpose of nomination becomes nugatory.

It was further indicated :

If the law is that he must obtain a succession certificate in order to be entitled to the relief that would mean that the nomination becomes ineffective and meaningless for all practical purposes. That is neither the intention nor the purport of the law as contemplated by Section 39 of the Insurance Act. There is no question of Section 39 overriding Section 214 of the Indian Succession Act, as the learned Trial Judge seems to think. Section 214 in the facts of the case is dearly inapplicable.

In Sarbati Devi v. Usha Devi 1984 ACJ 138 (SC), it was observed :

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 u/s 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.

In the present case, there existed no dispute as to whether the petitioner was the wife of the assured or not. It is not the case of the respondents that there existed (sic.) also not disputed the fact that Aquila Bano and Aquila Kamal are one person. It was most unfair on the part of the respondents to make a mountain out of a mole hill. This was wilfully done with a view to debar the petitioner from getting the payment at due time. It is a matter of common knowledge that the Insurance Companies by adopting various modes of canvassing persuade the people to insure their life. But, if the person insured expires, leaving behind the nominee, may be the wife or children, the Insurance Companies often raise frivolous objection. This is one of those such cases where the respondent Insurance Company has not acted fairly. We could have understood their difficulty in making the payment if there would have been any dispute or anybody else would have staked his or her claim for the payment. But, in the present case, only the widow has staked her claim, who was nominated by her husband. Nomination indicated the hand which was authorised to receive the amount and the insurer by making such payment could have got a valid discharge of its liability under the policy without insisting on the production of a succession certificate. In case there would have been any other heir, he could have agitated the matter in proper Court of law in accordance with the law of succession applicable to him. We are definitely of the view that there existed no hurdle or impediment before the Insurance Company not to have made the payment. The plea which the Insurance Company has taken in withholding the payment, is devoid of merit.

In view of what has been indicated hereinabove writ petition succeeds with costs, which we assess at Rs. 1,000/-. A writ in the nature of mandamus commanding the respondent Nos. 1 and 2 to make the payment due under the policy in question alongwith the interest payable under saving bank account, with effect from the date i.e., February, 1987, when the writ petition was filed in this Court till the date of actual payment to the petitioner, is issued, opposite parties are directed to make the necessary payment within six weeks from the date of presentation of a certified copy of this order by the petitioner to the respondents.