# Smt. Kusum v. Anand Kumar & Ors

- **Citation:** (2025) 4 ILRA 26
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2025-04-30
- **Case number:** Matters Under Article 227 No. 2997 of 2022
- **Bench:** Pankaj Bhatia
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/smt-kusum-v-anand-kumar-ors-53110
- **Pages:** 31

## Headnote

A. Insurance Law - Insurance Act, 1938 -
Section
39(7)
-
Entitlement
to
get
insurance benefits - Rights of nominee
vis-a-vis legal heirs - Held, 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 - The nominee would
not unsettle the rights of the legal heirs by
virtue of the respective succession act.
[Para 4, 35(i) and 35(ii)]

B. Interpretation of statute - The pari
materia provision contained in Section
39(7) of the Insurance Act cannot be
interpreted
in
contradiction
to
the
interpretation
of
the
pari
materia
provision contained in Section 45-ZA(2) of
the Banking Regulation Act. (Para 13)

C. Interpretation of statute - Harmonious
construction
-
When
two
statutes
operating in different fields are called
upon
for
conciliation,
harmonious
construction is to be adopted - 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. [Para 27
and 35(iii)]

D. Interpretation of statute - General
law
Vs
Specific
law
-
Generalia
specialibus
non
derogant
and
generalibus specialia - Applicability -
When two statutes which are operating
in
different
fields
are
up
for
interpretation, the Special Act would
prevail over the General Act. (Para 27)

Petition dismissed. (E-1)

List of Cases cited:-

## Text

_Characters 0–39,765 of 107,504. This is a partial read: ask again with offset=39765 for what follows._

26 INDIAN LAW REPORTS ALLAHABAD SERIES
50A (now Section 47 and 48 BNSS) in the
light of the observations made above.
----------
(2025) 4 ILRA 26
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 30.04.2025
BEFORE

THE HON'BLE PANKAJ BHATIA, J.

Matters Under Article 227 No. 2997 of 2022

Smt. Kusum ...Petitioner
Versus
Anand Kumar & Ors. ...Respondents

Counsel for the Petitioner:
Deepak Kumar, Vindeshwri Pandey

Counsel for the Respondents:
Vivek Kumar Pandey, Mahendra Pratap
Singh, Vivek Shukla

A. Insurance Law - Insurance Act, 1938 -
Section
39(7)
-
Entitlement
to
get
insurance benefits - Rights of nominee
vis-a-vis legal heirs - Held, 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 - The nominee would
not unsettle the rights of the legal heirs by
virtue of the respective succession act.
[Para 4, 35(i) and 35(ii)]

B. Interpretation of statute - The pari
materia provision contained in Section
39(7) of the Insurance Act cannot be
interpreted
in
contradiction
to
the
interpretation
of
the
pari
materia
provision contained in Section 45-ZA(2) of
the Banking Regulation Act. (Para 13)

C. Interpretation of statute - Harmonious
construction
-
When
two
statutes
operating in different fields are called
upon
for
conciliation,
harmonious
construction is to be adopted - 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. [Para 27
and 35(iii)]

D. Interpretation of statute - General
law
Vs
Specific
law
-
Generalia
specialibus
non
derogant
and
generalibus specialia - Applicability -
When two statutes which are operating
in
different
fields
are
up
for
interpretation, the Special Act would
prevail over the General Act. (Para 27)

Petition dismissed. (E-1)

List of Cases cited:-

1. Smt. Sarbati Devi & anr.Vs Smt. Usha Devi;
(1984) 1 SCC 424

2. Ram Chander Talwar & anr. Vs Devender
Kumar Talwar & ors.; (2010) 10 SCC 671

3. Shweta Singh Huria & ors. Vs Santosh Huria
& ors.; AIR 2021 Delhi 121

4.
Mallela
Manimala
Vs
Mallela
Lakshmi
Padmavathi & ors.; 2023 SCC OnLine AP 459

5. W.P. (M.D.) No. 11044 of 2021; K.R. Sakthi
Murugeswari Vs The Division Manager, Life
Insurance Corporation of India & ors. decided
on 16.10.2023 : 2023/MHC/4812

6. RFA No.100471 of 2023; Smt. Neelavva @
Neelamma Vs Smt. Chandravva @ Chandrakala
@ Hema & ors. decided on 20.02.2025

7. Shakti Yezdani & anr.Vs Jayanand Jayant
Salgaonkar & ors.; (2024) 4 SCC 642

8. Arun Kumar Singh Vs Jaya w/o Chetan Singh
Chouhan & ors.; 2022 SCC OnLine MP 5948

9. KSL and Industries Ltd. Vs Arihant Threads
Ltd.
&
ors.;
(2009)
9
SCC
763
4 All. Smt. Kusum Vs. Anand Kumar & Ors.
27
10. Managing Director, Chhattisgarh St. CoOperative Bank Maryadit Vs Zila Sahkari
Kendriya Bank Maryadit & ors.; (2020) 6 SCC
411

11. Interplay Between Arbitration Agreements
Under Arbitration & Conciliation Act 1996 and
Stamp Act, 1889; (2024) 6 SCC 1

12. Life Insurance Corporation of India Vs D.J.
Bahadur & ors.; (1981) 1 SCC 315

(Delivered by Hon'ble Pankaj Bhatia, J.)

1. Present petition has been filed
challenging the order dated 12.07.2022
passed by District Judge, Unnao in Civil
Revision No.16 of 2022 (Smt. Kusum vs.
Anand Kumar & Ors.).

2. The facts, in brief, are that the
petitioner claims that she had taken out 15
life insurance in the name of her daughter
namely Ranjeeta when she was unmarried
and subsequently, the daughter was married
to respondent no.1, and respondent no.2 -
the granddaughter of the petitioner - was
born out of the wedlock in between the
daughter of the petitioner and respondent
no.1. Unfortunately, daughter of the
petitioner
died
on
01.09.2021
when
respondent no.2 was about 11 months' old.
It is claimed that in the 15 life insurance
policies, the petitioner was the nominee as
named by her daughter before her death.
However,
to
resist
the
said
claim,
respondent no.1 and respondent no.2 filed
Civil Misc. Case No.08/2022 under Section
372 of Indian Succession Act before the
Civil Judge (Senior Division), Unnao
claiming succession including the claim
arising out of life insurance policies. It is
claimed that the petitioner was not even
made a party. Subsequently, the said case
was disposed off in the Lok Adalat on
12.03.2022 without hearing the petitioner.
Aggrieved against the said judgment, the
petitioner preferred an petition being
Matters
Related
Under
Article
227
No.2114 of 2022 in which an order came to
be passed on 07.06.2022 holding that a
revision would lie against the said order
passed by the Civil Judge before the
competent Court. In terms of the said order,
Civil Revision No.16 of 2022 was preferred
before
the
District
Judge,
Unnao.
Ultimately, the revision came to be decided
by means of the order impugned vide
which the succession certificate was
modified to the extent that the amount of
all the 15 life insurance policies was
directed to be excluded from the list of
assets and further directions were issued to
the revisionist for depositing the same in
the form of Fix Deposit Receipts in the
name of respondent no.2 till her attaining
the age of 18 years.

3. Neat contention of learned
counsel for the petitioner is that in terms of
the mandate of Section 39(7) read with
Section 39(8) of the Insurance Act, it is the
petitioner who was named as a nominee, is
entitled to the amounts under the policies as
being a beneficial nominee. It is not denied
that apart from the amounts under the
policies, the respondent no.2 would be
entitled to succession to her estate as
admittedly the daughter of the petitioner
died intestate.

4. Thus, the issue that arises for
consideration is on the one hand the claim
of the petitioner by virtue of her being
nominee to be entitled to the beneficial
interest arising out of the amounts payable
for the insurance policies by virtue of
Section 39(7) of the Insurance Act to the
exclusion of respondent no.2 vis-a-vis the
rights of succession in respect to the
amounts under policies of the daughter
flowing from the Hindu Succession Act.
28 INDIAN LAW REPORTS ALLAHABAD SERIES
5. It is essential to notice that
Section 39(7) of Insurance Act was
amended in the year 2015 by virtue of Act
No.5 of 2015 on the recommendations
made by the Law Commission. Section 39
after its amendment is recorded as under:

"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 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.
4 All. Smt. Kusum Vs. Anand Kumar & Ors.
29

(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, 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 subsections (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.

(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, 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."

6. The reasons for amendment were
the
recommendations
of
the
Law
Commission, 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
30 INDIAN LAW REPORTS ALLAHABAD SERIES
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.

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 s.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 s.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:

(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 in the
prescribed manner any person 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
4 All. Smt. Kusum Vs. Anand Kumar & Ors.
31
text of the policy or registered in records of
the insurer.

(3) The insurer shall furnish to
the
policy-holder
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 accordance with s.98 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 re-assignment 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 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, will 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 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 policy holder 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 policy-holder
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, 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 subsections (7), (8) and (9) shall apply to all
32 INDIAN LAW REPORTS ALLAHABAD SERIES
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.

(12) The collector nominee shall
make payment the benefits arising out of
policy to the beneficiary nominee or his
legal heirs or representative in accordance
with the regulations made by the Authority.
 (13) 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.

(14) The provisions of this section
shall not apply to any policy of life
insurance to which s.6 of the Married
Women's Property Act, 1874, applies or
has at any time applied:

Provided
that
where
a
nomination made whether before or after
the commencement of this Act, 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 s.6 shall be deemed not to
apply or not to have applied to the policy."

7. It is admitted at the Bar that prior
to the amendment in Section 39 by virtue
of Act No.5 of 2015, the law was very well
settled in the case of Smt. Sarbati Devi and
Anr. v. Smt. Usha Devi; (1984) 1 SCC 424
to the effect that the nominee of a policy is
entitled to hold the amount for the benefit
of the successor and the nominee cannot be
treated as being equivalent to an heir or
legatee, and the amounts can be claimed by
the heirs in terms of the provisions
governing the Succession Act applicable to
them.

8. On the plain reading of the
opinion
expressed
by
the
Law
Commission which resulted in the
amendment to Section 39, it is clear that
the same was done at the instance of
insurance companies who wanted the
same to be brought at par with Section
45-ZA of the Banking Regulation Act so
as to discharge the insurance companies
from their burden of payment of the
amount to the nominee.

9. It is also essential to notice
that all the recommendations of the Law
Commission were not accepted while
enacting and amending the provisions
of
Section
39,
specifically
the
explanation
proposed
in
the
amendments by the Law Commission
was not incorporated while amending
the Act.

10. It is also essential to notice that
Section 45-ZA of the Banking Regulation
Act also made prescriptions for payment of
the amounts of the depositors' money on
the basis of nomination. Section 45-ZA
reads as under:
4 All. Smt. Kusum Vs. Anand Kumar & Ors.
33

"45-ZA.
Nomination
for
payment of depositors' money.-(1) Where
a deposit is held by a banking company to
the credit of one or more persons, the
depositor or, as the case may be, all the
depositors together may nominate in the
prescribed manner, one or more persons
not exceeding four, either successively or
simultaneously to whom in the event of the
death of the sole depositor or the death of
all the depositors, the amount of deposit
may be returned by the banking company.

(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 sale 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.

(3) Where the nominee is a
minor, it shall be lawful for the depositor
making the nomination to appoint in the
prescribed manner any person to receive
the amount of deposit in the event of his
death during the minority of the nominee.
 (4)
Payment
by
a
banking
company in accordance with the provisions
of this section shall constitute a full
discharge to the banking company of its
liability in respect of the deposit:

Provided that nothing contained
in this sub-section shall effect the right or
claim which any person may have against
the person to whom any payment is made
under this section."
11. Thus, on plain reading of
Section 45-ZA(2), it is clear that the same
is pari materia with Section 39(7) of the
Insurance Act.

12. Section 45-ZA came up for
interpretation before the Hon'ble Supreme
Court in the case of Ram Chander Talwar
& Anr. v. Devender Kumar Talwar &
Ors.; (2010) 10 SCC 671 wherein the
rights of the nominee vis-a-vis the right of
the successor was considered and the
Supreme Court held as under:

"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
and
devolve
according to the rule of succession to
which the depositor may be governed."

13.
Thus,
the
pari
materia
provision contained in Section 39(7) of the
Insurance Act cannot be interpreted in
contradiction to the interpretation of the
pari materia provision contained in Section
45-ZA(2) of the Banking Regulation Act
and thus, on that count the submission of
counsel for the petitioner merits rejection.

14. Besides the rejection of the
contention of counsel for the petitioner on
34 INDIAN LAW REPORTS ALLAHABAD SERIES
the ground that pari materia provision has
been interpreted in the case of Ram
Chander Talwar (supra) and would be
binding,
it
is
essential
to
see
the
interpretation
of
Section
39(7)
as
interpreted by various High Courts.

15. The amended Section 39(7)
came up for interpretation in the case of
Shweta Singh Huria & Ors. v. Santosh
Huria & Ors.; AIR 2021 Delhi 121
wherein the Delhi High Court considered
the earlier judgment in the case of Sarbati
Devi
(supra)
and
the
subsequent
amendment
and
also
recorded
the
recommendations of the Law Commission
in its 190th Report, which reads 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.

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
4 All. Smt. Kusum Vs. Anand Kumar & Ors.
35
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.

(8) Subject as aforesaid, where
the nominee, or if there are more nominees
than one, a nominee or nominees, to whom
subsection (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 subsections (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."

And ultimately carved out a difference
between a 'beneficiary nominee' and a
'collector nominee' to hold that prior to 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 relevant portions
are contained in Para - 31, 32 & 33, which
are as under:

"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
36 INDIAN LAW REPORTS ALLAHABAD SERIES
Section 39 was carefully and cautiously
drafted and the words used by the
legislature are 'beneficial interest'.

32. Perusal of the impugned
order of the Trial Court shows that the
Appellants
had
brought
the
2015
Amendment to the notice of the Trial Court,
including the judgment of the Rajasthan
High Court in Ramgopal (supra). But the
Trial Court has not even dealt with the
legal issue raised before it and allowed the
application under Order XII Rule 6 CPC,
based on the unamended provisions of
Section 39. It is a settled law that the rights
of the parties to a lis have to be decided in
accordance with the statutory provisions
and law that prevails on the day the cause
of action arises.

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."

16. Similarly, the matter came up
for
interpretation
before
the
Andhra
Pradesh High Court in the case of Mallela
Manimala v. Mallela Lakshmi padmavathi
and Ors.; 2023 SCC OnLine AP 459
wherein the amended Section 39(7) was
taken into consideration and the judgment
of the Delhi High Court in the case of
Shweta Singh Huria (supra) was also
considered and ultimately, the High Court
recorded as under:

"17.
Thus,
the
above
jurisprudence tells that the consistent view
of the High Courts is that after 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.
To this extent change is brought in the law.

18. The above being the law, the
facts of the case are that admittedly
Ramesh Babu, the son of petitioner, who
obtained the insurance policies, died on
04.06.2021, as is evident from the copy of
Death Certificate issued by the Greater
Hyderabad Municipal Corporation, filed
along with material papers in the writ
petition, and as such the two insurance
policies shall be deemed to have matured
on the date of his death. Admittedly, he
died after the amendment to Section 39 of
Insurance Act, 1938 came into force. In
that view, the law prevailing on the date of
maturity of insurance policies would be
applicable to this case, meaning thereby,
the 1st respondent, the wife of the
deceased, who is shown as nominee in the
two policies, shall be beneficially entitled
to receive the policy amounts in exclusion
of the other heirs. Ergo, this writ petition is
not maintainable."

17. The matter also came up for
consideration before the High Court of
Madras in the case of K.R. Sakthi
Murugeswari
v.
The
Division
Manager, Life Insurance Corporation
of India and Ors.; W.P. (M.D.)
No.11044
of
2021
decided
on
16.10.2023 : 2023/MHC/4812 wherein
the
Court
ultimately
held
that
a
beneficiary nominee under the amended
Section 39(7) would be entitled to the
amounts. The relevant paragraph reads
as under:
4 All. Smt. Kusum Vs. Anand Kumar & Ors.
37
 "12.
A
beneficiary
nominee
means a nominee who is entitled to receive
the entire sum assured under the insurance
policy absolutely. On the other hand, a
collector nominee means a nominee other
than a beneficiary nominee . It is true that
on a plain reading of Section 39(7) of the
Act, this distinction has been done away
with. However, the legislature was careful
enough to identity who all will fall within
the category of nominees who in law will
be considered as a beneficiary nominee.
While categorizing those persons, the
legislature was careful enough to bring in
the parents, spouse, children, spouse and
children or any of them. If the legislature
had thought it fit to make everyone as a
beneficiary nominee, there was no need for
the legislature to specifically prescribe
those persons who will fall within the ambit
of Section 39 (7) of the Insurance Act,
1938. The fact that such a conscious
description of persons, who fall under
Section 39(7) of the Act has been
prescribed by the legislature, shows that
the legislature only wanted those persons
who are closely related to the deceased
policy holder alone to be treated as
beneficiary nominees. In the instant case,
the third respondent is admittedly the
brother of the deceased policy holder and
the third respondent cannot be brought
within the scope of Section 39(7) of the Act.
If the third respondent cannot be brought
within the scope of Section 39(7) of the Act,
it would only mean that he will be treated
as a collector nominee. The Insurance
Company cannot deal with the inter~se
rights and the claim between the petitioner
and the third respondent and the company
has to entrust the sum assured to someone
who has been nominated under the policy.
By handing over the sum assured to the
nominee, the job of the Insurance Company
comes to an end. Thereafter, it is not the
concern of the Insurance company to see as
to who has the rightful claim over the sum
assured and whether it actually goes into
their hands as per the personal law
governing the parties. Therefore, the
concept of nomination is only to ensure that
the Insurance Company does not get into
the area of dispute and the Company
washes of its hands by handing over the
sum assured to the nominee. If the nominee
falls within the scope of Section 39(7) of
the Act, those persons described therein
automatically takes it as a beneficiary
nominee.