1960 (10) TMI 86 - HC - Indian Laws

Interpretation of Life Insurance Nomination Clause: Appellants Entitled to Policy Amount

Sarojini Amma Versus Neelakanta Pillai

The court interpreted the nomination clause in a life insurance policy, determining that a nominee does not become the owner of the money but has the ... - Issues: Interpretation of nomination in a life insurance policy and entitlement to policy proceeds upon the death of the assured.In this case, the main issue was the interpretation of the nomination clause in a life insurance policy and the entitlement to the policy proceeds upon the death of the assured. The appellants, who were the widow and son of the deceased policyholder, contested the claim made by the father of the deceased based on the nomination in the policy. The court had to determine whether the nomination only gave the nominee the right to collect the amount or also conferred the right to appropriate it. The key question was whether the nominee becomes the owner of the money on the death of the assured without any liability to make it over to his legal representatives.The court referred to Section 39 of the Insurance Act, 1938, which allows the policyholder to nominate the person to whom the money secured by the policy shall be paid in the event of his death. The court analyzed previous judgments, including Ramballav Dhandhania v. Gangadhar Nathmall and Mohanavelu Mudaliar v. Indian Insurance and Banking Corporation Ltd., which held that a nominee under a life insurance policy does not become the owner of the money but merely has the right to collect it. The court agreed with this interpretation, stating that a nomination confers no right on the nominee during the lifetime of the assured and only gives a bare right to collect the policy money upon his death.The court also discussed a previous case, In re, Baron Kensington; Earl of Longford v. Baron Kensington, which dealt with the entitlement to policy moneys based on the circumstances of the policyholder taking out the policy in the name of another individual. However, in the present case, there was no contention based on the relationship between the nominee and the deceased or possession of the policy. Therefore, the court found it unnecessary to consider the impact of those factors on the case.Ultimately, the court allowed the appeal filed by the appellants, ruling that they were entitled to share the policy amount equally with the deceased's mother based on the provisions of the Travancore Nayar Act. The court ordered the costs to be paid by the respondent to the appellants.