https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=766985 https://www.taxtmi.com/caselaws?id=766985 Overriding provisions of nomination on provisions relating to succession - Amendments to Section 39 of the Insurance Act, 1938, specifically sub-sections (7) and (8), confer a beneficial interest to certain nominees, thereby excluding heirs from succeeding to the benefits of an insurance policy under personal law - HELD THAT:- The right of a nominee under Section 39 of the Act of 1938, vis- -vis the right of an heir under the personal law, was considered in Smt. Sarbati Devi Anr vs Smt. Usha Devi, [ 1983 (12) TMI 319 - SUPREME COURT ] wherein the Apex Court has held that there is nothing in Section 39 of the Act of 1938 (before amendment) to hold that the provision overrides the law relating to succession. The ratio in Smt. Sarbati Devi s case [ 1983 (12) TMI 319 - SUPREME COURT ] is followed in various other cases where the provisions relating to nomination are interpreted to hold that such provisions do not override the law relating to succession. It is required to be emphasised that the Apex Court and various Courts, despite the use of the expression vest absolutely or Notwithstanding anything contained in any law for the time being in force and to the exclusion of all in various provisions of law governing nominations have held that such provisions have to be understood in the background of the scheme of the Act in which the provisions relating to nomination are found. The contentions suggesting nomination overriding the provisions of law have been rejected, in various decisions. Section 39(7) and (8) of the Act of 1938, seem to suggest a different category of succession not provided in personal law, (Hindu Succession Act) but running contrary to personal law. The provision meddling with the law of succession does not fit in the Scheme of the Act of 1938 which occupies a different field in the Seventh Schedule as compared to Succession which is found in a different List and Entry. In the light of the discussions made above, it is difficult to hold that the Parliament has enacted a parallel law relating to succession in so far as benefits flowing from the policy of insurance. 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), there is no such obligation as long as there is no claim by the legal heirs. In the absence of any claim by legal heirs, the title vests in beneficiary nominee. However, if there is a claim by the legal heir/s, then the nominee s claim has to yield to the personal law governing succession. Coming to the facts of the case, the appellant who is the mother of late Ravi Somanakatti, the insured, is one of the Class-I heirs, along with widow and minor son of the insured. Since this Court has taken a view that the Section 39 of the Act of 1938 does not override the provisions of Hindu Succession Act, 1956, the appellant who is the nominee described in Section 39(7) of the Act of 1938 cannot claim absolute ownership over the benefits flowing from the insurance policy as other Class-I heirs of the deceased have also laid a claim over the benefits flowing from the policy - Though the Trial Court has not noticed the amended Section 39 and decreed the suit for partition by referring to un-amended Section 39, this Court is confirming the judgment and decree for the reasons already recorded. Conclusion - i) The amended Section 39 is not intended to override the provisions of law relating to succession. ii) The expression beneficial interest in Section 39(7) and beneficial title in Section 39(8) should be interpreted to mean that such nominees or their legal representatives will get beneficial title over the benefits if the testamentary and non-testamentary heirs do not claim the benefits. iii) In the absence of any claim by legal heirs, the title vests in the beneficiary nominee. However, if there is a claim by the legal heir/s, then the nominee s claim has to yield to the personal law governing succession. Appeal dismissed. Case-Laws Indian Laws Thu, 20 Feb 2025 00:00:00 +0530