AI Drafter 
TaxTMI 
TaxTMI 
1975 (7) TMI 159
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....int allegations there is a Math known as Bawa Sarwanath Math of which Mahanth Mahadeo Nath happened to be the Mahanth Gaddinashin and in that capacity he filed the suit. It was stated that the Mahanth had no personal interest in the income of the Math's properties. Mahanth Shankeranand Nath was the preceding Mahanth of the Math who got himself insured with the Life Insurance Corporation of India under two policies -- one dated 28-12-1957 for Rs. 25,000/- and the other dated 5-8-1960 for Rs. 30,000/-. Certain instalments of premium due under the said two policies were paid by the assured out of the Math's fund and the said policies were taken out for the benefit of the Math and belonged to the Math. Subsequently, Mahanth Shankeranand Nath resigned his Mahantship in 1961 and the plaintiff became the Mahanth of the Math. Mahanth Shankeranand Nath died on 2nd September, 1963. On his death the plaintiff claimed the proceeds of the two policies of the defendant-respondent No. 2 but the latter stated that the assured had nominated the defendant-respondent No. 1 as the nominee of the two policies and as such she was entitled to the proceeds of the policies unless the court directed....
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....;s funds were utilised for making payment towards the insurance premium, still, the defendant-respondent No. 1 was in law entitled to the proceeds of the two policies and not the plaintiff. The plaintiff took out an appeal to the lower appellate Court but did not succeed. The lower appellate Court also endorsed the aforesaid findings recorded by the trial Court. Feeling aggrieved the plaintiff has come up in the instant appeal and in support thereof I have heard Shri V. K. S. Chaudhary, learned counsel for the plaintiff-appellant. In opposition, Shri K. C. Saxena, the learned counsel for the defendant-respondent No. 1 has made his submissions. Shri Chaudhary's first contention is that the Courts below have not correctly interpreted the relevant provisions of the Insurance Act. The trial Court and the lower appellate Court on an interpretation of Section 39 of the Insurance Act held that the nominee was bound to be paid the amount of the policies and the Insurance Company had no choice in the matter. The Lower Appellate Court in its judgment relied upon the following three cases: Kesari Devi v. Dharma Devi 1962 All LJ 265 :; D. M. Mudaliar v. I. I. & B. Corpn.; M.....
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.... fund is vitiated in law. He contends that the relevant entries of the cash book of the Math were fully proved to prove the payment from the fund of the Math. Moreover, the payments were made by cheques or bank draft and, therefore, there was no dispute about the payment The instalments in question were admittedly received by the insurer and no instalment was paid on the said policies after the deceased Mahanth resigned his Mahantship on 28-3-1962. It was next contended that the courts below did not properly appreciate the probative value of Ex. B-14 which is the letter dated 2-4-1960 addressed by the deceased Mahanth Shankeranand Nath to the insurer. In this letter the Mahanth wrote that he would make the nomination in respect of the policies after the election of the Mahanth was held. It was alleged in the letter that that was the practice or custom. Similarly, it was contended that the courts below did not properly appreciate the probative value of Ex. 5 which is the reply to the Income Tax Officer, A-Ward, Saharanpur on behalf of the deceased Mahanth with reference to the notice under Section 23(3) of the Income Tax Act for the assessment year 1959-60 which had been issued by t....
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....ee to claim the benefits of the policy in his own name. Nomination, however, does not amount to a transfer but it merely enables the nominee in the event of the death of the assured to get the amount of the insurance policy. In it was laid down: "Under the Insurance Act, 1938. assignment of a policy stands on a footing different from nomination, by a policy-holder, of a person to whom the money secured by the policy should be paid in the event of the death of the policy-holder. An assignment is transfer of a policy. The consequences which follow on assignment of a policy are to be found in Sub-section (5) of Section 38 of the Insurance Act, ..... Nomination by a policy-holder is governed by the provisions of Section 39 of the Insurance Act. The nomination effects no transfer or assignment of the policy which has merely the effect of nominating the person or persons to whom the money, secured by the policy, shall be paid in the event of the death of the policy-holder." 7. In a Division Bench of the Madras High Court laid down as under: "A nomination does not involve a transfer of the rights under a policy unlike an assignment. This distincti....
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.... is effected by a coparcenary and that the proceeds of an insurance policy do not belong to the joint family. It might be true that for purposes of insurance by the family is meant the wife and children of the Karta, the assured. But the question is not whether the Karta took out the policies for the benefit of his own family but whether he did so without detriment to the joint family funds and if it was the latter, then anything obtained with the joint family funds would belong to the joint family." 11. It is not necessary to discuss the other cases as the point seems to be clear that the nomination creates no interest in the nominee in respect of the title to the insurance policy. I, therefore, hold that the courts below were not right in thinking that in view of her nomination the defendant No. 1 was entitled to the proceeds of the policy in dispute. The true owner's right will not be affected by the nomination. In my view, the Supreme Court case referred to above is clear on the point. 12. In the instant case, if the insurance policies in dispute be found to be the assets of the Math then, in my view, the defendant-respondent No. 1 as a nominee cannot have pr....
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.... clear that at the earlier stage before his marriage with the defendant-respondent No. 1 the deceased Mahant was clear in his mind and stated so that the nominee was to be the successor in the office of the Mahant of the Gaddi. These documents (whose genuineness has not been questioned by the courts below) reasonably establish that the policies were the assets of the Math and the deceased Mahant dealt with the same on the said footing till he got himself married with the defendant-respondent No. 1. In the same way, I think, the true significance of Ex. 5 has not been appreciated by the courts below. The said exhibit is the reply addressed on behalf of Mahant Shankeranand Nath, the deceased Mahant. to the Income Tax Officer. A-Ward, Saharanpur. The said communication was sent in reply to the notice under Section 23(3) of the Income Tax Act for the year 1959-60 which had been issue by the said I-T. Officer. This reply is dated 5th May, 1960, and it is stated there: "Insurance. The Mahant got himself insured in the year 1950 and correspondence is going on with the Life Insurance Corporation of India, Head Quarters for the purpose of nominating the successor Mahant for t....
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....a. 414 it is laid down: "The property of a Math is held by the Mahanth as spiritual head of the institution, but the property may by the usage and custom of the institution vest in trustees other than the spiritual head. In any case, the property is held solely in trust for the purposes of the institution; surplus income must be added to the endowment and not applied for the personal enjoyment of the head of the Math. A Mahant is not a trustee in the English legal sense of the term. His functions and duties are regulated by custom. His very wide discretion as to the application of the income is subject to the obligation to manage the property so as to serve effectively the objects for which the Math exists. In the conception of Mahantship as in Shebaitship, both the elements of an office and property are blended together and neither can be detached from the other. The personal or beneficial interest of the Mahant in the endowment attached to an institution is manifested in his large powers and disposal and his right to create derivative tenures in respect of endowed properties and these and other rights of a similar character of proprietary right which, though anomal....