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Malli Dei And Another v. Kanchan Prava Dei Opposite Party.
Factual and Procedural Background
The deceased, Sarada Charan Pradhan, who served as an assistant in the Planning and Coordination Department in the Orissa Secretariat, died on 13-3-1968. After his death the petitioners (his mother and a son) filed T.S. No. 139/70 in the Court of the Subordinate Judge, Cuttack, seeking declaration of title to Rs. 5,000 payable under life insurance policy No. 10755464. The petitioners also applied for an ad interim injunction restraining the defendant (the widow and nominee) from withdrawing the policy proceeds. The learned Subordinate Judge dismissed the injunction application, and the Additional District Judge confirmed that order by his judgment dated 30th June, 1971, directing that the suit should be heard within a month. The petitioners filed this Civil Revision against the confirming order of the Additional District Judge.
Legal Issues Presented
- Whether a nominee acquires an interest or title in the policy proceeds to the exclusion of other heirs under Section 39(6) of the Insurance Act, 1938, or merely a right to receive the amount.
- Whether an interim injunction restraining a nominee (the widow) from withdrawing the policy proceeds should have been granted.
- How the plaintiffs' proprietary interest (their share as heirs) in the policy proceeds should be protected pending disposal of the suit.
Arguments of the Parties
Petitioners' Arguments (as presented)
- Mr. Mohapatra for the petitioners relied on Section 39(6) of the Insurance Act, 1938, contending that a nomination does not confer title on the nominee.
- The petitioners argued that a nomination merely confers a right on the nominee to receive the amount after the insured's death and that the nominee acts as a trustee for all heirs (including himself), not as exclusive owner.
- The petitioners relied on a Full Bench decision of the Allahabad High Court (AIR 1972 All 167, Raja Ram v. Mata Prasad) as supporting their contention that a nominee does not acquire absolute title.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| AIR 1972 All 167, Raja Ram v. Mata Prasad | Supported the proposition that nomination does not confer absolute title on the nominee; previous law on nomination and nominees' rights was reviewed by the Full Bench. | The court held that the petitioners' contention was fully supported by this Full Bench decision and relied on it in concluding that a nominee's right is to receive the amount and not to exclude other heirs. |
Court's Reasoning and Analysis
The court began by construing Section 39(6) of the Insurance Act, 1938, noting the statutory language: "Where the nominee ... survives the person whose life is insured, the amount secured by the policy shall be payable to such survivor or survivors." The court emphasized the word "payable" and interpreted the provision to mean that nomination makes the amount payable to the nominee but does not vest title in the nominee to the exclusion of other heirs.
The court accepted the petitioners' submission that a nomination confers a right to receive and that the nominee acts in effect as a trustee for the heirs. This view was held to be supported by the Full Bench decision in AIR 1972 All 167, Raja Ram v. Mata Prasad, which reviewed earlier law on the subject.
Applying Section 8 of the Hindu Succession Act, 1956, the court observed that the mother, widow and sons are simultaneous Class I heirs; accordingly, the plaintiffs (mother and one son), the defendant (widow) and the two other minor sons (not parties) are all entitled to shares of the policy proceeds. The court calculated that the plaintiffs together are entitled to 2/5ths of the amount payable under the policy.
On the question of granting an interim injunction restraining the nominee from withdrawing the proceeds, the court held that such an injunction would frustrate the statutory scheme under Section 39 of the Insurance Act because the nomination makes the amount payable to the nominee. The court stated that a court should not normally grant an injunction that defeats a statutory provision; hence the injunction application was properly refused by the courts below.
To protect the plaintiffs' proprietary interest pending the suit, the court directed the trial court to call upon the defendant (nominee) to furnish security to the satisfaction of the trial court equal to 2/5ths of the amount payable under the policy. After such security is furnished, the defendant would be allowed to receive the amount.
The court further directed expeditious disposal of the trial suit, ordering the learned trial Court to dispose of the suit within three months from the date of the order and to intimate this Court.
Holding and Implications
DISMISSED
The Civil Revision was dismissed. The direct effects and orders are:
- The courts below were upheld in refusing the interim injunction against the nominee.
- The defendant (nominee) is to be called upon by the trial court to furnish security equal to 2/5ths of the amount payable under the policy to protect the plaintiffs' share; upon furnishing such security she may receive the proceeds.
- The trial court was directed to dispose of the suit within three months and to inform this Court.
- There was no order as to costs.
The opinion does not discuss broader implications beyond these direct effects; no new precedent beyond the application of existing statutory interpretation and reliance on the cited Full Bench decision was announced.
1. The material facts may be stated in short. One Sarada Charan Pradhan was serving as an assistant in the planning and Coordination Department (planning branch) in the Orissa Secretariat. He died on 13-3-1968 leaving behind his mother (plaintiff 1). a son (plaintiff 2). his widow (defendant 1) and two other minor sons who are not parties to the suit. After death of Sarada the petitioners filed T.S No. 139/70 in the Court of the Subordinate Judge, Cuttack for declaration of title to a sum of Rs. Five thousand secured by the insurance policy on the life of the deceased. The petitioners filed an application for issue of an ad interim injunction against the defendant to restrain her from withdrawing the amount payable under policy No. 10755464 on the life of the deceased.
2. The learned Subordinate Judge dismissed this application and his order was confirmed by the learned Additional District Judge by his order dated 30th June, 1971, whereby he directed that the suit should be heard within a month. It is against this confirming order of the Additional District Judge that this Civil Revision has been filed. Mr. Mohapatra, for the petitioners, places reliance on Section 39(6) of the Insurance Act, 1938 (hereinafter to be referred to as ‘the Act’), in support of his contention that a nominee does not acquire an interest in the policy. In other words, a nomination merely confers a right on the nominee to receive the amount under the policy after death of the insured. He is merely a trustee on behalf of all the heirs including himself. In my opinion the contention is unassailable and is fully supported by a Full Bench decision of the Allahabad High Court, reported in AIR 1972 All 167, (Raja Ram v. Mata Prasad), wherein, the previous law was reviewed.
3. Section 39(6) of the Act runs thus:
“(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.”
4. The emphasis is on the expression ‘payable’. Under a nomination the amount is payable to the nominee. The section does not say that the nominee acquires title to the amount to the exclusion of all other heirs.
5. Under Section 8 of the Hindu Succession Act, 1956, the mother, widow and sons of the deceased are simultaneous heirs in class I. The plaintiffs, the defendant and the two minor sons who are not parties to the suit are therefore, entitled to the amount payable under the policy. The plaintiffs shall be entitled to 2/5ths share thereof.
6. The other question for consideration is whether the prayer for interim injunction should be allowed. In my view the Courts below were right in refusing the prayer for injunction, which was against the nominee of the insured, and was to stultify the provisions of Section 39 of the Act inasmuch as under the nomination the amount was payable to the nominee. No injunction should ordinarily be granted by a Court where it defeats any statutory provision. The prayer for injunction was therefore misconceived and was rightly disallowed.
7. The next question for consideration is how to safeguard the interest of the plaintiffs in their 2/5ths share in the amount payable under the policy. The best course would have been for the plaintiffs to make a prayer before the trial Court to call upon the defendant to give an undertaking to pay 2/5ths of the amount payable if the suit is decreed. It is not necessary to further the litigation on this account.
8. I therefore, direct the trial Court to call upon the defendant to furnish security to its satisfaction to the tune of 2/5ths of the amount pays able under the policy.
9. The learned trial Court is directed to dispose of the suit within three months from today with intimation to this Court.
10. In the result, the Civil Revision is dismissed, subject to the direction that the defendant would be called upon to furnish security to the satisfaction of the trial Court as indicated above, after which she would be allowed to receive the amount. There would be no order as to costs.
11. Order accordingly.
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