Mahadara Brahmamma vs Kandula Venkataramana Rao and Another

Chandra Reddy, J.—This appeal raises a question relating to the interpretation of Section 39 of the Indian Insurance Act. The facts leading up to this may be briefly narrated.

One Atchutaramayya executed a promissory note in favour of the Appellant on 4-12-1.950. On the foot of this document, a decree was obtained by the Appellant on 28-11-1952 against the 1st and 2nd Respondents i.e., the widow and the son of the debtor who died some time during the pendency of the suit In execution of the decree the Appellant sought to attach a policy taken by Atchutaramayya on his own life in the United India Life Assurance Company.

The widow raised an objection that she having been nominated u/s 39 of the Insurance Act was entitled to the proceeds thereof and the creditor of her husband has no right to proceed against it. This objection weighed with the courts below and the execution petition was dismissed. Being aggrieved by this decision, the decree-holder has come up to this Court in a second appeal.

The contention urged by Mr. Chowdary in support of the appeal is that the Life Insurance Policy remained an asset of Atchutaramayya in the hands of his legal representatives which can be proceeded against in execution of a decree obtained against his estate. The point involved in this appeal has to be answered with reference to the provisions of Section 39 of the Insurance Act, the relevant of which is extracted below.

(1) The holder of a policy of life insurance on his own life, may, when effecting the at any time before the policy matures payment, nominate the person or persons to the money secured by the policy shall be event of his death.

(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 him1 to a nominee mentioned in the text of the policy or registered in records of the insurer.

(3) xxx xxx

(4) A transfer or assignment of a policy made in accordance with Section 38 shall automatically cancel a nomination:

(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.

(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) The provisions of this section shall not apply to any policy of life insurance to which Section 66 of the Married Women''s Property Act, 1874 (III of 1874) applies or has at any time applied. Provided that where a nomination made whether before or after the commencement of the Insu Trance Amendment) Act, 194G, in favour of the wife e of the person who has insured his life 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 8. 6 shall, be deemed not to apply or not to have applied to the policy.

A reading of the relevant provisions of the section can only lead to a conclusion that the at holder of the policy continues to have interest in the policy notwithstanding the nomination effected in regard to the policy. It does no divest him of the rights in the policy and he retains Disposing power over-it Under Sub-section (2) and Sub-section (4) it is competent for the holder of the policy to bequeath to somebody or make an assignment of it and this automatically cancels the nomination which implies that a nominee has no I vested right in the document.

In fact, under Sub-section (5), if the policy holder survives the nominee, the money is payable to the holder himself arid not to the heirs or the legal representatives of the nominee which would not be the case if the nominee had acquired any vested interest in the policy. Therefore, the title does not pass to the nominee by reason of the nomination. Consequently, the nominee gets the property in the policy subject to all the liabilities of the policy-holder.

The Courts below thought that by virtue of Section 6 of the Married Women''s Property Act the widow of the policy-holder was entitled to get the benefit of the nomination and consequently receive the mount from the Insurance Company.

Section 6 of the Married Women''s Property Act recites:

A policy of insurance effected by any married man on his own life, and expressed on the face of it to be for the benefit of his wife, or of his wife and children, or any of them, calenture and be deemed to be a trust, for the benefit of his wife, or of his wife and children or any of them according to the interest so expressed, and shall not, so long as any object of the trust remains, be subject to the Control of the husband, or to his creditors or form part of his estate.

It is not necessary for me to consider whether Section 6 of the Married Women''s Properly Act could apply to a nomination u/s 39 of the Insurance Act in view of the proviso to Sub-section (7). It is manifest that it does not apply to a nomination and retrospective operation was given to this provision of law. Hence, although the nomination was made on 3-12-1944 prior to the introduction of the amendment, Section 6 of the Married Women''s Property Act does not govern it.

It follows that the right which a nominee gets under the policy is subject to the discharge of any liability of her husband. The Appellant can reach this asset of Atchutaramayya in the hands of his legal representative. This appeal is allowed with costs of this Court including the amount paid by the Appellant to the court guardian of the minor. Advocate''s fee is fixed at Rs. 50. The execution petition will be restored to file. In the Courts below the parties will bear their own costs.