Case Title: A Devika v. The Senior Branch Manager and Another
Summary of the Case:
The Madras High Court ruled that an insurance company is only responsible for disbursing the policy amount to the beneficiary or collector nominee named in the policy and is not required to intervene in legal disputes over heirs. Justice Bharatha Chakravarthy emphasized that a beneficiary nominee is entitled to claim the entire insurance amount, whereas a collector nominee receives it in trust for distribution among legal heirs. The ruling came in response to a petition filed by the mother of a deceased policyholder seeking to restrain Life Insurance Corporation (LIC) from disbursing the insurance amount to the deceased’s wife, alleging that she was also a Class-I legal heir entitled to a share. However, LIC asserted that the wife was the valid beneficiary nominee under Section 39 of the Insurance Act, making her legally entitled to the sum. Since the wife voluntarily agreed to share 1/3rd of the amount with the mother, the court disposed of the case, directing both parties to submit necessary documents for claim processing.
Detailed Explanation:
The case was brought before the Madras High Court by the mother of a deceased policyholder, requesting the court to prevent LIC from releasing the insurance proceeds to her son’s wife until a pending criminal case was resolved. The petitioner contended that despite her son nominating his wife, she was also a legal heir entitled to 1/3rd of the claim, along with the wife and the deceased’s minor child. She further alleged that her daughter-in-law was involved in her son’s death. LIC, however, argued that as per Section 39 of the Insurance Act, the wife was the beneficiary nominee named by the policyholder, making her solely entitled to the sum. The wife, in response, expressed no objection to giving 1/3rd of the amount to the mother while keeping the remaining 2/3rd for herself and the minor child. Taking note of this agreement, the court disposed of the petition, instructing the parties to submit the required documents within two weeks and directing LIC to process and disburse the amount within eight weeks.
