Chandigarh

DF-I

CC/580/2018

Smt. Deepika Dahiya - Complainant(s)

Versus

Life Insurance Corporation of India. - Opp.Party(s)

J.P. Nahar

15 Nov 2019

ORDER

 DISTRICT CONSUMER DISPUTES REDRESSAL FORUM-I,

U.T. CHANDIGARH

                                     

Consumer Complaint No.	:	CC/580/2018
Date of Institution	:	13/11/2018
Date of Decision	:	15/11/2019

 

1. Smt. Deepika Dahiya wife of late Sh. Amardep Singh, resident of House No.864, Sector 19, Panchkula.
2. Master Navdeep Singh (aged about two years) son of late Sh. Amardeep Singh, resident of House No.864, Sector-19, Panchkula through his mother and natural guardian Smt. Deepika Dahiha.

… Complainants

V E R S U S

1. Life Insurance Corporation of India, Unit-I, Branch Office Code No.163, Jeevan Prakash Building, Sector 17-B, Chandigarh through its Chief Manager.
2. Smt. Kamla Devi wife of Sh. Satibir Singh resident of Village & Post Office, Baroda, Tehsil Uchana, District Jind (Haryana).

… Opposite Parties

CORAM :	SHRI RATTAN SINGH THAKUR	PRESIDENT
	MRS. SURJEET KAUR	MEMBER
	SHRI SURESH KUMAR SARDANA	MEMBER

                                                                     

ARGUED BY	:	Sh. J.P. Nahar, Counsel for complainants
	:	Sh. Rajeev Sharma, Counsel for OP-1
	:	Sh. Tarun Gupta, Counsel for OP-2 (OP-2 ex-parte)

Per Rattan Singh Thakur, President

1.         The summary of the allegations are complainant No.1 and 2 happen to be the widow and minor son respectively of late Sh. Amardeep Singh.  The marriage inter se complainant No.1 and late Sh. Amardeep Singh was solemnized and out of their wedlock minor son, complainant No.2 was born on 30.9.2016.  The case of complainant No.1 is, her husband deceased Sh. Amardeep Singh had died on 4.1.2018 and prior to her marriage with him, he had taken three life insurance policies from OP-1.  In the said policies, he had nominated his mother, Smt. Kamla Devi (OP-2) as his nominee to receive the amount in the event of his death.  After acquisition of family, on account of marriage, the nomination was not changed and Sh. Amardeep Singh died on 4.1.2018.  Complainant No.1 had come to know regarding the nomination and had made communication with OP-1 not to disburse the sum assured in favour of nominee (OP-2) as complainant No.1 happen to be widow and complainant No.2 minor son, i.e. class I legal heirs of deceased Sh. Amardeep Singh.  However, OP-1 in spite of the request made by complainants, disbursed the total amount of the policies i.e. Rs.15,09,180/- to OP-2.  Information was sought under the RTI Act and after great struggle by way of appeal, intimation was received.  The case of the complainants is, OP-1/insurer ought not to have disbursed the amount to OP-2, and it amounts to deficiency in service and unfair trade practice.  Hence, the present consumer complaint for directing the OPs to refund the amount of Rs.15,09,180/- i.e. the sum assured of the policies in favour of the complainants alongwith compensation and costs of litigation.
2.         OP-1 contested the consumer complaint and filed its written reply.  The sum and substance of the reply is, since OP-2 happen to be the nominee of deceased of Sh. Amardeep Singh, therefore as per provisions of the relevant Act, the amount was disbursed to his nominee i.e. OP-2.  The receipt of the communication with regard to non disbursement of the sum assured to OP-2 was received, but, the request was not acceded to as the nomination could not have been changed after the death of the assured. No succession certificate was produced.  Hence, prayed there was no deficiency in service or unfair trade practice on its part.  On these lines, the cause is sought to be defended.
3.         OP-2 filed her separate written reply and claimed since she happen to be the nominee, therefore, she is entitled to have the sum assured of her son, late Sh. Amardeep Singh. Objections were also raised of complaint being not maintainable and it was not a consumer dispute.  The matter could have been agitated before the competent civil court. 
4.         Separate rejoinders were filed and averments made in the consumer complaint were reiterated.
5.         Parties led evidence by way of affidavits and documents.
6.         We have heard the learned counsel for the parties and gone through the record of the case. After appraisal of record, our findings are as under:-
7.         Per pleadings of the parties, late Sh. Amardeep Singh had obtained policies bearing No.164564715, 165952234 and 165952235 before his marriage in the year 2011.  It is also the admitted case, at that juncture, he was unmarried and he had nominated his own mother (OP-2) as his nominee.  It is also the admitted case, the consolidated amount of Rs.15,09,180/- as per chart drawn after the death of Sh. Amardeep Singh was disbursed to OP-2 despite protest from the complainants.
8.         Per pleadings of the parties, admittedly complainant No.1 is the hapless widow; complainant No.2 Master Navdeep Singh is minor son and OP-2 is the mother of late Sh. Amardeep Singh. In this regard the schedule annexed with the Hindu Succession Act, 1956 is reproduced below :-

                “HEIRS IN CLASS I AND CLASS II

                                Class I

Son; daughter; widow; mother; son of a predeceased son; daughter of a predeceased son; son of a predeceased daughter; daughter of a predeceased daughter; widow of a predeceased son; son of a predeceased son of a predeceased son; daughter of a predeceased son of a predeceased son; widow of a predeceased son of a predeceased son [son of a pre-deceased daughter of a pre-deceased daughter; daughter of a pre-deceased daughter of a pre-deceased daughter; daughter of a pre-deceased son of a pre-deceased daughter; daughter of a pre-deceased daughter of a pre-deceased son].”

 

A perusal of the aforesaid schedule shows, complainant No.1 (widow), complainant No.2 (minor son) and OP-2 (mother) of late Sh. Amardeep Singh are admittedly the class I heirs as per Hindu Succession Act, 1956.  It is also the admitted case, late Sh. Amardeep Singh had died intestate and had not testamented or willed away his property in favour of any other person.  Thus, since he had died intestate, therefore, complainants and OP-2 are admittedly his class I legal heirs and were only entitled to succeed to the sum assured in the event of his death to the extent of 1/3^rd share each.  There is no dispute about these facts as well as proposition of law. 

9.         The claim of the complainants is being denied as OP-2 happen to be the nominee of the life assured in the insurance policies, the amount of which was disbursed after his death to OP-2.  It is the admitted case, at the time when the insurance policies were purchased, late Sh. Amardeep Singh was unmarried and after acquisition of family in the year 2016, he had not changed his nomination in the insurance policies.  The rationality could be derived from the General Provident Fund Rules and the proviso to relevant rule 5 (5) is reproduced below :-

                        “Provided that if at the time of making the nomination the subscriber has only one member of the family, he shall provide in the nomination that the right conferred upon the alternate nominee under Clause (a) shall become invalid in the event of his subsequently acquiring other member or members in his family.”

10.         A perusal of this rule shows, the moment a Govt. servant acquires family, he has to nominate his family members, wife and children, as his nominees and the nomination which was done for the purpose of receipt of the GPF amount prior to his marriage automatically becomes invalid. We are referring this rule for the purpose of gathering rationality and the objective behind this rule is in case of death of the Govt. servant, as Sh. Amardeep Singh, deceased was also a government servant, his family/dependents may not be left in lurch.  So is the case here as the hapless widow (complainant No.1) of late Sh. Amardeep Singh and his dependent minor son (complainant No.2) are in crisis after his death and the amount of the sum assured was disbursed to his nominee, own mother (OP-2). 
11.         The moot question which arises is whether the nominee exclusively is entitled in presence of the first class legal heirs to solely inherit the sum assured or the nomination will bypass the statutory provisions of inheritance as per schedule referred hereinbefore.  In case titled as Smt. Sarabati Devi & Ar. Vs. Smt. Usha Devi, 1984 AIR 346, the Hon’ble Apex Court in the concluding paragraphs of the judgment held as under :-

                “Moreover there is one other strong circumstance in this case which dissuades us from taking a view contrary to the decisions of all other High Courts and accepting the view expressed by the Delhi High Court in the two recent judgments delivered in the year 1978 and in the year 1982. The Act has been in force from the year 1938 and all along almost all the High Courts in India have taken the view that a mere nomination effected under section 39 does not deprive the heirs of their rights in the amount payable under a life insurance policy. Yet Parliament has not chosen to make any amendment to the Act. In such a situation unless there are strong and compelling reasons to hold that all these decisions are wholly erroneous, the Court should be slow to take a different view. The reasons given by the Delhi High Court are unconvincing. We, therefore, hold that the judgments of the Delhi High Court in Fauja Singh's case (supra) and in Mrs. Uma Sehgal's case (supra) do not lay down the law correctly. They are, therefore, overruled. We approve the views expressed by the other High Courts on the meaning of section 39 of the Act and hold that a mere nomination made under section 39 of the Act does not have the effect of conferring on the nominee any beneficial interest in the amount payable under the life insurance policy on the death of the assured. The nomination only indicates the hand which is authorised to receive the amount, on the payment of which the insurer gets a valid discharge of its liability under the policy, The amount; however, can be claimed by the heirs of the assured in accordance with the law of succession governing them.

                        In view of the above conclusion, the judgments and decrees of the High Court, the first appellate court and the trial court are liable to be set aside. They are accordingly set aside. Since it is not disputed that the plaintiffs are under the law of succession governing them each entitled to 1/3 share in the estate of the deceased, it is hereby declared that each of the plaintiffs is entitled to 1/3rd share in the amount received under the insurance policies in question and the interest which may have been earned by its investment. The suit stands decreed accordingly.”

12.         A perusal of the aforesaid authoritative precedent shows, mere nomination made under Section 39 of the Insurance Act does not confer beneficial interest on the nominee under the life insurance policy on the death of the assured.  The said amount can be claimed by the heirs of the assured in accordance with the law of succession governing them. This is the proposition of law settled by the Hon’ble Apex Court.  Admittedly, the complainants and OP-2 are his first class legal heirs as per Hindu succession Act, 1956 as the deceased had died intestate and they were entitled to succeed to the sum assured to the extent of 1/3^rd share each as in the capacity of a nomine the amount is disbursed or taken or received subject to claim of all the legal heirs as he had not willed away his property.  The said matter was brought to the notice of OP-1, but, it had not bothered and disbursed the claim in favour of OP-2.
13.         The contention of the learned counsel for the OPs is, proper remedy is the civil court and not the Consumer Forum under the Consumer Protection Act, 1956.  To controvert this contention, learned counsel for the complainants had relied on case titled as Popatbhai Manjibhai Khaniya Vs. Life Insurance Corporation of India, III (2016) CPJ 38 (Guj.), the relevant head note and paragraph No.4 are reproduced below :-

“Consumer Protection Act, 1986 — Sections 2(1)(g), 15 — Insurance (Life) — Death claim — Nomination — Claim repudiated on ground of concealment of material facts — Alleged deficiency in service — District Forum allowed complaint and directed to pay amount to widow of deceased — Brother of deceased filed appeal — Legal heir of insured is only entitled to get benefits under policy of insurance in question and nominee has no right over assets of deceased — It is duty of nominee to pay said amount to legal heir of deceased as agent of insured — It was incumbent upon complainant to join widow of deceased as necessary party but he did not join her as a necessary party — No evidence that divorce took place — Impugned order upheld.

4. Heard Pradip J. Patel, learned Advocate for the complainant and Mr. Bhavesh Trivedi, Legal Officer of LIC of India. No doubt, as per Section 39 of the Insurance Act, 1938, the insured has right to appoint his nominee and the nominee is entitled to get the amount but the provisions of Section 6 of the Married Women Property Act, 1874 contained in Sub-section (7) of Section 39 of the Act, will prevail over the provisions contained in Section 39 of the Insurance Act. In the present case, legal heir of the insured is only entitled to gel the benefits under the policy of insurance in question and the nominee has no right ever the assets of the deceased. It is the duty of the nominee to pay the said amount to the legal heir of the deceased as agent of the insured.”

The Hon’ble State Commission had held that the insured has a right to appoint his nominee and the nominee is entitled to get the amount, but the provisions of section 6 of the Married Women Property, 1874 will prevail over the provisions contained in Section 39 of the Insurance Act.  In the present case, legal heirs of the insured are only entitled to get the benefits under the policy of insurance in question and nominee has no right over the assets of the deceased.  It is the duty of the nominee to pay the said amount to the legal heirs of the deceased as an agent of the insured. It was held to be a consumer dispute regarding nomination under the Insurance Act. 

14.         Keeping in view the factual and legal position, the sum assured of three policies was to be apportioned amongst complainants No.1 & 2 and OP-2 proportionately in equal shares.  As such, OP-1 has also committed deficiency in service and liability of OPs would be joint as well as several as it tantamounts to deficiency in service and unfair trade practice.
15.         We have a glance to the proceedings conducted before this Forum as in view of the relationship of the parties i.e. own widowed daughter in law (complainant No.1) and own grandson (complainant No.2) of OP-2, OP-2 was directed to put in appearance before this Forum to make attempt for the reconciliation of the matter, however, despite of directions, she failed to put in appearance. It also speaks of her defiant conduct and she was entitled to 1/3^rd share only out of the total disbursed amount.
16.         In view of the above discussion, the present consumer complaint succeeds and the same is accordingly partly allowed. OPs are directed as under :-

1. to refund the amount of Rs.5,03,060/- each to complainant Nos. 1 & 2 (i.e. 1/3^rd share each of the total disbursed amount of Rs.15,09,180/-) alongwith interest @ 9% per annum from the date of disbursal i.e. 9.5.2018 till realization.
2. to pay an amount of Rs.20,000/- to the complainants as compensation for causing mental agony and harassment to them;
3. to pay Rs.10,000/- to the complainants as costs of litigation.

17.         This order be complied with by the OPs within thirty days from the date of receipt of its certified copy, failing which, they shall make the payment of the amounts mentioned at Sr.No.(i) & (ii) above, with interest @ 12% per annum from the date of this order, till realization, apart from compliance of direction at Sr.No.(iii) above.  Though the liability would be joint and several, but, since the entire amount was disbursed to and received by OP-2, therefore, at the first instance, the execution shall lie against OP-2 and in case the order remains unsatisfied, only then the amount, or any part thereof, would be recovered from OP-1. This direction is passed as the amount is in the hands of OP-2. 
18.         It is also made clear that the amount of Rs.5,03,060/-, falling in the share of minor complainant No.2, if recovered, will not be disbursed to his next friend/guardian.  Rather, the same be deposited in the shape of FD in a nationalized bank in his name through complainant No.1, being his mother natural guardian, but, she would not be entitled to withdraw the same till the period of minority of complainant No.2 is over without the permission of this Forum. This order is passed in the welfare of the minor complainant No.2, whose interest this Forum is also supposed to watch. 
19.         The certified copies of this order be sent to the parties free of charge. The file be consigned.

	Sd/-	Sd/-	Sd/-
15/11/2019	[Suresh Kumar Sardana]	[Surjeet Kaur]	[Rattan Singh Thakur]
hg	Member	Member	President