BEFORE  THE A.P STATE CONSUMER DISPUTES REDRESSAL COMMISSION: HYDERABAD

FA.NO.865 OF 2005 AGAINST C.D.NO.277 OF 2000  District  Forum East Godavari :Kakinada.

Between:

1.The Senior Divisional Manager,

    L.I.C. of India, Divisional Office,

    D.No.46/7/12, Danavaipet,

    Rajahmundry-3.

2. The Branch Manager,

     L.I.C. of India, Post Box No.6,

     Kakinada.                                                        ... Appellants/

                                                                                 Opp.parties 1 & 2

             And

1. Smt. Durga Sesha Sunitha,

   W/o.Late Venkata Naga Ramalinga Raj Kumar,

   Hindu, aged 30 years, House wife,

   C/o.Kankatala Nageswara Rao,

    Aatevari street, Gopalapuram,

    Ravulapalem Mandal.

2. Durga Bala Murali Krishna,

     S/o.Late Venkata Naga Ramalinga Raj Kumar,

    Hindu , aged 7 years, (being minor rep. by his

    Guardian and next friend , his mother i.e.

     1st respondent herein)                                              ... Respondents/

                                                                                           Complainants

3. Durga Atchutamba, W/o.Siva Parasurama

    Krishna , Hindu, aged 64 years, House wife,

    D.NO.7-8-21/3,  Velamurivari Street,

    Ramaraopeta, Kakinada.                                             ...Respondent/

                                                                                           3rd opp.party.

Counsel for the appellant         :       Mr.Singam Srinivas Rao

Counsel for the  respondents    :

      CORAM: THE HON’BLE JUSTICE SRI D.APPA RAO, PRESIDENT

         SMT.M.SHREESHA,  HON’BLE MEMBER

                                                     AND

             SRI G.BHOOPATHI REDDY, HON’BLE MEMBER

           WEDNESDAY, THE TWENTY SEVENTH DAY OF FEBRUARY,                       

        TWO THOUSAND EIGHT

Oral Order :  (Per Sri G.Bhoopathi Reddy, Hon’ble Member)

                                                            ****

      This is an appeal filed by the appellants/opp.parties 1 & 2  under Section 15 of Consumer Protection Act ,1986  to set  aside the order passed by the District Forum , East Godavari :Kakinada in C.D.No.277/2000 , dt.26.4.2005.

     The respondents 1 and 2 herein are the complainants before the District Forum.  They filed a complaint under Section 12 of Consumer Protection Act,1986 to direct the opp.parties  to pay 2/3rd  share of total claim amount i.e. 2 lakhs ,  and Rs.25,000/-  towards damages  and  Rs.2,500/- towards costs.

      The case of the complainants is as follows:

Husband of the 1st complainant  during his life time  took LIC  policy bearing no. No.690331931   for a sum of  Rs.1 lakh  and paid premium amounts  to the 2nd opp.party regularly.   He was un married by the time of taking policy  and put his mother(3rd opp.party) as nominee in the said policy.   The policy holder died in a train accident.   After the death of her husband the  1st complainant filed an application to the 2nd opp.party   to settle the claim in her favour.   The 2nd opp.party did not respond to the claim application of the 1st. complainant.  On enquiry the 1st complainant came to know  that with the collusion of the 2nd opp.party the 3rd op.party and her husband are trying to receive the claim amount duly suppressing the legal right of the complainants.  The  complainant no.1 met the 2nd opp.party and explained how they are entitled for 2/3rd share  in the total claim amount  and  the 3rd opp.party  is eligible only for 1/3rd share in claim amount , but all her efforts were in vain. She got issued a legal notice to the opp.parties 1 and 2 requesting them to settle the claim equally among herself ,the 2nd complainant and the 3rd opp.party.   Subsequently the 2nd opp.party sent a reply to her informing that they would disburse the amount only to the 3rd opp.party as she was the nominee under the policy and refused to entertain her claim. Alleging deficiency in service the complainants approached the District Forum to direct the opp.parties 1 and 2    to pay 2/3rd      share  of total claim amount i.e. 2 lakhs , Rs.25,000/-  towards damages  and  Rs.2,500/- towards costs   

         The opp.party no.1 filed counter.  Opp.party no.2 adopted counter of opp.party no.1.   The opp.parties   stated  that they  were  not aware of the marriage of the insured with the 1st complainant  and the 2nd complainant is his son .    It is true that  the 3rd opp.party is the mother of the insured who died in a train accident  and she was nominee under  the policy  and the said nomination continued in policy till his death . On receipt of the claim petition from the 1st complainant a letter dt.22.11.99 was addressed by the 2nd opp.party informing her that the corporation  consider the claim in favour of opp.party no.3 only.   As per the manual provisions of  the company the claim has been settled in favour of the nominee Smt.D.Atchutamba  as there was a valid nomination in her favour under the policy.  They were unable to consider the claim of the complainant due to the existence of valid nomination in favour of the mother of policy holder.   There is  no deficiency in service on their part . They prayed for dismissal of the complaint with costs.

          On behalf of the 3rd  opp.party  though advocate filed vakalat  did not file written version for two years and ten months. Hence she was set exparte for  absence of herself or  her advocate when called.

        The complainants have filed  documents   Exs.A1 to A5.   The opp.parties 1 and 2 filed documents Exs.B1 to B6 . The District Forum based on the evidence adduced and pleadings   allowed the  complaint partly directing the opp.parties 1 and 2  to deposit in the Forum 2/3rd share  of Rs.1,75,000/- (settled as amount payable under the policy)  and Rs.1 lakh  (settled as accident benefit) which are the amounts  paid to the nominee,  together with interest at 9%  from respective dates of payment.  The opp.parties 1 and 2 are at liberty to recover from the 3rd opp.party the amounts deposited  in  the Forum.  It is made clear that 1/3rd share out of the amounts of Rs.1,75,000/- and Rs.1  lakh paid to the 3rd opp.party by the opp.parties 1 & 2  on 12.1.2000  and 18.2.2000 are  not liable to be recovered as she was entitled to the same being one of the class I legal heir of the insured.  The opp.parties 1 and 2  should also deposit an amount of Rs.2000/-  towards the costs of the case  After making  the above deposits in the Forum 1st complainant shall be entitled to withdraw her half share by filing a cheque petition   and since the 2nd complainant is a minor his half share shall be kept in a special term deposit in ay nationalised bank for his benefit and for  being withdrawn after attainment of majority.   Amount of costs of Rs.2000/- shall be withdrawn only by the 1st complainant as she prosecuted the case for herself and on behalf of the minor 2nd complainant.  3rd opp.party   will  refund to the LIC of India 2/.3rd share out of Rs.1,75,000/- and Rs.1,00,000/- together with interest at 9% from  12.1.2000 and 18.2.2000 respectively and avoid unnecessary legal action from the opp.parties 1 and  2.

          Aggrieved by the said order the opp.parties 1 and 2 preferred this appeal contending that   order of the    District Forum is contrary to law , weight of evidence and probabilities of case. The  District Forum ought to have seen that in terms of Section 39 of the Insurance Act,1938 any payment made to the nominee is valid discharge and the  appellant corporation cannot be held liable if the nominee does not pass on the benefits to the other legal heirs.   The nominee receives the money in the capacity of a trustee and is personally liable for distribution and the corporation cannot be forced to pay once again.. If the complainants intend to establish their right they have to seek a declaration before an appropriate court of law.   The complainants are not entitled to directly receive the amounts payable on the policy when there is a valid nomination existing as on the date of the death of the insured.    They prayed  that the order passed by the District  Forum be set aside and appeal be allowed.   

      There is no dispute with regard to the third opp.party is the nominee  under the insurance  policy  and it was valid on the date of  death of the insured.   The insurance company paid Rs.1,75,000/-   towards  death claim amount  and Rs,.1`lakh towards accident benefit to the 3rd opp.party.  The appellants contended that  the complainants  are not nominees under the policy  hence they  are not entitled for the insurance claim amount, order passed by the  District Forum may be set aside.  The respondents 1 and 2 resisted the plea stating  that  as they  are the legal heirs they are entitled for the share of the insurance claim amount and  order passed by the District Forum  be confirmed. The submission made by the appellants is concerned as per the Section 39 of Insurance Act, 1938 the nominee  is entitled to  receive insurance claim amount.   After the  death of   insured , the nominee i.e. opp.party no.3 submitted a claim and the insurance company has paid the claim amount.   The appellants contended that the Civil Court is a proper authority to decide with regard to the entitlement of the claim  and  the complainants  ought to have approached the Civil Court instead of filing a complaint before the District Forum  to establish that they are legal heirs and entitled to the share in respect of the insurance claim amount.  The submission made by the appellants is concerned as complainants are claiming that they are  legal heirs , the Civil Court is proper  authority to decide this aspect.   The  complainants  ought to have approached the Civil Court and file a declaration suit to prove that they are legal heirs and entitled for the share in  insurance claim amount.  The insurance company has paid  claim amount to the nominee.  After payment of the  claim   amount to the nominee , the complainants have approached the District Forum and filed a complaint alleging deficiency in service on the part of the insurance company.  The District Forum directed the opp.parties  1 and 2  to deposit 2/3rd share out of Rs.2,75,000/-  which was paid to the third opp.party with interest and also costs of Rs.2000/-.    The said order is not   sustainable.

     The appellants have relied on a decision reported in AIR 1984 Supreme Court   346 SMT. SARBATI DEVI AND ANOTHER vs. SMT USHA DEVI  wherein it is held  “that nomination under Section 39 of insurance Act,1938 indicates the hand which is authorized   to receive the amount, on the payment of which the insurer get a valid discharge of its liability under the policy.   The amount, however, can be claimed by the heirs of the assuror in accordance with the law of succession governing them.” . The principle laid in this case  supports the claim of the appellants  in the present case. The appellants have also relied on  another decision reported in 2000(6) SCC  724  M/s.VISHIN N.KHANCHANDANI  AND ANOTHER vs. VIDYA LACHMANDAS KHANCHANDANI AND ANOTHER   wherein it was held    that “the nominee is entitled to receive the same but he retains the said amount for the benefit of the persons who are entitled to it under the law of succession applicable to the parties and nomination only indicates hand who was authorised to receive the amount,  on payment of which  the insurer gets a valid discharge of its liability under the policy.”.    The appellants relied on another decision  reported in 2005(1) ALD 256  M/s.KAKI ANJULAMMA AND ANOTHER vs. PONUGUMATI KOTESWARA RAO AND ANOTHER  wherein Hon’ble High Court held that the  “nomination by the deceased enables the nominee to withdraw the amount from the employer or insurance company as the case may be. . However he shall be under obligation to distribute the same among the legal heirs or the legatees or share with them as the case may be depending on the facts and circumstances of the case.”.    The principle laid down  in the above  cases is applicable in our present case .  In our present case the   complainants ought to have approached a Civil Court instead of raising consumer dispute before the District Forum.

       The insured has nominated the opp.party no.3 as nominee  and as per the said nomination she has claimed the  policy amount  and the insurance company has paid the  claim amount.  If the complainants intend to establish their rights they have to seek declaration before the appropriate court of law duly impleading all the necessary parties including respondent no.3 herein.    The appellants have already paid the policy amount to the mother of the deceased  under Section 39 of Insurance Act 1938  and the appellants are not liable to pay the amounts  to the other legal heirs of the deceased  .    The District Forum ought to have seen that once the nominee  was paid the claim amount  payable under  the policy there is no further obligation  on the  insurance company for disbursement of the claim amount to the legal heirs.    Nominee has received the money in the capacity of trustee and the   third respondent  being  nominee is personally liable  for distribution and the appellant corporation cannot be forced to pay the amounts once again .

     In the result appeal is allowed. Order of the District Forum is set aside . Complaint is dismissed . In the circumstances without costs.

                                           PRESIDENT        LADY MEMBER   MALE MEMBER

                                                                                    DT.27.2.2008

Pm*