District Consumer Disputes Redressal Commission, Hooghly
PETITIONER
VS.
OPPOSITE PARTY
Complaint Case No.CC/232/2022
(Date of Filing:-30.11.2022)
- Smt. Rikta Dutta
Bou Master Gali, P.O. and P.S. Chandannagar,
Dist. Hooghly, Pin:-712136, West Bengal…………Complainant
- The Manager, Peerless Financial Product Distribution Ltd.,
Peerless Bhaban, Akhan Bazar, P.O. and P.S. Chinsurah,
District:- Hooghly, Pin-712101
- The Manager (Claims Unit), Max Life Insurance Co. Ltd.
Operations centre-2nd floor, Plot No. 90A, Sector-18
Udyog Bihar, Gurgaon-122015, Haryana.….Opposite parties
Mr. Debasish Bandyopadhyay, President
Mr. Debasis Bhattacharya, Member
-
Final Order/Judgment
Debasis Bhattacharya:- Presiding Member
Being aggrieved by and dissatisfied with the reluctance primarily of the opposite party 2 as mentioned above viz. ‘The Manager (claims unit) of Max Life Insurance’ Operations centre (hereinafter referred to as OP 2) in the matter of sanctioning the insurance claim arising out of expiry of the insured person, the instant case has been filed by the complainant, u/s 35(1)(a) of the Consumer Protection Act 2019.
At the very outset it will be worth mentioning that the case runs ex parte against both the Opposite Parties as in spite of proper service of notices, both the Opposite Parties preferred to keep themselves away from the proceedings of the case.
After trimming the unnecessary details incorporated in the complaint petition the facts of the case stand as follows.
Initially three policies bearing no.46804179, 468043260 and 468043070 were incepted in the name of Late Anindya Dutta the son of the Complainant.The Complainant in the instant case, who is incidentally the mother of the insured, was made nominee of those insurance policies.
The said Anindya Dutta, the policy holder died on 11.04.2013 leaving behind his wife Smt. Paramita Duta and mother Smt. Rikta Dutta.
OP 1 i.e. Peerless financial product Pvt. Ltd. Chinsurah appears to have acted as a referral agent of OP 2.
Reportedly, on presentation of the claim against the insurance policies, by the Complainant, the OP 2 i.e. Max Life Insurance Company, in their communication dtd. 24.12.2013 intimated that at the claim stage the wife of the deceased i.e. Smt. Paromita Dutta claimed for the policy benefits. OP 2 thus called for the document i.e. succession certificate.
On 08.08.2015 the Complainant submitted further documents before the Insurance Company. However, OP 2 in their reply dtd. 13.10.2015 harped on the same string.
The Complainant here refers to the concept of ‘Beneficial Nominee’ the provision of which was introduced in the Insurance Laws (Amendment) Act, 2015.
Section 39(1) of The Insurance Laws (Amendment) Act, 2015 states
“The holder of a policy of Life Insurance on his own life may, when effecting the policy or at any time before the policy matures for payment, nominate the person or persons to whom the money secured by the policy shall be paid in the event of his death, provided that , where any nominee is a minor, it shall be lawful for the policyholder to appoint any person in the manner laid down by the insurer, to receive the money secured by the policy in the event of his death during the minority of the nominee.”
However the Complainant claims to have waited for years for the sanction of the death claim and again on 16.02.2022 submitted a further ‘prayer for claim as a nominee’ along with all relevant documents.
As the OP 2 this time also remained unresponsive, the Complainant finally sent a legal notice on this issue on 28.03.2022.
OP 2 in their communication dtd. 30.04.2022 sought for the succession certificate again.
In continuation and in reply to the OP 2’s letter, another legal notice was sent to the insurance Company on 03.06.2022 quoting the provisions of section 39(1) of the Insurance Laws (Amendment) Act, 2015.
OP 2 however did not show any reaction and stuck to their previous stand of production of succession certificate.
Repeated persuasion made with the OP 1 and OP 2 proved to be futile exercises.
The Complainant is yet to receive any amount against the death claim of the deceased Anindya Dutta from the OP Insurance Company.
Here the cause of action arose on 08.08.2015 and there was continued cause of action. The treatment extended to Complainant by the OPs appeared deceitful, illegal and intentional and thus established mala fide intention on their part.
Having been compelled to file the instant complaint petition the Complainant in her petition prays for a direction to the opposite parties to sanction the death claim amounting to Rs.1,05,000/-, to pay further Rs.1,00,000/- as compensation for causing mental agony and harassment and to pay Rs.20,000/-towards litigation cost.
Evidence on affidavit and Brief Notes of argument submitted by the Complainant are almost replicas of the Complaint petition.
The Complainant along with the Complaint petition has submitted copies of communications made by her to the OP 2, legal notices as mentioned before, communications received from the OP 2, death certificate of Shri Anindya Dutta, and receipts against the payments of premiums of OP 2
Issues for consideration
- Whether the complainant is the consumer as defined in the Consumer Protection Act.
- Whether this Commission has territorial/pecuniary jurisdiction to entertain the instant petition.
- Whether there is any deficiency of service on the part of the opposite party.
- Whether the complainant is entitled to get any relief.
Decision with reason
Issue No. 1
In view of the above discussion and on examination of available records it transpires that the complainant is a consumer as far as the provisions laid down under Section 2(7)(ii) of the Consumer Protection Act 2019 are concerned.
Issue No. 2
The complainant and the opposite party no.1 are resident/having their office address within the district of Hooghly.
The claim preferred by the complainant does not exceed the limit of Rs.50,00,000/-
Thus this Commission has territorial as well as pecuniary jurisdiction to proceed in the instant case.
Issue No. 3 and 4
The issues being mutually inter-related, are taken together for convenient disposal of the instant case. However, as none of the opposite parties appeared before this Commission in spite of proper service of notice, the case runs ex parte against all the opposite parties. .
Materials on records viz. complaint petition, evidence on affidavit, brief notes of argument and connected documents submitted by the Complainant are perused.
The Apex Court in the case of Smt. Sarbati Devi vs. Smt. Usha Devi held 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 authorized 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.
Similarly, in the case of Shipra Sengupta vs. Mridul Sengupta and ors., the Supreme Court held that the amount in any head can be received by the nominee but the amount can be claimed by the heirs of the deceased in accordance with law of succession governing them.
In other words nomination does not confer any beneficial interest on the nominee.
As per the amended provisions of year 2015 in Insurance (Amended) Act 2015, the concept of beneficial nominee was introduced under section 39(7). It was alleged that as per the amendment, the parents, spouse and children have been put under the heading of Beneficial Nominee. The policy taken by the deceased son of petitioner is governed by the aforesaid provisions.
A life insurance is an enforceable contract that involves multiple parties such as the policy holder, the insurer and the nominee. Section 39(1) of the Insurance Act 1938 defines a nominee as a person who the policyholder nominates to receive the money secured under the policy upon the death of the policyholder.
Initially the transaction seems straightforward that is upon the death of the policyholder the nominee will receive the life insurance proceeds and the insurer’s liability would stand discharged. However conflicts arise when the payment of the proceeds to the nominee is challenged by the legal heirs of the policyholder/deceased on the ground that they should be entitled to payment of proceeds by succession laws.
However section 39 was amended in 2015. This amendment introduced the concept of a ‘beneficial nominee’ thereby creating a new class of nominees that was different from a mere ‘collector nominee’. Hence this discussion aims to examine how/if the introduction of a ‘beneficial nominee’ has altered the position of law clarified by the Supreme Court in the Sarbati Devi case.
By virtue of the judgment delivered by the Hon’ble Supreme Court in the Sarbati Devi case, Section 39 was not competent to change the direction of succession. Thus the legal heirs of the deceased were the rightful beneficial owners of the life Insurance proceeds. Rights of the nominee were significantly diluted by way of such judicial precedents.
In 2015 a new sub-section i.e. sub section (7) was added to section 39 which provides that if the nominee are parents, spouse, children or children and spouse or any of them of the policyholder then they will be beneficially entitled to the Life Insurance Proceeds (to the exclusion of legal heirs). Hence the amendment created a new category of nominees.
Now after the amendment, the scenario related to nomination underwent certain changes. Two important changes to note are
- If the wife, parent, and/or children are nominated, then other family members such as non-nominated class-1 heirs cannot claim proceeds on account of them being the legal heirs.
- The amendment also works out an exception for the nominated father. A father can now be beneficially entitled to the proceeds to exclude other legal heirs despite being a class 2 heir as per the Hindu succession Act.
In the instant case the focus lies on the issue related to rights of the nominee vs. the rights of the legal heir vis-à-vis life insurance proceeds.
The effect of nomination on the rights of the legal heirs has been a vexatious question of law in the past, leading to conflicting judgments of several High Courts. However the same was settled by the Apex Court in Sarbati Devi vs. Usha Devi, wherein it was held that the nominee Acts only as an agent /trustee and has no beneficial interest in the proceeds. However, an amendment to the Insurance Act in 2015 brought about a new concept of ‘beneficial nominee’ thus altering the traditional understanding of the collector status of the nominee. Taking everything into account, it can be said that the amendment to some extent modified the understanding of a ‘nominee’ as compared to the explanation that the apex Court gave in Sarbati Devi vs. Usha Devi.
While the amendment did not shift the initial understanding of a nominee being a simple trustee or agent, it accommodated the idea of a ‘beneficial nominee’ in relation to the payment of life insurance proceeds.
In view of the amendment it transpires that wherever the amended provisions are applicable the nominee shall have beneficiary interest to the exclusion of all non-nominated legal heirs.
The Insurance laws (Amendment) Act 2015 states that if a person nominates their immediate family member i.e. parents, or spouse, or children, such nominees shall be beneficially be entitled to the amount payable by the insurer to the deceased policyholder and shall not merely be custodians. Such nominees would obtain the proceeds of the insurance policies outright.
In view of the above, this Commission is of the considered opinion that in the instant case the OP 2 has been thoroughly reluctant to disburse the claim amount to the recorded nominee on the plea that the wife of the deceased also approached to them representing her claim. However the case ran ex parte against OP 2 and thus there was no question of producing any hard evidence establishing the fact that the wife of the deceased also approached to OP 2.
The developments depicted chronologically in the complaint petition indicate that the OP 2 with a mala fide intention of brushing aside the claim, repeatedly took recourse to the plea of production of succession certificate. This indicates at gross deficiency of service and unfair dealing.
However this Commission is of the opinion that against the backdrop of the ‘The Insurance laws (Amendment) Act 2015’ the Complainant being the ‘beneficial nominee’ of the insurance policies is entitled to receive the claim amounts.
Hence it is
ORDERED
that the Complaint case bearing no. 232/22 be and the same is allowed ex parte but in part.
OP 2 is being directed to sanction the claim against the insurance policies of Late Shri Anindya Dutta, in favour of the complainant and disburse the claim amount of Rs.1,05,000/- accordingly.
Apart from the above, OP 2 will also be liable to pay Rs.25,000/- as compensation for causing mental agony and further Rs.10,000/- towards litigation cost.
OP 2 is hereby directed to comply with this order within 45 days from the date of this order.
In the event of non-compliance of the order within the stipulated time frame, OP 2 will be liable to pay a cost of Rs.10,000/- to the Consumer Legal Aid account.
Let a plain copy of this order be supplied free of cost to the parties/their Ld. Advocates/Agents on record by hand under proper acknowledgement/sent by ordinary post for information and necessary action.
The final order will be available in the website www.confonet.nic.in
