Beneficiary Nomination Under Insurance Act Can't Override Succession Law: Karnataka HC Suggests 'Better Practices' To Follow While Enacting, Amending Law

Dismissing the mother's appeal and upholding the trial court order, the high court said, “ Appellant who is the mother of late Ravi Somanakatti, the insured, is one of the Class-I heirs, along with widow and minor son of the insured. Since this Court has taken a view that the Section 39 of the Act of 1938 does not override the provisions of Hindu Succession Act, 1956, the appellant who is the nominee described in Section 39 of the Act of 1938 cannot claim absolute ownership over the benefits flowing from the insurance policy as other Class-I heirs of the deceased have also laid a claim over the benefits flowing from the policy ”. " The court held that if the legal heirs of the deceased policy holder make a claim on the holder's policy, then the "nominee's claim has to yield to the personal law governing succession". The Karnataka High Court has held that the amended Section 39 of the Insurance Act is not intended to override the provisions of law relating to succession. The clause to treat the nominee as the beneficiary nominee in the absence of any declaration by the policy holder as to the nature of nomination, suggested by the Law Commission, is also not found in the amended provision.” Perusing the suggestions of the Law Commission the court said that the same indicate's that the Law Commission wanted certain class of nominee/s to exclude the heirs under law from claiming rights, suggesting an explanation of the term “beneficiary nominee”.