Devika    [Petitioner]  Vs.  The Senior Branch Manager, Life Insurance Corporation of India (LIC)  [Respondent]

Writ Petition No.29882 of 2023

(D. BHARATHA CHAKRAVARTHY, J.)

The Madras High Court, in the case of a writ petition filed by a mother against the Life Insurance Corporation of India (LIC) and her deceased son’s wife, ruled that a validly nominated beneficiary under Section 39(7) of the Insurance Act, 1938, is entitled to claim the entire insured amount. The petitioner, the mother of the deceased, challenged LIC’s decision to release the full policy amount to her son’s wife, the nominee. The petitioner contended that as a Class-I legal heir, she was entitled to a one-third share of her son’s estate, along with the nominee (Respondent No. 2) and the deceased’s minor daughter. The petitioner sought to restrain LIC from disbursing the full amount solely to the wife, despite her status as the nominated beneficiary.

LIC, however, argued that under Section 39 of the Insurance Act, the nominee is entitled to receive the full sum insured. Respondent No. 2 (the wife) acknowledged her legal and moral obligation and submitted before the Court that she was willing to disburse one-third of the amount to the petitioner, retaining the remaining two-thirds for herself and her minor daughter.

Justice D. Bharatha Chakravarthy, while deciding the case, relied on the Andhra Pradesh High Court’s precedent in Mallela Manimala v. Mallela Lakshmi Padmavathi (2023), which clarified that a “beneficiary nominee” is distinct from a “collector nominee.” A beneficiary nominee has the right to claim the insurance amount as her own, whereas a collector nominee acts as a trustee to distribute the proceeds among all legal heirs. The Court affirmed that a valid beneficiary nominee under Section 39(7) is entitled to the full policy amount, and the insurer’s obligation is discharged once the amount is disbursed to the nominee.

Since Respondent No. 2 voluntarily agreed to release one-third of the amount to the petitioner, the Court held that there was no further need to invoke broader legal questions under Section 39. The Court directed LIC to disburse the amount accordingly—one-third to the petitioner and two-thirds to Respondent No. 2.

The judgment clarified that any internal disputes regarding the distribution of the proceeds among legal heirs, beyond the statutory rights of the beneficiary nominee, are outside the insurer’s purview and must be resolved separately. LIC’s role is limited to disbursing the amount to the valid nominee as per the policy and Section 39 of the Act. Thus, the writ petition was disposed of with the direction that LIC immediately release the funds as agreed by the parties, closing the matter at this stage.