Malabika Ghosh Vs UOI & Ors (2021): A Nominee Remains A Trustee Holding The Proceeds Of The Insurance Policy For And On Behalf Of The Legal Heirs Of The Deceased

Case Background

• The petitioner challenged the constitutional validity of Section 39(7) of the Insurance Act, 1938. The Section was inserted by the Insurance Laws (Amendment) Act, 2015.
• It was alleged that the Amendment made the family members of the insured, who were his nominees, as the beneficial owners.
• Therefore, the petitioner (wife) also requested the Court to issue the writ of mandamus, prohibiting the Insurance Company from disbursing any sum of money to the mother of her deceased husband under two life insurance policies taken out by him.

Court’s Order

• The Court held that the writ petition is maintainable, and opined that the mother in law of the petitioner should be entitled to the proceeds of the deceased person’s insurance policy.
• It further directed the Insurance Company to extend the proceeds to the mother of the deceased within 10 days from the date of receipt of the Court Order.
• The Bench also sought the response of the Centre with respect to the petitioner’s suit within a period of six weeks.

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