Bengaluru: The Karnataka High Court has ruled that a nomination made during a deceased person’s lifetime does not override the rights of legal heirs. The court clarified that after a person’s death, their estate is inherited by legal heirs. This is under the applicable law of succession, regardless of any nominee.
Justice Hanchate Sanjeevkumar made this observation while dismissing an appeal by Annapurna. She had challenged a trial court order rejecting her plea to be impleaded in a suit. The suit was filed by the legal heirs of Kantesh Khandagale. The heirs had sought a succession certificate under Section 372 of the Indian Succession Act.
Nomination Does Not Confer Ownership
The appellant argued that Kantesh Khandagale had purchased an insurance policy during his lifetime and named her as the nominee. She contended that, as the nominee, she was legally entitled to receive the policy amount, not the legal heirs.
Citing Sections 39(7) and 39(8) of the Insurance Act, 1938. Annapurna maintained that since she was the only nominee. She alone was entitled to the insurance amount. She further claimed that granting a succession certificate to the legal heirs would make it difficult for her to receive the policy payout.
Court’s Observations
The court noted that being a nominee does not override the rights of legal heirs under succession law. It stated, “Just because the deceased made the appellant a nominee, it does not defeat the law of succession when other legal heirs have a rightful claim to the estate.”
It clarified that the purpose of nomination is to facilitate the initial payout process by financial institutions. However, nomination does not exclude legal heirs from claiming their rightful inheritance.
Reliance on Supreme Court Precedent
Referring to the Supreme Court’s ruling in Smt. Sarabati Devi and Another v. Smt. Usha Devi (1984), the High Court reaffirmed that a nominee does not have absolute ownership over an insurance policy’s proceeds. Instead, the nominee merely acts as a trustee for the legal heirs.
Concluding that Annapurna’s claim had no legal merit, the court dismissed the appeal, upholding the legal heirs’ right to claim the estate, including the insurance amount.
This ruling reinforces that legal heirs retain their rights to a deceased person’s assets, regardless of any nomination, ensuring adherence to the law of succession.
