+A Feminist Rewriting of the Khushboo Gupta case.

In Re Khushboo Gupta v. LIC of India & Ors.

I. Facts:

1. The petitioner, Khushboo Gupta, is the widow of Prem Kumar Yadav, who obtained a
life insurance policy from The Life Insurance Corporation of India (LIC).

2. The deceased had nominated his mother, Mahasundari Devi, as the policy beneficiary.

3. Following the death of the life assured, respondent no. 5, Mahasundari Devi, claimed
the entire insurance amount.

4. The petitioner, Khushboo Gupta, remarried after the death of her husband but still
asserts her right to 50% of the death claim proceeds.

II. Issues:

1. Whether the petitioner, as a widow who has remarried, is entitled to receive 50% of
the death claim proceeds.

2. Whether the nomination made by the deceased in favour of his mother entitles her to
claim the entire insurance amount.

III. Reasoning:

The court examined the relevant provisions of the Insurance Act of 1938, specifically Section
39, which governs the rights of a nominee. The court held that a nominee has no absolute
right to the entire amount payable under the policy. Various case laws, including the case of
Kasturi Devi v. Dy Director of Consolidation, supported this interpretation.

The court also considered the Hindu Succession Act 1956 provisions governing property
succession in this case. The petitioner and respondent no. 5 are Class – I legal heirs under this
act. The court concluded that the petitioner, as the widow, has a vested right to receive the
death claim proceeds, which cannot be divested even if she has remarried. This conclusion
was supported by the case of Cherotte Sugathan (Dead) through LRS. & Ors. v. Cherotte
Bharathi & Ors.
IV. Case Law:

1. Kasturi Devi v. Dy. Director of Consolidation: In this case, it was held that a widow
who succeeds to her deceased husband’s property under the Hindu Succession Act,
1956 acquires an absolute right and cannot be divested of that right upon remarriage.

2. Cherotte Sugathan (Dead) through LRS. & Ors. v. Cherotte Bharathi & Ors.:
This case established that once a right has been vested in the widow in the estate of
her husband by dying intestate, the subsequent marriage conducted by the widow
would not take away her vested right to receive a portion of the policy proceeds.

V. Application of Ratio Decidendi:

If the decision were to be appealed, potential arguments could be raised. One view is that the
court’s interpretation of Section 39 of the Insurance Act 1938 may need to be more relaxed. It
could be argued that the nominee should have an absolute right to the entire amount payable
under the policy, as the deceased specifically nominated respondent No. 5 as the beneficiary.

However, it is essential to note that the court’s decision was based on a thorough analysis of
the relevant case laws. The court considered the widow’s rights under the Hindu Succession
Act, 1956, and concluded that her remarriage does not affect her entitlement to the death
claim proceeds. Therefore, it is likely that an appeal would fail in challenging the court’s
decision.

VI. Conclusion:

Based on the facts, issues, reasoning, and application of relevant laws and case laws, the
court determined that the petitioner, Khushboo Gupta, as the widow, is entitled to 50% of the
death claim proceeds, regardless of her remarriage. The court directed The Life Insurance
Corporation of India and its authorities to divide the proceeds equally between the petitioner
and respondent No. 5.
VII. Issues – Rewritten Judgment:

A comprehensive, inclusive plan for balancing competing rights is possible when property
rights are examined from a feminist perspective within a non-exclusionary structure. As such,
this rewritten judgment will borrow from such views to reframe property rights based on
considerations beyond what is presently provided for in statutes. In this exercise, a great need
for revision and harmonisation is felt. Instead of tirelessly seeking to fit laws into finalities,
this rewritten judgment focuses on the latent possibility and the radical potential inherent to
such transformative decisions.

The following issues were framed:

1. Whether the nominee’s rights as under §39 of the Insurance Act are affected by
Succession Law except for otherwise provided for by the Act?
2. Whether the judgment of the learned High Court in the matter is overturned?
3. Whether the rights of Class-I Heirs to proceeds of an insurance policy higher than the
rights of a nominee?
4. What reliefs, if any, can be granted?
 IN THE SUPREME COURT OF INDIA
IN THE MATTER OF

Life Insurance Corporation and Others …………………………. Appellant

v.

Khushboo Gupta…………………………………………….Respondent

JUDGMENT

HEADNOTE

Insurance - Policy claim - Entitlement to - Section 39 of Insurance Act, 1938 - Writ

Petition filed for direction to Respondent authorities to pay policy amount on the death
of deceased arising out of life insurance policy obtained by deceased - Whether
Petitioner entitled to claim policy amount - Held, the Petitioner could not claim 50% of
policy proceeds by nomination under Section 39 of Act - ... No. 5 by dividing the same
equally between them - Court’s judgment overturned - nominee entitled to full and free
enjoyment - Insurance Policy Proceeds not to be seen within ambit of inheritable
property - Writ Petition allowed.

Justice XYZ.

1. The above matter has become a topic of debate in academic and legal circles, where
the foundation of Succession Law and interpretation of the Hindu Succession Act
becomes shaky, and this court, established to resolve this issue, finds certain elements
and propositions untenable.
2. This appeal arises from the judgment of the Patna High Court in the matter of
Khushboo Gupta v. LIC of India, dated 25.09.2019. The case raises significant
questions concerning the interplay between nominee rights under Section 39 of the
Insurance Act and the rights of legal heirs under the laws of succession. This Court is
now prepared to deliver its judgment after considering all parties’ arguments,
submissions, and relevant precedents.
3. The present case involves a dispute over the entitlement to the policy amount under a
life insurance policy obtained by the deceased. The petitioner, who claims to be the
legally wedded wife of the dead, seeks 50% of the death claim proceeds. In contrast,
 respondent no. 5, the deceased's mother, claims the entire insurance proceeds by the
nomination made by the dead. The main issue before the Court is whether the
petitioner is entitled to claim the policy amount. After considering the relevant
provisions of the Insurance Act, 1938 and the Hindu Succession Act, 1956, the
learned High Court held that respondent no. 5 cannot claim 100% of the policy
proceeds. It directs the LIC to divide the amount equally between the petitioner and
respondent No. 5.
4. The learned High Court stated the current legal position through the cases of Sarbati
Devi v. Usha Devi (AIR 1984 SC 346) and the Uma Sehgal case (AIR 1982 Del 36),
which, in confluence led the learned single judge to conclude that the Insurance
Company was liable to pay the nominee just half of the proceeds and that the other
half would go to the Class-I Heir of the deceased policyholder.
5. We have since heard both appeals arising from the decision and framed the following
issues.
I. Whether the nominee’s rights as under §39 of the Insurance Act are affected
by Succession Law except for otherwise provided for by the Act?
II. Whether the judgment of the learned High Court in the matter is overturned?
III. Whether the rights of Class-I Heirs to proceeds of an insurance policy higher
than the rights of a nominee?
IV. What reliefs, if any, can be granted?
6. We shall extensively deal with Issue I by looking at three notable features of the Acts
and analysing the grounds for the appeal.
7. Issue 1 addresses the relationship between a nominee's rights under Section 39 of the
Insurance Act and Succession Law. Nominee rights are unique and arise from the
insurance contract framework. If a nominee is also a rightful heir under Succession
Law, they receive insurance proceeds as clearly intended by the legislature.
Succession Law shouldn't override the Insurance Act, which prioritizes adherence to
statutory norms. The court upholds the distinctive nature of nominee rights under
Section 39 and emphasizes their primacy over succession law, except when the Act
explicitly says otherwise. This ensures equitable and predictable outcomes in
insurance benefit distribution.
8. Furthermore, it is imperative to consider the provisions laid out in Sub-section 2 of
Section 39 of the Act (Insurance Act, 1938), which delineate the meticulous
procedure for making a nomination and outline the insurer's obligations concerning
the payment of the assured sum to the nominee. This sub-section unequivocally states:
"Any such nomination, to be effectual, shall, unless it is incorporated in the
text of the policy itself, be made by an endorsement on the policy
communicated to the insurer and registered by him in the records relating to
the policy. Any such nomination may, at any time before the policy matures
for payment, be cancelled or changed by an endorsement or a further
endorsement or a will, as the case may be, but unless notice in writing of any
such cancellation or change has been delivered to the insurer, the insurer
shall not be liable for any payment under the policy made bona fide by him to
a nominee mentioned in the text of the policy or registered in records of the
insurer."
9. This statutory provision is both perspicuous and instructive in delineating the process
for a nomination to be deemed effective. It mandates that a nomination must either be
incorporated into the policy's text or communicated to the insurer and duly registered
in the insurer's records. Moreover, it is underscored that a policyholder retains the
prerogative to alter the nominee through an endorsement or, notably, a will. However,
and this is of paramount importance, the sub-section further elucidates that the insurer
cannot be held liable for any payment made in good faith to the earlier nominee,
provided that the insurer still needs to be duly notified of the change or cancellation.
10. This provision bears testament to the legislature's intent to provide policyholders with
flexibility in nominating beneficiaries. It acknowledges the possibility of changes
being effected through a will, even if not reflected in the policy's text. Nonetheless,
the provision also imposes a duty of due diligence upon insurers, emphasising that
payments made in good faith to the nominee listed in the policy or registered in the
insurer's records are protected. The pivotal criterion here is the bona fides of the
insurer's actions.
11. In this context, "payment made bona fide" emerges as a linchpin in interpreting
insurers' obligations under Section 39 of the Act. It is vital to underscore that payment
made by an insurer, once duly informed of a change effected through a will, can no
longer be considered bona fide. In such circumstances, the insurer faces a binary
choice: either to adhere to the terms stipulated in the will or await the resolution of
 any potential litigation, particularly if the validity of the will is contested by any of the
legal heirs of the policyholder.
12. This interpretation aligns harmoniously with the statutory framework and the
overarching principle that insurers are bound by the information provided,
emphasising the significance of timely and accurate communication in insurance
transactions. The provision, read in conjunction with judicial precedents, underscores
the pivotal role of bona fides in safeguarding the interests of all parties involved, be
they nominees or legal heirs, and reaffirms the need for transparency and diligence in
insurance matters.
13. Additionally, this interpretation is fortified by the judgment of the Hon’ble High
Court of Delhi in Shweta Singh Huria and Others vs Santosh Huria and Another,
which elucidated the importance of bona fides in insurance transactions and affirmed
the principle that insurers must act in accordance with the information provided to
them. This case is a pertinent precedent in understanding the nuanced interplay
between nominations, wills, and insurer liability under Section 39 of the Act.
14. It is paramount to recognise that nominee rights possess a unique character, as
enshrined in Section 39 of the Insurance Act. These rights emanate directly from the
statutory framework governing insurance contracts and are characterised by their
clarity and specificity. When nominees are designated in an insurance policy, they are
vested with a particular entitlement contingent upon the policyholder's demise.
15. The statutory language pertaining to nominee rights is unequivocal. If a nominee
happens to be a rightful heir under the Succession Law, they shall receive the
insurance proceeds without any ambiguity. This reflects the clear legislative intent
behind the provision. It underscores the legislature's commitment to providing a
streamlined mechanism for the disbursement of insurance benefits, free from the
intricacies of succession disputes.
16. Crucially, the principles of succession law should not and cannot override the explicit
provisions of the Insurance Act. Our legal system places a premium on adherence to
statutory norms, and it is the solemn duty of the judiciary to uphold their sanctity. The
Court must ensure that its orders align with the unequivocal language of the statute.
This is fundamental to maintaining the integrity of our legal system and ensuring
predictability and consistency in applying laws.
17. In reaching this conclusion, the Court acknowledges the traditional values enshrined
in Hindu Shastras, which emphasise an individual's primary duty towards their
 parents. While these values hold undeniable significance, they must coexist
harmoniously with the legal framework that governs insurance contracts.
18. Therefore, after a comprehensive and deliberate examination, this Court firmly
upholds the distinctive nature of nominee rights under Section 39 of the Insurance
Act. These rights are to be respected and implemented per the statute's mandate. They
stand apart from the principles of succession law and should not be subject to the
uncertainties of the latter, except where explicitly provided otherwise by the Act. To
do otherwise would be to compromise the legislative intent and erode the clarity and
certainty that the Insurance Act seeks to provide regarding insurance benefit
disbursement.
19. The second pivotal issue that commands our deliberation pertains to the question of
whether the judgment rendered by the High Court in this intricate matter warrants
overturning. To this query, our unequivocal response is in the affirmative. The High
Court's pronouncement, albeit issued with due consideration, needs to be more
accurate on two salient fronts, casting a shadow upon the clarity of its legal reasoning
and the fidelity to recent legal developments.
20. At the epicentre of this jurisprudential quagmire lies the seminal and watershed
decision rendered in the august context of Section 39 of the venerable Insurance Act
of 1938, bearing the nomenclature Mallela Manimala Vs. Mallela Lakshmi
Padmavathi and Ors. [2023 (3) ALD 530]. This landmark judicial decree, a
jurisprudential lodestar, represents nothing short of a tectonic shift in the ever-
evolving tapestry of legal doctrines governing nominations in insurance policies. The
resonant clarion call of this decision resounds with a declaration that, in the aftermath
of the august amendment of Section 39, transformative legal alchemy transpires,
wherein a beneficial nominee emerges as the paramount and unassailable inheritor of
the insurance pecuniary largesse, transcending the realm of mere legal heirs who are
thereby consigned to the murky depths of jurisprudential subordination. The
legislative chisel, honed with meticulous care and foresight, brings forth a paradigm
shift of profound import. This seismic shift amplifies, with crystalline clarity, the
nominee's entitlement to an echelon of unparalleled eminence. The High Court's
lamentable judgment, cloaked in the veneer of scholarly precision, inadvertently
cleaves itself asunder from the beacon of this transformative legal paradigm,
perpetrating the grievous oversight of neglecting to bestow upon it the due imprimatur
of recognition. This lamentable lacuna in the High Court's analytical edifice is an
 unfortunate testament to the fallibility inherent in the human endeavour of
jurisprudential elucidation.
21. The second infirmity that tarnishes the High Court's judgment stems from its reliance
upon the precedent enunciated in Sarabati Devi v. Usha Devi. Regrettably, the legal
terrain has undergone subsequent evolution, precipitating a shift in the judicial
perspective, which necessitates the recalibration of our legal compass. Although of
undeniable legal import, the earlier judgment in Sarabati Devi must now yield to the
persuasive authority of subsequent decisions that have altered the legal contours
pertaining to nominations and beneficiary rights in insurance policies. In light of the
evolving legal landscape and the corollary overruling of Sarabati Devi, the High
Court's reliance on this precedent needs to be revised, diminishing its legal rationale's
potency.
22. Therefore, considering the transformative legal developments in Mallela Manimala
and the recalibration of legal principles vis-à-vis nominations in insurance policies,
we are compelled to exercise our appellate jurisdiction to overturn the High Court's
judgment. This corrective measure is dictated not by caprice but by a solemn
commitment to upholding the law in its most contemporary and evolved form,
ensuring that justice is rendered in consonance with the prevailing legal precepts.
23. The judgment of the learned High Court is hereby overturned.
24. The third issue, we feel, is clearly answered in the judgment delivered on the first two
issues. Nonetheless, my brother Judge and I find it pertinent to note the following.
25. To address the third issue, it is instructive to draw from the wisdom expounded in the
decision of the Delhi High Court in the case of Uma Sehgal [MANU/DE/0337/1981:
AIR 1982 Del 36: ILR (1981) 2 Del 315], which illuminates the interplay between the
rights of legal heirs and the rights of a nominee in the context of insurance policies.
This precedent serves as a lodestar in navigating the intricate terrain of the nominee
and legal heir their rights, laying down a jurisprudential foundation that should have,
in all propriety, informed the impugned judgment of the Patna High Court. In the
aforementioned decision, the court grappled with a situation akin to the present
matter, where the deceased policyholder had nominated his wife in the insurance
policy. The critical question that arose was whether the deceased's mother was
entitled to a portion of the insurance amount in virtue of her status as a legal heir. The
court's answer to this query was unequivocal and in alignment with established legal
principles. It held that the nomination, a deliberate act by the policyholder, effectively
 excluded the mother from claiming a share in the insurance proceeds. The court's
rationale was underpinned by the statutory provisions enshrined in Section 44(2) of
the Insurance Act, which provides that commissions payable to an insurance agent
continue to be payable to their heirs after their demise. However, if the agent has
nominated a person, the commission shall be paid to the nominated individual. As
elucidated by the court, this statutory provision substantiates the notion that the
nominee receives the proceeds not as a mere conduit but as the rightful recipient,
thereby excluding the legal heirs from a competing claim.
26. With all due deference to the learned Patna High Court, it is a matter of profound
regret that the wisdom imparted by the Delhi High Court in Uma Sehgal was not
bestowed with the due reverence it merited in the impugned judgment. The Delhi
High Court's lucid exposition underscores a fundamental legal tenet that resonates
with law and reason. The nominee's status is not that of a mere agent handling the
proceeds on behalf of others; instead, the nominee assumes the mantle of rightful
ownership over the insurance proceeds. This assertion is not a jurisprudential novelty
but is firmly entrenched within the ambit of Section 44(2) of the Insurance Act, as
reaffirmed in various judicial pronouncements, including B.M. Mundkur v. Life
Insurance Corporation [MANU/TN/0295/1977: AIR 1977 Mad 72: 47 Com Cas 19 :
(1977) 1 MLJ 59: ILR (1975) 3 Mad 336].
27. As custodians of justice, we are bestowed with a solemn duty not only to interpret the
law but also to rectify missteps when they occur. The legal landscape, fortified by the
harmonious interplay of statutes and precedents, leaves no room for ambiguity — the
nominee's exclusive entitlement to the insurance proceeds, to the exclusion of
competing claims by legal heirs, stands as a testament to the legislature's intent and
judicial wisdom. In honouring this legal imperative, we hope to restore equilibrium to
the principles governing insurance policies and provide clarity to those who, in their
most vulnerable moments, place their trust in these contracts to safeguard the future of
their loved ones.
28. The paramount question before this Court pertains to the appropriate relief, if any,
that can be granted in light of the intricate legal framework that governs the
competing claims for the insurance proceeds. In addressing this issue, we must
explore the remedies available within the contours of the law and the inherent equities
of the case.
29. The legal arena, ever vigilant to protect the rights and interests of parties, offers an
array of remedies designed to address the multifaceted dimensions of a dispute. In the
instant matter, we are confronted with a scenario where the nominee, the mother of
the deceased policyholder, has been steadfastly recognised as the rightful beneficiary
under the insurance policy. This recognition, grounded in both the statutory
framework and established legal precedents, underscores the nominee's undeniable
claim to the insurance proceeds. To contest this claim on behalf of the legal heirs
would be akin to tilting at windmills—an exercise in futility, bereft of legal support
and jurisprudential rationale.
30. In the realm of insurance jurisprudence, the nominee's entitlement to the proceeds
enjoys a sanctified status shielded by legislative intent and judicial wisdom. The
Insurance Act of 1938 and the seminal decision in Mallela Manimala Vs. Mallela
Lakshmi Padmavathi [2023 (3) ALD 530] have unambiguously clarified that the
nominee's right supersedes all other claims, relegating legal heirs to the periphery.
31. ` This pronouncement, founded upon the edifice of legal precedent, precludes any
alternative outcome that might divert the insurance proceeds away from the nominee's
rightful grasp.
32. In this hallowed arena of insurance law, where the legislative intent aligns seamlessly
with judicial interpretation, we must tread with utmost circumspection. The mother, as
the nominee, stands as the solitary beacon of the deceased policyholder's intent,
entrusted with the solemn duty to secure the financial future of her family. To
contemplate any relief that would infringe upon this sacred trust would be an affront
to the sanctity of insurance contracts and the paramountcy of the nominee's
entitlement.
33. In light of the preceding analysis, it becomes abundantly clear that no relief, save for
the confirmation of the mother's entitlement to the insurance proceeds, can be
countenanced within the ambit of the law. The legal framework, steeped in clarity and
unambiguous in its delineation, leaves no room for ambiguity or contravening claims.
As the arbiters of justice, it is our duty to affirm the nominee's rights and uphold the
principles of equity and justice enshrined in the law.
34. Therefore, we grant the relief sought by the mother, the nominee, and affirm her
undisputed entitlement to the entire quantum of the insurance proceeds. The Insurance
Corporation is directed to expeditiously disburse the said proceeds to the nominee
 without delay in fulfilment of the solemn commitment made under the insurance
policy.
35. In light of the comprehensive analysis and conclusions drawn in this judgment, we
proceed to address ancillary matters, including costs, the disposition of the appeal,
and any further directions necessary to ensure the orderly implementation of our
decision.
36. In view of the clear and unequivocal legal principles that have guided this judgment
and considering that the appeal has been allowed in favour of the nominee and that
the appellant, LIC of India, shall bear the costs of these proceedings. The costs shall
include the legal expenses incurred by the respondent, the nominee, in defending her
rightful claim to the insurance proceeds.
37. Having meticulously examined the issues and being persuaded by the sound legal
principles and precedents discussed in this judgment, we hereby allow the appeal. The
impugned ruling of the Patna High Court is overturned. The nominee, the mother of
the deceased policyholder, is affirmed as the rightful beneficiary of the insurance
proceeds.
38. To ensure the expeditious implementation of this judgment, we direct the Life
Insurance Corporation of India (LIC) to immediately release the entire quantum of the
insurance proceeds to the nominee, the mother of the deceased policyholder, as per
the insurance policy's terms. LIC is further instructed to facilitate this disbursement
without any undue delay, and in adherence to the statutory and contractual
obligations.
39. LIC of India is directed to comply with the orders of this Court forthwith and intimate
the nominee of the specific steps taken to effectuate the release of the insurance
proceeds. LIC shall also provide a detailed account of the disbursed amount to ensure
transparency in the process. The nominee, the mother of the deceased policyholder, is
entitled to any accrued interest on the insurance proceeds from the date of the
policyholder's demise until the actual disbursal of the amount. LIC of India is directed
to compute and include this interest in the total amount paid to the nominee.
40. This judgment, being the culmination of a thorough examination of the legal and
factual aspects of the case, is final and binding. No further appeal or review shall lie
in this matter, and the parties are expected to abide by the principles enunciated
herein.
41. A copy of this judgment shall be provided to all concerned parties and the counsel
representing them. Furthermore, we direct the publication of this judgment in the
official law reports and legal databases to ensure its accessibility and applicability as a
legal precedent.
42. In the event of any non-compliance with the orders of this Court, the affected party,
i.e., the nominee, shall have the liberty to approach this Court for appropriate
remedies and directions.
43. The Registry of this Court is instructed to take necessary steps to ensure the prompt
execution of this judgment, including the issuance of notices, communication with the
parties, and the preservation of records.