Nomination under an insurance policy only indicates hand which is authorised to receive the insured amount — Insurance Act, 1938.

[Anita Dilip Gaidhane and Anr. v. Bajirao Madhavrao
Gaidhane and Ors., 2010 Vol. 112(3) Bom. L.R. 1065]

The respondent No. 1 — father was nominated by the deceased
Dilip while effecting the insurance policies. The appellant i.e., wife and
daughter of the deceased Dilip applied for succession certificate. The Trial
Court refused to grant succession certificate to the appellants on the ground
that the respondent No. 1 — father was nominated by deceased while effecting
insurance policies. The appellants contention was that admittedly they were
class-I heirs, therefore entitled to one-third share in the money payable under
various policies, which could be declared by the Court instead of undergoing
another round of litigation.

The Court held that the amount assured shall be paid to the
nominee in order to give discharge to the insurer, but it does not mean that the
nominee becomes the owner of the amount and that S. 39 cannot operate as a third
kind of succession and the nominee cannot be treated equivalent to an heir or
legatee. At the same time, it also held that the nomination only indicates the
hand which is authorised to receive the amount, on the payment of which the
insurer gets a valid discharge of its liability under the policy. The amount,
however can be claimed by the heirs of the assured in accordance with the law of
succession governing them.

The Court further held that even after remarriage to another
person in a different family, a widow, having acquired absolute interest in the property of her deceased husband, is
not divested of the same. To avoid multiplicity of litigation, the Court
directed the insurance company to release the amount payable under the policies
to the father and on receipt of the amount payable under the policies, the
father shall distribute the same to the appellants in equal proportion.