Report No. 66

8.34. Point (d)-Nomination made under section 39, Insurance Act, 1938.-

The next question pertains to the effect of a nomination under section 39 of the Insurance Act, 19381. Some difficulty in this regard is created by the words in section 6-"for the benefit of " Do these words mean that a nomination under section 39 of the Insurance Act would satisfy the formula? The High Courts have taken the view that a nomination under section 39 of the Insurance Act, 1938, does not satisfy the requirements of section 6. This is the Allahabad2, Andhra Pradesh3, Calcutta4 and Madras5 view. We shall refer to some of the reported decisions.

In one Allahabad6 case it was held that section 6(1) clearly shows that the policy has to be effected for the benefit of the wife. The language was not that a policy effected for the benefit of another person may be considered to have been effected for the benefit of the wife by a subsequent nomination. The making of a subsequent nomination in favour of the wife is merely authorising her to receive the money arid is not the "effecting" of a policy for her benefit, A policy cannot be effected twice. Where, therefore, the wife was not made beneficiary ab initio, the policy was not effected by the husband "for the benefit of his wife" within, section 6(1), and the mere fact that he had made a subsequent nomination such as he was empowered to make under section 39 of the Insurance Act, does not make the policy a policy to which section 6(1) applies because of such nomination.

The court held that the equitable and beneficial interest, whether immediate or contingent, must be created at the very inception of the policy. It was held: "It must be created ab initio in the wife or the children or any of them if it is to attract section 6(1) of the Married Women's Property Act. Otherwise if a trust is to be created later in favour of any person after the policy has been effected, then it cannot be created under section 6(1) of the Married Women's Property Act, but must be created as any other trust is created It seems to us clear that section 39 of the Insurance Act and section 6(1) of the Married Women's Property Act are not complementary, and that the right of nomination which is bestowed on a policy-holder under section 39 of the Insurance Act cannot be read into section 6(1) of the Married Women's Property Act so as to vary the clear intention of the latter Act."

The wife's appeal was dismissed on the above ground.

1. Para. 5.5, supra.

2. AIR 1958 All 569 (572) (see infra), para. 8.34.

3. AIR 1957 AP 757 (758) (see infra), para. 8.35.

4. AIR 1956 Cal 275 (276) (see infra), para. 8.36.

5. AIR 1957 Mad 105 (see infra), para. 8.38.

6. Shanti Devi v. Shri Ram Lal, AIR 1958 All 569.