In this civil appeal, the Supreme Court of India addressed a dispute concerning the disbursal of life insurance policy proceeds of a deceased husband between his wife (the appellant) and his father (the 6th respondent and policy nominee). Noting that the wife and the mother are the sole Class I legal heirs and recognizing the appellant’s fair concession to take only half of the proceeds, the Supreme Court invoked the settled legal principle that a nominee holds funds in trust for the legal heirs. The Court directed the father-in-law to pay 50% of the insurance proceeds to the wife within two months, disposed of pending succession cases, and ordered the closure of related criminal proceedings upon fulfillment of the payment.
- Factual Background:
- The appellant’s husband passed away on October 1, 2024, prior to the culmination of a pending divorce petition between them.
- Following his death, a dispute arose regarding the disbursal of proceeds from his life insurance policy.
- The 6th respondent (the deceased’s father and father-in-law of the appellant) was recorded as the nominee in the policy, and the High Court had earlier directed the insurance money to be disbursed to him.
- Two separate succession cases (Succession Case No. 686 of 2025 and Succession Case No. 567 of 2025) had been filed by the wife and the mother (wife of the 6th respondent) before the jurisdictional court.
- Concessions and Proceedings Before the Supreme Court:
- During the hearings, the appellant’s senior counsel fairly offered to accept 50% of the insurance proceeds, relinquishing her previous claims to the entire amount and her assertions regarding the payment of premiums.
- The wife and the mother constitute the sole Class I legal heirs entitled to succeed to the estate of the deceased.
- The Court declined requests for adjournments driven by attempts to change counsel, dismissing them as dilatory tactics.
- Supreme Court’s Directions and Settlement:
- Disbursal of Insurance Proceeds: Reaffirming the trite legal principle that a nominee holds funds in trust for those entitled to succeed to the estate, the Court directed the 6th respondent to pay 50% of the insurance proceeds to the appellant within two months either via demand draft or direct bank transfer.
- Default Interest: If the amount is not paid within the stipulated two-month period, it will attract an interest rate of 12% per annum from the date the insurer disbursed it to the 6th respondent until final payment.
- Closure of Succession Cases: Parties are required to present a copy of this order before the competent court, and the pending succession cases shall be closed provided there are no other assets left to partition.
- Quashing of Criminal Proceedings: The appellant conceded not to proceed with FIR No. 288/2024 (under Sections 498A, 506 read with Section 34 of the IPC). Further proceedings under this FIR are stayed for two months, and upon proof of payment by the 6th respondent, the Station House Officer of Vasant Kunj Police Station must close the investigation and file a closure report before the jurisdictional magistrate.
- Counsel Fees: The Court specified that the counsel appointed by the Legal Services Committee, who appeared twice, must be paid her due fees.
