Nominee status does not displace legal heirs' rights to insurance proceeds under personal law of succession.

The Petitioner No. 1 is the widow and Petitioner No. 2 is the minor son of late Sadidur Rahman, an employee of the Assam Police Battalion

Under a Memorandum of Understanding (MoU) between the Police Department and State Bank of India (SBI), employees were provided Personal Accident Insurance Cover of Rs. 75 lakhs

Following Rahman's death, the petitioners claimed the insurance benefits. However, the authorities declined the claim, stating that the respondent No. 8 (the deceased's father) was the registered nominee in the salary account

While the Police Department updated the service sheet to include the petitioners’ names for other terminal benefits like leave encashment (which were paid), the SBI and Oriental Insurance Company maintained that the insurance claim must be released to the nominee per the MoU

The private respondents (parents) expressed willingness to share 50% of the amount, whereas the petitioners claimed shares based on personal law

1. Whether a nominee in a bank account/insurance policy is the absolute owner of the funds or merely a trustee for the legal heirs.

2. Whether the Writ Court can determine the specific shares of legal heirs in a disputed claim governed by personal law and succession.

The Court primarily applied the principle established by the Supreme Court of India in Smt. Sarabati Devi & Anr. v. Smt. Usha Devi (1984) 1 SCC 424, which mandates that a nomination does NOT confer beneficial interest or ownership of the insurance amount upon the nominee; the nominee is merely the hand authorized to receive the amount on behalf of the legal heirs

The Court further considered the principles of Muslim Personal Law regarding the distribution of an estate, where a widow is entitled to 1/8th, parents to 1/6th each, and the remainder to the son

The Court analyzed the conflict between the contractual terms of the MoU (which directs payment to the nominee) and the established law of succession. Referring to Sarabati Devi, the Court noted that while the Insurance Company is contractually bound to pay the nominee (Respondent No. 8), such payment does not extinguish the rights of other legal heirs

The Court observed that determining the exact distribution involves disputed questions of fact and the interpretation of Muslim Personal Law, which requires the adducing of evidence

Consequently, the Court held that a Writ Petition under Article 226 is not the appropriate forum for such adjudication; rather, the parties must approach a competent Civil Court to establish their claims under the law of succession

The Court disposed of the writ petition without adjudicating the inter se rights of the parties, granting the petitioners liberty to approach a competent Civil Court

To protect the corpus of the claim, the Court directed the Oriental Insurance Company and SBI not to disburse the insurance amount for a period of 30 days, or until an order is passed by a competent Civil Court, whichever is earlier