Section 47 of IA : Section 47: Payment Of Money Into Court

Explanation using Example

Imagine a situation where Mr. Sharma, who held a life insurance policy, has passed away. The policy is due to pay out a significant sum to the beneficiaries. However, there are multiple individuals claiming to be the rightful recipients of the policy payout, including a former spouse, an estranged child, and a business partner. Additionally, there is some confusion regarding the validity of the nomination made by Mr. Sharma due to a lack of clear documentation.

The insurance company, unable to determine the rightful claimant and concerned about potential legal disputes, decides to use Section 47 of the Insurance Act, 1938. They file a petition to the court with all the required details, including the names and addresses of the claimants, the nature of the policy, and their reasons for being unable to provide a satisfactory discharge of payment.

After waiting for the mandatory six months from the receipt of the death notice, the court accepts the insurer's application and allows the payout amount to be deposited with the court. The court then takes on the responsibility of notifying the claimants, investing the funds in government securities, and ultimately deciding who is legally entitled to the policy's amount.

This action by the insurance company ensures that they are not held liable for paying out the funds to the wrong party and that the dispute over Mr. Sharma's insurance policy will be resolved by the judicial system.