Life insurance policy assignment under statute prevails: insurer must recognise a valid assignee, even without insurable interest.

Section 38 of the Insurance Act is substantive: it governs the valid assignment of life insurance policies, makes the transfer effective once the statutory procedure is followed, and requires the insurer to recognise the assignee subject to policy terms. A later assignee need not have insurable interest merely because the policy is assigned, since insurable interest is required at inception, not for every subsequent transfer. Such an assignment is not invalid as a wagering contract or as contrary to public policy on that ground alone. Administrative circulars that refused registration of otherwise valid assignments were inconsistent with the statute and therefore invalid.

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Issues: (i) Whether section 38 of the Insurance Act, 1938 is a substantive provision conferring a right to assign life insurance policies, or merely procedural and subject to the insurer's policy terms; (ii) Whether assignment of a life insurance policy to a person lacking insurable interest is invalid as a wagering contract or contrary to public policy; (iii) Whether the impugned circulars refusing registration of such assignments were valid.

Issue (i): Whether section 38 of the Insurance Act, 1938 is a substantive provision conferring a right to assign life insurance policies, or merely procedural and subject to the insurer's policy terms.

Analysis: Section 38 prescribes the mode of assignment and makes the transfer effective inter partes upon execution, with notice to the insurer required for binding effect against the insurer. The statutory scheme, including section 39, shows that once the prescribed procedure is followed, the insurer must recognise the assignee and the assignee becomes entitled to the benefits of the policy, subject to the terms of the policy. The provision does not merely regulate procedure; it creates and protects the right of assignment, while leaving the assignee bound by the policy conditions.

Conclusion: Section 38 is substantive and the insurer cannot refuse registration of a valid assignment made in accordance with the statute.

Issue (ii): Whether assignment of a life insurance policy to a person lacking insurable interest is invalid as a wagering contract or contrary to public policy.

Analysis: The law requires insurable interest at the inception of the policy, but the subsequent assignment of a valid policy does not require the assignee to have an insurable interest, unless some other law or the policy itself prohibits it. Wagering contracts are not, by that reason alone, a recognised head of public policy invalidating such assignments. A life policy is property and, once validly assigned, the assignee acquires the policyholder's interest subject to the contract.

Conclusion: Assignment to a person without insurable interest is not, by itself, invalid as a wagering transaction or as being opposed to public policy.

Issue (iii): Whether the impugned circulars refusing registration of such assignments were valid.

Analysis: The circulars sought to impose a restriction inconsistent with the statutory right of assignment under section 38 and with the insurer's obligation to recognise a valid assignee after compliance with the statute. A public authority cannot, by administrative policy, override the governing statute or add a disability not found in the policy or the Act.

Conclusion: The circulars were illegal, null and void.

Final Conclusion: The statutory right to assign a life insurance policy prevailed, the attempted restriction on assignments could not be sustained, and the petitioners were entitled to relief.

Ratio Decidendi: A valid life insurance policy is assignable as property under section 38, and once the statutory procedure is followed the insurer must recognise the assignee, subject only to the policy terms and any prohibitory law; the absence of insurable interest in the assignee does not by itself invalidate the assignment.

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