Statutory authority for service charges on insurance policy assignments is required; administrative circulars cannot create a valid levy.

Section 38 of the Insurance Act limits the fee for acknowledgement of notice of assignment and does not confer an independent power on the Corporation to impose a service charge by circular. A levy styled as a service fee is valid only where there is statutory authorisation and a broad co-relation between the charge and the service rendered; absent delegated authority, the charge is ultra vires and without authority of law. The Article 14 challenge failed because the classification of assignees had an intelligible differentia and rational nexus, but the levy still infringed the rights protected by Articles 19(1)(g) and 300A.

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Issues: Whether the Life Insurance Corporation could, by circular, levy service charges for registration of assignment of life insurance policies without express statutory authority, and whether the levy was constitutionally valid under Articles 14, 19(1)(g), 265 and 300A of the Constitution of India.

Analysis: Section 38 of the Insurance Act, 1938 prescribes the mode of assignment and limits the fee for acknowledgement of notice to one rupee. The statutory scheme, read with the provisions governing rule-making and regulation-making power, showed that the Corporation had no independent power to impose a fiscal levy by administrative circular. Applying the settled distinction between a tax and a fee, the Court held that a levy is valid as a fee only where there is a broad co-relation between the charge and the service rendered and where the levy is authorised by law. The material placed showed that the charge was presented as a service fee for the assignment process, but the absence of delegated authority to impose it was . The challenge under Article 14 failed because the classification between family assignments, Government bodies, LIC entities and other finance organisations had an intelligible differentia and a rational nexus to the object of recovering charges from those generating the burden. However, the levy remained unauthorised by statute and therefore offended the petitioners' right to carry on business and their property rights.

Conclusion: The circular levy was held to be without authority of law and ultra vires the governing statutes. The constitutional challenge under Articles 19(1)(g) and 300A succeeded, while the Article 14 challenge did not.

Final Conclusion: The impugned circular could not be sustained insofar as it imposed service charges for registration of assignments, and the writ petition was allowed to that extent.

Ratio Decidendi: A delegated authority cannot impose a fee or tax by administrative circular unless the statute expressly confers that power; a charge styled as a service fee remains invalid if it lacks statutory authorisation, even where a broad service nexus is asserted.

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