Insurance assignment and tax avoidance issues: policy trust under Married Women's Property Act survived, and fraud was not proved.

Insurance policies assigned under Section 6 of the Married Women's Property Act, 1874 were treated as creating a completed trust for the named wife or children, so the policies did not revest in the insured's estate on the beneficiary's death. Section 281 of the Income-tax Act, 1961 was held inapplicable because the relevant previous year and assessment year predated that Act, and no corresponding provision under the 1922 regime was shown. The allegation of fraudulent transfer also failed because service of the assessment order and demand notice was not proved, secondary evidence was not properly laid, and no reliable evidence of fraudulent intent to defeat revenue was established.

---

---

Issues: (i) Whether insurance policies assigned under Section 6 of the Married Women's Property Act, 1874 reverted to the insured's estate on the death of the beneficiary; (ii) Whether Section 281 of the Income-tax Act, 1961 rendered the assignments void in respect of an assessment year preceding the commencement of that Act; (iii) Whether the assignments were proved to be fraudulent transfers made to defeat the revenue.

Issue (i): Whether insurance policies assigned under Section 6 of the Married Women's Property Act, 1874 reverted to the insured's estate on the death of the beneficiary.

Analysis: The language of Section 6 of the Indian Act was treated as materially identical to Section 11 of the English Married Women's Property Act, 1882. Relying on the English authorities and the earlier Bombay decision on the same statutory scheme, the Court held that once a policy is assigned for the benefit of the wife or children, the vesting is complete. The death of the beneficiary does not cause the policy to revest in the original insured.

Conclusion: The contention that the policies reverted to the insured's estate was rejected.

Issue (ii): Whether Section 281 of the Income-tax Act, 1961 rendered the assignments void in respect of an assessment year preceding the commencement of that Act.

Analysis: The relevant previous year was 1958-59 and the assessment year was 1959-60, both anterior to the Income-tax Act, 1961. The Court held that Section 281 could not be applied retrospectively to a period governed by the earlier regime, and no equivalent provision under the Income-tax Act, 1922 was shown to exist.

Conclusion: Section 281 was held inapplicable and the challenge based on that provision failed.

Issue (iii): Whether the assignments were proved to be fraudulent transfers made to defeat the revenue.

Analysis: The Court found that the plaintiffs failed to prove service of the assessment order or demand notice and failed to lay the foundation for admitting the copied documents as secondary evidence under the Evidence Act. In the absence of reliable proof of knowledge of liability or fraudulent intent, the allegation of a transfer intended to defeat creditors was not established.

Conclusion: Fraudulent transfer was not proved.

Final Conclusion: The suit was dismissed because the plaintiffs failed to establish any legal basis for setting aside the policy assignments or claiming the insurance proceeds for tax recovery.

Ratio Decidendi: A policy assigned under Section 6 of the Married Women's Property Act, 1874 creates a completed trust in favour of the named beneficiaries, does not revest in the insured on the beneficiary's death, and cannot be avoided for fraud unless fraudulent intent and the relevant factual foundation are proved on evidence.

---