Statutory assignment of life insurance policies could not be refused by insurer circulars under the pre-2015 regime.

Under unamended Section 38 of the Insurance Act, life insurance policies were assignable as of right once the prescribed procedure for assignment was completed, and the insurer's role was limited to recording the transfer and recognising the assignee's entitlement to policy benefits. The insurer had no discretion to refuse registration of a valid assignment, and circulars restricting such assignments were inconsistent with the statutory scheme and unenforceable. The later amendment introducing an express power to decline assignments in specified cases was a substantive change, not a clarificatory or retrospective one. A delegate cannot override a statutory right conferred by the parent Act through circulars or policy instructions.

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Issues: Whether, under unamended Section 38 of the Insurance Act, 1938, life insurance policies were assignable and transferable as of right, and whether the insurer could refuse to register such assignments by issuing circulars.

Analysis: Section 38, as it stood prior to the 2015 amendment, prescribed the mode of effecting an assignment and declared the assignment complete and effectual once the statutory procedure was followed. The insurer's role was confined to recording the transfer on receipt of notice and recognising the assignee as the person entitled to the policy benefits. The section did not confer any discretion on the insurer to reject a valid assignment. The later amendment, which expressly introduced discretion to decline assignments in specified circumstances, was held to be a substantive change and not a clarificatory or retrospective enactment. The circulars issued by the insurer, to the extent they curtailed assignments otherwise valid under the statute, were inconsistent with the legislative scheme and could not override the Act.

Conclusion: Under the law as it stood before the 2015 amendment, valid assignments of life insurance policies had to be recognised by the insurer, and the circulars refusing such registration were ultra vires and unenforceable.

Ratio Decidendi: A delegate cannot, by circulars or policy instructions, nullify a statutory right expressly conferred by the parent enactment; where the statute makes an assignment complete upon compliance with the prescribed procedure, the insurer has no discretion to refuse recognition of that assignment.

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