Report No. 66
VI. Significance of Section 6
8.12. Assignment of policy essentially assignment of an actionable claim being of contract.-
In order to understand the significance of section 6 of the Act of 1874, it is desirable to examine the law which would be otherwise applicable. Apart from statutory provisions of a special character, the right to claim moneys under a life insurance policy could, before 1938, be assigned by complying with the formalities required1 by section 1302 of the Transfer of Property Act, 1882. The assignment may be direct or by way of trust, but, in either case, so far as the formalities are concerned, compliance with section 130 of the Transfer of Property Act was required.
This is because, in its essence, such assignment is an assignment of the benefit of a contract which is a species of 'actionable claim' within the meaning of the Transfer of Property Act. It was therefore well-settled that before the enactment of section 38 of the Insurance Act, 1938, the transfer of a life insurance of Property Act3 which deals with the assignment of actionable claim. The assignment created an immediate vested interest in the assignee; it was not revocable and operate completely to divest the assignor4 of all rights it.5-6-7
The assignment could be conditional or unconditional. Difficulty was experienced only in relation to Muslim policy holders, because, under the rules of the Muslim law, conditions attached to gifts were generally void, except where the assignment of the policy is made to the wife by way of dower. The gift was valid, but the condition was void.8
1. Paras. 8.9 and 8.11, supra.
2. Para. 8.13, infra.
3. (a) Mool Raj v. Vishwanath, 1913 ILR 37 Born 198: 24 MLJ 60 (PC); (b)Balamba v. Krishnayya, ILR 37 Mad 483: AIR 1914 Mad 595 (PB).
4. Cf. Rayner v. Proston, (1881) 18 Ch Div 1.
5. Mool Raj v. Vishwanath, 1913 ILR 37 Born 198: 24 Mad 14 60 (PC).
6. Laxmi Kutty v. Vishnu Nanibison, AIR 1939 Mad 411.
7. Bai Laxmi v. Jaswantlal, AIR 1947 Born 369.
(a) Sham Das v. Savitri Bai, AIR 1937 Sind 181;
(b) Sadiq Ad v. Zahida Begum, AIR 1939 All 744.