Scope and import of the depositions of life insurance policies by the two modes.

GOVINDA MENON, J. :- I have had the advantage of reading the Judgment which my learned brother is about to deliver and in view of the importance of the question of law raised I wish to add a few words of my own.

2. What are the scope and import of the dispositions of life insurance policies: (a) by assignment and (b) by nomination seem to be the chief points for consideration.

3. That a policy of life insurance is a security for money payable at a date uncertain, but calculable is well established for the sum insured is certain the premium or consideration for its payment is also certain and the time when the money is payable is also certain where the date is fixed but uncertain on death. As per Porters Laws of Insurance (8th edn. p. 305) a life insurance policy is "Nihil Certius morte, nihil incertius hora mortis."

4. Such being the case a life insurance policy has to be construed as a contract to pay a certain sum in a certain event depending on the duration of human life. Such a policy always forms part of the estate of the assured and may be dealt with at his absolute discretion such as sale, charge, settlement or bequest or made the subject of donatio mortis causa.

5. Dispositions of life insurance policies can be classed under three heads: (1) assignment, (2) nomination and (3) statutory creation of a trust by reason of the provisions of the Married Womens Property Act, 1882. So far as the English law is concerned legal title to the policy can be obtained by assignment as laid down in the Policies of Life Assurance Act, 1867 or section 136 of the Law of Property Act, 1925 which replaced Section 25 sub-section (6) of the Judicature Act of 1873. In India such an assignment is payable by virtue of Section 38 of the Indian Insurance Act IV of 1938. Except adverting to the fact that in America also the law is practically the same no further discussion of the effect of an assignment is necessary in this connection.

6. Under the general law, an assignment is understood as a transfer by an individual of his right or interest in the property to another resting upon a contract between them. That being the case if a policy is assigned it operates so as to completely divest the assignor of any right under it, for the essence of assignment is complete divesting. The assignee is, therefore, clothed with all the rights and liabilities which the insured occupied before the transfer; that is, there is a substitution for the assured so far as the benefits are concerned by the assignee.

Ordinarily love and affection are considered sufficient consideration for the assignment of a policy. Therefore when the formalities which have to be observed in the case of a transfer or assignment coming under section 38 of the Insurance Act, 1938 are complied with the insurer shall from the date of the receipt of the notice referred to in sub-sec. (2) of section 38 recognise the transferee or the assignee named in the notice as the only person entitled to the benefit named under the policy and such a person shall be subject to all the liabilities and equities to which the transferor or assignor was subject at the time of the transfer or assignment.

The assignee may institute any proceedings in relation to the policy without obtaining the consent of the assignor or making him a party to the proceedings. The only limitation so far as the assignee is concerned is that he cannot be in a better position than the person who effected the assignment.

7. So far as nomination is concerned we do not see any appreciable difference between the English and American law on the one hand, and what obtains in our country. According to the English law the payee or the nominee is nothing more than an agent to receive the money, which money remains as the property of the assured and at his disposal during his life time and on his death forms part of the estate. The result is that the payee or the nominee takes no beneficial interest in it.

In Cleaver v. Mutual Reserve Fund L