Hon'ble Judges/Coram:
Vikramajit Sen and S.K. Singh

JUDGMENT

Vikramajit Sen, J.

1. This Appeal assails the judgment of the learned Division Bench of the High Court of Judicature at Bombay dated 22.3.2007, which allowed the writ petitions of the First and Second Respondent herein. In this detailed and indeed lucid judgment it has been clarified that the insurance policies issued by the Appellant "are transferable and assignable in accordance with the provisions of the Insurance Act, 1938 and in terms of the contract of life insurance."

2. The First Respondent is a company which is engaged, inter alia, in the business of accepting and dealing in assignment of life insurance policies issued by the Appellant. The Second Respondent is the Director and shareholder of the First Respondent. The Third Respondent is a statutory authority established Under Section 3 of the Insurance Regulatory & Development Authority Act, 1999, and is hereinafter referred to as IRDA. The business of the First Respondent is to acquire life insurance policies from policy holders by paying them consideration. The assigned policy is registered and recorded in the books of the Appellant, and is then further assigned to a third party for consideration. Upon registration in the books of the Appellant, it could then be further assigned.

3. In January 2003, several branches of the Appellant refused to accept notices of assignment lodged by the First Respondent. A Circular was issued on 22.10.2003, the content of which is reproduced below for facility of reference:

There have been reports in the Press recently of the existence of firms that are in the business of buying of Insurance policies which are lapsed after acquiring paid-up value, from the original policyholders by paying them an attractive sum over and above the surrender value. The firm then becomes the assignee and is entitled to all the rights of the policy be it maturity claim/death claim, etc.

The above practice if it becomes prevalent would not only undermine the real purpose of life insurance but also allow third parties to make windfall gains by such wagering contracts. Therefore, it is felt necessary to introduce measures to safeguard the principles of life insurance and the larger interest of our policyholders.

• If any Agent/employee is found to be involved in assisting such Companies in respect of data acquisition of lapsed policies for revival and subsequent assignment, strict action may be initiated against him.

• The Branch Offices would have to be more vigilant in case of revival of policies that have been lapsed for longer duration say over 3 years. In such cases, strict control on non-acceptance of third party cheques, strict adherence to medical requirements, quality of medical examination etc. would be required. Wherever it is clear that a TIP company is involved, the revival may be outrightly rejected.

• If there are a number of assignments in the same Branch Office/Divisional Office in favour of the same Financial Company, the nature of the business of the Company may be investigated.

• If the Branch Office already has information that the nature of business interest of the Financial Company is trading in insurance policies only, the assignments in favour of such a Company may be declined.

• Such policyholders may be educated thro........