THE INSURANCE ACT, 1938

(4 of 1938)

 

 

[Act as on Date – Modified up to 1968]

 

               

[26th February 1938]

 

 

An Act to consolidate and amend the law relating to the business of insurance.

Contents

PART I

PRELIMINARY

1.Short title, extent and commencement

2.Definitions

2A.      Rule of construction in applying Act to Part B States.-

PART II

PROVISIONS APPLICABLE TO INSURERS

3.Registration

4.Minimum limits for annuities and other benefits secured by policies of life insurance

5.Restriction on name of insurer

6.Requirements as to capital

7.Deposits

8.Reservation of deposits

9.Refund of deposit

10.Separation of accounts and funds

11.Accounts and balance-sheet

12.Audit

13.Actuarial report and abstract

14.Register of policies and register of claims

15.Submission of returns

16.Returns by insurers established outside India

17.Exemption from certain provisions of the Indian Companies Act, 1913

18.Furnishing reports

19.Abstract of proceedings of general meetings

20.Custody and inspection of documents and supply of copies

21.Power of Controller regarding returns

22.Powers of Controller to order revaluation

23.Evidence of documents

24.       Summary of returns to be published.–

25.Returns to be published in statutory forms

26.       Alternations in the particulars furnished with application for registration to be reported.-

INVESTMENT, LOANS AND MANAGEMENT

27.Investment of assets

"27A.       Provisions regarding investments.-

28.Statement of investments of assets

29.Prohibition of loans

30.       Liability of directors, etc., for loss due to contraventions of sections 27, 27A, and 29.-

31.Assets of insurer how to be kept

32.Limitation on employment of managing agents and on the remuneration payable to them

33.Power of investigation

APPOINTMENT OF STAFF

34.Power of the Controller to issue directions

CONTROL OVER MANAGEMENT

35.Amalgamation and transfer of insurance business

36.Sanction of amalgamation and transfer by Controller

37.Statements required after amalgamation and transfer

ASSIGNMENT OR TRANSFER OF POLICIES AND NOMINATIONS

38.Assignment and transfer of insurance policies

39.       a*Nomination by policy-holder.-

COMMISSION AND REBATES AND LICENSING OF AGENTS

40.Prohibition of payment by way of commission or otherwise for procuring business

41.Prohibition of rebates

42.Licensing of insurance agents

43.Register of insurance agents

44.Prohibition of cessation if payment of commission

SPECIAL PROVISIONS OF LAW

45.Policy not to be called in question on ground of mis-statement after two years

46.Application of the law in force in India to policies issued in India

47.Payment of money into Court

48.Directors of insurers being companies

49.Restriction on dividends and bonuses

50.Notice of options available to the assured on the lapsing of a policy

51.Supply of copies of proposals and medical reports

52.Prohibition of business on dividing principle

52A.    When Administrator for management of insurance business may be appointed.-

52H.    Power of Central Government to acquire undertakings of insurers in certain cases.-

WINDING UP

53.Winding up by the court

54.       Voluntary winding up.-

55.Valuation of liabilities

56.       Application of surplus assets of life insurance fund in liquidation or insolvency.-

57.winding up of secondary companies

58.Scheme for partial winding up of insurance companies

59.Return of deposits

60.Notice of policy value

61.Power of Court to reduce contracts of insurance

SPECIAL PROVISIONS RELATING TO EXTERNAL COMPANIES

62.       Power of central Government to impose reciprocal disabilities on non-Indian companies.-

63.Particulars to be filled by insurance established outside India

64.       Books to be kept by insurers established outside India.-

INSURANCE ASSOCIATION OF INDIA, COUNCILS OF THE ASSOCIATION AND COMMITTEES THEREOF

64-A.       Incorporation of the Insurance Association of India.-

64-O, 64-P, 64-Q.

TRAIFF ADVISORY COMMITTEE AND CONTROL OF TARIFF RATES

64-U.       Establishment of Tariff Advisory Committee.-

SOLVENCY MARGIN ADVANCE PAYMENT OF PREMIUM AND RESTRICTIONS ON THE OPENING OF A NEW PLACE OF BUSINESS

64-V.       Assets and liabilities how to be valued.-

PART III

PROVIDENT SOCIETIES

66.Restrictions on provident societies

67.Name

68.       Insurable interest.-

69.Dividing business

70.Registration

72.Working capital

73.Deposits

74.Rules

75.Amendment of rules

76.Supply of copy of rules

77.Registered office

78.Publication of authorized capital to contain also subscribed and paid-up capital

79.Registers and books

80.Revenue account, balance-sheet and annual statement

81.Actuarial report and abstract

82.Submission of returns to Controller

83.Actuarial examination of schemes

84.       Separation of accounts and funds.-

85.       Investment of funds.-

86.Inspection of books

87.Inquiry by or on behalf of Controller

88.Winding up by Court and voluntary winding up

89.       Reduction in insurance contracts.-

90.Appointment of liquidator

91.Powers of liquidator

92.Procedure at liquidation

93.Dissolution of provident society

94.Nominations and assignments

PART IV

MUTUAL INSURANCE COMPANIES AND CO -OPERATIVE LIFE INSURANCE SOCIETIES

95.Definitions

96.Application of act to Mutual Insurance Companies and Co-operative life insurance societies

97.Working capital of Mutual insurance Companies and CO-operative Life Insurance societies

98.Deposits to be made by Mutual insurance Companies and CO-operative Life Insurance Societies

99.Transferees and assignees of policies not to become members

100.Publication of notices and documents of Mutual insurance Companies and CO-operative Life Insurance Societies

101.Supply of documents to members

RE-INSURANCE

101A.      Re- insurance with Indian re-insurers.-

101B.       Advisory Committee.-

PART V

MISCELLANEOUS

102.     Penalty for default in complying with, or act in contravention of, this Act.-

103.     Penalty for carrying on insurance business in contravention of sections 3,7, and 98.-

104.Penalty for false statement in document

105.     Wrongfully obtaining or withholding property.-

106.Power of Court to order restoration of property of insurer or compensation in certain cases

107.     Previous sanction of Advocate-General for institution of proceedings.-

a*[107A.     Chairman, etc., to be public servants.–

108.Power of court to grant relief

109.Cognizance of offences

110.Appeals

111.Service of notices

112.Declaration of interim bonuses

113.     Acquisition of surrender values by policy.-

114.Power of Central Government to make rules

115.Alteration of forms

116.Power to exempt from certain requirements

117.Saving of provisions of Indian Companies Act, 1913

119.Inspection and supply of copies of published prospectus, etc

120.Determination of market value of securities deposited under this Act

121.     Amendment of section 130, Act 4 of 1882.–

122.     Amendment of Schedule I, Act 9 of 1908.-

123.     Repeals.-

THE FIRST SCHEDULE

THE SECOND SCHEDULE

THE THIRD SCHEDULE

THE FOURTH SCHEDULE

THE FIFTH SCHEDULE

THE EIGHTH SCHEDULE

 

WHEREAS it is expedient to consolidate and amend the law relating to the business of insurance; It is hereby enacted as follows:-

 

 

 

PART I

 

 

PRELIMINARY

 

 

 

1.Short title, extent and commencement

.-

 

(1) This Act may be called the Insurance Act, 1938.

 

a*[(2) It extends to the whole of India b*[………],]

 

(3) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint in this behalf.

 

 

                [a] Substituted for the former sub-section (2) by the Insurance (Amendment) Act, 1950

                (47 of 1950), section 2 (1-6-1950).Sub-section (2) of section 66 of this amending Act of

                1950  is as follows:-

 

"(2) If immediately before the commencement of the Insurance (Amendment) Act, 1950, there is in force in any Part B State to which the Insurance Act, 1938, now extends any law corresponding to that Act, that law also shall stand repealed."

 

[b] The words "except the State of Jammu and Kashmir" were omitted by Jammu and Kashmir (Extension of Laws) Act, 1956  (62 of 1956), section 2 and schedule (1-11-1956).

 

               

 

 

 

 

2.Definitions

.-

 

In this Act, unless there is anything repugnant in the subject or context,-

 

(1) "actuary" means an actuary possessing such qualifications as may be prescribed.

 

a*[(2) "policy-holder" includes a person to whom, the whole of the interest of the policy-holder in the policy is assigned once and for all, but does not include an assignee thereof whose interest in the policy is defeasible or is for the time being subject to any condition:]

 

                [a] Substituted for clause (2) by the Insurance (Amendment) Act, 1946 (6 of 1946),

                Section 2  (20-3-1946).

 

 

a*[(3) "approved securities" means-

                               

(i) Government securities and other securities charged on the revenues of the Central Government or of the Government of a b*[……..] State of guaranteed fully as regards principal and interest by the Central Government, or the Government of any b*[…….] State;

 

(ii) debentures or other securities for money issued under the authority of any Central Act or Act of a State Legislature by or on behalf of a port trust or municipal corporation or city improvement trust in any presidency-town;

 

(iii) shares of a corporation established by law and guaranteed fully by the Central Government or the Government of a b*[……..] State as to the repayment of the principal and the payment of dividend;

 

(iv) securities issued or guaranteed fully as regards principal and interest by the Government of any Part B State and specified as approved securities for the purposes of this Act by the Central Government by notification in the Official Gazette; and

 

(v) subject to the limitations contained in the proviso hereto, securities guaranteed fully as regards principal and interest by a Provincial Government in Pakistan or charged on the revenues of any part of that Dominion, and debentures or other securities for money issued by or on behalf of the trustees of the port of Karachi:

 

Provided that securities or debentures specified in item (v) shall be recognised as approved securities only for such purposes and for such period and subject to such conditions as may be prescribed;]

 

c*[Explanation.- In sub-clauses (i) and (iii) "Government of a State" in relation to any period before the 1st November, 1956, means the Government of a part A State.]

 

[a] Substituted for the former clause by the Insurance (Amendment) Act, 1950  (47 of 1950), section 3 (1-6-1950).

 

                                [b] The word and letter "Part A" were omitted by 3 A.L.O., 1956.

 

                                [c] Inserted, ibid.

 

 

 

 

 

 

a*[(4) "auditor" means a person qualified under the Chartered Accountants Act, 1949, to act as auditor of companies;]

 

                [a] Substituted for the former clause by the Insurance (Amendment) Act, 1950  (47 of 1950),

                section 3 (1-6-1950).

 

 

a*[(4A) "banking company" and "company" shall have the meanings respectively assigned to them in clauses (c) and (d) of sub-section (1) of section 5 of the Banking Companies Act, 1949;]

 

                [a] Inserted by the Insurance (Amendment) Act, 1950  (47 of 1950), section 3 (1-6-1950).

 

 

(5) "certified" in relation to any copy or translation of a document required to be furnished by or on behalf of  a*[an insurer or a provident society as defined in Part III] means certified by a principal officer or  b*[such insurer or provident society] to be a true copy or a correct translation, as the case may be;

 

                [a] Substituted for "an insurer by the Insurance (Amendment) Act, 1941  (13 of 1941),

 section 2 (8-4-1941).

 

                [b] Substituted for "the insurer", ibid.

 

 

a*[(5A) "chief agent" means a person who, not being a salaried employee of an insurer in consideration of any commission-

 

                (i) performs any administrative and organising functions for the insurer, and

 

(ii) procures life insurance business for the insurer by employing or causing to be employed insurance agents on behalf of the insurer;]

 

                                [a] Clause (5A) was inserted by the Insurance (Amendment) Act, 1950  (47 of 1950),

                section 3 (1-6-1950).

 

 

a*[(5B) "Controller of Insurance" or "Controller" means the officer appointed by the Central Government to perform the duties of the Controller of Insurance under this Act;]

 

                                [a] Clause (5B) was inserted by the Insurance (Amendment) Act, 1950  (47 of 1950),

                                section 3 (1-6-1950).

 

 

(6) "Court" means the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction;

 

a*[(6A) "fire insurance business" means the business of effecting, otherwise than incidentally to some other class of insurance business, contracts of insurance against loss by or incidental to fire or other occurrence customarily included among the risks insured against in fire insurance policies;]

 

                                [a] Clause (6A) was inserted by the Insurance (Amendment) Act, 1950  (47 of 1950),

                                section 3 (1-6-1950).

 

 

a*[(6B) "general insurance business" means fire, marine or miscellaneous insurance business, whether carried on singly or in combination with one or more of them;]

 

                [a] Clause (6B) was inserted by the Insurance (Amendment) Act, 1950  (47 of 1950),

                section 3 (1-6-1950).

 

 

a*[(7) "Government security" means a Government security as defined in the Public Debt Act, 1944;]

 

                [a] Substituted for the former clause by the Insurance (Amendment) Act, 1950  (47 of 1950),

                section 3 (1-6-1950).

 

 

(8) "insurance company" means any insurer being a company, association or partnership which may be wound up under the Indian Companies Act, 1913, or to which the Indian Partnership Act, 1932, applies;

 

(9) "insurer" means-

 

(a) any individual or unincorporated body of individuals or body corporate incorporated under the law of any country a*[other than India, b*[..]] carrying on insurance business (not being a person specified in sub-clause (c) of this clause) which-

               

(i) carries on that business in c*[India], or

               

                                (ii) has his or its principal place of business or is domiciled in c*[India], d*[or

 

(iii) with the object of obtaining insurance business, employs a representative, or maintains a place of business, in c*[India];]

 

(b) any body corporate (not being a person specified in sub-clause (c) of this clause) carrying on the business of insurance, which is a body corporate incorporated under any law for the time being in force in  c*[India]; or stands to any such body corporate in the relation of a subsidiary company within the meaning of the Indian Companies Act, 1913, as defined by sub-section (2) of section 2 of that Act, and

 

(c) any person who in c*[India] has a standing contract with underwriters who are members of the Society of Lloyd's whereby such person is authorised within the terms of such contract to issue protection notes, cover notes, or other documents granting insurance cover to others on behalf of the underwriters,

 

               

e*[but does not include a principal  agent, chief agent, special agent, or an insurance  agent] or  a provident society f*[as defined in Part III];

 

 

                                [a] Substituted for "or State outside the Provinces of India", by A.L.O., 1950.

 

[b] The words "or of any Part B State" were omitted by the Insurance (Amendment) Act, 1950 (47 of 1950), section 3 (1-6-1950).

 

                                [c] Substituted for "the States" by Jammu and Kashmir (Extension of Laws) Act, 1956

                                (62 of 1956), section 2 and Schedule (1-11-1956).

 

                                [d] Inserted by the Insurance (Amendment) Act, 1939 (11 of 1939), section 2.

 

[e] Substituted for "but does not include an insurance agent licensed under section 42", ibid, 1950  (47 of 1950), section 3 (1-6-1950).

 

                                [f] Substituted for "to which the provisions of Part III apply, ibid, 1941 (13 of 1941),

                                section 2 (8-4-1941).

 

 

(10) "insurance agent" means an insurance agent licensed under section 42 a*[…….] who receives or agrees to receive payment by way of commission or other  remuneration in consideration of his soliciting or procuring insurance business b*[ including  business relating to the continuance, renewal or revival of policies of insurance];

 

                        [a] The words "being an individual" were omitted by the Insurance (Amendment) Act, 1957

                        (35 of 1957), section 2 (with retrospective effect from 1-9-1957).

 

                        [b] Inserted, ibid, 1950  (47 of 1950), section 3 (1-6-1950).

 

 

a*[(10A)  "investment company"  means a company whose principal business is the  acquisition of shares, stocks, debentures or other securities;]

 

                [a] Inserted by the Insurance (Amendment) Act, 1950  (47 of 1950), section 3  (1-6-1950).

 

 

 

a*[ (11) " life insurance business" means the business of effecting contracts of insurance  upon human life, including any contract whereby the payment of money is assured on death ( except death by accident only) or the happening of any contingency dependent on human life, and any contract which is subject to payment  of premiums for a term dependent on human life and shall be deemed to include -

 

(a) the granting of disability  and double or triple indemnity accident benefits, if so provided in the contract of insurance,

 

                (b) the  granting of annuities upon human life, and

 

(c)  the granting of superannuation allowances and annuities payable out of any fund applicable solely to the relief and maintenance of persons engaged or who have been engaged in any particular profession, trade or employment or of the dependants of such persons;]

 

[a] Substituted for the former clause by the Insurance (Amendment) Act, 1950  (47 of 1950), section 3  (1-6-1950).

 

 

(12)  "manager"  and "officer" have the meanings assigned to those expressions in clauses (9) and (11),  respectively, of section  2 of the Indian Companies Act, 1913;

 

 

(13)  "managing agent" means a person, firm or company entitled to the management  of the whole affairs of a company by virtue of an agreement  with the company, and under the control  and direction of the directors except to the extent, if any, otherwise provided for in the agreement, and includes any person, firm or company occupying such position by whatever name called.

 

Explanation.- If a person occupying the position of managing agent calls himself manager or managing director, he shall nevertheless be regarded as managing  agent for the purposes of section 32 of this  Act;

 

 

 

 

a*[(13A)  "marine insurance business" means the business of effecting contracts of insurance upon vessels of any description including cargoes, freights and other interests which may be legally insured, in or in relation to such vessels, cargoes and freights, goods, wares, merchandise and property of whatever description insured for any transit by land or water, or both, and whether or not including warehouse risks or similar risks in addition or as incidental to such transit, and includes any other risks customarily included among the risks insured against in marine insurance policies;]

 

[a] Clause (13A) was inserted by the Insurance (Amendment) Act, 1950 (47 of 1950), section 3  (1-6-1950).

 

 

a*[(13B) "miscellaneous insurance business" means the business of effecting contracts of insurance which is not principally or wholly or any kind or kinds included in clauses (6A), (11) and (13A);]

 

[a] Clause 13B was inserted by the Insurance (Amendment) Act, 1950 (47 of 1950), section 3  (1-6-1950).

 

 

(14) "prescribed" means prescribed by rules made under section 114; and

 

 

a*[(14A) ………………………………….]

 

[a] Clause (14A) was omitted by Jammu and Kashmir (Extension of Laws) Act, 1956 (42 of 1956), section 2 and Schedule (1-11-1956).

 

 

a*[(15) "principal agent" means  a person who, not being a salaried employee of an  insurer, in consideration of any commission,-

 

                (i) performs any administrative and organising functions for the insurer, and

 

(ii) procures general insurance business whether wholly or in  part by employing or causing to be employed insurance agents on behalf of the insurer;]

 

[a] Present clause (15) was substituted for the former clause (15) by the Insurance (Amendment) Act, 1950  (47 of 1950), section 3 (1-6-1950).

 

 

a*[(16) "private company" and "public company" have the meanings  respectively assigned to them in clauses (13) and (13A) of section 2 of the Indian Companies Act, 1913;]  

                               

[a] Present clause (16) was substituted for the former clause (15) by the Insurance (Amendment) Act, 1950  (47 of 1950), section 3 (1-6-1950).

 

 

a*[(17) "special agent" means a person who, not being a salaried employee of an insurer, in consideration of any commission, procures life insurance business  for the insurer whether wholly or in part by employing or causing to be employed insurance agents on behalf of the insurer: but does not include a chief agent.]

 

[a] Present clause (17) was substituted for the former clause (15) by the Insurance (Amendment) Act, 1950  (47 of 1950), section 3 (1-6-1950).

 

 

 

2A.      Rule of construction in applying Act to Part B States.-

 

[Omitted by 3 A.L.O., 1956.]

 

 

a*[2B.  Appointment of Controller of Insurance.-

 

(1) The Central Government may, by notification in the Official Gazette, appoint a person to be the Controller of Insurance under this Act.

 

(2) In making any appointment under this section, the Central Government shall have due regard to the following considerations, namely, whether the person to be appointed has had experience in industrial, commercial or insurance matters and whether such person has actuarial qualifications.]

 

                [a] Inserted by the Insurance (Amendment) Act, 1950  (47 of 1950), section 5 (1-6-1950).

 

 

 

PART II

 

 

PROVISIONS APPLICABLE TO INSURERS

 

 

a*[ 2C. Prohibition of transaction of insurance business by certain persons.-

 

(1) Save as hereinafter provided, no person shall, after the commencement  of the Insurance (Amendment ) Act, 1950, begin to carry on any class of insurance business in  b*[India] and no insurer carrying on any class of insurance business in  b*[India] shall, after the expiry of one year from such commencement, continue to carry on any such business unless he is -

 

                (a) a public company, or

 

(b) a society registered under the Co-operative Societies  Act, 1912, or under any other law for the time being  in force in any State relating to co-operative societies, or  

 

(c) a body corporate incorporated under the law of any country outside b*[India] not being of the nature of a private company:

 

Provided that the Central Government may, by notification in the Official Gazette, exempt from the operation of this section to such extent for such period and subject to such conditions as it may specify, any person or insurer for the purpose of carrying on the business of granting, superannuation allowances and annuities of the nature specified in sub-clause (c) of clause (ll) of section 2 or for the purpose of carrying on any general insurance business;

 

Provided further that in the case of an insurer carrying on any general insurance business no such notification shall be issued having effect for more than three years at any one time.

 

(2) Every notification issued under sub-section (1) shall be laid before Parliament as soon as may be after it is used.]

 

                [a] Inserted by the Insurance (Amendment) Act, 1950  (47 of 1950), section 6 (1-6-1950).

 

                 

 

[b] Substituted for "the States" by Jammu and Kashmir (Extension of Laws) Act, 1956   (62 of 1956), section 2 and Schedule (1-11-1956).

 

 

OBJECTS AND REASONS

 

Sections 2C and 65A "provide that only a public company or a co-operative society shall carry on insurance business.Power to grant exemption to cover cases such as superannuation funds is retained."-S.O.R.Gazette of India, 1949, Extra, p.2213.

 

"In our opinion, bodies incorporated outside India should also be public companies in the same manner as is required of Indian companies before they are allowed to carry on insurance business in India.We are also providing that exemptions granted to insurers carrying on general insurance business should not have effect for more than three years at any one time, and that Parliament should be kept informed of every such exemption."-S.C.R., Gazette of India, 1950, Pt.II, sec.2, page 99.

 

 

a*[2D.  Insurers to be subject to this Act while liabilities remain unsatisfied.-

 

Every insurer shall be subject to all the provisions of this Act in relation to any class of insurance business so long as his liabilities in b*[India] in respect of business of that class remain unsatisfied or not otherwise provided for.]

 

[a] Former sections 2-A and 2-B were renumbered as sections 2-D and 2-E by the Insurance (Amendment) Act, 1950  (47 of 1950), section 6 (1-6-1950).

 

[b] Substituted for "the States" by Jammu and Kashmir (Extension of Laws) Act, 1956   (62 of 1956), section 2 and Schedule (1-11-1956).

 

 

 

a*[2E.  This Act not to apply to certain insurers, ceasing to enter into new contracts before commencement of Act.-

 

The provisions of this Act shall not apply to an insurer as defined in paragraph (i) or (iii) of sub-clause (a) of clause (9) of section 2 in relation to any class of his insurance business where such insurer has ceased, before the commencement of this Act, to enter into any new contracts of that class of business.]

 

[a] Former sections 2-A and 2-B were renumbered as sections 2-D and 2-E by the Insurance (Amendment) Act, 1950  (47 of 1950), section 6 (1-6-1950).

 

 

 

 

 

3.Registration

.-

 

(1) No a*b*[person] shall, after the commencement of this Act, begin to carry on any class of insurance business in c*[India] and no insurer carrying on any class of insurance business in c*[India] shall, after the expiry of three months from the commencement of this Act, continue to carry on such business unless he has obtained from the d*[Controller] a certificate of registration e*[for the particular class of insurance business];

 

f*[Provided that in the case of  insurer who was carrying on any class of insurance business in  c*[India] at the commencement of this Act , failure to obtain a certificate of registration in accordance with the requirements of this sub-clause shall not operate  to invalidate any contract of insurance entered into by him if before  g*[such date  as may be  fixed in this behalf by the Central Government by notification in the Official Gazette] he has obtained that certificate.]

 

[ab] Substituted for "insurer" by the Insurance (Amendment) Act, 1940  (20 of 1940), section 3  (10-4-1940).

 

[c] Substituted for "the States" by Jammu and Kashmir (Extension of Laws) Act, 1956   (62 of 1956), section 2 and Schedule (1-11-1956).

 

[d] Substituted for "Superintendent of Insurance" by the Insurance (Amendment) Act, 1950 (47 of 1950), section 4  (1-6-1950).

 

                [e] Inserted, ibid, 1946 (6 of 1946), section 3 (20-3-1946).

 

[f] The proviso was added and was deemed always to have been added by the Insurance (Amendment) Act, 1940  (20 of 1940), section 3.

 

                [g] Substituted for certain words, ibid, 1941 (13 of 1941) section 3 (8-4-1941).

 

 

(2) Every application for registration shall be accompanied by-

 

(a) a certified copy of the memorandum and articles of association, where the applicant is a company and incorporated under the India Companies Act, 1913  a*[or under the Indian Companies Act, 1882 or under the Indian Companies Act, 1866, or under any Act repealed thereby,] or  in the case of any other insurer specified in sub-clause (a) (ii) or sun-clause (b) of clause  (9) of section 2, a certified copy of the deed of partnership or of the deed of constitution of the company, as the case may be, or in the case of an insurer having his principal place of business or domicile outside b*[India] the document specified in clause (a) of section 63;

 

(b) the name, address and the occupation, if any, of the directors where the insurer is a company incorporated under the Indian Companies Act, 1913,  a*[or under the Indian Companies Act, 1882, or under the Indian Companies Act, 1866, or under any Act repealed thereby,] and in the case of an insurer specified in sub-clause (a) (ii) of clause (9) of section 2 the names and addresses of the proprietors and of the manager in b*[India], and in any other case the full address of the principal office of the  insurer in b*[India], and the names of the directors and the manager at such  office and the  name and address  of  someone or more persons resident in b*[India] authorized to accept  any notice required to be served on the insurer;

 

(c) a statement of the class or classes of insurance business done or to be done, and a statement that the amount required to be deposited by section 7 or section 98 before application for registration is made has been deposited together with a certificate form the Reserve Bank of India showing the amount deposited ;

 

(d) where the provision of section 6 or section 97 apply, a declaration verified by an affidavit made by the principal officer of the insurer authorized in that behalf that the provisions of those sections as to working capital have been complied with;

 

(e) in the case of an insurer having his principal place of business or domicile outside c*[India] , a statement verified  by an affidavit made by the principal officer of the insurer setting forth the requirements (if any) not applicable to  nationals of the country in which such insurer is constituted, incorporated  or domiciled which are imposed by the laws or practice of that country upon Indian nationals as a condition of carrying  on insurance business in that country;

 

(f) a certified copy of the published prospectus, if any, and of the standard policy forms of the insurer and statements of the assured rates, advantages,, terms and conditions  to be offered in  connection  with insurance policies together with a certificate in connection with life  insurance business by an actuary that such rates, advantages, terms and conditions are workable and sound :

 

Provided that in the case of marine accident and miscellaneous insurance business other than workmen's compensation and motorcar insurance the above requirements regarding prospectus, forms and statements shall be complied with only in so far as prospectus, forms and statements may be available ; and

 

(g) the d*[receipt showing payment in the prescribed manner of the prescribed fee which shall not be] more than e*[five] hundred rupees for each class of business.

 

                                [a] Inserted by the Insurance (Second Amendment) Act, 1939 (41 of 1939), section 2.

 

[b] Substituted for "the States" by Jammu and Kashmir (Extension of Laws) Act, 1956   (62 of 1956), section 2 and Schedule (1-11-1956).

 

[c] Substituted for "British India" by the Insurance (Amendment) Act, 1940  (20 of 1940), section 2 (10-4-1940).

 

[d] Substituted for "prescribed fee for registration being not", ibid, 1946 (6 of 1946), section 3 (20-3-1946).

 

                                [e] Substituted for "one", ibid, 1941 (13 of 1941), section 3 (8-4-1941).

 

 

 

a*[(2A) If, on receipt of an application for registration and after making such inquiry as he deems fit, the Controller is satisfied that-

 

                (a) the financial condition and the general character of management of the applicant are sound;

 

(b) the volume of business likely to be available to, and the capital structure and earning prospectus of, the applicant  will be adequate;

 

(c) the interests of the general public will be served if the certificate of registration  is granted to  the applicant in respect of the class or classes of insurance business specified in the  application; 

 

(d) the applicant has complied with the provisions of sections 2C, 5, 31 A and 32 and has fulfilled all the requirements of this section applicable to him,

               

the  Controller may register the applicant  as insurer and grant him a certificate of registration.

 

(2B) Where the Controller refuses registration, he shall record the reasons for such decision and shall furnish a copy thereof to the applicant.

 

(2C) Any person aggrieved by the decision of the Controller refusing registration may, within thirty days from the date on which a copy of the decision is received by him, appeal to the Central Government.

 

(2D) The decision of the Central Government on such appeal shall be final and shall not be questioned  before any court.]

 

                [a] Inserted by the Insurance (Amendment) Act, 1965  (32 of 1965), section 2 (29-9-1965).

 

 

(3) a*[Notwithstanding anything contained in sub-section (2A), in the case of any insurer having his principal place of business or domicile outside India], the b*[Controller] shall withhold registration or shall cancel a registration already made, if he is satisfied that in the country in which such insurer has his principal place of business or domicile Indian nationals are debarred by the law or practice of the country relating to, or applied to insurance from carrying on the business of insurance, or that any requirement imposed on such insurer under the provisions of section 62 is not satisfied.

 

                [a] Substituted for the words "In the case of any insurer having his principal place of business

                or domicile outside India" by Act 32 of 1965, section 2 (29-9-1965).

 

[b] Substituted for "Superintendent of Insurance" by the Insurance (Amendment) Act, 1950 (47 of 1950), section 4 (1-6-1950).

 

 

a*[(4) The b*[Controller] shall cancel the registration  of an insurer either wholly or in so far as it relates to a  particular class of insurance business, as the case may be,-

 

                (a) if the insurer fails to comply with the provisions of Section 7 or section 98 as to deposits, or

 

c*[(aa) if the insurer fails, at any time, to comply with the provisions of section 64VA as to the excess of the value of assets over the amount of his liabilities, or]

 

                (b) if the insurer is in liquidation or is adjudged an insolvent, or

 

(c) if the business or a class  of the business of the insurer has been transferred to any person or  has been  transferred to or amalgamated with the business of any other insurer, or

               

(d) if the whole of the deposit made in respect of a class of  insurance business has been returned to the insurer under section 9,]  d*[or]

 

d*[(e) if, in the case of an insurer specified in sub-clause (c) of clause (9) of section 2, the standing        contract referred to in that sub-clause is cancelled or is suspended and continues to be suspended               for a period of six months,

 

and the b*[Controller] e*[may cancel] the registration of an insurer f*[or,

 

        f*[(ee) if the Central Government so directs under sub-section (4) of section 33;]

 

        g*[(f) if the insurer makes default in complying with, or acts in contravention of, any requirement

                of this Act or of any rule or order made thereunder, or]

 

(g) if the b*[Controller] has reason to believe that any claim upon the insurer arising in India  under any policy of insurance remains unpaid for three months after final judgment in regular  course of law, or

               

         g*[(h) if the insurer carries on any business other than insurance business or any prescribed                business,]].]

 

 

[a] Substituted and deemed always to have been substituted for the original sub-section (4) by the Insurance (Amendment) Act, 1940  (20 of 1940), section 3.

 

[b] Substituted for "Superintendent of Insurance", ibid, 1950 (47 of 1950), section 4 (1-6-1950).

 

[c] Inserted by the Insurance (Amendment) Act, 1968  (62 of 1968), section 2 (1-6-1969).

 

                                [d] Inserted by Act 13 of 1941, section 3 (8-4-1941).

 

                                [e] Substituted for certain words by Act 6 of 1946, section 3 (20-3-1946).

 

                                [f] Inserted by Act 62 of 1968, section 2 (1-6-1969).

 

                                [g] Substituted for original clause by Act, 47 of 1950, section 7 (1-9-1950).

 

 

 

OBJECTS AND REASONS

 

"Amendments made in 1946 in sub-sections (4), (5) and (5C).- Complaints had been received on tardy settlement of claims having been supported by a final judgment of Courts.These amendments now enable registration to be cancelled for such delays revival being contemplated where the Superintendent of Insurance is satisfied that due claims have been honoured.These amendments also provide for cancellation of registration of insurers for failing to comply with an order made by the Superintendent of Insurance regarding the premium rates, etc.in respect of life insurance business and also for revival of the registration after compliance with the order."-See S.O.R., Gaz.of Ind., 1946, Pt.V, page 13.

 

 

(5) When the a*[Controller] withholds or cancels any registration under sub-section (3) or b*[clause (a), c*[clause (aa)], clause (e), c*[clause (ee), clause (f), clause (g) or clause (h) of sub-section (4)], he shall give notice in writing to the insurer of his decision, and the decision shall take effect on such  date as he may specify in that behalf in the notice, such date not being less than one month not more than two months  from the date of the receipt of the notice in the ordinary course of transmission.

 

 

[a] Substituted for "Superintendent of Insurance" by the Insurance (Amendment) Act, 1950 (47 of 1950), section 4 (1-6-1950).

 

                [b] Substituted for certain words, ibid, 1946 (6 of 1946), section 3 (20-3-1946).

 

                [c] Inserted, ibid, 1968 (62 of 1968), section 2 (1-6-1969).

 

 

a*[(5A) When the b*[Controller] cancels any registration under clause (b) , clause(c) or clause (d) of sub- section (4) the cancellation shall take effect on the date on which notice of the order of cancellation is served on the insurer.]

 

[a] Sub-section (5A) was inserted and deemed always to have been inserted by the Insurance (Amendment) Act, 1940  (20 of 1940), section 3.

 

[b] Substituted for "Superintendent of Insurance", ibid, 1950  (47 of 1950), section 4 (1-6-1950).

 

 

a*[(5B) When a registration is cancelled the insurer shall not, after the cancellation has taken effect, enter into any new contracts of insurance, but all rights and liabilities in respect of contracts of insurance entered into by him before such cancellation takes effect shall, subject to the provisions of sub- section (5D), continue as if the cancellation had not taken place.]

 

[a] Sub-section  (5B) was inserted and deemed always to have been inserted by the Insurance (Amendment) Act, 1940 (20 of 1940), section 3.

 

               

a*[(5C) Where a registration is cancelled under b*[clause (a), c*[clause (aa)] clause (e), clause (f), clause (g) or clause (h) of sub-section (4),] the d*[Controller] may at his discretion revive the registration, if the insurer within six months from the date on which the cancellation took effect makes the deposits required by section 7 or section 98, c*[or complies with the provisions of section 64 VA as to the excess  of the value of his assets over the amount of his liabilities] e*[or has his standing contract restored or has had an application under sub-section (4)  of section 3A accepted], f*[or satisfies the d*[Controller] that no claim upon him such as is referred to in clause (g) of sub-section (4) remains unpaid g*[or that he has complied with any requirement of this Act or of any rule or order made thereunder or that he has ceased to carry on any business other than insurance business or any prescribed business],]  as the case may be, and complied with any directions which may be given to him by the d*[Controller].]

 

[a] Inserted and deemed always to have been inserted by the Insurance (Amendment) Act, 1940  (20 of 1940), section 3.

 

                [b] Substituted for certain words, Ibid, 1946  (6 of 1946), section 3 (20-3-1946).

 

                [c] Inserted, ibid, 1968  (62 of 1968), section 2 (1-6-1969).

 

[d] Substituted for "Superintendent of Insurance", Ibid.1950 (47 of 1950), section 4 (1-6-1950).

 

                [e] Inserted, ibid, 1941  (13 of 1941), section 3 (8-4-1941).

 

                [f] Inserted by Act 6 of 1946, section 3 (20-3-1946).

 

                [g] Substituted for "or that he has complied with the order under section 3B" by Act 47 of 1950,

                section 7 (1-9-1950).

 

 

a*[(5D) Where b*[the registration of an insurance company is cancelled under sub-section (4), the c*[Controller] may,] after the expiry of six month from the date on which the cancellation took effect, apply to the Court for an order to wind up the insurance company, or to wind up the affairs of the company in respect of a class of insurance business, unless the registration of the insurance company has been  revived under sub-section (5C) or an application for winding up the company has been already presented to the Court.The Court may proceed as if an application under this sub-section were an application under sub-section (2) of section 53, or sub-sec.(1) of section 58, as the case may be.]

 

[a] Inserted and deemed always to have been inserted by the Insurance (Amendment) Act, 1940  (20 of 1940), section 3.

 

                [b] Substituted for certain words, ibid, 1946 (6 of 1946), section 3 (20-3-1946).

 

[c] Substituted for "Superintendent of Insurance", ibid, 1950 (45 of 1950), section 4  (1-6-1950).

 

 

a*[………………………]

                       

[a] Sub-section (6) omitted by the Insurance (Amendment) Act, 1965  (32 of 1965), section 2 (29-9-1965).

 

a*[(7) The b*[Controller] may, on payment of the prescribed fee which shall not exceed twenty-five rupees, issue a duplicate certificate of registration to replace a certificate lost , destroyed or mutilated, or in any other case where he is of opinion that the issue of a duplicate certificate is necessary.]

 

                [a] Inserted by the Insurance (Amendment) Act, 1946 (6 of 1946), section 3 (20-3-1946).

 

[b] Substituted for "Superintendent of Insurance", Ibid, 1950 (47 of 1950), section 4       (1-6-1950).

 

 

a*[3A.  Renewal of registration.-

 

(1) An insurer who has been granted a certificate of registration under section 3 shall have the registration renewed annually for each year after that ending on the 31st day of December, 1941.

 

(2) An application for the renewal of a registration for any year shall be made by the insurer to the b*[Controller] before the 31st day of December of the preceding year, and shall be accompanied as provided in sub-section (3) by evidence of payment of the prescribed fee c*[which may vary according to the total gross premium written direct in India, during the year preceding the year in which the application is required to be made under this section, by the insurer in the class of insurance business to which the  registration relates but shall not-

 

                (i) exceed one-fourth of one per cent.of such premium income,

 

                (ii) be less, in any case, than five hundred rupees for each class of insurance business:

 

Provided that in the case of an insurer carrying on solely re-insurance business the provisions of this sub-section shall apply with the modification that instead of the total gross premium written direct in India, the total premiums in respect of facultative re-insurances accepted by him in India shall be taken into account.]

 

(3) The prescribed fee for the renewal of a registration for any year shall be paid into the Reserve Bank of India, or, where there is no office of that Bank, into the Imperial Bank of India acting as the agent of that Bank, or into any Government treasury, and the receipt shall be sent along with the application for renewal of the registration.

 

(4) If an insurer fails to apply for renewal of registration before the date specified in sub-section (2) the b*[Controller] may, so long as an application to the Court under sub-section (5D) of section 3 has not been made, accept an application for renewal of the registration on receipt from the insurer of the fee payable with the application and such penalty, not exceeding the prescribed fee payable by him, as the b*[Controller] may require:

 

Provided that an appeal shall lie to the Central Government from an order passed by the b*[Controller] imposing a penalty on the insurer.

 

(5) The b*[Controller] shall, on fulfilment by the insurer of the requirements of the section, renew the registration and grant him a certificate of renewal of registration.]

 

 

 

                        [a] Inserted by the Insurance (Amendment) Act, 1941 (13 of 1941), section 4 (8-4-1941).

                       

[b] substituted for "Superintendent of Insurance", ibid, 1950  (47 of 1950), section 4 (1-6-1950).

 

                        [c] Substituted for certain words, ibid, 1968  (62 of 1968), section 3  (1-6-1969).

 

 

 

a*[3B.  Certification of soundness of terms of life insurance business.-

 

If, when considering an application for registration under section 3 or at any other time, it appears to the b*[Controller] that the assured rates, advantages, terms and conditions offered or to be offered in connection with life insurance business are in any respect not workable or sound, he may require that a statement thereof shall be submitted to an actuary appointed by the insurer for the purpose and approved by the b*[Controller], and may by order in writing further require the insurer to make within such time as may be specified in the order such modifications in the said rates, advantages, terms  or conditions, as the case may be, as the said actuary may report to be necessary to enable him to certify that the said rates, advantages, terms and conditions are workable and sound.]

 

                [a] Inserted by the Insurance (Amendment) Act, 1946  (6 of 1946), section 4 (20-3-1946).

 

[b] Substituted for "Superintendent of Insurance", ibid, 1950  (47 of 1950), section 4 (1-6-1950).

 

 

 

 

4.Minimum limits for annuities and other benefits secured by policies of life insurance

.-

 

(1) a*[No insurer, not being a Co-operative Life Insurance Society to which Part IV of  b*[this Act] applies, shall pay] or undertake to pay on any policy of life insurance issued after the c*[commencement of the Insurance (Amendment) Act, 1946,] an annuity of  d*[less than one hundred rupees or a gross sum of less than one thousand rupees] exclusive of any profit or bonus provided that this shall not  prevent an insurer from converting any policy into a paid -up policy of any value or payment of surrender value of any amount.

 

e*[(2)  Nothing contained in this section shall apply to any policy of the description known as a group policy, where the number of persons covered by the policy is not less than fifty or such smaller number as may be approved by the f*[Controller] and a standard form of the policy has been certified in writing by the f*[Controller] to be a policy of such description g*[or to any policy undertaking to pay a gross sum of more than five hundred rupees or an annuity of more than fifty rupees, issued-

 

                (a) by an insurer to any person in his permanent  employ in respect of the life of that person, or

 

(b) under any scheme, approved by the f*[Controller] and complying with such conditions, if any, as he may think fit to impose, whereby premiums due from  persons employed under any employer are collected by or under the supervision of the employer,

               

or to any policy issued by a mutual insurance company to which Part IV applies and which the  f*[Controller] may by order in writing exempt from the provisions of this section, for so long as the company complies with such conditions, if any, as may be prescribed].]

 

 

 

[a] Substituted for certain words by the Insurance (Amendment) Act, 1948  (10 of 1948), section 2 (8-3-1948).

 

                [b] Substituted for "the Insurance Act, 1938", ibid, 1950  (47 of 1950), section 8 (1-6-1950).

 

                [c] Substituted for "commencement of this Act", ibid, 1946  (6 of 1946), section 5 (20-3-1946).

 

                [d] Substituted for "fifty rupees or less or a gross sum of rupees five hundred or less", ibid.

 

                [e] Substituted for the former sub-section, ibid, 1941  (13 of 1941), section 5 (8-4-1941).

 

                [f] Substituted for "Superintendent of Insurance" by Act 47 of 1950, section 4 (1-6-1950).

 

                [g] Inserted by Act 6 of 1946, section 5 (20-3-1946).

 

 

 

 

5.Restriction on name of insurer

.-

 

(1) An insurer shall not be registered by a name identical with that by which an insurer in existence is already registered, or so nearly resembling that name as to be calculated to deceive except when the insurer in existence is in the course of being dissolved and signifies his consent to the a*[Controller].

 

(2) If an insurer, through inadvertence or otherwise is without such consent as aforesaid registered by a name identical with that by which an insurer already in existence whether previously registered or not is carrying on business or so nearly resembling it as to be calculated deceive the first-mentioned insurer shall, if called upon to do so by the a*[Controller] on the application of the second-mentioned insurer, change his name within a time to be fixed by the a*[Controller]:

 

Provided that nothing in this section shall apply to any insurer carrying on business before the 27th day of January, 1937, under the Indian Life Assurance Companies Act, 1912:

 

b*[Provided further that in the application of this section to any insurer who begins to carry on insurance business after the commencement of the Insurance (Amendment) Act, 1946, the references to an insurer in existence in sub- section (1) and this sub-section shall be construed as including references to a provident society (as defined in Part III) in existence, whether or not the society is in the course of being dissolved].

 

(3) No insurer other than a provident society c*[as defined in Part III], who begins to carry on insurance business after the commencement of this Act, shall adopt as its name and no such insurer carrying on business before the commencement of this Act shall continue after the expiry of six months from the commencement thereof to use as its name any combination of words which includes the word "provident".

 

[a] Substituted for "Superintendent of Insurance" by the Insurance (Amendment) Act,    1950  (47 of 1950), section 4 (1-6-1950).

 

                [b] Inserted, ibid, 1946  (6 of 1946), section 6 (20-3-1946).

 

                [c] Substituted for "to which Part III applies", ibid, 1941  (13 of 1941), section 6 (8-4-1941).

 

 

 

 

6.Requirements as to capital

.-

 

No insurer incorporated after, or who commenced carrying on the business of life insurance in a*[India] whether solely or in common with any other business, after the 26th day of January, 1937, shall be registered unless he has as working capital a net sum of not less than fifty thousand rupees exclusive of the deposit to be made before registration under sub-section (5) of section 7 of this Act, and exclusive in the case of a company of any sums payable as preliminary expenses in the formation of the company.

 

 

[a] Substituted for "the States" by Jammu and Kashmir (Extension of Laws) Act, 1956 (62 of 1956), section 2 and Schedule (1-11-1956).

 

 

 

a*[6A.Requirements as to capital structure and voting rights and maintenance of registers of beneficial owners of shares.-

 

(1) No public company limited by shares having its registered office in b*[India] shall carry on life insurance business, unless it satisfies all the following conditions, namely :-

 

(i) that the capital of the company consists only of ordinary shares each of which has a single face value;

 

(ii) that, except during any period not exceeding one year allowed by the company for payment of calls on shares the paid up amount is the same for all shares, whether existing or new:

 

Provided that the conditions specified in this sub-section shall not apply to a public company which has, before the commencement of the Insurance (Amendment) Act, 1950, issued any shares other than ordinary shares each of which has a single face value or any shares the paid-up amount whereof is not the same for all of them for a period of three years from such commencement.

 

(2) Notwithstanding anything to the contrary contained in any law for the time being in force or in the memorandum or articles of association but subject to the other provisions contained in this section the voting right of every shareholder of any public company as aforesaid shall in all cases be strictly proportionate to the paid-up amount of the shares held by him.

 

(3) No public company as aforesaid which carries on life insurance business shall, after the commencement of the Insurance (Amendment) Act, 1950, issue any shares other than ordinary shares of the nature specified in the sub-section (1).

 

(4) A Public company as aforesaid which carries on life insurance business-

 

(a) shall maintain, in addition to the register of members to be maintained under the Indian Companies Act, 1913, a register of shares in which shall be entered the name, occupation and address of the beneficial owner of each share, and shall incorporate therein any change of beneficial owner declared to it within fourteen days from the receipt of such declaration;

 

                (b) shall not register any transfer of its shares-

 

(i) unless, in addition to compliance being made with the provisions of section 34 of the Indian Companies Act 1913, the transferee furnishes a declaration in the prescribed form as to whether he proposes to hold the shares for his own benefit or as a nominee, whether jointly or severally, on behalf of others, and in the latter case giving the name, occupation and  address  of the beneficial owner or owners, and the extent of the beneficial interest of each; and

 

(ii) where, after the transfer, the total paid-up holding of the transferee in the shares of the company is likely to exceed  five per cent.of its paid-up capital or where the transferee is a banking or an investment company, is likely to exceed two and a half per cent.of such paid-up capital, unless the previous sanction of the Central Government has been obtained to the transfer.

 

(5) Every person who has any interest in any share of a company referred to in sub-section (4) which stands in the name of another person in the register of members of the company, shall, within thirty days from the commencement of the Insurance (Amendment) Act, 1950, or from the date on which he acquires such interest, whichever is later, make a declaration in the prescribed form (which shall be countersigned by the person in whose name the share is registered) to  the company declaring his interest in such share, and notwithstanding anything contained in any other law or in any contract to the contrary, a person who fails to make a declaration as aforesaid in respect of any share shall be deemed to have no right or title whatsoever in that share:

 

Provided that nothing in this sub-section shall affect the right of a person who has an interest in any such share to establish in a Court his right thereto, if the person, in whose name the share is registered, refuses to countersign the declaration as required by this sub-section:

 

Provided further that where any share, belonging to an individual who has made any such declaration as is referred to in this sub-section, is held by a company in its name in pursuance of any trust or for the purpose of safe custody or collection or realisation of dividend, such individual shall, notwithstanding anything contained in the Indian Companies Act, 1913, or in the memorandum or articles of association of the company which has issued the share, be deemed to be the holder of the said share for the purpose of exercising any voting rights under this section  to the exclusion of any other person.

 

(6) If the total paid-up holding of any person in the shares of a company referred to in sub-section (1) on the commencement of the Insurance (Amendment) Act, 1950, exceeds two and a half per cent.of its paid-up capital where that person is a banking company or an investment company, or five per cent.of its paid-up capital in any other case, he shall not be entitled to any vote as a shareholder of the company in respect of such excess holding of shares.

 

(7) Where the total paid-up holding of any person in the shares of a company referred to in sub-section (1) on the date of the commencement of the insurance (Amendment) Act, 1950, exceeds five per cent.of its paid-up capital where that person is a banking company or an investment company, or ten per cent.of its paid-up capital in any other case, he shall dispose of the excess holding of shares within three years from such commencement or such further period not exceeding two years as may be allowed to him  by the Central Government.

 

(8) If, after the expiry of three years or of such further period as may be allowed to any person under sub-section (7), the total paid-up holding of any such person has not been reduced to the limits specified in that sub-section, any shares in excess of the limits specified in that sub-section shall vest in the Administrator- General of the State in which the registered office of the company concerned is situate and the Administrator-General shall take such steps as may be necessary for taking charge of any property which has so vested in him and shall dispose of the said shares and the proceeds thereof in such manner as may be prescribed.

 

(9) Subject to the other provisions contained in this section, but notwithstanding anything contained in the Indian Companies Act, 1913,  or in the memorandum or articles of association of any such company as is referred to in sub-section (1),  no such company shall refuse to register the transfer of any shares where the transfer is for the purpose of securing compliance with the provisions of sub-sections (7) and (8).

 

(10) The Central Government may, subject to such restrictions as it may think fit to impose, exempt from the operation of sub-sections (6) ,(7)  and (8) any insurance company, in any case where the total paid-up holding of such insurance company in the shares of any other insurance company exceeds the limits specified in the said sub-sections, if the other insurance company is or is to be made a subsidiary company of the insurance company.

 

c*[(11) The Provisions of this section, except those of sub-sections (7), (8) and (9), shall, on and from the commencement of the Insurance (Amendment) Act 1968, also apply to insurers carrying on general insurance business subject to the following modifications, namely:-

 

(i) that references in sub-sections (1), (3), (5) and (6) to the Insurance (Amendment) Act, 1950, shall be construed as references to the Insurance (Amendment) Act, 1968;  and

 

                (ii) references in sub-section (10) to sub-sections (7) and (8) shall be omitted].

 

Explanation  d*[1].- For the purposes of this section, the holding of a person in the shares of a company shall be deemed to include-

 

                (i) the total paid-up holding in such shares held by such person in the name of others; and

 

                (ii) if any shares of the company are held-

 

(a) by a public limited company, of which such person is a member holding more than ten per cent.of the paid-up capital, or

 

                                (b) by a private limited company, of which such person is a member, or

 

(c) by a company, of which such person is a managing director, manager, managing agent or in which he has a controlling interest, or

 

                                (d) by a firm in which such person is a partner, or

 

                                (e) by such person jointly with others,

 

such part of the total paid-up holding of the company or firm or of the total joint holding in those shares, as is proportionate to the contribution made by such person to the paid-up capital of the company, the paid-up capital of the firm or joint holding, as the case may be.]

 

d*[Explanation2.- The provisions of Explanation 1 shall, in their application after the commencement of the Insurance (Amendment) Act, 1968, to insurers carrying on general insurance business be subject to the modification that for sub-clauses (a) and (b) of clause (ii) thereof the following shall be substituted, namely:-

 

"(a) by a company of which such person is a member holding more than ten per cent.of the paid-up share capital, or"]

 

 

[a] Clause (6A) was inserted by the Insurance (Amendment) Act, 1950  (47 of 1950), section 9 (1-6-1950).

 

[b] Substituted for "the States" by Jammu and Kashmir (Extension of Laws) Act, 1956   (62 of 1956), section 2 and Schedule (1-11-1956).

 

[c] Inserted by the Insurance (Amendment) Act, 1968  (62 of 1968), section 4 (1-6-1969).

 

[d] Original Explanation renumbered as No.1 thereof and after that, Explanation 2 inserted, ibid.

 

 

OBJECTS AND REASONS

 

The amendments made by the amending Act of 1950 provide "that a life insurance company should have only ordinary shares with voting rights proportionate to the paid up capital and should maintain a register showing the beneficial owners of its shares and further make provision for altering the existing capital structure suitably with the sanction of the Central Government.They also provide for the conversion of a proprietary company into a mutual company through a scheme sanctioned by the Central Government"-S.O.R., Gazette of India, 1949, Extra, page 2213.

 

"We think that companies which have more than one class of shares should have three years to convert all such shares into one class, but the voting right should always be proportionate to the paid-up value of the shares.Companies which commence life insurance business after the amending Bill comes into force should have only one class of shares with a single face value and equal voting rights, and existing companies should hereafter issue only ordinary shares.

 

We have omitted sub-section (3) of the proposed section 6A, as in our opinion, sub-section (4) thereof is sufficient to cover it.We have, however, added a provision expressly providing for a right of suit by a person who is the beneficial owner of the share and whose right the nominal holder of the share refuses to recognise.We have also provided that in cases where banks hold share merely as custodians, the beneficial owner should have the right to vote.

 

We think that a much longer period than one year is required for the liquidation of excess shares which may be held by any person at the commencement of the amending Act, as otherwise a sudden release of the shares may cause a disturbance in the market.We have, therefore, provided that if any shareholder is unable to get his shares sold, the Administrator-General should come to the rescue."-S.C.R.Gazette of India, 1950, Pt.II, Section 2, p.99.

 

 

 

 

a*[6B.  Provision for securing compliance with requirements relating to capital structure.-

 

(1) For the purpose of enabling any public company carrying on life insurance business to bring its capital structure into conformity with the requirements of section 6A, an officer appointed in this behalf by the Central Government may, notwithstanding anything contained in the Indian Companies Act, 1913,-

 

                (a) examine any scheme proposed for the purpose aforesaid by the directors of the company;

 

                Provided that-

 

(i) the scheme has been placed before a meeting of the shareholders for their opinion and has been forwarded to the officer together with the opinion of the shareholders thereon; and

 

(ii) the scheme does not involve any diminution of the liability of the shareholders in respect of unpaid-up share capital;

 

                (b) invite objections and suggestions in respect of the scheme so proposed; and

 

(c) after considering such objections and suggestions to the scheme so proposed, sanction it with such modifications as he may consider necessary or desirable.

 

(2) Any shareholder or other person aggrieved by the decision of the officer sanctioning a scheme under sub-section (1) may, within ninety days of the date of the order sanctioning the scheme, prefer an appeal to the High Court within whose jurisdiction the registered office of the insurer is situate for the purpose of modifying or correcting any such scheme for the purpose specified in sub-section (1).

 

(3) The decision of the High Court where an appeal has been preferred to it under subs-section (2), or of the officer aforesaid where no such appeal has been preferred, shall be final and binding on all the shareholders and other persons concerned].

 

b*[(4) The provisions of this section shall, on and from the commencement of the Insurance (Amendment) Act, 1968 also apply to insurers carrying on general insurance business.]

 

 

[a] Clause (6B) were inserted by the Insurance (Amendment) Act, 1950  (47 of 1950), section 9 (1-6-1950).

 

                [b] Inserted by the Insurance (Amendment) Act, 1968  (62 of 1968), section 5 (1-6-1969).

 

 

 

a*[6C.  Conversion of company limited by shares into company limited by guarantee.-

 

(1) Where a public company limited by shares carrying on insurance business has passed a special resolution for converting itself into a public company limited by guarantee, it may apply to the Central Government with a scheme for putting the special resolution into effect, including any provision for the alteration of the memorandum or articles of association in so far as it may be necessary for this purpose.

 

(2) If the Central Government, after giving such notice to any person concerned as it thinks fit, is satisfied-

 

(a) that the scheme makes suitable provision with respect to the repayment, conversion or liquidation of the paid-up capital of the company.

 

(b) that the consent of the creditors to the conversion of the company limited by shares into a company limited by guarantee has been obtained, or that suitable provisions have been made for discharging, determining  or securing the debts or claims of such creditors, and

 

(c) that the scheme is otherwise reasonable, it may sanction the scheme and thereupon the scheme shall become binding on the company and on all the persons concerned.

 

(3) Against the decision of the Central Government sanctioning a scheme under sub-section (2), any person aggrieved thereby may, within ninety days of the date of the order sanctioning the scheme, prefer an appeal to the High Court within whose jurisdiction the registered office of the insurer is situate.

 

(4) The decision of the High Court where an appeal has been preferred to it under sub-section (3) or of the Central Government where no such appeal has been preferred, shall be final and binding on all the persons concerned.

 

(5) Where a scheme has been sanctioned under this section, the company shall file with the Registrar of Companies a certified copy of the scheme as sanctioned, and thereupon the provisions of the Indian Companies Act, 1913, relating to companies limited by guarantee shall become applicable to the company.]

 

[a] Clause (6C) were inserted by the Insurance (Amendment) Act, 1950  (47 of 1950), section 9 (1-6-1950).

 

 

 

 

7.Deposits

.-

 

(1) Every insurer not being an insurer specified in sub-clause (c) of clause (9) of section 2 shall, in respect of the insurance business carried on by him in a*[India], deposit and keep deposited with the Reserve Bank of India in one of the officers in India of the Bank for and on behalf of the Central Government b*[the amount hereafter specified, either in cash or in approved securities estimated at the market value of the securities on the day of deposit, or partly in cash and partly in approved securities so estimated],-

 

c*[(a) where his total gross premium written direct in India in respect of general insurance business in any calendar year commencing after the 31st day December 1967, did not exceed rupees one crore, a sum of rupees ten lakhs,

 

(b) where his total gross premium written direct in India in respect of general insurance business during any calendar year referred to in clause (a) exceeded rupees one crore, a sum of rupees twenty lakhs;]

 

d*[Provided that, where the business done or to be done is marine insurance only and relates exclusively to country craft or its cargo or both, the amount to be deposited under this sub-section shall be e*[one hundred thousand rupees] only:

 

f*[Provided further that in respect of an insurer not having a share capital and carrying on only such insurance business as in the opinion of the Central Government is not carried on ordinarily by insurers under separate policies, the Central Government may, by notification in the Official Gazette, order that the provisions of this sub-section shall apply to such insurer with the modification that instead of the sum of rupees twenty lakes or rupees ten lakhs, as the case may be, the deposit to be made by such insurer shall be such amount, being not less than one hundred and fifty thousand rupees, as may be specified in the said order.]

 

g*[(1A) (i) An insurer who holds immediately before the commencement of the Insurance (Amendment) Act, 1968, a valid certificate of registration in respect of any class of insurance business and who has deposited and kept deposited a sum which is less than the sum required to be deposited under sub-section (1) may make deposited of the sum which is equal to the difference between the sum already deposited and kept deposited and the sum required to be  deposited  under sub-section (1), in not more than five instalments, of which-

 

(a) the first shall be not less than one-fifth of the said sum and shall be paid before the expiry of one year from such commencement,

 

(b) the second shall be not less than one-fourth of the balance left after making the deposit under clause (a) and shall be paid before the expiry of two years from such commencement.

 

(c) the third shall be not less than one-third of the balance left after making the deposit under clauses (a)  and (b) and shall be paid before the expiry of three years from such commencement.

 

(d) the fourth shall be not less than one-half of the residue and shall be paid before the expiry of four years from such  commencement, and

 

                (e) the balance shall be paid before the expiry of the five years from such commencement.

 

(ii) An insurer referred to in clause (a) of sub-section (1), the total gross premium written direct by whom in India in any calendar year in respect of general insurance business exceeds for the first time rupees one crore, shall make deposit of the sum which is equal to the difference between the sum already deposited and kept deposited by him, as at end of such calendar year, and the sum of rupees twenty lakhs, in not more than five equal annual instalments, the first of which shall be made on or before the 31st day of December of the year immediately following the year in which the total gross premium written direct by him in India exceeded rupees one crore, and nothing in clause (i) of this sub-section shall apply to such insurer after the end of the calendar year during which the gross premium written direct by him in India exceeded rupees one crore.

 

(1B) Notwithstanding anything contained in sub-section (1), it shall be sufficient compliance with the provisions of sub-section (1) in the case of a group of insurers operating in India as a group (hereafter in this Act referred to as a ''group'') if the total amount of the deposit made by all the insurers in the group is not less than the amount which the group, if considered to be a single insurer, would have been required to deposit under sub-section (1):

               

Provided that the deposit made by each insurer in the group is not less than that proportion of the total deposit required to be made under this sub-section as the proportion of his share of the risk on each policy issued by the group bears to the total risk on that policy.

 

Explanation.- For the purposes of this section and section 64VA, a group shall be deemed to be operating as such in India if the following conditions are fulfilled, namely:-

 

(a) no insurer in the group has commenced carrying on insurance business in India after the commencement of the Insurance (Amendment) Act, 1968;

 

(b) all the insurers in the group are registered for the same class or classes of insurance business;          

      

(c) there is an  agreement between all the insurers in the group to function as a group in respect of their business in India, and such agreement provides that the proportionate share of each insurer in the total risk on every policy issued by the group shall be such as may be mentioned therein and that  such proportion shall be the same for all policies in all the classes  of insurance policies issued by the group;  

    

(d) the agreement referred to in clause (c) has been filed with the Controller within thirty days from the date of its execution:

 

Provided that if the Controller is satisfied that any insurer was prevented by sufficient cause from filing such agreement within the specified time, he may, by order, allow the insurer to file such agreement within a period of thirty days from the date of his order ;

 

(e) every policy issued by the insurers in the group mentions, on the face of the policy, the names of all the members of the group and the proportion of the risk for which each member is liable ;

 

(f) the insurers in the group function with common offices, common officers, not being directors or members of any Board of management, and common staff within India;

 

(g) all the expenses in India of the insurance business (but excluding expenses solely relating to any Board of management, whether set up for the purpose of managing the insurance business or not,) are shared by the insurers in the group in the proportion in which the risks are shared by and between them.

 

(1C) When a group of insurers ceases to be a group, every insurer in that group who continues to carry on any class of insurance business in India shall, unless he has joined another group within a period of six months from the date of cessation of the previous group and has complied with all the provisions of this section, comply with the requirements of sub-section (1) as if he had not been an insurer in any group at any time and he shall pay, within a period of six months from the date of such cessation, in a lump sum, the amount of the instalments of deposit which he would have been required to make under sub-section (1A) before the date of such cessation had he not been an insurer in any group at any time, reduced by the amount of deposit, if any, made by him after the commencement of Insurance (Amendment) Act, 1968.

 

(1D) The Central Government may, at its discretion, extend the time for making any deposit or instalment of deposit required to be made by any insurer under the provisions of sub-sections (1) (1A), (1B) and (1C) by a period of not more than six months at a time ;

 

Provided that not more than two extensions shall be given in respect of any deposit or instalment of deposit required to be made by an insurer.

 

(1E) Where a group of insurers is operating in India as a group, such insurers may, notwithstanding anything contained in  section 32A, have common officers and common staff within India.]

 

                [a] Substituted for "the States" by Act 56 of 1962, Section 2 and Schedule (1-11-1956).

 

                [b] Substituted and deemed always to have been so by Act 20 of 1940, Section 4.

 

[c] Substituted for clauses (a) to (i) by the Insurance (Amendment) Act, 1968  (62 of 1968), Section 6 (1-6-1969).

 

                [d] Proviso was added by Act 20 of 1940, Section 4.

 

                [e] Substituted for "ten thousand rupees" by Act 62 of 1968, Section 6 (1-6-1969).

 

                [f] Inserted, ibid.

 

                [g] Sub-sections (1A) to (1E) inserted, ibid.

 

 

(2) Where the insurer is an insurer specified in sub-clause (c) of clause (9) of sections 2, he shall be deemed to have complied with the provisions of this section as to deposits, if in respect of c*[……..] insurance business a*[carried on] by him in b*[India] under a standing contract of the nature referred to in sub-clause (c) of clause(9) of section 2 a deposit of an amount one-and-a-half times that specified in sub-section (1) c*[……….] has been made in the Reserve Bank of India in one of the offices in India of the Bank for and on behalf of the Central Government in cash or approved securities estimated at the market value of the securities on the day of deposit by or on behalf of the underwriters who are members of the Society of L1oyd's with whom he has his standing contract.

 

 

[a] Substituted for "transacted" by the Insurance (Amendment) Act, 1939  (11 of 1939), Section 3.

 

[b] Substituted for "the State" by Jammu and Kashmir (Extension of Laws) Act, 1956     (62 of 1956), Section 2 and Schedule (1-11-1956).

 

[c] Words "any class of" and "as deposit for that class of insurance business" omitted by Act 62 of 1968, Section 6 (1-6-1969).

 

 

a*[(3) Where the deposit is to be made by an insurer not carrying on insurance business in India immediately before the commencement of the insurance (Amendment) Act, 1968, a deposit of rupees ten lakhs shall be made before the application for registration is made, and the provisions of clause (ii) of sub-section (1A) shall apply to such insurer after his registration as they apply to an insurer specified in clause (a) of sub-section (1).

 

(4) An insurer shall not be registered for any class of insurance business in addition to the class or classes for which he is already registered until the full deposit required under sub-section (1) has been made.

 

(5) Where an insurer who intends to become a member of a group, does not carry  on all the classes of insurance business carried on by the other insurers in such group, or, where out of the several insurers who desire to form themselves into a group, any insurer does not carry on all the classes of insurance business carried on by the other insurers who desire to form themselves into the group such insurers may be registered for that class or those classes of insurance business which is or are carried on by the other insurers of the group or the proposed group, as the case may be, and where any application for registration is made by any such insurer, the Controller may, notwithstanding anything contained in sub-section (2A) of section 3 or sub-section (4), register such insurer for one or more additional classes of insurance, if the following conditions are fulfilled, namely :-

 

(a) the Controller is satisfied that registration for the proposed one or more additional classes of insurance business would qualify the insurer to become a member of a group ;

 

(b) agreements have been executed by all the insurers in the group or proposed group, as the case may be, and such agreements, in the opinion of the Controller,  satisfy the requirements of the Explanation to sub-section (1B) ; and

 

(c) the insurer has, after the commencement of the Insurance (Amendment) Act,1968, made deposit of a sum not less than the total of all the instalments of deposit which he would have been required to make after such commencement till the date of his becoming a member of the group, had he been a member of the group from such commencement.

 

(6) The Controller shall cancel the registration made in pursuance of the provisions of sub-section (5) if the insurer referred to therein fails to become, within a period of three months from the date of such registration, a member of the group or proposed group, as the case may be, and, where such registration has been cancelled, the provisions of this Act shall apply to the insurer as if he had been registered for the class or classes of insurance business in relation to which his registration has been cancelled.]

 

[a] Substituted for former sub-sections (3) to (6) by the Insurance (Amendment) Act, 1968 (62 of 1968), Section 6 (d) (1-6-1969).

 

 

(7) Securities already deposited with the Controller of Currency in compliance with the Indian Life Insurance Companies Act, 1912, shall be transferred by him to the Reserve Bank of India and shall, to the extent of their market value a*[as at the date of the commencement of this Act], be deemed to be deposited under this Act b*[as the instalment or as part of this instalment to be made under the foregoing provisions of this section before the application for registration is made whether any such application is or is not in fact made].

 

[a] Substituted and deemed always to have been substituted for "on the day of the first deposit made in compliance with this Act" by the Insurance (Amendment) Act, 1940  (20 of 1940), Section 4.

 

[b] Substituted for "in respect of the life insurance business of the insurer", ibid (with retrospective effect).

 

 

(8) A deposit made in cash shall be held by the Reserve Bank of India to the credit of the insurer and shall   a*[except to the extent, if any, to which the cash has been invested in securities under sub-section (9A)], be returnable to the insurer in cash in any case in which under the provisions of this Act a deposit is to be returned; and any interest accruing due and collected on securities deposited under sub-section(1) or sub-section (2) shall be paid to the insurer, subject only to deduction of the normal commission chargeable for the realisation of interest.

 

                [a] Inserted and deemed always to have been inserted by the Insurance (Amendment) Act, 1940

                (20 of 1940), Section 4.

 

 

a*[(9) The insurer may at any time replace any securities deposited by him under this section with the Reserve Bank of India either by cash or by other approved securities or partly cash by other approved securities, provided that such cash, or the value of such  other approved securities estimated at the market rates prevailing at the time of replacement, or such cash together with such value, as the case may be, is not less than the value of the securities replaced estimated at the market rates prevailing when they were deposited.

 

(9A) The Reserve Bank of India shall, if so requested by the insurer,-

 

(a) sell any securities deposited by him with the Bank under this section and hold the cash realised by such sale as deposit, or

 

(b) invest in approved securities specified by the insurer the whole or any part of a deposit held by it in cash or the whole or any part of  cash received by it on the sale of or on the maturing of securities deposited by the insurer, and hold the securities in which investment is so made as deposit,

 

b*[and may charge the normal commission on such sale or on such investment].

 

(9B) Where sub-section (9A) applies,-

 

(a) if the cash realised by the sale of or on the maturing of the securities (excluding in the former case the interest accrued) falls short of the market value of the securities at the date on which they were deposited with the Bank, the insurer shall make good the deficiency by a further deposit either in cash or in approved securities estimated at the market value of the securities on the day on which they  are deposited, or partly in cash and partly in approved securities so estimated, within a period of two months from the date on which the securities matured or were sold or where the securities matured or were sold before the 21st day of March, 1940, within a period of four months from the commencement of the Insurance (Amendment) Act,1940; and unless he does so the insurer shall be deemed to have failed to comply with the requirements of this section as to deposits; and

 

(b) if the cash realised by the sale of or on the maturing of the securities (excluding in the former case the interest accrued) exceeds the market value of the securities at the date on which they were deposited with the Bank, the Central Government may, if satisfied that the full amount required to be deposited under sub-section (1) is in deposit, direct the Reserve Bank to return the excess.]

 

[a] Sub-sections (9), (9A) and (9B) were substituted and deemed always to have been substituted by Act 20 of 1940, Section 4.

 

[b] Inserted by the Insurance (Amendment) Act, 1941  (13 of 1941), Section 7 (8-4-1941).

 

 

(10) If any part of a deposit made under this section is used in the discharge of any liability of the insurer, the insurer shall deposit such additional sum in cash or approved securities a*[estimated at the market value of the securities on the day of deposit, or partly in cash and partly in such securities,] as will make up the amount so used.The insurer shall be deemed to have failed to comply with the requirements of sub-section (1), unless the deficiency is supplied within a period of two months from the date when the deposit or any part thereof is so used for discharge of liabilities.

 

                [a] Inserted by the Insurance (Amendment) Act, 1940  (20 of 1940), Section 4.

 

 

 

 

 

8.Reservation of deposits

.-

 

(1) Any deposit made under section 7 a*[or section 98] shall be deemed to be part of the assets of the insurer but shall not be susceptible of any assignment or charge; nor shall it be available for the discharge of any liability of the insurer other than liabilities arising out of policies of insurance issued by the insurer so long as any such liabilities remain undischarged; nor shall it be liable to attachment in execution of any decree except a decree obtained by a policy-holder of the insurer in respect of a debt due upon a policy which debt the policy-holder has failed to realise in any other way.

 

(2) Where a deposit is made in respect of life insurance business, the deposit made in respect thereof shall not be available for the discharge of any liability of the insurer other than liabilities arising out of policies of life insurance issued by the insurer.

 

                [a] Inserted by the Insurance (Amendment) Act, 1939  (11 of 1939), Section 4.

 

 

 

a*[

9.Refund of deposit

.-

 

Where an insurer has ceased to carry on in India all classes of insurance business, and his liabilities in lndia in respect of all classes of insurance business have been satisfied or are otherwise provided for, the court may, on the application of the insurer, order the return to the deposit made by him under this Act.]

 

 

[a] Substituted for former Section 9 by the Insurance (Amendment) Act, 1968  (62 of 1968), Section 7 (1-6-1969).

 

 

 

 

10.Separation of accounts and funds

.-

 

(1) Where the insurer carries on business of more than one of the a*[following classes, namely, life insurance, fire insurance, marine insurance or miscellaneous], he shall keep a separate account of all receipts and payments in respect of each such class of insurance business b*[and where the insurer carries on business of the a*[miscellaneous insurance], whether alone or in conjunction with business of another class, he shall, unless the c*[Controller] waives this requirement in writing, keep a separate account of all receipts and payments in respect of a*[each of such sub-classes of miscellaneous insurance business] as may be prescribed in this behalf;

 

Provided that no sub-class of a*[miscellaneous insurance business] shall be prescribed under this sub-section if the insurance business comprised in the sub-class consists of insurance contracts which are terminable by the insurer at intervals not exceeding twelve months and under which, if a claim arises, the insurer's liability to pay benefit ceases within one year of the date on which the claim arose.]

 

 

(2) Where the insurer carries on the business of life insurance d*[all receipts due in respect of such business], shall be carried to and shall form a separate fund to be called the life insurance fund e*[the assets of which shall, after the expiry of six months from the commencement of the Insurance (Amendment) Act, 1946, be kept distinct and separate from all other assets of the insurer] and the deposit made by the insurer in respect of life insurance business shall be deemed to be f*[part of the assets of such fund, g*[and every insurer shall, within the time limited in sub-section (1) of section 15 in regard to the furnishing of the statements and accounts referred to in section 11, furnish to the Controller a statement showing in detail such assets as at the close of every calendar year duly certified by an auditor or by a person qualified to audit under the law of the insurer's country :

 

Provided that such statement shall, in the case of an insurer to whom section 11 applies, be set out as a part of the balance-sheet mentioned in clause (a) of sub-section (1) of that section :

 

Provided further that an insurer may show in such statement all the assets held in his life department, but at the same time showing any deductions on account of general reserves and other liabilities of that department :

 

Provided also that the Controller may call for a statement similarly certified of such assets as at any other date specified by him to be furnished within a period of three months from the date with reference to which the statement is called for]].

 

e*[(2A) No insurer carrying on life insurance business shall be entitled to be registered for any class of insurance business in addition to the class or classes for which he has been already registered unless the    c*[Controller] is satisfied that the assets of the life insurance fund of the insurer are adequate to meet all his liabilities on policies of life insurance maturing for payment.]

 

(3) The life insurance fund shall be as absolutely the security of the life policy-holders as though it belonged to an insurer carrying on no other business than life insurance business and shall not be liable for any contracts of the insurer for which it would not have been liable had the business of the insurer been only that of life insurance and shall not be applied directly or indirectly h*[……] for any purposes i*[other than those of the life insurance business of the insurer].

 

[a] Substituted for certain words by the Insurance (Amendment) Act, 1968  (62 of 1968), Section 8 (1-6-1969).

 

                [b] Inserted by the Insurance (Amendment) Act, 1941  (13 of 1941), section 8 (8-4-1941).

 

[c] Substituted for "Superintendent of Insurance", ibid, 1950  (47 of 1950), section 4 (1-6-1950).

 

[d] Substituted for "the excess of receipts over payments in respect of such business" by Act (13 of 1941), section 8 (8-4-1941).

 

                [e] Inserted, ibid, 1946  (6 of 1946), section 8 (20-3-1946).

 

                [f] Substituted for "part of such fund", ibid.

 

                [g] Substituted for certain words by Act  (47 of 1950), section 11 (1-6-1950).

 

                [h] The words "save as provided in section 19" were omitted by Act 13 of 1941, section 8.

 

                [i] Substituted for "other than those of life insurance", ibid.

 

 

 

 

 

OBJECTS AND REASONS

 

Section 10 (1), Proviso.- "We have added a proviso to sub-section (1) of section 10 to make it clear that such classes of insurance as fire insurance and accident insurance, where the contracts do not normally extend beyond one year, are not to be required to have separate accounts kept".-S.C.R.Gaz.of India, 1941, Pt.V, p.79

 

Amendment made in 1946 in sub-sec.(2).- These amendments make it clear that the life insurance fund should be separately invested and kept apart from the other assets of the insurer and also provide for annual submission and statements showing such assets.

 

Sub-section (2A).- This sub-section provides that a person carrying on a life insurance business shall not be entitled to embark on other classes of insurance business unless the Superintendent of Insurance is satisfied that the life insurance fund is adequate to meet all his liabilities on policies of life insurance maturing for payment-S.O.R., Gazette of India, 1946, Part V, p.13.

 

 

 

 

11.Accounts and balance-sheet

.-

 

(1) Every insurer, in the case of an insurer specified in sub-clause (a) (ii) or sub-clause (b) of clause (9) of section 2 in respect of all insurance business transacted by him, and in the case of any the insurer in respect of the insurance business transacted by him in India, shall at the expiration of each calendar year prepare with reference to that year-

 

(a) in accordance with the regulations contained in Part I of the First Schedule a balance-sheet in the form set forth in Part II of the Schedule ;

 

(b) in accordance with the regulations contained in Part I of the Second Schedule, a profit and loss account in the forms set forth in Part II of that Schedule, except where the insurer carries on business of one class only of a*[the following classes, namely, life insurance, fire insurance or marine insurance] and no the business;

 

(c) b*[in respect of each class or sub-class of insurance business for which he is required under sub-section (1) of section 10 to keep a separate account of receipts and] c*[payments, a revenue account in accordance with the regulations, and in the form or forms, set forth in the Third] Schedule applicable to d*[that class or sub-class or insurance business].

 

(2) Unless the insurer is a company e*[as defined in clause (2) of sub-section (1) of section 2 of the Indian Companies Act, 1913] the accounts and statements referred to in sub-section (1) shall be signed by the insurer, or in the case of a company by the chairman, if any, and two directors and the principal officer of the company, or in the case of a firm by two partners of the firm, and shall be f*[accompanied by a statement containing the names, descriptions and occupations of, and the directorships held by, the persons in charge of the management of the business] during the period to which such accounts and statements refer and by a report g*[……]  on the affairs of the business during that period.

 

(3) Where an insurer carrying on the business of insurance at the commencement of this Act has prepared the balance-sheet and accounts required by the Indian Life Assurance Companies Act, 1912, or has based his accounts upon the financial and not the calendar year, the provisions of this section shall, if the Central Government so directs in any case, apply until the 31st day of December, 1939, as if in sub-section (1) references to the calendar year were references to the financial year.

  

 

[a] Substituted for certain words by the Insurance (Amendment) Act, 1968  (62 of 1968), section 9 (1-6-1969).

 

[b] Substituted for "in respect of each class of insurance business carried on by him", by the Insurance (Amendment) Act, 1941  (13 of 1941), section 9 (8-4-1941).

 

[c] Substituted for "payment in accordance with the regulations contained in Part I of the Third Schedule, a revenue account in the form or forms set forth in Part II of that", ibid, 1946  (6 of 1946), section 9 (20-3-1946).         

 

                [d] Substituted for " that class of insurance business" by Act 13 of 1941, section 9.

 

                [e] Substituted for "to which the Indian Companies Act, 1913, applies", ibid.

 

[f] Substituted for "accompanies by a statement containing the names and descriptions of the persons in charge of the management of the business" by the Insurance (Amendment) Act, 1950  (47 of 1950), section 12  (1-6-1950).

 

                [g] The words "by such persons" were omitted, ibid.

 

 

 

 

12.Audit

.-

 

The balance-sheet, profit and loss account, revenue account and profit and loss appropriation account of every insurer, in the case of an insurer specified in sub-clause (a) (ii) or sub-clause (b) of clause (9) of section 2 in respect of all insurance business transacted by him, and in the case of any other insurer in respect of the insurance business transacted by him in India, shall, unless they are subject to audit under the Indian Companies Act, 1913, be audited annually by an auditor, and the auditor shall in the audit of all such accounts have the powers of, exercise the functions vested in,  and discharge the duties and be subject to the liabilities and penalties imposed on, auditors of companies by section 145 of the Indian Companies Act, 1913.

 

 

 

 

 

13.Actuarial report and abstract

.-

 

(1) Every insurer carrying on life insurance business shall, in respect of the life insurance business transacted by him in India, and also in the case of an insurer specified in sub-clause (a) (ii) or sub-clause (b) of clause (9) of section 2 in respect of all life insurance business transacted by him, once at least a*[in every three years] cause an investigation to be made by an actuary into the financial condition of the life insurance business carried on by him, including a valuation of his liabilities in respect thereto and shall cause an abstract of the report of such actuary to be made in accordance with the regulations contained in Part I of the Fourth Schedule and in conformity with the requirements of part II of that Schedule :   

 

b*[Provided that the Controller may, having regard to the circumstances of any particular insurer, allow him to have the investigation made as at a date not later than for years from the date as at which the previous investigation was made :

 

Provided further that for an insurer carrying on life insurance business in c*[India] at the commencement of the Insurance (Amendment) Act, 1950, the last date as at which that first investigation after such commencement should be caused to the made by an actuary shall be-

 

(a) the 31st day of December, 1950, or the date of expiration of five years from the date as at which the last investigation was made by an actuary before such commencement, whichever is earlier, where the said last investigation was at a date--

 

(i) before the 31st day of December, 1946, but not more than five years before such commencement, or

 

(ii) after the 30th day of December, 1946, but before the 31st day of December, 1947, and had disclosed a deficit in the life insurance fund;

 

(b) the 31st day of December, 1951, where the last investigation by an actuary before such commencement was at a date-

 

(i) after the 30th day of December, 1946, but before the 31st day of December, 1947, and did not disclose a deficit in the life insurance fund; or

 

                                (ii) after the 30th day of December, 1947, but before the 31st day of December, 1948;

 

(c) the 31st day of December, 1952,  where the last investigation by an actuary before such commencement was as at any date after the 30th day of December, 1948, but before the 1st day of January, 1950 :

 

Provided also that, in the case of an insurer who has not caused an investigation to be made by an actuary as at any date prior to such commencement, the date of commencement of life insurance business in c*[ India] shall, for the purpose of the preceding proviso, be deemed to be the date as at which the last investigation was made by an actuary before such commencement and such investigation shall be deemed to have disclosed  no deficit in the life insurance fund.]

 

 

[a] Substituted for "in every five years" by the Insurance (Amendment) Act, 1950  (47 of 1950), section 13 (1-6-1950).

 

                [b] Inserted, ibid.

 

[c] Substituted for "the States" by Jammu and Kashmir (Extension of Laws) Act, 1956  (62 of 1956), section 2 and Schedule (1-11-1956).

 

 

(2) The provisions of sub-section (1) regarding the making of an abstract shall apply whenever at any other time an investigation into the financial condition of the insurer is made with a view to the distribution of profits or an investigation is made of which the results are made public.

 

(3) There shall be appended to every such abstract as is referred to in sub-section (1) or sub-section (2) a certificate signed by the principal officer of the insurer that full and accurate particulars of every policy under which there is a liability either actual or contingent have been furnished to the actuary for the purpose of the investigation.

 

(4) There shall be appended to every such abstract a statement, in conformity with the requirements of Part II of the Fifth Schedule and prepared in accordance with the regulations contained in Part I of that Schedule, of the life insurance business in force at the date to which the accounts of the insurer are made up for the purposes of such abstract :

 

Provided that, if the investigation referred to in sub-sections (1) and (2) is made annually by any insurer, the statement need not be appended every year but shall be appended at least once a*[in ever three years].

 

 

 

[a] Substituted for "in every five years" by the Insurance (Amendment) Act, 1950  (47 of 1950), Section 13 (1-6-1950).

 

 

(5) Where an investigation into the financial condition of an insurer is made as at a date the than the expiration of the year of account, the accounts for the period since the expiration of the last year of account and the balance-sheet as at the date at which the investigation is made shall be prepared and audited in the manner provided by this Act.

 

a*[(6) The provisions of this section relating to life insurance business shall apply also to any such sub-class of insurance business included in the class 'Miscellaneous Insurance' as may be prescribed under sub-section (1) of section 10; and the b*[Controller] may authorize such modifications and variations of the regulations contained in Part I of the Fourth and Fifth Schedules and of the requirements of Part II of those Schedules as may be necessary to facilitate their application to any such sub-class of insurance business:

 

Provided that, if the b*[Controller] is satisfied that the number and amount of the transactions carried out by an insurer in any such sub-class of insurance business is so small as to render periodic investigation and valuation unnecessary, he may exempt that insurer from the operation of this sub-section in respect of that sub-class of insurance business.]

 

 

                [a] Inserted by the Insurance (Amendment) Act, 1941 (13 of 1941), S.10 (8-4-1941).

 

                [b] Substituted for "Superintendent of Insurance", Ibid, 1950  (47 of 1950), S.4 (1-6-1950).

 

 

 

 

 

14.Register of policies and register of claims

.-

 

Every insurer, in the case of an insurer specified in sub-clause (a) (ii) or sub-clause (b) of clause (9) of section 2 in respect of all business transacted by him, and in the case of any other insurer in respect of the insurance business transacted by him in India, shall maintain-

 

(a) a register or record of policies, in which shall be entered, in respect of every policy issued by the insurer, the name and address of the policy-holder, the date when the policy was effected and a record of any transfer, assignment or nomination or which the insurer has notice, and

 

(b) a register or record of claims, in which shall be entered every claim made together with the date of the claim, the name and address of the claimant and the date on which the claim was discharged, or, in the case of a claim which is rejected, the date of rejection and the grounds therefor.

 

 

 

15.Submission of returns

.-

 

(1) The audited accounts and statements referred to in section 11 a*[or sub-section (5) of section 13] and the abstract and statement referred to in section 13 shall be printed, and four copies thereof shall be furnished as returns to the b*[Controller] c*[in the case of the accounts and statements referred to in section 11 a*[or sub-section (5) of section 13] within six months and in the case of the abstract and statement referred to in section 13 within nine months] from the end of the period to which they refer d*[……]

 

Provided that the said period of six months shall, in the case of insurers having their principal place of business or domicile outside India and in the case of insurers constituted, incorporated or domiciled in e*[ India] but also carrying on business outside India, be extended by three months, and provided further that the Central Government may in any case extend the time allowed by this sub-section for the furnishing of such returns by a further period not exceeding three months.

 

(2) Of the four copies so furnished one shall be signed in the case of a company by the chairman and two directors and by the principal officer of the company and, if the company has a managing director or managing agent by that director or managing agent, in the case of a firm, by two partners of the firm, and in the case of an insurer being an individual, by the insurer himself a*[and one shall be signed by the  author who made the audit or the actuary who made the valuation as the case may be].

 

(3) Where the insurer's principal place of business or domicile is outside e*[India], he shall forward to the  b*[Controller], along with the documents referred to in section 11, the balance-sheet,  profit and loss account and revenue account and the valuation reports and valuation statements, if any, which the insurer is required to file with the public authority of the country in which the insurer is constituted, incorporated or domiciled, or, where such documents are not required to be filed, a certified statement showing the total assets and liabilities of the insurer at the close of the period covered  by the said documents  and his total income and expenditure during that period.

 

 

                [a] Inserted by the Insurance (Amendment) Act, 1946  (6 of 1946), S.10 (20-3-1946).

 

                [b] Substituted for "Superintendent of Insurance" ibid, 1950  (47 of 1950), S.4 (1-6-1950).

 

                [c] Substituted for "within six months", ibid, 1941 (13 of 1941), section 11 (8-4-1941).

 

[d] The "sentence" the Superintendent of Insurance may extend the time allowed furnishing the abstract and statement referred to in section 13 by a period not exceeding three months" was omitted, ibid.

 

[e] Substituted for "the States" by Jammu and Kashmir (Extension of Laws) Act, 1956 (62 of 1956), section 2 and Schedule (1-11-1956).

 

 

 

 

 

16.Returns by insurers established outside India

.-

 

(1) Where, by the law of the country in which an insurer, not being an insurer specified in sub-clause (a) (ii) or sub-clause (b) of clause (9) of section 2 is constituted, incorporated or domiciled the insurer is required to prepare and to furnish to a public authority of that country documents of substantially the same nature as the documents required to be furnished as returns in accordance with the provisions of section 15, the provisions of sub-section (2) of this section shall apply to such insurer in lieu of the provisions of sections 11, 12, 13, and 15.

 

(2) The insurer shall, within the time specified in sub-section (1) of section 15, furnish to the a*[Controller] four certified copies in the English language of every balance-sheet, account, abstract, report and statement supplied to the public authority referred to in sub-section (1) of this section, and in addition thereto, b*[for certified copies] in the English language of each of the following statements, namely:-

 

(a) a statement c*[audited d*[by an auditor or] by a person duly qualified under the law of the insurer's country] showing the assets held by the insurer in India e*[as at the date of any balance-sheet so furnished] ;

 

(b) a*[for each class or sub-class of insurance business for which he is required under sub-section (1) of section 10 to keep a separate account of receipts and payments, a revenue account for the period covered by an account so  g*[furnished, prepared in accordance with the regulations, and in the form or forms, set forth in]] the Third Schedule applicable to h*[that class or sub-class of insurance business] c*[and similarly audited], showing separately with respect to business transacted by the insurer in India the details required to be supplied in a revenue account furnished under this clause of this sub-section;

 

i*[( c ) a separate abstract of the valuation report  in respect of all business transacted in India in each class or sub-class of insurance business to which section 13 refers, prepared in the manner required by that section ; and]

 

(d) a declaration in the prescribed form stating that all amounts received by the insurer directly or indirectly whether from his head office or from any other source outside India have been shown in the revenue accounts except such sums as properly appertain to the capital accounts.

 

 

[a] Substituted for "Superintendent of Insurance" by the Insurance (Amendment) Act, 1950  (47 of 1950), section 4 (1-6-1950).

 

                                [b] Substituted for "four copies", ibid, 1939  (11 of 1939), S.7.

 

                                [c] Inserted, ibid.

 

                                [d] Inserted, ibid, 1946 (6 of 1946), S.11 (20-3-1946).

 

                                [e] Inserted, ibid, 1941 (13 of 1941), S.12 (8-4-1941).

 

[f] Substituted for "for each class of insurance business carried on by him, a revenue account", ibid.

 

[g] Substituted for "furnished in the form or forms set forth in Part II of" by Act (6 of 1946), S.11 (20-3-1946).

 

                                [h] Substituted for "that class of business" by Act 13 of 1941, S.12 (8-4-1941).

 

                                [i] Substituted for the former clause, ibid.

 

 

 

 

 

17.Exemption from certain provisions of the Indian Companies Act, 1913

.–

 

Where an insurer, being a company incorporated under the Indian Companies Act, 1913 a*[or under the Indian Companies Act, 1882, or under the Indian Companies Act, 1866, or under any Act repealed thereby], in any year furnishes b*[his balance-sheet and accounts] in accordance with the provisions of section 15, he may at the same time send to the Registrar of Companies c*[copies of such balance-sheet and accounts]; and d*[where such copies are so sent] it shall not be necessary for the company e*[to file copies of the balance-sheet and accounts] with the Registrar as required by sub-section (1) of section 134 of  g*[the first-mentioned Act] and f*[such copies so sent] h*[shall be chargeable with the same fees and] shall be dealt with in all respects as if they were filed in accordance with that section.

 

 

                        [a] Inserted by the Insurance (Amendment) Act, 1939  (11 of 1939), S.8.

                       

                        [b] Substituted for "his accounts and balance-sheet", ibid.

 

 

                        [c] Substituted for "a copy of such accounts and balance sheet", ibid.

 

                        [d] Substituted for "where such copy is so sent", ibid.

 

                        [e] Substituted for "to file a balance-sheet", ibid.

 

                        [f] Substituted for "that Act", ibid, 1946 (6 of 1946), S.12 (20-3-1946).

 

                        [g] Substituted for "the copy of the accounts and balance-sheet so sent" by Act 11 of 1939, S.8.

 

                        [h] Inserted, ibid, 1941 (13 of 1941), S.13 (8-4-1941).

 

 

 

 

a*[17A.            This Act not to apply to preparation of accounts, etc., for periods prior to this Act coming into force.-

 

Nothing in this Act shall apply to the preparation of accounts by an insurer and the audit and submission thereof in respect of any accounting year which has expired prior to the commencement of this Act, and  notwithstanding the other provisions of this Act, such accounts shall be prepared, audited and submitted in accordance with the law in force immediately before the commencement of this Act.]

 

                [a] Inserted by the Insurance (Amendment) Act, 1939  (11 of 1939), section 9.

 

 

 

 

 

18.Furnishing reports

.-

 

Every insurer shall furnish to the a*[Controller] a certified copy of every report on the affairs of the concern which is submitted to the members or policy-holders of the insurer immediately after its submission to the members or policy-holders, as the case may be.

 

 

[a] Substituted for "Superintendent of Insurance" by the Insurance (Amendment) Act, 1950  (47 of 1950), section 4 (1-6-1950).

 

 

 

 

 

19.Abstract of proceedings of general meetings

.-

 

Every insurer, being a company or body incorporated under any law for the time being in force in   a*[India], shall furnish to the b*[Controller] c*[a certified copy of the minutes of the proceedings of every general meeting, as entered in the Minutes Book of the insurer] within thirty days from the holding of the meeting to which it relates.

 

               

 

[a] Substituted for "the States" by Jammu and Kashmir (Extension of Laws) Act, 1956  (62 of 1956), section 2 and Schedule (1-11-1956).

 

[b] Substituted for "Superintendent of Insurance" by the Insurance (Amendment) Act, 1950  (47 of 1950, section 4 (1-6-1950).

 

[c] Substituted for "an abstract of the proceedings of every general meeting", ibid, section 14 (1-6-1950).

 

 

 

 

 

20.Custody and inspection of documents and supply of copies

.-

 

(1) Every return furnished to the a*[Controller] or a certified copy thereof shall be kept by the   b*[Controller] and shall be open to inspection; and any person may procure a copy of any such return, or of any part thereof, on payment of a fee of six annas for every hundred words or fractional part  thereof required to be copied, any five figures being deemed equivalent to one word.

 

(2) A printed or certified copy of the accounts, statements and abstract furnished in accordance with the provisions of section 15 or section 16 shall, on the  application of any shareholder or policy-holder made at any time within two years from the date on which the document was so furnished, be supplied to him by the insurer within fourteen days when the insurer is constituted, incorporated or domiciled in c*[India] and in any other case within one month of such application.

 

(3) A copy of the memorandum and articles of association of the insurer, if a company, shall, on the application of any policy-holder, be supplied to him by the insurer on payment of one rupee.

 

[a] Substituted for "Superintendent of Insurance" by the Insurance (Amendment) Act, 1950 (47 of 1950), section 4 (1-6-1950).

 

[b] Substituted for "Superintendent", ibid.

 

[c] Substituted for "the States" by Jammu and Kashmir (Extension of Laws) Act, 1956  (62 of 1956), section 2 and Schedule (1-11-1956).

 

 

 

 

 

21.Power of Controller regarding returns

.-

 

(1) If it appears to the a*[Controller] that any return furnished to him under the provisions of this Act is inaccurate or defective in any respect, he may-

 

(a) require from the insurer such further information, certified  if he so directs by an auditor or actuary, as he may consider necessary, to correct or supplement such return ;

 

(b) call upon the insurer to submit for his examination at the principal place of business of the insurer in  b*[India] any book of account, register or other document or to supply any statement which he may specify in a notice served on the insurer for the purpose;

 

                (c) examine any officer of the insurer on oath in relation to the return;

 

(d) decline to accept any such return unless the inaccuracy has been corrected or the deficiency has been supplied before the expiry of one month from the date on which the requisition asking for correction of the inaccuracy or supply of the deficiency was delivered to the insurer c*[or of such further time as the Controller may specify in the requisition] and if he declines to accept any such return, the insurer shall be deemed to have failed to comply with the provisions of section 15 or section 16  d*[or section 28] e*[or section 28A] h*[or section 28B  or section 64V] relating to the furnishing of returns.

 

(2) The Court may, on the application of an insurer and after hearing the f*[Controller] cancel any order made by the f*[Controller] under clause (a), (b) or (c) of sub-section (1) or may direct the acceptance of any return which the f*[Controller] has declined to accept, if the insurer satisfies the Court that the action of the f*[Controller] was in the circumstances unreasonable :

 

g*[Provided that no application under this sub-section shall be entertained unless it is made before the expiration of four months from the time when the a*[Controller] made the order or declined to accept the return.]

 

[a] Substituted for "Superintendent of Insurance" by the Insurance (Amendment) Act, 1950  (47 of 1950), section 4 (1-6-1950).

 

[b] Substituted for "the States" by Jammu and Kashmir (Extension of Laws) Act, 1956  (62 of 1956), section 2 and Schedule (1-11-1956).

 

                [c] Inserted by Act 47 of 1950, section 15 (1-6-1950).

 

                [d] Inserted by the Insurance (Amendment) Act, 1946 (6 of 1946), section 13 (20-3-1946).

 

                [e] Inserted by Act 47 of 1950, section 15 (1-6-1950).

 

                [f] Substituted for "Superintendent", ibid.

 

                [g] Inserted, ibid, 1941 (13 of 1941), section 14 (8-4-1941).

 

                [h] Inserted by the Insurance (Amendment) Act, 1968  (62 of 1968), section 10 (1-6-1969).

 

 

 

 

 

22.Powers of Controller to order revaluation

.-

 

 a*[(1)] If it appears to the b*[Controller] that an investigation or valuation to which section 13 refers c*[or an abstract of a valuation report furnished under clause (c) of sub-section (2) of section 16] does not properly indicate the condition of the affairs of the insurer by reason of the faulty basis adopted in the valuation, he may, after giving notice to the insurer and giving him an opportunity to be heard, cause an investigation and valuation d*[as at such date as the b*[Controller] may specify] to be made at the expense of the insurer by an actuary appointed by the insurer for this purpose and approved by the b*[Controller] d*[and the insurer shall place at the disposal of the actuary so appointed and approved all the material required by the actuary for the purposes of the investigation and valuation within such period, not being less than three months, as the b*[Controller] may specify].

 

a*[(2) The provisions of sub-sections (1) and (4) of section 13, and of sub-section (1) and (2) of section 15 or, as the case may be, of sub-section (2) of section 16, shall apply in relation to an investigation and valuation under this section :

 

Provided that the abstract and statement prepared as the result of such investigation and valuation shall be furnished by such date as the b*[Controller] may specify.]

 

 

[a] Section 22 was renumbered as sub-section (1) of that section and sub-section (2) was inserted by the Insurance (Amendment) Act, 1946  (6 of 1946), section 14 (20-3-1946).

 

[b] Substituted for "Superintendent of Insurance", ibid, 1950  (47 of 1950), section 4 (1-6-1950).

 

                [c] Inserted, ibid, 1941 (13 of 1941), section 15 (8-4-19141).

 

                [d] Inserted by Act 6 of 1946, section 14 (20-3-1946).

 

 

 

 

 

23.Evidence of documents

.-

 

(1) Every return furnished to the a*[Controller] which has been certified by the b*[Controller] to be a return so furnished, shall be deemed to be a return so furnished.

 

(2) Every document, purporting to be certified by the a*[Controller] to be a copy of a return so furnished, shall be deemed to be a copy of that return and shall be received in evidence as if it were the original return, unless some variation between it and the original return is proved.

 

 

[a] Substituted for "Superintendent of Insurance" by the Insurance (Amendment) Act, 1950  (47 of 1950), Section 4 (1-6-1950).

 

                [b] Substituted for "Superintendent", ibid.

 

 

 

 

24.       Summary of returns to be published.–

 

[Omitted by the Insurance (Amendment) Act, 1941  (13 of 1941), section 16 (8-4-1941).]

 

 

 

 

25.Returns to be published in statutory forms

.-

 

No insurer shall publish in a*[India] any return in a form other than that in which it has been furnished to the b*[Controller]:

 

Provided that nothing contained in this section shall prevent an insurer from publishing a true and accurate abstract from such returns for the purposes of publicity.

 

[a] Substituted for "the States" by Jammu and Kashmir (Extension of Laws) Act, 1956  (62 of 1956), section 2 and Schedule (1-11-1956).

 

[b] Substituted for "Superintendent of Insurance" by the Insurance (Amendment) Act, 1950  (47 of 1950), section 4 (1-6-1950).

 

 

 

26.       Alternations in the particulars furnished with application for registration to be reported.-

 

Whenever any alteration occurs or is made which affects any of the matters which are required under the provisions of sub-section (2) of section 3 of accompany an application by an insurer for registration, the insurer shall forthwith furnish to the ab*[Controller] full particulars of such alteration.c*[All such particulars shall be authenticated in the manner required by that sub-section for the authentication of the matters therein referred to, and, where the alteration affects the assured rates, advantages, terms and conditions offered in connection with life insurance policies, the actuarial certificate referred to in clause (f) of the said sub-section shall accompany the particulars of the alteration.]

 

[ab] Substituted for "Superintendent of Insurance" by the Insurance (Amendment) Act, 1950  (47 of 1950), section 4 (1-6-1950).

 

[c] Inserted, ibid, 1941 (13 of 1941), section 17 (8-4-1941).

 

 

 

 

 

INVESTMENT, LOANS AND MANAGEMENT

 

 

a*[

27.Investment of assets

.-

 

(1) Every insurer shall invest and at all times keep invested assets equivalent to not less than the sum of-                   

 

(a) the amount of his liabilities to holders of life insurance policies in India on account of matured claims, and

 

(b) the amount required to meet the liability on polices of life insurance maturing for payment in India.

 

(i) the amount of premiums which have fallen due to the insurer on such policies but have not ben paid and the days of grace for payment of which have not expired, and

 

(ii) any amount due to the insurer for loans granted on and within the surrender values of policies of life insurance maturing for payment in India issued by him or by an insurer whose business he has acquired and in respect of which he has assumed liability,

 

in the manner following, namely, twenty-five per cent.of the said sum in Government securities, a further sum equal to not less than twenty-five per cent.of the said sum in Government securities or other approved securities and the balance in any of the approved investments specified in sub-section (1) of section 27 A or, subject to the limitations, conditions and restrictions specified in sub-section (2) of that section, in any other investment.]

 

[a] Substituted for the former section by the Insurance (Amendment) Act, 1950  (47 of 1950), section 16  (1-9-1950).

 

 

 

(2) For the purposes of sub-section (1),

 

(a) the amount of any deposit made under section 7 or section 98 by the insurer in respect of his life insurance business shall be deemed to be assets invested or kept invested in Government securities.:

 

(b) the securities of, or guaranteed as to principal and interest by, the Government of the United Kingdom shall be regarded as approved securities other than Government securities for a period of four years from the commencement of the Insurance (Amendment) Act, 1950, in the manner and to the extent hereinafter specified, namely :-

 

(i) during the first year, to the extent of twenty-five per cent.in value of the sum referred to in sub-section (1) :

 

(ii) during the second year, to the extent of eighteen and three-fourths per cent.in value of the said sum;

 

(iii) during the third year, to the extent of twelve and a half per cent, in value of the said sum;  and

 

(iv) during the fourth year, to the extent of six and a quarter per cent.in value of the said sum:

 

Provided that, if the Central Government so directs in any case, the securities specified in clause (b) shall be regarded as approved securities other than Government securities for a longer period than four years, but not exceeding six years in all, and the manner in which and the extent to which the securities shall be so regarded shall be as specified in the direction.

 

(c) any prescribed assets shall, subject to such conditions, if any, as may be prescribed, be deemed to be assets invested or kept invested in approved investments specified in sub-section (1) of section 27A.

 

 

(3) In computing the assets referred to in sub-section (1),-

 

(a) any investment made with reference to any currency other than the Indian rupee which is in excess of the amount required  to meet the liabilities of the insurer in India with reference to that currency, to the extent of such excess; and

 

(b) any investment made in the purchase of any  immovable property outside India or on the security of any such property,

shall not be taken into account :

 

Provided that nothing contained in this sub-section shall affect the operation of sub-section (2):

 

Provided further that the Central Government may, either generally or in any particular case, direct that any investment, whether made before or after the commencement of the Insurance (Amendment) Act, 1950, and whether made in or outside India, shall, subject to such conditions as may be imposed, be taken into account, in such manner as may be specified in computing the assets referred to, in sub-section (1) and where any direction has been issued under this proviso copies thereof shall be laid before Parliament as soon as may be after it is issued.

 

 

(4) Where an insurer has accepted reassurance in respect of any policies of life insurance issued by another insurer an maturing for payment in India or has ceded reassurance to another insurer in respect of any such policies issued by himself, the sum referred to in sub-section (1) shall be increased by the amount of the liability involved in such acceptance and decreased by the amount of the liability involved in such cession.

 

(5) The Government securities and other approved securities in which assets are under sub-section (1) to be invested and kept invested shall be held by the insurer free of any encumbrance, charge, hypothecation or lien.

 

(6) The assets required by this section to be held invested by an insurer incorporated or domiciled outside   a*[India] shall, except to the extent of any part thereof which consist of foreign assets held outside a*[India] be held in a*[India] , and all such assets shall be held in trust for the discharge of the liabilities of the nature referred to in sub-section (1) and shall be vested in trustees resident in a*[India] and approved by the Central Government, and the instrument of trust under this sub-section shall  be executed by the insurer with the approval of the Central Government and shall define the manner  in which alone the subject-matter of the trust shall be dealt with.

 

Explanation.- This sub-section shall apply to an insurer incorporated in a*[India] whose share capital to the extent of one-third is owned by, or the members of whose governing body to the extent of one-third consists of members domiciled elsewhere than in a*[India].

 

                       

[a] Substituted for "the States" by Jammu and Kashmir (Extension of Laws) Act, 1956  (62 of 1956), section 2 and Schedule (1-11-1956).

 

 

OBJECTS AND REASONS

 

The amendment made in the year 1950 "reduces by five per cent.the quantum of compulsory investments to be held in Government and approved securities, prescribes the proportions to be held in these and provides that investments shall be held free of any encumbrance.United Kingdom Government securities will also cease to be authorised investment for this purpose and time should easily be left to be regulated by rules.Hence the proposed section 27 (2) ( c ).

 

We also feel that the Central Government should have the power to direct that in computing the assets, any investment made is allowed for the change-over.Non-Indian insurers should hold their compulsory investment in India."-S.O.R., Gazette of India, 1949, page 2213.

 

"We feel that investible assets like interest (outstanding and accrued), cash, furniture, fittings and stationery should be considered as approved investments, but the matter outside India (for example, in Pakistan) belonging to insurers in India should be taken into account in the prescribed manner."-S.C.R.;, Gazette of India, 1950, Pt.II, section 2, page 100.

 

 

a*[27A.           Further provisions regarding investments.–

 

(1) No insurer shall invest or keep invested any part of his controlled fund otherwise than in any of the following approved investments, namely :-

 

                (a) approved securities ;

 

(b) securities of, or guaranteed as to principal and interest by, the Government of the United Kingdom ;

 

(c) debentures or other securities for money issued with the permission of the State Government by any municipality in a State ;

 

(d) debentures or other securities  for money issued by any authority constituted under any housing or building scheme approved by the Central or a State Government, or by any authority  or body constituted by any Central Act or Act of a State Legislature ;

 

(e) first mortgages on immovable property situated in India under any housing or building scheme of the insurer approved by the Central Government or a State Government ;

 

(f) debentures secured by  a first charge on any immovable property, plant or equipment of any company which has paid interest in full for the five years immediately preceding or for at least five out of the six or seven years immediately preceding on such or similar debentures issued by it;

 

(g) debentures secured by a first charge on any immovable property, plant or equipment of any company where either the book value or the market value, whichever is less, of such property, plant or equipment is more than three times the value of such debentures;

 

(h) first debentures secured by a floating charge on all its assets of any company which has paid dividends on its ordinary shares for the five years immediately preceding or for at least five out of the six or seven years immediately preceding ;

 

(i) preference shares of any company which has paid dividends on its ordinary shares for the five years immediately preceding or for at least five out of the six or seven years immediately preceding ;

 

(j) preference shares of any company on which dividends have been paid for the five years immediately preceding or for at least five out of the six or seven years immediately preceding and which have priority in payment over all the ordinary shares of the company in winding up;

 

(k) shares of any company which have been guaranteed by another company , such other company have paid dividends on its ordinary shares for the five years immediately preceding or for at least five out  of the six or seven years immediately preceding :

 

Provided that the total amount of shares of all the companies under guarantee by the guaranteeing company is not in excess of fifty percent of the paid-up amount of preference and ordinary shares of the guaranteeing company;

 

(l) shares of any company on which dividends of not less than four percent, including bonus have been paid for the seven years immediately preceding or for at least seven out of the eight or nine years immediately preceding;

 

(m) first mortgages on immovable property situated in b*[India] or in any other country where the insurer is carrying on insurance business:

 

Provided that the property mortgaged is not leasehold property with an outstanding term of less than thirty years and the value of the property exceeding by one-third, or if it consists of buildings, exceeds by one-half, the mortgage money;

 

(n) immovable property situated in b*[India] or in any other country where the insurer is carrying on insurance business:

 

                                                Provided that the property is free of all encumbrances;

 

(o) loans on life interests, or on policies of life insurance within their surrender values issued by him or by an  insurer whose business he has acquired and in respect of which business he has assumed liability;

 

                (p) life interests;

 

(q) fixed deposits with banks included for the time being in the Second Schedule to the Reserve Bank of India Act,1934 or with co-operative societies registered under the Indian Co-operative Societies Act,1912, or under any other law for the time being in force, the primary object  of which is to finance other co-operative societies similarly registered;

 

(r) debentures of, or shares in co-operative societies registered under the Indian Co-operative Societies Act,1912,or under any other law for the time being in force;

         

(s) such other investments as the Central Government may, by notification on the Official Gazette, declare to be approved investments for the purposes of this section.

(2) Notwithstanding anything contained in sub-section (1), an insurer being a company or a co-operative life insurance society as defined in clause (b) of sub-section (1) of section 95,may, subject to the provisions contained in the next succeeding sub-sections, invest or keep invested any part of his controlled fund otherwise than in an approved investment, if-

 

(i) after such investment, the total amount of all such investments of the insurer do not exceed fifteen percent of the sum referred to in sub-section (1) of section 27,

 

(ii) the investment is made, or, in the case of any investment already made, the continuance of such investment is with the consent of all thee directors present at a meeting and eligible to vote, special notice of which has been given to all the directors then in b*[India],and all such investments, including investments in which any director is interested, are reported without delay to the Controller with full details of the investments and the extent of the director's interest in any such investment.

 

(3) An insurer shall not out of his controlled fund invest or keep invested in the shares of any one banking company or investment company more than-

 

                (a) two and a quarter per cent, of the sum referred to in sub-section (1) of section 27,or

 

(b) two percent, of the subscribed share capital and debentures of the banking company or investment company concerned, whichever is less.

 

(4) An insurer shall not out of the controlled fund invest or keep invested in the shares or debentures of any one company other than a banking company or investment company more than-

 

                (a) two and a quarter percent, of the sum referred to in sub-section (1) of section 27,or

 

                (b) ten  percent, of the subscribed share capital and debentures of the company, whichever is less 

 

Provided that nothing in this sub-section shall apply to any investment made with the previous consent of the Central Government by an insurer, being a company with a view to forming a subsidiary company carrying on insurance business.

 

(5) An insurer shall not out of his controlled fund invest or keep invested any sum in the shares or debentures of any private limited company.

 

(6) Where an investment is in partly paid-up shares, the uncalled liability on such shares shall be added to the amount invested for the purpose of computing the percentages referred to in clauses (a) of sub-section (3) and clause (a) of sub-section (4).

 

(7) Notwithstanding anything contained in sub-sections  (3) and (4), where new shares are issued to the existing shareholders by a company, the existing shares of which are covered by clause (i) or clause (k) or clause (l) of sub-section (1) and of which an insurer is already a shareholder, the insurer may subscribe to such new shares;

 

Provided that the proportion of new shares subscribed by him does not exceed the proportion which the paid-up amount on the shares held by him immediately before such subscription bears to the total paid-up capital of the company at the time of such subscription.

 

(8) If, on an application submitted through the Controller, the Central Government is satisfied that special grounds exist warranting such exemption, the Central Government may for such period, to such extent and in relation to such particular investments and subject to such conditions as may be specified by it in this behalf, exempt an insurer from all or any of the provisions of sub-sections (3), (4) and (7).

 

(9) An insurer shall not keep more than three percent of the controlled fund in fixed deposit or current deposit, or partly in fixed deposit and partly in current deposit, with any one banking company or with any one co-operative society registered under the Indian Co-operative Societies Act,1912, or under any other law for the time being in force and during banking business :

 

Provided that in applying this sub-section to the amount in deposit with a banking company on any day all the premiums collected by that company on behalf of the insurer during the preceding thirty days shall be excluded.

 

Provided further that the Controller may permit a co-operative life insurance society as defined in clause (b) of sub-section (1) of section 95 to keep more than three percent, of its controlled fund in fixed deposit  with any co-operative society referred to in sub-section, if the fixed deposit is secured by a first mortgage on any immovable property.

 

(10) All assets forming the controlled fund, not being Government securities or other approved securities in which assets are to be invested or held invested in accordance with section 27, shall (except for a part thereof not exceeding one tenth of the controlled fund in value which may, subject to such conditions and restrictions as may be prescribed, be offered as security for any loan taken for purposes of any investment),be held free of any encumbrance charge, hypothecation or lien.

 

(11) If, at any time the Central Government considers any one or more of the investments constituting an insurer's controlled fund to be unsuitable or undesirable, the Central Government may, after giving the insurer an opportunity  of being heard, direct him to realise the investment or investments and the insurer shall comply with the direction within such time as may be specified in this behalf by the Central Government.

               

(12) Every insurer in existence at the c*[ ]commencement  of the Insurance (Amendment) Act,1950,whose investments or any part thereof at such commencement contravene or contravenes any of the provisions of this section, shall, within ninety days from the commencement, submit to the Controller a report specifying all such investments, and if the Central Government is satisfied that it will not be in the interest of the insurer or any class of insurers generally to realise any such investments, it may, by order, direct that the provisions of this section (other than the provisions contained in sub-section (11)), shall not apply in relation to any such investments or to any class of investments generally for such period or periods as may be specified in the order.

 

(13) Without prejudice to the powers given to the Central Government by sub-section (11), nothing contained in this section shall be deemed to require any insurer to realise any investment made in conformity with the provisions of sub-section (1) after the commencement of this Act, which, after the making thereof, has ceased to be an approved investment within the meaning of this section.

 

(14) Nothing contained in this section shall be deemed to affect in any way the manner in which any  moneys relating to the provident fund of any employee or to any security taken from any employee or other moneys of a like nature are required to be held by or under any Central Act, or Act of a State Legislature.

 

Explanation.-In this section"controlled fund" means-

 

(a) in the case of any insurer specified in sub-clause(a) (ii) or sub-clause (b) of clause (9) of section 2 and carrying on life insurance business,-

 

                                (i) all his funds, if he carries on no other class of insurance business;

 

(ii) all the funds  appertaining to his life insurance business if he carries on some other class of insurance business  also, and

 

                (b) in the case of any other insurer carrying on life insurance business,-

 

                                (i) all his funds in India, if he carries on no other class of insurance business;

 

(ii) all the funds  in India appertaining to his life insurance business if he carries on some other class  of insurance business also;               

 

but does not include any fund or portion thereof in respect of which the Controller is satisfied that such fund or portion thereof, as the case may be is regulated by the law of any country outside India or in respect of which the Controller is satisfied that it would not be in the interest of the insurer to apply the provisions of this section.]

 

 

[a] Inserted by the Insurance (Amendment) Act, 1950 (47 of 1950), section 17 (1-6-1950).

 

[b] Substituted for "the States" by Jammu and Kashmir (Extension of Laws) Act, 1956 (62 of 1956), section 2 and Schedule (1-11-1956).

 

[c] 1st  June, 1950 – Inserted by the Insurance  (Amendment) Act, 1950  (47 of 1950), section 6 (1-6-1950).

 

OBJECTS AND REASONS

 

This section "institutes class of 'Approved Investments' and places certain restrictions on the investment of life insurance fund and certain other funds of an insurer including restrictions on the amounts that can be kept by an insurer in the shares of any one banking, investment or joint stock company and on the amount that can be kept in deposit in any one banking company.It also provides for requiring an undesirable or unsuitable investment to be vacated." - - S.O.R., Gazette of India, 1949, Extra, page 2213.

 

"We have added a few items to the list of approved investments and have clarified the position with regards to co-operative societies and co-operative banks.

 

It might cause hardship to any insurer to realise any investment properly made which has ceased to be an approved investment after it has been so made.We have, therefore, provided for this contingency in the proposed section 27A (13)", -- S.C.R., Gazette of India, 1950, Pt.II, Sec.2, page 100

 

LIFE INSURANCE CORPORATION OF INDIA

 

In its application to the Life Insurance Corporation of India, for Section 27 A, substitute the following, namely :--

"27A.  Provisions regarding investments.-

(1) The Life Insurance Corporation of India shall invest, and at all times keep invested twenty-five per cent of its controlled fund in Government securities and a further sum equal to not less than twenty-five per cent of the controlled fund in Government securities or other approved securities, and shall not invest, or keep invested, any part of the balance otherwise than in any of the following approved investments, namely :--

(a) debentures or other securities for money issued with the permission of the State Government by any municipality in a State;

(b) debentures secured by a first charge on any immovable property, plant or equipment of any company which has paid interest in full for the five years immediately preceding or for at least five out of the six or seven years immediately preceding on such or similar debentures issued by it;

(c) debentures secured by a first charge on any immovable property, plant or equipment of any company where either the book value or the market value, whichever is less, of such property, plant or equipment is more than three times the value of such debentures ;

(d) cumulative preference shares of any company which has paid dividends on its equity shares for the five years immediately preceding or for at least five out of the six or seven years immediately preceding, provided such preference shares have priority in payment over all the equity shares of the company in winding up;

(e) cumulative preference shares of any company on which dividends have been paid for the five years immediately preceding or for at least five out of six or seven years immediately preceding and which have priority in payment over all the equity shares of the company in winding up ;

(f) shares of any company which have been guaranteed by another company, such other company having paid dividends on its equity shares for the five years immediately preceding or for at least five out of the six or seven years immediately preceding;

 

Provided that the total amount of shares of all the companies under guarantee by the guaranteeing company is not in excess of fifty per cent of the paid-up amount of preference and equity shares of the guaranteeing company ;

(g) shares of any company on which dividends of  not less than four per cent including bonus have been paid for the five years immediately preceding or for at least five out of seven years immediately preceding ;

(h) immovable property situated in India or in any other country where the Corporation is carrying on insurance business ;

 

                                                Provided that the property is free of all encumbrances ;

(i) first mortgage on immovable property situated in India or in any other country where the Corporation is carrying on insurance business ;

 

Provided that the property mortgaged is not leasehold property with an outstanding term of less than thirty years and the amount of mortgage-money does not exceed fifty per cent of the value of the property ;

(j) loans to any authority or any co-operative society registered under the Co-operative  Societies Act, 1912, or under any other law for the time being in force operating a housing or building scheme in India in any case where the repayment of principal and interest is guaranteed by the Central or State Government;

(k) first mortgage of immovable property situated in India under any housing or building scheme of a public limited company or a co-operative  society registered under the Co-operative  Societies Act, 1912, or under any other law for the time being in force ;

 

Provided that the amount of mortgage does not exceed three-fourths of the value of the property.

(l) loans on first mortgage of immovable property under any housing or building scheme of the Corporation for the benefit of the policy-holders ;

 

Provided that the amount of the loan does not exceed a*[eighty-five percent] of the value of the property ;

(m) loans on life interests, or on policies of life insurance within their surrender values issued by the Corporation or by an insurer, the assets and liabilities of whose controlled business have been transferred to and vested in the Corporation or loans to employees of the Corporation for the purposes of purchasing or constructing houses or for the purpose of purchasing motor-cycle, motor-cars or any other conveyances in accordance with any scheme approved by the Corporation;

(n) life interests ;

(o) deposits with banks included for the time being in the Second Schedule to the Reserve Bank of India Act, 1934, or with co-operative  societies registered under the Co-operative  Societies Act, 1912, or under any other law for the time being in force, the primary object of which is to finance other co-operative  societies similarly registered.

(p) debentures of, or shares in, co-operative  societies registered under the Co-operative  Societies Act, 1912, or under any other law for the time being in force ;

(q) such other investments as the Central Government may, by notification in the Official Gazette, declare to be approved investments for the purposes of this section.

(2) Notwithstanding anything contained in sub-section (1), the Life Insurance Corporation of India may invest or keep invested any part  of its controlled fund otherwise than in an approved investment, if after such investment the total amounts of all such investments do not exceed fifteen per cent of the amount of its controlled fund :

 

Provided that the investment is made after securing the unanimous recommendation of its Investment Committee or if no such recommendation can be obtained on a resolution of the Corporation passed by a majority of at least three-fourths of the members present at the meeting.

(3) The Corporation shall not, out of the controlled fund, invest or keep invested in the equity shares of any one company more than thirty per cent of the subscribed equity share capital of the company except with the prior permission of the Central Government :

 

Provided that nothing in this sub-section shall apply to any investment made by the Corporation in the equity shares of its subsidiary companies.

(4) Where an investment is in partly paid-up shares, the uncalled liability on such shares shall be added to the amount invested for the purpose of computing the percentage referred to in sub-section (3).

(5) Where new shares are issued to the existing shareholders by a company, the existing shares of which are covered by clause (d) or clause (e) or clause (f) of sub-section (1) and of which the Corporation is already a shareholder, the Corporation may subscribe to such new shares :

 

Provided that the proportion of new shares subscribed by it does not exceed the proportion which the paid-up amount of the shares held by it immediately before such subscription bears to the total paid-up capital of the company at the time of such subscription.

(6) If, on application made by the Corporation, the Central Government is satisfied that special grounds exist warranting such exemption, the Central Government may for such period, to such extent and in relation to such particular investments and subject to such conditions as may be specified by it in this behalf, exempt the Corporation from all or any of the provisions of sub-sections (3) and (5).

(7) The Corporation shall not out of the controlled fund invest or keep invested any sum in the shares or debentures of any private limited company except with the prior permission of the Central Government.

(8) The Central Government may, in the interest of the Corporation or its policy-holders, require the Corporation not to invest its funds in any investment specified by it, or where it has any existing investment to realise them within a time to be specified.

(9) Without prejudice to the powers given to the Central Government by sub-sec.(8), nothing contained in the section shall be deemed to require the Corporation to realise any investment made in conformity with the provisions of sub-section (1) which, after the making thereof has ceased to be an approved investment within the meaning of this section.

(10) Nothing contained in this shall be deemed to affect to any way the manner in which any moneys relating to the provident fund of any employee or any security taken from any employee or other money of a like nature are required to be held by or under any Central Act or Act of a State Legislature.

 

Explanation.- In this section, "controlled fund" means all the funds of the Corporation appertaining to its life insurance business, capital redemption, insurance business and annuity certain business, but does not include any fund or portion thereof in respect of which the Controller is satisfied that such fund or portion thereof, as the case may be, is regulated by the law of any country outside India or in respect of which the Controller is satisfied that it would not be in the interest of the Corporation to apply the provisions of this section".--Life Insurance Corporation Act, 1956, section 43 and a*[ ] G.S.R; 734 dated 23-8-1958.

 

                                                [a] Substituted by G.S.R.990, Gazette of India, 15-6-1963, Pt.II, S.3 (i), p.1105.

 

 

 

a*[27B.            Further provisions regarding investments.-

 

(1) No insurer carrying on general insurance business shall, after the commencement of the Insurance (Amendment) Act, 1968, invest or keep invested any part of this assets otherwise than in any of the following approved investments, namely.-

 

                (a) the investments specified in clauses(a) to (e),(n),(q) and  (r) sub-section(1) of section 27A;

 

(b) debentures secured by a first charge on any immovable property, plant or equipment of any company which has paid interest in full for the three years immediately  preceding or for at least three out of the four or five years immediately preceding on such or similar debentures issued by it;

 

(c) debentures secured by a first charge on any immovable property, plant or equipment of any company where either the book value or the market value, whichever is less, of such property, plant or equipment is more than twice the value of such debentures;

 

(d) first debentures secured by a floating charge on all its assets or by a fixed charge on fixed assets and floating charge on all other assets of any company which has paid dividends on its equity shares for the three years immediately preceding or for at least three out of the four or five years immediately preceding the date of the investment;

 

(e) preference shares of any company which has paid dividends on its equity shares for the three years  immediately preceding or for at least three out of the four or five years immediately preceding.

 

(f) Preference shares of any company on which dividends have been paid for the three years immediately proceeding or for at least three out of the four or five years immediately preceding and which have priority in payment over all the equity shares of the company in winding up ; 

 

(g) Shares of any company which have been guaranteed by another company, such other company having paid dividends on its equity shares of the three years immediately preceding or for at least three out of the four or five years immediately preceding.

 

Provided that the total amount of shares of all the companies under guarantee by the guaranteeing company is not in excess of fifty percent of the paid -up amount of preference and equity shares of the guaranteeing company.

 

(h) shares of any company on which dividends of not less than four per cent , including bonus have been paid for the three years immediately preceding  or for at least three out of the four or five years immediately preceding  ;

    

(i) first mortgages on immovable property situated in India or in any other country where the insurer is carrying on insurance business.

 

Provided that the property mortgaged is not leasehold property with on outstanding term of less than fifteen years and the value of the property exceeds by one-third , or if it consists of buildings , exceeds by one-half , the mortgage money ;

 

(j) such other investments as the Central Government may, by notification in the Official Gazette, declare to be approved investments for the purposes of this section.

 

(2) Any prescribed assets shall, subject to such conditions, if any, as may be prescribed, be deemed to be assets investable or kept invested in approved investments specified in sub-section (l).

               

(3) Notwithstanding anything contained in sub-section (1), an insurer may, subject to the provisions contained in the next succeeding sub-sections, invest or keep invested any part of his assets otherwise than in an approved investment specified in sub-section (1), if,-

 

(i) after such investment, the total amounts of all such investments of the insurer do not exceed twenty-five per cent.of his assets, and

 

(ii) the investment is made, or in the case of any investment already made, the continuance of such investment is with the consent of all the directors, other than the directors appointed under section 34C, present at a meeting and eligible to vote, special notice of which has been given to all the directors then in India.and all such investments, including investments in which any director is interested, are reported without delay to the Controller with full details of the investments and the extent of the director's interest in any such investment:

 

Provided that the making, or the continuance, of such investment is not objected to by any director appointed under section 34C.

 

(4) An insurer shall not invest or keep invested any part of his assets in the shares of any one banking company or investment company more than-

 

                (a) ten per cent.of his assets, or

 

(b) two per cent.of the subscribed share capital and debentures of the banking company or investment company concerned,

 

whichever is less.

 

(5) An insurer shall not invest or keep invested any part of his assets in the shares or debentures of any one company other than a banking company or investment company more than-

               

                (a) ten per cent.of his assets, or

 

                (b) ten per cent.of the subscribed share capital and debentures of the company,

 

whichever is less

 

Provided that nothing in this sub-section shall apply to any investment made by an insurer in the shares of any other insurer if such other insurer is a company within the meaning of section 3 of the Companies Act, 1956, and carries on insurance or re-insurance business in India.

 

(6) An insurer shall not invest or keep invested any part of his assets in the shares or debentures of any private company.

 

(7) Where an investment is in partly paid-up shares, the uncalled liability on such shares shall be added to the amount invested for the purpose of computing the percentages referred to in clause (a) of sub-section (4) and clause (a) of sub-section (5).

 

(8) Notwithstanding anything contained in sub-sections (4) and (5), where new shares are issued to the existing shareholders by a company, the existing shares of which are covered by clause (e) or clause (g) or clause (h) of sub-section (1) and of which an insurer is already a shareholder, the insurer may subscribe to such new shares:

 

Provided that the proportion of new shares subscribed by him does not exceed the proportion which the paid-up amount on the shares held by him immediately before such subscription bears to the total paid-up capital of the company at the time of such subscription.

 

(9) If, on an application submitted to the Controller.he is satisfied that special grounds exist warranting such exemption, he may, for such period, to such extent and in relation to such particular investments and subject to such conditions as may be specified by him in this behalf, exempt an insurer from all or any of the provisions of sub-sections (4), (5) and (8).

 

(10) An insurer shall not keep more than ten per cent.of his assets in fixed deposit or current  deposit, or partly in fixed deposit and partly in current deposit, with any one banking company or with any co-operative society registered under the Co-operative Societies Act, 1912, or  under any other law for the time being in force and doing banking business:

 

Provided that in applying this sub-section to the amount in deposit with a banking company on any day, all the premiums credited during the preceding sixty days, to the account of the insurer with such banking company and the amounts deposited, during the preceding thirty days, by such insure with that banking company for payment of claims or out of re-insurance recoveries , shall be excluded.

 

(11) All assets shall (except for a part thereof not exceeding one-tenth of the total assets in value which  may subject to such conditions and restrictions as may be prescribed, be offered as security for any loan taken for purposes of any investment or for payment of claims, or which may be kept as security deposit with the banks for acceptance of policies) be held free of any encumbrance, charge, hypothecation or lien.

 

(12) If at any time the Controller considers any one or more of the investments constituting all insurers assets to be unsuitable or undesirable, he may, after giving the insurer an opportunity of being heard, direct the insurer to realise the investment or investments, and the insurer shall comply with the direction within such time as may be specified in this behalf by the Controller.

 

(13) Every insurer in existence at the commencement of the Insurance (Amendment) Act 1968, whose investments or any part thereof as such commencement do or does not fulfill the requirements of this section, shall, within ninety days from such commencement, submit to the Controller a report specifying all such investments, and, if the Controller is satisfied that it will not be in the interest of the insurer or any class of insurers generally to realise any such investments, be may, by order, direct that the provisions of this section, other than the provisions contained in sub-section (12), shall not apply in relation to any such investments or to any class of investments generally for such period or periods as may be specified in the order.

 

(14) Without prejudice to the powers conferred on the Controller by sub-section (12), nothing contained in this section shall be deemed to require any insurer to realise any investment made in conformity with the provisions of sub-section (1) after the commencement of the Insurance  (Amendment) Act, 1968, which, after the making thereof, has ceased to be on approved investment within the meaning of this section.

 

(15) Nothing contained in this section shall be deemed to affect in any way the manner in which any moneys relating to the provident fund of any employee or to any security taken from any employee or other moneys of a like nature are required to be held by or under any Central, Provincial or State Act.

               

(16) In this section, unless the context otherwise requires, "assets;' means-

 

(a) in the case of an insurer carrying on life insurance business in India.all his assets required be shown under the column "Other Classes of Business" in the balance-sheet in Form A, in Part II of the First Schedule, but excluding any items against the head "Other Accounts (to be specified)";

 

(b) in the case of an insurer specified in sub-clause (a) (ii) or sub-clause (b) of clause (9) of section 2, who is not carrying on life insurance business in India, all his assets, required to be shown in the balance-sheet in Form A in Part II of the First Schedule but excluding any items against the head "Other Accounts (to be specified)"; and

 

(c) in the case of any other insurer the assets required to be shown in the statement in From AA, in Part II of the First Schedule, but excluding office furniture,

 

but does not include any assets specifically held against any fund or portion thereof in respect of which the Controller is satisfied that such fund or portion thereof, as the case may be, is regulated by the law of any country outside India or in respect of which the Controller is satisfied that it would  not be in the interest of the insurer to apply the provisions of this section.]

 

                        [a] Inserted by the Insurance (Amendment) Act, 1968 (62 of 1968), section 11 (1-6-1969).

 

OBJECTS AND REASONS

 

"Clause 11.-- The new section 27B is on the same lines as the existing 27A with appropriate modifications and seeks to make the provisions of that section applicable to insurers, carrying on general insurance business.The new section provides that the investments of the assets of general insurers carrying on general insurance business should be made only in approved investments except for 25 per cent or in certain special cases." -- Gax.of India, 8-4-1968, Pt.II, S.2, Extra, p.385.

 

 

28.Statement of investments of assets

.-

 

 a*[(1) Every insurer b*[……..] carrying on the business of  life insurance shall every year, within thirty-one days from the beginning of the year, submit to the c*[Controller] a  d*[return] showing as at the 31st day of December of the preceding year the assets held invested in accordance with section 27, and all other particulars necessary to establish that the requirements of that section have been complied with, and such  d*[return] shall be certified by the principal officer of the insurer.

 

(2) Every such insurer shall also furnish, within fifteen days from the last day of March, June and September, a d*[return] certified as aforesaid showing as at the end of each of the said months the assets held  invested in accordance with section 27,

 

e*[(2A)  In respect of the Government securities and other approved securities invested and kept invested in accordance with sub-section (l) of section 27 an insurer shall submit along with the return referrered to in sub-sections (1) and (2) a certificate, where such assets are in the custody of a banking company, from that company, and in any other case, from the chairman, two directors and a principal officer, if the insurer is a company, or otherwise from a principal officer of the insurer to the effect that the securities are held free of any encumbrance, charge, hypothecation or lien.and every such certificate after the first shall also state that since the date of the certificate immediately preceding all the securities have been so held.

 

(2B) In respect of the assets forming the controlled fund within the meaning of section 27A, and which not from part of the Government securities and approved securities invested and kept invested in accordance with section 27, an insurer shall submit, along with the returns referred to in sub-sections (1) and (2), a statement, where such assets are in the custody of a banking company, from that company.and, in any other case, from the chairman, two directors and a principal officer if the insurer is a company, or from a principal officer of the insurer if the insurer is not a company, specifying the assets, which are subjected to a charge and certifying that the other assets are held free of any encumbrance, charge, hypothecation, or lien, and every such statement  after the first shall also specify the charges created in respect of any of those assets since the date of the statement immediately preceding, and, if any such charges have been liquidated, the date on which they were so liquidated.]

 

(3) The c*[Controller] may at his discretion require any insurer to whom sub-section (1) applies to submit before the 1st day of August in each or any year a d*[return] of the nature referred the in sub-section (1), certified as required by that sub-section and prepared as at the 30th day of June.

 

(4) In the case of an insurer having his principal place of business or domicile outside f*[India] the   c*[Controller] may, on application made by the insurer, extend the periods of fifteen and thirty-one days mentioned in the foregoing sub-sections to thirty days and sixty days, respectively.]

 

g*[(5)] The c*[Controller] shall be entitled at any time to take such steps as he may consider necessary for the inspection or verification of the assets invested in compliance with section 27 h*[or for the purpose of securing the particulars necessary to establish that the requirements of that section have been complied with].i*[The insurer shall comply with any requisition made in this behalf by the c*[Controller], and if he fails to do so within two months from the receipt of the requisition he shall be deemed to have been made default in complying with the requirements of this section.]

 

 

[a] Sub-sections (1), (2), (3) and (4) were substituted for the original sub-section (1) by the Insurance (Amendment) Act, 1941 (13 of 1941), section 18 (8-4-1941).

 

[b] The words "registered under this Act" were omitted, ibid, 1950 (47 of 1950), section 18 (1-6-1950).

                [c] Substituted for "Superintendent of Insurance", ibid, section 4 (1-6-1950).

                [d] Substituted for "statement", ibid, 1946 (6 of 1946), section 16 (20-3-1946).

                [e] Sub-sections (2A) and (2B) were inserted by Act 47 of 1950, section 18 (1-6-1950).

 

[f] Substituted for "the States" by Jammu and Kashmir (Extension of Laws) Act, 1956 (62 of 1956), section 2 and Schedule (1-11-1956).

 

[g] Original sub-section (2) was renumbered as sub-section (5), by Act 13 of 1941, section 18 (8-4-1941).

                       

[h] Inserted by the Insurance (Amendment) Act, 1940 (20 of 1940), section 6.

 

[i] Substituted for "and the insurer shall comply with all requisitions made by the Superintendent in that behalf," ibid.

 

                       

 

a*[28A.            Return of investments relating to controlled fund and changes therein.-

 

 

(1) Every insurer carrying on life insurance business, shall every year, within thirty-one days from the beginning of the year submit to the Controller a return in the prescribed form showing as at the 1st day of December of the preceding year, the investments made out of the controlled fund referred to in section 27A, and every such return shall be certified by a principal officer of the insurer.

 

(2) Every insurer referred to in sub-section (1) shall also submit to the Controller a return in the prescribed form showing all the changes that occurred in the investments aforesaid during each of the quarters ending on the last day of March, June, September and December within thirty-one days from the close of the quarter to which it relates, and every such return shall be certified by a principal officer of the insurer.]

 

                        [a] Inserted by the Insurance (Amendment) Act, 1950  (47 of 1950), section 19 (1-6-1950).

 

 

a*[28B.Returns of investments relating to the assets and changes therein.-

 

(1) Every insurer carrying on general insurance business shall, every year, within thirty-one days from the beginning of the year, submit to the Controller a return in the prescribed form showing as at the 31st day of December of the preceding year the investments made out of his assets referred to in section 27B and every such return shall be certified by a principal officer of the insurer.

 

(2) Every insurer referred to in sub-section (1) shall also submit to the Controller a return in the prescribed form showing all the changes that occurred in the investments aforesaid during each of the quarters ending on the last day of March, June, September and December within thirty-one days from the close of the quarter to which it relates and every such return shall be certified by a principal officer of the insurer.

 

(3) Every insurer shall submit, along with the returns referred to in sub-sections (1) and (2), a statement, where any part of the assets are in the custody of a banking company, from that company, and in any other case, from the chairman, two directors and a principal officer, if the insurer is a company, or from a principal officer of the insurer, if the insurer is not a company, specifying the assets, which are subject to a charge and certifying that the other assets are held free of any encumbrance, charge, hypothecation or lien, and every such statement after the first shall also specify the charges created in respect of any of those assets since the date of the statement immediately preceding, and, if any such charges have been liquidated, the date on which they were so liquidated.]

 

                        [a] Inserted by Insurance (Amendment) Act, 1968 (62 of 1968), Section 12 (1-6-1969).

 

 

29.Prohibition of loans

.-

 

a*[(1) No  insurer shall grant loans or temporary advances either on hypothecation of property or on personal security or otherwise, except loans on life policies issued by him within their surrender value, to any director, manager, managing agent, actuary, auditor or officer of the insurer if a company, or where the insurer is a firm, to any partner therein, or to any other company or firm in which any such director, manager, managing agent, actuary, officer or partner holds the position of a director, manager, managing agent, actuary, officer or partner:

 

Provided that b*[nothing contained in this sub-section] shall apply to loans made by an insurer to a banking company:

 

c*[……………Omitted……………….]                             

 

Provided further that nothing in this section shall prohibit a company from granting such loans or advances to a subsidiary company or to any other company of which the company granting the loan or advance is a subsidiary company d*[and where any such loan or advance is made out of any life insurance fund the matter shall he reported within thirty days of the making of such loan or advance to the Controller]].

 

e*[(2) The provisions of section 86D of the Indian Companies Act, 1913 (7 of 1913), shall not apply to a loan granted to a director of an insurer being a company, if the loan ; granted to the security of a policy on which the insurer bears the risk and the policy was issued to the director on his own life.and the loan is within the surrender value of the policy.]

 

f*[(3) Subject to the provisions of sub-section (1), no insurer carrying on life insurance business shall grant-

 

(a) any loans or temporary advances either or hypothecation of property or on personal security or otherwise, except such loans, as are specified in sub-section (1) of section 27A;

 

(b) temporary advances to any chief, special or insurance agent to facilitate the carrying out of his functions as such except in cases where such advances do not exceed in the aggregate-

 

(i) in the case of a chief agent, the over-ridiny renewal commission earned by him during the year immediately preceding,

 

(ii) in the case of a special agent, the renewal commission earned by him during the year immediately preceding,

 

(iii) in the case of an insurance agent, the renewal commission earned by him during the year immediately preceding.

 

Explanation.-The temporary advance referred to in clause (b) of this sub-section shall also be admissible in the case of any special agent or insurance agent newly appointed, but such advance-

 

(a) shall be repayable within two years from the late on which such special agent or insurance agent was first appointed, and

 

(b) shall not exceed, in the case of the special agent, five hundred rupees, and in the case of the insurance agent, one hundred rupees,

 

and the total amount of all advances so made shall not exceed ten thousand rupees in the case of any insurer whose business in force is one crore of rupees or more and five thousand rupees in any other case.

 

(4) Every loan or advance existing at the commencement of the Insurance (Amendment) Act, 1950 (47 of 1950), which contravenes the provisions of sub-section (3) shall be notified by the insurer to the Controller within thirty days of such commencement and shall notwithstanding any contract to the contrary be repaid within one year from such commencement.

 

(5) Where any event occurs giving rise to circumstances, the existence of which at the time of the grant of any subsisting loan or advance would have made such grant a contravention of this section, such loan or advance shall, notwithstanding anything in any contract to the contrary, be repaid within three months from the occurrence of such event.

 

(6) In case of default in complying with the provisions of sub-section (4) or sub-section (5), the director, manager, auditor, actuary, officer or partner, or the chief, special or insurance agent concerned shall, without prejudice to any other penalty which he may incur, cease to hold office under, or to act for, the insurer granting the loan on the expiry of the said period of one year or three months, as the case may be.]

 

 

[a] Section 29 was renumbered as sub-section (1) of that section by the Insurance (Amendment) Act, 1941 (13 of 1941), section 19 (8-4-1941).

 

                        [b] Substituted for "nothing herein contained," ibid, 1950  (47 of 1950), section 20 (1-6-1950).

                [c] Second and third provisos were omitted, ibid.

 

                [d] Inserted, ibid.

 

                        [e] Sub-section (2) was inserted by Act 13 of 1941, Section 19 (8-4-1941)

 

                        [f] Sub-sections (3) to (6) were inserted by Act 47 of 1950, Section 20 (1-6-1950).

 

 

30.       Liability of directors, etc., for loss due to contraventions of sections 27, 27A, and 29.-

 

If by reason of a contravention of any of the provisions of section 27, a*[section 27A], b*[section 27B] or section 29, any loss is sustained by the insurer or by the policy-holders, every director, manager, managing agent, officer of partner who is knowingly a party of such contravention shall, without prejudice to any other penalty to which he may be liable under this Act, be jointly and severally liable to make good the amount of such loss.

 

                [a] Inserted by the Insurance (Amendment) Act, 1950 (47 of 1950), section 21 (1-6-1950).

 

                [b] Inserted by ibid, 1968 (62 of 1968), section 13 (1-6-1969).

 

 

31.Assets of insurer how to be kept

.-

 

a*[(1) None of the assets in b*[India] of any insurer shall, except in the case of deposits made with the Reserve Bank of India under section 7 c*[or section 98] or in so far as assets are required to be vested in trustees by sub-section (4) of section 27 be kept otherwise than c*[in the name of a public officer approved by the Central Government, or] in the corporate name of the undertaking, if a company, or in the name of the partners, if a firm, or in the name of the proprietor, if an individual.

 

d*[(2) Nothing contained in this section shall be deemed to prohibit the endorsement in favour of a banking company of any security or other document solely for the purpose of collection or for realisation of interest, bonus or dividend.]

               

[a] Section 31 was renumbered as sub-section (1) and sub-section (2) was inserted by the Insurance (Amendment) Act, 1946 (6 of 1946), section 18 (20-3-1946).

 

[b] Substituted for "the States" by Jammu and Kashmir (Extension of Laws) Act, 1956 (62 of 1956), section 2 and Schedule (1-11-1956).

 

                        [c] Inserted by the Insurance (Amendment) Act, 1939 (11 of 1939), section 12

 

                        [d] Substituted for the former sub-section, ibid, 1950 (47 of 1950), section 22 (1-6-1950).

 

 

 a*[31A. Provisions relating to managers, etc.-

(1) Notwithstanding anything to the contrary contained in the Indian Companies Act, 1913, or in the articles of association of the insurer, if a company, or in any contract or agreement, no insurer shall, after the expiry of one year from the commencement  of the Insurance (Amendment) Act, 1950,-

 

                (a) be managed by a company or a firm, or

 

(b) be directed or managed by, or employ as manager or officer or in any capacity, any person whose remuneration or any part thereof takes the form of commission or bonus or a share in the valuation surplus in respect of the life insurance business of the insurer, or

 

(c) be directed or managed by, or employ as manager or officer or in any capacity, any person whose remuneration or any part thereof takes the form of commission or bonus in respect of the general insurance business of the insurer:

 

Provided that nothing in this sub-section shall be deemed to prohibit-

 

(i) the payment of commission to a chief agent, special agent or an insurance agent, in respect of life insurance business procured by or through him;

 

(ii) the payment of commission to a principal agent or an insurance agent in respect of general insurance business procured by or through him;

 

(iii) the payment of commission, with the approval of the Central Government and for such period as it may determine, to a person  not being an officer of an insurer who was, on the 1st day of November, 1944, employing on behalf of an insurer, chief agents or special agents and continues so to do in respect of insurance business procurred by or through him;

 

(iv) the employment of any individual in a clerical or other subordinate capacity who, as an insurance agent, receives commission in respect of insurance business procured by him;

 

(v) the employment as an officer of any individual who receives renewal commission in respect of life insurance business procured by him in his capacity as an insurance agent or as an employer of agents before such employment, or before the commencement of the Insurance (Amendment) Act, 1950 (47 of 1950), whichever is later;

 

 

                                (vi) the payment of a share in the profits of general insurance business;

 

(vii) the payment of bonus in any year of a uniform basis to all salaried employees or any class of them by way of additional remuneration.

 

                        b*[............Omitted...................]

 

(2) Notwithstanding anything to the contrary contained in the Indian Companies Act, 1913, or in the articles of association of the insurer, being a company, or in any contract or agreement, no manager, managing director or any other person concerned in the management of an insurer's business shall be entitled to nominate a successor to his office, and no person so nominated, whether before or after the commencement of the Insurance (Amendment) Act, 1950, shall be entitled to hold or to continue in such office.

 

(3) If in the case of any insurance company provision is made by the articles of association of the company or by an agreement entered into between any person and the company for empowering a director or manager or other officer of the company to assign his office to any other person, any assignment of office made in pursuance of the said provision, shall, notwithstanding anything to the contrary contained in the said provision or in section 86B of the Indian Companies Act, 1913, be void.

 

(4) No person shall have any right, whether in contract or otherwise, to any compensation for any loss incurred by reason of the operation of any provision of this section.]

 

                        [a] Inserted by the Insurance (Amendment) Act, 1950 (47 of 1950), section 23 (1-6-1950)

 

                        [b] Certain words omitted by the Insurance (Amendment) Act, 1968 (62 of 1968), section 14.

 

 

OBJECTS AND REASONS

 

This section "seeks to restrict commission method of remuneration to chief, principal, special and insurance agents to prohibit nomination of a successor or assignment of office by a manager, managing director, or other officer and to check payment of excessive remuneration to insurance executives."--S.O.R.Gaz.of India, 1949, Extra, p.2214.

 

"We have extended the period for compliance with the proposed section 31A from three months to one year."--S.C.R.Gaz.Of India, 1950, Pt.II, S.2, p.100.

 

 

a*[31B.  Power to restrict payment of excessive remuneration.-

 

(1) The Central Government may if it is satisfied that any insurer, in the case of an insurer specified in sub-clause (a) (ii) or sub-clause (b) of clause (9) of section 2 in respect of all insurance business transacted by him, and in the case of any other insurer in respect of the insurance business transacted by him in India, is paying any person remuneration, whether by way of commission or otherwise, on a scale disproportionate, according to the normal standards prevailing in insurance business, to the resources of the insurer, call upon the insurer to comply within six months with such directions as it may think fit to issue in the matter, and if compliance with the directions so issued requires the alteration of any of the terms of the contract entered into by the insurer with such person, no compensation shall be payable to such person by the insurer by reason only of such alteration or of the resignation of such person if the altered terms are not acceptable to him and no payment by way of renewal commission or otherwise shall be made to such person by the insurer in respect of any premiums paid after the date of such resignation except at such rate as may be approved by the Central Government in this behalf.

               

(2) Every insurer shall, before the close of the month following every year, submit to the Controller a statement in the prescribed from showing the remuneration paid, whether by way of commission or otherwise, to any person in cases where such remuneration exceeds the sum of five thousand rupees in that year.

 

(3) Where any person not being a chief agent, principal agent or special agent is in receipt of remuneration exceeding the sum of five thousand rupees in any year, the Controller may, by notice in writing, require the insurer to submit certified copies of the agreement entered into between the insurer and any such person, and the insurer shall comply with any such requisition within the time specified in the notice.]

 

                        [a] Inserted by the Insurance (Amendment) Act, 1950 (47 of 1950), section 23 (1-6-1950).

OBJECTS AND REASONS

 

"In the proposed section 31B, we have provided that if a person resigns he should continue to get the renewal commission due to him, but the rate of such commission should be approved by the Central Government." ---S.C.R.Gaz of India, 1950, Pt.II, S.2, p.100.

 

 

32.Limitation on employment of managing agents and on the remuneration payable to them

.-

 

(1) No insurer shall, after the commencement of this Act, appoint a managing agent for the conduct of his business.

 

(2) Where any insurer engaged in the business of insurance before the commencement of this Act employs a managing agent for the conduct of his business, then, notwithstanding anything to the contrary contained in the Indian Companies Act, 1913, and notwithstanding anything to the contrary contained in the articles of the insurer, if a company, or in any agreement entered into by the insurer, such managing agent shall cease to hold office on the expiry of three years from the commencement of this Act and no compensation shall be payable to him by the insurer by reason only of the premature termination of his employment as managing agent.

 

(3) After the commencement of this Act, notwithstanding anything contained in the Indian Companies Act, 1913, and notwithstanding anything to the contrary contained in any agreement entered into by an insurer or in the articles of association of an insurer being  a company, no insurer shall pay to a managing agent and no managing agent shall accept from an insurer as remuneration for his services as managing agent more than two thousand rupees per month in all, including salary and commission and other remuneration payable to and receivable by him, for his services as managing agent.

 

 

a*[32A.            Prohibition of common officers and requirement as to whole-time officers.-

 

(1) A managing director or other officer of an insurer specified in sub-clause (b) of clause (9) of section 2 and carrying on life insurance business shall not be a managing director or other officer of any other insurer carrying on life insurance business or of a banking company or of an investment company:

 

Provided that the Central Government may permit such managing director or other officer to be  managing director or other officer of any other insurer carrying on life insurance business for the purpose of amalgamating the business of the two insurers or transferring the business of one insurer to the other.

 

(2) Where an insurer specified in sub-clause (b) of clause (9) of section 2 has a life insurance fund of more than twenty-five lakhs of rupees or insurance funds totalling more than fifty lakhs of rupees, the manager, managing director or other officer of the insurer shall be a wholetime employee of the insurer.

 

Provided that the Central Government may, for such period as it thinks fit, permit the employment of any specified person as a part-time manager, managing director or other officer of such insurer.

 

(3) Nothing in this section shall prevent-

 

(a) the manager, managing director or other officer of an insurer being the manager, managing director or other officer of a subsidiary company of the insurer with the previous approval of the Central Government ;

 

(b) the manager, managing director or other officer of an insurer, exclusively carrying on life insurance business, being the manager, managing director or other officer of an insurer not carrying on life insurance business ;

 

(c) any officer of a branch of one insurer carrying on general insurance business from being any officer of a branch in the same town of another insurer carrying on general insurance business ;

 

                (d) an officer in the employment of an insurer from giving professional advice.

 

                        Explanation.- In this section the expression "officer" does not include a director.]

 

[a] Inserted by the Insurance (Amendment) Act, 1950 (47 of 1950), section 24 (1-6-1950).

 

OBJECTS AND REASONS

 

"This section seeks to prohibit insurers and banks from having common officers and requires insurers of more than a certain size to have only whole-time officers." ---S.O.R.Gaz of.India, 1949, Extra, p.2214.

 

"Clause 14 seeks to omit, from the seventh proviso to sub-section (1) of section 31A, the direction now vested in the Central Government to decide the maximum bonus which an insurer can give to his employees.The object is to bring the matter of bonus within the jurisdiction of Industrial Tribunals.This amendment has been necessitated by a decision of the Supreme Court in 1960"-- Gaz of India, 1968, Pt.II, S.2, Extra, p.396.

 

 

a*[INVESTIGATION]

 

b*[

33.Power of investigation

.-

 

(1) The Central Government may, at any time, by order in writing, direct the Controller or any other person specified in the order to investigate the affairs of any insurer and to report to the Central Government on any investigation made by him:

 

Provided that the Controller or the other person may, wherever necessary, employ an auditor or actuary or both for the purpose of assisting him in any investigation under this section.

 

c*[(1A)  'Notwithstanding anything to the contrary contained in section 235 of the Companies Act, 1956, the Controller may, at any time, and shall, on being directed so to do by the Central Government, cause an inspection to be made by one or more of his officers of any insurer and his books and accounts; and the Controller shall supply to the insurer a copy of his report on such inspection.]

 

(2) It shall be the duty of every manager, managing director or other officer of the insurer to produce before the person directed to make the investigation under sub-section (1) d*[or inspection under sub-section (1A)] all such books of account, registers and other documents in his custody or power and to furnish him with any statements and information relating to the affairs of the insurer as the said person may require of him within such time as the said person may specify.

 

(3) Any person, directed to make an investigation under sub-section (1), d*[or inspection under sub-section (1A)], may examine on oath, any manager, managing director or other officer of the insurer in relation to his business and may administer oaths accordingly.

 

e*[(3A)  The Controller shall, if he has been directed by the Central Government to cause an inspection to be made, and may, in any other case, report to the Central Government, on any inspection made under this section.]

 

(4) On receipt of any report under sub-section (1), d*[or under sub-section (3A)], the Central Government may, after giving such opportunity to the insurer to make a representation in connection with the report as, in the opinion of the Central Government, seems reasonable, by order in writing,-

 

(a) require the insurer to take such action in respect of any matter arising out of the report as the Central Government may think fit; or,

 

                (b) direct the Controller to cancel the registration of the insurer; or

 

(c) direct the Controller to apply to the Court for the winding up of the insurer, if a company, whether the registration of the insurer has been cancelled under clause (b) or not.

 

e*[(4A)  The Central Government may, after giving reasonable notice to the insurer, publish the report submitted by the Controller under sub-section (3A) or such portion thereof as may appear to it to be necessary.

 

(4B) The Central Government may prescribe the minimum information to be maintained by insurers in their books, the manner in which such information should be maintained, the checks and other verifications to be adopted by insurers in that connection and all other matters incidental thereto as are, in its opinion, necessary to enable the Controller to discharge satisfactorily his functions under this section.

 

                Explanation.- For the purposes of this section, the expression "insurer" shall include-

 

                                (i) in the case of an insurer incorporated outside India, all his branches in India, and

 

                                (ii) in the case of an insurer incorporated in India-

 

(a) all his subsidiaries formed for the purpose of carrying on the business of insurance exclusively outside India; and

 

                                                (b) all his branches whether situated in India or outside India.]

 

(5) No order made under this section other than an order made under clause (b) of sub-section (4) shall be capable of being called in question in any Court.

 

(6) All expenses of, and incidental to, any investigation made under this section shall be defrayed by the insurer, shall have priority over other debts due from the insurer and shall be recoverable as an arear of land-revenue.]

 

                        [a] Substituted for "Inspection" by Act 25 of 1952, section 3 and Schedule II.

 

                        [b] Substituted for original sections 33 and 34 by Act 47 of 1950, section 25 (1-6-1950).

 

[c] Inserted by the Insurance (Amendment) Act, 1968 (62 of 1968), Section 15 (1-6-1950)

                [d] Inserted, ibid.

                [e] Sub-sections (3A), (4A) and (4B) inserted, ibid.

 

OBJECTS AND REASONS

 

"This section authorises the Central Government to order investigation of the affairs of an insurer and after investigation to secure appropriate action being taken." ---S.O.R.Gaz of India, 1949, Extra, p.2214.

 

"An order directing the Controller to cancel the registration of the insurer being a vital matter should be appealable and, therefore, we have split up clause (b) of sub-section (4) of the proposed section 33 into two separate clauses.Incidentally, we are deleting the existing sections 33 and 34 of the Insurance Act, because their provisions are fully covered by the proposed section 33." --- S.C.R.Gaz of India, 1950, Pt.II, S.2, p.100.

 

"Clause 15 inserts provisions in the existing section 33 to empower the Controller to carry out inspection of insurers whether on his own initiative or on the direction of the Central Government with the provision for cancellation of the registration or applying for winding up in the certain circumstances." --Gaz  of India, 8-4-1968, Pt.II, S.2, Extra, p.386.

 

APPOINTMENT OF STAFF

 

a*[33A.           Power to appoint staff.-

 

The Central Government or the Controller may appoint such staff, and at such places as it or he may consider necessary, for the scrutiny  of the returns, statements and information furnished by the insurers under this Act and generally to ensure the efficient performance of the functions of the Controller under this Act.]

 

[a] Section 33A inserted after section 33 by the Insurance (Amendment) Act, 1968  (62 of 1968), section 16 (1-6-1969).

 

POWER TO ISSUE DIRECTIONS

 

a*[

34.Power of the Controller to issue directions

.-

 

(1) Where the Controller is satisfied that-

 

                (a) in the public interest; or

 

(b) to prevent the affairs of any insurer being conducted in a manner detrimental to the interests of the policy-holders or in a manner prejudicial to the interests of the insurer; or

 

                (c) generally to secure the proper management of any insurer,

 

it is necessary to issue directions to insurers generally or to any insurer in particular, he may, from time to time, issue such directions as the deems fit, and the insurers or the insurer, as the case may be, shall be bound to comply with such directions:

 

Provided that no such direction shall be issued to any insurer in particular unless such insurer has been given a reasonable opportunity of being heard.

 

(2) The Controller may, on representation made to him or on his own motion, modify or cancel any direction issued under sub-section (1), and in so modifying or cancelling any direction, may impose such conditions as he thinks fit, subject to which the modification or cancellation shall have effect.]

 

[a] Section 34 inserted after section 33 by the Insurance (Amendment) Act, 1968  (62 of 1968), section 16 (1-6-1969).

 

CONTROL OVER MANAGEMENT

 

a*[34A.           Amendment of provisions relating to appointments of managing directors, etc., to be subject to previous approval of the Controller.-

 

(1) In the case of an insurer,-

 

(a) no amendment made after the commencement of the Insurance (Amendment) Act, 1968, of any provision relating to the appointment, re-appointment, termination of appointment or remuneration of a managing or whole-time director, or of a manager or a chief executive officer, by whatever name called, whether that provision be contained in the insurer's memorandum or articles of association, or in an agreement entered into by him, or in any resolution passed by the insurer in general meeting or by his Board of directors shall have effect unless approved by the Controller;

 

(b) no appointment, re-appointment or termination of appointment, made after the commencement of the Insurance (Amendment) Act, 1968, of a managing or whole-time director, or a manager or a chief executive officer, by whatever name called, shall have effect unless such appointment, re-appointment or termination of appointment is made with the previous approval of the Controller.

 

Explanation.- For the purposes of this sub-section, any provision conferring any benefit or providing any amenity or perquisite, in whatever form, whether during or after the termination of the term of office of the manager of the chief executive officer, by whatever name called, or a managing or whole-time director, shall be deemed to be a provision relating to his remuneration.

 

(2) Nothing contained in sections 268 and 269, the proviso to sub-section (3) of section 309, sections 310 and 311, the proviso to section 387, and section 388 (in so far as section 388 makes the provisions of sections 310 and 311 apply in relation to the manager of a company) of the Companies Act, 1956 (1 of 1956), shall apply to any matter in respect of which the approval of the Controller has to be obtained under sub-section (1).

 

(3) No act done by a person as a managing or wholetime director or a director not liable to retire by rotation or a manager or a chief executive officer, by whatever name called, shall be deemed to be invalid on the ground that it is subsequently discovered that his appointment or reappointment had not taken effect by reason of any of the provisions of this Act; but nothing in this sub-section shall be construed as rendering valid any act done by such person after his appointment or reappointment has been shown to the insurer not to have had effect.]

 

[a] Section 34A inserted after section 33 by the Insurance (Amendment) Act, 1968  (62 of 1968), section 16 (1-6-1969).

 

 

a*[34B.           Power of Controller to remove managerial persons from office.-

 

(1) Where the Controller is satisfied that in public interest or for preventing the affairs of an insurer being conducted in a manner detrimental to the interests of the policy-holders or for securing the proper management of any insurer it is necessary so to do, he may, for reasons to be recorded in writing, by order, remove from office, with effect from such date as may be specified in the order, any director or the chief executive officer, by whatever name called, of the insurer.

 

(2) No order under sub-section (1) shall be made unless the director or chief executive officer concerned has been given a reasonable opportunity of making a representation to the Controller against the proposed order :

 

Provided that if, in the opinion of the Controller, any delay would be detrimental to the interests of the insurer or his policy-holders, he may, at the time of giving the opportunity aforesaid or at any time thereafter, by order direct that, pending the consideration of the representation aforesaid, if any, the director or, as the case may be, chief executive officer, shall not, with effect from the date of such order,-

 

                (a) act as such director or chief executive officer of the insurer;

 

(b) in any way, whether directly or indirectly, be concerned with, or take part in, the management of the insurer.

 

(3) Where any order is made in respect of a director or chief executive officer of an insurer under sub-section (1), he shall cease to be a director or, as the case may be, chief executive officer of the insurer and shall not, in any way, whether directly or indirectly, be concerned with or take part in, the management of any insurer for such period not exceeding five years as may be specified in the order.

 

(4) If any person in respect of whom an order is made by the Controller under sub-section (1) or under the proviso to sub-section (2) contravenes the provisions of this section, he shall be punishable with fine which may extend to two hundred and fifty rupees for each day during which such contravention continues.

 

(5)  Where an order under sub-section (1) has been made, the Controller may, by order in writing, appoint a suitable person in place of the director or chief executive officer who has been removed from his office under that sub-section, with effect from such date as may be specified in the order.

 

(6) Any person appointed as director or chief executive officer under this section shall-

 

(a) hold office during the pleasure of the Controller and subject thereto for a period not exceeding three years or such further periods not exceeding three years at a time as the Controller may specify;

 

(b) not incur any obligation or liability by reason only of his being a director or chief executive officer or for anything done or omitted to be done in good faith in the execution of the duties of  his office or in relation thereto.

 

(7) Notwithstanding anything contained in any law or in any contract, memorandum or Articles of Association, on the removal of a person from office under this section, that person shall not be entitled to claim any compensation for the loss or termination of office.]

 

[a] Section 34B inserted after section 33 by the Insurance (Amendment) Act, 1968  (62 of 1968), section 16 (1-6-1969).

 

a*[34C.           Power of Controller to appoint additional directors.-

 

(1) If the Controller is of opinion that in the public interest or in the interests of an insurer or his policy-holders it is necessary so to do, he may, from time to time, by order in writing, appoint, with effect from such date as may be specified in the order, one or more persons to hold office as additional directors of the insurer:

 

Provided that the number of additional directors so appointed shall not, at any time, exceed five or one-third of the maximum strength fixed for the Board by the Articles of Association of the insurer, whichever is less.

 

(2)  Any person appointed as additional director in pursuance of this section,-

 

(a) shall hold office during the pleasure of the Controller, and subject thereto for a period not exceeding three years or such further periods not exceeding three years at a time as the Controller may specify;

 

(b) shall not incur any obligation or liability by reason only of his being a director or for anything done or omitted to be done in good faith in the execution of the duties of his office or in relation thereto; and

 

                (c) shall not be required to hold qualification shares of the insurer.

 

(3) For the purpose of reckoning any proportion of the total number of directors of the insurer, any additional director appointed under this section shall not be taken into account.]

 

[a] Section 34C inserted after section 33 by the Insurance (Amendment) Act, 1968  (62 of 1968), section 16 (1-6-1969).

 

a*[34D.           Sections 34B and 34C to override other laws.-

 

Any appointment or removal of a director or chief executive officer in pursuance of section 34B or section 34C shall have effect notwithstanding anything to the contrary contained in the Companies Act, 1956, or any other law for the time being in force or in any contract or any other instrument.]

 

[a] Section 34D inserted after section 33 by the Insurance (Amendment)  Act, 1968  (62 of 1968), section 16 (1-6-1969).

 

a*[34E.           Further powers of Controller.-

The Controller may,-

 

(a) caution or prohibit insurers generally or any insurer in particular against entering into any particular transaction or class of transactions, and generally give advice to any insurer;

 

(b) at any time, if he is satisfied that in the public interest or in the interests of the insurer or for preventing the affairs of the insurer being conducted in a manner detrimental to the interests of the insurer or his policy-holders, it is necessary so to do, by order in writing and on such terms and conditions as may be specified therein,-

 

(i) require the insurer to call a meeting of his directors for the purpose of considering any matter relating to or arising out of the affairs of the insurer;

 

(ii) depute one or more of his officers to watch the proceedings at any meeting of the Board of Directors of the insurer or of any committee or of any other body constituted by it; require the insurer to give an opportunity to the officers so deputed to be heard at such meetings and also require such officers to send a report of such proceedings to the Controller;

 

(iii) require the Board of Directors of the insurer or any committee or any other body constituted by it to give in writing to any officer specified by the Controller in this behalf at his usual address all notices of, and other communications relating to, any meeting of the Board, committee or other body constituted by it;

 

(iv) appoint one or more of his officers to observe the manner in which the affairs of the insurer or of his offices or branches are being conducted and make a report thereon;

 

(v) require the insurer to make, within such time as may be specified in the order, such changes in the management as the Controller may consider necessary.]

 

[a] Section 34E inserted after section 33 by the Insurance (Amendment) Act, 1968   (62 of 1968), section 16 (1-6-1969).

 

 

 

a*[34F.           Power of Controller to issue directions regarding re-insurance treaties, etc.-

 

(1) Without prejudice to the generality of the powers conferred by sub-section (1) of section 34, the Controller may, if he is of opinion that the terms or conditions of any re-insurance treaty or other re-insurance contract entered into by an insurer are not favourable to the insurer or are detrimental to the public interest, he may, by order, require the insurer to make, at the time when the renewal of such treaty or contract becomes next due, such modifications in the terms and conditions of such treaty or contract as he may specify in the order or not to renew such treaty or contract, and, if the insurer fails to comply with such order, he shall be deemed to have failed to comply with the provisions of this Act.

 

(2) The Controller may, if he has reason to believe that an insurer is entering into or is likely to enter into re-insurance treaties or other re-insurance contracts which are not favourable to the insurer or are detrimental to the public interest, he may, by order, direct that the insurer shall not enter into such re-insurance treaty or other re-insurance contract unless a copy of such treaty or contract has been furnished to him in advance and the terms and conditions thereof have been approved by him and if the insurer fails to comply with such order he shall be deemed to have failed to comply with the requirements of this Act.]

 

 

[a] Section 34F inserted after section 33 by the Insurance (Amendment) Act, 1968  (62 of 1968), section 16 (1-6-1969).

 

a*[34G.           Power of Controller to order closure of foreign branches.-

 

Without prejudice to the generality of the powers conferred by sub-section (1) of section 34, the Controller may, if he has reason to believe that the working of any branch outside India of an insurer being an insurer specified in sub-clause (b) of clause (9) of section 2, is generally resulting in a loss or that the affairs of that branch are being conducted in a manner prejudicial to the interests of the policy-holders or the public interest, he may, after giving an opportunity to the insurer of being heard, direct that the insurer shall cease, within such period not being less than one year, as may be specified in the order, to carry on insurance business in the country in which such branch is situated and if the insurer fails to comply with such order he shall be deemed to have failed to comply with the provisions of this Act.]

 

 

[a] Section 34G inserted after section 33 by the Insurance (Amendment) Act,  1968  (62 of 1968), section 16 (1-6-1969).

 

a*[34H.           Search and seizure.-

 

(1) Where the Controller, in consequence of information in his possession, has reason to believe that-

 

(a) any person who has been required under sub-section (2) of section 33 of produce, or cause to be produced, any books, accounts or other documents in his custody or power has omitted or failed to produce, or cause to be produced, such books, accounts or other documents, or

 

(b) any person to whom a requisition to produce any books, accounts or other documents as aforesaid has been or might be issued will not, or would not, produce or cause to be produced, any books, accounts or other documents which will be useful for, or relevant to, an investigation under sub-section (1) of section 33 or an inspection under sub-section (1A) of that section, or

 

(c) a contravention of any provision of this Act has been committed or is likely to be committed by an insurer, or

 

(d) any claim which is due to be  settled by an insurer, has been or is likely to be settled at a figure higher than a reasonable amount, or

 

(e) any claim which is due to be settled by an insurer, has been or is likely to be rejected or settled at a figure lower than a reasonable amount, or

 

                (f) any illegal rebate or commission has been paid or is likely to be paid by an insurer, or

 

(g) any books, accounts, receipts, vouchers, survey reports or other documents, belonging to an insurer are likely to be tampered with, falsified or manufactured,

 

he may authorise any subordinate officer of his, not lower in rank than an Assistant  Controller of Insurance (hereafter referred to as the authorised officer) to-

 

(i) enter and search any building or place where he has reason to suspect that such books, accounts or other documents, or any books or papers relating to any claim, rebate or  commission or any receipts, vouchers, reports or other documents are kept;

 

(ii) break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred by clause (i) where the keys thereof are not available;

 

                (iii) seize all or any such books, accounts or other documents, found as a result of such search;

 

(iv) place marks of identification on such books, accounts or other documents or make or cause to be made extracts or copies therefrom.

 

(2) The authorised officer may requisition the services of any police officer or of any officer of the Central Government, or of both, to assist him for all or any of the purposes specified in sub-section (1) and it shall be the duty of every such officer to comply with such requisition.

 

 

(3) The authorised officer may, where it is not practicable to seize any such book, account or other document, specified in sub-section (1), serve an order on the person who is in immediate possession or control thereof that he shall not remove, part with or otherwise deal with it except with the previous permission of such officer and such officer may take such steps as may be necessary for ensuring compliance with this sub-section.

 

(4) The authorised officer may, during the course of the search or seizure, examine on oath any person who is found to be in possession or control of any books, accounts or other documents, and any statement made by such person during such examination may thereafter be used in evidence in any proceeding under this Act.

 

(5) The books, accounts, papers, receipts, vouchers, reports, or other documents seized under sub-section (1) shall not be retained by the authorised officer for a period exceeding one hundred and eighty days from the date of the seizure unless the reasons for retaining the same are recorded by him in writing and the approval of the Controller for such retention is obtained:

 

Provided that the Controller shall not authorise the retention of the books, accounts, papers, receipts, vouchers, reports, or other documents for a period exceeding thirty days after all the proceedings under this Act for which the books, accounts, papers, receipts, vouchers, reports, or other documents are relevant are completed.

 

(6) The person from whose custody any books, accounts, papers, receipts, vouchers, reports, or other documents are seized under sub-section (1) may make copies thereof, or take extracts therefrom, in the presence of the authorised officer or any other person empowered by him in this behalf at such place and time as the authorised officer may appoint in this behalf.

 

(7) If a person legally entitled to the books, accounts, papers, receipts, vouchers, reports, or other documents are seized under sub-section (1), objects for any reason to the approval given by the Controller under sub-section (5), he may make an application to the Central Government stating therein the reason, for such objection and requesting for the return of the books, accounts, papers, receipts, vouchers, reports, or other documents.

               

(8) On receipt of the application under sub-section (7), the Central Government may, after giving the applicant an opportunity of being heard, pass such orders as it thinks fit.

 

(9) The provisions of the Code of Criminal Procedure, 1898, relating to searches and seizures shall apply, so far as may be, to every search and seizure made under sub-section (1).

 

(10) The Central Government may make rules in relation to any search or seizure under this section; in particular, and without prejudice to the generality of the foregoing power, such rules may provide for the procedure to be followed by the authorised officer,-

 

(i) for obtaining ingress into such building or place to be searched where free ingress thereto is not available;

 

 

(ii) for ensuring safe custody of any books, accounts, papers, receipts, vouchers, reports, or other documents seized under this section.]

 

[a] Section 34H inserted after section 33 by the Insurance (Amendment) Act, 1968 (62 of 1968), section 16 (1-6-1969).

 

AMALGAMATION AND TRANSFER OF INSURANCE BUSINESS

 

 

35.Amalgamation and transfer of insurance business

.-

 

(1) No life insurance business of an insurer specified in sub-clause (a)  (ii) or sub-clause (b) of clause (9) of section 2 shall be transferred to a*[any person or transferred to] or amalgamated with the life insurance business of any other insurer except in accordance with a scheme prepared under this section and sanctioned by the b*[Controller].

 

               

(2) Any scheme prepared under this section shall set out the agreement under which the transfer or amalgamation is proposed to be effected, and shall contain such further provisions as may be necessary for giving effect to the scheme.

 

(3) Before an application is made to the c*[Controller] to sanction any such scheme, notice of the intention to make the application together with a statement of the nature of the amalgamation or transfer, as the case may be, and of the reason therefor shall, at least two months before the application is made, be sent to the  d*[Controller] e*[and certified copies, four in number, of each of the following documents shall be furnished to the d*[Controller], and other such copies shall] during the two months aforesaid be kept open for the inspection of the members and policy-holders at the principal and branch offices and chief agencies of the insurers concerned, namely :-

 

(a) a draft of the agreement or deed under which it is proposed to effect the amalgamation or transfer;

 

f*[(b) balance-sheets in respect of the insurance business of each of the insurers concerned in such  amalgamation or transfer, prepared in the Form set Forth in Part II of the  First Schedule and in accordance  with the regulation  contained in Part I of that Schedule;

 

(c) actuarial reports and abstracts in respect of the life insurance business of each of the insurers so concerned prepared in conformity with the requirements of part II of the Fourth and Fifth  schedules and in accordance with the regulations contained in Part I of the schedule concerned]

 

(d) a report on the proposed amalgamation or transfer, prepared by an independent actuary who has never been professionally connected with any of the parties concerned in amalgamation or transfer at any time in the five years preceding the date on which he signs his report;

 

                (e) any other  report  on which the scheme of amalgamation or transfer was founded.

 

The balance-sheets, reports and abstracts referred to in clauses (b), (c) and (d) shall all be prepared as at the date at which the amalgamation or transfer if sanctioned by the c*[Controller] is to take effect, which date shall not be more than twelve months before the date on which the application to the c*[Controller] is made under this section:

 

Provided that if the d*[Controller] so directs in the case of any particular insurer there may be substituted respectively for the balance-sheet, report and abstract referred to in clauses (b) and (c) prepared in accordance with this-section certified copies of the last balance-sheet and last report and abstract prepared in accordance with sections 11 and 13 g*[of this Act or sections 7 and 8 of the Indian Life Assurance Companies Act, 1912], if that balance-sheet is prepared as at a date  not more than twelve months, and that report and abstract as at a date not more than five years, before the date on which the application to the  c*[ Controller] is made under this section.]

 

h*[(4) ………….Omitted……………]              

 

 

                        [a] Inserted by the Insurance (Amendment) Act, 1940 (20 of 1940), S.7.

 

[b] Substituted for "Court having jurisdiction over one or other of the parties concerned", ibid, 1950 (47 of 1950), S.26 (1-6-1950).

 

[c] Substituted for "Court" by the Insurance (Amendment) Act, 1950 (47 of 1950), S.26 (1-6-1950).

 

                [d] Substituted for "Central Government", ibid.

 

[e] Substituted for " and certified copies of the following documents shall be furnished to the Central Government and shall", ibid, 1941 (13 of 1941), S.22 (8-4-1941).

                [f] Substituted for the original clauses (b) and (c), ibid, 1940 (20 of 1940), S.7

                [g] Inserted and deemed always to have been inserted by Act 13 of 1941, S.22

                [h] Sub-section (4) was omitted by Act, 1950 ( 47 of 1950), S.26 (1-6-1950).

 

 

36.Sanction of amalgamation and transfer by Controller

.-

 

b*[(1)] When any application such as is referred to in sub-section  (3) of section 35 is made to the  b*[Controller], the  b*[Controller] shall cause, if for special reasons c*[he] so directs, notice of the application to be sent to every person resident in d*[India dd*[……….Omitted……….]] who is the holder of a life policy of any insurer concerned and shall cause a statement of the nature and terms of the amalgamation or transfer, as the case may be, to be published in such manner and for such period as c*[he] may direct, and, after hearing the directors and such policy-holders as apply to be heard and any other persons whom c*[he] considers entitled to be heard, may sanction the arrangement, if  c*[he] is satisfied that no sufficient objection to the arrangement has been established e*[and shall make such consequential orders as are necessary to give effect to the arrangement, including orders as  to the disposal of any deposit made under section 7 or section 98]] :

 

f*[Provided that

 

(a) no part of the deposit made by any party to the amalgamation or transfer shall be returned except where, after effect is given to the arrangement, the whole of the deposit to be made by the insurer carrying on the amalgamated business or the person to whom the business is transferred is completed,

 

(b) only so much shall be returned as is no longer required to complete the deposit last mentioned in clause (a), and

 

(c) while the deposit last mentioned in clause (a) remains uncompleted, no accession, resulting from the arrangement, to the amount already deposited by the insurer carrying on the amalgamated business or the person to whom the business is transferred shall be appropriated as payment or part payment of any instalment of deposit subsequently due from his under section 7 or section 98.]

 

g*[(2) If the arrangement involves a reduction of the amount of the insurance and other contracts of the transferor insurer or of any or all of the insurers concerned in the amalgamation, the Controller may sanction the arrangement reducing the amount of such  contracts upon such terms and subject to such conditions as he may think proper, and the reduction of contracts as sanctioned by the Controller shall be valid and binding on all the parties concerned.]

 

[a] Section 36 was renumbered as sub-section (1) by the Insurance (Amendment) Act, 1950 (47 of 1950), S.27 (1-6-1950).

                [b] Substituted for "Court", ibid.

                [c] Substituted for "it" ibid.

 

                        [d] Substituted for "British India or in an Indian State" by A.C.A.O., 1948

 

                        [dd]  The words "or in a non-acceding Indian State' were omitted by A.L.O., 1950

 

                        [e] Inserted by the Insurance (Amendment) Act, 1940 (20 of 1940), S.5 (10-4-1940)

                [f] Inserted, ibid, 1941 (13 of 1941), S.23 (8-4-1941)

                [g] Inserted by Act (47 of 1950), S.27 (1-6-1950).

 

 

37.Statements required after amalgamation and transfer

.-

 

Where an amalgamation takes place between any two or more insurers, or a*[where any business of an insurer is transferred] whether in accordance with a scheme confirmed by the b*[Controller] or otherwise, the insurer carrying on the amalgamated business or c*[the person to whom the business is transferred], as the case may be, shall, within three months from the date of the completion of the amalgamation or transfer, d*[furnish in duplicate to the e*[Controller]] -

 

(a) a certified copy of the scheme, agreement or deed under which the amalgamation or transfer has been effected, and

 

(b) f*[a declaration signed by every party concerned] or in the case of a company by the chairman and the principal officer that to the best of their belief every payment made or to be made to any person whatsoever on account of the amalgamation or the transfer is therein fully set forth and that no other payments beyond those set forth have been made or are to be made either in money, policies, bonds, valuable securities or other property by or with the knowledge of any parties to the amalgamation or transfer, and

 

g*[(c) where the amalgamation or transfer has not been made in accordance with a scheme sanctioned by the b*[Controller] under section 36 -

 

(i) balance-sheets in respect of the insurance business of each of the insurers concerned in such amalgamation or transfer, prepared in the Form set forth in Part II of the First Schedule and in accordance with the regulations contained in Part I of that Schedule, and

 

(ii) certified copies of any other reports on which the scheme of amalgamation or transfer was founded].

 

[a] Substituted for "where any business of one insurer is transferred to another "by the Insurance (Amendment) Act, 1941 (13 of 1941), S.24 (8-4-1941).

 

                                                [b] Substituted for "Court", ibid, 1950 (47 of 1950), S.28 (1-6-1950).

 

[c] Substituted for "the insurer to whom the business is transferred" by Act 13 of 1941, S.24 (8-4-1941).

 

                                                [d] Substituted for "furnish to the Central Government", ibid.

 

                                                [e] Substituted for "Central Government", by Act 47 of 1950, S.28 (1-6-1950).

 

[f] Substituted for "a declaration signed by every insurer concerned" by Act 13 of 1941, S.24 (8-4-1941).

 

                                                [g] Substituted for the original clause, ibid.

 

a*[37A.           Power of Controller to prepare scheme of amalgamation.-

 

(1) If the Controller is satisfied that -

 

                (i) in the public interest ; or

 

                (ii) in the interests of the policy-holders; or

 

                (iii) in order to secure the proper management of an insurer; or

 

                (iv) in the interests of the insurance business of the country as a whole;

 

it is necessary so to do, he may prepare a scheme for the amalgamation of that insurer with any other insurer (hereafter referred to in this section as the transferee insurer ) :

 

Provided, that no such scheme shall be prepared unless the other insurer has given his written consent to the proposal for such amalgamation.

 

(2) The scheme aforesaid may contain provisions for all or any of the following matters namely :--

 

(a) the constitution, name and registered office, the capital, assets, powers, rights, interests, authorities and privileges, and the liabilities, duties and obligations of the transferee insurer;

 

(b) the transfer to the transferee insurer of the business, properties, assets and liabilities of the insurer on such terms and conditions as may be specified in the scheme ;

 

(c) any change in the Board of directors, or the appointment of a new Board of directors of the transferee insurer and the authority by whom, the manner in which, and the other terms and conditions on which, such change or appointment shall be made and, in the case of appointment of a new Board of directors or of any director, the period for which such appointment shall be made;

 

(d) the alteration of the memorandum and articles of association of the transferee insurer for the purpose of altering the capital thereof or for such other purposes as may be necessary to give effect to the amalgamation ;

 

(e) subject to the provisions of the scheme, the continuation by or against the transferee insurer, of any actions or proceedings pending against the insurer ;

 

(f) the reduction of the interest or rights which the shareholders, policy-holders and other creditors have in or against the insurer before the amalgamation to such extent as the Controller considers necessary in the public interest or in the interests of the shareholders, policy-holders and other creditors or for the maintenance of the business of the insurer;

 

(g) the payment in cash or otherwise to policy-holder and other creditors in full satisfaction of their claim, -

 

(i) in respect of their interest or rights in or against the insurer before the amalgamation; or

 

(ii) where their interest or rights aforesaid in or against the insurer has or have been reduced under clause (f) in respect of such interest or rights as so reduced.

 

(h) the allotment to the shareholders of the insurer for shares held by them therein before the amalgamation [whether their interest in such shares has been reduced under clause (f) or not ] of shares in the transferee insurer and where any shareholders claim payment in cash and not allotment of shares, or where it is not possible to allot shares to any shareholders  the payment in cash to those shareholders in full satisfaction of their claim-

 

                                (i) in respect of their interest in shares in the insurer before the amalgamation; or

 

(ii) where such interest has been reduced under clause (f) in respect of their interest in shares as so reduced;

 

(i) the continuance of the services of all the employees of the insurer (excepting such of them as not being workmen within the meaning of the Industrial Disputes Act, 1947, are specifically mentioned in the scheme ) in the transferee insurer at the same remuneration and on the same terms and conditions of service, which they were getting or, as the case may be.by which they were being governed, immediately before the date of amalgamation:

 

Provided that the scheme shall contain provision  that the transferee insurer shall pay or grant not later than the expiry of the period of three years, from the date of amalgamation, to the said employees the same remuneration  and the same term and conditions of service as are applicable to the other employees of corresponding rank on status of the transferee insurer subject to the qualifications and experience of the said employees being the same as or equivalent to those such other employees of transferee insurer:

 

Provided further that if in any case any doubt or difference arises as to whether the qualification and experience of any of the said employees are the same as or are equivalent to the qualifications and experience of the other employees of or corresponding rank or status of the transferee insurer, the doubt or difference shall be referred to the Controller whose decision thereon shall be final;

 

(j) notwithstanding anything contained in clause (I), where any of the employees of the insurer not being workmen within the meaning of the Industrial Disputes Act, 1947, are specifically mentioned in the scheme under clause (i) or where any employees of the insurer have by notice in writing given to the insurer, or as the case may be, the transferee insurer at anytime before the expiry of one month next following the date on which the scheme is sanctioned by the Central Government, intimated their intention of not becoming employees of the transferee insurer, the payment such employees of compensation, if any, to which they are entitled under the Industrial Dispute Act, 1947, and such pension, gratuity, provident fund or other retirement benefits ordinarily admissible to them under the rules or authorisations of the insurer immediately before the date of the amalgamation:

 

                (k) any other terms and conditions for the amalgamation of the insurer;

 

(l) such incidental, consequential and supplemental matters as are necessary to secure that the amalgamation shall be fully and effectively carrid out.

 

(3) (a) A copy of the scheme prepared by the controller shall be sent in draft to the insurer and also to the transferee insurer and any other insurer concerned in the amalgamations, for suggestions and objections, if any, within such period as the Controller may specify for this purpose.

 

(b) The Controller may make such modifications, if any, in the draft scheme as he may consider necessary in the light of the suggestions and objections received from the insurer and also from the transferee insurer, and any other insurer concerned in the amalgamation and from any shareholder, policy-holder or other creditor of each of those insurers and the transferee insurer.

 

(4) The scheme shall thereafter be placed before the Central Government for its sanction and the Central Government may sanction the scheme without any modification or with such modifications as it may consider necessary; and the scheme as sanctioned by the Central Government may specify in this behalf:

 

Provided that different dates may be specified for different provisions of the scheme.

 

(5) The sanction accorded by the Central Government under sub-section (4) shall be conclusive evidence that all the requirements of this section relating to amalgamation have been complied with and a copy of the sanctioned scheme certified in writing by an officer of the Central Government to be a true copy thereof, shall, in all legal proceedings (whether in appeal of otherwise) be admitted as evidence to the same extent as the original scheme.

 

(6) The Controller may, in like manner, add to, amend or vary any scheme made under this section.

 

(7) On and from the date of the coming into operation of the scheme or any provision thereof, the scheme or such provision shall be binding on the insurer or, as the case may be, on the transferee insurer and any other insurer concerned in the amalgamation and also on all the shareholders, policy-holders and other creditors and employees of each of those insurers and of the transferee insurer, and on any other person having any right or liability in relation to any of those insurers or the transferee insurer.

 

(8) On and from such date as may be specified by the Central Government in this behalf the properties and assets of the insurer shall, by virtue of and to the extent provided in the scheme, stand transferred to, and vest in, and the liabilities of the insurer shall, by virtue of and to the extent provided in the scheme, stand transferred to and become the liabilities of, the  transferee insurer.

 

(9) If any difficulty arises in giving effect to the provisions of the scheme, the Central Government may by order do anything not inconsistent with such provisions which appear to it necessary or expedient for the purposes of removing the difficulty.

 

(10) Copies of every scheme made under this section and of every order made under sub-section (9) shall be laid before each House of Parliament, as soon as may be, after the scheme has been sanctioned by the Central Government or, as the case may be, the order has been made.

 

(11) Nothing in this section shall be deemed to prevent the amalgamation with an insurer by a single scheme of several insurers.

 

(12) The provision of this section and of any scheme made under it shall have effect notwithstanding anything to the contrary contained in any other provision of this Act or in any other law or any agreement, award or other instrument for the time being in force.

 

(13) The provisions of section 37 shall not apply to an amalgamation given effect to under the provisions of this section.]

 

                        [a] Inserted by Insurance (Amendment) Act, 1968 (62 of 1968), S.17 (1-6-1969).

 

OBJECTS AND REASONS

 

"Clause 17 inserts provisions to empower the Controller if he is satisfied that it is necessary to do so on certain grounds, to prepare a scheme for the amalgamation or an insurer with another insurer and after securing the suggestions or objections from both the insurers concerned, to place the scheme before the Central Government.When the Central Government approves the scheme it shall be final legally binding and shall take effect from the date specified by the Central Government".--Gazette of India, 8-4-1968, Pt.II, S.2, Extra., p.386.

 

ASSIGNMENT OR TRANSFER OF POLICIES AND NOMINATIONS

 

 

38.Assignment and transfer of insurance policies

.-

 

(1) A transfer or assignment of a policy of life insurance, whether with or without consideration, may be made only by an endorsement upon the policy itself or by a separate instrument, signed in either case by the transferor or by the assignor or his duly authorized agent and attested by at least one witness, specifically, setting forth the fact of transfer or assignment.

 

(2) The transfer or assignment shall be complete and effectual upon the execution of such endorsement or instrument duly attested but a*[except where the transfer or assignment is in favour of the insurer] shall not be operative as against an insurer and shall not confer upon the transferee or assignee, or his legal representative, any right to sue for the  amount of such policy or the money secured thereby until a notice in writing of the transfer or assignment a*[ b*[and] either the said endorsement or instrument itself or a copy thereof certified to be correct by both transferor and transferee or their duly authorized agents] c*[have been delivered] to the insurer d*[………………].

 

e*[Provided that where the insurer maintains one or more places of business in f*[India], such notice shall be delivered only at the place in f*[India] mentioned in the policy for the purpose or at his principal place of business in f*[India]].

 

                       

[a] Inserted by the Insurance (Amendment) Act, 1939 (11 of 1939), S.14.

                       

[b] Substituted for "together with", ibid, 1941 (13 of 1941), S.25 (8-4-1941).

                       

[c] Substituted for "has been delivered", ibid.

               

[d] The words "at his principal place of business in British India by or on behalf of the transferor or transferee" were omitted by Act 11 of 1939, S.14

                       

[e] Proviso was added, ibid.

[f] Substituted for "the States" by the Jammu and Kashmir (Extension of Laws) Act, 1956 (62 of 1956), S.2 and Schedule (1-1-1958).

(3) The date on which the notice referred to in sub-section (2) is delivered to the insurer shall regulate the priority of all claims under a transfer or assignment  as between persons interested in the policy; and where there is more than one instrument of transfer or assignment the priority of the claims under such instruments shall be governed by the order in which the notices referred to in sub-section (2) are delivered.

(4) Upon the receipt of the notice referred to in sub-section (2), the insurer shall record the fact of such transfer or assignment together with the date thereof and the name of the transferee or the assignee and shall, on the request of the person by whom the notice was given, or of the transferee or assignee, on payment of a fee not exceeding one rupee, grant a written acknowledgment of the receipt of such notice; and any such acknowledgment shall be conclusive evidence against the insurer that he has duly received the notice to which such acknowledgment relates.

 

(5) a*[Subject to the terms and conditions of the transfer or assignment, the insurer shall, from the date of the receipt of the notice referred to in sub-section (2),] recognize the transferee or assignee named in the notice as the only person entitled to benefit under the policy, and such person shall be subject to all liabilities and equities to which the transferor or assignor was subject at the date of the transfer or assignment and may institute any proceedings in relation to the policy without obtaining the consent of the transferor or assignor or making him party to such proceedings.

 

[a] Substituted for "from the date of receipt of the notice referred to in sub-section (2), the insurer shall' by the Insurance (Amendment) Act, 1939 (11 of 1939), S.14.

a*[(6) Any rights and remedies of an assignee or transferee of a policy of life insurance under an assignment or transfer effected prior to the commencement of this Act shall not be affected by the provisions of this section.]

 

                [a] Substituted for the original sub-section by Act 11 of 1939, S.14.

 

 

(7) Notwithstanding and law or custom having the force of law to the contrary, an assignment in favour of a person made with the condition that it shall be inoperative or that the interest shall pass to some other person on the happening of a specified event during the a*[lifetime of the person whose life is insured], and an assignment in favour of the survivor or survivors of a number of persons, shall be valid.

 

                        [a] Substituted for "life of the policy-holder" by Act 11 of 1939, S.14.

 

 

39.       a*Nomination by policy-holder.-

 

(1) The holder of a policy of life insurance b*[on his own life c*[……….]] may when effecting the policy or at any time before the policy matures for payment, nominate the person to whom the money secured by the policy shall be paid in the event of his death:

 

d*[Provided that, where any nominee is a minor, it shall be lawful for the policy-holder to appoint in the prescribed manner any person receive the money secured by the policy in the event of his death during the minority of the nominee.]

 

[a] Section 39 applies to the Life Insurance Corporation of India --- Life Insurance Corporation Act, 1956, S.43(1).

 

                        [b] Inserted by the Insurance (Amendment) Act, 1939 (11 of 1939), S.15.

 

[c] The words "not being an absolute assignee of the benefits under the policy" were omitted, ibid, 1941 (13 of 1941), S.26 (8-4-1941).

 

                        [d] The proviso was inserted, ibid, 1950 (47 of 1950), S.29 (1-6-1950).

 

(2) Any such nomination in order to be effectual shall, unless it is incorporated in the text of the policy itself, be made by an endorsement on the policy communicated to the insurer and registered by him in the records relating to the policy and any such nomination may at anytime before the policy matures for payment be cancelled or changed by an endorsement or a further endorsement or a will, as the case may be, a*[but unless notice in writing of any such cancellation or change has been delivered to the insurer, the insurer shall not liable for any payment under the policy made bone fide by him to a nominee mentioned in the text of the policy or registered in records of the insurer.]

 

                        [a] Inserted by Act 11 of 1939, S.15.

 

a*[(3) The insurer shall furnish to the policy-holder a written acknowledgment of having registered a nomination or a cancellation or change thereof, and may charge a fee not exceeding one rupee for registering such cancellation or change.]

 

                [a] Substituted for the original sub-section by Act 11 of 1939, S.15.

 

(4) A transfer or assignment of a policy made in accordance with section 38 shall automatically cancel a nomination:

 

a*[Provided that the assignment o a policy to the insurer who bears the risk on the policy at the time of the assignment, in consideration of a loan granted by that insurer on the security of the policy within its surrender value, or its re-assignment on repayment of the loan shall not cancel a nomination, but shall affect the rights of the nominee only to the extent of the insurer's interest in the policy.]

 

                       

[a] Inserted by the Insurance (Amendment) Act, 1941 (13 of 1941), S.26 (8-4-1941).

 

(5) Where the policy matures for payment during the a*[lifetime of the person whose life is insured] or where the nominee or, if there are more nominees than one, all the nominees die before the policy matures for payment, the amount secured by the policy shall be payable to the policy-holder or his heirs or legal representatives or the holder of a succession certificate, as the case may be.

 

                        [a] Substituted for "lifetime of the policy-holder" by Act 11 of 1939, Section 15.

 

(6) Where the nominee or, if there are more nominees than one,  a nominee or nominees survive the a*[person whose life is insured], the amount secured by the policy shall be payable to such survivor or survivors.

 

                        [a] Substituted for "policy-holder" by Act 11 of 1939, Section 15.

 

(7) The provisions of this section shall not apply to any policy of life insurance to which section 6 of the Married Women's Property Act, 1874, applies a*[or has at any time applied :

 

Provided that where  a nomination made whether before or after the commencement of the Insurance (Amendment) Act, 1946, in favour of the wife of the person who has insured his life or of his wife and children or any of them is expressed, whether or not on the face of the policy, as being made under this section 6 shall be deemed not to apply or not to have applied to the policy].

 

                        [a] Inserted by the Insurance (Amendment) Act, 1946  (6 of 1946), section 20 (20-3-1946).

 

 

OBJECTS AND REASONS

 

Section 39(4), Proviso.-The words "its reassignment on repayment of the loan' were inserted in the proviso to sub-section (4) of Section 39 by the Select Committee.

 

"The words inserted and intended to remove any doubt whether, when an assignment of the nature referred to is cancelled by the reassignment of the policy to the holder, that reassignment can affect the rights of the nominee."--S.C.R.Gazette of India, 1941, Pt.V, p.79.

 

 

 

 

COMMISSION AND REBATES AND LICENSING OF AGENTS

 

 

40.Prohibition of payment by way of commission or otherwise for procuring business

.-

 

(1) No person shall, after the expiry of six months from the commencement of this Act, pay or contract to pay any remuneration or reward whether by way of commission or otherwise for soliciting or procuring insurance business in India to any person except an insurance agent a*[..] b*[or a principal chief or special agent.]

 

[a] The words "licensed under section 42" were omitted by the Insurance (Amendment) Act, 1939 (11 of 1939), S.16.

 

[b] Substituted for "or a person acting on behalf of an insurer who for the purposes of insurance business employs insurance agents", ibid, 1950 (47 of 1950), S.30 (1-9-1950).

 

 a*[(1A) In this section and section b*[40A], 41 and 43, references  to an insurance agent shall be construed as including  references to an individual  soliciting  or procuring insurance business exclusively in  c*[the territories which, immediately before the 1st November, 1956, were comprised in a Part B State] notified in this behalf by the Central Government in the Official Gazette and holding a valid licence as an insurance agent under the law of d*[the part B State ]].

 

                        [a] Inserted by the Insurance (Amendment) Act, 1946 (6 of 1946), S.21 (20-3-1946).

                [b] Inserted, ibid, 1950 (47 of 1950), S.30 (1-9-1950)

                [c] Substituted for "a Part B State" by 3 A.L.O., 1956.

                [d] Substituted for "that State", ibid.

 

(2) No insurance agent a*[…………..] shall be paid or contract to be paid by way of commission or as remuneration in any form an amount exceeding, in the case of life insurance business forty per cent of the first year's premium payable on any policy or policies effected through him  and five per cent.of a renewal premium b*[payable on such a policy ], or, in the case of business of any other  class, fifteen  per cent of the premium :

                 

Provided that insurers  in respect of life insurance business only, may pay, during the first ten years of their business to their insurance agents fifty-five per cent.of the first year's premium   payable on any policy or policies effected through them and six per cent.of the renewal premiums b*[payable on such  policies];

 

c*[Provided further that nothing in this subsection  shall apply in respect of any policy of life insurance  issued after the 31st  day of December 1950, or in respect of any policy  of general insurance issued after the commencement of the Insurance ( Amendment ) Act, 1950]

 

                        [a] The words "licensed under S.42" were omitted by Act 11 of 1939, S.16.

 

                        [b] Inserted by the Insurance (Amendment) Act, 1946 (6 of 1946), S.21 (20-3-1946).

                [c] Inserted, ibid, 1950 (47 of 1950), S.30 (1-9-1950).

 

 

a*[ (2A) Save as hereinafter provided, no insurance agent shall be paid or contract to be paid by way of commission or as remuneration in any form any amount in respect of any policy not effected through him :

 

Provided that where a policy of life insurance has lapsed, and it cannot under the terms and conditions applicable to it, be revived without further medical examination of the person whose life was insured thereby, an insurer, after giving by notice in writing to the insurance agent through whom the policy was effected b*[if such agent continues to be an agent of the insurer] an opportunity to effect the revival of the policy within a time specified in the notice, being not less than one month from the date of the receipt by him   of the notice, may pay to another insurance agent who effects the revival of the policy an amount calculated at a rate not exceeding half the rate of commission at which the agent through whom the policy was effected would have been paid had the policy not lapsed, on the sum payable on revival of the policy on account of arrears premiums (excluding any interest on such arrear premiums) and also on the  subsequent renewal premiums payable on  the policy].

 

                        [a] Inserted by Act 6 of 1946, S.21 (20-3-1946).

                        [b] Inserted by Act 47 of 1950, S.30 (1-9-1950).

               

(3) Nothing in this section shall prevent the payment under any contract existing prior to the 27th day of January, 1937, of gratuities or renewal commission to a*[any person, whether an insurance agent within the meaning of this Act or not], or to his representatives after his decease in respect of insurance business effected through him before the said date.

 

                        [a] Substituted for "an insurance agent" by Act 11 of 1939, S.16.

 

 

a*[40A.Limitation of expenditure on commission.-

 

(1) No person shall pay or contract to pay to an insurance agent, and no insurance agent shall receive or contract to receive by way of commission or remuneration in any form in respect of any policy of life insurance issued in India by an insurer after the 31st day of December, 1950, and effected through an insurance agent an amount exceeding -

 

(a) Where the policy grants an immediate annuity or a deferred annuity in consideration of a single premium, or where only one premium is payable on the policy, two per cent of that premium,

 

(b) Where the policy, grants a deferred annuity in consideration of more than one premium seven and a half per cent of the first year's premium and two per cent of each renewal premium, payable on the policy, and

 

(c) in any other case, thirty-five  per cent of the first year's premium, seven  and an half  per cent.of the second and third year's renewal premium, and thereafter five per cent of each renewal premium, payable on the policy :

 

Provided that in a case referred to in clause (c) an insurer, during the first ten years of his business, may pay to an insurance agent, and an insurance  agent may receive  from such an insurer, forty per cent of the first year's premium payable on the policy ;

 

                       

(2) No person shall pay or contract to pay to a special agent, and no special agent, shall receive or contract to receive,  by way of commission or as remuneration in any form, in respect of  any policy of life insurance issued in India by an insurance   issued in   India by an insurer after the 31st day of December, 1950, and effected through a special agent , an amount exceeding-

 

                        (a) in a case referred   to in clause (a) of sub-section (1) one half per cent of the premium,

 

(b) in a case referred to in clause (b)  of sub-section  (1), two per cent  of the first year's premium payable on the policy and

 

(c) in a case referred to in clause (c) of sub-section (1)  fifteen per cent of the first year's premium payable on the policy:

 

Provided that in a case referred to in clause (c) an insurer, during the first ten years of his business, may pay to a special agent, and a special agent may receive from such an insurer, seventeen and a half per cent of the first year's premium payable on the policy.

 

(3) No person shall pay or contract to pay to an insurance agent, and no insurance agent shall receive or contract to receive, by way of commission or remuneration in any form, in respect of any policy of general insurance issued in India by an insurer after the commencement of b*[the Insurance (Amendment) Act, 1968], and effected through an insurance agent, an amount exceeding -

 

b*[ (a) Where the policy relates to fire or marine insurance, five per cent, of the premium payable on the policy, and

 

(b) Where the policy relates to miscellaneous insurance, ten per cent.of the premium payable on the policy].

 

(4) No person shall pay or contract to pay to a principal agent, and no principal agent shall receive or contract to receive, by way of commission or remuneration in any form, in respect of any policy of general insurance issued in India in India by an insurer after the commencement of the Insurance (Amendment) Act, 1950, and effected through a principal agent, an amount exceeding -

 

(a) in the case referred to in clause (a) of sub-section (3) twenty  per cent of the premium  payable  on the policy, and

 

(b) in the case referred to in clause  (b) of that  sub-section, fifteen per cent, of the policy,

 

less any commission payable to any insurance agent in respect of the said policy :

 

Provided that the Central Government may, in such circumstances and to such extent and for such period as may be, specified  authorize the payment of commission  or remuneration exceeding the limits specified in this sub-section   to a principal agent of an insurer   incorporated or domiciled elsewhere  than in India, if such agent carries  out and has continuously carried out in his own office duties on behalf of the insure which would otherwise have been performed by the insurer.

 

(5) Without prejudice to the provisions of section 102 in respect of a contravention of any of the provisions of the preceding sub-sections by an insurer, any insurance agent who contravenes the provisions of sub-section (1) or sub-section (3) shall be punishable with fine which may extend to one hundred rupees].

 

[a] Sections 40-A were inserted by the Insurance (Amendment) Act, 1950 (47 of 1950), S.31

(1-9-1950).

 

[b] Substituted for certain words and former clauses (a) and (b) by the Insurance (Amendment) Act, 1968, (62 of 1968), S.18 (1-6-1969).

 

OBJECTS AND REASONS

 

Sections 40A to 40C and Part II-A.- "Provide for the control of overall expenses of all insurers through the medium of a statutory association of insurers and two Councils operating through two Executive Committees with Government representation, one being for life  and the other for general insurance.The General Insurance Council is also to regulate the tariff rates and conditions.Maximum rates of commission to insurance agents and special agents in life insurance business and to insurance agents and principal agents in general insurance business are prescribed".--S.O.R., Gazette of India, 1949, Extra, page 2214.

 

Sections 40A to 40C read with Sch.VI.-  "We think that the minimum number of insurance agents for a special agent should be two and for a chief agent, six in the case of small companies, and twelve in the case of big companies.The special agent may at the same time be permitted to do personal business, but he should procure annually for the insurer at least business to the extent of fifty thousand rupees sum assured.The principal agent may also in certain circumstances be permitted to do personal business.

 

Some relaxation in the case of principal agents doing head office work for foreign insurers should, in our opinion, be allowed for a limited period as in the Proviso in the proposed section 40A(4).

 

The limitation of expenses regarding life insurance business should be brought into force from 1st January, 1951, while the limitation of expenses for general insurance business may be from 1st January, 1950.We think that the basic limitation in either case should be prescribed by rules made under the Act, but the rules so made should have due regard to the size and age of the insurers concerned.

 

We also feel that all decisions connected with relaxation in the limits of expenses for insurers should be taken by the Controller himself, after consulting the Executive Committee of the relevant Insurance Council".---S.C.R.Gazette of India, 1950, Pt.II, S.2, page 100.

 

a*[40B.           Limitation of expenses of management in life insurance business.-

 

(1) Every insurer transacting life insurance business in India  shall  furnish to the  Controller, within such time as may be prescribed, statements in the prescribed form certified by an actuary on the basis of premiums currently used by him in regard to new business in respect of mortality rate  of interest, expenses and bonus loading.

 

(2) After the 31st day of December, 1950, no insurer shall, in  respect of life insurance business transacted by him in India, spend as expenses of  expenses of management in any  calendar year an amount in excess of the prescribed  limits and in prescribing any such limits regard shall be had to the size and age of the insurer and the provision generally made for expenses of management in the premium rates of insurers :

 

Provided that where an insurer has spent as such expenses in any year an amount in excess of the amount permissible under this sub-section, he shall not be deemed to have contravened the provisions of this  section, if the excess  amount to spent is within such limits as may be fixed in respect of the year by the Controller after consultation with the Executive committee of the Life Insurance Council constituted under  section 64F, by which the actual expenses incurred  may exceed the expenses permissible under this sub-section.

 

(3) In respect of any statement mentioned in sub-section (1) the Controller may require that it shall be submitted to another actuary appointed by the insurer for the purpose and approved by the Controller, for certification by him, whether with or without modifications.

 

(4) Every insurer transacting life insurance business in India shall incorporate in the revenue account -

 

(a) a certificate signed by the chairman and two directors and by the principal officer of the insurer, and an auditor's certificate, certifying that all expenses of management in respect of life insurance business transacted by the insurer in India have  been fully debited in the revenue account as expenses; and

 

 

(b) if the insurer is carrying on any other class of insurance business in  addition to life insurance business an auditor's certificate certifying  that all charges incurred in respect of his life insurance business and in respect of his business other than life insurance business have been fully debited in the respective revenue accounts.

 

Explanation.- In this section,-

 

(a) "calendar year" or "year" means, in relation to an insurer who is required to furnish returns in accordance with sub-section (2) of section 16, the period  covered by the revenue account furnished by such insurer under clause (b) of that sub-section;

 

(b) "expenses of management" means all charges wherever incurred whether directly  or indirectly, and includes -

 

                                (i) commission payments of all kinds,

 

                                (ii) any amount of expenses capitalized,

 

(iii) in the case of an insurer having his principal place of business outside India, a proper share of head office expenses which shall not be less than such percentage as may be prescribed of the total premiums (less re-insurances) received during the year in respect of life insurance business transacted by him in India,

 

but does not include in the case of an insurer having his principal place of business in India any share of head office expenses   in respect of life insurance business transacted by him outside India.]

 

[a] Section 40-B were inserted by the Insurance (Amendment) Act, 1950  (47 of 1950), S.31 (1-9-1950).

                       

a*[40C.           Limitation of expenses of management in general insurance business.-

 

(1) After the 31st day of December, 1949 no insurer shall, in respect of any class of general insurance business transacted by him in India, spend in any calendar year as expenses of management including  commission or remuneration for procuring business an amount in excess of the prescribed limits and in prescribing any such limits regard shall be had to the  size and age of the insurer.

 

Provided  that where an insurer has spent as such expenses in any year an amount in excess of the amount permissible under this sub-section, shall not be deemed to have contravened  the provisions of this section, if the  excess amount so spent is within such limits as may be fixed in respect of the year by the Controller after consultation with the Executive Committee of the General  Insurance   Council constituted under section 64F by which the actual expenses incurred may exceed the expenses permissible under this sub-section.

 

(2) Every insurer as aforesaid shall incorporate in the revenue account a certificate signed by the chairman and two directors and by the principal officer of the insurer, and by an auditor certifying that all expenses of management wherever incurred, whether directly or indirectly in respect of the business referred to in this section, have been fully debited in the revenue account  as expenses.

 

Explanation.- In this section ,-

 

                (a) "calendar year " shall have the meaning assigned to it in section 40B;

 

(b) "expenses of management"  means all  charges, wherever incurred whether directly or indirectly, including commission payments of all kinds and, in the case of an insurer having his principal place of business outside India, a proper share of head office expenses, which shall not be less than such percentage as may be prescribed, of his  gross premium income ( that is to say, the premium income without taking in to  account premiums on reinsurance ceded or accepted ) written direct in India during the year b*[but in computing the expenses of management in India the following, and only the following, expenses may be excluded, namely :-

 

(i) in the case of an insurer having his principal  place of business in India, a share of head office expenses in respect of general insurance business transacted by him outside India not exceeding such percentage of his gross direct premium written outside India as may be prescribed,

 

(ii) in the  case if an insurer having his principal place of business outside India, a share of the  expenses of his office in India in respect of general insurance business transacted by him outside India  through his office in India, not exceeding such percentage of his gross direct premium written outside India through his office in India, as may be prescribed,

 

(iii) any expenses debited to profit and loss account relating exclusively to the management of capital, and dealings with shareholders and a proper share of managerial expenses calculated in such manner as may be prescribed, and

 

(iv) any expenses debited to claims in the revenue account in Form F of Part II of the Third schedule];

 

(c) "insurance business transacted in India" includes insurance business, wherever effected, relating to any property situate in India or to any vessel or aircraft registered in India.]

 

 

[a] Section 40-C was inserted by the Insurance (Amendment) Act, 1950  (47 of 1950), S.31  (1-9-1950).

 

                                                [b] Inserted by the Insurance (Amendment) Act, 1968 (62 of 1968), Section 19

(1-6-1969).

 

OBJECTS AND REASONS

 

"Clause 19 is intended to clarify a doubt in regard to the interpretation of Section 40C; the amendment  seeks to define more precisely the expenses which need not be treated as expenses of management purposes of limitations imposed by the section." Gazette of India, 8-4-1968, Pt.II, Section 2, Extra, p.386 (387) :

 

 

41.Prohibition of rebates

.-

 

(1) No person shall allow or offer to allow, either directly, as an inducement to any person to a*[take out or renew or continue] an insurance in respect of any kind risk relating to lives or property in India, any rebate of the whole or part of the commission payable or any rebate of the premium shown on the policy , nor shall any person  taking out or renewing b*[or continuing] a policy accept  any rebate, except such rebate as may  be allowed in accordance with the published  prospectuses or tables of the insurer :

 

c*[ Provided that acceptance by an insurance  agent of commission in connection with a policy of  life insurance taken out  by himself  on his own life shall not be deemed to be acceptance of a rebate of premium within the meaning  of this sub-section  if at the time of such  acceptance  the insurance agent satisfies the prescribed conditions establishing that he is a bona fide insurance agent employed by  the insurer.]

 

(2) Any person making default in complying with the provisions of this section shall be punishable with fine which may extend to d*[five hundred rupees]

 

[a] Substituted for "effect or renew" by the Insurance (Amendment) Act, 1941 (13 of 1941), Section 27 (8-4-1941).

 

                        [b] Inserted, ibid.

 

                        [c] Substituted for certain words, ibid, 1946 (6 of 1946), Section 22 (20-3-1946).

 

OBJECTS AND REASONS

 

Sub-section (1), Proviso -- Bona fide agent.—

 

"We understand that in prescribing conditions establishing that an insurance agent is a bona fide agent the provisions will be such as to establish that an agent has secured policies on six different lives excluding his own is a bona fide agent."  --  S.C.R.Gazette of India, 1941, Pt.V.Page 79.

 

 

42.Licensing of insurance agents

.-

 

a*[ (1) The Controller or an officer authorised by him in  this behalf shall, in the prescribed manner and on payment  of the prescribed fee which shall not be more than b*[twenty-five  rupees], issue to any person making  an application in the prescribed manner a licence to act as an insurance agent for the purpose of soliciting or procuring insurance business :

 

Provided that-

 

(a) in the case of an individual, he does not suffer from any of the disqualifications mentioned in sub-section (4), and

 

(b) in the case of a company or firm, any of its directors or partners does not suffer from  any of the said disqualifications, and the company or firm was immediately before the 1st  day of August  1957, holding   a certificate issued under section 42A entitling it to act as a principal agent for the purpose of procuring insurance business :

 

Provided further that in the case of a company or firm the licence under this sub-section shall be issued only for the purpose of soliciting or procuring general insurance business.]

 

[a] Substituted for the former sub-section (1) by the Insurance (Amendment) Act, 1957

(35 of 1957), Section 3 (with retrospective effect from 1-9-1957).

 

                        [b] Substituted for "ten rupees", ibid, 1968, Section 20 (1-6-1969).

 

(2) A licence issued under this section shall entitle the holder to act as an insurance agent for any  a*[………..] insurer.

 

[a] The word "registered" was omitted by the Insurance (Amendment) Act, 1950 (47 of 1950), Section 32 (1-9-1950).

 

 

a*[ (3) A licence issued under this  Section, after the commencement of the Insurance ( Amendment) Act, 1950, shall remain in force for a period of three years only from the  date of issue, but shall, b*[if the applicant, being  an individual does not, or being a company or firm any of its directors or partners does not, suffer from any of the  disqualifications  mentioned in clause  (b), (c) and (d) of sub-section (4)] and the  application for renewal of the licence reaches the issuing authority at least thirty  days before the date on which the licence ceases to remain in force, be renewed for a period  of three years at any one time on payment of the prescribed fee which shall not be more than c*[ twenty-five  rupees], and an additional  fee  of a prescribed amount, not exceeding c*[ten rupees] by way if penalty, if the application for renewal of the licence does not reach the issuing authority at least thirty days before  the date on which the licence ceases to remain in force.

 

(3A) No application for the renewal of a licence under this section shall be entertained if the application  does not reach the issuing authority before the licence ceases to remain in force :

 

Provided that the Controller may, if satisfied that undue hardship would be caused other wise, accept any application in contravention of this sub-section on payment by the applicant of a penalty of d*[seventy-five rupees].]

 

[a] Sub-section (3) and (3A) were substituted for the original sub-section (3) by the Insurance (Amendment) Act, 1950 (47 of 1950), Section 32 (1-9-1950).

 

[b] Substituted for the words, "if the applicant does not suffer from any of the disqualifications mentioned in items (b), (c) and (d) of sub-section (4)", ibid, 1957 (35 of 1957), Section 3 (with retrospective effect from 1-9-1957) :

 

[c] Substituted for "ten rupees" and "three rupees", respectively, by Act 62 of 1968, Section 20 (1-6-1969).

 

                        [d] Substituted for "thirty rupees", ibid.

 

(4) This disqualification above referred to shall be the following :-

 

                (a) that the person is a minor :

 

                (b) that he is found to be of unsound mind by a Court of competent jurisdiction ;

 

(c) that he has been found  guilty of criminal misappropriation or criminal breach of trust or cheating  a*[or forgery or an abetment of or attempt to commit any such offence] by a Court of  competent jurisdiction :

 

b*[ Provided that, where at least five years  have elapsed since the completion of the sentence imposed on any person in respect of any such offence, the b*[Controller] shall  ordinarily declare in respect of such person that his conviction shall cease to operate as a disqualification under this clause;]

 

(d) that in the course of any judicial proceeding relating to any policy of insurance or the winding up of an insurance  company or in the course of an  investigation of the affairs of an insurer  it has been found that he has been guilty of or has knowingly participated in or connived  at any fraud, dishonesty  or  misrepresentation  c*[against an insurer or an insured].

 

                                                [a] Inserted by the Insurance (Amendment) Act, 1941 (13 of 1941), Section 28

(8-4-1941).

 

[b] Substituted for "Superintendent of Insurance", ibid, 1950 (47 of 1950), Section 4 (1-6-1950).

 

                                                [c] Substituted for "against an insurer or an assured" by Act 13 of 1941, Section 28.

 

a*[(5) If it be found that an insurance agent  being an individual is, being a company or firm contains a director or partner who is, suffering from any of the disqualifications mentioned in sub-section (4)  then, without  prejudice to any other penalty to which he may be liable, the  Controller shall, and if the insurance  agent has knowingly contravened any of the provisions of this Act may,   cancel the licence issued to the agent under this section.]

 

[a] Substituted for sub-section (5) by the Insurance (Amendment) Act, 1957 (35 of 1957), Section 3 (with retrospective effect from 1-9-1957).

 

 

a*[(6)  The authority which issued any licence under this section may issue a duplicate licence to replace a licence lost, destroyed  or mutilated on payment  of the prescribed fee which  shall not be  more than one rupees.]

                        [a] Inserted by Act 13 of 1941, Section 28 (8-4-1941).

               

a*[(7) Any person who acts as an insurance agent without holding a licence issued under this section to act as such shall be punishable with fine which may  extend to fifty rupees, and any insurer  or any person acting on behalf  of an insurer, who appoints as an insurance agent any person not licensed to act as such or  transacts any insurance  business in India through any such  person, shall be punishable  with fine  which may extend to one  hundred rupees.]

 

[a] Sub-section (7) was inserted by the Insurance (Amendment) Act, 1957 (35 of 1957), Section 3 (with retrospective effect from 1-9-1957).

 

a*[(8) Where the person contravening  sub-section  (7) is a company or a firm, then, without prejudice to any other proceeding which  may be taken against  the   company  or firm, every director, manager, secretary or other  of the company, and every partner of the firm who is knowingly a party to such contravention shall be punishable with fine   which  may extend to fifty rupees.]

 

[a] Sub-section (8) was inserted by the Insurance (Amendment) Act, 1957  (35 of 1957), Section 3 (with retrospective effect from 1-9-1957).

 

OBJECTS AND REASONS

 

Amendment made in 1957.--"Under Section 42B of the Insurance (Amendment) Act, 1938, no insurer can appoint or transact any insurance business in India through a principal agent after the 31st August, 1957.Individuals, who have been working as principal Agents hitherto can, however, continue in business as ordinary insurance agents.The general insurance industry has suggested that the knowledge and experience of the business acquired by the companies and firms who were working as principal agents should not be lost to it.It is, therefore, proposed that principal agents at present in business may, if they so desire, continue to play their part in the industry by acting an ordinary insurance agents."The  amendments made in its section seek to amend the Insurance (Amendment) Act for the purpose.--S.O.R.Gazette of India, 1957, Extra, Pt.II, Sec.2, page 438.

 

STATE AMENDMENT

Union territory of Goa, Daman and Diu :

 

In its application to the Union territory of Goa, Daman and Diu, provisions of proviso (b) to sub-section (1) of Section 42 shall have effect as if the following words were inserted therein at the end---

 

"or was immediately before the 15th day of December, 1963, acting as a principal agent for the purpose of procuring general insurance business in the Union Territory of Goa, Daman and Diu." -- See S.O.423 (issued under section 8 of Goa, Daman and Diu (Laws) Regulation, 1963(, published in Gazette of India, 6-2-1965.Pt.II, Sec.3 (ii), p.416.

 

 

 

a*[42A.            Registration of principal agents, chief agents and special agents.-

 

(1) The Controller or an officer authorized by him in this behalf shall, in the prescribed manner and on payment of the prescribed fee, which shall not be more than twenty-five rupees for a principal agent or a chief agent and ten rupees for a special agent, register any person who makes an application to him in the prescribed manner if,-

 

(a) in the case of an individual, he does not suffer from  any of the disqualification  mentioned in sub-section (4) of section 42, or

 

(b) in the case of a company or firm, any of its directors or partners does not suffer from any of the said  disqualifications,

 

and a certificate to act  as a principal agent, chief agent or  special agent, as the case may be, for the   purpose  of  procuring insurance business shall be issued to him.

 

(2) A certificate issued under this section shall entitle the holder thereof to act as a principal agent, chief agent or special agent, as the case may be, for any insurer.

 

(3) A certificate issued under this section shall remain in force for  a period of twelve months only from the date of issue, but shall, on application made in this behalf, be renewed from year to year on production of a certificate from the insurer concerned that the provisions of clauses 2  and 3 of Part A of the Sixth Schedule  in the case of a principal agent, the   provisions of clauses  2 and 4 of Part B of the said Schedule  in the case of a chief agent, and   the provisions of clauses 2 and 3  of Part C of the said Schedule in the case of a special agent, have been complied with, and on payment of the prescribed fee, which shall not be more than twenty-five rupees, in the case of a principal agent or a chief agent, and ten  rupees in the case of a special agent, and an additional fee of the prescribed amount not exceeding five rupees by way of penalty, in cases where the application for renewal of the  certificate does not reach the issuing authority before the date on which the certificate  ceases to remain in force :

               

Provided that where the applicant is an individual, he does not suffer from any of the disqualifications mentioned in clauses (b) to (d) of sub-section (4) of section 42, and where the applicant is a company or a firm, any of its directors or partners does not suffer from any of the said disqualifications.

 

(4) Where it is found that the principal agent, chief agent or special agent being an individual is, being  a company or firm contains  a director or partner who is, suffering from any of the disqualifications mentioned in sub-section ( 4 ) of section 42  without prejudice to any other penalty to which he may be liable, the Controller shall, and where a principal agent, chief  agent or special agent has contravened any of the provisions of this Act may, cancel the certificate issued under this   section to such principal agent, chief agent or special agent.

 

(5) The authority which issued any certificate under this section may issue a duplicate certificate to replace a certificate lose, destroyed or mutilated on payment of the prescribed fee, which shall not be more than two rupees.

 

(6) Any person who acts as a principal agent, chief agent or special agent, without holding a certificate issued under this section to act  as such, shall be punishable with fine which  may extend to five hundred rupees, and any   insurer or any person  acting on behalf of any insurer, who appoints  as a principal agent, chief agent or special  agent any person  not entitled  to act as such or transacts any insurance business in  India through any such person, shall be punishable with fine which may extend to one thousand rupees.

 

(7) Where the person contravening sub-section  (6) is a company or a firm, then without prejudice to any other proceedings which may be taken against the company or firm, every director, manager, secretary or any other officer of the company, and the company, and every partner of the firm  who is knowingly a party to such contravention shall be punishable with fine which  may extend to five hundred rupees.

 

 

(8) The provisions of  sub-sections (6) and (7) shall not  take effect until  the expiry  of six months from the commencement of the Insurance  ( Amendment ) Act, 1950.]

 

[a] Section 42-A was inserted by the Insurance (Amendment) Act, 1950 (47 of 1950), Section 33 (1-9-1950).

 

 

 

a*[42B.            Regulation of employment of principal agents.-

 

(1) No insurer shall, after the expiration of seven years from the commencement of the Insurance  ( Amendment ) Act, 1950, appoint, or transact any insurance business in India, through  a principal agent.

 

(2) Every contract between an insurer and a principal agent shall be in writing and the terms contained in Part  A of the Sixth Schedule shall be deemed to be incorporated in and form part of every such contract.

 

(3) No insurer shall, after the commencement of the Insurance (Amendment) Act, 1950, appoint any person as a principal agent except in a presidency-town unless the appointment is by way of renewal of any contract subsisting at  such commencement.

 

(4) Within sixty days of the commencement of the Insurance (Amendment) Act, 1950, every principal   agent shall file with the insurer concerned a full list of insurance agents employed by him indicating the terms of the contract between  the principal agent and each of such  insurance agents, and if any principal  agent fails to file such a list within the period  specified, any commission payable to such principal agent on premiums received from   the dated of expiry  of the  said  period of sixty days until the date of the filing  of the  said list shall, notwithstanding  anything in any contract to the contrary, cease to be so payable.

 

(5) A certified copy of every contract as is referred to in sub-section (2) shall be furnished by the insurer to the Controller within thirty days of his entering into such contract and intimation of any change  in any such contract shall be furnished by the insurer with full particulars  thereof to the Controller within thirty days of the making of any such change.

 

(6) If the commission due to any insurance agent in respect of any general insurance business procured by such agent is not paid by the principal agent for any reason, the insurer may pay the insurance agent the commission so due and recover the amount so paid from the principal agent concerned.

 

(7) Every contract as is referred to in sub-section (2), subsisting at the commencement of the Insurance  ( Amendment ) Act, 1950, shall with respect to terms regarding remuneration be deemed to have been so altered as to be in accordance with the provisions of sub-section (4) of section 40A.

 

(8) If any dispute arises as to whether a person is or was a principal agent, the matter shall be referred to the Controller, whose decision shall be final.

 

(9) Every insurer shall maintain a register in which the name and address of every principal agent appointed  by him, the date of such appointment and the date, if any, on which the appointment ceased shall be entered.]

 

[a] Section 42-B was inserted by the Insurance (Amendment) Act, 1950  (47 of 1950), Section 33 (1-9-1950).

 

 

OBJECTS AND REASONS

 

Sub-sections (1) and (3).-- "We think that the system of employing principal agents in general insurance business should be put an end to within a period of seven years, and during that period appointment of new principal agents should be confined to presidency-towns.We have amended the proposed Section 42B accordingly." -- S.C.R.Gazette of India, 1950, Pt.II, Sec.2, page 101.

 

 

a*[42C.            Regulation of employment of chief agents and special agents.-

 

(1) Every contract between an insurer carrying on life insurance business and a chief agent shall be in writing, and shall specify the area (not being less in extent than a district or the equivalent thereof) for which the chief agent is appointed, and the terms contained in Part  B of the Sixth  Schedule shall be deemed to be incorporated in, and form part of, every such contract.

 

(2) No chief agent shall, either directly or through insurance agents or special agents  employed by or through him procure life insurance  business  for the insurer in any area outside the area for which he has been appointed or in any area for which another chief agent has been  appointed or in any  neither the head office not any branch office of the insurer shall operate in any area for which a chief agent has been appointed :

 

Provided that nothing in this sub-section shall be deemed to prohibit the head office of an insurer which had been operating at the commencement  of the Insurance (Amendment) Act, 1950, for a period of not less than ten years before such commencement within the  municipal limits of any town where the head office is situate and a chief agent who, in pursuance of an agreement in writing had been  operating for a similar period within such limits from continuing  to operate within  the said limits :

 

Provided further that nothing in this sub-section shall, be deemed to prohibit an insurance agent from procuring life insurance business in or from any area and submitting the proposals direct to the principal office of the insurer in b*[India]

 

(3) Within sixty days of the commencement of the Insurance (Amendment) Act, 1950, every chief agent  shall file with the insurer concerned a full list of the insurance agents employed by him,.indicating the terms of the contract between  the chief agent and each of such insurance agents and the business secured by each of such agents, and if any  chief agent fails to file such a list within the period  specified, any commission payable to such chief  agent on premiums received from the date of the expiry of the said period  of sixty days until the date of the  filing of the said list shall, notwithstanding  anything in any contract to the contrary, cease to be so payable.

 

(4) Every contract between  an insurer carrying on life insurance business and a  special  agent, or between a chief agent of such insurer and a special agent, shall be in writing and the terms  contained in Part C of the Sixth Schedule shall be deemed to be incorporated in, and form part of, every such contract :

 

Provided  that the controller may, in the case of a contract between a co-operative life insurance society as defined  in clause (b) of sub-section (1) of section 95 and a co-operative society registered under the Indian  Co-operative  Societies Act, 1912 (2 of 1912), or  under any other law for the time being in force and acting as a special agent, alter, to such extent as he thinks fit, all or any of the said terms.

 

(5) A certified copy of every contract as is referred to in sub-section  (1) or sub-section  (4) shall be furnished by the insurer or the chief agent to the Controller within thirty days of his entering into such contract, and intimation of any change in any such contract shall be furnished by the insurer or the chief agent with full particulars thereof to the Controller within thirty days of the making of any such change.

                 

(6) No such contract as is referred to in sub-section (1) or sub-section (4) shall be entered into or renewed for a period exceeding ten years at any one time, and notwithstanding the terms of any contract to the contrary, no option to renew any such contract given to any of the parties shall be enforceable without the consent of the other.

 

(7) Every contract between an insurer and a person acting on behalf of such insurer who before the commencement of the Insurance (Amendment) Act, 1950,  has been employing insurance agents for the purpose of life insurance business, which is subsisting on such commencement, shall terminate after the expiration of ten years from such commencement, if it does not terminate earlier :

 

Provided that every such contract shall be modified by the parties before the 1st day of January, 1951, to bring it into conformity with this Act, and any such modification shall --

 

(i) as respects remuneration, whether in respect  of business already procured or in respect of business to be procured thereafter, be such as may be mutually agreed upon between the parties, subject in the case of remuneration payable  on business procured  before  such commencement to a maximum of an over-riding commission of two and  a half per cent.plus a further commission not exceeding three and three-quarters per cent.on premiums in respect of which no commission is payable to any insurance agent ;

 

(ii) be deemed to include all the term  specified  in  Part B  or  Part C of the Sixth   Schedule, as the case may be :

 

Provided further that, in the event of any dispute as to the terms of any fresh contract, the matter shall be referred to arbitration.

 

(8) Any such contract as is referred to in sub-section (7) which was subsisting on the 1st day of January, 1949, but has terminated or has been terminated before the commencement of the Insurance  (Amendment)  Act, 1950, shall be subject to the maximum limits  specified  in clause  (I) of the  proviso to sub-section (7) as respect remuneration, if any, payable on business procured before  the termination of the contract.

               

(9) Nothing in this section shall be deemed to prevent any special agent from receiving any renewal commission on policies effected through him as an insurance agent at any time before his appointment as such special agent.

 

(10) If any dispute arises as to whether a person  is or was a chief agent or a special  agent for the purpose  of this Act, the matter shall be referred to the Controller whose decision shall  be final.

               

(11) Every insurer shall maintain a register in which the name and address of every chief agent appointed   by him, the  date on which  the appointment was made and the date, if any, on which the appointment ceased shall be entered, and a separate register in which similar particulars  relating to every  special agent shall be entered, and every chief agent shall maintain a register in which similar particular relating  to every special agent appointed by him shall be entered.]

[a] Section 42-C was inserted by the Insurance (Amendment) Act, 1950  (47 of 1950), Section 33 (1-9-1950).

 

[b] Substituted for "the States" by the Jammu and Kashmir (Extension of Laws) Act, 1956

(62 of 1956), Section 2 and Schedule (1-11-1956).

 

OBJECTS AND REASONS

 

"In our opinion there is no need to terminate immediately existing contracts between insurers and chief agents, but they should, in any event, be terminated after the expiry of ten years from the commencement of the Amending Act.We also think that in respect of the commission payable to chief agents on renewal premiums paid on policies already secured, the rate should be fixed in the Bill itself.The proposed section 42C has been amended in this behalf."  --- S.C.R.Gazette of India, 1950, Pt.II, S.2, page 101.

 

 

43.Register of insurance agents

.-

 

(1) Every insurer and every person who acting on behalf of an insurer employs a*[…….] insurance agents shall maintain a register showing  the name and address of every a*[…….] insurance  agent  appointed by him and the  date on which his appointment  began and the date,  if any, on which  his appointment ceased.

 

b*[…………..(2) and (3) Omitted……………………]

 

[a] The word "licensed" was omitted by the Insurance (Amendment) Act, 1941 (13 of 1941), Section 29 (8-4-1941).

 

[b] Sub-sections (2) and (3) were omitted, ibid, 1957 (35 of 1957), Section 4 (with retrospective effect from 1-9-1957).

 

a*[

44.Prohibition of cessation if payment of commission

.-

 

(1) Notwithstanding anything to the contrary contained in any contract between any person and an insurance agent providing for the forfeiture or stoppage of payment of renewal commission to such  insurance  agent,  no such person shall, in respect of life  insurance  business transacted in India refuse payment to an insurance agent of commission due to him on renewal premium under the agreement by reason  only of the termination of his agreement, except for fraud :

 

Provided that -

 

(a) such agent ceases to act for the insurer concerned after the Central Government has notified in the Official Gazette that it is satisfied that the circumstances in which the said insurer is placed are such  as to justify the agent's ceasing to act for him; or

 

(b) such agent has served the insurer  continually  and exclusively in respect of life insurance business for at least five years and policies assuring a total sum  of not less than fifty  thousand rupees effected though him for the insurer were in force on a date one  year before his ceasing to act as such agent for the insurer, and that the commission on renewal premiums due to him does not exceed four per cent, in any case; or

 

(c) such agent has served the insurer  continually and exclusively for at least ten years and after his ceasing to act as such agent he does not directly or indirectly solicit or procure insurance business for any other person.

 

Explanation.- For the purpose of this sub-section, service of an insurance agent under a chief agent of the insurer, whether before or after the commencement of the Insurance (Amendment) Act, 1950, shall be deemed to be service under the insurer.

 

(2) Any commission payable to an insurance agent under the provisions of clauses  (b) and (c) of the proviso to sub-section (1) shall, notwithstanding the death of the agent, continue to be payable to his heirs  for so long as such commission would have been payable  had such  insurance agent been alive.]

 

[a] Substituted for the former Section by the Insurance (Amendment) Act, 1950 (47 of 1950), Section 34 (1-6-1950).

 

 

OBJECTS AND REASONS

 

"We are of the opinion that the commission payable to an agent in respect of renewal premiums paid on policies secured by him should continue to be payable, although he has ceased to work for the insurer, provided he had worked continuously for the insurer for five years and had built up a business in force of fifty thousand rupees.The renewal commission should, however, not exceed four per cent.We have also provided that on the death of such an agent, the commission should continue to be payable to the heirs for so long as it would have been paid had the deceased been alive." --  S.C.R., Gazette of India, 1950, Pt.II, Sec.2, p.101 :

 

 

 

a*[44A.            Power to call for information.-

 

For the purpose of ensuring compliance with the provisions of sections 40A, 40B, 40C, 42B and 42C the Controller may by notice -

 

(a) require from an insurer, principal agent, chief  agent or special agent such  information, certified if so required by an auditor or actuary, as he may consider necessary;

 

(b) require an insurer, principal agent, chief  agent or special agent to submit, for his examination  at the principal place of business of the insurer in  b*[India], any book of account, register or other  document, or to supply any statement  which may be specified in the notice;

 

(c) examine any officer of an insurer or a principal agent, chief agent or special agent of oath, in relation  to any such information, book, register, document  or statement and administer the oath accordingly ;

 

and  an insurer, principal agent, chief agent  or special  agent  shall  comply with any such requirement within such time as may be specified in the notice].

                [a] Inserted by the Insurance (Amendment) Act, 1950 (47 of 1950), Section 35 (1-9-1950).

[b] Substituted for "the States" by the Jammu and Kashmir (Extension of Laws) Act, 1956 (62 of 1956), Section 2 and Schedule (1-11-1956).

 

 

SPECIAL PROVISIONS OF LAW

 

 

45.Policy not to be called in question on ground of mis-statement after two years

.-

 

No policy of the life insurance effected before the commencement of this Act shall after the expiry of two years from the date of commencement of this Act and no policy of life insurance effected after the coming into force of this Act, shall, after the expiry of two years from the date on which it was effected, be  called in question by an  insurer on the ground that a statement made in the proposal for insurance or in any report of a medical officer, or referee, or friend of the insured, or in any other document leading to the issue of the policy, was  inaccurate or false, unless the insurer shows that such statement a*[was  on a material matter or suppressed facts  which it was material to  disclose and that it was fraudulently made] by the policy-holder and that the policy -holder knew at the time of making it that the statement was false b*[or that it suppressed facts which it was material to disclose]:

 

b*[Provided that nothing in this section shall prevent the insurer from calling for proof of age at any time if he is entitled to do so, and no policy shall be deemed to be called in question merely because the terms of the policy are adjusted on subsequent proof that the age of the life insured was incorrectly stated in the proposal.]

 

[a] Substituted for "was on a material matter and fraudulently made" by the Insurance (Amendment) Act, 1941 (13 of 1941), Section 31 (8-4-1941).

 

                        [b] Inserted, ibid.

 

 

46.Application of the law in force in India to policies issued in India

.-

 

The holder of a policy of insurance issued by an insurer in respect of insurance business transacted in  a*[India] after the commencement of this Act shall have the right, notwithstanding to the contrary contained in the policy or in any agreement relating thereto, to receive payment in a*[India] of any sum secured thereby and to sue for any relief in respect of the policy in any Court of competent jurisdiction in  a*[India] any question of law arising in connection with any such policy shall be determined according to the law in force in a*[India].

 

b*[Provided that nothing in this Section shall apply to a policy of marine insurance].

 

[a] Substituted for "the States" by the Jammu and Kashmir (Extension of Laws) Act, 1956

(62 of 1956), Section 2 and Schedule (1-11-1956).

 

                        [b] Inserted by the Insurance (Amendment) Act, 1944 (7 of 1944), Section 2.

 

OBJECTS AND REASONS

 

Amendment made in 1944.-- "The application of this Section to policies of marine insurance seriously interferes with the normal business of marine insurers inasmuch as marine insurance contracts are international in scope and are affected mostly for the benefit of the consignees abroad who have the option of stipulating the place where contracts are intended to be carried out".This defect is now removed by the amendment made in 1944.--- See Gazette of India, 1944, Pt.V.P.30.

 

 

47.Payment of money into Court

.-

 

(1) Where in respect of any policy of life insurance maturing for payment an insurer is of opinion that by reason of conflicting claims to or insufficiency of proof of title to the amount secured thereby or for any other adequate reason it is impossible otherwise for the insurer to obtain a satisfactory discharge for the payment of such amount, a*[the insurer may], b*[………..] apply to pay the amount into the Court within the jurisdiction of which is situated the place at which such amount is payable under the terms of the policy or otherwise.

 

(2) A receipt granted by the Court for any such payment shall be a satisfactory discharge to the insurer for the payment of such amount.

 

(3) An application for permission to make into Court under this section shall be made by a petition verified by an affidavit signed by a principal officer of the insurer setting forth the following particulars, namely:-

                (a) the name of the insured person and his address;

                (b) if the insured person is deceased, the date and place of his death;

                (c) the nature of the policy and the amount secured by it;

(d) the name and address of each claimant so far as is known to the insured with details of every notice of claim received;

(e) the reasons why in the opinion of the insurer a satisfactory discharge cannot be obtained for the payment of the amount; and

(f) the address at which the insurer may be served with notice of any proceeding relating to disposal of the amount paid into Court.

 

(4) An application under this section shall not be entertained by the Court if the application is made before the expiry of six months c*[from the maturing of the policy by survival, or from the date of receipt of the notice by the insurer of the death of the insured, as the case may be.]

               

(5) If it appears to the Court that a satisfactory discharge for the payment of the amount cannot otherwise by the insurer it shall allow the amount to be paid into Court and shall invest the amount in government securities pending its disposal.

 

(6) The insurer shall transmit to the Court every notice of claim received after the making of the application under sub-section (3), and any payment required by the Court as costs of the proceedings or otherwise in connection with the disposal of the amount paid into Court shall as to the costs of the application under sub-section (3) be borne by the insurer and as to any other costs be in the discretion of the Court.

 

(7) The Court shall cause notice to be given to every ascertained claimant of the fact that the amount has been paid into Court, and shall cause notice at the cost of any claimant applying to withdraw the amount to be given to every ascertained claimant.

 

(8) The Court shall decide all questions relating to the disposal of claims to the amount paid into Court.

 

 

[a] Substituted for "the insurer shall" by the Insurance (Amendment) Act, 1941 (13 of 1941), Section 32 (8-4-1941).

 

[b] The words "before the expiry of nine months from the date of the maturing of the policy or, where the circumstances are such that the insurer cannot be immediately aware of such maturing, from the date on which notice of such maturing is given to the insurer" were omitted, ibid, 1950 (47 of 1950), Section 36 (1-6-1950).

 

[c] Substituted for "from the death of the insured, or the maturing of the policy by survival" ibid, 1939 (11 of 1939), Section 18.

 

 

 

a*[47A.            Claims on small life insurance policies.-

 

(1) In the event of any dispute relating to the settlement of a claim on a policy of life insurance assuring a sum of not exceeding two thousand rupees (exclusive of any profit or bonus not being a guaranteed profit or bonus) issued by an insurer in respect of insurance business transacted in India, arising between a claimant under the policy and the insurer who is issued the policy or has otherwise assumed liability in respect thereof, the dispute may at the opinion of the claimant be referred to the Controller for decision, and the Controller may, after giving an opportunity to the parties to be heard and after making such further inquiries as he may think fit, decide the matter.

 

(2) The decision of the Controller under this sub-section shall be final and shall not be called in question in any Court, and may be executed by the Court which would have competent to decide the dispute if it had not been referred to the Controller as if it were a decree passed by that Court.

 

(3) There shall be charged and collected in respect of the duties of the Controller under this Section such fees whether by way of percentage or otherwise as may be prescribed.]

 

                        [a] Inserted by the Insurance (Amendment) Act, 1950 (47 of 1950), Section 37 (1-9-1950).

 

 

48.Directors of insurers being companies

.-

 

(1) Where the insurer is a company incorporated under the Indian Companies Act, 1913, a*[or under the Indian Companies Act, 1882, or under the Indian Companies Act, 1866, or under any Act repealed thereby], and carries on the business of life insurance, not less than one-fourth of the whole number of the directors of the company b*[the number to be elected not being less than two in any case] c*[shall notwithstanding anything in the contrary in the Articles of Association of the company be elected in the prescribed manner by the holders of polices of life insurance issued by the company.

 

                        [a] Inserted by the Insurance (Amendment) Act, 1939 (11 of 1939), Section 19.

 

                        [b] Inserted, ibid, 1950 (Act 47 of 1950), Section 38 (1-6-1950).

 

                        [c] Substituted for certain words, ibid, 1941 (13 of 1941), Section 33 (8-4-1941).

 

a*[(2) Only and all persons holding otherwise than as assignees policies of life insurance issued by the company of such minimum amount and having been in force for such minimum period as may be prescribed shall b*[unless disqualified under sub-section (2A)] be eligible for election as directors under sub-section (1), and only all the persons holding policies of life insurance issued by the company and having been in force at the time of the election for not less than six months shall be eligible to vote at such elections:

 

Provided that the assignment of a policy who took out the policy shall not disqualify that person for being eligible for election as a director under sub-section (2).]

 

                        [a] Inserted by Act (13 of 1941), Section 33 (8-4-1941).

 

                        [b] Inserted by Act (7 of 1944), Section 3 (7-3-1944).

 

a*[(2A) A person shall be ineligible for election as a director under sub-section(1), of any company if he is a director, officer, employee, or legal or technical adviser of that company or of any other insurer, b*[…….] and shall cease to be a director under sub-section (1) if after election he acquires any disqualification specified in this sub-section or no longer holds the qualifications required by sub-section (2):

 

Provided that nothing in this sub-section shall disqualify a person who is an elected director under sub-section (1) and is not otherwise disqualified under this sub-section being re-elected:

 

c*[Provided further that the Controller may exempt any director of a subsidiary company of the insurer from any qualification imposed by this sub-section.]]

 

                        [a] Inserted by the Insurance (Amendment) Act, 1944  (7 of 1944), Section 3 (7-3-1944).

 

[b] The words "or is an insurance agent or employer of insurance agents" were omitted, ibid, 1946 (6 of 1946), Section 23 (20-3-1946).

 

                        [c] Substituted for the Second Proviso, ibid, 1950 (47 of 1950), Section 38 (1-6-1950).

 

a*[(3) The Central government may, for such period, or to such extent and subject to such conditions as may be specified by it in this behalf exempt from the operation of this section,---

 

(a) any Mutual Insurance Company as defined in clause (a) of sub-sec.(1) of Section 95, in respect of which the b*[Controller] certifies that in his opinion owing to the conditions governing membership of the company or to the nature of the insurance contracts undertaken by it the application of the c*[provisions of the this section] to the company in impracticable, or

 

(b) any company in respect of which the  b*[Controller] certifies that in his opinion the company, having been taken all reasonable steps to achieve compliance with the provisions of this section, has been unable to obtain the required numbers of directors with the required qualifications.

 

                                [a] Inserted by the Insurance (Amendment) Act, 1941  (13 of 1941), Section 33

(8-4-1941).

 

[b] Substituted for the words "Superintendent of Insurance", ibid, 1950  (47 of 1950), Section 4  (1-6-1950).

 

                                [c] Substituted for the words "provisions of this sub-section",  ibid, Section 38

(1-6-1950).

 

 

a*[ b*[ (4)] This Section shall not take effect, in respect of any company in existence at the commencement of this Act, until the expiry of one year therefrom, and  in respect  of any company incorporated after the commencement of this Act, until the expiry of two years from the date of registration to carry on life insurance business].

 

[a] Substituted for the former sub-section by the Insurance (Amendment) Act, 1939  (11 of 1939), Section 19.

               

[b] Original sub-section (2) was renumbered as (4), ibid.1941 (13 of 1941), Section 33 (8-4-1941).

 

 

OBJECTS AND REASONS

 

Sub-section (2) as inserted in 1941 "renders ineligible for election as policy-holders' directors persons who hold policies of life  insurance merely on assignment to them, and disqualify as electors persons whose policies have been taken out only in the preceding three  months".-S.C.R., Gazette of India, 1941, Pt.V, p.79.

 

Sub-section (2A).- "Under Section 48 (2) employees and agents of the insurance companies are eligible for  appointment as policy-holders' directors.This is destructive of the object of Section 48 since a policy-holder, who is an employee or agent of an insurance company, cannot be expected to safeguard the interests of policy-holders where those interests conflict with those of the shareholders.Such persons should, therefore, be disqualified from becoming policy-holders' directors": This defect is now removed by the amendments made in 1944-S.O.R., Gazette of India, 1944, Pt.V, p.30.

 

 

 

a*[48A.            Life insurance agents not to be directors of life insurance companies.-

 

No insurance agent who solicits or procures life insurance business, and b*[no chief agent or special agent] shall be eligible to be or remain a director of any insurance company carrying on life insurance business:

 

Provided that any director holding office at the commencement of the Insurance (Amendment) Act, 1946,  shall not become ineligible to remain a director by reason of this section the expiry of six months from the commencement of that Act.]

 

                        [a] Inserted by the Insurance (Amendment) Act, 1946 (6 of 1946), Section 24 (20-3-1946).

 

[b] Substituted for "no person acting on behalf of an insurer who, for the purpose of life insurance business, employs insurance agents," ibid, 1950 (47 of 1950), Section 39 (1-6-1950).

 

OBJECTS AND REASONS

 

"It is considered undesirable that a life insurance agent or an employer of insurance agents should be director of any company transacting life insurance business." -- S.O.R.Gazette of India, 1946, Pt.V, p.13.

 

 a*[48B.           Further provision regarding directors.-

 

(1) An insurer specified in sub-clause (b) of clause (9) of section 2 and carrying on life insurance business hall not have a common director with another such insurer.

 

(2) The Central Government may, for such period, to such extent and subject to such conditions as it may specify, exempt from the operation of this section---

 

                (a) any insurer, who is a subsidiary company of another insurer, or

 

(b) two or more insurers, for the purpose of facilitating their amalgamation or the transfer of business of one insurer to the other].

 

[a] Sections 48B was inserted by the Insurance (Amendment) Act, 1950 (47 of 1950), Section 40 (1-6-1950).

 

 

48C.Appointment of additional directors.—

 

[Omitted by the Insurance (Amendment) Act, 1968 (62 of 1968), Section 21 (1-6-1969)].

 

 

a*[

49.Restriction on dividends and bonuses

.-

 

a*[(1) No insurer, being an insurer specified in sub-clause (a) (ii) or sub-clause (b) of clause (9) of section 2, who carries on the business of life insurance or any other class or sub-class of insurance business to which Section 13 applies shall, for the purpose of declaring or paying any dividend to shareholders or any bonus to policy-holders or of making any payment in service of any debentures, utilize directly or indirectly any portion of the life insurance fund or of the fund of such other class or sub-class of insurance business, as the case may be, except a surplus shown in the valuation balance sheet in Form I as set forth in the Fourth Schedule submitted to the c*[Controller] as part of the abstract referred to in section 15 as a result of an acturial valuation of the assets and liabilities of the insurer; not shall be increase such surplus by contributions out of any reserve fund or otherwise unless such contributions have been brought in as revenue through the revenue account applicable to that class or sub-class of insurance business on or before the date of the valuation aforesaid, except when the reserve fund is made up solely of transfers from similar surpluses disclosed by valuations in respect of which returns have been submitted to the  c*[Controller] under section 15 of this Act or to the Central Government under section 11 of the Indian Life Assurance Companies Act, 1912 :

 

Provided that payments made out of any such surplus in service of any debentures shall not exceed fifty per cent.of such surplus including any payment by way of interest on the debentures, and interest paid on the debentures shall not exceed  ten per cent.of any such surplus except when the interest paid on the debentures is offset against the interest credited to the fund or funds concerned in deciding the interest basis adopted in the valuation disclosing the aforesaid surplus:]

 

d*[Provided further that the share of any such surplus allocated to or reserved for the shareholders (including any amount for the payment of dividends guaranteed to them, whether by way of first charge or otherwise) shall not exceed seven and a half per cent, of such surplus.]

 

d*[(2) For the purposes of sub-section (1), the actual amount of income-tax deducted at source during the period following the date as at which the last preceding valuation was made and preceding the date as at which the valuation in question is made may be added to such surplus after deducting an estimated amount for income-tax on such surplus, such addition and deduction being shown in paragraph 8 (1) of the abstract prepared in accordance with Part II of the Fourth Schedule to this Act.]

 

                        [a] Substituted by the Insurance (Amendment) Act, 1941 (13 of 1941), Section 34 (8-4-1941).

 

[b] Section 49 was renumbered as sub-section (1) of that Section, ibid, 1950 (47 of 1950), Section 41 (1-6-1950).

 

                        [c] Substituted for "Superintendent of Insurance", ibid  Section 4 (1-6-1950).

 

                        [d] Inserted, ibid, Section 41.

 

 

50.Notice of options available to the assured on the lapsing of a policy

.-

 

An insurer shall, a*[before the expiry of three months from the date on which the premiums in respect of a policy of life insurance were payable but not paid], give notice to the policy-holder informing him of the options available to him b*[unless these are set forth in the policy].

 

[a] Substituted for "within three months of the lapsing of a policy of life insurance" by the Insurance (Ad) Act, 1939 (11 of 1939), Section 20.

                       

[b]  Added, ibid, 1941 (13 of 1941), Section 35 (8-4-1941).

 

 

51.Supply of copies of proposals and medical reports

.-

 

Every insurer shall, on application by a policy-holder and on payment of a fee not exceeding one rupee, supply to the policy-holder certified copies of the questions put to him and his answers thereto contained in his proposal for insurance and in the medical report supplied in connection therewith.

 

 

52.Prohibition of business on dividing principle

.-

 

a*[(1)] No insurer shall after the commencement of this Act begin, or after three years from that date continue to carry on, any business upon the dividing principle, that is to say, on the principle that the benefit secured by a policy is not fixed but depends either wholly or partly on the results of a distribution of certain sums amongst policies becoming claims within certain time-limits, or on the principle that the premiums payable by a policy-holder depend wholly or partly on the number of policies becoming claims within certain time-limits :

 

Provided that nothing in this section shall be deemed to prevent an insurer from allocating bonuses to holders of policies of life insurance as a result of a periodical acturial valuation either as reversionary additions to the sums insured or as immediate cash bonuses or otherwise :

 

Provided further that an insurer who continues to carry on insurance business on the dividing principle after the commencement of this Act shall withhold from distribution a sum of not less than forty per cent.of the premiums received during each year after the commencement of this Act in which such business is continued so as to make up the amount required for investment under Section 27.

 

b*[(2) On the expiry of the period of three years referred to in sub-section (1), or on the insurer's ceasing before such expiry but at any time after the commencement of the Insurance (Amendment) Act, 1941, to carry on business on the dividing principle, the insurer shall forthwith cause an investigation to be made by an actuary, who shall determine the amount accumulated out of the contributions received from the holders of all policies to which the dividing principle applies and the extent of the claims of those policy-holders against the realisable assets of the insurer, and shall, before the expiration of six months from the date on which he is entrusted with the investigation, make recommendations regarding the distribution, whether by cash payments or by the allocation of paid-up policies or by a combination of both methods, of such assets as he finds to appertain to such policy-holders; and the insurer shall, before the expiry of six months from the date on which the actuary makes his recommendations, distribute such assets in accordance with those recommendations.]

 

b*[(3) Where at any time prior to the commencement of the Insurance (Amendment) Act, 1941, an insurer has ceased to carry on business on the dividing principle, the insurer shall, before the expiration of two months from the commencement of that Act, report to the c*[Controller] the measures taken or proposed by him for the distribution among holders of policies to which the dividing principle applies of the assets due to them; and the c*[Controller] may either sanction such measurers or refuse his sanction, and if he refuses his sanction or if the insurer does not report to him as required by this sub-section the provisions of sub-section (2) shall apply to the insurer forthwith.]

 

 

[a] Section 52 was renumbered as sub-section (1) of that Section by the Insurance (Amendment) Act, 1941 (13 of 1941), Section 35 (8-4-1941).

 

                        [b] Sub-sections (2) and (3) were inserted, ibid.

 

[c] Substituted for "Superintendent of Insurance", ibid, 1950 (47 of 1950), Section 4 (1-6-1950).

 

a*[MANAGEMENT BY ADMINISTRATOR

 

52A.    When Administrator for management of insurance business may be appointed.-

 

(1) If at any time the Controller has reason to believe that an insurer carrying on life insurance business is acting in a manner likely to be prejudicial to the interests of holders of life insurance policies, he may, after giving such opportunity to the insurer to be heard as he thinks fit, make a report thereon to the Central Government.

 

(2) The Central Government, if it is of opinion after considering the report that it is necessary or proper to do so, may appoint an Administrator to manage the affairs of the insurer under the direction and control of the Controller.

 

(3) The Administrator shall receive such remuneration as the Central Government may direct and the Central Government may at any time cancel the appointment and appoint some other person as Administrator.

 

(4) The management of the business of the insurer shall as on and after the date of appointment of the Administrator vest in such Administrator, but except with the leave of the Controller the Administrator shall not issue any further policies.

 

(5) As on and after the date of appointment of the Administrator any person vested with any such management immediately prior to that date shall be divested of that management.

 

(6) The Controller may issue such directions to the Administrator as to his powers and duties as he deems desirable in the circumstances of the case, and the Administrator may apply to the Controller at any time for instructions as to the manner in which he shall conduct the management of the business of the insurer or in relation to any matter arising in the course of such management.]

 

[a] The heading and section 52A was inserted by the Insurance (Amendment) Act, 1950 (47 of 1950), Section 42 (1-6-1950).

 

 

a*[52B.            Powers and duties of the Administrator.-

 

(1) The Administrator shall conduct the management of the business of the insurer with the greatest economy compatible with efficiency and shall, as soon as may be possible, file with the Controller a report stating which of the following courses is in the circumstances most advantageous to the general interests of the holders of life insurance policies, namely:-

 

                (a) the transfer of the business of the insurer to some other insurer;

 

(b) the carrying on of its business by the insurer (whether the policies of the business continued for the original sum insured with the addition of bonuses that attach to the policies or for reduced amounts);

 

                (c) the winding up of the insurer; or

 

                (d) such other course as he deems advisable.

 

(2) On the filing of the report with the Controller, the Controller may take such action as he  thinks fit for promoting the interests of the holders of life insurance policies in general.

 

(3) Any order passed by the Controller under sub-section (2) shall be binding on all persons concerned, and shall have effect notwithstanding anything in the memorandum or articles of association of the insurer, of a company.]

 

[a] Section52B was inserted by the Insurance (Amendment) Act, 1950 (47 of 1950), Section 42 (1-6-1950).

 

                       

a*[52BB.         Powers of Administrator respecting property liable to attachment under section 106.-

 

(1) If the Administrator is satisfied that any person has rendered himself liable to be proceeded against under section 106, he may, pending the institution of proceedings against such person under that section, by order in writing, prohibit him or any other person from transferring or otherwise disposing of any property which, in the opinion of the Administrator, would be liable to attachment in proceedings under that section.

 

(2) Any person aggrieved by an order made by the Administrator under sub-section (1) may, within fourteen days from the date on which the order is served on him, appeal against such order to the Central Government, and the Central Government may pass such order thereon as it thinks fit.

 

(3) An order made by the Administrator under sub-section (1) shall, subject to any order made by the Central Government on appeal, be in force for a period of three months from the date of the order unless, before the expiry of the said period, and application is made under sub-section (1) of section 106 to the Court competent to exercise jurisdiction under that sub-section, and when such and application is made, the order shall, subject to any order made by that Court, continue in force as if it were an order of attachment made by that Court in proceedings under that section.

 

(4) An order made by the Administrator under this section shall,-

 

(a) in the case of an order affecting a corporation or firm, be served in the manner provided for the service of summons in Rule 2 of Order XXIX or Rule 3 of Order XXX, as the case may be, in the First Schedule to the Code of Civil Procedure, 1908 (5 of 1908), and

 

(b) in the case of an order affecting a person not being a corporation or firm, be served on such person--

 

                                (i) personally, by delivering or tendering to him the order, or

 

                                (ii) by post, or

 

(iii) where the person cannot be found, by leaving a copy of the order with some adult male member of his family or by affixing such copy to some conspicuous part of the premises in which he is known to have last resided or carried on business or personally worked for gain,

 

and every such order shall also be published in the Official Gazette.

 

(5) If any question arises whether a person was duly served with an order under sub-section (4), the publication of the order in the Official Gazette shall be conclusive proof that the order was so served, and failure to comply with the provisions of clause (a) or clause (b) of sub-section (4) shall not affect the validity of the order.

 

(6) Notwithstanding anything contained in this section, any property in respect of which an order has been made by the Administrator may, with the previous permission of the Administrator and subject to such terms and conditions as he may impose, be transferred or otherwise disposed of.

 

(7) Notwithstanding anything contained in any other law for the time being in force, the transfer or other disposition of any property in contravention of any order made by the Administrator under this section or of any terms and conditions imposed by him shall be void.

 

(8) For the purpose of enabling him to form an opinion as to whether any property would be liable to attachment in proceedings under section 106 or for the purpose of enabling him to institute proceedings under that section, the Administrator may require any person to furnish information on such points or matters as, in the opinion of the Administrator, may be relevant for the purpose, and any person so required shall be deemed to be legally bound to furnish such information within the meaning of section 176 of the Indian Penal Code.

 

(9) The Administrator shall have all the powers of a Civil Court under the Code of Civil Procedure, 1908, while trying a suit in respect of the following matters, namely:-

 

                (a) summoning and enforcing the attendance of witness and examining them on oath;

                (b) requiring the production of documents; and

                (c) receiving evidence on affidavits;

 

and any proceeding before the Administrator under this section shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228 of the Indian Penal Code.

 

(10) Save as provided in this section or in section 106, and notwithstanding anything contained in any other law for the time being in force,-

 

(a) no suit or other legal proceeding shall lie in any Court to set aside or modify any order of the Administrator or the Central Government made under this section, and

 

(b) no Court shall pass any decree, grant any injunction or make any other order which shall have the effect or nullifying or affecting in any way any such order.]

 

[a] Section 52BB was inserted by the Insurance (Second Amendment) Act, 1955

(54 of 1955), Section 2 (1-11-1955).

 

 

a*[52C.Cancellation of contracts and agreements.-

 

The Administrator may, at the time during the continuance of his appointment with respect to an insurer and after giving an opportunity to the persons concerned to be heard, cancel or vary (either unconditionally or subject to such conditions as he thinks fit to impose) any contract or agreement (other than a policy) between the insurer and any other person which the Administrator is satisfied is prejudicial to the interests of holders of life insurance policies.]

 

[a] Section 52C was inserted by the Insurance (Amendment) Act, 1950 (47 of 1950), Section 42 (1-6-1950).

 

a*[52D.            Termination of appointment of Administrator.-

 

If at any time, on a report made by the Controller in this behalf, it appears to the Central Government that the purpose of the order appointing the Administrator has been fulfilled or that for any reason it is undersirable that the order of appointment should remain in force, the Central Government may cancel the order and thereupon the Administrator shall be divested of the management of the insurance business which shall, unless otherwise directed by the Central Government, again vest in the person in whom it was vested immediately prior to the date of appointment of the Administrator.]

 

[a] Section 52D was inserted by the Insurance (Amendment) Act, 1950 (47 of 1950), Section 42 (1-6-1950).

 

                       

a*[52E.            Finality of decision appointing Administrator.-

 

Any order or decision of the Central Government made in pursuance of section 52A or section 52D shall be final and shall not be called in question in any Court.]

 

[a] Section 52E was inserted by the Insurance (Amendment) Act, 1950 (47 of 1950), Section 42 (1-6-1950).

 

 

a*[52F. Penalty for withholding documents or property from Administrator.-

 

If any director or officer of the insurer or any other person fails to deliver to the Administrator any books of account, registers or any other documents in his custody relating to the business of the insurer the management of which has vested in the Administrator, or retains any property of such insurer, he shall be punishable with imprisonment which may extend to six months, or with fine which may extend to one thousand rupees, or with both.]

 

 

[a] Section 52F was inserted by the Insurance (Amendment) Act, 1950 (47 of 1950), Section 42 (1-6-1950).

 

 

a*[52G.            Protection of action taken under sections 52A to 52D.-

 

(1) No suit, prosecution or other legal proceeding shall lie against an Administrator for anything which is in good faith done or intended to be done in pursuance of b*[section 52A, section 52B, section 52BB or section 52C].

 

(2) No suit or other legal proceeding shall lie against the Central Government or the Controller for any damage caused or likely to be caused by anything which is in good faith done or intended to be done under section 52A, section 52B, or section 52D.]

 

[a] Section 52G were inserted by the Insurance (Amendment) Act, 1950 (47 of 1950), Section 42 (1-6-1950).

 

[b] Substituted for "Sections 52A to 52C inclusive" by the Insurance (Second Amendment), Act, 1955 (54 of 1955), Section 3 (1-11-1955).

 

 

 

a*[ACQUISITION OF THE UNDERTAKINGS OF INSURERS IN CERTAIN CASES

 

52H.    Power of Central Government to acquire undertakings of insurers in certain cases.-

 

(1) If, upon receipt of a report from the Controller, the Central Government is satisfied that an insurer,-

 

                (a) has persistently failed to comply with-

 

                                (i) any direction given to him under section 34, section 34F or section 34G, or

 

                                (ii) any order made under section 34E; or

 

(b) is being managed in a manner detrimental to the public interest or to the interests of his policy-holders, or shareholders,

and that-

               

                (i) in the public interest, or

 

(ii) in the interests of the policy-holder or shareholders of such insurer, it is necessary to acquire the undertaking of such insurer, the Central Government may, by notified order, acquire the undertaking of such insurer (hereafter in this section and in sections 52-I, 52J and 52N and in the Eighth Schedule referred to as the acquired insurer) with effect from such date as may be specified in the order (hereafter in this section and in sections 52-I and 52J and in the Eighth Schedule referred to as the appointed day) :

 

Provided that no undertaking of an insurer shall be so acquired unless such insurer has been given a reasonable opportunity of showing cause against the proposed action.

 

Explanation.- For the purposes of this section and of sections 52-I to 52-N-

 

                (a) "notified order" means an order published in the Official Gazette,

 

(b) "undertaking" in relation to an insurer incorporated outside India, means the undertaking of the insurer in India.

 

(2) Subject to the other provisions contained in this section and in sections 52-I to 52M, on the appointed day, all the assets and liabilities of the undertaking of the acquired insurer shall stand transferred to, and vest in, the Central Government.

 

(3) The assets and liabilities of the undertaking of the acquired insurer shall be deemed to include all rights, powers, authorities and privileges and all property, whether movable or immovable, including, in particular, cash balances, reserve funds, investments, deposits and all other interests and rights in, or arising out of, such property, as may be in the possession of, or held by, the acquired insurer immediately before the appointed day and all books, accounts and documents relating thereto, and shall also be deemed to include all debts, liabilities and obligations, of whatever kind, then existing of the acquired insurer.

 

(4) Notwithstanding anything contained in sub-section (2), the Central Government may, if it is satisfied that all the assets and liabilities of the undertaking of the acquired insurer should, instead of vesting in the Central Government, or continuing to so vest, vest in a corporation or company, whether established under the scheme made under section 52I or not (hereafter in this section and in sections 52-I to 52N and in the Eighth Schedule referred to as the acquiring insurer), by order, direct that the assets and liabilities of the said undertaking, shall vest in the acquiring insurer, either on the publication of the notified order or on such other date as may be specified in this behalf in the direction.

 

(5) Where the undertaking of the acquired insurer vest in an acquiring insurer under sub-section (4), the acquiring insurer shall, on and from the date of such vesting, be deemed to have become the transferee of the acquired insurer and all the rights and liabilities in relation to the acquired insurer shall, on and from the date of such vesting, be deemed to have been the rights and liabilities of such acquiring insurer.

 

(6) Unless otherwise expressly provided by or under this section or sections 52-I to 52-M, all contracts, deeds, bonds, agreements, powers of attorney, grants of legal representation and other instruments of whatever nature subsisting or having effect immediately before the appointed day and to which the acquired insurer is a party or which are in favour of the acquired insurer shall be of as full force and effect against or in favour, of the Central Government or, as the case may be, the acquiring insurer, and may be enforced or acted upon as fully and effectually as if in the place of the acquired insurer the Central Government or the acquiring insurer had been a party thereto or as if they had been issued in favour of the Central Government or the acquiring insurer, as the case may be.

 

(7) If, on the appointed day, any suit, appeal or other proceeding, of whatever nature, is pending by or against the acquired insurer, the same shall not abate, be discontinued or be, in any way, prejudicially affected by reason of the transfer of the undertaking of the acquired insurer or of anything contained in this section or in sections 52-I to 52M, but the suit, appeal or other proceeding may be continued, prosecuted and enforced by or against the Central Government or the acquiring insurer, as the case may be.]

 

[a] Heading and Section 52H inserted by the Insurance  (Amendment) Act, 1968  (62 of 1968), Section 22 (1-6-1969).

 

 

 

a*[52-I.           Power of Central Government to make scheme.-

 

(1) The Central Government may make a scheme for carrying out the purposes of sections 52H and 52J to 52M (both inclusive) in relation to the acquired insurer.

 

(2) In particular, and without prejudice to the generality of the foregoing power, the said scheme may provide for all or any of the following matters, namely:-

 

(a) transfer of the undertaking, including the property, assets and liabilities of the acquired insurer to an acquiring insurer, and the capital, constitution, name and office of the acquiring insurer;

 

(b) the constitution of the first Board of Management (by whatever name called) of the acquiring insurer and all such matters in connection therewith or incidental thereto as the Central Government may consider to be necessary or expedient;

 

(c) the continuance of the services of all the employees of the acquired insurer [excepting such of them as, not being workmen within the meaning of the Industrial Disputes Act, 1947, are specifically mentioned in the scheme] in the Central Government or in the acquiring insurer, as the case may be, on the same terms and conditions, so far as may be, as are specified in clauses (i) and (j) of sub-section (2) of section 37A so far as they may apply ;

 

(d) the continuance of the rights of any person who, on the appointed day, is entitled to, or is in receipt of, a pension or other superannuation or compassionate allowance or benefit from the acquired insurer or any provident, pension or other fund or any authority administering such fund to be paid by, and to receive from the Central Government or the acquiring insurer, as the case may be, or any provident, pension or other fund or any authority administering such fund, the same pension, allowance or benefit so long as he observes the conditions on which the pension, allowance or benefit so long as he observes the conditions on which the pension, allowance or benefit was granted, and if any question arises whether he has so observed such conditions, the question shall be determined by the Central Government and the decision of the Central Government thereon shall be final;

 

(e) the manner of payment to the acquired insurer in full satisfaction of his claim in relation to the compensation payable in accordance with the provisions of section 52J;

 

(f) the provision, if any, for completing the effectual transfer to the Central Government or the acquiring insurer of any asset or liability which forms part of the undertaking of acquired insurer in any country outside India;

               

(g) such incidental, consequential and supplemental matters as may be necessary to secure that the transfer of the undertaking, property, assets and liabilities of the acquired insurer to the Central Government or the acquiring insurer, as the case may be, is effectual and complete.

 

(3) The Central Government may, by notification in the Official Gazette, add to, amend or vary any scheme made under this section.

 

(4) Every scheme made under this section shall be published in the Official Gazette.

 

(5) Copies of every scheme made under this section shall be laid before each House of Parliament as soon as may be after it is made.

 

(6) The provisions of sections 52H and 52J to 52M and of any scheme made under this section shall have effect notwithstanding anything to the contrary contained in any other provision of this Act or in any other law or any agreement, award or other instrument for the time being in force.]

 

[a] Heading and Section 52I inserted by the Insurance  (Amendment) Act, 1968  (62 of 1968), Section 22 (1-6-1969).

 

a*[52J.            Compensation to be given to the acquired insurer.-

 

(1) The acquired insurer shall be given by the Central Government or the acquiring insurer, as the case may be, such compensation in respect of the transfer of the undertaking of the acquired insurer as is determined in accordance with the principles contained in the Eighth Schedule.

 

(2) The amount of compensation to be given in accordance with the principles contained in the Eighth Schedule shall be determined, in the first instance, by the Central Government or the acquiring insurer, as the case may be, in consultation with the Controller, and shall be offered by it to the acquired insurer, in full satisfaction thereof.

 

(3) If the amount of compensation offered in terms of sub-section (2) is not acceptable to the acquired insurer, he may, before such date as may be notified by the Central Government in the Official Gazette, request the Central Government in writing to have the matter referred to the Tribunal constituted under section 52K.

 

(4) If before the date notified under sub-section (3) the Central Government does not receive request as provided in that sub-section, the amount of compensation offered under sub-section (2), or where a reference has been made to the Tribunal, the amount determined by it, shall be the compensation payable under sub-section (1) and shall be final and binding on all the parties concerned.

 

(5) Where the Central Government does not receive request as provided in sub-section (3) the compensation payable in pursuance of the provisions of this section shall become due for payment on the expiry of one year from the appointed day, and where a reference has been made to the Tribunal under sub-section (3), the amount determined by the Tribunal as compensation shall become due for payment on the expiry of one year from the appointed day or on the date of decision of the Tribunal, whichever is earlier.

 

(6) If between the appointed day and the date on which the compensation becomes due in pursuance of sub-section (5), any facts come to light which call for revision of the amount of the compensation, the necessary modification of the amount of the compensation shall be made and the amount of the compensation so determined shall be the compensation payable in pursuance of sub-section (1).

 

(7) There shall also be paid simple interest at the rate of three per cent.per annum on the amount of the compensation for the period from the appointed day to the date on which payment of the compensation becomes due.]

 

[a] Heading and Section 52J inserted by the Insurance  (Amendment) Act, 1968  (62 of 1968), Section 22 (1-6-1969).

 

 

a*[52K.           Constitution of the Tribunal.-

 

(1) The Central Government may, for the purposes of sections 52H to 52J, constitute a Tribunal which shall consist of a Chairman and two other members.

 

(2) The Chairman shall be a person who is, or has been, a Judge of a High Court or of the Supreme Court and of the two other members, one shall be a person who, in the opinion of the Central Government, has had experience of matters connected with general insurance and the other shall be a person who is a chartered accountant within the meaning of the Chartered Accountants Act, 1949.

 

(3) If, for any reason, a vacancy occurs in the office of the Chairman or any other member of the Tribunal, the Central Government may fill the vacancy by appointing another person thereto in accordance with the provisions of sub-section (2), and any proceeding may be continued before the Tribunal so constituted from the stage at which the vacancy occurred.

 

(4) The Tribunal may, for the purpose of determining any compensation payable under section 52J, choose one or more persons having special knowledge or experience of any relevant matter to assist it in the determination of such compensation.]

 

[a] Heading and Section 52K inserted by the Insurance  (Amendment) Act, 1968  (62 of 1968), Section 22 (1-6-1969).

 

 

a*[52L.           Tribunal to have powers of Civil Court.-

 

(1) The Tribunal shall have the powers of a Civil Court, while trying a suit, under the Code of Civil Procedure, 1908, in respect of the following matters, namely:--

 

                (a) summoning and enforcing the attendance of any person and examining him on oath;

 

                (b) requiring the discovery and production of documents;

 

                (c) receiving evidence on affidavits;

 

                (d) issuing commissions for the examination of witness or documents.

 

(2) Notwithstanding anything contained in sub-section (1) or in any other law for the time being in force, the Tribunal shall not compel the Central Government or the Controller---

 

(a) to produce any books of account, or other documents which the Central Government or the Controller claims to be of a confidential nature;

 

(b) to make any such books or documents a part of the record of the proceedings before the Tribunal;

 

               

(c) to give inspection of any such books or documents to any party before it and to any other person.

 

(3) Any proceeding before the Tribunal shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228 of the Indian Penal Code (45 of 1860) and the Tribunal shall be deemed to be a Civil Court for the purposes of section 195 and Chapter XXXV of the Code of Criminal Procedure, 1898.]

 

[a] Heading and Section 52L inserted by the Insurance  (Amendment) Act, 1968  (62 of 1968), Section 22 (1-6-1969).

 

a*[52M.           Procedure of the Tribunal.-

 

(1) The Tribunal shall have power to regulate its own procedure.

 

(2) The Tribunal may hold the whole or any part of its inquiry in camera.

 

(3) Any clerical or arithmetical error in any order of the Tribunal or any error arising therein from any accidental slip or omission may, at any time, be corrected by the Tribunal either of its own motion or on the application of any of the parties.]

 

[a] Heading and Section 52M  inserted by the Insurance  (Amendment) Act, 1968  (62 of 1968), Section 22 (1-6-1969).

 

a*[52N.           Special provisions for the dissolution of acquired insurers.-

 

Where any acquired insurer, being a company, has in accordance with the provisions of this Act, collected and distributed any monies paid to him by the Central Government or the acquiring insurer, as the case may be, by way of compensation or otherwise, and has also complied with any directions given to him by the Central Government or the acquiring insurer, as the case may be, for the purpose of securing that the ownership of any property or any right is effectively transferred to the Central Government or the acquiring insurer, as the case may be, the Central Government may, on application being made to it in this behalf by such insurer, grant a certificate to the insurer that there is no reason for the continued existence of the insurer, and upon the publication of such certificate, the insurer shall be dissolved.]

 

[a] Heading and Section 52N inserted by the Insurance (Amendment) Act, 1968 (62 of 1968), Section 22 (1-6-1969).

 

OBJECTS AND REASONS

 

"Clause 22 empowers the Central Government to acquire the business of an insurer on payment of compensation.The circumstances in which the business may be acquired, the basis on which compensation shall be paid, and provisions for setting up a Tribunal to resolve any dispute in regard to the amount of compensation are also set out." -- Gazette of  India, 8-4-1968, Pt.II, Section 2, Extra, p.387.

                                          

 

WINDING UP

 

 

53.Winding up by the court

.-

 

The court may order the winding up in accordance with the Indian companies Act 1913, of any insurance company and the provision of that Act shall, subject to the provision of this a*[Act], apply accordingly.

 

(2) In addition to the grounds on which such an order may be based the court may order the winding up of an insurance company -

 

(a) if with sanction of the court previously obtained petition in this behalf is presented by shareholders not less in number than one-tenth of the whole body of shareholders and holding not less than one-tenth of the whole share capital or by not less than fifty policy-holders holding policies insurance that have been in force for not less than three years and are of the value of not, less forty thousand rupees or

 

(b) if the b*[controller], who is hereby authorized to do so applies in this behalf to the court on any of the following grounds, namely -

 

(i) that the company had failed to deposit or to keep deposits with the Reserve Bank  of India the amounts required by section 7 c*[or section 98].

 

(ii) that the company having failed to comply with any requirement of this  Act has continued such failure d*[or having contravened any  provision of this Act has continued such contravention] for  a period of three months after notice of such failure d*[or contravention] has been conveyed to the company by the b*[Controller].

 

(iii) that it appears from c*[any returns,  statements] furnished under the provision of this Act or from the results of any investigation made there under that the e*[company is, or is deemed to be, insolvent]

 

(iv) that the continuance of the company is prejudicial to the interests of the policy - holders f*[or to public interest  generally.]

 

                [Cf.Insurance Companies Act, 1958  (6 and 7.Eliz.2, c.72), Section 15.The Board of Trade is

authorised by the section to present a petition for winding up of an insurance company under the Companies Act, 1948.]

 

 

[a] Substituted for "Chapter" by the Insurance (Amendment) Act, 1941  (13 of 1941), Section 37 (8-4-1941).

 

[b] Substituted for "Superintendent of Insurance", ibid 1950  (47 of 1950), section 4 (1-6-1950).

                                [c] Inserted, ibid, 1939 (11 of 1939), Section 21.

                                [d] Inserted, ibid, 1941 (13 of 1941), Section 37 (8-4-1941).

 

[e] Substituted for certain words by the Insurance (Amendment) Act, 1968 (62 of 1968), Section 23 (1-6-1969).

 

                                                [f] Inserted, ibid.

 

a*[53-A Unpaid -up share capital.    -

 

Notwithstanding any thing contained in any other law in ascertaining for any purpose of this Act solvency or other wise of an insurer no account shall be taken of any assets of the insurer consisting of unpaid-up share capital.]

 

                        [a] Inserted by the Insurance (Amendment) Act, 1946  (6 of 1946), Section 25 (20-3-1946).

 

OBJECTS AND REASONS

 

"Unpaid-up share capital is not necessarily a realisable asset, and this clause provides that unpaid-up share capital shall not be taken into account in determining the solvency or otherwise of an Insurer or provident society." -- S.O.R.Gazette of India, 1946, Pt.V, page 13.

 

54.       Voluntary winding up.-

 

Notwithstanding anything contained in the Indian companies Act, 1913, an insurance company shall not be wound up voluntarily expect for the purpose of effecting an amalgamation or a reconstruction of the company, or on the ground that by reason of its liabilities it cannot continue its business.

 

 

55.Valuation of liabilities

.-

 

(1) In the winding up of an insurance company or in the insolvency of any other insurer the value of the assets and the liabilities of the insurer shall be ascertained in such manner and upon such basis as the liquidator or receiver in insolvency  thinks fit subject so far as applicable to the rule contained in the  a*[Seventh Schedule] and to any directions which may be given by the Court.

 

(2) For the purposes of any reduction by the court of the amounts of the contracts of any insurance company the value of the assets and liabilities of the company and all aims in respect of policies issued by the it shall be ascertained in such manner and up on such basis as the court thinks proper having regard to the rule aforesaid

 

(3) The rule in the a*[seventh schedule] shall be of the same force and may be repealed, altered or amended as if it were a rule made in pursuance of section 246 of the Indian Companies Act, 1913 and rules may be made under that section for the purpose of carrying into effect the provisions of this Act with respect to the winding up of insurance companies.

 

 

[a] Substituted for "Sixth Schedule" by the Insurance (Amendment) Act, 1950 (47 of 1950),

S.43 (1-9-1950).

 

56.       Application of surplus assets of life insurance fund in liquidation or insolvency.-

 

(1) In the winding up of an insurance company and in the insolvency of any other insurer the value of the assets and the liabilities of the insurer in respect of life insurance business shall be ascertained separately from the value of any other assets or any other liabilities of the insurer and no such assets shall be applied to the discharge if any liabilities other than those in respect of life insurance business expect in so far as those assets exceed the liabilities in respect of life insurance business.

   

(2) In the winding up of an insurance company carrying on the business of life insurance or in the insolvency of any other insurer carrying on such business where any proportion of the profits of the insurer was before the commencement of the winding up or insolvency allocated to policy-holders if when the assets and liabilities if the insurance have been ascertained there is found to be a surplus of assets over liabilities (hereinafter  referred to as a prima face surplus ) there shall be added to the liabilities of the insurer in respect of the life insurance business an amount equal to such proportion of the prima facie surplus as is equivalent  to such proportion of the profits  allocated to shareholders and  policy-holders as was allocated to policy-holders during the ten years immediately preceding the commencement of the winding up and the assets of the insurer  shall be deemed to exceed his liabilities only in so far as those assets exceed those liabilities after such addition:

             

Provided that -

 

(i) if any case there has been no such allocation or if it appears to the court that by reason of special circumstances it would be inequitable that the amount to be added to the liabilities of the insurer in respect of the ;of insurance business should be an amount equal to such proportion as aforesaid the amount to be so added shall be such amount as the court may direct, and

 

(ii) for the purpose of the application of this sub-section to any case where before the commencement of the winding up or insolvency a proportion of such profits as aforesaid of a branch only of the life insurance business in question has been allocated to policy-holders the value of the assets and liabilities of the insurer in respect of that branch shall be separately ascertained in like manner as the value of his assets and liabilities in respect of the life insurance business was ascertained and the surplus so found if any of assets over liabilities shall, for the purpose of determining the amount to be added to the liabilities if the insurer in respect of the life insurance business be deemed to be the prima face surplus.

 

 

 

57.winding up of secondary companies

.-

 

(1) Where the insurance business or any part of the insurance business of an insurance company has been transferred to another insurance company under an arrangement in pursuance of which the first-mentioned company (in this section referred to as the secondary company) or the creditors of has or have claims against the company to which such transfer was made (in this section referred to as the principal company ) than if the principal company is being wound up by or under the supervision  of the Court, the Court shall (subject as hereinafter mentioned ) order the secondary company to be wound up the conjunction with the principal company and may by the same or any subsequent order point the same parson  to be liquidator for the two companies and make provision for such other matters as may seem to the Court necessary with a view to companies being wound up as if they were one company.

 

(2) The commencement of the winding up of the principal company shall save as otherwise ordered by the court, be the commencement of the winding up of  the secondary company

 

(3) In adjusting the rights and liabilities of the members of the several companies among themselves the court shall have regard to the constitution of the companies and to the arrangements entered in to between the companies in the same manner as the court has regard to the rights and liabilities if different classes of contributories in the case of the winding up of a single company or as near thereto as circumstances admit.

 

(4) where any company alleged to be secondary is not in process of being wound up at the same time as the principal company to which it is  alleged to be secondary, the Court shall not direct the secondary  company to be wound up, unless, after hearing all objections (if any) that may be urged by or on behalf of the company against its being wound up, the Court is of opinion that the company is secondary to the principal company and that the winding up of the company in conjunction with the principal company is just and equitable.

 

(5) An application may be made in relation to the winding up of any secondary company in conjunction with the principal company by any creditor of, or person interested in, the principal or secondary company.

 

(6) Where a company stands  in the relation of a principal company to on insurance company and in the relation of a secondary company to same  other insurance company or where there are several insurance companies  standing in the  relation of secondary companies  to once  principal  company the court may deal  with any number of such companies together or in separate groups as it thinks most expedient upon the principal  laid down in this section.

 

 

58.Scheme for partial winding up of insurance companies

.-

 

(1) If at any time it appears expedient that the affairs of an insurance company in respect of any class of business comprised in the undertaking of the company should be wound up but that any other class of business comprised in the undertaking should continue to be carried on by the company or be transferred  to another insurer  a scheme for such purposes  may be prepared and submitted  for confirmation of the court in accordance with the provisions  of this Act

 

(2) Any scheme prepared under this section shall provide for the allocation and distribution of the assets  and liabilities  of the company  between  any classes of business affected (including  the allocation  of any surplus assets which may arise in the proposed  winding up) for any future  rights  of every classes of policy-holders in respect of their policies and for the  manner of winding up any of the affairs of the company which are proposed to be wound up and may contain  provisions  for altering  the memorandum of the company with respect to its objects and such further provision as may be expedient for giving effect to the  scheme.

 

(3) The provisions of this Act relating to the valuation of liabilities of insurers in liquidation and insolvency and to the application of surplus assets of the life insurance fund in liquidation or insolvency shall apply  to the winding up of any part of the affairs  of a company  in accordance with the scheme under this section in like manner as they apply in the winding up of an insurance company, and any scheme  under this section may apply with the necessary modifications any of the provisions of the Indian Companies Act, 1913,  relating  to the winding up of companies.

 

(4) An order of the Court confirming a scheme under this section whereby the memorandum of a company is altered with respect to its object shall, as respects the alteration, have effect as if it were an order  confirmed under section 12 of the Indian Companies Act, 1913 and  the provision of section 15 and 16 of that Act shall apply accordingly.

 

                a*[……………Omitted……………………..]

[a] Sub-section (5) omitted by the Insurance (Amendment) Act, 1968 (62 of 1968), S.24 (1-6-1969).

 

 

 

59.Return of deposits

.-

 

In the winding up of an insurance company a*[otherwise than in a case to which section 58 applies] and in the insolvency of any other insurer the liquidator or assignee, as the case may be, shall apply to the Court for an order for the return of the b*[deposit made by the company or the insurer, as the case may be, under section 7 or section 98] and the Court shall on such application order a return of the deposit subject to such terms and conditions as it shall direct.

 

                        [a] Inserted by the Insurance (Amendment) Act, 1946   (6 of 1946), S.26 (20-3-1946).

 

                        [b] Substituted for "deposit made by the company under S.7", ibid, 1939 (11 of 1939), S.22.

 

 

60.Notice of policy value

s.-

 

In the winding of an insurance company for the purposes of cash distribution of the assets and in the insolvency of any other insurer the liquidator or assignee as the case may be in the case of all persons appearing by the books of the company or other insurer or to be entitled to or interested in the policies granted by the company or other insurer shall ascertain the value of the liability of the company or other insurer to each such person and shall give notice of such value to those person on such manner as the Court may direct and any person to whom notice is so  given shall be bound by the value so ascertained unless he gives notice of his  intention  to dispute  such value in such manner and  within such time as may be specified by a rule of order of the Court

 

 

 

61.Power of Court to reduce contracts of insurance

.-

 

(1) Where an insurance company is in liquidation or any other insurer is insolvency the court may make  an order reducing the amounts  of the insurance contracts  of the company upon such terms and subject to such conditions as the court thinks  just.

(2) Where a company carrying on the business of life insurance has been proved to be insolvent, the Court may, if it thinks fit in place of making a winding up order, reduce the amount of the insurance contracts of the company upon such terms and subject to such conditions as the Court thinks ft.

 

(3) Application for the an order under this section may be made either by the liquidator or by or on behalf of the company or by a policy-holder, or by the a*[Controller] and the a*[Controller] and by any person whom the Court thinks  likely  to be  affected shall  be entitled  to  be heard on any such application.

 

 

[a] Substituted for "Superintendent of Insurance" by the Insurance (Amendment) Act, 1950 (47 of 1950), S.4 (1-6-1950).

 

SPECIAL PROVISIONS RELATING TO EXTERNAL COMPANIES

 

62.       Power of central Government to impose reciprocal disabilities on non-Indian companies.-

 

where by the law  or practice  of any country outside India  in which an insurer carrying on insurance business in a*[India]  is constituted,  incorporated  or domiciled, insurance companies incorporated in    a*[India]  are required as a condition of carrying  on insurance  business in that country  to comply  with any special  requirement  whether as to the keeping of deposits or assets in that country  or otherwise which is  not imposed  upon insurers of that  country  under this  Act, the Central Government  shall, if satisfied of the existence of such special requirement,  by notification  in the Official  Gazette,  direct that the same  requirement, or requirements as similar thereto as may be,  shall be  imposed  upon insurers of that country as a condition of carrying  on the business of insurance in a*[India].

 

[a] Substituted for "the States" by the Jammu and Kashmir (Extension of Laws) Act, 1956 (62 of 1956), S.2 and Schedule (1-11-1956).

 

 

63.Particulars to be filled by insurance established outside India

.-

 

Every insurer, having his principal place of business or domicile outside a*[India], who establishes a place of business within a*[India], or appoints a representative in a*[India] with the object of obtaining  insurance business, shall, within three months from the establishment  of such place of business or the  appointment of such b*[representative],  file with the c*[Controller]-

 

(a) a certified copy of the charter, statutes,  deed of settlement  or memorandum and articles  or other  instrument  constituting  or defining  the constitution  of the insurer,  and, if the instrument  is not written in the English language, a certified translation thereof,

 

                 (b) a  list of the directors,  if the insurer is a company,

 

(c) the name and address of some one or more persons  resident  in a*[India] authorized  to accept  on behalf  of the insurer service of process and any notice required  to be served  on the insurer,  together with a copy  of the power  of attorney  granted to him,

 

                (d) the full address of  the principal office of the insurer  in a*[India]

 

                (e) a statement  of the  classes of insurance  business  to be carried on by  the insurer, and

 

(f) a statement  verified  by an affidavit  setting forth  the special requirements, if any, of the nature specified in section 62 imposed  in the country  of origin of the insurer on Indian  nationals,

 

and, in the event of any alteration being  made in the address of  the principal  office or in the classes of business to be carried on, or in any instrument here referred to, or in the name of any of the persons here   referred  to or in the matters specified  in clause (f)  above,  the Company shall forthwith furnish to the c*[Controller] particulars of such alteration.

 

[a] Substituted for "the States" by the Jammu and Kashmir (Extension of Laws) Act, 1956

(62 of 1956), S.2 and Schedule (1-11-1956).

 

                        [b] Substituted for "agent" by the Insurance (Amendment) Act, 1939 (11 of 1939), S.23.

 

                        [c] Substituted for "Superintendent of Insurance", ibid, 1950 (47 of 1950), S.4 (1-6-1950).

 

64.       Books to be kept by insurers established outside India.-

 

 

Every insurer having his principal place of business or domicile outside a*[India] shall keep at his principal office in a*[India] such books of account, registers and documents as will enable the accounts, statements and abstracts which he is required under this Act to furnish to the b*[Controller] in respect of the insurance business transacted by him in India to be complied and if necessary, checked by the  b*[Controller] c*[and shall furnish to the Controller on or before the last day of January in every calendar year a certificate from an auditor to the effect that the said books of account, register and documents are being kept as required at the principal office of the insurer in India.]

 

[a] Substituted for "the States" by the Jammu and Kashmir (Extension of Laws) Act, 1956

(62 of 1956), S.2 and Schedule (1-11-1956).

 

[b] Substituted for "Superintendent of Insurance" by the Insurance (Amendment) Act, 1950 (47 of 1950), S.4 (1-6-1950).

 

                [c] Inserted, ibid, S.44 (1-6-1950).

 

a*[PART II A

 

INSURANCE ASSOCIATION OF INDIA, COUNCILS OF THE ASSOCIATION AND COMMITTEES THEREOF

 

64-A.   Incorporation of the Insurance Association of India.-

 

(1) All insurers carrying on insurance business in b*[India] at the commencement of the Insurance (Amendment) Act, 1950, all insurers who may after such commencement begin to carry on insurance  business in b*[India],  and, if the Central Government,  by notification in the Official Gazette,  so declares all provident societies carrying  on insurance business in b*[India] on the date of such   notification and all provident societies  which  may begin to carry on insurance business in b*[India]  after  such date are hereby  constituted a body corporate  by the name of the Insurance Association of India.

 

(2) All insurers and provident societies incorporated or domiciled in b*[India] shall be known as members of the Insurance Association  of India,  and all insurers and provident societies incorporated  or domiciled elsewhere  than in b*[India]  shall be known  as associate  members  of that Association.

 

(3) The Insurance Association of India shall have perpetual  succession and a common seal and shall have  power  to acquire,  hold  and dispose of all  property,  both movable and immovable, and shall by the said name sue and  be sued.]

 

[a] Part IIA containing S.64-A was inserted by the Insurance (Amendment) Act, 1950  (47 of 1950), S.45 (1-9-1950).

 

 

[b] Substituted for "the States" by the Jammu and Kashmir (Extension of Laws) Act, 1956 (62 of 1956), S.2 and Schedule (1-11-1956).

 

 

 

a*[64-B Entry of names of members in the register.            -

 

(1) The Controller shall take or cause  to be taken  through   such  agency as he thinks  fit such  steps  as may be necessary  to have the names of all insurers and provident  societies,  who or which are entitled  to have their names entered in the register  of members  and associate  members  of the Insurance  Association  of India  maintained for this purpose  entered therein.

 

(2) Where any insurer or provident  society  has ceased to carry on business  as such, the Controller  shall cause such steps to be  taken as may be necessary to have  the name of such insurer or provident society, as the case  may be, removed  from the register.]

 

[a] Part IIA containing S.64-B was inserted by the Insurance (Amendment) Act, 1950  (47 of 1950), S.45 (1-9-1950).

 

 

a*[64-C.          Councils of the Insurance Association of India.-

 

There shall be two Councils of the Insurance Association of India, namely:-

 

(a) the Life Insurance  Council consisting of all the members and associate  members  of the Association who carry on life  insurance business in b*[India],  and

 

(b) The General Insurance Council consisting of all the members and associate members of the Association  who carry on general insurance  business on b*[India].]

 

 

[a] Part IIA containing S.64-C was inserted by the Insurance (Amendment) Act, 1950  (47 of 1950), S.45 (1-9-1950).

 

[b] Substituted for "the States" by the Jammu and Kashmir (Extension of Laws) Act, 1956

(62 of 1956), S.2 and Schedule (1-11-1956).

 

a*[64-D.          Authority of members of Association to act through agents.-

 

It shall be lawful for any member of the Life Insurance Council or the General Insurance Council to authorize any individual, whether an officer of the insurer or not, to act as the representative of such member at any meeting of the Council concerned or to stand as a candidate for any election held by that Council.] 

 

[a] Part IIA containing S.64-D was inserted by the Insurance (Amendment) Act, 1950  (47 of 1950), S.45 (1-9-1950).

 

 

a*[64-E.          Authorities of the Life Insurance Council and the General Insurance Council.-

 

The authorities of the Life Insurance Council and the General Insurance Council shall be the Executive Committees, b*[………..] constituted in the manner provided in this Part.

 

[a] Part IIA containing S.64-E was inserted by the Insurance (Amendment) Act, 1950  (47 of 1950), S.45 (1-9-1950).

 

[b] Certain words omitted by the Insurance (Amendment) Act, 1968 (62 of 1968), S.25 (1-6-1969).

 

 

a*[64-F.          Executive Committees of the Life Insurance Council and the General Insurance Council.-

 

(1) The Executive Committee of the Life Insurance Council shall consist of the followfing persons,  namely:-

 

(a) two officials nominated by the Central  Government, one as the Chairman  and the other as a member;

 

(b) eight representatives of members of the Insurance Association of India  carrying on life insurance business elected in their individual capacity by the said members in such manner, from such  groups  of members and from such areas as may  be specified by the Central Government;

               

(c) one non-official not connected with any insurance business nominated by the central  Government; and

 

(d) five persons connected  with life insurance business, nominated by the Central  Government for the purpose of  representing  such groups of  insurers carrying on life insurance business or such areas as have not been able to secure adequate representation  on the  Executive Committee of the Life Insurance Council or for any other  purpose.

 

(2) The Executive Committee of the General Insurance Council shall consist of the following persons,  namely:-

 

(a) two officials nominated by the Central Government, one as the chairman and the other as a member;

 

(b) eight representatives of members of the Insurance Association of India  carrying on general  insurance business elected   in their individual capacity by the said members in such manner, from such groups  and from such areas as may be specified by the Central  Government;

 

(c) one non-official not connected with any insurance business  nominated by the Central Government; and

 

(d) five persons connected with general insurance business,  nominated by the Central  Government for the purpose of representing such groups of insurers carrying on general  insurance business or such areas as have not been able to secure adequate representation on the Executive Committee of the General Insurance Council or for any other propose.

(3) If any body of persons specified in sub-sections (1) and (2) fails to elect any of the members of the Executive Committees of the Life Insurance Council or the General Insurance Council, the Central Government may nominate any person to fill the vacancy, and any person so nominated shall be deemed to be a member of the Executive Committee of the Life Insurance Council or the General Insurance Council, as the case may be, as if he had been duly elected thereto.

 

(4) No official nominated by the Central Government shall be entitled, whether as chairman or as a member, to vote in respect of any matter coming up before any meeting of the Executive Committee of the Life Insurance Council or the Executive Committee of the General Insurance Council, as the case may be, and subject thereto each of the said Executive Committees may, with the approval of the Central Government, make bye- laws for the transaction of any business at any meeting of the said Committee, and any such bye-law may provide that any member of the Committee, who is interested in any matter for the time being before that Committee may not be present  at or take part in any meeting thereof.

 

(5) The Life Insurance Council or the General Insurance Council may form such other committees consisting of such persons as it may think fit to discharge such functions as may be delegated thereto :

 

Provided that any action taken by any of the said Councils under this sub-section shall be with the previous consent of the Central Government and nothing  in this sub-section shall derogate from any of the powers vested in the Executive Committees.

 

(6) The Secretary of the Executive Committee of the Life Insurance Council and of the Executive  Committee of the General Insurance  Council shall in each case be an official nominated by the Central Government.]

 

[a] Part IIA containing S.64-F was inserted by the Insurance (Amendment) Act, 1950  (47 of 1950), S.45 (1-9-1950).

 

 

a*[64-G.          Resignation and filing up of casual vacancies.-

 

(1) Any member of the Executive Committee of the Life Insurance Council or of the General Insurance  Council may resign his membership  of the Committee by notice in writing addressed to the Chairman of the Committee to that effect.

 

(2) Casual vacancies in the Executive Committee of the Life Insurance Council or of the General Insurance Council, whether caused by resignation death or otherwise shall be filled by nomination by the Central Government and any person so nominated to fill the vacancy shall hold office until the dissolution of the Committee to which he has been nominated.

 

(3) No act of the Executive Committee of the Life Insurance Council or of the General Insurance Council shall be called in question on the ground merely of the existence of any vacancy in, or defect in the constitution of, the Committee concerned.]

 

[a] Part IIA containing S.64-G was inserted by the Insurance (Amendment) Act, 1950  (47 of 1950), S.45 (1-9-1950).

 

 

 

 

a*[64-H.          Duration and dissolution of Executive Committees.-

 

(l) The duration of the Executive Committee of the Life Insurance Council or the General Insurance Council shall be three years from the date of its first meeting on the expiry of which it shall stand dissolved and a new Executive Committee constituted.

 

(2) Notwithstanding the dissolution of the Executive Committee of the life Insurance Council or the General Insurance Council, the outgoing members thereof shall continue to hold office and discharge such administrative and other duties as may be prescribed until such time as a new Executive Committee of the Life Insurance Council or the General Insurance Council, as the case may be, shall have been constituted.]

 

 

[a] Part IIA containing S.64-H was inserted by the Insurance (Amendment) Act, 1950  (47 of 1950), S.45 (1-9-1950).

 

 

 

 

a*[64-I.           Power of Executive Committee of Life Insurance Council to hold examinations for insurance agents.-

 

The Life Insurance Council may with the approval of the Central Government, authorize its Executive Committee to hold examinations for individuals wishing to qualify themselves as insurance agents for the purpose of procuring life insurance business, and if the Central Government, by notification in the Official  Gazette, so declares, then, notwithstanding anything contained in section 42, only individuals who have passed any such examination shall be eligible to apply for a licence under section 42:

 

               

Provided that nothing in this sub-section shall affect the right of any individual, who has been licenced to act as an insurance agent under section 42 before the date of such notification, to act as such, or to have his licence renewed from time to time.]

 

[a] Part IIA containing S.64-I was inserted by the Insurance (Amendment) Act, 1950  (47 of 1950), S.45 (1-9-1950).

 

a*[64-J.           Functions of Executive Committee of Life Insurance Council.-

 

(1) The functions of the Executive Committee of the Life Insurance Council shall be-

 

(a) to aid, advise and assist insurers carrying on life insurance business in the matter of setting up standards of conduct and sound practice and in the matter of rendering efficient service to holders of life insurance policies;

 

(b) to render advice to the Controller in the matter of controlling the expenses of insurers in respect of their life insurance business in India;

 

(c) to bring to the notice of the Controller the case of any insurer acting in a manner prejudicial to the interests of holders of life insurance policies;

 

(d) to act in any matter incidental or ancillary to any of the matters specified in clauses (a) to (c) as, with the approval of the Central Government, may be notified by the Life Insurance Council in the Gazette of India.

 

(2) For the purpose of enabling it effectively to discharge its functions, the Executive Committee of the Life Insurance Council may collect such sums of money, whether by way of fees or otherwise, as may be prescribed from all members and associate members of the Insurance Association of India who carry on life insurance business.

 

[a] Part IIA containing S.64-J was inserted by the Insurance (Amendment) Act, 1950  (47 of 1950), S.45 (1-9-1950).

 

 

 

a*[64-K.          Executive Committee of Life Insurance Council may advise in controlling expenses.-

 

(I) It shall be the duty of the Executive Committee of the Life Insurance Council to meet at least once before the 31st day of March every year to advise the Controller in fixing under the proviso to sub-section (2) of section, 40-B the limits by which the actual expenses incurred by an insurer carrying on life insurance business in respect of such business in the preceding year may exceed the limits prescribed under that sub-section, and in fixing any such limits the Controller shall have due regard to the conditions obtaining in life insurance business generally during that year, and he may fix different limits for different groups  of  insurers.

 

(2) Where an insurer is guilty of contravening the provisions of section 40B with respect to the expenses of management, the Controller may, after giving the insurer an opportunity of being heard, administer a warning to the insurer.

 

(3) Where within a period of seven years two warnings have been given to an insurer under sub-section (2) and they have been disregarded by him, the Controller may cause an investigation and valuation, as at such date as the Controller may specify, to be made at the expenses of the insurer by an actuary appointed by the insurer for this purpose and approved by the Controller, and the insurer shall place at the disposal of the said actuary all the materials required by him for the purpose of such investigation and valuation, within such period, not being less than three months, as the Controller may specify.

 

(4) The provisions of sub-sections (1) and (4) of section 13 and of sub-sections (1) and (2) of section 15, or, as the case may be, of sub-section (2) of section 16 shall apply in relation to an investigation and violation under this section:

 

Provided that the abstract and statement prepared as the result of such investigation and valuation shall be furnished by such date as the Controller may specify.

 

(5) There shall be appended to every such abstract a statement signed by the actuary giving such information as may be prescribed.

               

(6) On receipt of the abstract and statement furnished in accordance with sub-section (4), the Controller may take such action as may be prescribed.]

 

[a] Part IIA containing S.64-K was inserted by the Insurance (Amendment) Act, 1950  (47 of 1950), S.45 (1-9-1950).

 

 

 

 

a*[64-L.Functions of Executive Committee of General Insurance Council.-

 

(1) The functions of the Executive Committee of the General Insurance Council  shall be-

 

(a) to aid and advise insurers, carrying on general insurance business, in the matter of setting up standarcls of conduct and sound practice and in the matter of rendering efficient service to holders of policies of general insurance;

 

(b) to render advice to the Controller in the matter of controlling the expenses of such insurers carrying  on business in India in the matter of commission and other expenses;

 

(c) to bring to the notice of the Controller the case of any such insurer acting in a manner prejudicial to the interests of holders of general insurance policies;

 

(d) to act in any matter incidental or ancillary to any of the matters specified in clauses (a) to (c) as with the approval of Central Government may be notified by the General Insurance Council in the Gazette of India.

 

(2) For the purpose of enabling it effectively to discharge its functions the Executive Committee of the General Insurance Council may collect such fees as may prescribed from all insurers carrying on general insurance business;

 

b*[Provided that if the General Insurance Council thinks fit, it may, by a resolution passed by it, waive the collection of the prescribed fees for any year and where any such resolution has been approved by the Central Government the Executive Committee of the General Insurance Council shall not collect any fees in relation to that year.]]

 

[a] Part IIA containing S.64-L was inserted by the Insurance (Amendment) Act, 1950  (47 of 1950), S.45 (1-9-1950).

 

                        [b] Inserted by the Insurance (Amendment) Act, 1968  (62 of 1968), S.26 (1-6-1969).

 

 

a*[64-M.         Executive Committee of General Insurance Council may advise in controlling expenses.-

 

(1) It shall be the duty of the Executive Committee of the General Insurance Council  to meet at least once before the 31st day of March every year to advise the Controller in fixing under the proviso to sub-section (1) of section 40C the limits by which the actual expenses of management incurred by an insurer carrying on general insurance business in respect of such business in the preceding year may exceed the limits prescribed under that sub-section and in fixing any such limits the Controller shall  have due regard to the conditions obtaining in general insurance business in the proceeding year, and he may fix different limits for groups of insurers.

 

 

(2) Where an insurer is guilty of contravening the provisions of section 40C with respect to the expenses of management, the Controller may, after giving the insurer an opportunity of being heard, administer a warning to the insurer.

 

(3) Where in any case two warnings given to an insurer under sub-section (2) have been disregarded by him, the Controller may take such action against the insurer as may be prescribed.]

 

[a] Part IIA containing S.64-M was inserted by the Insurance (Amendment) Act, 1950  (47 of 1950), S.45 (1-9-1950).

 

 

 

a*[64-N.          Power of the Executive Committees to act together in certain cases.-

 

The Central Government may prescribe the circumstances which, the manner in which, and the conditions subject to which, the Executive Committee of the Life Insurance Council and the Executive Committee of the General Insurance Council may hold joint meetings for the purpose of dealing with any matter of common interest to both Committees, and it shall be lawful for the two Committees at any such joint meeting to delegate any matter under consideration for the determination of a sub-committee appointed for this purpose from amongst the members of the two Committees.]

 

[a] Part IIA containing S.64-N was inserted by the Insurance (Amendment) Act, 1950  (47 of 1950), S.45 (1-9-1950).

 

 

 

               

64-O, 64-P, 64-Q.      

 

[Omitted by the Insurance (Amendment) Act, 1968 (62 of 1968), section 27 (1-6-1969).]

 

 

 

a*[64-R.          General Powers of Life Insurance Council and General Insurance Council.-

 

(1) For the efficient performance of its duties, the Life Insurance Council or the General Insurance Council, as the case may be, may-

 

                (a) appoint such officers and servants as may be necessary and fix the conditions of their service;

 

                (b) determine the manner in which any prescribed fee may be collected;

 

(c) keep and maintain up-to-date a copy of the list of all insurers who are members or associate members of the Insurance Association of India;

 

                (d) with the previous approval of the Central Government, make regulations for--

 

                                (i) the holding of elections other than the first elections;

 

(ii) the summoning and holding of meetings, the conduct of business thereat and the number of persons necessary to form a quorum;

 

(iii) the submission by insurers to the Executive Committee of the Life Insurance Council, or the General Insurance Council of such statements or information as may be required of them and the submission of copies thereof  by the insurers to the Controller;

 

                                (iv) the levy and collection of any fees;

 

(v) the regulation of any other matter which may be necessary for the purpose of enabling it to carry out its duties under this Act.

 

(2) The Life Insurance Council or the General  Insurance Council may authorise the Executive Committee concerned b*[…………] to exercise any of the powers conferred on the Life Insurance Council or the General Insurance Council, as the case may be, under clause (a), clause (b) or clause (c) of sub-section(1).]

 

 

[a] Part IIA containing S.64-R was inserted by the Insurance (Amendment) Act, 1950  (47 of 1950), S.45 (1-9-1950).

 

[b] Certain words omitted by the Insurance (Amendment) Act, 1968 (62 of 1968), S.28 (1-6-1969).

 

 

a*[64-S.          Power of Central Government to remove difficulties.-

 

The Central Government may exercise such power as may be necessary for bringing the Life Insurance Council, the General Insurance Council or the Executive Committee of any of the said Councils as the case may be, into effective existence for the purposes of this Part, and any such powers shall include-

 

(a) the power to hold in such manner as may be directed by the Central Government, the first elections to the Executive Committees of the Life Insurance Council and the General Insurance Council;

 

(b) where a notification under sub-section (1) of section 64-A has been issued debarring provident societies to be members of the Insurance Association of India, the power to associate provident societies effectively in the exercise of all power and the discharge of all functions of the Life Insurance Council and the Executive Committee thereof;

 

(c) the power to make the provisions of section 40-B applicable to the provident societies specified in clause (b) in the same manner as they apply to insurers.]

 

[a] Part IIA containing S.64-S was inserted by the Insurance (Amendment) Act, 1950  (47 of 1950), S.45 (1-9-1950).

 

 

 

a*[64-T.          Power to exempt.-

 

The Central Government may subject to such conditions and restrictions as it may think fit to impose, exempt any insurer specified in sub-clause (c) of clause (9) of section 2 from the operation of all or any of the provisions of this part.]

 

[a] Part IIA containing S.64-T was inserted by the Insurance (Amendment) Act, 1950 (47 of 1950), S.45 (1-9-1950).

               

 

 

a*[PART IIB

 

TRAIFF ADVISORY COMMITTEE AND CONTROL OF TARIFF RATES

               

64-U.   Establishment of Tariff Advisory Committee.-

 

(1) With effect from the commencement of the Insurance (Amendment) Act, 1968, there shall be established a Committee to be called the Tariff Advisory Committee (hereafter in this Part referred to as the Advisory Committee) to control and regulate the rates, advantages, terms and conditions that may be offered by insurers in respect of general insurance business.

 

(2) The Advisory Committee shall be a body corporate having perpetual succession and a common seal, with power subject to the provisions of this Act, to acquire hold and dispose of property, both movable and immovable and to contract, and may, by the said name, sue and be sued.]

 

[a] Part IIB consisting of S.64-U inserted by the Insurance (Amendment) Act, 1968 (62 of 1968), section 29 (1-6-1969).

 

               

 

 

 

a*[64-UA.       Composition of the Advisory Committee.-

 

(1) The Advisory Committee shall consist of the following members, namely;-

 

                (a) the Controller of Insurance, ex officio, who shall be the Chairman;

 

(b) a senior officer of the office of the Controller, nominated by the Controller who shall be the Vice-Chairman;

 

(c) not more than ten representatives of Indian insurers elected (in their individual capacities) by such insurers in such manner from such areas and from among such insurers or groups of insurers as may be prescribed;

 

(d) not more than four representatives of insurers incorporated or domiciled elsewhere than in India but registered in India, elected (in their individual capacities) by such insurers in  such manner, and from among such insurers or groups of insurers as may be prescribed.

 

(2) The Secretary to the Advisory Committee shall be an officer of the office of the Controller, nominated by the Controller.]

 

[a] Part IIB consisting of S.64-UA inserted by the Insurance (Amendment) Act, 1968 (62 of 1968), section 29 (1-6-1969).

 

 

 

a*[64-UB.       Power to make rules in respect of matters in this part.-

 

(1) The Central Government may make rules to carry out the purposes of this Part.

 

(2) In particular and without prejudice to the generality of the foregoing power such rules may provided for all or any of the following matters namely;-

 

                (a) the functions to be discharged by the Advisory Committee;

 

(b) the term of office of the members of the Advisory Committee, the procedure for their election and the manner of  filing casual vacancies in the Advisory Committee;

 

                (c) the travelling and other allowances payable to the members of the Advisory Committee;

 

(d) the procedure for holding the meetings of the Advisory Committee and fro transaction of business thereat.

 

(3) The Advisory Committee may, with the previous approval of the Central Government, make regulations for all or any of the following matters, namely;-

 

(a) the constitution power and duties of Regional Committees and of sub-committees constituted by the Advisory Committee or any Regional Committee;

 

(b) the method of election of candidates fro Regional Committees and sub-committees, their eligibility term of office and method of filling casual vacancies;

 

(c) the procedure for convening meetings and transaction of business by Regional Committees and sub-committees;

 

(d) the appointment of officers and other employees of the Advisory  Committee and of Regional Committees or sub-committees constituted by or under the Advisory Committee or any Regional Committee and the terms and conditions of their service including travelling and other allowances;

 

(e) such other matters pertaining to procedure as are not inconsistent with the provisions of this Act or of rules made thereunder,

 

and may, from time to time, with the previous approval of the Central Government,  add to, amend or vary any such regulations.

               

(4) The regulations made by the Tariff Committee of the General Insurance Council under section 64-O as they were in force immediately before the commencement of the Insurance (Amendment) Act, 1968, shall, after such commencement, continue to be in force until rules  are made by the Central Government under sub-section (1) and immediately after such rules have come into effect, the regulations aforesaid shall cease to be valid.

 

(5) The Controller of Insurance shall be in direct charge of the establishment of the Advisory Committee and the Secretary of the Advisory Committee shall work under his direction and control.]

 

[a] Part IIB consisting of S.64-UB inserted by the Insurance (Amendment) Act, 1968 (62 of 1968), section 29 (1-6-1969).

 

 

a*[64-UC.       Power of the Advisory Committee to regulate rates, advantages, etc.-

 

 (1) The Advisory Committee may from time to time and to the extent it deems expedient, control and regulate the rates, advantages, terms and conditions that may be offered by insurers in respect of any risk or of any class or category of risks, the rates, advantages, terms and conditions of which, in its opinion, it is proper to control and regulate, and any such rates, advantages, terms and conditions shall be binding on all insurers;

 

Provided that the Controller may, with the previous approval of the Central Government, permit any insurer to offer, during such period (being not more than two years but which may be extended by periods of not more than two years at a time) and subject to such conditions as may be specified by him rates advantages terms or conditions different from those fixed by the Advisory Committee in respect of any particular category of risks, if he is satisfied that such insurer generally issues policies only to a restricted class of the public or under restricted category of risks.

 

(2) In fixing, amending or modifying any rates, advantages, terms or conditions, relating to any risk, the Advisory Committee shall try to ensure, as far as possible, that there is no unfair discrimination between risks of essentially the same hazard, and also that consideration is given to past and prospective loss experience :

 

Provided that the Advisory Committee may, at its discretion, make suitable allowances for the degree of credibility to be assigned to the past experience, including allowances for random fluctuations and may also, at its discretion, make suitable allowances for future fluctuations and unforseen future contingencies, including hazards of conflagration or catastrophe or both.

 

(3) Every decision of the Advisory Committee shall be valid only after and to the extent it is ratified by the Controller, and every  such decision shall take effect form the date on which it is or ratified by the Controller, or, if the Controller so orders in any case, form such earlier date as he may specify in the order.

 

(4) The decisions of the Advisory Committee in pursuance of the provisions of this section shall be final.

 

(5) Where as insurer is guilty of breach of any rate, advantage, term or condition fixed by the Advisory Committee, he shall be deemed to have contravened the provisions of this Act ;

 

Provided that instead of proceeding against the insurer for such contravention, the Controller may, if the insurer removes the contravention by recovering the deficiency in the premium, or where it is not practicable to do so, modifies suitably or cancels the contract of insurance, compound the offence on payment to the Advisory Committee of such fine, not exceeding rupees one thousand, as he may decide in consultation with the Advisory Committee.]

 

[a] Part IIB consisting of S.64-UC inserted by the Insurance (Amendment) Act, 1968 (62 of 1968), section 29 (1-6-1969).

 

 

 

a*[64-UD.       Transitional provisions.-

 

(1) Notwithstanding anything contained in this Part until the names of the members of the Advisory Committee elected for the first time after the commencement of the Insurance (Amendment) Act, 1968, are notified, the Tariff Committee of the General Insurance Council appointed under regulations made under sub-section (2) of section 64-O as it was in force immediately before the commencement of the Insurance (Amendment) Act, 1968, and in existence on such commencement (hereafter in this Part referred to as the Tariff Committee) shall continue to function and shall be deemed to be the Advisory Committee duly elected under this Part and the Controller of Insurance shall become the Chairman of that Committee with effect from the commencement of the Insurance (Amendment) Act, 1968, and function as such, and any Chairman of the Tariff Committee holding office immediately before such commencement shall cease to be the Chairman thereof from the date of such commencement but shall continue to be an ordinary member of the Advisory Committee.

 

(2) Notwithstanding anything contained in this Part, the constitutions of the Regional Councils establish under section 64P, as in force immediately before the commencement of the Insurance (Amendment) Act, 1968 (hereafter referred to as the Regional councils), and of the Sectional Committees formed thereunder, existing immediately before such commencement, shall continue to be in full force and be  of full effect until the regulations made by the Advisory Committee for the first item under section 64UB come into effect and as soon as such regulations have come into effect such constitution shall cease to have effect.

 

(3) Notwithstanding anything contained in this Part, until the Secretary to the Advisory Committee is nominated under sub-section (2) of the Section 64UA, the Secretary to the Tariff Committee holding office immediately before the commencement of the Insurance (Amendment) Act, 1968, shall function as the Secretary and shall be deemed to have been duly nominated under this Part.

 

(4) All rates, advantages, terms and conditions fixed by the Tariff Committee or the Regional councils prior to the commencement of the Insurance (Amendment) Act, 1968 and in force immediately before such commencement shall continue, except to such extend as they may be altered, replaced or abolished by the Advisory Committee, to be valid and fully in force as if they were rates, advantages, terms and conditions fixed by the Advisory Committee.]

 

 

[a] Part IIB consisting of S.64-UD inserted by the Insurance (Amendment) Act, 1968 (62 of 1968), section 29 (1-6-1969).

 

 

 

 

a*[64-UE.       Power of the Advisory Committee to require information, etc.-

 

(1) The Advisory Committee may require, by notice in writing any insurer to supply to it such information or statements, periodical or ad hoc, as it may consider necessary to enable it to discharge its functions under this Part and every insurer shall comply with such requirements within such period as may be specified by the Advisory Committee in this behalf, failing which the insurer shall be deemed to have contravened the provisions of this Act.

 

(2) Any information supplied under this section shall be certified by  a principal officer of the insurer or where the Advisory Committee has agreed in advance, by such other officer or officers of the insurer as the principal officer of the insurer may nominated for the purpose and if the notice so requires, also by an auditor.

 

(3) The Controller may, at any time, in writing, depute any subordinate of his to make a personal inspection of the books of account, ledgers, policy-registers and other books or documents of any insurer to verify the accuracy of any return or statement furnished by him under sub-section (1), or to verify that full particulars have been supplied by him in respect of all policies issued by him, and the insurer shall provide all facilities for such inspection, and make available to such person all the books of account, ledgers, policy-registers and other books or documents of the insurer which might be needed by him for such verification and the person debuted may himself extract from out of the books and recorcls of the insurer such information as may be needed to fill up or complete the returns required to be submitted to the Advisory Committee under this section.

 

(4) The Advisory Committee may, at any time, on the application of an insurer, make arrangements for the inspection of an organization which is concerned with the inspection of risks, adjustment of losses or fire fighting appliances, and may, whenever necessary, advise insurers about the adequacy of the arrangements for the inspection of risks and adjustment of losses or the suitability of such appliances :

 

Provided that no such inspect shall be made without the written permission of the concerned organisation.]

 

[a] Part IIB consisting of S.64-UE inserted by the Insurance (Amendment) Act, 1968 (62 of 1968), section 29 (1-6-1969).

 

 

 

a*[64-UF.       Assets and liabilities of the General Insurance Council to vest in the Advisory Committee.-

 

(1) On the commencement of the Insurance (Amendment) Act, 1968, all the assets and liabilities of the General Insurance Council appertaining to its Tariff Committee and to its Regional Councils and their Sectional Committees existing on the day shall be transferred to, and vest in, the Advisory Committee.

 

(2) The assets appertaining of the Tariff Committee, the Regional Councils, and their Sectional committees shall be deemed to included all rights and powers and all property, whether movable or immovable, including, in particular, cash balances, reserve funds, investments, deposits and all other interests and rights in, or arising out of, such property as any be in the possession of the Tariff Committee, Regional Councils and their Sectional Committees and all books of account or documents thereof; and liabilities shall be deemed to included all debts, liabilities and obligations of whatever kind existing and appertaining to the work of the Tariff Committee, the Regional Councils and their Sectional Committees.

 

(3) Where the General Insurance Council has established a provident or Superannuation fund or any other fund for the benefit of the Employees of its Tariff Committee or Regional Councils and constituted a trust in respect thereof (hereafter in this section referred to as an existing trust), the monies standing to the credit of any such fund at the commencement of the Insurance (Amendment) Act, 1968, shall, subject to the provisions of sub-section (4), stand transferred to,and vest in, on such commencement, the Advisory Committee.

 

(4) Where any employee of the Tariff Committee, or Regional Councils, of the General Insurance Council does not become an employee of the Advisory Committee, the monies and other assets appertaining to any fund referred to in sub-section (3) shall be apportioned between the trustees of the fund and the Advisory Committee in the prescribed manner; and in case of any dispute regarding such apportionment, the decision of the Central Government thereon shall be final.

 

(5) The Advisory Committee shall, as soon as may be after the commencement of the Insurance (Amendment) Act, 1968, constitute in respect of the monies and other assets which are transferred to, and vested in it under sub-section (3), one or more trusts having, as far as practicable, objects similar to the objects of the existing trust.

 

(6) Where all the monies and other assets belonging to an existing trust are transferred to, and vested in, the Advisory Committee under sub-section (3), the trustees of such trust shall, on the commencement of the Insurance (Amendment) Act, 1968, be discharged form the trust except as respects things done or omitted to be done by them before such commencement.]

 

[a] Part IIB consisting of S.64-UF inserted by the Insurance (Amendment) Act, 1968 (62 of 1968), section 29 (1-6-1969).

 

 

 

a*[64-UG.       Contracts, etc., to be effective by or against the Advisory Committee.-

 

(1) Unless otherwise expressly provided by or under this Act, all contracts, agreements and other instruments of whatever nature subsisting or having effect immediately before the commencement of the Insurance (Amendment) Act, 1968, and to which the Tariff Committee, or any Regional Council is a party or which is in favour of that Committee or that Council, shall be of as full force and effect against or in favour of the Advisory Committee and may be enfroced or acted upon as fully and effectually as if, instead of the Tariff Committee or the Regional Council, the Advisory Committee had been a party thereto or as if they had been entered into or issued in favour of the Advisory Committee.

 

(2) If, at the commencement of the Insurance (Amendment) Act, 1968 any suit, appeal or other legal proceeding of whatever nature is pending by or against the Tariff Committee, or any Regional Council then it shall not abate, be discontinued or in any way be prejudicial affected by reason of the transfer to the Advisory Committee of the assets and liabilities of the Tariff Committee, and the Regional Councils or of anything done under this Act, but the suit, appeal or other proceeding any be continued, prosecuted or enforced by or against the Advisory Committee.]

 

[a] Part IIB consisting of S.64-UG inserted by the Insurance (Amendment) Act, 1968 (62 of 1968), section 29 (1-6-1969).

 

 

 

a*[64-UH.       Employee, etc., to continue.-

 

(1) Every whole-time employee of the Tariff Committee, or the Regional Councils who was employed by that Committee or those Councils wholly or mainly in connection with its or their statutory duties immediately before the commencement of the Insurance (Amendment) Act, 1968, shall, on and form such commencement, become  an employee of  the Advisory Committee and shall hold his office in it by the same tenure,  at the same remuneration, and upon the same terms and conditions and with the same rates and privileges as to pension, gratuity and other matters as he would have held on such commencement if this Part had not been enacted, and shall continue to do so until his employment under the Advisory Committee is terminated or until his remuneration, terms and conditions, are duly altered by the advisory Committee :

 

Provided that nothing contained in this sub-section shall apply to any employee who has given notice of the Central Government in writing either prior to or within two months from the commencement of the Insurance (Amendment) Act, 1968, intimating his intention of not becoming an employee of the Advisory Committee.

 

(2) Where the Central Government is satisfied that for the purpose of securing uniformity in the scales of pay, remuneration and other terms and conditions of service applicable to employees of the Tariff Committee, or the Regional Councils, it is necessary so to do, or that a reduction in the remuneration payable or revision of the other terms and conditions of service applicable to employees or any class of them is called for, the Central Government may, notwithstanding anything contained in sub-section (1), or in the Industrial Disputes Act, 1947 (14 of 1947), or in any other law for the time being in force or in any award, settlement, or agreement for the time being in force, alter (whether by way of reduction or otherwise) the remuneration and other terms and conditions of service to such extend and in such manner as it thinks fit; and if the alteration is not acceptable to any employee, the Advisory Committee may terminate his employment by giving him compensation equivalent of three months' remuneration, unless the contract of service with such employee provides for a shorter notice of termination.

 

Explanation.- The compensation payable to an employee under this sub-section shall be in addition to and shall not affect any person, gratuity, provident fund money or any other benefit to which the employee may be entitled under his contract of service.

 

(3) If any question arises as to whether any person was a whole-time employee of the Tariff Committee, or the Regional Council, on the commencement of the Insurance (Amendment) Act, 1968, or as to whether any employee was employed wholly or mainly in connection with the statutory duties of the Tariff Committee, or any Regional Council, immediately before such commencement, the question shall be referred  to the Central Government whose decision thereon shall be final.

 

(4) Notwithstanding anything contained in the Industrial Disputes Act, 1947, or in any other law for the time being in force, the transfer of the services of any employee of the Tariff Committee, or the Regional Councils, of the Advisory Committee shall not entitle any such employee to any compensation under that Act or other law, and no such claim shall be entertained by any court tribunal or other authority.]

 

[a] Part IIB consisting of S.64-UH inserted by the Insurance (Amendment) Act, 1968 (62 of 1968), section 29 (1-6-1969).

 

 

 

 

a*[64-UI.        Duty of person having custody or control of property to deliver such property to the Advisory Committee.-

 

(1) Where any property of the Tariff Committee, or the Regional Councils (appertaining to its or their statutory duties) has been transferred to, and vested in, the Advisory Committee, then,-

 

(a) every person in whose possession, custody or control any such property may be, shall deliver the property to the Advisory Committee forth with:

 

(b) any person, who, on the commencement of the Insurance (Amendment) Act, 1968, has in his possession, custody or control any books, documents and other papers relating to the Tariff Committee, or the Regional Councils, shall be liable to account for the said books, documents and papers to the Advisory Committee and shall deliver them to the Advisory Committee or such person as that Committee may direct.

 

(2) Without prejudice to the provisions contained in this section, it shall be lawful for the Advisory Committee to take all necessary steps for securing possession of all properties which have been transferred to, and vested in, it under this Act.]

 

[a] Part IIB consisting of S.64-UI inserted by the Insurance (Amendment) Act, 1968 (62 of 1968), section 29 (1-6-1969).

 

 

 

a*[64-UJ.        Power of the Advisory Committee to constitute Regional Committees.-

 

(1) The Advisory Committee may constitute such Regional Committees as and when it deems fit for one or more of the prescribed regions.

 

(2) Each Regional Committee shall consist of not more than seven persons of which not more than five shall be elected by such groups of insurers carrying on general insurance business in the region as may be prescribed and not more than two shall be nominated by the Controller.

 

(3) For the purpose of enabling it effectively to discharge its duties, any Regional committee may constitute such sub-committees as it may think fit, whether consisting of members of the Regional Committee or not.

 

(4) It shall be the duty of every Regional Committee to advise the Advisory Committee on any question connected with the fixation of rates, advantages, terms and conditions for risks in its region which may be referred to it by the Advisory Committee for advice, and in addition, every Regional Committee shall perform such other functions as may be delegated to it by the Advisory Committee by regulations made by it with the previous approval of the Central Government.

 

(5) Where, in the exercise of any functions delegated to it under this section, any Regional Committee or any sub-committee thereof restrains an insurance agent from procuring or causing  to be procured  general insurance business in any area, such agent may prefer an appeal to the Central Government against such order within thirty days from the date of service of that order on him and the Central Government may, after giving such agent an  opportunity of being heard, pass such orders thereon as it may think fit and the orders made by the Central Government  on such appeal shall be final.

 

(6) Notwithstanding anything contained in this section, every Regional Council and every Sectional or other Committee of such Regional Council, in existence immediately before the commencement of the Insurance (Amendment) Act, 1968, shall, until it is abolished by the Advisory Committee, be deemed to be a Regional Committee or sub-committee as the case may be, established in accordance with the provisions of this section and shall function as such and shall have all the powers and responsibilities which it and immediately before such commencement, and if the term of any such Council or Committee expires before Regional Committees constituted under sub-section (1) and sub-committees constituted under sub-section (3) come into existence, such terms shall be deemed to have been validly extended up to the time when such Regional Committees and sub-committees are established.]

 

[a] Part IIB consisting of S.64-UJ inserted by the Insurance (Amendment) Act, 1968 (62 of 1968), section 29 (1-6-1969).

 

 

 

 

 

 

a*[64-UK.       Levy of fees by the Advisory Committee.-

 

(1) Every insurer shall annually before the prescribed ate make payment to the Advisory Committee in the prescribed manner or such fees, not exceeding for any year, in the case of an insurer doing only re-insurance business in India, one percent, of his total premiums in respect of facultative re-insurance accepted by him in India in the preceding year and, in the case of any other insurer, one percent.of the total gross premium written direct by him in India in the preceding year, as may be specified by the Advisory Committee for the purpose of this Part.

 

(2) The Advisory Committee may collect, in addition to the fees mentioned in sub-section (1) reasonable fees and charges from any person to cover the cost of any specific services rendered by it.

 

(3) If an insurer fails to make payment within the prescribed date of any fee required to be paid under sub-section (1) he shall be deemed to have failed to comply with the provisions of this Act.

 

(4) The Controller may, so long as an application to the Court under sub-section (5D) of section 3 has not been  made, revive the registration which might have been cancelled for failure to make payment of the fee required to be made under sub-section (1), if the insurer makes payment of such fee together with such penalty not exceeding the actual amount of fee payable as the Controller may require.]

 

[a] Part IIB consisting of S.64-UK inserted by the Insurance (Amendment) Act, 1968 (62 of 1968), section 29 (1-6-1969).

 

 

 

a*[64-UL.       Power to remove difficulties.-

 

If any difficulty arises in giving effect ot e provisions of this Part, the Central Government may, by order, make such provisions or give such directions not inconsistent with the provisions of this Act as may appear to it to be necessary or expedient for the removal of the difficulty :

 

Provided that no such power shall be exercised after the expire of a period of four years from the commencement of this Part.]

 

[a] Part IIB consisting of S.64-UL inserted by the Insurance (Amendment) Act, 1968 (62 of 1968), section 29 (1-6-1969).

 

 

 

 

a*[64-UM.      Licensing of surveyors and loss assessors.-

 

(1), (A) Save as otherwise provided in this section, no person shall act as a surveyor or loss assess or in respect of general insurance business after the expiry of a period of one year from the commencement of the Insurance (Amendment) Act, 1968, unless he holds a valid licence issued to him by the Controller.

 

(B) Every person who intends to act as a surveyor or loss assessor after the expiry of a period of one year from the commencement of the Insurance (Amendment) Act, 1968, shall make an application to the Controller within such time, in such form, in such manner and on  payment of such fee, not exceeding rupees two hundred and fifty, as may be prescribed.

 

(C) Every license issued under this section  shall remain in force, unless cancelled earlier, for a period of five years form the date of issue thereof, and any be renewed for a period of five years at a time, on payment of such fee, not exceeding rupees two hundred, as may be prescribed.

 

(D) No licence to act as a surveyour or loss assessor shall be issued unless-

 

                (i) the applicant, where he is an individual, satisfies  the Controller that he-

 

(a) has been in practice as a surveyor or loss assessor on the 26th day of October, 1968, or

 

                                (b) holds a degree of a recognized University in any branch a engineering, or

 

(c) is a fellow or associate member of the Institute of Chartered Accountants of India or the Institute of Cost and Works Accountants of India, or

 

(d) possesses  actuarial qualifications or holds a degree or diploma of any recognized University or institute in relation of insurance, or

 

                                (e) holds a diploma in insurance granted or recognized by the Government, or

 

                                (f) possesses such other technical qualification as any be prescribed, and

 

(g) does not suffer from any of the disqualification mentioned in sub-section (4) of section 42;

 

(ii) the applicant, where he is a company or firm, satisfies the Controller that all his directors or partners, as the case may be, possess one or more of the qualifications specified in clause (i) and none of such directors or partners suffer from any of the disqualification's mentioned in sub-section (4) of section 42.

 

(E) Every application for the renewal of the licence shall be made at least thirty days before the expiry of the period of validity thereof.

 

(F) The Controller may, if he is satisfied that any licence issued or renewed under this section has been lost or destroyed, issue a duplicate licence on payment of a fee of rupees five and the duplicate licence so issued shall remain in force for the remainder of the period of validity of the licence in lieu of which it is issued.

 

(G) Without prejudice to the powers conferred by sub-section (7), the Controller, if satisfied that the holder of any licence has made a statement which is false in material particulars with regard to his eligibility for obtaining such licence or has, after the issue or renewal of such licence, acquired any of the disqualifications mentioned in sub-section (4) of section 42, may, after giving a reasonable opportunity to the holder of such licence of being heard, by order cancel such licence and notify such cancellation in the Official Gazette.

 

(2) No claim in respect of loss which has occurred in India and requiring to be paid or settled in India equal to or exceeding twenty thousand rupees in value on any policy of insurance, arising or intimated to an insurer at any time after the expiry of a period of one year from the commencement of the Insurance (Amendment) Act, 1968 (62 of 1968), shall, unless otherwise directed by the Controller, be admitted for payment or settled by the insurer unless he has obtained a report, on the loss that has occurred from a person who holds a  licence issued under this section to act as a surveyor  or loss assessor (hereafter referred to as "approved surveyor or loss assessor"):

 

Provided that nothing in this sub-section shall be deemed to take away or abridge the right of the insurer to pay or settle any claim at any amount different from the amount assessed by the approved surveyor or loss assessor.

 

(3) The Controller may, at any time, in respect of any claim of the nature referred to in sub-section (2), call for an independent report from any other approved surveyor or loss assessor specified by him and such surveyor or loss assessor shall furnish such report to the Controller within such time as may be specified by the Controller or if no time limit has been specified by him within a reasonable time and the cost of, or incidental to, such report shall be borne by the insurer.

 

(4) The Controller may, no receipt of a report referred to in sub-section (3), issue such directions as he may consider necessary with regard to the settlement of the claim including any direction to settle a claim at a figure less than or more than that at which it is proposed to settle it or it was settled and the insurer shall be bound to comply with such directions :

 

Provided that where the Controller issues a direction for settling a claim at a figure lower the that at which it has already been settled, the insurer shall be deemed to comply with such direction if he satisfies the Controller that all reasonable steps, with due regard to the question whether the expenditure involved is not disproportionate to the amount required to be recovered, have been taken with due dispatch by him.

 

Provided further that no direction fro the payment of a lesser sum shall be made where the amount of the claim has already been paid and the Controller is of opinion that the recovery of the amount paid in excess would cause undue hardship to the insured :

 

Provided also that nothing in this section shall relieve the insurer from any liability, civil or criminal, to which he would have been subject but or the provisions of this sub-section.

 

(5) No insurer shall, after the expiry of a period of one year from the commencement of the Insurance (Amendment) Act, 1968, pay to any person any fee or remuneration for surveying, verifying or reporting on a claim of a loss under a policy of insurance unless the person making such survey, verification or report is an approved surveyor or loss assessor.

 

(6) Where, in the case of a claim of less than twenty thousand rupees in value on any policy of insurance it is not practicable for an insurer to employ an approved surveyor or loss assessor without incurring expenses disproportionate to the amount of the claim, the insurer any employ any other person (not being a person disqualified for the time being for being employed as a surveyor or loss assessor) for surveying such loss and may pay such reasonable fee or remuneration to the person so employed as he may think fit.

 

(7) If the C