Licensing of insurance agents
42. (1) The Authority or an officer authorised by him in this behalf shall, in the manner determined by the regulations made by it and on payment of the fee which shall not be determined by the regulations, which shall not be more than two hundred and fifty rupees, issue to any person making any application in the manner determined by the regulations, a licence to act as an insurance agent for the purpose of soliciting or procuring insurance business:
Provided that—
(i) in the case of an individual, he does not suffer from any of the disqualification mentioned in sub‑section (4); and
(ii) in the case of a company or firm, any of its directors or partners does not suffer from any of the said disqualifications:
Provided further that any licence issued immediately before the commencement of the Insurance Regulatory and Development Authority Act, 1999, shall be deemed to have been issued in accordance with the regulations which provide for such licence.
(2) A licence issued under this section shall entitle the holder to act as an insurance agent for any insurer.
(3) A licence issued under this section, after the commencement of the Insurance Regulatory and Development Authority Act, 1999, shall remain in force for a period of three years only from the date of issue, but shall, 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 disqualification mentioned in clauses (b), (c), (d), (e), (ea) and (f) 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 fee determined by the regulations made by the Authority which shall not be more than rupees two hundred and fifty, and an additional fee of an amount determined by the regulations not exceeding rupees one hundred by way of 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 Authority may, if satisfied that undue hardship would be caused otherwise, accept any application in contravention of this subsection on payment by the applicant of a penalty of seven hundred and fifty rupees.
(4) The disqualifications 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 or forgery or an abetment of or attempt to commit any such offence by a Court of competent jurisdiction:
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 Authority 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 of the winding up of an insurance company or in the course of an investigation of the affairs of all insurer it has then found that he has been guilty off or has knowingly participated in or connived at any fraud, dishonestly fir misrepresentation against an insurer or an insured.
(e) that in the case of an individual, he does not possess the requisite qualifications and practical training for a period not exceeding twelve months, as may be specified by the regulations made by the Authority in this behalf;
(ea) that in the case of a company or firm making an application under sub-section (1) or sub-section (3), a director or a partner or one or more of its officers or other employees so designated by it and in the case of any other person, the chief executive, by whatever name called, or one or more of his employees designated by him, do not possess the requisite qualifications and practical training and have not passed such an examination as required under clauses (e) and (f);
(g) that he violates the code of conduct as may be specified by the regulations made by the Authority.
(5) if it be found that an insurance agent being an individual is, or 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 Authority 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.
(6) The Authority may issue a duplicate licence to replace a licence lost, destroyed or mutilated on payment of such fee not exceeding rupees fifty as may be determined by the regulations.
(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 five hundred 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 thousand rupees.
(8) Where the person contravening sub‑section (7) 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 other officer 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 five thousand rupees.
Registration of principal agents, chief agents and special agents
42A. (1) The Authority or an officer authorised by it 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 disqualifications 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 on 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, or being a company or firm contains a director or partner who is suffering from any of the disqualifications mentioned in subsection (4) of section 42, without prejudice to any other penalty to which he may be liable, the Authority 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 lost, 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 an 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 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.
(9) No insurer shall, on or after the commencement of the Insurance (Amendment) Act, 2002, appointment or transact any insurance business in
Regulation of employment of principal agents
42B. (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
(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 (47 of 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 (47 of 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 date 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 Authority 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 Authority 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 (47 of 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 Authority, 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.
Regulation of employment of chief and special agents
42C. (1) Every contract between art 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 or 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 area in which the head office or any branch office of the insurer is operating, and neither the head office nor 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
(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 Authority 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 Authority 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 Authority 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 ant, 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 overriding commission of two and a half per cent. plus a further commission not exceeding three and three‑quarter per cent. on premiums in respect of which no commission is payable to any insurance agent;
(ii) be deemed to include all the terms 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 lst 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 respects 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 purposes of this Act, the matter shall be referred to the Authority 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 particulars relating to every special agent appointed by him shall be entered.
Issue of licence to intermediary or insurance intermediary
42D. (1) The Authority or an officer authorized by it in this behalf shall, in the manner determined by the regulations made by the Authority and on payment of the fees determined by the regulations made by the Authority, issue to any person making an application in the manner determined by the regulations, and not suffering from any of the disqualifications herein mentioned, a licence to act as an intermediary or an insurance intermediary under this Act:
Provided that,-
(a) in the case of an individual, he does not suffer from any of the disqualifications 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.
(2) A licence issued under this section shall entitle the holder thereof to act as an intermediary or insurance intermediary.
(3) A licence issued under this section shall remain in force for a period of three years only from the date of issue, but shall, 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 clauses (b), (c), (d), (e) and (f) of sub-section (4) of section 42 and the application for renewal of 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 fee, determined by the regulations made by the Authority and additional fee for an amount determined by the regulations, not exceeding one hundred rupees by way of 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.
(4) 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 Authority may, if satisfied that undue hardship would be caused otherwise, accept any application in contravention of this sub-section on payment by the application of the penalty of seven hundred and fifty rupees.
(5) The disqualifications above referred to shall be the following: -
(a) that the person is a minor;
(b) that he is found to be a 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 or forgery or an abetment of or attempt to commit any such offence by a court of competent jurisdiction:
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 Authority 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 proceedings relating to any policy of insurance of 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 dishonestly or misrepresentation against an insurer or an insured;
(e) that he does not possess the requisite qualifications and practical training for a period not exceeding twelve months, as may be specified by the regulations made by the Authority in this behalf;
(f) that he has not passed such examinations as may be specified by the regulations made by the Authority in this behalf;
(g) that he violates the code of conduct as may be specified by the regulations made by the Authority.
(6) If it be found that an intermediary or an insurance intermediary suffers from any of the foregoing disqualifications, without prejudice to any other penalty to which he may be liable, the Authority shall, and if the intermediary or an insurance intermediary has knowingly contravened any provisions of this Act may cancel the licence issued to the intermediary or insurance intermediary under this section.
(7) The Authority may issue a duplicate licence to replace a licence lost, destroyed or mutilated, on payment of such fee, as may be determined by the regulations made by the Authority.
(8) Any person who acts as an intermediary or an insurance intermediary without holding a licence issued under this section to act as such, shall be punishable with fine, and any insurer or any person who appoints as an intermediary or an insurance intermediary or any person not licensed to act as such or transacts any insurance business in India through any such person, shall be punishable with fine.
(9) Where the person contravening sub-section (8) 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 other officer of the company, and every partner of the firm who is knowingly a party to such contravention shall be punishable with fine.
Commission, brokerage or fee payable to intermediary or insurance intermediary
42E. (1) No intermediary or insurance intermediary shall be paid or contract to be paid by way of commission, fee or as remuneration in any form, an amount exceeding thirty per cent of the premium payable as may be specified by the regulations made by the Authority, in respect of any policy or policies effected through him:
Provided that the Authority may specify different amounts payable by way of commission, fee or as remuneration to an intermediary or insurance intermediary or different classes of business of insurance.
(2) Without prejudice to the provisions contained in this Act, the Authority may, by the regulations made in this behalf, specify the requirements of capital, form of business and other conditions to act as an intermediary or insurance intermediary.
Register of insurance agents
43. (l) Every insurer and every person who acting on behalf of an insurer employs insurance agents shall maintain a register showing the name and address of every insurance agent appointed by him and the date on which his appointment began and the date, if any, on which his appointment ceased.
Prohibition of cessation of payments of commission
44. (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 sucks 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 through him for the insurer were in force on a de to 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 (47 of 1950), shall be deemed to be service under the insurer.
(2) Any commission payable to an insurance agent under the provisions of clause (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.
Power to call for information
44A. For the purposes of ensuring compliance with the provisions of sections 40A, 40B, 40C, 42B and 42C the Authority 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 as the principal place of business of the insurer in 1India), 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 on 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.
Special provisions of law
Policy not to be called in question on ground of mis‑statement after two years
45. No policy of 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 calf two years from the date on which it was effected be called in question by an insurer on the ground that statement made in the proposal 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 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 or that it suppressed facts which it was material to disclose:
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.
Application of the law in force in
46.The holder of a policy of insurance issued by an insurer in respect of insurance business transacted in India after the commencement of this Act shall have the right, notwithstanding anything to the contrary contained in the policy or in any agreement relating thereto, receive payment in India of any sum secured thereby and to sue for any relief in respect of the policy in any court of competent jurisdiction in India; and if the suit is brought in India any question of law arising in connection with any such policy shall be determined according to the law in force in India:
Provided that nothing in this section shall apply to a policy of marine insurance
Payment of money into Court
47. (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, the insurer may, 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 a payment 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 insurer with details of every notice of claim received;
(e) the reasons why in the opinion of the insurer 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 from the maturing of the policy by survival, or from the date of receipt of 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 be obtained 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 cost 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 other ascertained claimant.
(8) The Court shall decide all questions relating to the disposal of claims to the amount paid into Court.
Claims on small life insurance policies
47A (1) In the event of any dispute relating to the settlement of a claim on a policy of life insurance assuring a sum 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 issued the policy or has otherwise assumed liability in respect thereof, the dispute may at the option of the claimant be referred to the Authority for decision and the Authority may, after giving an opportunity to the parties to be heard and after making such further inquires as he may think fit, decide the matter.
(2) The decision of the Authority 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 been competent to decide the dispute if it had not been referred to the Authority as if it wore a decree passed by that Court.
(3) There shall be charged and collected in respect of the duties of the Authority under this section such fees whether by way of percentage or otherwise as may be prescribed.
Directors of insurers being companies
48. (1) Where the insurer is a company incorporated under the Indian Companies Act, 1913 (7 of 1913), or under the Indian Companies Act, 1882 (6 of 1882), or under the Indian Companies Act, 1866 (10 of 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 the number to be elected not being less than two in any case shall notwithstanding anything to the contrary in the Articles of Association of the company be elected in the prescribed manner by the holders of policies of life insurance issued by the company.
(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 unless disqualified under sub‑section (2A) be eligible for election as directors under sub‑section (1), and only and all 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 to the persons who took out the policy shall not disqualify that person for being eligible for election as a director under sub‑section (1)
(2A) A person shall be ineligible for election as a director, under subsection (1) of any company if he is a director, officer, employee, or legal or technical adviser of that company, or any other insurer, 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, from being re‑elected:
Provided further that the Authority may exempt any director of a subsidiary company of the insurer from any disqualification imposed by this sub-section
(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‑section (1) of section 95 in respect of which the Authority certifies that in his opinion owing to conditions governing membership of the company or to the nature of the insurance contracts undertaken by it the application of the provisions of this section to the company is practicable, or
(b) any company in respect of which the Authority certifies that in opinion the company, have taken all reasonable steps to achieve compliance with the provisions of this section, has been unable to obtain the required number of directors with the required qualifications.
(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 there from, 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.
Life Insurance agents not to be directors of life insurance companies
48A. No insurance agent who solicits or procures life insurance business, and 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 (6 of 1946), shall not become ineligible to remain a director by reason of this section until the expiry of six months from the commencement of that Act.
Further provision regarding directors
48B. (1) An insurer specified in sub-clause (b) of clause (9) of section 2 and carrying on life insurance business shall not have a common director with another such insurer.
(2) The Authority may, for such period, to such extent and subject to such conditions as it may specify, exempt from the operation of this I 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.
Appointment of additional directors
48C. [Repealed by the Insurance (Amendment) Act, 1968(62 of 1968).]
Restriction on dividends and bonuses
49.(1) No insurer, being an insurer specified in sub‑clause (a) (ii) or sub-clause (b) of clause (9) of section 2, who I carries on the business of life insurance or any other class or subclass ofinsurance business to which Sec. 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 services 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 such form as may be specified by the regulations made by the Authority submitted to the Authority as part of the abstract referred to in Section 15 as a result of an actuarial valuation assets and liabilities of the insurer; nor shall he increase such surplus by contributions out of any reserve fund or otherwise unless such contributions have been brought in as 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 Authority under Section 15 of this Act or to the Central Government under Section 11 of the Indian Life Assurance Companies Act, 1912 (6 of 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 where 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:
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 such sums as may be specified by the Authority and such share shall in no case exceed ten percent of such surplus in case of participating policies and in other cases the whole thereof.
(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 an abstract of the report of the actuary referred to in sub-section (1) of section 13.
Notice of options available to the assured on the lapsing of a policy
50. An insurer shall, 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 unless these are set forth in the policy.
Supply of copies of proposals and medical reports
51. 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.
Prohibition of business on dividing principle
52. (l) 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 party 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 actuarial 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.
(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 (13 of 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 payment 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‑holder; and the insurer shall, before the expiry of six months from the date on which the actuary make his recommendations, distribute such assets in accordance with those recommendations.
(3) Where at any time prior to the commencement of the Insurance (Amendment) Act, 1941 (13 of 1941), an insurer has 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 Authority 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 Authority may either sanction such measures 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.
Mismanagement by Administrator
When Administrator for management of insurance business may be appointed
52A (1) If at any time the Authority 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 Authority.
(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 Authority 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 Authority 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 Authority 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.
Powers and duties of the Administrator
52B (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 Authority 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 with 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; and
(d) such other course as he deems advisable.
(2) On the filing of the report with the Authority, the Authority 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 Authority 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, or a company.
Powers of Administrator respecting property liable to attachment under Section 106
52BB. (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, an application is made under sub‑section (1) of Sec. 106 to the Court competent to exercise jurisdiction under that sub‑section, and when such an 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 someadult male member of his family or by affixing such copy to someconspicuous part of the premises in which he is known to have last resided orcarried 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 a 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 sections 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 Sec. 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 Sec. 176 of the Indian Penal Code (45 of 1860).
(9) The Administrator shall have all the powers of a civil court under the Code of Civil Procedure, 1908 (5 of 1908), while trying a suit in respect of the following matters, namely:
(a) summoning and enforcing the attendance of witnesses 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 (45 of 1860).
(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 of nullifying or affecting in any way any such order.
Cancellation of contracts and agreements
52C. The Administrator may, at any 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 interest of holders of life insurance policies.
Termination of appointment of Administrator
52D. If at any time, on a report made by the Authority 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 undesirable 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.
Finality of decision appointing Administrator
52E. Any order or decision of the Central Government made in pursuance of Section 52‑A or Section 52‑D shad be final and shall not be called in question in any Court.
Penalty for withholding documents of property from Administrator
52 F 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.
Protection of action taken under Sections 52‑A to 52‑D
52G 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 Section 52‑A, Section 52‑B, Section 52‑BB or Section 52‑C.
(2) No suit or other legal proceeding shall lie against the Central Government or the Authority for any damage caused‑ or likely to be caused by anything which is in good faith done or intended to be done under Section 52‑A, Section 52‑B, or Section 52‑D.
Acquisition of the Undertakings of Insurers in Certain Cases
Power of Central Government to acquire undertakings of insurers in certain cases
52H (1) If, upon receipt of a report from the Authority, 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 34‑F or Section 34G,or
(ii) any order made under Sec. 34‑E; or
(b) is being managed in a manner detrimental to the public interest or to the interests of his policy‑holders, or share‑holders,
and that
I. in the public interest, or
II. in the interest of the policy‑holders or share‑holders 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, 52‑J and 52‑N and in the Eighth Schedule referred to as the acquired insurer) with effect from such date as maybe specified in the order (hereinafter in this section and in Sections 52‑1 and 52J and in the Eighth Schedule referred to as the appointed day):
Provided that no undertaking off 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 52‑1 to 52N—
(a) "notified order" means an order published in the official Gazette;
(b) "undertaking", in relation to an insurer incorporated outside
(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 Sec. 52‑I or not (hereafter In this section and in Section 52‑1 to 52‑N and in the Eighth Schedule referred to as the acquired 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 no such other date as may be specified in this behalf in the direction.
(5) Where the undertaking of the acquired insurer vests 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 52M, all contracts, deeds, bonds, agreements, powers of attorney, grants of legal representation and other instruments of whatever nature subsisting, 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 of 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.
Power of Central Government to make scheme
52-I (1) The Central Government may make a scheme for carrying out the purposes of Sections 52 H and 52J to 52‑M (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 officer 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 Sec. 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 was granted, and if any question arises whether he has so observed such conditions, the question shall he 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, completing the effectual transfer to the Central Government or the acquiring insurer of any asset or liability which forms part of the undertaking of the 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.
Compensation to be given to the acquired insurer
52J (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 Authority, 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 (l) 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 subsection (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.
Constitution of the Tribunal
52K (1) The Central Government may, for the purposes of Sections 52‑H 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 (38 of 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 subsection (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 Sec. 52J, choose one or more persons having special knowledge or experience of any relevant matter to assist it in the determination of such compensation.
Tribunal to have powers of Civil Court
52L (1) The Tribunal shall have the powers of a Civil Court, while trying a suit, under the Code of Civil Procedure, 1908 (5 of 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 commission for the examination of witnesses 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 Authority-
(a) to produce any books of account, or other documents which the Central Government or the Authority 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, 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 (5 of 1898).
Procedure of the Tribunal
52M (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.
Special provisions for the dissolution of acquired insurers
52N 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, 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 be 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.
Winding up
Winding up by the Court
53. (1) The Court may order the winding up in accordance with the Indian Companies Act, 1913 (7 of 1913), of any insurance company and the provisions of that Act shall, subject to the provisions of this Act apply accordingly.
(2) In additional 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 the sanction of the Court previously obtained a 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 of life insurance that have been in force for not less than three years and are of the total value of not less than fifty thousand rupees; or
(b) if the Authority, who is hereby authorised to do so, applies in this behalf to the Court on any of the following grounds, namely
(i) that the company has failed to deposit or to keep deposited with the Reserve Bank of India the amounts required by Section 7 or Section 98;
(ii) that the company having failed to comply with any requirement of this Act has continued such failure Nor having contravened any provision of this Act has continued such contravention for a period of three months after notice of suchfailure Nor contravention has been conveyed to the company by the Authority.
(iii) that it appears from Many returns or statements furnished under the provisions of this Act or from the results of any investigation made there under that the company is, or is deemed to be, insolvent, or
(iv) that the continuance of the company is prejudicial to the interest if the policy‑holders or to the public interest generally
Unpaid‑up share capital
53A Notwithstanding anything contained in any other law, in ascertaining for any purpose of this Act the solvency or otherwise of an insurer no account shall be taken of any assets of the insurer consisting of unpaid‑up share capital.
Voluntary winding up
54. Notwithstanding anything contained in the Indian Companies Act, 1913 (7 of 1913), an insurance company shall not be wound up voluntarily except for the purpose of effecting an amalgamation or a re‑construction of the company, or on the ground that by reason of its liabilities it cannot continue its business.
Valuation of liabilities
55. (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 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 amount of the contracts of any insurance company the value of the assets and liabilities of the company and all claims in respect of policies issued by it shall be ascertained in such manner and upon such basis as the Court thinks proper having regard to the rule aforesaid.
(3) The rule in the 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 (7 of 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.
Application of surplus assets of life insurance fund in liquidation or insolvency
56 (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 of any liabilities other than those in respect of life insurance business except 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 of the insurer have been ascertained, there is found to be a surplus of assets over liabilities (hereinafter referred to as a prima facie 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-
(a) if in 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 life 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
(b) 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 to 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 of the insurer in respect of the life insurance business be deemed to be the prima facie surplus..
Winding up of secondary companies
57 (l) 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 thereof has or have claims against the company to which such transfer was made (in this section referred to as the principal company) then, 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 in conjunction with the principal company and may, by the same or any subsequent order appoint the same person 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 the 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 into between the companies in the same manner as the Court has regard to the rights and liabilities of different classes of contributories in the case of the winding‑up of a single company or as near thereto as circumstances admit. I
(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 one insurance company and in the relation of a secondary company to some other insurance company or where there are several insurance companies standing in the relation of secondary companies to one principal company, the court may deal with any number of such companies together or in separate groups as it thinks most expedient upon the principles laid down in this section.
Schemes for partial winding‑up of insurance companies
58. (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 on the proposed winding‑up) for any future rights of every class 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 provisions 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 (7 of 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 objects shall as respects the alteration have effect as if it where an order confirmed under Sec. 12 of the Indian Companies Act, 1913 (7 of 1913), and the provisions of Sections 15 and 16 of that Act shall apply accordingly.
Return of deposits
59. In the winding up of an insurance company (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 redeposit 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.
Notice of policy values
60. In the winding up of an insurance company for the purposes of a 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 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 persons in 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 or order of the Court.
Power of Court to reduce contracts of insurance
61. (1) where an insurance company is in liquidation or any other insurer is insolvent, the Court may make an order reducing the amount of the insurance contracts of the company or otherinsurer 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 fit.
(3) Application for 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 Authority and the Authority and any person whom the Court thinks likely to be affected shall be entitled to be heard on any such application.
Special Provisions Relating to External Companies
Power of Central Government to impose reciprocal disabilities on non-Indian companies
62. Where by the law or practice of any country outside India in which an insurer carrying on insurance business in India is constituted, incorporated or domiciled, insurance companies incorporated in 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 India.
Particulars to be filled by insurers established outside India
63. Every insurer, having his principal place of business or domicile outside Indian, who establishes a place of business within
(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
(d) the full address of the principal office of the insurer in
(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 C1ause(f) above, the company shall forthwith furnish to the Authority particulars of such alteration.
Books to be kept by insurers established outside
64. Every insurer having his principal place of business or domicile outside India shall keep at his principal office in 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 Authority in respect of the insurance business transacted by him, in India to be complied and if necessary, checked by the Authority and shall furnish to the Authority 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.
PART II‑A
Insurance Association of
Incorporation of the Insurance Association of
64A. (1) All insurers carrying on insurance business in
commencement begin to carry on insurance business in India, and, if the Central Government, by notification in the official Gazette, so declares all provident societies carrying on insurance business in India on the date of such notification and all provident societies which may begin to carry on insurance business in 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
(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 moveable, and immoveable and shall by the said name sue and be sued.
Entry of names of members in the register
64B. (1) The Authority 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 Authority 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.
Councils of the Insurance Association of
64C. 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) the General Insurance Council consisting of all the members and associate members of the Association who carry on general insurance business in
Authority of members of Association to act through agents
64D. It shall be lawful for any member of the Life Insurance Council or the General Insurance Council to authorise any individual, whether an officer of the insurer or not, to act as the representative of such member at any meeting of the Council concerns or to stand as a candidate for any election held by that Council.
Authorities of the Life Insurance Council and the General Insurance Council
64E. The authorities of the Life Insurance Council and the General Insurance Council shall be the Executive Committees constituted in the manner provided in this Part.
Executive Committees of the Life Insurance Council and the General Insurance Council
64F.1) The Executive Committee of the Life Insurance Council shall consist of the following persons, namely:
(a) two officials nominated by the Authority, 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 Authority.
(c) one official not connected with any insurance business, nominated by the Authority and
(d) five persons connected with life insurance business, nominated by the Authority 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 Authority, 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 of members and from such areas as may be specified by the Authority
© one non‑official not connected with any insurance business, nominated by the Authority and
(d) five persons connected with general insurance business, nominated by the Authority 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 purpose.
(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 Authority 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 Authority 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 Authority, 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 Council under this subsection shall be with the previous consent of the Authority 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 Authority.
Resignation and filling up of casual vacancies
64G. (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 Authority, 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.
Duration and dissolution of Executive Committees
64H. (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 out‑going 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.
Power of Executive Committee of Life Insurance Council to hold examinations for Insurance agents
64-I The Life Insurance Council may, with the approval of the Authority authorise 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 Authority, by notification in the official Gazette, so declares, then, not withstanding anything contained in Sec. 42, only individuals who have passed any such examination shall be eligible to apply for a 1icence under Section 42:
Provided that nothing in this sub‑section shall affect the right of any individual, who has been licensed to act as an insurance agent under Section 42 before the date of such notification, to act as such, or to have his 1icence renewed from time to time
Functions of Executive Committee of Life Insurance Council
64J. (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 Authority in the matter of controlling the expenses of insurers in respect of their life insurance business in
(c) to bring to the notice of the Authority 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 Authority, 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.
Executive Committee of Life Insurance Council may advise in controlling expenses
64K. (1)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 Authority 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 Authority 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 Authority 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 Authority may cause an investigation and valuation, as at such date as the Authority 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 Authority, 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 Authority may specify.
(4) The provisions of sub‑sections (1) and (4) of Section 13 and sub‑sections (1) and (2) of Section 15, or, as the case may be, of sub‑section (2) of Sec. 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 Authority 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 Authority may take such action as may be prescribed.
Functions of the Executive Committee of General Insurance Council
64L (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 standards 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 Authority 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 Authority the case of any such insurer acting in a manner prejudicial the interests of holders of general insurance po1icies;
(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 Authority 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 be prescribed from all insurers carrying on general insurance business:
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 Authority, the Executive Committee of the General Insurance Council shall not collect any fees in relation to that year.
Executive Committee of the General Insurance Council may advise in controlling expenses.
64M. (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 Authority in fixing under the proviso to subsection (1) of Section 40‑C 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 the fixing any such limits the Authority shall have due regard to the conditions obtaining in general insurance business in the preceding year, and he may fix different limits for different groups of insurers.
(2) Where an insurer is guilty of contravening the provisions of Section 40C with respect to the expenses of management the Authority 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 Authority may take such action against the insurer as may be prescribed.
Powers of Executive Committees to act together in certain cases
64N. The Central Government may prescribe the circumstances in 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 doing with any matter of common interest to both Committee, 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.
General powers of Life Insurance Council and General Insurance Council
64R (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 Authority, 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 thenumber 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 Authority;
(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 to exercise any of the powers conferred on the Life Insurance Council or the General Insurance Council, as the case may be, under C1ause (a), C1ause (b) or C1ause (c) of sub‑section (1).
Power of Central Government to remove difficulties
64S. The Central Government may exercise such powers 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 64A has been issued declaring provident societies to be members of the Insurance Association of India, the powers to associate provident societies effectively in the exercise of all powers 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 40B applicable to the provident societies specified in Clause (b) in the same manner as they apply to insurers.
Power to exempt
64T. 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 C1ause (9) of Section 2 from the operation of all or any of the provisions of this Part.
PART II‑B
TARIFF ADVISORY COMMITTEE AND AUTHORITY OF TARIFF RATES
Establishment of Tariff Advisory Committee
64U (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 moveable and immoveable, and to contract, and may, by the said name, sue and be sued.
Composition of the Advisory Committee
64UA. (1) The Advisory Committee shall consist of the following members, namely:—
(a ) the Chairperson of the Authority ex officio, who shall be the Chairman;
(b)a senior officer of the office of the Authority nominated by the Authority, 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 Authority, nominated by the Authority.
Power to make rules in respect of matters in this part
64UB. (1) The Authority may by notification in the official Gazette may make regulations tocarry out the purposes of this Part.
(2) In particular, and without prejudice to the generality of the foregoing power, such regulations may provide 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 filling casual vacancies in the Advisory Committee;
(c) the traveling and other allowances payable to the members of the Advisory Committee;
(d) the procedure for holding the meeting of the Advisory Committee and for transaction of business thereat.
(3)The Advisory Committee may, by notification in the Official Gazette with the previous approval of the Authority, make regulations for all or any of the following matters, namely,—
(a) the constitution, powers and duties of Regional Committees and of sub‑committeesconstituted by the Advisory committee or any Regional Committee;
(b) the method of election of candidates for Regional Committees and of 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 there under,
and may, from time to time, with the previous approval of the Authority, 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 Chairperson of the Authority 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.
Power of the Advisory Committee to regulate rates, advantages, etc
64UC. (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 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 rate, advantages, terms and conditions shall be binding on all insurers:
Provided that the Authority may, 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 a 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 risk 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 unforeseen 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 Authority, and every such decision shall take effect from the date on which it is so ratified by the Authority, or if the Authority so orders in any case, from 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 an 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 Authority 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.
Transitional provisions
64UD. (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 64-0 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 Authority 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.
Provided that the Chairperson of the Authority shall become the Chairman of the Advisory committee with effect from the commencement of the Insurance Regulatory and Development Authority Act, 1999 and function as such, and any chairman of the Tariff Committee holding office immediately before such commencement shall cease to be the Chairman.
(2) Notwithstanding anything contained in this Part, the constitution of the Regional Councils established under Section 64‑P, 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 there under, 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 time under Section 64UB come into effect and as soon as such regulations have come into effect such constitutions 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 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 extent 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. ‑
Power of the Advisory Committee to require Information, etc
64UE. (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 nominate for the purpose and if the notice so requires, also by an auditor.
(3) The Authority 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 deputed may himself extract from out of the books and records 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 inspection shall be made without the written permission of the concerned organization
Assets and liabilities of the General Insurance Council to vest in the Advisory Committee
64UF. (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 that day shall be transferred to, and vest in, the Advisory Committee.
(2) The assets appertaining to the Tariff Committee, the Regional Councils, and their Sectional Committees shall be deemed to include all rights and powers and all property, whether moveable 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 the Tariff Committee, Regional Councils and their Sectional Committees and all books of account or documents thereof; and liabilities shall be deemed to include 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 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 subsection (4), stand transferred to, and vest in, on such commencement, the Advisory Committee.
(4) Where any employee of the Tariff Committee, or the Regional Councils, or 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 subsection (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 trusts.
(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 from the trust except as respects things done or omitted to be done by them before such commencement.
Contracts, etc., to be effective by or against the Advisory Committee
64UG (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 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 enforced 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 prejudicially 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 may be continued, prosecuted or enforced by or against the Advisory Committee.
Employees, etc., to continue.—
64UH. (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 from 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 to 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 extent 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 to three months' remuneration, unless the contract of service with such employees provides for a shorter notice of termination.
Explanation. - The compensation payable to an employee under this subsection shall be in addition to and shall not affect any pension, 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 (14 of 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, to 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.
Duty of person having custody or control of property to deliver such property to the Advisory Committee
64UI. (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 forthwith;
(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 suchperson as the 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.
Power of the Advisory Committee to constitute Regional Committees
64UJ. (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 Authority.
(3) For the purpose of enabling it effectively to discharge its duties, and 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 Authority against such order within thirty days from the date of service of that order on him and the Authority 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 Authority on such appeal shall be final.
(6) Notwithstanding anything contained in this section every Regional Council and every Sectional or other Committee of the 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 had immediately before such commencement, and if the term of any such Council or Committee expires before Regional Committees constituted under sub‑section (1) and subcommittees 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.
Levy of fees by the Advisory Committee.
64UK. (1) Every insurer shall annually before the prescribed date make payment to the Advisory Committee in the prescribed manner of such fees, not exceeding for any year, in the case of an insurer doing only re‑insurance business in India, one per cent 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 per cent 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 Authority may, so long as an application to the Court under sub section (5‑D) 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 Authority may require.
Power to remove difficulties
64UL. If any difficulty arises in giving effect to the 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 expiry of a period of four years from the commencement of this Part
Licensing of surveyors and loss assessors
64UM (1) (A) Save as otherwise provided in this section, no person shall act as a surveyor or loss assessor 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 Authority.
(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, but before the commencement of the Insurance Regulatory and Development Authority Act, 1999,shall make an application to the Authority 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.
(BA) 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 Regulatory and Development Authority Act, 1999 shall make an application to the Authority within such time, in such manner and on payment of such fee as may be determined by the regulations made by the Authority;
Provided that any licence issued immediately before the commencement of the Insurance Regulatory and Development Authority Act, 1999 shall be deemed to have been issued in accordance with the regulations providing for such licence.
(C) Every licence issued under this section shall remain in force, unless cancelled earlier, for a period of five years from the date of issue thereof, and may be renewed for a period of five years at a time, on payment of such fee, not exceeding rupees two hundred, as may be determined by the regulations.
(D) No licence to act as a surveyor or loss assessor shall be issued unless
(i) the applicant, where he is an individual, satisfies the Authority that he –
(a) has been in practice as a surveyor or loss assessor on the date of commencement of the Insurance Regulatory and Development Authority Act, 1999 or
(b) holds a degree of a recognised University in any branch of 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 to insurance, or
(e) holds a diploma in insurance granted or recognised by the Government, or
(f) possesses such other technical qualifications as may be specified by the regulations made by the Authority, and
(g) does not suffer from any of the disqualifications mentioned in sub section (4) of Section 42;
(ii) the applicant, where he is a company or firm, satisfies the Authority that all his directors or partners, as the case may be, possess one or more of the qualifications specified in C1ause (i) and none of such directors or partners suffer from any of the disqualifications 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 Authority 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 a validity of the licence in lieu of which it is issued.
(G) Without prejudice to the powers conferred by sub‑section (7), the Authority, 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.
(1A) Every surveyor and loss assessor shall comply with the code of conduct in respect of their duties, responsibilities and other professional requirements as may be specified by the regulations made by the Authority.
(2) No claim in respect of a 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, shall, unless otherwise directed by the Authority, 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 assessors)
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 Authority 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 Authority within such time as may be specified by the Authority or if no time limit has been specified by him within reasonable time and the cost of, or incidental to, such report shall be borne by the insurer.
(4) The Authority may, on 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 Authority issues a direction for settling a claim at a figure lower than that at which it has already been settled, the insurer shall be deemed to comply with such direction if he satisfies the Authority 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 despatch by him:
Provided further that no direction for the payment of a lesser sum shall be made where the amount of the claim has already been paid and the Authority 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 for 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 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 may employ any other person (not being a person disqualified for flee 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 Authority is satisfied that an approved surveyor or loss assessor has been guilty of wilfully making a false statement knowing it to be false or of being knowingly a party to the settlement of a claim in a fraudulent manner, he may, after giving such surveyor or loss assessor an opportunity of being heard, cancel the licence issued to him with effect from such date as may be specified by him and shall notify such cancellation in the official Gazette.
(8) Any surveyor or loss assessor whose licence has been cancelled shall not be eligible for having a licence to act as a surveyor or loss assessor for a period of three years from the date on which the cancellation is notified in the official Gazette.
(9)The Authority may in respect of any claim of value of less than twenty thousand rupees on an insurance policy, if the claim has not been or is not proposed to be reported upon by a surveyor or loss assessor, direct that such claim shall be reported upon by an approved surveyor or loss assessor and where the Authority makes such direction, the provisions of sub sections (3) and (4) shall apply in respect of such claim.
(10) Where, in relation to any class of claims, the Authority is satisfied that it is customary to entrust the work of survey or less assessment to any person other than a licensed surveyor or loss assessor, or if not practicable to make any survey or loss assessment, it may, by an order published in the Gazette, exempt such class of claims from the operation of this section.
PART II‑C
SOLVENCY MARGIN, ADVANCE PAYMENT OF PREMIUM AND RESTRICTIONS ON THE
OPENING OF A NEW PLACE OF BUSINESS
Assets and liabilities how to be valued
64V. (1) For the purpose of ascertaining compliance with the provisions of Section 64 VA,—
(i) assets shall be valued at values not exceeding their market or realisable value and the assets hereafter mentioned shall be excluded to the extent indicated, namely:
i. agents' balances and outstanding premiums in
ii. agents' balances and outstanding premiums outside
iii. sundry debts, to the extent they are not realizable;
iv. advances of an unrealizable character;
v. furniture, fixtures, dead stock and stationery;
vi. deferred expenses;
vii. profit and loss appropriation account balance and any fictitious assets other than pre‑paid expenses;
viii. such other asset or assets as may be specified by the regulations made in this behalf.
(ii) a proper value shall be placed on every item of liability and liabilities in respect of share capital, general reserve and other reserves of similar nature not created to meet specific liabilities and investment reserves, reserve for bad and doubtful debts, and depreciation fund shall be excluded and liabilities hereafter mentioned shall be included to the extent indicated, namely:
(a) provision for dividends declared or recommended, and outstanding dividends in full;
(b) reserves for unexpired risks in respect of
(i) fire and miscellaneous business, 50 per cent.,
(ii) marine cargo business, 50 per cent., and
(iii) marine hull business, 100 per cent., of the premium, net of re‑insurances, during the preceding twelve months;
(c) estimated liability in respect of outstanding claims, in full;
(d) amount due to insurance companies carrying on insurance business in full;
(e) amounts due to sundry creditors, in full;
(f) provision for taxation, in full.
(g)such other liability which may be made in this behalf to be included for the purpose of clause (ii)
Explanation. In the case of an insurer, whose principal place of business or domicile is outside India, where, in the accounts filed with the public authority of the country in which the insurer is constituted, incorporated or domiciled, in respect of marine insurance business, the provisions for unexpired risks and outstanding claims are not shown separately, the liabilities under items (b) and (c) of C1ause (ii) in respect of marine insurance business shall be takentogether at a figure of not less than the total premium less‑reinsurances in respect of that class ofbusiness during the preceding twelve months.
(2) Every insurer shall furnish to the Authority with his returns under Section 15 or Section 16, as the case may be, a statement certified by an auditor, of his assets and liabilities assessed in the manner required by this section as on the 31st day of December of the preceding year.
(3) Every insurer shall value his assets and liabilities in the manner required by this section and in accordance with the regulations which may be made by the Authority in this behalf.
Sufficiency of assets
64VA. (1) An insurer shall, at all times, before the commencement of the Insurance Regulatory and Development Authority Act, 1999, maintain an excess of the value of his assets over the amount of his liabilities of not less than the amount arrived at as follows (hereafter in this section referred to as the "relevant amount"), namely—
(i) in the case of an insurer whose total premium income less reinsurances in respect of general insurance brininess (hereafter in this subsection referred to as the "said income") in the preceding twelve months did not exceed five crores of rupees, one fifth of the said income subject to a minimum of
a. five lakhs of rupees in the case of an insurer who is a cooperative society registered under the Cooperative Societies Act, 1912 (2 of‑ 1912), or any other law for the time being in force in any State relating to co‑operative societies, or
b. ten lakhs of rupees in the case of any other insurer; and
(ii) in the case of an insurer whose said income in the preceding twelve months exceeded five crores of rupees, the aggregate of one‑fifth of the first five crores of rupees of the said income and one‑tenth of the amount by which the said income in the preceding twelve months exceeded five crores of rupees:
Provided that where a number of insurers occupying the status of parent and subsidiary companies prepare, under the laws of the country of origin of the parent company, a consolidated balance sheet, the provisions of this subsection shall apply to such of them as are not members of any group as if they constituted a single insurer, subject to the further condition that the relevant amount shall, in no case, be less than a sum equal to—
I. the number of such insurers multiplied by ten lakhs of rupees, or
II. where all the insurers are co‑operative societies registered under the Co‑operative Societies Act, 1912 (2 of 1912), or any other law for the time being in force in any State relating to co‑operative societies, the number of such insurers multiplied by five lakhs of rupees:
Provided further that If in respect of any insurer the Central Government is satisfied that either by reason of an unfavorable claim, experience or because of a sharp increase in the volume of new business or for any other reason, compliance with the provisions of this sub‑section would cause undue hardship to the insurer, it may direct that for such period and subject to such conditions as it may specify, the provisions of this sub‑section shall apply to that insurer with the modification that instead of the proportion of one‑fifth, wherever mentioned in this sub‑section, such other proportion being not less than one-tenth as may be specified by that Government shall be applicable to that insurer:
Provided also that in the case of an insurer carrying on insurance business at the commencement of the Insurance (Amendment) Act, 1968, it shall be sufficient compliance with the provisions of this sub‑section until the 31st December, 1972 or until such subsequent date, not being later than 31st December, 1976, as the Central Government may, at its discretion, allow for any particular insurer, if he progressively brings up the excess of the value of his assets over the amount of his liabilities, in such manner as may be prescribed, to the relevant amount.
(1A) Every Insurer shall, at all times, on or after the commencement of the Insurance Regulatory and Development of Authority Act, 1999, maintain an excess of the value of his assets over the amount of his liabilities of not less than the amount arrived at as follows (hereinafter referred to in this section referred to as the “required solvency margin”), namely:-
i. in the case of an insurer carrying on life insurance business, the required solvency margin shall be the higher of the following amounts-
a) fifty crores of rupees (one hundred crores of rupees in case of reinsurers); or
b) the aggregate sums of the results arrived at in items (I) and (II) stated below:-
I. the aggregate of the results arrived at by applying the calculation described in item (A) below (Step I) and the calculation described in items (B) below (Step II):
A. for Step I-
(A.1) there shall be taken, a sum equal to a percentage determined by the regulations not exceeding five per cent of the mathematical reserves for direct business and re-insurance acceptances without any deduction for re- insurance cessions;
(A.2) the amount of mathematical reserves at the end of the preceding financial year after the deduction of re- insurance cessions shall be expressed as a percentage of the amount of those mathematical reserves before any such deduction; and
(A.3) the sum mentioned in item (A.1) above shall be multiplied-
(A.3-1) where the percentage arrived at under item (A.2) above is greater then eighty-five per cent. (Or in the case of a re-insurer carrying on exclusive re-insurance business, fifty percent),by that greater percentage; and
(A.3-2) in any other case, by eighty-five percent. (or in the case of a re-insurer carrying on exclusive re-insurance business, by fifty per cent.);
(B) for Step II –
(B1) there shall be taken, a sum equal to a percentage determined by the regulations made by the Authority not exceeding one per cent of the sum at risk for the policies on which the sum at risk is not a negative figure, and
(B.2) the amount of sum at risk at the end of the preceding financial year for policies on which the sum at risk is not a negative figure after the deduction of re-insurance cession shall be expressed as a percentage of the amount of that sum at risk before any such deduction, and
(B.3) the sum arrived at under item (B.1) above shall be multiplied-
(B.3-1) where the percentage arrived at under item (B.2) above is greater than fifty per cent, by that greater percentage; and
(B.3-2) in any other case, by fifty per cent
(II) a percentage determined by the regulations made by the Authority of the value of assets determined in accordance with the provisions of section 64V;
(ii) in the case of an insurer carrying on general insurance business, the required solvency margin, shall be the highest of the following amounts:-
a) fifty crores of rupees (one hundred crores of rupees in case of reinsurer); or
b) a sum equivalent to twenty per cent of net premium income; or
c) a sum equivalent to thirty per cent of net incurred claims,
subject to credit for re-insurance in computing net premiums and net incurred claims being actual but a percentage, determined by the regulations, not exceeding fifty per cent;
Provided that if in respect of any insurer, the Authority is satisfied that either by reason of an unfavorable claim experience or because of sharp increase in the volume of the business, or for any other reason, compliance with the provisions of this sub-section would cause undue hardship to the insurer, the Authority may direct, for such period and subject to such conditions, such solvency margin not being less than the lower of the amount mentioned in sub-clause (i) or sub-clause (ii) above, as the case may be.
Explanation – For the purposes of this sub-section, the expressions-
(i) “Mathematical reserves” means the provision made by an insurer to cover liabilities (excluding liabilities which have fallen due and liabilities arising from deposit back arrangement in relation to any policy whereby an amount is deposited by re-insurer with the cedant) arising under or in connection with policies or contracts for life insurance business. Mathematical reserves also include specific provision for adverse deviations of the bases, such as mortality and morbidity rates, interest rates, and expense rates, and any explicit provision made in the valuation of liabilities in accordance with the regulations made by the Authority for this purpose;
(ii) “net incurred claims” means the average of the net incurred claims during the specified period of not exceeding three preceding financial years;
(iii) “sum at risk”, in relation to a life insurance policy, means a sum which is-
a. in any case in which an amount is payable in consequence of death other than a case falling within sub-clause (b) below, the amount payable on death, and
b. in any case in which the benefit under the policy in question consists of the making, in consequence of death, of the payments of annuity, payment of a sum by instalments or any other kind of periodic payments, the present value of that benefit,
less in either case the mathematical reserves in respect of the relevant policies.)
(2) An insurer who does not comply with the provisions of sub‑section (1) shall be deemed to be insolvent and may be wound up by the Court.
(2A) If, at any time an insurer does not maintain the required solvency margin in accordance with the provisions of this section, he shall, in accordance with the directions issued by the Authority, submit a financial plan, indicating a plan of action to correct the deficiency to the Authority within a specified period not exceeding three months.
(2B) An insurer who has submitted a plan under sub-section (2A) to the Authority shall propose modifications to the plan if the Authority considers it inadequate, and shall give effect to any plan accepted by the Authority as adequate.
(2C) An insurer who does not comply with provisions of sub-sections (2A) shall be deemed to be insolvent and may be wound up by the court.
(3) The Authority shall be entitled at any time to take such steps as he may consider necessary for the inspection or verification of the assets and liabilities of any insurer or for securing the particulars necessary to establish that the requirements of this section have been complied with as on any date and the insurer shall comply with any requisition made in this behalf by the Authority, and if he fails to do so within two months from the receipt of the requisition, he shall be deemed to have made default in complying with the requirements of this section.
(4) The provisions of this section shall not apply to an insurer specified in sub‑clause (c) of Clause (9) of Section 2.
(5) In applying the provisions of sub‑section (1) to any insurer, who is a member of a group, the relevant amount for that insurer shall be an amount equal to that proportion of the relevant amount which that group, if considered as a single insurer, would have been required to maintain as the proportion of his share of the risk on each policy issued by the group bears to the total risk on that policy:
Provided that 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
Provided further that it shall be sufficient compliance with the provisions of the foregoing proviso if the insurer brings up the excess of the value of his assets over the amount of his liabilities to the required amount within a period of six months from the date of cessation of the group:
Provided also that the Central Government may, on sufficient cause being shown, extend the said period of six months by such further periods as it may think fit, so however that the total period may not in any case exceed one year.
(6) The Central Government may, by notification in the Official Gazette, reduce the sum of ten lakhs of rupees or five lakhs of rupees, as the case may be, referred to in sub‑section (1) to a lower figure not less than one hundred thousand rupees in respect of a country craft insurer or 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.
(7) Every insurer shall furnish to the Authority his returns under section 15 or section 16 as the case may be, in case of life insurance business a statement certified by the actuary approved by the Authority, and in case of general insurance business a statement certified by an auditor approved by the Authority, of the required solvency margin maintained by the insurer in the manner required by sub-section (IA).
No risk to be assumed unless premium is received in advance.
64VB. (1) No insurer shall assume any risk in India in respect of any insurance business on which premium is not ordinarily payable outside India unless and until the premium payable is received by him or is guaranteed to be paid by such person in such manner and within such time as may be prescribed or unless and until deposit of such amount as may be prescribed, is made in advance in the prescribed manner.
(2) For the purposes of this section, in the case of risks for which premium can be ascertained in advance, the risk may be assumed not earlier than the date on which the premium has been paid in cash or by cheque to the insurer.
Explanation. ~ Where the premium is tendered by postal money‑order or cheque sent by post, the risk may be assumed on the date on which the money‑order is booked or the cheque is posted, as the case may be.
(3) Any refund of premium which may become due to an insured on account of the cancellation of a policy or alteration in its terms and conditions or otherwise shall be paid by the insurer directly to the insured by a crossed or order cheque or by postal money‑order and a proper receipt shall be obtained by the insurer from the insured, and such refund shall in no case be credited to the account of the agent.
(4) Where an insurance agent collects a premium on a policy of insurance on behalf of an insurer, he shall deposit with, or despatch by post to, the insurer, the premium so collected in full without deduction of his commission within twenty‑four hours of the collections excluding bank and postal holidays.
(5) The Central Government may, by rules, relax the requirements of sub‑section (1) In respect of particular categories in insurance policies.
Restrictions on the opening of a new place of business
64VC. (1) No insurer shall, after the commencement of the Insurance (Amendment) Act, 1968, open a new place of business in
(2) The Authority may grant permission under sub‑section (1) subject to such conditions as he may think fit to impose either generally or with reference to any particular case.
(3) Where, in the opinion of the Authority, an insurer has, at any time, failed to comply with any of the conditions imposed on him under this section, the Authority may, by order in writing and after affording reasonable opportunity to the insurer for showing cause against the action proposed to be taken against him, revoke any permission granted under this section.
Explanation.—For the purposes of this section, "place of business" include a branch,sub‑branch, inspectorate, organisation office and any other office, by whatever name called.
PART III
Provident Societies
65. Definition of "provident society". ‑ (1) In this Part "Provident society" means a person who, or a body of persons (whether corporate or unincorporate, which, not being an insurer registered for the time being under Part II of this Act, carries on the: business of insuring the payment, on the happening of any of the contingencies mentioned in sub‑section (2), of—
(a) an annuity of or equivalent to one hundred rupees or less, payable for an uncertain period, or
(b) a gross sum of one thousand rupees or less whether paid for payable in a lump sum or in two or more installments over a certain period,
exclusively in both cases (a) and (b) of any profit or bonus not being a guaranteed profit or bonus.
Explanation.—For the purposes of this sub‑section a period is "certain" if its duration is ascertainable in advance and "uncertain" if its duration is not so ascertainable.
(2) The contingencies referred to in sub‑section (1) are the following, namely:
a) the birth, marriage or death of any person or the survival by a person of a stated or implied age or contingency;
b) failure of issue;
c) the occurrence of social, religious or other ceremonial occasion;
d) loss of or retirement from employment;
e) disablement in consequence of sickness or accident;
f) the necessity of providing for the education of a dependent;
g) any other contingency which may be prescribed or which may be authorised by the State Government with the approval of the Central Government.
(3) For the purposes of sub‑sections (1) and (2),—
(a) contracts entered into before the commencement of this Act shall not be taken into account;
(b) two or more policies issued to one person shall, for the purposes of determining whether the limits fixed by sub‑section (1) have or have: not been exceeded, be deemed to be one policy if the contingencies on the happening of which the sums are payable under the policies (whether the contingencies be the same or different) relate to one‑person only, whether he be the policy‑holder or some other person.
(4) Every person or body of persons for the time being registered as a provident society under the Provident Insurance Societies Act, 1912 (5 of 1912) and every person or body of persons for the time being registered as a provident society under this Act shall be deemed to be a provident society for all the purposes of this Act.
(5) If any question arises whether any person or body of persons is or is not a provident society within the meaning of this section, the Authority shall decide the question and his decision shall be final.
Prohibition of transaction of insurance business by provident societies other than public companies or co‑operative societies
65A. No person shall, after the commencement of the Insurance (Amendment) Act, 1950 (47 of 1950), begin to carry on in India any business specified in sub‑section (1) of Section 65, and no provident society carrying on any such business in India shall, after the expiry of one year from such commencement continue to carry on any such business, unless he or it is—
(a) a public company, or
(b) a society registered under the Co‑operative Societies Act, 1912 (2 of 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
Restrictions on provident societies
66. No provident society shall undertake any form of insurance not falling within the limits fixed by subsection (1) of Section 65, nor shall any provident society be eligible to be registered under Section 3.
Name
67. No provident society established after the commencement of this Act shall adopt as its name, and no provident society established 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 fails to include the word "provident" or which includes the word "life".
Insurable interest.‑
68. Repealed by the Insurance (Amendment) Act, 1950
Dividing business
69. (1) No provident society shall 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.
(2) The Authority shall, as so‑on as possible, take steps to have any provident society which carries on business on dividing principle wound up:
Provided that, where any such provident society in existence at the commencement of this Act applies within three months of such commencement to the Authority for permission to continue carrying on its business with a view meanwhile to reorganise its business in accordance with the provisions of this Act, the Authority may at his discretion, with due regard to the past history of the society, permit the society to continue business for a period not exceeding two years from the date of receipt of such permission, so however that no new business on the dividing principle is undertaken by the society.
(3) Where after the commencement of the Insurance (Amendment) Act, 1941 (13 of 1941), a provident society is to be wound up in pursuance of this section, or where, whether before or after the commencement of that Act, a provident society ceases to carry on business on the dividing principle the provisions of sub‑sections (2) and (3) of Section 52 shall, so far as may be apply in like manner as they apply to an insurer ceasing to carry on business on the dividing principle.
Registration
70. (1) No provident society except a provident society registered under the provisions of the Provident Insurance Societies Act, 1912 (5 of 1912), shall receive any premium or contribution until it has, obtained from the Authority, before the date of commencement of the Insurance Regulatory and Development Authority Act, 1999, a certificate of registration.
(2) Every application for registration shall be accompanied by:
(a) a certified copy of the rules of the society, and when the society is a company incorporated under the Indian Companies Act, 1913 (7 of 1913) or under the Indian Companies Act, 1882 (6 of 1882), or under the Indian Companies Act, 1866 (10 of 1866), or under any Act repealed thereby,] a certified copy of the memorandum and articles of association or where the society is not such a company a certified copy of the deed of constitution of the society;
(b) the names and addresses of the proprietors or directors, and the managers of the society, the full address of the registered office of the society, the full address of the principal office of the society in India the name of the manager at such office, and the name and address of some one or more persons resident in India authorised to accept any notice required to be served on the society;
(c) a certificate from the Reserve Bank of
(d) a declaration verified by an affidavit made by the principal officer of the society authorised in that behalf that the minimum working capital required by Section 72 is available; and
(e) the receipt showing payment in the prescribed manner of the prescribed fee for registration being not more than two hundred rupees.
(3) The Authority may refuse to issue a certificate of registration until he is satisfied that the rules of the society comply with the provisions of this Act and that the society complies with the provisions of Sections 65‑A, 67, 71, 72, 73 and 73‑A, but if he is so satisfied he shall register the society and its rules.
(4) The Authority may, after giving previous notice in writing in such manner as he thinks fit specifying the grounds for the proposed cancellation, and allowing the society concerned an opportunity of being heard, apply to the Court and obtain sanction for cancellation of the registration made under this section or made under the provisions of the Provident Insurance Societies Act, 1912 (5 of 1912).—
(a) if he is satisfied from the returns furnished under the provisions of this Act or as the result of an inquiry made under Section 87 -
I. that the society is insolvent or is likely to become so, or
II. that the business of the society is conducted fraudulently or not in accordance with the rules thereof, or that it is in the interests of the policy‑holders that the society should cease to carry on business, or
(b) if the society, having failed to comply with any requirement or having contravened any provision of this Act, has continued such failure or contravention for a period of one month after notice of such failure or contravention has been conveyed to the society by the Authority:
Provided that the Authority may, if he thinks fit, instead of applying for cancellation of the registration under sub‑clause (i) of C1ause (a) of this subsection make a recommendation to the Court that the contracts of the society should be reduced in such manner and subject to such conditions as he may indicate:
Provided further that the Authority may, without previous notice and without application to the Court for sanction,—
(a) cancel the registration of a provident society which has failed to have its registration renewed, or
(aa) cancel the registration of a provident society if any deposit required by Sec. 73 has not been made, or
(b) cancel' on such terms and conditions as he thinks fit, the registration of any provident society which applies to him for such cancellation if he it satisfied that the society has ceased to carry on insurance business and the all its liabilities in respect of insurance policies are either satisfied or otherwise provided for, or
(c) cancel the registration of a provident society if he has reason to believe that any claim upon the society arising in
(5) When a registration is cancelled the provident society 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 it before such cancellation takes effect shall, subject to the provisions of Section 88, continue as if the cancellation had not taken place.
(6) Where a registration is cancelled under Clause b of sub‑section (4), or C1ause (c) of the second proviso to that sub‑section, or because the society has failed to have its registration renewed, the Authority may at his discretion revise the registration of the provident society, within six months from the date on which the cancellation took effect, makes the deposits required by Section 73 or satisfies the Authority that no claim upon it such as is referred to in the said C1ause © remains unpaid, or has had an application under sub‑section (3) of Sec. 70A accepted, as the case may be, and complies with any directions which may be given to it by the Authority.
(7) The Authority may, on payment of the prescribed fee which shall not exceed 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.
Renewal of registration
70A (1) Every provident society registered under this Act, or under the Provident Insurance Societies Act, 1912 (5 of 1912), shall have its registration renewed annually for each period of twelve months after that ending on the 30th day of June, 1942.
(2) An application for the renewal of a registration shall be made by the society to the Authority before the 30th day of June preceding the period for which renewal is sought, and shall be accompanied as provided in sub‑section (3) by evidence of payment of the prescribed fee which shall not exceed two hundred rupees but may vary according to the volume of insurance business done by the society.
(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 lndia 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 a provident society fails to apply for renewal of registration before the date specified in sub‑section (2) the Authority may, so long as he has taken no action under Section 88 to have the society wound up, accept an application for renewal of registration on receipt from the society of the fee payable with the application and such penalty, not exceeding the prescribed fee payable by the society, as he may require.
(5) The Authority shall, on being satisfied that the society has fulfilled the requirements of this section, renew the registration and grant it a certificate of renewal of registration.
Supplements information and reports of alterations in particulars furnished with application for registration.
70B. (1) Every provident society registered under Section 70 before the commencement of the Insurance (Amendment) Act, 1941 (13 of 1941), shall, before the expiration of three months from the commencement of the Insurance (Amendment) Act, 1941 furnish to the Authority such particulars in addition to those already supplied for the purpose of obtaining registration as are required by sub‑section (2) of Section 70 of this Act as amended by the Insurance (Amendment) Act, 1941.
(2) Every provident society registered under the provisions of the Provident Insurance Societies Act, 1912 (5 of 1912), shall, before the expiration of three months from the commencement of the Insurance (Amendment) Act, 1941 (13 of 1941), furnish to the Authority so far as it has not already done so the documents and information required by Clauses (a) and (b) of sub‑section (2) of Section 70 to accompany an application by a provident society for registration under that section.
(3) When any alteration occurs or is made which affects any of the matters which are required under the provisions of sub‑section (2) of Section 70 to accompany an application by provident society for registration under that section, or are to be furnished to the Authority, under this section, the provident society shall furnish forthwith to the Authority full particulars duly authenticated of such alteration.
Certain provisions of Part II to apply to provident societies
71. The provisions of sub‑sections (2) and (3) of Section 10, Section 20, sub‑section (1) of Section 27, Sections 27‑A, 28, 29, 31‑A, 31‑B 32, 46 and 53A shall apply to provident societies as they apply to insurers, and in such application references to shareholders of an insurer shall be construed as references to members of a provident society and references to Section 7 or Section 98 shall tee construed as references to Section 73:
Provided that a provident society may charge a fee not exceeding one rupee for supplying a copy of any document referred to in sub‑section (2) of Section 20.
Working capital
72. No provident society shall be registered unless it has a paid‑up capital sufficient to provide as working capital a net sum of not less than five thousand rupees exclusive of deposits made under this Act and exclusive in the case of a company of any expenses incurred in connection with the formation of the company.
73. Deposits.—(1) Every provident society shall, if established before the commencement of this Act within one year from such commencement, applies for registration under Section 70, deposit and keep deposited with the Reserve Bank of India in one of the offices in India of the Bank, for and on behalf of the Central Government, cash or approved securities amounting at the market value of the securities on the date of deposit to five thousand rupees, and shall thereafter make each calendar year a further deposit amounting to not less than one‑fifth of the premium income for the preceding calendar year as shown in the revenue account of the society (including admission fees and other fees received by the society) until the total amount so deposited and kept is fifty thousand rupees.
(2) The provisions of sub‑sections (8), (9), (9‑A), (9‑B) and (10) of Section 7 and of sub‑section (1) of Section 8 and of Section 9 shall apply to the deposits made under this section as they apply to deposits made by an insurer.
Restriction on name of provident society
73A. (1) A provident society shall not be registered by a name identical with that by which an insurer or another provident society in existence is already registered, or so nearly resembling that name as to be calculated to deceive, except when the provident society in existence is in the course of being dissolved and signifies its consent, or the insurer in existence signifies his consent to the Authority.
(2) If a provident society, through inadvertence or otherwise, is without such consent as aforesaid registered by a name identical with that by which an insurer or another provident society already in existence is registered, or so nearly resembling it as to be calculated to deceive, the first‑mentioned society shall, if called upon to do so by the Authority on the application of the insurer or the second‑mentioned society, change its name within a time to be fixed by the Authority:
Provided that nothing in this section shall apply to any provident society carrying on business before the commencement of the Insurance (Amendment) Act, 1946 (6 of 1946)
Rules.
74. (1) Every provident society shall, in its rules, set forth-
(a) the name, the object and the location of the registered office of the society
(b) the contingencies or classes of contingency on the happening, of which money is to be paid;
(c) the condition to be complied with before, and the payments to be made on, admission to the society;
(d) the rates of premium or contribution, and the periods for which or the times at which premiums or contributions are payable;
(e) the maximum amount payable to a subscriber or policy‑holder;
(f) the nature and amounts of the benefits provided for by the society;
(g) the circumstances in which a bonus may be paid to a policyholder;
(h) the nature of the evidence required for the proof of the happening of any contingency on which money is to be paid;
(i) the circumstances in which policies may be forfeited or renewed or the whole or a part of the premiums paid on a policy may be returned or a surrender value of a policy may be granted;
(j) the penalties for delay in paying or failure to pay premiums or contributions;
(k) the proportion of the annual income of society which may be disbursed on and the provisions to be made for meeting the expenses of the management of the society;
(l) the person or persons who or the authority which shall have power to invest the funds of the society;
(m) the provisions for appointment of auditors and their remunerations;
(n) the procedure to be adopted in altering the rules of the society;
(o) unless these are provided for in the articles of association of a society which is a company incorporated under the Indian Companies Act, 1913 (7 of 1913), or under the Indian Companies Act, 1882 (6 of 1882) or under the Indian Companies Act, 1866 (10 of 1866), or under any Act repealed thereby:
i. the mode of appointment and removal, the qualification and the powers of a director, manager, secretary or other officer of the society;
ii. the manner of raising additional capital; and
iii. the provisions for the holding of general meetings of the members and policy holders and for the powers to be exercised and the procedure to be followed thereat; and
(p) such other matters as may be prescribed.
(2) Where the rules of any provident society registered under the Provident Insurance Societies Act, 1912 (5 of 1912), fail to comply with the provisions of this section, the society shall, before the expiry of twelve months from the commencement of this Act, amend the rules so as to comply with these provisions.
Amendment of rules
75. (1) No amendment of any rule of a provident society shall be valid until it has been sent to the Authority and has been registered by him.
(2) The Authority on being satisfied that the proposed amendment is not contrary to the provisions of this Act shall, unless he is of opinion that the amendment unfairly affects the rights of existing members or policy‑holders of the society, issue to the society an acknowledgment of the registration of the amended rule.
Supply of copy of rules
76. Every provident society shall on demand deliver free of cost to any member of the society a copy of the rules of the society and to any person other than a member a copy of such rules on the payment of a sum not exceeding one rupee.
Registered office
77. Every provident society shall have in India a principal office (on the outside of which it shall keep displayed its name in a conspicuous position in legible characters) to which all communications and notices may be addressed, and shall give notice to the Authority of any change in the location thereof within twenty‑eight days of its occurrence.
Posts
No comments:
Post a Comment