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REGISTERED No. D. 221

The Gazette of India

EXTRAORDINARY

PART II—Section 2

PUBLISHED BY AUTHORITY

No. 39] NEW DELHI, MONDAY, SEPTEMBER 13, 1965/BHADRA 22, 1887

Separate paging is given to this Part in order that it may be filed

as a separate compilation

LOK SABHA

The following Bill was introduced in Lok Sabha on the 13th Sep- tember, 1965: —

BILL NO. 55 OF 1965 A Bill further to amend the Life Insurance Corporation Act, 1956.

BE it enacted by Parliament in the Sixteenth Year of the Republic of India as follows: —

1. This Act may be called the Life Insurance Corporation (Amendment) Act, 1965.

Short title.

31 of 1956. 5

Amend- ment of section 26.

2. In the Life Insurance Corporation Act, 1956 (hereinafter refer- red to as the principal Act), in section 26, for the words "business of the Corporation, including a valuation of the liabilities of the Corporation", the words "life insurance business of the Corporation, including a valuation of the liabilities of the Corpora- tion in respect thereto" shall be substituted.

(837)

838 THE GAZETTE OF INDIA EXTRAORDINARY [PAKI IX

3. For section 28 of the principal Act, the following section shall be substituted and shall bo deemed always to have been so substitu- ted, namely:-—

Substitu- tion of new- section for section 28.

5 Surplus from life insurance business how to be utilized.

IO "28. If as a result of any investigation undertaken by the Corporation under section 26 any surplus emerges, ninety-five per cent, of such surplus or such higher percentage thereof as the Central Government may approve shall be allocated to or reserved for the life insurance policy-holders of the Corpora- tion and after meeting the liabilities of the Corporation, if any, which may arise under section &, the remainder shall be paid to the Central Government or, if that Government so directs, be utilized for such purposes and in such manner as that Govern- ment may determine.".

4. After section 28 of the principal Act, the following section

shall be inserted, namely: —

15 Insertion of new section 28A.

"28A. If for any financial year profits accrue from any busi- ness (other than life insurance business) carried on by the Corporation, then, after making provision for reserves and other matters for which provision Is necessary or expedient, the balan- ce of such profits shall be paid to the Central Government.". 20 Profits from any business (other than lifc insurance business) how to be utilized.

SEC. 2] THE GAZETTE OF INDIA EXTRAORDINARY 839

STATEMENT OF OBJECTS AND REASONS

Section 28 of the Life Insurance Corporation Act, 1956, provides that where an actuarial valuation under section 26 discloses a sur- plus, the remainder of the surplus after allocation of not less than 95 per cent, thereof to policy-holders, "may be utilized for such purposes and in such manner as the Central Government may deter- mine". This provision was intended to enable Government to ap- propriate this portion of the surplus to the Central Government revenue, if they so desired. Accordingly, during each of the last four valuations, a part of the surplus was appropriated to Central revenues. In a recent case, the Supreme Court observed that while the Central Government may determine the manner in which the remainder of the surplus may be utilized, it could not appropriate •t as revenue. The amendment, which is retrospective, is designed to give effect to the original intention, while making it clear that the liabilities which devolved on the Corporation under section 9 of the Act but which were not payable out of the Life Insurance Fund would constitute a first charge on the surplus remaining after allocation to policy-holders.

2, Opportunity is taken to clarify that the profits of any insu- rance business, other than life insurance business, carried on by the Corporation would be payable to Government.

3. The Bill seeks to achieve the above objects.

NEW DELHI; T. T. KRISHNAMACHAHI.

The 3

PRESIDENT'S RECOMMENDATION UNDER ARTICLE 117 OF THE CONSTITUTION OF INDIA

[Copy of letter dated September 3, 1965 from Shri T. T. Krishna- machari, Minister of Finance to the Secretary, Lok Sabha].

The President having been informed of the subject matter of the Bill further to amend the Life Insurance Corporation Act, 1956 recommends, under clauses (1) and (3) of article 117 of the Consti- tution, the introduction and consideration of the said Bill in the Lok Sabha during its current Session.

840 THE GAZETTE OF INDIA EXTRAORDINARY (.PART II—SEC. 2]

FINANCIAL MEMORANDUM

Clause 3 of the Bill amends with retrospective effect section 28 of the Act to regularise payments hitherto made under the section to the Central Government to the extent that such payments are in excess of the liabilities of the Corporation under section 9. The liabilities under section 9 relate to certain deposits which some erst- while insurers had collected and which were repayable only out of surpluses disclosed at future valuations. In a recent case, the Supreme Court has held that such deposits will have to be repaid out of the balances left over after payment to the policy-holders of not less than ninety-five per cent, of the surpluses disclosed at the valuations of the Corporation. Such deposits together with interest amount to about Rs. 18 lakhs and will have to be repaid out of the Consolidated Fund of India as, in the past, the balances were ap- propriated to Central Revenues without meeting such liabilities.

S. L. SHAKDHER,

Secretary.

PRINTED IN INDIA BY THE GENERAL MANAGER, GOVERNMENT OF INDIA PRESS, Mr/J7() nOAD, NEW DELHI AND PUBLISHED BY THH MANAQEH OF PUBLICATIONS. DELHI, 1965