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REGISTERED NO. D. 221

The Gazette of India

EXTRAORDINARY

PART II—Section 1

PUBLISHED BY AUTHORITY

No. 65]NEWDELHI,WEDNESDAY,SEPTEMBER20,1972/BHADRA29, 1894

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

as a separate compilation.

MINISTRY OF LAW A ND JUSTICE (Legislative Department) New Delhi, the 20th September, 1972 'Bhadra 29, 1894(Saka)

The following Act of Parliament received the assent of the President on the 20th September, 1972, and is hereby published for general infor- mation:—

THE GENERAL INSURANCE BUSINESS (NATIONALI- [ SATION) ACT, 1972 No. 57 OF 1972

[20th September, 1972]

An Act to provide for the acquisition and transfer of shares of Indian insurance companies and undertakings of other existing insurers in order to serve better the needs of the economy by securing the development of general insurance business in the best interests of the community and to ensure that the operation of the economic system does not result in the concentration of wealth to the common detriment, for the regulation and control of such business and for matters connected therewith or incidental thereto.

BE it enacted by Parliament in the Twenty-third Year of the Republic of India as follows: —

CHAPTER I

PRELIMINARY

1. This Act may be called the General Insurance Business (Nationali-

sation) Act, 1972.

Short title.

( 815)

2. It Is hereby declared that this Act Is for giving effect to the policy of the State towards securing the principles specified in clause (c) of article 39 of the Constitution.

Declara- tion as to the policy of the Stat*.

Explanation.—In this section, "State" has the same meaning as in

article 12 of the Constitution.

3. In this Act, unless the context otherwise requires,—

Defini- tions

(a) "acquiring company" means any Indian insurance company and, where a scheme has been framed involving the merger of one Indian insurance company in another or the amalgamation of two or more such companies, means the Indian insurance company in which any other company has been merged or the company which has been formed as a result of the amalgamation;

(b) "appointed day" means such day not being a day later than the 2nd day of January, 1973, as the Central Government may, by notification, appoint;

L of 1956.

(c) "Companies Act" means the Companies Act, 1956;

(d) "Corporation" means the General Insurance Corporation of

India formed under section 9;

17 of 1971.

(e) "existing insurer" means every insurer the management of whose undertaking has vested dru the 'Central Government under section 3 of the General Insurance (Emergency Provisions) Act, 1971, and includes the undertaking of the Life Insurance Corporation in so far as it relates to the general insurance business carried on ' by it; ] (f) "foreign insurer" means an existing insurer incorporated

under the law of any country outside India;

(g) "general insurance business" means fire, marine or miscel- laneous insurance business, whether carried on singly or in combina- tion with one or more of them, but does not include capital redemp- tion business and annuity certain business;

(h) "Government company" means a Government company as

defined in section 617 of the Companies Act;

(i) "Indian insurance company" means an existing insurer hav-

ing a share capital who is a company within the meaning of the Com- panies Act;

4 of 1938.

(j) "Insurance Act" means the Insurance Act, 1938;

31 of 1956.

(Jc) "Life Insurance Corporation" means the Life Insurance Cor- poration of India established under the Life Insurance Corporation Act, 1950;

(I) "notification" means a notification published in the Official

Gazette;

'

(m) "prescribed" means prescribed by rules made under this

Act;

'

(n) "Schedule" means the Schedule to this Act;

(o) "scheme" means the scheme framed under section 16;

(p) words and expressions used in this Act but not defined here- in and defined in the Insurance Act, shall have the meanings respec- tively assigned to them in that Act;

(q) words and expressions used in this Act but not defined here- in or in the Insurance Act and denned in the Companies Act, shall have the meanings respectively assigned to them in the Companies Act.

CHAPTER II

TRANSFER TO PUBLIC OWNERSHIP OP GENERAL INSURANCE BUSINESS

Transfer of shares of Indian insurance companies.

4. (1) On the appointed day, all the shares in the capital of every Indian insurance company shall, by virtue of this Act, stand transferred to and vested in the Central Government free of all trusts, liabilities and encumbrances affecting them.

(2) Out of the shares so transferred and vested, the Central Govern- ment shall, immediately thereafter, by notification, provide for the trans- fer of not less than ten shares of every such company to such persons aa may be specified in the notification to enable the Indian insurance com- pany to function as a Government company.

(3) Every notification made under sub-section (2) shall specify the names and description of the persons to whom the shares are transferred and the particulars of the shares which axe transferred to each such person.

(4) A copy of every notification made under sub-section (2) shall, as soon as may be after it is made, be sent by the Central Government to the concerned Indian insurance company, who shall, on receipt of such copy, and notwithstanding anything contained in the Companies Act or In its articles of association, forthwith rectify its register of members by including therein the persons mentioned in the notification as the holders of the shares specified therein.

(5) For the removal of doubts it is. hereby declared that the transfer and vesting of shares effected under sub-section (I) shall not be deemed to affect any right of the Indian insurance company subsisting imme- diately before the appointed day against any shareholder to recover from him any sum of money on the ground that that shareholder has not paid or credited to the insurer the whole or any part of the value of the shares held by him or on any other ground whatsoever.

Transfer of undertak- ings of other exis- ting in- surers.

5. (I) On the appointed day, the undertaking of every existing insurer who is not an Indian insurance company shall stand transferred to and vested in the Central Government and the Central Government shall immediately thereafter provide, by notification, for the transfer to and vesting in such Indian insurance company, as it may specify in the noti- fication, of that undertaking.

(2) Any notification made under sub-section (1) may provide that any of the undertakings aforesaid may be transferred to and vested in more than one Indian insurance company in such manner and subject to such conditions as may be specified in the notification.

Effect of transfer of undertok- ingi.

6. (1) The undertaking of every such existing insurer as is referred: to In section 5 shall be deemed to include all assets, rights, powers, autho- rities and privileges and all property, movable and immovable, cash balances, reserve funds, investments and all other rights and interests in, or arising out of, such property as were immediately before the ap-

pointed day in the ownership, possession, power or control of such exist- ing insurer in relation to the undertaking, whether within or without India, and all books of accounts, registers, records and all other docu- ments of whatever nature relating thereto, and shall also be deemed to include all borrowings, liabilities and obligations of whatever kind then subsisting of the existing insurer in relation to the undertaking.

(2) Unless otherwise expressly provided by this Act, all deeds, bonds, agreements, powers of attorney, grants of legal representation and other instruments of whatever nature subsisting or having effect immediately before the appointed day and to which any such insurer as is referred to in section 5 is a party or which are in favour of such existing insurer shall be of as full force and effect against or in favour of the Indian, insurance company in which the undertaking or the part to which the instrument relates has vested and may be enforced or acted upon as fully and effectually as if, in the place of the existing insurer referred to in section 5, the Indian insurance company in which the undertaking or any part thereof has vested had been a party thereto, or as if they had been issued in its favour.

(3) If, on the appointed day, any suit, appeal or other proceeding of whatever nature in relation to any business of the undertaking which has been transferred under section 5 is pending by or against any such exist- ing insurer as is referred to in that section, the same shall not abate, be discontinued or be in any way prejudicially affected by reason of the transfer of the undertaking or of anything contained in this Act, but the suit, appeal or other proceeding may be continued, prosecuted and enforced by or against the Indian insurance company in which the undertaking or the part to which the proceeding relates has vested.

(4) For the removal of doubts it is hereby declared that in the case of a foreign insurer or, as the case may be, the Life Insurance Corporation, the provisions of section 5 and of the preceding sub-sections shall only apply to the extent to which any property appertains, in the former case, to the general Insurance business carried on in India and, in the latter case, to the general insurance business carried on, whether within or without India, and to rights and powers acquired, and to debts, liabilities and ob- ligations incurred and to contracts, agreements and other instruments made by the foreign insurer or the Life Insurance Corporation, as the case may be, for the purpose of such general insurance business and to legal proceedings relating to those purposes, and the said provisions shall be construed accordingly.

(5) If any question arises as to whether any property appertains to any such general insurance business as is referred to in this section or whether any rights, powers, liabilities or obligations were acquired or in- curred or any contract, agreement or other instrument was made by the foreign insurer or the Life Insurance Corporation, as the case may be, for the purposes of any such business or whether any documents relate to those purposes, the question shall be referred to the Central Government which shall, after giving an opportunity of being heard to the persons interested in the matter, decide it in such manner as it thinks fit.

Transfer of service of existing employees In certain cases.

7. (I) Every whole-time officer or other employer of an existing insur- er other than an Indian insurance company who was employed by that in- surer wholly or mainly in connection with his general insurance business immediately before the appointed day shall, on the appointed day, become an officer or other employee, as the case may be, of the Indian insurance company in which the undertaking of that insurer or that part of the un- dertaking to which the service of the officer or other employee relates has vested, and shall hold his office or service under the Indian insurance company on the same terms and conditions and with the same rights to pension, gratuity and other matters as would have been admissible to him if there had been no such vesting, and shall continue to do so unless and until his employment in the Indian insurance company in which the undertaking or part has vested is terminated or until his remuneration, terms and conditions are duly altered by that Indian insurance company:

Provided that nothing in this sub-section shall apply to any such officer or other employee who has given, in writing, notice to the Central Government or to any person nominated in this behalf by that Govern- ment before the appointed day intimating his intention of not becoming an officer or employee of the Indian insurance company in whom the un- dertaking or part thereof to which his service relates has vested.

(2) If any question arises as to whether any person was a whole-time officer or employee, or as to whether any officer or employee, was emp- loyed wholly or mainly in connection with the general insurance business of the existing insurer referred to in sub-section (1) immediately before the appointed day, the question shall be referred within a period of two years from the appointed day and not thereafter to the Central Govern- ment which shall, after giving an opportunity of being heard to the person concerned in the matter, decide it in such manner as it thinks fit and such decision shall be final.

14 of 1947.

(3) Notwithstanding anything contained in the Industrial Disputes Act, 1947 or in any other law for the time being in force, the transfer of the services of any officer or other employee under sub-section (1) shall not entitle any such officer or other employee to any compensation under that Act or such other law and no such claim shall be entertained by any court, tribunal or other authority.

Provident, superan- nuation, welfare and other funda 8. (1) Where an existing insurer has established a provident, super- annuation, welfare or any other fund for the benefit of his employees and constituted a trust in respect thereof (hereafter in this section referred tc as an existing trust), the moneys standing to the credit of such fund on the appointed day, together with any other assets belonging to such fund, shall stand transferred to and vested in the Indian insurance Company on the appointed day free from any such trust.

(2) Where all the employees of the Life Insurance Corporation 01 any other existing insurer do not become employees of an Indian insur- ance company, the monies and other assets belonging to any such func as is referred to in sub-section (I), shall be apportioned between the trustees of the fund and the Indian insurance company in the prescribed manner; and in case of any dispute about such apportionment the deci sion of the Central Government thereon shall be final.

(3) Where the undertaking of an existing insurer has vested in more than one Indian insurance company, the Central Government may, by or- der, provide for the apportionment among such Indian insurance compa- nies of monies and other assets belonging to any existing trust relating to that undertaking in such manner as in its opinion may bo appropriate.

(4) The Indian insurance company shall as soon as may be after the appointed day constitute in respect of the moneys and other assets which are transferred to and vested in it under this section one or more trusts having objects as similar to the objects of the existing trusts as in the circumstances may be practicable.

(5) Where all the moneys and other assets belonging to an exisfing truest are transferred to and vested in an Indian insurance company un- der this section, the trustees of such trust shall, as from the appointed day, stand discharged from the trust, except as respects things done or omitted to be done before the appointed day.

CHAPTER III

GENERAL INSURANCE CORPORATION OF INDIA

Formation of General Insurance Corpora- tion -of India.

9. (1) As soon as may be after the commencement of ths Act, the Central Government shall form a Government company in accordance with the provisions of the Companies Act, to be known as the General Insurance Corporation of India for the purpose of superintending, control- ling and carrying on the business of general insurance.

(2) The authorised capital of the Corporation shall be rupees seventy- five crores, divided into seventy-five lakhs fully paid-up shares of one •hundred rupees each, out of which rupees five crores shall be the initial subscribed capital of the Corporation,

(3) Notwithstanding anything contained in the Companies Act, 1956, it shall not be necessary to add the wowrd "Limited" as the last word of the name of the Corporation.

Transfer to Corpora- tion of shares ves- ted in Central Govern- ment.

10. All the shares in the capital of every Indian insurance company which stand transferred to and vested in the Central Government by virtue of section 4 [with the exception of the shares transferred to any person under sub-section (2) ol that section] shall immediately after such vesting, stand transferred to and vested in the Corporation and every Indian insurance company shall forthwith give effect to such transfer of shares and rectify its register of members by including therein the Cor- poration as the holder of such shares.

CHAPTER IV

AMOUNTS TO BE PAID FOR ACQUISITIONS

Amounts to be paid for trans- fer and vesting of shares ori undertak- ings.

11. (1) For the transfer of the shares of each Indian insurance com- pany to, and vesting in, the Central Government, under section 4, there shall be paid by the Central Government to the Corporation, for distri- bution to the shareholders of each such company, the amount specified against such company in the corresponding entry under column 3 of Part A of the Schedule.

(2) For the transfer to, and vesting in the Central Government, under

section 5, of the undertaking of each existing insurer, who is not an Indian insurance company there shall be paid by the Central Government to the Corporation, for payment to each such existing insurer, the amount speci-

fied against such insurer in the corresponding entry under column 3 of Part B of the Schedule.

Disburse- ment of amounts bj Corpora- tion, 12. (1) The total amount paid by the Central Government under section 11 shall be treated as additional contribution to the subscribed capital of the Corporation and such additional subscribed capital shall stand allotted to, and vested in, the Central Government.

(2) The Corporation shall distribute the amount paid to it under sec- tion 11, to the shareholders of each Indian insurance company and to each existing insurer, who is not an Indian insurance company, in accor- dance with their rights and interests, and, if there is any doubt or dis- pute as to the right, or extent of the right, of any person to receive the whole or any part of such amount, refer such doubt or dispute to the Central Government for determination and thereafter, act in accordance with the determination made by that Government.

(3) Save as otherwise provided in sub-section (2), the amount refer- red to in section 11 shall be given in accordance with the provisions of section 13, section 14 or section 15, as the case may be.

13. (1) Where the amount referred to in section 11 is to be given— Mode of payment.

(a) to the members of an Indian insurance company, the amount due to each such member shall be paid in full, where it does not exceed twenty-five thousand rupees, and where it exceeds twenty- five thousand rupees, each such member shall be paid twenty-five thousand rupees, and the balance of the amount due to such member shall be paid to him in three equal annual instalments, the first of which shall fall due on the appointed day;

(b) to a foreign insurer, it shall be given to him in cash within

three months from the appointed day;

(c) to the Life Insurance Corporation, it shall be given to it in three equal annual instalments, the first of which shall fall due on the appointed day;

(d) to an existing insurer who is a co-operative society, it shal- be distributed as soon as may be after the appointed day in accordance with the rules of the society which will apply in case of dissolution of the society;

(e) to an existing insurer not falling within any of the foregoing provisions, it shall be apportioned by the acquiring company among the individual policy-holders of the insurer whose policies with that insurer were in force on the appointed day and were comprised in the undertaking of such insurer in proportion to the premiums paid by the policy-holders under such policies and every such paymen' shall be made either—

(i) in cash, to be sent by postal money order, or (ii) at the option of the policy-holder, as a deduction in th< premium due at the time of the renewal of the policy and sucl option shall be exercised by the policy-holder before the expiry of three months from the appointed day (or within such furthe: time not exceeding three months as the Central Governmen may, on the application of the policy-holder, allow); and thi

option so exercised shall be final and shall not be altered or re- scinded after it has been exercised:

Provided that if any policy-holder fails to exercise his option within the time allowed, he shall be deemed to have exercised his option in favour of payment in cash by postal money order.

(2) Where any amount is payable whether in instalments or other- wise under the provisions of this section the unpaid amount, where its payment has become due shall carry interest at the rate of four per cent per annum from the appointed day.

Amount payable to sharehol- ders may be paid to named persons In- stead In certain cases.

14. (1) Notwithstanding anything contained elsewhere in this Act, if a majority in number of the persons, who, immediately before the appointed day, were registered in the books of an Indian insurance company as the members thereof, and representing two-thirds in value of the amount payable to the Indian insurance company, agree either in person or by proxy at a meeting specially convened for the purpose that the amount so payable instead of being distributed among the members shall be given to any such person or body of persons as the members may nominate either at that meeting or subsequently for the purpose of car- rying on any business, and the Central Government is satisfied that due provision has been or will be made for the payment of the value of their respective shares to persons who have dissented from the resolution, the amount may be given to the person or body of persons so nominated in such manner and subject to such conditions as the Central Government may think fit.

(2) No resolution passed at any such meeting as is referred to in sub-section (1) held after the appointed day shall have any effect unless the meeting has been convened after obtained the approval of the Cen- tral Government.

Payment into court in case of rival claims.

15. Where a claim to the amount payable under section 11 is made by two or more persons adversely to one another, the corporation may cause the amount to be deposited in any civil court having jurisdiction in that behalf and the court shall decide as to whom the pay- ment shall be made.

CHAPTER V

SCHEME FOR REORGANISATION OF GENERAL INSURANCE BUSINESS

Schemes for mer- gers of companies, etc.

16. (1) If the Central Government is of opinion that for the more efficient carrying on of general insurance business it is necessary so to do, it may, by notification, frame one or more schemes providing for all or any of the following matters: —

(a) the merger.in one Indian insurance company of any other Indian insurance company, or the formation of a new company by the amalgamation of two or more Indian insurance companies;

(b) the transfer to and vesting in the acquiring company of the undertaking (including all its business, properties, assets and liabili- ties) of any Indian insurance company which ceases to exist by reason of the scheme;

(c) the constitution, name and registered office and the capital structure of the acquiring company and the issue and allotment of . shares;

(d) the constitution of a board of management by whatever name called for the management of the acquiring company;

(e) the alteration of the memorandum and articles of association of the acquiring company for such purposes as may be necessary to give effect to the scheme;

(f) the continuance in the acquiring company of the services of all officers and other employees of the Indian insurance company which has ceased to exist by reason of the scheme, on the same terms and conditions which they were getting or, as the case may be, by which they were governed immediately before the commencement of the scheme;

(g) the rationalisation or revision of pay scales and other terms and conditions of service of officers and other employees wherever necessary;

(h) the transfer to the acquiring company of the provident, superannuation, welfare and other funds relating to the officers and other employees of the Indian insurance company which has ceased to exist by reason of the scheme;

(i) the continuance by or against the acquiring company of legal proceedings pending by or against any Indian insurance company which has ceased to exist by reason of the scheme, and the initia- tion of such legal proceedings, civil or criminal, as the Indian insur- ance company might have initiated if it had not ceased to exist;

(3) such incidental, consequential and supplemental matters as are necessary to give full effect to the scheme.

(2) In framing schemes under sub-section (1), the object of the Cen- tral Government shall be to ensure that ultimately there are only four companies (excluding the Corporation) in existing and that they are so situate as to render their combined services effective in all parts of India.

(3) Where a scheme under sub-section (1) provides for the transfer of any property or liabilities, then, by virtue of the scheme, the property shall stand transferred to and vested in, and those liabilities shall be transferred to and become the liabilities of, the acquiring company.

(4) If the rationalisation or revision of any pay scale or other terms and conditions of service under any scheme is not acceptable to any officer or other employee, the acquiring company may terminate his employ- ment by giving him compensation equivalent to three months' remu- neration, unless the contract of service with such employee provides for a shorter notice of termination.

Explanation.—The compensation payable to an officer or other emplo- yee under this sub-section shall be in addition to, and shall not affect, any pension, gratuity, provident fund or other benefit to which the employee may be entitled under his contract of service.

14 of 1047.

(5) Notwithstanding anything contained in the Industrial Disputes Act 1947 or in any other law for the time being in force, the transfer of the services of any officer or other employee of an Indian insurance

company to the acquiring company shall not entitle any such officer or other employee to any compensation under that Act or other law, and no such claim shall be entertained by any court, tribunal or other autho- rity.

(6) The Central Government may, by notification, add to, amend or vary any scheme framed under this section.

(7) The provisions of this section and of any scheme framed under it shall have effect notwithstanding anything to the contrary contained in any other law or any agreement, award or other instrument for the time being in force.

17. A copy of every scheme and every amendment thereto framed . under section 16 shall be laid, as soon as may be after it is made, before Schemes to bo laid be- tora Parlia aient. each House of Parliament.

CHAPTER VI

FUNCTIONS OF CORPORATION AND ACQUIRING COMPANIES AND THEIR MANAGEMENT

18. (/) The functions of the Corporation shall include—

Functions of Corpo- retlon.

(a) the carrying on of any part of the general insurance busi- ness, if it thinks it desirable to do so;

(b) aiding, assisting and advising the acquiring companies in the matter of setting up of standards of conduct and sound practice in general insurance business and in the matter of rendering efficient service to holders of policies of general insurance:

(c) advising the acquiring companies in the matter of controlling their expenses including the payment of commission and other ex- penses;

(d) advising the acquiring companies in the matter of the In- vestment of their funds;

(e) issuing directions to acquiring companies in relation to the conduct of general insurance business.

(2) In issuing any directions under sub-section (1), the Corporation shall keep in mind the desirability of encouraging competition amongst the acquiring companies as far as possible in order to render their services more efficient.

Functions of acquir- ing com- panies.

19. (/) Subject to the rules, if any, made by the Central Govern- ment in this behalf and to its memorandum and articles of association, it shall be the duty of every acquiring company to carry on general in- surance business.

(2) Each acquiring company shall so function under this Act as to secure that general insurance business is developed to the best advantage of the community.

(3) In the discharge of any of Its functions, each acquiring company shall act so far as may be on business principles and where any direc- tions have been issued by the Corporation, shall be guided by such, directions.

(4) For the removal of doubts it is hereby declared that the Corpora- tion and any acquiring company may, subject to the rules, if any, made by the Central Government in this behalf, enter into such contracts of reinsurance or reinsurance treaties as it may think fit for the protection of its interests.

Balance of profit how to be uti- lised.

20. (i) After making provision for bad and doubtful debts, depre- ciation in assets, provident, superannuation, welfare and other funds, debts due to Government and all other matters for which provision ia necessary under any law or which are usually provided for by insurance companies, every acquiring company shall distribute the balance of profit as dividends.

(2) Any profit made by the Corporation and any sums received by the Corporation by way of dividends or otherwise shall be dealt with by it in such manner as may be prescribed.

Interim provisions for manage- ment of Indian Insurance com- panies

17 0X1971.

21. (1) Notwithstanding anything contained in the Companies Act or in the memorandum and articles of association of any Indian insurance company, on and from the appointed day and until a new board of direc- tors of the Indian insurance company is duly constituted, the manage- ment of the company shall continue to vest in the Custodian in charge of the management of the undertaking of that company Immediately be- fore the appointed day by virtue of the provisions contained in the Gene- ral Insurance (Emergency Provisions) Act, 1971, and the Custodian shall be entitled, subject to such directions as the Central Government may issue in this behalf, to exercise all the powers and do all acts and things as may be exercised or done by the company or by its board of directors.

(2) Nothing contained in sub-section (1) shall be deemed to prevent the Central Government from appointing any other person to take charge of the management of the undertaking of any Indian insurance company during the period referred to in that sub-section if for any reason it be- comes necessary so to do, and any person so appointed may exercise all the powers and do all acts and things which a Custodian may exercise or do under sub-section (7).

(3) The Custodian referred to in sub-section (1) and the person ap- pointed under sub-section (2) shall be entitled to such salaries and other allowances as the Central Government may specify in this behalf and shall hold office during the pleasure of the Central Government.

Power of Central jovern- nent to :ransfer em- ployees.

22. The Corporation may at any time transfer any officer or employee from an acquiring company or the Corporation to any other acquiring company or the Corporation, as the case may be, and the officer or em- . ployee so transferred, shall continue to have the same terms and condi- • tions of service as werel applicable to him immediately before such ' transfer.

23. The Corporation and every acquiring company shall, in the dis- ; charge of its functions, be guided by such directions in regard to matters ] of policy involving public interest as the Central Government may give. , i

^ower of Central j-overn- nent to ssue 31rec- ;ions.

CHAPTER VII

MISCELLANEOUS

24. (1) Except to the extent expressly provided in this Act, on and from the appointed day, the Corporation and the acquiring companies shall have the exclusive privilege of carrying on general insurance busi- ness in India.

(2) Subject to the provisions of section 36, any certificate of registra- companies to have th( exclusive privilege of carry- ing on general in- surance business.

tion granted under the Insurance Act to any insurer other than an insurer referred to in sub-section (i) shall, on and from the appointed day, cease to have effect:

Provided that nothing in this sub-section shall apply to the carry- ing on by the Life Insurance Corporation of life insurance business and capital redemption and annuity certain business,

25. (1) No person shall take out or renew any policy of insurance in respect of any property in India or any ship or other vessel or aircraft registered in India with an insurer whose principal place of business is outside India save with the prior permission of the Central Gov- , ernment.

Properties In India not to be insured with foreign insurers except with per- mission of Central Govern- ment.

(2) If any person contravenes any provision of sub-section (i), he shall be punishable with imprisonment for a term which may extend to one year, or with fine which may extend to one thousand rupees, or with both.

|

43 of 1961.

Acquiring companies and in- come-tax.

26. For the purposes of the Income-tax Act, 1961, every acquiring company shall be deemed to be an Indian company and a company in which the public are substantially interested.

Power to reduce amounts of insur- ance in certain cases.

27. An acquiring company may, having regard to its financial condi- tion on the 13th day of May, 1971 or the financial condition on the said date of any existing insurer whose undertaking has been transferred to and vested in it under this Act reduce the liabilities which have arisen under contracts of general insurance entered into before the said date in such manner and subject to such conditions as it thinks fit:

Provided that no such reduction shall be made except in accordance with specific proposals made by the acquiring company in this behalf and approved by the Central Government.

28. (1) Where an existing insurer has at any time within five years

before the 13th day of May, 1971—

(a) made any payment to any person without consideration,

(b) sold or disposed of any property of the insurer without consi-

deration or for an inadequate consideration,

(o) acquired any property or rights for an excessive considera- Eight of acquiring company to seek relief in respect of certain transac- tions.

tion,

(d) entered into or varied any agreement so as to require an

excessive consideration to be paid or given by the insurer,

(>e) entered into any other transaction of such an onerous nature as to cause a loss to, or impose a liability on, the insurer exceeding any benefit accruing to the insurer,

and the payment, sale, disposal, acquisition, agreement or variation there- of or other transaction was not reasonably necessary for the purpose of

the general insurance business of the insurer or was made with an un- reasonable lack of prudence on the part of the insurer, regard being had in either case to the circumstances at the time, the acquiring company may apply for relief to the court in respect of such transaction, and all parties to the transaction shall, unless the court otherwise directs, be made parties to the application.

(2) The court may make such order against any of the parties to the application as it thinks just having regard to the extent to which those parties were respectively responsible for the transaction or benefited from it and all the circumstances of the case.

(3) Where an application is made to the court under this section in respect of any transaction and the application is determined in favour of the acquiring company, the court shall have exclusive jurisdiction to determine any claim outstanding in respect of the transaction.

29. (I) Where any property appertaining to an existing insurer has been transferred to and vested in an Indian insurance company under section 5,—

Duty to deliver possession of pro- perty and documents relating thereto.

(a) every person in whose possession, custody or control any such property may be, shall deliver the property to the Indian insur- ance company forthwith,

(b) any person who immediately before such vesting has in his possession, custody or control any books, documents or other papers relating to an existing insurer shall be liable to account for the said books, documents and papers to the Indian insurance company, and shall deliver them to that company or to such person as that company may direct.

(2) In particular, all the assets of an existing insurer appertaining to the undertaking held in deposit by the Reserve Bank of India under the Insurance Act or by trustees in trust shall be delivered to the Indian in- surance company.

(3) Without prejudice to the other provisions contained in this sec- tion, it shall be lawful for each Indian insurance company to take all necessary steps for taking possession of all properties which have been transferred to and vested in it under this Act.

Penalty LOT with- holding property etc. 30. If any person wilfully withholds or fails to deliver to an Indian insurance company as required by section 29 any property or any books, documents or other papers which may be in his possession or unlawfully retains possession of any property of an existing insurer which has been transferred to and vested in an Indian insurance company under section 5 or wilfully applies any such property to purposes other than those ex- pressed in or authorised by this Act, he shall, on the complaint of the Indian insurance company, be punishable with imprisonment for a term which may extend to one year, or with fine which may extend to one thousand rupees, or with both.

31. Every officer or other employee of the Corporation or of an acquir- j

ing company shall be deemed to be a public servant for the purposes of Chapter IX of the Indian Penal Code.

• 45 of i860.

Officers and em- ployees of Cor- poration or of ac- quiring companies to be pub- lic ser- vants.

Indemnity.

32. Every officer of the Central Government and every officer or othei employee of the Corporation and of any acquiring company shall be in demnifkd by the Central Government or the Corporation or the acquir- ing company, as the case may be, against all losses and expenses incurrec by him in, or in relation to, the discharge of his duties under this Ac except such as have been caused by his own wilful act or default.

Dissolu- tion of Corpora- tion and acquiring companies.

33. No provision of law relating to the winding up of companies shall apply to the Corporation or to an acquiring company, and neithei the Corporation nor any such company shall be placed in liquidatior save by order of the Central Government and in such manner as it maj direct.

34. Any reference to an existing insurer in any law other than this Act or any contract or other instrument shall, in so far as it relates tc an acquiring company, be construed as a reference to that company.

Reference to existing Insurer in other laws.

Applica- tion of Insurance Act.

35. Subject to such exceptions, restrictions and limitations, if any, as the Central Government may, by notification, specify in this behalf, the Insurance Act shall apply to or in relation to the Corporation and every acquiring company as if the Corporation or the acquiring company, as the case may be, were an insurer carrying on general insurance busi- ness within the meaning of that Act.

36. (1) Nothing contained in this Act shall apply in relation to—

Exemp- tions.

(a) any general insurance business carried on by a State Govern- ment, to the extent to which such insurance relates to properties be- longing to it or undertakings owned wholly or mainly by the State Government or to properties belonging to semi-government bodies, or any Board or body corporate established by the State Government under any statute or any industrial or commercial undertaking in which the State Government has substantial financial interest, whe- ther as shareholder, lender or guarantor;

(b) any general insurance business not falling within clause (a) which has been carried on by a State Government before the com- mencement of this Act, to the extent to which it is necessary to allow such business to run off:

Provided that nothing contained in this clause shall be deemed to authorise the State Government to issue any new policies or renew any existing policies;

(c) any insurer whose business is being voluntarily wound up or is being wound up by a court;

(d) the insurance business carried on by the Calcutta Hospital and Nursing Home Benefits Association Limited;

47 of 1961.

(e) the insurance business carried on by the Export Credit Guarantee Corporation Limited and the Deposit Insurance Corporation established under section 3 of the Deposit Insurance Corporation Act, 1961;

(f) any scheme in existence immediately before the 14th day of May, 1971 or any scheme framed after the said day with the approval of the Central Government for the insurance of crops or of cattle or of flood risks or of war or emergency risks.

(2) If the Central Government is satisfied that an insurer, whether established before or after the appointed day, carries on only such gene- ral insurance business as is not carried on ordinarily by insurers, it may by notification, direct that nothing contained in this Act shall apply to such insurer.

37. No act or proceeding of the Corporation or of an acquiring com- Vacancies, etc., not to invalidate proceed- ings.

pany shall be called in question merely on the ground of the existence of any vacancy in, or defect in the constitution of, the Corporation or the company.

Protection of action taken in good faith.

38. No suit, prosecution or other legal proceeding shall lie against any officer of the Central Government or officer or other employee of the Corporation or of the acquiring company for anything which is in good faith done or intended to be done under this Act.

39. (1) The Central Government may, by notification, make rules to carry out the provisions of this Act.

Power to make ruies.

(2) In particular, and without prejudice ito the generality of the foregoing power, rules made under this section may provide for—

(a) the manner in which the profits, if any, and other moneys received by the Corporation may be dealt with;

(b) the conditions, if any, subject to which the Corporation and the acquiring companies shall carry on general insurance business;

(c) the terms and conditions subject to which any reinsurance contracts or treaties may be entered into;

(d) the form and manner in which any notice or application may be given or made to the Central Government;

(e) the reports which may be called for by the Central Govern- ment from the Corporation and the acquiring companies;

(f) any other matters which is required to be, or may be, pres- cribed.

(3) Every rule made under this section and every notification issued under section 35 'shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or tho successive sessions aforesaid, both Houses agree in making any modification in the rule or notification or both Houses agree that the rule or notification should not be made, the rule or notification shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modi- fication or annulment shall be without prejudice to the validity of any- thing previously done under that rule or notification.

40. Section 14 of the General Insurance (Emergency Provisions) Act, 1971, is omitted.

Omission of section 14 of Act 17 of 1971.

THE SCHEDULE

(See Section n)

Amount to be paid

PART A

Serial Name of Indian insurance company Number

Amount to be paid

( I)

(*)

(3)

Rs.

i

10,00,000 ²

AU India General Insurance Company Ltd⁷] . Anand Insurance Company L t d .\ . Preference

"3,50,000

shares. Equity shares.

r'2,00,000

Bhabha Marine Insurance Company Ltd.

54,448

Bharat General Reinsurance Ltd. . Preference

3 4

shares.

8,18,000

Ordinary

shares.

13,49,844

British India General Insurance Company Ltd.

37,50,000 ⁶ Calcutta Insurance Limited

Central Mercantile Assurance Company Ltd.

7 8 CUve Insurance Company Ltd. . . . ..

1,000 9

10

39,77.IC|O II

16,80,000

12

13

14

15,52,500 25,20,605 t5 16 975 10,00,000 17

18

2,05,02,200 19

20 5⁰

21

i,95-⁶9.7⁶° 333,i95 2,38,753

22

1,00,000

23

24

25

26

27

1,000

28

29

N a me of I n d i an insurance company

Serial Numb( :r

A m o u nt to be paid

( 1)

(3)

(=0

30 M a r i ne & General Insurance C o m p n ay L i d. .

Rs. 8,95,300

Mother India F i re & General I n s u r a n ce C o m p a ny L t d. .

3i 32 M o t or Owners' Insurance C o m p a ny L t d.

7,44,345 1.65,575 49,200 Naranji Bhanabhai & C o m p a ny L td

33

2,36,400 N a r h a ri M a r i ne Insurance C o m p a ny L t d.

34

60,58,150 N a t i o n al Insurance C o m p a ny L t d. . . ..

35

10,00,000 N e p t u ne Assurance C o m p a ny L t d. . . ..

36

43,50,000 N ew Great I n s u r a n ce C o m p a ny of I n d ia L t d.

37

N ew I n d ia Assurance C o m p a ny L t d. . ..

8,20,37,678 38

68,912 N ew M e r c h a n ts Insurance C o m p a ny L t d.

39

T . 2 I , I IO 40 N ew Premier Insurance C o m p a ny L t d.

N o r t h e rn India General I n s u r a n ce C o m p a ny L i d.

998 4i 42 Oriental F i re & General I n s u r a n ce C o m p a ny L t d.

2,43,98,000

90,00,000 P a n d y an I n s u r a n ce C o m p a ny Ltd

43

11,82,610 Pioneer F i re & General I n s u r a n ce C o m p a ny L t d. .

44

P o r b a n d ar Insurance C o m p a ny L t d. . . ..

59,194

Prachi Insurance C o m p a ny L t d. . . . ..

45 46

21,375 1,38,74,000 R u by G e n e r al Insurance C o m p a ny L t d.

1,18,252 Shree Mahasagar Vima C o m p a ny L t d.

47 48

60,63,000 S o u th I n d ia I n s u r a n ce C o m p a ny L t d.

49

Sterling General I n s u r a n ce C o m p a ny L t d. Preference

50

shares

23,000

Ordinary shares

T r i t on I n s u r a n ce C o m p a ny L t d. . . . ..

16,08,139 47,07,180

U n i t ed I n d ia F i re & General I n s u r a n ce C o m p a ny L t d. ,

5i 52

2i,39,99i

Universal F i re & General I n s u r a n ce C o m p a ny L t d.

24,71,618

53

896 Vanguard I n s u r a n ce C o m p a ny L t d. . ' .

54

32,49,617 Vulcan Insurance C o m p a ny L td

55

PART B

Name of Insurer

Amount to be paid

Serial Numbei

( 2)

(3)

Rs.

18,69,000 Co-operative Fire & General Insurance Society Ltd.

1 1

5,93,000 Co-operative General Insurance Society Ltd..

2 1

1,40,000 Indian Mutual General Insurance Society Ltd.

3

2,81,34,000 Life Insurance Corporation of India . . ..

4

12,89,000 Mlllowners' Mutual Insurance Association Ltd.

2,83,000 Orissa Co-operative Insurance Society Ltd. .

5 6 <

Reinsurance Association of India (International) Ltd.

13,000 7 ]

N a me of i n s u r er

A m o u nt to be

r

p a id

Serial Numbe

(3)

( 2)

d)

Rs.

37,60,000

8 U n i on C o - o p e r a t i ve I n s u r a n ce S o c i e ty L t d. .

36,65,000

A l l i a n ce A s s u r a n ce C o m p a ny L t d. . . ..

9

3,30,000

10 A m e r i c an I n s u r a n ce C o m p a ny . . . ..

64,85,000

A t l as A s s u r a n ce C o m p a ny L t d. . . . ..

II

22,67,000

B a l o i se I n s u r a n ce C o m p a ny L i m i t ed . . ..

12

1,000

B r i t i sh A v i a t i on I n s u r a n ce C o m p a ny L t d.

13

81,000

C a l e d o n i an I n s u r a n ce C o m p a ny . . . ..

14

6,04,000

C e n t u ry I n s u r a n ce C o m p a ny L t d. . . ..

15

85,20,000

C o m m e r c i al U n i on A s s u r a n ce C o m p a ny L t d.

16

37,12,000

E a g le S t ar I n s u r a n ce C o m p a ny L t d, . . ..

17

1,000

G e r l i ng G l o b al R e i n s u r a n ce C o m p a ny L t d.

18

3,81,000

G r e at A m e r i c an I n s u r a n ce C o m p a ny . . ..

19

19.98,000

G u a r d i an A s s u r a n ce C o m p a ny L td

20

42,13,000

H a n o v er I n s u r a n ce C o m p a ny

21

2,96,000

H a r t f o rd F i re I n s u r a n ce C o m p a ny . . ..

32

H o me I n s u r a n ce C o m p a ny . . . . ..

23

3>73.°°° 5,28,000

L e g al & G e n e r al A s s u r a n ce S o c i e ty L t d.

24

8,23,000

L i v e r p o ol a nd L o n d on a nd G l o be I n s u r a n ce C o m p a ny L td

25

12,30,000

L o n d on A s s u r a n ce . . . . . ..

26

40,000

L o n d on G u a r a n t ee & A c c i d e nt C o m p a ny L t d.

27

47,70,000

L o n d on & L a n c a s h i re I n s u r a n ce C o m p a ny L t d.

28

L ' U n i on F i r e, A c c i d e nt a nd G e n e r al I n s u r a n ce C o m-

29

p a ny L td

1,000

30 N a t i o n al E m p l o y e r s' M u t u al G e n e r al I n s u r a n ce A s s o- c i a t i on L t d. . . . . • • ••

3,17,000

N a t i o n al I n s u r a n ce C o m p a ny of N ew Z e a l a nd L t d.

1,000

31

19,08,000

N ew H a m p s h i re I n s u r a n ce C o m p a ny . . ..

32

10,84,000

N ew Z e a l a nd I n s u r a n ce C o m p a ny L t d.

33

31,43,000

N o r w i ch U n i on F i re I n s u r a n ce S o c i e ty L t d.

34

2,63,000

P h o e n ix A s s u r a n ce C o m p a ny L t d. . . ..

35

1,000

P r o v i n c i al I n s u r a n ce C o m p a ny L td

36

10,31,000

Q u e e n s l a nd I n s u r a n ce C o m p a ny L td

37

49,62,000

R o y al E x c h a n ge A s s u r a n ce '

38

73,28,000

R o y al I n s u r a n ce C o m p a ny L td

39

43,15,000

S c o t t i sh U n i on & N a t i o n al I n s u r a n ce C o m p a ny

40 :

1,000

S k a n d ia I n s u r a n ce C o m p a ny L t d. . • •

41

S o u th British Insurance C o m p a ny L t d.

18,42,000 42

25,86,000 Sun Insurance Office L t d. . . ..

43

6,35,000 Switzerland General Insurance C o m p a ny L t d.

44

T h r e a d n c e d le Insurance C o m p a ny L t d.

1,000

92,000 T o k yo M a r i ne & Fire Insurance C o m p a ny L t d.

45 46

5,89,000 U n i on Insurance Society of C a n t on L t d.

83,000 United Scottish Insurance Company L t d.

47 43

1,000 Welfare I n s u r a n ce Company L t d.

- 49

13,92,000 Western Assurance Company . . ..

50

16,31,000 Yorkshire Insurance C o m p a ny L t d.

5i

1,000 Z u r i ch Insurance C o m p a ny L t d. . . ..

;2

K. K. SUNDARAM,

Joint Secy, to the Govt. of India.

PRINTED BY THE GENERAL MANAGER, GOVERNMENT OF INDIA PRESS, MINTO ROAD, NEW DELHI AND PUBLISHED BY THE MANAGER OF PUBLICATIONS, DELHI, 1 9 72