The Insurance (Amendment) Ordinance, 1950

' ' .. , .. ,.. . . . . . : ,_,. ' . ) .. 1: •• .•~ • ,:~' i' . i • • I'. • . ' . ,.,L "- ORDINAN~E No. VI of t9so· ' ' il ,· , • t.: , (Published in the Gazette of India Extraordina1'1J, dated the 19th • t > , J anua1'1J, 1950.) , \ An Ordinance further to amend the Insurance Act 1938 ; . ' . • ' HEREAS a Bill_ further to_ amend th~ ~nsurance Act, 1938 (lV of . 1938), has been introduced 1n the Dom1n1on Legislature but has not · -. yet been passed; . . · AND. WHEREAS . an emergency has arisen • which makes it necessary 1xnmed1ately to give effect to some of the amendments proposed in the s~.~ .. , Bill; • • . .. ... iow, TIIEREFORE, in e~ercise of the powe1·s conferred by section 42 of . . :0:e GovE:rnment of India Act, 1935 (26 Geo. 5, c. 2), the Governor­ t:, eneral 1s pleased to make and promulgate the following• Ordinance:-- !. Short title and commencement.-(1) This Ordinance may be called ~; the Insurance (Amendment) Ordinance, 1950. • ~,< . (2) It shall come into force at once. • ~ . ' . . . ' ' • ;':. . ;_,. · 2. Amendment of section 2, Act IV of 1938 .. -In section 2 of the Insur• •. . ance ,Act, 1938 (hereinafter referred to as the said Act),- • . · (1) after clause (4), the following • clause shall be inserted, . -· • namely : - .. ' '(4A) ''banking company'' and ''company'' have ·the meanings . - ' ' ., ~ .. . ' .. ✓ ·.,. ,· . . ' ' . . . i . t . , t . ' - • , ' ., : . ,. . ' i l -: • respectively assigned to them in clauses (c) and (d) of sub-sec• tion (1) of section 5 of the Banking Companies Act; 1949 (X oj 1949)·'· ' , ' ' • • . • (2) after clause '(10), the following clause shall be inserted, namely:- • ,· • . ~ ~ . · '(10A) "investment company" means a company· whose principal business is the acquisi\i.on of shares, stocks, debentures or other securities;'; • , .., (3) after clause (15), ~e following clause shall· be inserted, namely: . • • ·, • '(16) "private comp~y" and "publ_ic coxµpany" have the . :meanings respectively ~ssigned to -~hem 1n clauses (13) and (~3A) of section 2 of the Indian Companies Act, 1913 (VII of 1913); • , ' 3 Insertion of new section 6A in Act IV of 1938.-After section 6 of. the ~aid Act, the following section shall be inserted, namely: - • / . . ;'6A. Requirements as to voting rights and_ maintenan?e. of t · .. -;ijregisters of be~fi,c~t ow~ers of shares • . (1) A publ1? company l~m1ted · carrying on life . insurance business r .• · · (a) shall maintain, in addi_tion to {be .~egister of members to · · be maintained under the Indian Companies Act, 1913 (VII of t • · · · , 1913), a register of shares in which _shall be entered the name, ' · · · occupation and address of the beneficial owner _of each share, and ~ shall incorporate therein any change of b~neficial owner decl~re~ • ;. . , to .it within fourteen days from the receipt of such declaration, ;:' • •;",. . ,. ~: . , -. . . Price anna 1 or i-&d. ~; j • "'. . . . .. • • r, f'r·¥. . l • 1: • ~'. • r. . . , "': ' ~ .. .. , .. ... . . .. ' ' . ' . . • . . • , • .. • . . . •• . ·- ' • .. • • ' • • i • ,. ., • .. ' . - . . ' . , ·. .. ' ' ' " . • ,. . ' . ' ' ... I ' ' ., , . . • • ' .. .. . ... _. • ' • ; .• • ' .... . , . ' ' ' , , ' • • ' • , • ' • . ' . . \ - ' . , • • f I ' . , - ; . ' I • ' • • I ,. • • ' . . . . • • • • t • • ,· • ' ' ' . ' • .. lnsuru:rice (Amendment) . [Oit1>. Vt: • • (b) shall not register any transfer of its shares.-·· • : . ' •• ( i) unless, in addi~ion to . complianc~ being ma~e With ·;; ·; the provisions• of section 34 of the I~dian Companies Act • . 1913 (VII of 1913) the transferee furnishes a declaration , . to whether he pr~poses to hold t~e. shares for _his ow~ benefit or as a nominee, whether Jointly ?r. ·severally, on :_ behalf of others, and in the latter c~se g1v1ng the nallle ,. , • • , ·' . , • • • occup~tion and address of the ~enefic1al o~ner or owner , and the extent of the beneficial 1~1terest of each; and s, ":. ·; . • (ii) where aft~r the transfer, the total paid~up _holding . of the transferee 1n the shares . of the col!lpany 1s. likely to exceed five per ce~t. ·of its l?a1d-up capital or w~ere_ the ,. • transferee is a banking or an investment compa!ly, 1s l1k • to exceed two and a half per cent. of such paid ... up capii ~ . unless the previous sanction of the Central Government hai. · been obtained to the transfer. • (2) Every person who has any interest i~ any share of a coµipany referred to in sub~section (J) which stands 1n the name (!f . another •. person in the register of members of the company, shall, w1th1n thirty days from the date of commencement of the. Insuranc~ (Amendment) Ordinance 1950 or the date on which he acquires such interest, which­ ever is later, make a declaration (wh~ch sh.all· be countersigned by the person in whose name the share 1s reg1ste~ed) to ~he company . declaring his interest in such share, and notw1thstand1ng anything • • contained in any other law or in an)· contract to the contrary, a person who fails to make a declaration as . aforesaid in respect of any share shall be deemed to have no right or title whatsoever in those . shares : , . . · · .· • , • ' • ' . Provided that nothing in this sub ... section shall affect the right of . a person who has an interest in any such share to establish in a Court his right thereto, if the person in whose name the share is registered refµses to countersign the ·declaration as required by this sub ... section. • · . ,, (3) If' the total /paid--up holding oft)any person in the ~hares of a company referred. to in sub--section (1) on the date on which the provisions of this sect~on become applicable to the co~pany exceed~ , : two and a half per cent. of its paid ... up capital. where that person i~ ~ • , a banking company or an investment company; or five per cent. of · . . its paid-up capital in any other case,_ he shall not be entitled to any • vote as a shareholder of the company 1n respect of such excess holding of shares: • I I I ~r~vided t~at the <;entral G<?vernment may, subject to suc})t restr1ct1ons as 1t may think fit to impose, exempt from the operatic1 of this ~ub ... section_ any ~suran~e company in any case where tn total pa1d-.up ho~d1ng of such . 1nst1rance company in the shares of . any. oth~r insurance ~ompany exceeds t~e limits specified in this sub• section 1£ the other insurance company is or is to be made the subsidi•ary company of the insurance company~ • ·, . . • E~lanation.-For the purposes of this section · the holding of· a person 1n the shares of a company shall be deemed to include·- • ( i) • _the total paid-up holding in -such · shares held by . sucli • person 1n the name of others; and -· . • I . ,· . . . . • \ • , ' • • • • .. I : ,. . ' '. I I::.~ J: • • • . : : ' J P.: , , . . ., ► ·~,;:.··or 1950] ; I nsun.i,:i~e (Amendment) {' , .. ft . • • t~: : . (ii) if any shares of the company are held-·. . ' . -. . . ·. , . • .. . ' ' . . ' . . ' ·' . . ' , . . 3 . . : . . • • • •·, . > ' • I • I • ' . ·. ' . \i i • . , • . 1s 8: member, holdmg more than ten per cent. of the paid-up \:'i . · · . . . . . capital, or • • • •• ~i( • • . , . (b) by .a private limited ~oml)any, of Which such person ~ t •· . . . . . . . ~ a member, or . , '~»~/ • _ •• • •. ( c) by a company, ·of. which such person is a • managing [.; .· • . p1rector?. m~nager, managing agent or in which he has a t:\·· controlling interest, or • . r : . . I i; ·:· ' ' I . \ • ,. ' f· It-:.,·.· ..... ·" • (e) by such person jointly with others, -t f • _· or of the to~al J.01~t holding 1n those shares, as is proportionate to the· contr1but1on made by such person to the paid-up capital ·J- . • of the company, the paid-µp capital of the firm or the joint holding, as the case may be.'' • • • t ' ii .. ' · .-·~- 4. Insertion of new section 27A in Act IV of 1938.-After section 27 •• · ~ ·. t>f the said Act, ·the fallowing • section shall be inserted, namely : -. ·.• ' . it- .•. , . ''274.• Further· provisions regarding investments.-(1) No insurer f' ·:.· •. shall invest or -keep invested any part of· his controlled fund other-: ::r: _: . -:: wise than in any of the following approved_ investments, namely: - f_·,-. · :. . • . ,. , .. (t;t) approved securities~ 1 ,· • .. • r . \ .. . ' • • .. • I ' • • ' • • " • ' ' . . • I ' ' • ~-: • · • • • • . ·- (b) securities of, or . guaranteed as to principal and interest k _ •. · by the Government ,of the. United Kingdom; . • • • - •-:, • •. • .·. - . _ (c) debentures or other securities for money issued with the · • • . permission of the Provincial Government by any municipality ~:: • ·: .' • • · .in a Province· • • : •• ' ' ' . . . f • • • •• (d) debentures or other securities for money issued by any· . t i . __ . -_ ••• - authority constituted under any housing or building scheme !_- • • ~ • • • approved by the Centra~ or a Provincial Government, or by any :\ ·. . • ·authority or body const1tuteq 11y any Central . Act or Act of a ·:· . , :. Legislature established in a Province; . • . ' • .• ,. • . . • · :•. • · (e) debentures secured - by a charge. on any immovable • .: '-_ ; · . property, plant or equipment of ai:iy co~pany which: has paid . . I · fJ . • .• ,interest . in • full for the five years 1mmed1ately preceding or for • . . ~: • ... : ' · at least five out of the six or seven years immediately preceding · . ·; • ~- • • . · · • on such or similar debentures issued. by it;· I . . . • . t- _. • . . • (f) debentures of any company ~hich ~as paid div~dends on • . ~-, ·. ,· '. · .its ordinary shares for the five years 1mmed1ately preceding or for ?.:~·- •: · at least five out of the six or seven years immediately 'preceding: ·~ • • t;: • -··:. , (g) preference shires. of any company which has paid divi- ~- . {·- · ~ , dends on its ordinary shares for the five years immediately f, .· ·. . ,. · . preceding or for at ·1east· five out of. the ~ix or seve~ years i~me~ · ·, diately preceding; . . . t: · · . . (h) share~ of any company which hav1: been. ~~r~nte~d by , ::· . . · • another company, such ,~ther company .~av1ng_ paid d1v1de~ds on i!:r' · . •• • . • .- its ordinary shares for the five. ye~rs 1mmed1ately ~r:c~d1~g or ~- · . · • • for at least five ·out of the six or seven years 1nm1ed1ately • •. • . . ( . ' ' ' ' ' ' • ' • . ' ' ' • . •• • ~, ·• . preceding : •• - , _ . .. . . , . . , . • i • . ' • ~. . • ·' 1 • • . • Pr.ovided that the amount of shares under guarantee i~ not (::·· - _ . . • in excess of fifty per cent. of t~e amount of preferen~~ Jnd f - . •. ~ ( - 0,rdin~ry sh~r~s Qf ·the . guar~ntee1n~ co~pany; fl: .... , L : . ., :· ., ' • r::,. . -'; • .• r : • ~· - . ' . . ' . (. • ' . •• . . ' ' • . • . ' ' . .. . . • . . • . . ' ' . ' ' ;:::;:::::.::::=;:=:::: :::e:::::,::4F::C1.J .... £ 1 6 V • ~ . 0 ; • , .. ' . ' .. • ' •, • • • \ ; . ' I ' ... ' • • ' • ' . 4 tr .. : ... • . ' . .. . . ~ , ~ • • Insurance (Amendment) . . [oao. " : .• . l . ••• ny on which dividends of not 1 : • (i) shares of a~y co~pa bonUS have been paid for the se ess .· years 1mm_ed1ate Y P!ece diately preceding; . . e . ·ght or rune years imme . . . e1 • n immovable prope~y in t_he Provin : . (3) first hmortgaget~yo where the insurer IS carrying on ins~s . or 1n any ot er coun . ~·.. . rt with an outstanding term of less tD:an th1r!y .Years anq phopealy f th property exceeds by one-third, or if it consists - !f e b~ildi~~. ex~eeds by one-half' the mor!gage mo~ey;, • k immovable property in t~e Proy1nces or in ~ny other Provided that the property is free of all encumbrances; i . (l) loans on reversi~ns or life interests? or on po~icies c•:. , life insurance within their surrender valll:es issued ~y him or b~ ... .,1 an insurer whose business he h~s ~?quired and In respe.ct of • ~-. which business he has assumed l1ab1lity; . ''. • ( m) reversions and life_ interests; · \ • (n) fixed deposits with banks included for th~ time being in ·. the Second Schedule to the_ Reserv~ ~~nk of_ India Act, 1934 (II ~ of 1934), or with co-operative soc1et1es registered under the , Indian Co-operative Societies Act, 1912 (II ot 1912), <?r unde~ any : other law for the time being in fore~ and ·doing banking business; · ~- ( o) debentures of o~ s~ares in ~o-?perative societies registered • ·under the Indian Co-operative Soc1et1es Act, 1912 (II of 1912), or under any other law for the time being in force; . (p) such other investments as the Central Government may, , -- l>y notification in the official Gazette~ declare to be approved . Investments for the purposes of this section. • {2) Notwithstanding anything contained in sub-section (l), an insurer being a company or 0 a co-operative life insurance society as defined in clause (b) of sub-section ( l) of section 95, may, subject to the provisions contained in the next succeeding sub-sections, invest .. or keep invested any part of his con'trolled f1wd otherwise than in . : • -· · . an approved investment, . if- 0 • • .. " ' ' • . ' . •• • (i) after such investment, the total amounts of all s ,;··' ,j investments of the insurer do not exceed fifteen per cent. of t e ' , sum referred to in sub-section (1) of section 27. : ' . , (ii) the investment-is made, or, in the case of any investment already made, the coptinuance of such investment is with the consent o~ all th;e directo~s present at • a meeting and eligible to • vote, special notice of which has been given to all the direct·· ··s ~hen i~ India, a!ld all ~uc~ investments, including investm ·· 6 1n which any d1rE:ctor 1s interested, shall • be reported. without ?elay to the Superintendent of Insurance with full details of the • !nv~stments and the extent of the directoI''s interest in any such •• investment. ·· . . • (3) A~ insurer shall not out of his controlled fund invest or keep invested 1n the shares of any . one banking "')mpanv or investment. company more than- . . • ·· _. . · .. , . : • (a) ~wo and a quarter Per cent. of the sum ·referred to in t- s.ub-s~ct1on ( l) c;,f ~ection. 27, or , · · · · · - · · • • ..- • -. .. \ . • • ~~ , I . ., • • . '{,I ' • , ' -·t~::- . ~-•.. • .. or 1950] _ Insurance (Amendment) . 5 \, . •• • debentures _of the banking company or investment .. ;; :'. cerned, whichever is less: company co11- i\ ;- . ' ., • •• • Pr<?vided that nothing in this sub-section shall apply to ·n t 'll~i • • • • • men ts in the shares of the Imperial Bank of India. i ves; . fl ~;' • . ( 4) A~ insurer shall not out of the controlled fund invest or kee ~'-- , a banking company or investment company more than1- f • • (a) ~wo and a· qu~ter per cent. of the sum referred 1:1-. in ~- . _ sub-section . ( 1) of section 27, or · ., '.\ . { . • • • • . (b) ten per cent. of the subscribed share capital ~d deben- . tures of the company, ,a whichever is less: lri ~ ·_ Provided that nothing in this sub-section shall apply to ahy I •• investment ~ade with -~he previous consent of the Central Govern- •.• . . men~ ~Y an insurer, bein~ a company with a view to forming a i:-.; • subs1d1ary company carrying on insurance business. · (, [ . (5) An insurer _shall not out of his controlled fund invest or keep t •• . • mvested any sum in the shares or debentures of any private limited Ir.: • ._ _ company. . _ ~·· ·: . • .. . l: •• • • . • .' .<?> Where an investment is in partly p~d-up shares, the uncalled C . •• liability on such shares shall be added to the amount invested for .: • • the purpos~ of computing the percentages referred to in clause (a) ;,;,' - . • f • of sul;>-section (3) and clause (a) of sub-section (4). . · . . ;'., • .. (7) . Notwithstanding anything contained in sub-sections (3) and . ·;. ( 4), where new shares • are issued to the existing share- ;, holders by a company the existing shares of which are covered by ~: . clause (g) or clause (h) or clause (i) of sub-section (1) and of which . ~:. • -an ·insurer is already a shareholder, the- insurer may subscribe· to ~ :- _: : · such new shares : , ;-. . . ,, ~ . ' , , '.. ; t ~: .. • • .Provided that • the proportidn of new shares subscribed by him :~. • • • . does not exceed the pro~ortion which the paid-up amour,.t on the ,·\. shares held by him immediately before such subscription bears to ' • the total paid-up c~pital of • the company at the time of suc;h ; .. subscription. • ~I • . • (8) u; on an applicatiOn submittE;d th~ough the Sup~rintendent • • .._ • of Insurance the Central Government 1s sat1sfi~d that special grounds i·:· •. •• - exist warranting .. such exemption, the Central Government may for 1 • such period, to such extent and ~~ relation to such pa~ticular i~ve~t- \ -- . ments and subject to such cond1t1ons as may be specified b_y_ 1t . 1n · :i· ', • • • this behalf,· exempt an insurer fro:ffi. all or any of the provisions of ·._ • J,~.. sub-sections (3), ( 4) and (7). , · · . , controlled fund iri fixed deposit or current deposit, or partly 1n fixed deposit and partly in current ~eposit, ~ith any one bank'ing ~ompany ·or with any co-operative society registered under th~ Indian Co- < .. operative Societies . Act, 1912 (II <!f 1912), . or und~r a~y other law :_ • • - for the time _ being 1n force. and doing banking business. \ Provided that in applying this sub-section to the :a~ount in .deposit with a banking company on an~ day· all -~~e prem1umi ~ol­ lected by that company on behalf of the Ill$Urer __ during tl)e preceding • •• • : - thirty days shall be excluded, . I • - . . ... . : . . • I ' " . . ,, ,, j ' , • ' , r , • 4 . • • I - • • • • • • • ' ' • I . .. • ' . ' . . . • • . . , . . . . . . ' . •. • ) . ~ •, - • • .i • • a .. · · • • • . • · • Insurance (Amendment) . [oa 0 . · r . . . . 'It . . . • ••• .. • • (ld) A11. li8sets fc,rming the ~ontrolled fund, shall (except for i • . . • t , . ' • . . ' . . . ' ' l • . . ' , . ., • • • i • " ' • , • • ' ,, • ' , 1 , • • . , . '. _ .. . , . I . ' , ; •• • ' ... . . : • which may, subject to such co~d1t1ons and restrictions as may b ~ prescribed, be offered as security for any .loan taken for purpose~ (:oe~ of any investment) be held free (!f. any encumbrance, charge, hypo~ " thecation or lien. (11) If at any time the Cent!al _Gover~ment ~onsiders an~~ 011 • • ~ . · or. more of the investmen~s const1tut1ng an insurer s controlled fun~ to be unsuitable or undesirable, the Cent~al Governm~nt may, aft ~ , giving the insurer an opportunity of being h~ard, direct him ~~ : : realise the investment or investme~ts, and the insurer_ ~hall cotnpl . ' 1 ! • • with the direction within such time as may. be specified in thi! . behalf by the Central Government. . · • (12) Every insurer in existence at the com1:1encement of t._ • ~ Insurance (Amendment) Ordinance, 1950, whose investments or a.fJ). • . part thereof at such comme~cement contravene or contravenes anY_. . of the provisions of this section, shall, on or before the 28th day J · _f February, 1950, submit to the Superintendent of Insurance a report • specifying all such investments, and, if the Central Government is .. - satisfied ~hat it will not be in th~ interest of _the insurer or an · ; t -• cl~ss of ms!lrers generally to ~~al1se any _such I?Vestme~ts, it ma Y by order, direct that the prov1s1ons of this section [other than t6~ provisions contained in sub-section (11)] spall not. apply in relation t9 any s1:1ch invest1:1ents or to any clas~ of i~vestments generally for . . . . . such period or periods as may be specified 1n the order. • .. . . (13) Nothing contain~d iri ~his section shall be ~eemed to affect 1n any way the manner ·1n which any moneys relating to the provi­ . dent fund of any employee or · to any security taken from an 1 • • employee or other moneys of a like nature are required to be hel~ I • by or ~nder any Central Act, or _Act of_ a Legislature .established in ~ - a Province. •• • ·i •• : ·Explanation.-In this section '_'controlled fund''. means.-·· 1 . , . , ' •• • (a) in the case of ant insurer sp~cified in sub-clause (a) (ii) ' • • . ' , . . . ?r sub-clause (b) of clause '9) of section 2 and carrying on l'f ··.insurance business-- ,.. 1 e •• •• • • • ( i) ~ his funds, if he Ca~i~s on no oth~r class of insur- ance business; . _ . · . .· · · . ness 1£" he carr1~s , on s9me other clnss of insurance bu · also; and. . · . I s1ness , . . . . .,, ' ..' . (b)· i!l the case of any other insurer carrying on 1·~ · • · ~ ance business . • . - . lJ.e 1nsur- ,1 • • ·~ • ~;j r . ( i) all his fu~ds in India, if he carries on no th, 1 . ·: • ·.: .• • , of insurance ~us1ness; . • .· .. . .. 0 er c 8t) . • (ii) ~11 the. funds in I~dia appertaining to h. 1·f . . • anc~ bus1ness if he carries. on . some oth I isf ! e insur- ·_. business also· er c ass o insurance . ; ' • . ' . ; . '· •• ·; but_ does ;not iQclude' an" fund . • • • . . • . ~.. • · . :: • • . • or portion thereof, as the case ma ce 18. satis ed that such fund. • of any country outside India or in Y be, is regulated by the law G • ~e~dent of Insurance is satisfied f h!f e~t of which the Su_perin- , interests of the .insure.r to apply th . :would no~ be 1~ th~ • • • . . . . . • · · e provisions of this section:' · . , . . . . ' ' ... , . : ____.,· -:· . . , ..,.:· • • , ' \, •f ~ ~ • • • \ • • I ~ :). " • ' • ' • I • • • • o ;~ ... ~!: . . ' )' . . ~ . ' ' . . . , . • . , • , . . t, ' I • • • i ... . . . . J • • • • • .. . , ' . ' . . . , . . . . . • .. ;J;.· : . . , ••••. : . : - ; ~- . . .... . ., t '\. ,,,-( • •, ' . ' • • - ... . f;~- . : . ~ •. ' .. ~ •,1 C • ' ' • ,' ,4' "~ ' ' • , •• • ::··,\ . . ~ . . . . •• . ; • '" . { . . . f; or 1950] • . • ·. • •. . Insurance (Amendment) , ' • • .· . . . , • . . • . ' 9 .. ; !>. 5. Amendment of section 28, Act IV of 1938 .-Afte· r 8 b : t, . 2 • • i •• ~ 28 f th ·d A . • u -sec 10n ( ) o~ /_· . section o • e sa1 ct, the following sub-section shall b . t d . . ;-- · ely : , . ~ . . e 1nser e ~ ~--\ 0am . . . . . ~... 11 I • . (. • • , l • ;:,~,: " • ''(2A)_In respect.of th~ asset~ forming the controlled fund.within -(:·: the meaning of sec!1on 27A, -~n _insurer shall submit. along with the> r; ; ' ' asd ~ a en th C s O yf O a an 1ng. company' from that company, ~:_: • an. , ~n a Y O ~r casE:, r-om . the chairman, two directors and a ::~ pr1nc1p~l office~ 1f the.~nsurer _is a company, or from a principal officez . t. • of , !he insurer ~f the insurer 1s not a co~p~ny, specifying the assets ~i ._ . which are subJect to a cha1 .. ge and cert1fy1ng that the other assets } ... • . are held fr~e of any encumbrance, charge, hypothecation,. or lien, and ._'.,. • ~/-. . every st:tch -statement after the first sh~l also specify the charges :: . . , ere ate~. 1n re~pect of any of those assets since . the date of the state­ ·, · ~f. men_t 1mmed1ately preceding, and, if any such char,zes have beel\ •·'fil . _ liquidated, the date on which they were so iiquidated.'' l: , _i· 6. ~se:rtion of new Sf:Ction 28A in Act IV of 1938.-After-section 28 ·of ; . the said A'!t, the following section .shall be inserted, ·namely: • ,. ; • , I • :,.- , , • ''28A. Ret'}-l:n of investments relating to controlled J·und • and J i} .• changes therein.-(1) Every insurer carrying on life insurance busi- • ~~:~ . .- ness at the commencement of the Insurance (Amendment) Ordinance: .• • 1950, shall_, on or before the 28th day of February, 1950, submit to 1 • ·, ~i···.. . . t~1e ~uper1nte~dent of Ins1:1rance a return in such form as may be ~-- . required showing as at the date of such commencement the invest- i.· ments constituting , his controlled fund referred to in section 27A, r- • .• and every .such return shall be ' certified by a principal officer of the • . . . ; • _ , .. ~ . insurer. ,· I .. \ J . .~:. . • (2) Every insurer referred to in sub-section (1) shall also submit t~ :., _ • to the Superintendent of Insurance a return, in such form as may be • ;1- _--~· •. required, showing the changes in the investments constituting his ::·: •. · controlled fund during each of the quarters ending on the last day ;>·· . of March, June, September and De'cember within thirty;..one days from ri_::. __ : • . • the close· of the quarter t(l which it relates, and every such, _return _ i\···" :'.: shall be certified by a principal officer of the insurer.'' · • • .. ' . . I !- . .:. , . , . • • . , ::._, y 7. Insertion of ·new section 31A, Act IV of .1938.-After· section 31, the owing section shall be inserted, namely: - . . . • . ' . : . • , t: ., -··.• , . • • ''31A .. Power . to • restrict payment of excessive remuneration.-( 1) • r· . • . • -The Central Government may, if _it is satisfied tha.t any insurer is f 'r paying any person in respect of insurance b_us~ness _ transact.ed !n i~::.- • India · remuneration, whether by way of comm1ss1on or otherwise, on . , . I ' (( ·, · ,:" p scale disproportion.ate, according to the normal ~tandards revail- __ f: :,- Q.ng in insurance bus1nes~, t_o ·the resources o_f the 1nsu!er, ~~1 upo~ - . . _ ~ ·. the insurer to comply w1th1n two m9nths w_1th such. d1rect10.ns as . 1t , • ~:·· .... , may think fit to issue in_ t·he matter, a11:d 1f compliance with the Y_ • directions so . issued requires the al~erat1on of _any of the , terms of 4 • • • • the contract eritered into ·by the insurer with such person, no _ compensatio~ shall be pay~ble to . su_ch per.son ~y the insurer by .. li . ... • . . ' ' • . . ' ., ' • reason only .of su~h • alteration or of the res~gn~t1on of , such person if the altered .terms are not acceptable .~o him, and no payment by ·way of renewal commission or otherwise -s?all b~ made to such person. by the insurer in . respect of any _prem1Qms paid after the date . . of such resignation.'' ., . . . . . . _ .·· , -. • • . • . ,. i , -, . . • . . • . , . . • • " . . .. • . ' . ' . . . . • . ,. . . • • ' . . . . ( \ . . . • .. , . . . . • l I , ' • • ; l • . . . . . ' • ... , . . . . . , . ' . . I ' ' I • . . ' . • .. . , . . . . . . ·. . .. . . . ' ' . . . . ' • . . . • , . ' . • -.. • . . . , • • • ' . .. ' I . . ' I ) ' i • ' i I ' ( ) . ! < • 1 , 'i; ' ' .f I . . .: ' -· ., .' I • I .. . .. r ,, _ ... ____ -- ---~-~- -·- , .. - • ' • •. . ' .. • .. .. • . • ' .. ' • ... ··. .. • .. . . . ' . .. • • ' ' . , ' .. . , ' . , ' ' ' . •, • ' • . ' 8 • - Insurance (Amendment) • [ORD. Vt • ~ 8. Insertion of new section 34A in Act IV. of 1938--Af ter section 34 • of the said Act, the following section shall be inserted, namely: - . ''34A. Power of lnvestigation.-(1) ~he Central _Government may, at any time, by order in wri_ting, . direct the Sup~r1nte~dent of ~ Insurance or any other person specified in the 0rder to investigate th affairs of any insurer and to_ report to the Central Government 0~ any investigation made by him : • Provided that the Superintendent of ID:surance or the other person : may, whe;rever necessary, employ an. audit.or ?r actuary o~ both for the purpose ·of assisting him in any 1nvest1gation under this section, (2) It shall be the duty of every manager, managing d!rector or • other officer of the insurer to produce ~ef ore the person directed make the investigation under sub-sect~on _(1) all such books • • 4 ' account, registers and other documents in_ h1s cus~ody or J?OWer anci • to furnish him with any statements and 1nformat1?n relat~ng to the affairs of the insurer as the said person may require of him within such time as the said person may specify. . / , (3) Any person, directed to make an investigation ~nder. sub­ section (1), may examine on oath, an~ manag~r, m~nag1ng director · or other. officer of the insurer in relation to • his business and may administer oaths accordingly. · • . . , (4) On receipt of any report under sub-section (1), the .Central Government may, after giving such opportunity to the insurer to make a representation in connection with the· report as in the _opinion of _the Central Government seems reasonable, by order in writing,- . . . • . (a) require the insurer to take such action in respect of any matter as the Central Government may think fit, or • (b) direct the Superintendent of Insurance to cancel the .· registration of the insurer, or . ! ' • • (c) direct the Superinjendent of Insurance to apply to the Court for the winding up of.the insurer, if a company, whether the registration of the insurer has been cancelled . under clause _ ' (b) or not. · 0 • , • • (5) No order made under this section [other than an order made -~ · . · under cla-use (b) of sub-section (4)] shall be capable of being caller,~~1 ~ • ih . question in any Court. • . • ~- : • • . ( 6) All expenses of,· and incidental ·to, any investigation made under this section sJ;tall be defrayed by the insurer, shall have prio­ , rity over other debts due from the insurer and shall be recoverable - as an arrear of land-revenue.'' 9. Insertion of new sections 52A to 52G in Act IV of 1938.-After secti--- 52 of the said Act, the following heading and sections shall . inserted, namely:-. . • ' . • " ''Management 'l)y Administrator·.· . 52A. W1?:en Administrator for. management of insurance business may· be. appointed . .. ( 1) If at any time the Superintendent of Insurance has. reas~n to. bel!eve that an . insurer carrying on life· insurance b;-1s1ness 1s act~ng .1n a manner ~1~ely to be prejudicial to the interests o~ ~olders of l~fe 1n~urance pol1c1es, he may,. afte.r giving such oppor­ turuty to the insurer to be heard as he thinks fit, make a report thereon to the Central Government. . . . ' . .. • • . . . I •. .· . ' " ', )·:,, ... ' ' . )... . . '\ ~· .• ~ .. ~· ,.. . . ''t' I .;. I."• '. ,, ' ' ' ' ' ' ' ' ' ' • " ' . &or1050'l · · . ~- , '· • • -lmura-rtce {Amendfnent) • • ~ . . ti . (2) 'The Cen~r~r G"oVeinment; if it is ·of opiriion after co~sidering' ., ... 9 t·:;.'.! the ~eJ?ort that 1t ~s neces~ary o~ proper ~o do so, may appoint an ;.J<· Administrator to manage t_h~ affairs of the insurer under the direction l;:;:: and· control ·of the Super1~ten_dent of Insurance. . ) ,.:; (3) The Adm~nistrator ~hall ·receive such remuneration as the t~ · l~entral ~oyernment may d1!ect and the Cen~ral Ge>vernment may r ~t ariy tJn:.e _cancel. th,e appo1nt~ent and appoint some other ·person [-· as Adm1n1s~rator. . • . • . . ~-. . ' ' ·~( . . _ (4) The manageme11t ~f the business of the insurer. shall as on • and after the. date of .appo1n~.ment of the Administrator vest in such ~~- J\.dn1inistrator, but ~~cept with the leaye of the Superintendent of , , <.4f nsurance the Adm1n1strator shall not ~ssue any further policies. :~-., (5)· As on anq aft~r tl1e date of appointment of the .Administrator f.GJI any person ve~te~ ~1th any such management .immediately pric>r to ~- tl1at date shall be divested of that management. ' ' ' ' ' ', . ; ' ' \ .. .. ' ... .. ' . ' ' ··• " ' ~-. ' ' ..... ~:-... . .~·· · .. :I;",, • . ' -·. (6_) Tl1e Superintendent ·of Insurance may issue such directions ·to the Administ1 .. ator as to his po\.vers and duties as he deems desir­ able in the cirGumstances of the case, and the A.dministrator may apply to the Superintendent of Insurance at any time for instruc­ tions 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. . • . • C . . 52B. Powers and duties of the Administrator. (1) The Adminis- trator 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 Superintendent of Insurance 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) th~ transfer of the busin~ss of the insurer to some other . , . · insurer; . _ · · , • • -• • • • • ~ - (b) the carrying on of its bµsiness ~y the insurer (whether: with the policies of the• bu§iness. continued for the priginal sum . insured with the addition of bonuses that attach ~o the policies or for reduced amounts); • • (c) the winding up of the insurer; or ( d) such other course as he deems advisable. • -· .... t ... : •. , ~:::·_ . • · • -(2)·· On the filing of the report wi·th the Superintendent of :;:~ . Insurance the Superintendent of Insurance may take such action as &. • · he think; fit for promoting the interests of the holders of life ins.ur- i{ . .Aince policies ill general, . • • . . . t- . _ (3) -Any order passed by the Superintendent of Insurance under ~ . sub-section (2) shall be binding on all persons concerned, and shall !:. ,· • have effect notwithstanding anything in the memorandum <>r articles fi:· of association of the insurer, if a company. • t.. ·· 52C. Cancellation of contracts and agreements.-The Administrator :··_ • may,. at any time during the co~t!nuance of his· ~ppointment with. ~- respect to an insurer and after g1v1ng an o:pportun1tY: to. ~he persons , I:. concerned to be heard, cancel or vary (either uncond1t1onally o~ ~;. subject to such conditions as he thinks fit to impose) any cont1'1ct ~: or agreement ( other tha? .a policy~ bet":een t~e ins~rer __ ~d a~y 0th.er , .. r:: . person which the Adm1n1strator 1s satisfied. 1s preJud1c1al. _to. the 1n- • {f;. , _ • terests o~ • holders of life , insurance poli~ies. . i' . . . . _ • '. ~···"·. ' ', ' ? ' '· ; . ' ". ' ' ' I ' • I • • • ;: . . ' ,. . . ~ ' . t . 1 • I ' l • , . ' . ' ' I • • . : . .· . . . . . ,. • . . . J • ' •. -. . • ' . . • . . . ., . . . . f . " • ' '· . . . ' . ' . , . t • ' .. ' .. , r . . . . ' . . . . . . . . ( • . .. . .. ' . . . \ . 1 •• .. . • • • • . . . . , • ' • . , ' • . . . . • • . . . . . . ·10 · . ' •• · . • tnsura~e (Amendment) [ORD. "1 ojt i9SO] r . • 52D Terminati~n of appointment of Administrator.-If at any • time o~ a report made by the Superintendent of Insurance in this beha'If, it appears to the Central Government that the purpose of the order appointing the Adminis~rator h~s been fylfilled or that for any ' reason it is undesirable that tne order of appointment should remain , in force the Central Government may cancel the order and there- ; upon th~ Administrator shall be divested of the. man.agement of the , insurance business which shall, unless other:wise dire~ted by the Central Government, again vest in the person m whom it ~a~ vested immediately prior to the date of appou:tment of the Administrator . .. ,. 52E. Finality of decision appointing Adm~nistrator.-Any order • or decision of the Central Government raade in pursuance of sect10 • ... _ , 52A or section 52D shall be final and shall not be called in questio· _ • ~n any Court. • 52F. Penalty for withholding documents _or pToperty from . Administrator.-!£ any director or officer of the insurer or any other person fails to deliver to the Adminis~rator any b~oks of account, . . registers or any other documents in his custody relating to the busi- i ·. , ness of ~the insurer the management of which has vested in the Administrator, or -retains any property of such ~urer, he shall be ·. punishable with imprisonment which may extend to - six months • _ or with fine w}?.ich may extend .to one thousand rupeess or with both: • 52G. Protection of action taken under sections 52A to 52D.--(l) •• 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 sections 52A to 52C inclusive.. . . (2) No suit or other legal proceeding sliall lie against .the Central ; , Governmen~ or the Superintendent o~ Insurance for any damage caused ~r likely to be caused by an~thing which is in good faith done or intended to be done under section 52A, section 52B or section : 52D.'' • ' ( . I . ' . ' . . ' • ' -· 10. In~ertion of new section llOC 'In Act IV of 1938.-After section llOB ,·; of the said Act, the following section shall be inserted, namely: - .: . . 1 . ''llOC. Power to ca!l fo_r info.r,:nauon.~ ~1) The Superintendent of _. _ • ~sur~ce may! by not~ce 1n wr1t1ng, require any insurer to supply ~un with any 1nformat~on relating to his insurance business, and the ~ 1nsu~er shall com~ly with such requirement _within such period after ' • I , , . ' ' .. • . /. t . . • • I •. . ' ' . . ' - . . , . • , receipt of t~e notice as may be specified therein. .. , • ·: .. (2) !in! information -sqpplied under this section shall be certitled . by a pnnc~pal _officer of the ·insurer and if the notice so req1iiies also : by an auditor.'' • · · ' . - .. • , v .. ' .. . . lj • • . • • • -- • • • • • • . . • C. RAJAGOPALACHARI, • -~ . • .. . . . . . .... .. .. • . . • • • Govemo,■-Genera~ .. . . • , • . ' .. ... . . . .. .. ' . . . . ' . . ' ·• . . . . ...