7. Transfer of assets and liabilities of existing insurers carrying on controlled business.—(1) On
the appointed day there shall be transferred to and vested in the Corporation all the assets and liabilities
appertaining to the controlled business of all insurers.
(2) The assets appertaining to the controlled business of an insurer shall be deemed to include all
rights and powers, and all property, whether movable or immovable, appertaining to his controlled
business, including, in particular, cash balances, reserve funds, investments, deposits and all other
interests and rights in or arising out of such property as may be in the possession of the insurer and all
books of account or documents relating to the controlled business of the insurer; and liabilities shall be
deemed to include all debts, liabilities and obligations of whatever kind then existing and appertaining to
the controlled business of the insurer.
Explanation.—The expression “assets appertaining to the controlled business of an insurer”—
(a) in relation to a composite insurer, includes that part of the paid-up capital of the insurer or
assets representing such part which has or have been allocated to the controlled business of the
insurer in accordance with the rules made in this behalf;
(b) in relation to a Government, means the amount lying to the credit of that business on the
appointed day.
(3) Where any such assets are subject to any trust referred to in sub-section (6) of section 27 of the
Insurance Act or to any other trust for the benefit of policy-holders, the assets shall be deemed to have
vested in the Corporation free from any such trust.
8. Provident, superannuation and other like funds.—(1) Where an insurer whose controlled
business is to be transferred to and vested in the Corporation under section 7, has established a provident
or superannuation fund or any other like fund for the benefit of his employees and constituted a trust in
respect thereof (hereinafter in this section referred to as an existing trust), the moneys standing to the
credit of any such fund on the appointed day, together with any other assets belonging to such fund, shall,
subject to the provisions of sub-section (2), stand transferred to and vest in the Corporation on the
appointed day free from any such trust.
(2) Where all the employees of any such insurer do not become employees of the Corporation under
section 11, the moneys and other assets belonging to any such fund as it referred to in sub-section (1),
shall be apportioned between the trustees of the fund and the Corporation in the prescribed manner; and in
case of any dispute regarding such apportionment, the decision of the Central Government thereon shall
be final.
(3) The Corporation 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.
(4) Where all the moneys and other assets belonging to an existing trust are transferred to and vested
in the Corporation under this section, the trustees of such trust, shall as from the appointed day, be
discharged from the trust, expect as respects things done or omitted to be done before the appointed day.
9. General effect of vesting of controlled business.—(1) Unless otherwise expressly provided by or
under this Act, all contracts, agreements and other instruments of whatever nature subsisting or having
effect immediately before the appointed day and to which an insurer whose controlled business has been
transferred to and vested in the Corporation is a party or which are in favour of such insurer shall in so far
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as they relate to the controlled business of the insurer be of as full force and affect against or in favour of
the Corporation, as the case may be, and may be enforced or acted upon as fully and effectually as if,
instead of the insurer, the Corporation had been a party thereto or as if they had been entered into or
issued in favour of the Corporation.
(2) If on the appointed day any suit, appeal or other legal proceeding of whatever nature is pending by
or against an insurer, then, in so far as it relates to his controlled business, it shall not abate, be
discontinued or be in any way prejudicially affected by reason of the transfer to the Corporation of the
business of the insurer or anything done under this Act, but the suit, appeal or other proceeding may be
continued, prosecuted and enforced by or against the Corporation.
10. Provisions as to composite insurers.—(1) For the removal of doubts it is hereby declared that in
any case where an insurer whose controlled business has been transferred to an vested in the corporation
under this Act is a composite insurer, the provisions of the preceding sections shall only apply to the
extent to which any property appertains to his controlled business and to rights and powers acquired, and
to debts, liabilities and obligations incurred, and to contracts, agreements and other instruments made by
the insurer for the purposes of his controlled business and to legal proceedings relating to those purposes,
and the provisions of those sections shall be construed accordingly.
(2) The Central Government may, by rules made in this behalf provide—
(a) for the determination of the question whether any property appertains to his controlled
business or whether any rights, powers, debts, liabilities or obligations were acquired or incurred or
any contract, agreement or other instrument was made by the insurer for the purposes of his
controlled business or whether any documents relate to those purposes;
(b) for the allocation of the paid-up capital or assets representing such paid-up capital, as the case
may be, between the controlled business of the insurer and any other business;
(c) for substituting for any agreements entered into by any insurer partly for the purposes of his
controlled business and partly for other purposes separate agreements in the requisite terms and for
any apportionments and indemnities consequent thereon;
(d) for the severance of leases comprising property of which part only is transferred to and vested
in the Corporation by virtue of this Act and for apportionment consequent on such severance;
(e) for the apportionment and the making of financial adjustments with respects to any debts,
liabilities of obligations incurred by any such insurer partly for the purposes of his controlled business
and partly for other purposes and for any necessary variation of mortgages and encumbrances relating
to such debts, liabilities or obligations;
(f) for the apportionment of the moneys and other assets belonging to any provident or
superannuation fund or any other like fund to which the provisions of section 8 do not apply between
persons employed in connection with the controlled business of an insurer and other persons;
(g) for any other matters supplementary to or consequential on the matters aforesaid for which
provision appears to be necessary or expedient.
(3) All rules made under this section shall be laid for not less than thirty days before both Houses of
Parliament as soon as possible after they are made, and shall be subject to such modifications as
Parliament may make during the session in which they are so laid or the session immediately following.
(4) Where at any time before the expiration of six months from the appointed day a question has
arisen under this section or under any rules made thereunder as to whether any property is or was held or
used by the insurer for the purposes of his controlled business, the question shall be referred to the
Tribunal for decision.
11. Transfer of service of existing employees of insurers to the Corporation.—(1) Every
whole-time employee of an insurer whose controlled business has been transferred to and vested in the
Corporation and who was employed by the insurer wholly or mainly in connection with his controlled
business immediately before the appointed day shall, on and from the appointed day, become an
employee of the Corporation, and shall hold his office therein by the same tenure, at the same
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remuneration and upon the same terms and conditions and with the same rights and privileges as to
pension and gratuity and other matters as he would have held the same on the appointed day if this Act
had not been passed, and shall continue to do so unless and until his employment in the Corporation is
terminated or until his remuneration, terms and conditions are duly altered by the Corporation:
Provided that nothing contained in this sub-section shall apply to any such employee who has, by
notice in writing given to the Central Government prior to the appointed day, intimated his intention of
not becoming an employee of the Corporation.
1
[(2) Where the Central Government is satisfied that for the purpose of securing uniformity in the
scales of remuneration and the other terms and conditions of service applicable to employees of insurers
whose controlled business has been transferred to, and 2
[vested in the Corporation], it is necessary so to
do, or that, in the interests of the Corporation and its policy-holders, a reduction in the remuneration
payable, or a revision of the other terms and conditions of service applicable, to employees or any class of
them is called for, the Central Government may, notwithstanding anything contained in sub-section (1), or
in the Industrial Disputes Act, 1947 (14 of 1947), or in any other law for the time being in force, or in any
award, settlement or agreement for the time being in force, alter (whether by way of reduction or
otherwise) the remuneration and the other terms and conditions of service to such manner as it thinks fit;
and if the alteration is not acceptable to any employee, the Corporation may terminate his employment by
giving him compensation equivalent to three months remuneration unless the contract of service with
such employee provides for a shorter notice of termination.
Explanation.—The compensation payable to an employee under this sub-section shall be in addition
to, and shall not affect, any pension, gratuity provident fund money or any other benefit to which the
employee may be entitled under his contract of service.]
(3) If any question arises as to whether any person was a whole time employee of an insurer or as to
whether any employee was employed wholly or mainly in connection with the controlled business of an
insurer immediately before the appointed day the question shall be referred to the Central Government
whose decision shall be final.
(4) Notwithstanding anything contained in the Industrial Disputes Act, 1947 (14 of 1947), or in any
other law for the time being in force, the transfer of the services of any employee of an insurer to the
Corporation shall not entitle any such employee to any compensation under that Act or other law, and no
such claim shall be entertained by any court, tribunal or other authority.
12. Transfer of services of existing employees of chief agents of insurers to the Corporation in
certain cases.—Subject to such rules as the Central Government may make in this behalf, every
whole-time salaried employee of a chief agent of an insurer whose controlled business has been
transferred to and vested in the Corporation and,—
(a) who was employed by the chief agent wholly or mainly in connection with the controlled
business of the insurer;
(b) whose salary on the appointed day did not exceed five hundred rupees per mensem; and
(c) who was in the employment of the chief agent for a continuous period of not less than one
year immediately before the appointed day;
shall, on and from the appointed day, become, an employee of the Corporation and the provisions of
section 11 shall, so far as may be, apply in relation to such employee as they apply in relation to a
whole-time employee of the insurer:
Provided that this section shall not apply except in cases where the chief agent of the insurer was
required under the terms of his contract with the insurer to render the prescribed services to policy holders
of the insurer.
1. Subs. by Act 17 of 1957, s. 2, for sub-section (2) (w.e.f. 6-6-1957).
2. Subs. by Act 36 of 1957, s. 2 and the First Schedule, for “vested in it” (w.e.f. 17-9-1957).
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Explanation.—In the case of a whole-time salaried employee of a chief agent who has been
retrenched by the chief agent on or after the 19th day of January, 1956, the provisions of this section shall
apply as if for the words ‘the appointed day’ the words and figures ‘the 19th day of January, 1956’ had
been substituted.
13. Duty to deliver possession of property and documents relating thereto.—(1) Where any
property appertaining to the controlled business of an insurer has been transferred to and vested in the
Corporation under this Act, then,—
(a) every person, in whose possession, custody or control any such property may be, shall deliver
the property to the corporation forthwith;
(b) any person who, on the appointed day, has in his possession, custody or control any books,
documents or other papers relating to such controlled business shall be liable to account for the said
books, documents and papers to the Corporation, and shall deliver them to the Corporation or to such
person as the Corporation may direct.
(2) In particular, all the assets of an insurer appertaining to life insurance business held in deposit by
the Reserve Bank of India under the Insurance Act or by trustees in trust shall be delivered to the
Corporation.
(3) Without prejudice to the other provisions contained in this section, it shall be lawful for the
Corporation to take all necessary steps for securing possession of all properties which have been
transferred to and vested in it under this Act.
14. Power of Corporation to modify contracts of life insurance in certain cases.—The corporation
may, having regard to the financial condition on the appointed day of any insurer whose controlled
business has been transferred to an vested in the Corporation, reduce the amounts of insurance under
contracts of life insurance entered into by such insurer before the 19th day of January, 1956, in such
manner and subject to such conditions as it thinks fit:
Provided that no such reduction shall be made except in accordance with a scheme prepared by the
Corporation in this behalf and approved by the Central Government.
15. Right of Corporation to seek relief in respect of certain transactions of the insurer.—(1)
Where an insurer whose controlled business has been transferred to and vested in the Corporation under
this Act has, at any time within five years before the 19th day of January, 1956,—
(a) made any payment to any person without consideration;
(b) sold or disposed of any property of the insurer without consideration or for an inadequate
consideration;
(c) acquired any property or rights for an excessive consideration;
(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;
(f) if a composite insurer, transferred any property from his life department to his general
department without consideration or for an inadequate consideration;
and the payment, sale, disposal, acquisition, agreement or variation thereof or other transaction or transfer
was not reasonably necessary for the purpose of the controlled business of the insurer or was made with
an unreasonable lack of prudence on the part of the insurer, regard being had in either case to the
circumstances at the time, the Corporation may apply for relief to the Tribunal in respect of such
transaction, and all parties to the transaction shall, unless the Tribunal otherwise directs, be made parties
to the application.
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(2) The Tribunal 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 Tribunal under this section is respect of any transaction and
the application is determined in favour of the Corporation, the Tribunal shall have exclusive jurisdiction
to determine any claims outstanding in respect of the transaction.
16. Compensation for acquisition of controlled business.—(1) Where the controlled business of an
insurer has been transferred to and vested in the Corporation under this Act, compensation shall be given
by the Corporation to that insurer in accordance with the principles contained in the First Schedule.
(2) The amount of the compensation to be given in accordance with the aforesaid principles shall be
determined by the Corporation in the first instance, and if the amount so determined is approved by the
Central Government it shall be offered to the insurer in full satisfaction of the compensation payable to
him under this Act, and if, on the other hand, the amount so offered is not acceptable to the insurer he
may within such time as may be prescribed for the purpose have the matter referred to the Tribunal for
decision.
17. Constitution of Tribunals.—(1) The Central Government may for the purposes of this Act
constitute one or more Tribunals and each of the Tribunals shall consist of three members appointed by
the Central Government one of whom shall be a person who is, or has been, a Judge of a High Court or
has been a Judge of the Supreme Court, and he shall be the Chairman thereof.
(2) A Tribunal may choose one or more persons possessing special knowledge of any matter relating
to any case under inquiry to assist the Tribunal in determining any question which has to be decided by it
under this Act.
(3) Every Tribunal shall have the powers of a civil court while trying a suit under the Code of Civil
Procedure, 1908 (5 of 1908), in respect of the following matters:—
(a) summoning and enforcing the attendance of any person and examining him on oath;
(b) requiring the discovery and production of documents;
(c) receiving evidence on affidavits;
(d) issuing commissions for the examination of witnesses or documents.
(4) Every Tribunal shall have power to regulate its own procedure and decide all matters within its
competence, and may review any of its decisions in the event of there being a mistake on the face of the
record or correct any arithmetical or clerical error therein.