Contents ths insurance act, 1938 Arrangement of Sections




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Provided that, where any such provident society in existence at the commencement of this Act applies within three months of such commencement to the Authority for permission to continue carrying on its business with a view meanwhile to reorganise its business in accordance with the provisions of this Act, the Authority may at his discretion, with due regard to the past history of the society, permit the society to continue business for a period not exceeding two years from the date of receipt of such permission, so however that no new business on the dividing principle is undertaken by the society.
(3) Where after the commencement of the Insurance (Amendment) Act, 1941 (13 of 1941), a provident society is to be wound up in pursuance of this section, or where, whether before or after the commencement of that Act, a provident society ceases to carry on business on the dividing principle the provisions of sub sections (2) and (3) of Section 52 shall, so far as may be apply in like manner as they apply to an insurer ceasing to carry on business on the dividing principle.
Registration
70. (1) No provident society except a provident society registered under the provisions of the Provident Insurance Societies Act, 1912 (5 of 1912), shall receive any premium or contribution until it has, obtained from the Authority, before the date of commencement of the Insurance Regulatory and Development Authority Act, 1999, a certificate of registration.
(2) Every application for registration shall be accompanied by:


  1. a certified copy of the rules of the society, and when the society is a company incorporated under the Indian Companies Act, 1913 (7 of 1913) or under the Indian Companies Act, 1882 (6 of 1882), or under the Indian Companies Act, 1866 (10 of 1866), or under any Act repealed thereby,] a certified copy of the memorandum and articles of association or where the society is not such a company a certified copy of the deed of constitution of the society;

  2. the names and addresses of the proprietors or directors, and the managers of the society, the full address of the registered office of the society, the full address of the principal office of the society in India the name of the manager at such office, and the name and address of some one or more persons resident in India authorised to accept any notice required to be served on the society;

  3. a certificate from the Reserve Bank of India that the initial deposit referred to in Section 73 has been made;

  4. a declaration verified by an affidavit made by the principal officer of the society authorised in that behalf that the minimum working capital required by Section 72 is available; and

  5. the receipt showing payment in the prescribed manner of the prescribed fee for registration being not more than two hundred rupees.

(3) The Authority may refuse to issue a certificate of registration until he is satisfied that the rules of the society comply with the provisions of this Act and that the society complies with the provisions of Sections 65 A, 67, 71, 72, 73 and 73 A, but if he is so satisfied he shall register the society and its rules.


(4) The Authority may, after giving previous notice in writing in such manner as he thinks fit specifying the grounds for the proposed cancellation, and allowing the society concerned an opportunity of being heard, apply to the Court and obtain sanction for cancellation of the registration made under this section or made under the provisions of the Provident Insurance Societies Act, 1912 (5 of 1912).—


  1. if he is satisfied from the returns furnished under the provisions of this Act or as the result of an inquiry made under Section 87 - ­




    1. that the society is insolvent or is likely to become so, or




    1. that the business of the society is conducted fraudulently or not in accordance  with the rules thereof, or that it is in the interests of the policy holders that the  society should cease to carry on business, or




  1. if the society, having failed to comply with any requirement or having contravened any provision of this Act, has continued such failure or contravention for a period of one month after notice of such failure or contravention has been conveyed to the society by the Authority:


Provided that the Authority may, if he thinks fit, instead of applying for cancellation of the registration under sub clause (i) of C1ause (a) of this sub­section make a recommendation to the Court that the contracts of the society should be reduced in such manner and subject to such conditions as he may indicate:
Provided further that the Authority may, without previous notice and without application to the Court for sanction,—
(a)  cancel the registration of a provident society which has failed to have its registration  renewed, or
(aa) cancel the registration of a provident society if any deposit required by Sec. 73 has  not been made, or
(b) cancel' on such terms and conditions as he thinks fit, the registration of any provident society which applies to him for such cancellation if he it satisfied that the society has ceased to carry on insurance business and the all its liabilities in respect of insurance policies are either satisfied or otherwise provided for, or
(c) cancel the registration of a provident society if he has reason to believe that any claim upon the society arising in India under any policy of insurance remains unpaid for three months after final judgment in regular course of law.
(5) When a registration is cancelled the provident society shall not, after the cancellation has taken effect, enter into any new contracts of insurance, but all rights and liabilities in respect of contracts of insurance entered into by it before such cancellation takes effect shall, subject to the provisions of Section 88, continue as if the cancellation had not taken place.
(6) Where a registration is cancelled under Clause b of sub section (4), or C1ause (c) of the second proviso to that sub section, or because the society has failed to have its registration renewed, the Authority may at his discretion revise the registration of the provident society, within six months from the date on which the cancellation took effect, makes the deposits required by Section 73 or satisfies the Authority that no claim upon it such as is referred to in the said C1ause © remains unpaid, or has had an application under sub section (3) of Sec. 70A accepted, as the case may be, and complies with any directions which may be given to it by the Authority.
(7) The Authority may, on payment of the prescribed fee which shall not exceed five rupees, issue a duplicate certificate of registration to replace a certificate lost, destroyed or mutilated, or in any other case where he is of opinion that the issue of a duplicate certificate is necessary.
Renewal of registration
70A (1) Every provident society registered under this Act, or under the Provident Insurance Societies Act, 1912 (5 of 1912), shall have its registration renewed annually for each period of twelve months after that ending on the 30th day of June, 1942.
(2) An application for the renewal of a registration shall be made by the society to the Authority before the 30th day of June preceding the period for which renewal is sought, and shall be accompanied as provided in sub section (3) by evidence of payment of the prescribed fee which shall not exceed two hundred rupees but may vary according to the volume of insurance business done by the society.
(3) The prescribed fee for the renewal of a registration for any year shall be paid into the Reserve Bank of India, or, where there is no office of that Bank, into the Imperial Bank of lndia acting as the agent of that Bank, or into any Government treasury, and the receipt shall be sent along with the application for renewal of the registration.
(4) If a provident society fails to apply for renewal of registration before the date specified in sub section (2) the Authority may, so long as he has taken no action under Section 88 to have the society wound up, accept an application for renewal of registration on receipt from the society of the fee payable with the application and such penalty, not exceeding the prescribed fee payable by the society, as he may require.
(5) The Authority shall, on being satisfied that the society has fulfilled the requirements of this section, renew the registration and grant it a certificate of renewal of registration.
Supplements information and reports of alterations in particulars furnished with application for registration.
70B. (1) Every provident society registered under Section 70 before the commencement of the Insurance (Amendment) Act, 1941 (13 of 1941), shall, before the expiration of three months from the commencement of the Insurance (Amendment) Act, 1941 furnish to the Authority such particulars in addition to those already supplied for the purpose of obtaining registration as are required by sub section (2) of Section 70 of this Act as amended by the Insurance (Amendment) Act, 1941.
(2) Every provident society registered under the provisions of the Provident Insurance Societies Act, 1912 (5 of 1912), shall, before the expiration of three months from the commencement of the Insurance (Amendment) Act, 1941 (13 of 1941), furnish to the Authority so far as it has not already done so the documents and information required by Clauses (a) and (b) of sub section (2) of Section 70 to accompany an application by a provident society for registration under that section.
(3) When any alteration occurs or is made which affects any of the matters which are required under the provisions of sub section (2) of Section 70 to accompany an application by provident society for registration under that section, or are to be furnished to the Authority, under this section, the provident society shall furnish forthwith to the Authority full particulars duly authenticated of such alteration.
Certain provisions of Part II to apply to provident societies
71. The provisions of sub sections (2) and (3) of Section 10, Section 20, sub section (1) of Section 27, Sections 27 A, 28, 29, 31 A, 31 B 32, 46 and 53A shall apply to provident societies as they apply to insurers, and in such application references to shareholders of an insurer shall be construed as references to members of a provident society and references to Section 7 or Section 98 shall tee construed as references to Section 73:
Provided that a provident society may charge a fee not exceeding one rupee for supplying a copy of any document referred to in sub section (2) of Section 20.
Working capital
72. No provident society shall be registered unless it has a paid up capital sufficient to provide as working capital a net sum of not less than five thousand rupees exclusive of deposits made under this Act and exclusive in the case of a company of any expenses incurred in connection with the formation of the company.
73. Deposits.—(1) Every provident society shall, if established before the commencement of this Act within one year from such commencement, applies for registration under Section 70, deposit and keep deposited with the Reserve Bank of India in one of the offices in India of the Bank, for and on behalf of the Central Government, cash or approved securities amounting at the market value of the securities on the date of deposit to five thousand rupees, and shall thereafter make each calendar year a further deposit amounting to not less than one fifth of the premium income for the preceding calendar year as shown in the revenue account of the society (including admission fees and other fees received by the society) until the total amount so deposited and kept is fifty thousand rupees.
(2) The provisions of sub sections (8), (9), (9 A), (9 B) and (10) of Section 7 and of sub section (1) of Section 8 and of Section 9 shall apply to the deposits made under this section as they apply to deposits made by an insurer.
Restriction on name of provident society
73A. (1) A provident society shall not be registered by a name identical with that by which an insurer or another provident society in existence is already registered, or so nearly resembling that name as to be calculated to deceive, except when the provident society in existence is in the course of being dissolved and signifies its consent, or the insurer in existence signifies his consent to the Authority.
(2) If a provident society, through inadvertence or otherwise, is without such consent as aforesaid registered by a name identical with that by which an insurer or another provident society already in existence is registered, or so nearly resembling it as to be calculated to deceive, the first mentioned society shall, if called upon to do so by the Authority on the application of the insurer or the second mentioned society, change its name within a time to be fixed by the Authority:
Provided that nothing in this section shall apply to any provident society carrying on business before the commencement of the Insurance (Amendment) Act, 1946 (6 of 1946)
Rules.
74. (1) Every provident society shall, in its rules, set forth-


  1. the name, the object and the location of the registered office of the society

  2. the contingencies or classes of contingency on the happening, of which money  is to  be paid;

  3. the condition to be complied with before, and the payments to be made on,  admission to the society;

  4. the rates of premium or contribution, and the periods for which or the times at         which premiums or contributions are payable;

  5. the maximum amount payable to a subscriber or policy holder;

  6. the nature and amounts of the benefits provided for by the society;

  7. the circumstances in which a bonus may be paid to a policy­holder;

  8. the nature of the evidence required for the proof of the happening of any       contingency on which money is to be paid;

  9. the circumstances in which policies may be forfeited or renewed or  the whole or a part of the premiums paid on a policy may be returned or  a surrender value  of a  policy may be granted;

  10.  the penalties for delay in paying or failure to pay premiums or contributions;

  11. the proportion of the annual income of society which may be disbursed on and  the provisions to be made for meeting the expenses of the management of the society;

  12. the person or persons who or the authority which shall have power to invest the  funds of the society;

  13. the provisions for appointment of auditors and their remunerations;

  14. the procedure to be adopted in altering the rules of the society;

  15. unless these are provided for in the articles of association of a society which is a  company incorporated under the Indian Companies Act, 1913 (7 of 1913), or         under  the Indian Companies Act, 1882 (6 of 1882) or under the Indian         Companies Act, 1866 (10 of 1866), or under any Act repealed thereby:




  1. the mode of appointment and removal, the qualification and the powers of a director, manager, secretary or other officer of the society;

  2. the manner of raising additional capital; and

  3. the provisions for the holding of general meetings of the members and  policy holders and for the powers to be exercised and the procedure to be followed thereat; and

(p) such other matters as may be prescribed.


(2) Where the rules of any provident society registered under the Provident Insurance Societies Act, 1912 (5 of 1912), fail to comply with the provisions of this section, the society shall, before the expiry of twelve months from the commencement of this Act, amend the rules so as to comply with these provisions.

Amendment of rules
75. (1) No amendment of any rule of a provident society shall be valid until it has been sent to the Authority and has been registered by him.
(2) The Authority on being satisfied that the proposed amendment is not contrary to the provisions of this Act shall, unless he is of opinion that the amendment unfairly affects the rights of existing members or policy holders of the society, issue to the society an acknowledgment of the registration of the amended rule.
Supply of copy of rules
76. Every provident society shall on demand deliver free of cost to any member of the society a copy of the rules of the society and to any person other than a member a copy of such rules on the payment of a sum not exceeding one rupee.
Registered office
77. Every provident society shall have in India a principal office (on the outside of which it shall keep displayed its name in a conspicuous position in legible characters) to which all communications and notices may be addressed, and shall give notice to the Authority of any change in the location thereof within twenty eight days of its occurrence.
Publication of authorised capital to contain also subscribed and paid­-up capital
78. Where any notice, advertisement or other official publication of a provident society contains a statement of the amount of the authorised capital of the society, the publication shall also contain a statement of the amount of the capital which has been subscribed and the amount paid up.
Registers and books.
79. Every provident society shall keep at its principal office in India



  1. such registers in such form as may be prescribed

  2. a cash book in Which shall be entered separately for each class of  contingency separately specified in Section 65 all sums received and  expended by the society and matters in respect of which the receipt or expenditure takes place,  

  3. a ledger;

  4. a journal.


Revenue account, balance sheet and annual statements
80. (1) Every provident society shall at the expiry of the calendar year prepare a revenue account and balance sheet in the prescribed form verified in the prescribed manner, together with a report on the general state of the society's affairs and shall cause the revenue account and balance sheet to be audited by an auditor, and the auditor shall so far as may be the audit of a provident society have the powers of, exercise the functions vested in, and discharge the duties and be subject to the liabilities imposed on, an auditor of companies by Section 145 of the Indian Companies Act, 1913 (7 of 1913).
(2) Every provident society shall at the expiry of. the calendar year prepare with respect to that year-


  1. a statement showing separately for each class of contingency separately specified in Section 65­

      1. the number of new policies effected, the total amount insured thereby and the total premium income received in respect thereof and the number of existing policies discontinued during the year with the total amount insured thereby, and

      2. the total amount of claims made and the total amount paid in satisfaction thereof;

  1. a statement showing details of every insurance effected on a life other than the life of the person insuring; and

  2. a statement showing the total amount paid as allowances to agents and canvassers.

(3) Until the expiry of two years from the commencement of this Act this section and Section 73 shall apply to provident societies registered before the commencement of this Act under the Provident Insurance Societies Act, 1912 (5 of 1912), as if the reference to the calendar year were a reference to either the financial year or the calendar year.


Actuarial report and abstract
81. Every provident society shall once in every five years or at such shorter intervals as may be laid down by the rules of the society cause an investigation to be made as at the last day of a calendar year into its financial condition including the valuation of its liabilities and assets by an actuary.
(2) The report of the actuary shall contain an abstract in which shall be stated .


  1. the general principles adopted in the valuation, including the method by  which the valuation age of lives was ascertained,

  2. the rate at each age of the mortality and any other factor assumed  and the annuity values used in valuation,

  3. the reserve values held against policies effected,

  4. the rate of interest assumed, and

  5. the provision made for expenses,

and shall have appended to it a certificate signed by a principal officer of the society that all material necessary for proper valuation has been placed at the disposal of the actuary and that full and accurate particulars of every policy under which there is a liability either actual or contingent have been furnished to the actuary for the purpose of the investigation.


(3) If the actuary finds that the financial conditions of the society is such that no surplus exists for distribution as bonus to the policy holders, or as dividend to the shareholders, he shall state in his report whether in his opinion the society is insolvent and, if so, whether it should be wound up or not, and the extent to which in his opinion existing contracts should be modified or existing rates of premium should be adjusted to make good the deficiency in the assets.
Submission of returns to Authority
82.(1) The revenue account and balance sheet with the auditor's report thereon and the report on the general state of the society's affairs referred to in sub section (2) of Section 80, shall be printed and four copies of these and of the statements referred to in sub-section (2) of Section 80, shall be furnished as returns to the Authority within six months from the end of the period to which they relate.
(2) All the material necessary for the proper valuation of the liabilities of the society under the provisions of Section 81 shall be placed at disposal of the actuary within three months from the end of the period to which such material relates, and the report and abstract referred to in Section 81 shall be furnished as a return to the Authority within a further period of three months:
Provided that the Central Government may, in any case, extend the time allowed by this sub section for the furnishing of such return by a period not exceeding three months.
(3) The provisions of sub section (2) of Section 15 relating to the copies therein referred shall apply to the returns referred to in sub section (1) of this section, and the provisions of Section 17 shall apply to the accounts and balance sheet of provident society being a company incorporated under the Indian Companies Act, 1913 (7 of 1913),or under the Indian Companies Act, 1882 (6 of 1882), or under the Indian Companies Act, 1866 (10 of 1866) or under any Act repealed thereby, as they apply to the accounts and balance sheet of an insurer, and the Authority may exercise, in respect of returns made by a provident society and in respect of an investigation or valuation to which Section 81 refers, the same powers as are exercisable by him under Sections 21 and 22, respectively, in the case of an insurer.
Actuarial examination of schemes
83. (1) Every provident society, registered after the commencement of this Act, shall cause every scheme of insurance which it proposes to put into operation, and every provident society registered before the commencement of this Act under the provisions of the Provident Insurance Societies Act, 1912 (5 of 1912), shall cause any scheme which it proposes to put into operation for the first time, after such commencement to be examined by an actuary, and shall not receive any premium or contribution in connection with the scheme until the actuary has certified that the rates, advantages, terms and conditions of the scheme are workable and sound and such certificate has been forwarded to the Authority.
(2) The provisions of sub section (1) shall apply to any alteration of a scheme already in operation, but the Authority may, if he is of opinion that the alteration unfairly affects the interests of existing policy holders, prohibit the alteration, and, if he does so, the society shall not put the altered scheme into operation, unless it first discharges to the satisfaction of the Authority all its liabilities to those of the existing policy holders who dissent from the alteration.
(3) Every provident society registered before the commencement of this Act under the provisions of the Provident Insurance Societies Act, 1912 (5 of 1912), shall, as soon as may be and in any event before the expiry of six months from the commencement of this Act, submit all schemes of insurance which the society has in operation at the commencement of this Act to examination by an actuary and shall, before the expiration of six months from the commencement of the Insurance (Amendment) Act, 1941 (13 of 1941), send the report of the actuary thereon to the Authority
(4) The report of the actuary shall state in respect of each scheme whether the advantages, terms and conditions are workable and sound and, where no actuarial report such as is referred to in Section 81 has been made within the two years preceding the examination the report shall also state whether the assets of the society are sufficient to meet its liabilities under the existing schemes, and, if not how in the opinion of the actuary the existing contracts should be modified.
(5) If the rates, advantages, terms and conditions of any scheme are not reported by the actuary to be workable and sound, Authority shall give notice to the society prohibiting the scheme, and the society shall not after its receipt of such notice enter into any new contract of insurance under the scheme, but all rights and liabilities in respect of contracts of insurance entered into by the society before receipt of the notice shall, subject to the provisions of sub­section (6), continue as if the notice had not been given.
(6) Where a scheme is prohibited under the provisions of subsection (5) the society shall, where its assets are sufficient to meet all existing liabilities, set apart out of its assets the sum sufficient in the opinion of the actuary to meet the liabilities incurred under the scheme so prohibited, and, where its assets are not so sufficient, within three months from the date of the prohibition, apply to the Court for a modification of its existing contracts or failing such modification for the winding up of the society.
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