Separation of accounts and funds
84. Where a provident society effects policies of insurance in connection with more than one of the classes of contingency separately specified in sub section (2) of Section 65, the receipts and payments in respect of each such class shall be recorded in a separate account in the cash book kept in accordance with Section 79.
Investment of funds
85. (1) [Repealed}
(2) No funds or investments of a provident society except a deposit made under Section 73 or under the law of any State or country relating to insurance shall be kept otherwise than in the name of the society or in the name of a public officer approved by the Central Government.
(3) No loan shall be made out of the assets of a provident society to any director, manager, managing agent, auditor, actuary, officer or partner of the society, except on the security of a policy of insurance held in the society and within its surrender value and no such loans shall be made to any concern of which a director, manager, managing agent, actuary, officer or partner of the society is a director, manager managing agent, actuary, officer or partner:
Provided that nothing in this sub section shall apply to loans made by a provident society to a banking company:
Provided further that where any event occurs giving rise to circumstances, the existence of which at the time of the grant of any subsisting loan would have made such grant a contravention of this sub section, such loan shall, notwithstanding any contract to the contrary, be repaid within three months from the occurrence of such event or from the commencement of the Insurance (Amendment) Act, 1946 (6 of 1946), whichever is later; and in case of default, the director, manager, auditor, actuary or partner concerned shall, without prejudice to any other penalty which he may incur, cease to hold office in the society on the expiry of the said three months.
(3A) Any loan prohibited under sub section (3), made before and outstanding at the commencement of the Insurance (Amendment) Act, 1940 (2 of 1940) shall be repaid before the 1st day of January, 1941, and in case of default the director, manager managing agent, auditor, actuary, officer or partner who has received the loan or is connected with the concern which has received the loan, as the case may be, shall cease to hold office in or be a partner of the society and shall be ineligible to hold office in or to be a partner of the society until the loan is repaid.
(4) Any director, manager, managing agent, auditor, actuary, officer or partner of a society which contravenes the provisions of sub section (3), who is knowingly a party to the contravention, shall without prejudice to any other penalty which he may incur be jointly and severally liable to the society for the amount of the loan, and such amount, together with interest from the date of the loan at such rate not exceeding twelve per cent per annum as the Authority may fix, shall on application by the Authority to any civil court of competent jurisdiction be recoverable by execution as if a decree for such amount had been passed by that Court.
(5) The provisions of Section 86D of the Indian Companies Act, 1913 (7 of 1913), shall not apply to a loan granted to a director of a provident society being a company if the loan is one granted on the security of a policy on which the society bears the risk and the policy was issued to the director on his own life and the loan is within the surrender value of the policy.
Inspection of books.
86. The books of every provident society shall at all reasonable times be open to inspection by the Authority or any person appointed by him in this behalf or by any member or policy holder of the society who has, on application in this behalf, been permitted by the Authority subject to such conditions, if any, as he may impose, to make such inspection.
87. Inquiry by or on behalf of Authority.
87. (l) The Authority shall at least once in two years and may, if he thinks fit, at any time visit personally or depute a suitable person to visit the principal office of a provident society or the principal office in India of a society having its principal place of
business or domicile outside India and inquire into the affairs of the society or may, after giving notice to the society and giving it an opportunity to be heard, direct such an inquiry to be made by an auditor or actuary appointed by him or by both an auditor and an actuary appointed simultaneously, or first by an auditor only or an actuary only and afterwards by an actuary or auditor.
(2) For the purposes of any such inquiry Authority or the auditor or actuary, as the case may be, shall be entitled to examine all books and documents of the society and may demand from the society or any officer of the society such explanations as he may require on any matter relating to the affairs of the society.
(3) The results of any such inquiry shall be recorded in writing by the person making the inquiry, and four copies of the record shall be supplied to the Authority and when the inquiry is completed, a copy of the record, or of each such record where more than one are made in the course of the same inquiry, shall be sent by the Authority to the society concerned and shall be open to inspection by any member or policy holder of the society.
(4) All expenses of incidental to any inquiry made by an auditor or actuary under sub section (1) including any expenses incurred before the date on which the Authority receives notice of an appeal under C1ause (e) of sub section (1) of Section 110 shall be defrayed by the provident society, shall have priority over other debts due from the society, and shall be recoverable as an arrear of land revenue.
(5) The Authority may by notice in writing require the provident society to comply within a time to be specified therein (not being less than fifteen days from the receipt of the notice by the society) with any directions he may issue to remedy defects disclosed by an inquiry under this section.
(6) If the society fails to comply with any direction issued under subsection (5), the Authority may, after giving notice to the society and giving it an opportunity to be heard, apply to the Court for the winding up of the society.
Amalgamation and transfer of insurance business
87A (1) The insurance business of a provident society may be transferred to any person or transferred to or amalgamated with the insurance business of any other provident society in accordance with a scheme prepared under this section and sanctioned by the Authority.
(2) Any scheme prepared under this section shall set out the agreement under which the transfer or amalgamation is proposed to be effected, and shall contain such further provisions as may be necessary for giving effect to the scheme.
(3) Before an application is made to the Authority to sanction any such scheme, notice of the intention to make the application together with a statement of the nature of the amalgamation or transfer, as the case may be, and of the reason there for, shall at least two months before the application is made, be sent to the Authority and certified copies, four in number, of each of the following documents shall be furnished to him, and other such copies shall during the two months aforesaid be kept open for the inspection of the members and policy holders at the principal and branch offices of the provident societies concerned, namely:
a draft of the agreement or deed under which it is proposed to effect the amalgamation or transfer,
balance sheets in respect of the insurance business of each of the provident societies concerned in such amalgamation or transfer,
actuarial reports and abstracts in respect of the insurance business of each of the provident societies so concerned,
a report on the proposed amalgamation or transfer, prepared by an independent actuary,
any other reports on which the scheme of amalgamation or transfer was founded;
and the balance sheets, reports and abstracts referred to in Clauses (b), (c) and (d) shall all be prepared as at the date at which the amalgamation or transfer if sanctioned by the Authority is to take effect, which date shall not be more than twelve months before the date on which the application to the Authority is made under this section:
Provided that the Authority may exempt the provident society or societies concerned from furnishing to him and from keeping open for inspection any one or more of the above documents
(4) When any application such as is referred to in sub section (3) is made to the Authority, he may require, if for special reasons he so directs, notice of the application to be sent to every person resident in India who is the holder Of a policy of any provident society concerned and may cause a statement of the nature and terms of the amalgamation or transfer, as the case may be, to be published in such manner and for such periods as he may direct, and after hearing: the societies concerned, such policy holders as apply to be heard and such other persons as he may deem fit, may sanction the arrangement, if he is satisfied that no sufficient objection to the arrangement has been established and shall make such consequential orders as are necessary to give effect to the arrangement, including orders as to the disposal of any deposit made under Section 73:
no part of the deposit made by any party to the amalgamation or transfer shall be returned except where, after effect is given to the arrangement the whole of the deposit to be made by the provident society carrying on the amalgamated business or the person to whom the business is transferred is completed;
only so much shall be returned as is no longer required to complete the deposit last mentioned in C1ause (a);
while the deposit last mentioned in C1ause (a) remains uncompleted, no accession, resulting from the arrangement, to the amount already deposited by the provident society carrying on the amalgamated business or the person to whom the business is transferred shall be appropriated as payment or part payment of any instalment of deposit subsequently due from it or him under Section 73.
(5) A copy of the order under subsection (4) sanctioning or refusing to sanction the arrangement shall be sent to each of the societies concerned and to each of the policy holders who applied to be heard.
(6) If the scheme involves a reduction of the amount of the insurance and other contracts of the transfer or society or of any or all of the societies concerned in the amalgamation, the Authority may sanction the scheme, reducing the amount of such contracts upon such terms and subject to such conditions as he may think proper, and the reduction of the contracts as sanctioned by the Authority shall be valid and binding on all the parties concerned.
Winding up by Court and voluntary winding up
88. (1) The Court may order the winding up of a 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, 18 (10 of 1866), or under any Act repealed thereby and the provisions of the Indian Companies Act, 1913 (7of 1913) shall, subject to the provisions of this Part, apply accordingly.
(2) In addition to the grounds on which an order may be based, the Court may order the winding up of a provident society if the Authority, who is hereby authorised to do so, applies in this behalf to the Court on any of the following grounds, namely:
that the registration of the society has been cancelled under subsection (4) of Section 70;
that it appears from the returns furnished under the provisions of this Act or as the result of an inquiry made under Section 87 that the society, is insolvent;
that the continuance of society is prejudicial to interests of the policy holders.
(3) A 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 may be wound up voluntarily in accordance with the provisions of the Indian Companies Act, 1913, but shall not be so wound up except for the purpose of effecting an amalgamation or re construction of the society or on the ground that by reason of its liabilities it cannot continue its business.
(4) A provident society not being a company incorporated under the Indian Companies Act, 1913 (7 of 1913) if 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 may be wound up voluntarily under this Act if a resolution is passed by the proprietors that the society should be wound up voluntarily for the purposes or on the ground specified in sub section (3), and the Authority may, in any case where he has ordered the cancellation of the registration of a society under sub section (4) of Sec. 70, order the winding up of the society under this Act.
Reduction of insurance contracts
89. The Court may make an order reducing the amount of the insurance contracts of a provident society upon such terms and subject to such conditions as the Court thinks just-
if the Authority as an alternative to canceling the registration of a society under sub section (4) of Section 70 applies to the Court in this behalf;
if while a society is in liquidation the Court thinks fit;
if when a society has been proved to be insolvent the Court thinks fit to do so in place of making an order for the winding up of the society; or
if the Court is satisfied on an application made in this behalf by the society supported by the report of an actuary, and after giving the policy holders an opportunity to be heard that it is desirable to do so.
Appointment of liquidator
90. (1) Where a provident society is to be wound up whether under the Indian Companies Act, 1913 (7 of 1913), or under this Act, the society shall, within seven days from the date of the order of the Court ordering the winding up of the passing of the resolution authorising the winding up, as the case may be, give notice thereof to the Authority shall appoint the liquidator and shall determine the remuneration to be paid to him:
Provided that if the Authority is not satisfied that the assets of the society are sufficient to meet the costs of liquidation including the remuneration of the liquidator, he may decline to make such appointment, and in such a case the society shall itself appoint a liquidator who shall carry out the liquidation as if the winding up was being done by an order of the Court.
(2) Any liquidator appointed by the Authority under subsection (1) may be removed by the Authority if satisfied that the duties entrusted to him are not being properly discharged.
Application of Act to liquidators
90A. Notwithstanding anything to the contrary contained in the Indian Companies Act, 1913 (7 of 1913), the provisions of Sections 91, 92 and 93 shall apply to any liquidator appointed to wind up a provident society, whether by the Court, the Authority or the society itself.
Powers of liquidator.
91. (1) A liquidator appointed to wind up a society shall have power
to institute or defend any legal proceedings on behalf of the society by his name of office;
to determine the contribution to be made by members of the society respectively to the assets of the society;
to investigate all claims against the society and to decide questions of priority arising between claimants;
to determine by what persons and in what proportion the costs of the liquidation including the remuneration of the liquidator and any expenses incurred under C1ause (g) of this sub section are to be borne;
to give such directions in regard to the collection and distribution of the assets of the society as may appear to him to be necessary for winding up the affairs of the society;
to summon, and enforce the attendance of, witnesses and to compel the production of documents by the same means and as far as may be in the same manner as is provided in the case of a civil court by the Code of Civil Procedure, 1908 (5 of 1908);
with the sanction of the Authority to employ such establishment and to obtain such assistance from an actuary or an auditor as may be necessary for the discharge of his duties;
to sell the immoveable and moveable property of the society by public auction or private contract, with power to transfer the whole thereof to any person or society or to sell the same in parcels.
(2) The liquidator shall, for settling the list of contributories and releasing the amount of contributions, have the same powers as an official liquidator appointed by the Court for the winding up of a company under the Indian Companies Act, 1913 (7 of 1913).
Procedure at liquidation
92. (1) As soon as a liquidator is appointed to wind up a society he shall take charge of all property moveable or immoveable of the society and of all its books and documents.
(2) If any proprietor or officer of the society or any other person retains any portion of the assets of the society or fails to deliver to the liquidator any book or document when so required by the liquidator, he shall be punishable with imprisonment which may extend to six months, or with fine which may extend to five hundred rupees, or with both, and the Court may order the delivery of the assets or book or document to the liquidator.
(3) The liquidator shall, within fifteen days of his appointments send notice by post to all persons who appear to him to be creditors of the society that a meeting of the creditors of the society will be held on a date not being less than twenty one or more than twenty eight days after his appointment, and at a place and hour to be specified in the notice, and shall also advertise notice of the meeting once in the local official Gazette and once at least in two newspapers circulating in the State in which the society is situated.
(4) At the meeting so held the creditors shall determine whether an application shall be made for the appointment of any person as liquidator in the place of or jointly with the liquidator already appointed, or for the appointment of a committee of inspection, and, if they so resolve and an application accordingly is made at any time not later than fourteen days after the date of the meeting by any creditor appointed for the purpose at the meeting, the Authority may, if he thinks fit, appoint a suitable person in place of or jointly with the liquidator already appointed, and determine the remuneration to be paid to him and if he considers it desirable, may also appoint a committee of inspection.
(5) The committee of inspection shall, subject to any prescribed conditions, have a general power of supervision over the acts of the liquidator and shall have the right to inspect his accounts at all reasonable times.
(6) The liquidator shall, with such assistance from an actuary as may be required, ascertain as soon as practicable the amount of the society's liability to every person appearing by the society's books to be entitled to or interested in any policy issued by the society, and shall give notice of the amount so found to each such person in the prescribed manner and each such person on receiving such notice shall be bound by the value so ascertained.
(7) The liquidator shall make a valuation of the assets of the society and an estimate of the costs of the winding up, and shall, on the basis of these settle the list of contributories.
(8) The liquidator shall apply to the Authority for an order for the return of the deposit made by the society under Section 73 and the Authority shall on such application order the return of the deposit subject to such terms and conditions as he may think fit.
(9) In administering and distributing the assets of the society the liquidator shall have regard to any directions that may be given by the creditors or contributories at a general meeting or by the Authority.
(10) The liquidator shall keep books of account in which he shall record the proceedings at all meetings attended by him, all amounts received or expended by him and any other matter that may be prescribed, and these books may with the sanction of the Authority be inspected by any creditor or contributory.
(11) If the winding up continues for more than a year the liquidator shall summon a meeting of the creditors and contributories at the end of the first year and of each succeeding year, and shall lay before them an account of his acts and dealings and of the conduct of the winding up, and that account together with any views expressed thereon by the meeting shall be forward by the liquidator within one week after the meeting to the Authority.
(12) So far as is not otherwise provided herein or is not otherwise prescribed under this Act, the liquidator shall so far as practicable follow the procedure to be followed by an official liquidator appointed by the Court for the winding up of a company under the Indian Companies Act, 1913 (7 of 1913).
(13) The costs of the liquidation including the remuneration of the liquidator and any expenses incurred under Clause (g) of sub section (1) of Section 91 shall, if the liquidator decides that they shall be payable out of the assets of the society, be payable in priority to all other claims.
Dissolution of provident society
93. (1) As soon as the affairs of a provident society are fully wound up the liquidator shall prepare an account of the winding up showing how the winding up has been conducted and the property of the society has been disposed of and shall call a meeting of the members, creditors and contributories for the purpose of laying before it the account and giving any explanation there of.
(2) Notice of the meeting shall be sent to each person individually and shall be advertised in the local official Gazette and in at least two newspapers circulating in the State in which the society is situated.
(3) Within one week after the meeting the liquidator shall send to the Authority a Copy of the account and shall report to him the holding of the meeting and its date and shall forward to him a copy of the proceedings of the meeting.
(4) The Authority may return the account to the liquidator if it is incomplete or unsatisfactory and may require the liquidator to carry out any further steps necessary to complete the winding up and the liquidator shall comply with such requirement and shall submit a further report to the Authority within six months.
(5) If the Authority is satisfied that the affairs of the society have been fully wound up he shall register the account of the liquidator who shall forthwith make over to the Authority sums, If any, remaining undisposed of; and on the expiry of three months from the registering of the account the Authority shall declare the society dissolved and cause the dissolution of the society to be notified in the local official Gazette, and the liquidator shall thereupon be discharged from further responsibility.
(6) If within a period of five years from the date on which any sums have been made over to the Authority under sub section (5) an order of a court of competent jurisdiction has not been obtained at the instance of any claimant to such sums for their disposal, the said sums shall become the property of Government.