Nominations and assignments
94. (1) The provisions of Sections 38 and 39 relating to assignment, transfer and nomination in the case of life insurance policies shall, subject to the provisions of this section, apply to policies of insurance issued by any provident society covering any of the contingencies specified in C1ause (a) of sub section (2) of Section 65.
Mutual Insurance Companies and Co operative Life
95. (1) In this Part, before the date of commencement of the Insurance Regulatory and Development Authority Act, 1999, -
(a) "Mutual Insurance Company" means an insurer, being a company incorporated under the Indian Companies Act, 1913 (7 of 1913), or under the Indian Companies Act, l882 (6 of 1882), or under the Indian Companies Act, 1866 (10 of 1866) or under any Act, repealed thereby, which has no share capital and of which by its constitution only and all policy holders are members;
(b) "Co operative Life Insurance Society" means an insurer being a society registered under the Co operative Societies Act, 1912 (2 of 1912) or under an Act of a State Legislature governing the registration of cooperative societies which carries on the business of life insurance and which has no share capital on which dividend or bonus is payable and of which by its constitution only original members on whose application the society is registered and all policy holders are members:
Provided that any co operative life insurance society in existence at the commencement of this Act shall be allowed a period of one year to comply with the provisions of this Act.
(2) Notwithstanding anything contained in sub section (1), other cooperative societies may be admitted as members of a co operative life insurance society, without being eligible to any dividend, profit or bonus.
(3) A State Government may, subject to any rules made by the Central Government, empower the Registrar of Co operative Societies of the State to register co operative societies for the insurance of cattle or crops or both under the provisions of the Co operative Societies Act in force in the State.
(4) A State Government may make rules not inconsistent with any rules made by the Central Government to govern such societies, and the provisions of this Act, in so far as they are inconsistent with those rules, shall not apply to such societies.
Application of Act to Mutual Insurance Companies and Co operative Life Insurance Societies
96. The provisions of Sections 6 and 7 and of sub section (2) of Section 20, so far as those provisions are inconsistent with the provisions of this part, shall not apply, and the provisions of this Part shall apply, to co operative life insurance societies.
Working capital of Mutual Insurance Companies and Co operative Life Insurance Societies
97. No co operative life insurance society registered after the 26th day of January, 1937 under the Co operative Societies Act, 1912 (2 of 1912) or under an Act of a State Legislature governing the registration of co operative societies shall be registered under this Act, unless it has as working capital a sum of fifteen thousand rupees, exclusive of the deposit to be made before or at the time of application for registration in accordance with sub section (2) of Section 98 of this Act and of the preliminary expenses, if any, incurred in the formation of the company or society.
Deposit to be made by Mutual Insurance Companies and Co operative Life Insurance Societies
98. (1) Everyday Co operative Life Insurance Society shall, in respect of the life insurance business carried on by it in India, deposit and keep deposited with one of the offices in India, of the Reserve Bank of India for and on behalf of the Central Government, a sum of two hundred thousand rupees in cash or in approved securities estimated at the market value of the securities on the day of deposit.
(2) The deposit referred to in sub section (1) may be made in instalments, of which the first shall be a payment, made before or at the time the application for registration under this Act is made, of not less than twenty five thousand rupees or such sum as with any deposit previously made by the insurer under the provisions of the Indian Life Assurance Companies Act, 1912 (6 of 1912), brings the amount deposited up to not less than twenty five thousand rupees, and the subsequent instalments shall be annual instalments made before the expiry of each subsequent calendar year of an amount in cash or in approved securities estimated at the marked value of the securities on the day of payment of the instalment, equal to not less than one third of the premium income in the preceding calendar year as shown in the revenue account.
(3) The provisions of sub section (7) of Section 7 shall apply in respect of a co operative life insurance society as if for the words "under the foregoing provisions of this section" the words and figures "under the provisions of Sec. 98" were substituted.
Prohibition of loans
98A. The provisions of Section 29 shall apply to cooperative life insurance societies as they apply to other insurers.
Transferees and assignees of policies not to become members
99. No transferee or assignee of a policy issued by an insurer to whom this Part applies shall become a member of a mutual insurance company or a cooperative life insurance society merely by reason of any such transfer or assignment.
Publication of notices and documents of Mutual Insurance Companies and Cooperative Life Insurance Societies
100. Notwithstanding the provisions of Sections 79 and 131 of the Indian Companies Act, 1913 (7 of 1913), a mutual insurance company or a co operative life insurance society may, instead of sending the notices and the copies of the balance sheet, revenue account and other documents which they are required to send to the members under those sections, publish such notice together with a summary in the prescribed form of the balance sheet and revenue account once in a newspaper published in the English language and in a newspaper published in an Indian language circulating in the place where the principal office of the company is situated:
Provided that, where any members of the company are domiciled in a State other than that in which the principal office of the company is situated, publication of the notice of the meetings shall made in a newspaper or newspapers published in the principal languages of that State and circulating therein and any member of the company domiciled in that State shall be entitled on application to the company to receive from it a copy of the balance sheet and revenue account.
Supply of documents to members
101. Every mutual insurance company and every Co operative Life Insurance Society shall, on the application of any members made within two years from the date on which any such document is furnished to the Registrar of Companies under the provisions of Section 134 of the Indian Companies Act, 1913 (7 of 1913), or to the Registrar of Co operative Societies of the State in which the Co operative Life Insurance Society is registered furnish a copy of the document free of cost to the member within fourteen days of the application.
PART IV A
Re insurance with Indian reinsurers
101A. (1) Every insurer shall re insure with Indian re insurers such percentage of the sum assured on each policy as may be specified by the Authority with the previous approval of the Central Government under sub section (2).
(2) For the purposes of sub section (1), the Authority may, by notification in the official Gazette,—
specify the percentage of the sum assured on each policy to be reinsured and different percentages may be specified for different classes of insurance:
Provided that no percentage so specified shall exceed thirty per cent of the sum assured on such policy; and
also specify the proportions in which the said percentage shall be allocated among the Indian re insurers.
(3) Notwithstanding anything contained in sub section (1), an insurer carrying on fire insurance business in India may, in lieu of re insuring the percentage specified under sub section (2) of the sum assured on each policy in respect of such business, re insure with Indian re insurers such amount out of the first surplus in respect of that business as he thinks fit, so however that the aggregate amount of the premiums payable by him on such re insurance in any year is not less than the said percentage of the premium income (without taking into account premiums on re insurance ceded or accepted) in respect of such business during that year
Explanation- For the purposes of this section, the year 1961 shall be deemed to mean the period from the 1st April to the 31st December of that year.
(4) A notification under subsection (2) may also specify the terms and conditions in respect of any business of re insurance required to be transacted under this section and such terms and conditions shall be binding on Indian re-insurers and other insurers.
(5) No notification under sub section (2) shall be issued except after consultation with the Advisory Committee constituted under Section 101B.
(6) Every notification issued under this section shall be laid before each House of Parliament, as soon as may be, after it is made.
(7) For the removal of doubts, it is hereby declared that nothing in subsection (1) shall be construed as preventing an insurer from reinsuring with any Indian re insurer or other insurer the entire sum assured on any policy or any portion thereof in excess of the percentage specified under sub section (2).
(8) In this section,
"policy" means a policy issued or renewed on or after the 1st day of April, 1961, in Respect of general insurance business transacted in India and does not include a re-insurance policy; and
'Indian re insurer" means an insurer specified in sub-clause (b) of Clause (9) of Section 2 who carries on exclusively re insurance business and is approved in this behalf by the Central Government.
101B. (1) The Authority with the previous approval of the Central Government shall, for the purposes of Section 101A, constitute an Advisory Committee consisting of not more than five persons having special Knowledge and experience of the business of insurance.
(2) The term of office of, and the allowance payable to, members of the Advisory Committee, the procedure to be followed by, and the quorum necessary for the transaction of business of, the Committee and the manner of filling casual vacancies therein shall be such as may be determined by the regulations made by the Authority.
Examination of re insurance treaties
101C. The Authority may, at any time
call upon an insurer to submit for his examination at the principal place of business of the insurer in India all re insurance treaties and other re insurance contracts entered into by the insurer;
examine any officer of the insurer on oath in relation to any such document as is referred to in C1ause (a) above; or
by notice in writing, require any insurer to supply him with copies of any of the documents referred to in Clause (a), certified by a principal officer of the insurer.
Penalty for default in complying with or act in contravention of, this Act.
If any person, who is required under this Act, or rules or regulations made there under,-
to furnish any document, statement, account, return or report to the Authority fails to furnish the same; or
to comply with the directions, fails to comply with such directions;
to maintain solvency margin, fails to maintain such solvency margin;
to comply with the directions on the insurance treaties, fails to comply with such directions on the insurance treaties,
he shall be liable to a penalty not exceeding five lakh rupees for each such failure and punishable with fine.
Penalty for carrying on insurance business in contravention of sections 3, 7 and 98:
103. If a person makes a statement, or furnishes any document, statement, account, return or report which is false and which he either knows or believes to be false or does not believe to be true,-
he shall be liable to a penalty not exceeding five lakh rupees for each such failure; and
he shall be punishable with imprisonment which may extend to three years or with fine for each such failure.
Penalty for false statement in document
104. If a person fails to comply with the provisions of section 27 or section 27A or section 27B or section 27C or section 27D, he shall be liable to a penalty not exceeding five lakh rupees for each such failure.
Wrongfully obtaining or withholding property.
105. If any director, managing director, manager, or other officer or employees of an insurer wrongfully obtains possession of any property or wrongfully applies to any purpose of the Act, he shall be liable to a penalty not exceeding two lakh rupees for each such failure.
Offences by Companies
105A. (1) Where any offence under this Act has been committed by a company, every person who, at the time the offence was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company as well as the company shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:
Provided that nothing contained in this sub-section shall render any such person liable to any punishment, if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence.
(2) Notwithstanding anything contained in sub-section(1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or it attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
Explanation- For the purposes of this section,-
“company” means any body corporate, and includes-
a firm; and
an association of persons or a body of individuals, whether incorporated or not; and
“director” in relation to –
a firm, means a partner in the firm;
an association of persons or a body of individuals, means any member controlling the affairs thereof.
Penalty for failure to comply with section 32B
105B. If an insurer fails to comply with the provisions of section 32B, he shall be liable to a penalty not exceeding five lakh rupees for each such failure and shall be punishable with imprisonment which may extend to three years or with fine for each such failure.
Penalty for failure to comply with section 32C
105C. If an insurer fails to comply with the provisions of section 32C, he shall be liable to a penalty not exceeding twenty-five lakh rupees for each such failure and in the case of subsequent and continuing failure, the registration granted to such insurer under section 3 shall be cancelled by the Authority.
Power of Court to order restoration of property of insurer or compensation in certain cases
106. (l) If, on the application of the Authority or an Administrator appointed under Section 52 A or an insurer or any policy holder or any member of an insurance company or the liquidator of an insurance company (in the event of the insurance company being in liquidation), the Court is satisfied—
that any insurer (including in any case where the insurer is an insurance company any person who has taken part in the promotion or formation of the insurance company or any past or present director, managing agent, manager secretary or liquidator) or any officer employee or agent of the insurer,—
has misapplied or retained or become liable or become accountable for any money or property of the insurer; or
has been guilty of any misfeasance or breach of trust in relation to the insurer; or
that any person, whether he is or has been in any way connected with the affairs of the insurer or not, is in wrongful possession of any money or property of the insurer or having any such money or property in his possession wrongfully withholds it or has converted it to any use other than that of the insurer; or
that by reason of any contravention of the provisions of this Act, the amount of the life insurance fund has been diminished;
the Court may examine any such insurer, director, managing agent, manager, secretary or liquidator or any such other officer, employee or agent of the insurer or such other person, as the case may be, and may compel him to contribute such sums to the assets of the insurer by way of compensation in respect of the misapplication, retainer, misfeasance or breach of trust, as the Court thinks fit, or to pay such sum as may be found due from him in respect of any money or property of the insurer for which he is liable or accountable or to restore any money or property of the insurer or any part thereof, as the case may be; and where the amount of the life insurance fund has been diminished by reason of any contravention of the provisions of this Act, the Court shall have power to assess the sum by which the amount of the fund has been diminished and to order the person guilty of such contravention to contribute to the fund the whole or any part of that sum by way of compensation; and in any of the aforesaid cases the Court shall have power to order interest to be paid at such rate and cases the Court shall have power to order interest to be paid at such rate and from such time as the Court may deem fit.
(2) Without prejudice to the provisions contained in sub section (1) or subsection (3), where it is proved that any money or property of an insurer has disappeared or has been lost' the Court shall presume that every person in charge of, or having a disposing power over, such money or property at the relevant time (whether a director, manager, principal officer or any other officer) has become accountable for such money or property within the meaning of sub clause (i) of Clause (a) to sub section (1), and the provisions of that subsection shall apply accordingly, unless such person proves that the money or property has been utilised or disposed of in the ordinary course of the business of the insurer and for the purpose of that business or that he took all reasonable steps to prevent the disappearance or loss of such money or property or otherwise satisfactorily accounts for such disappearance or loss.
(3) Where the insurer is an insurance company and any of the acts referred to in Clauses (a), (b) and (c) of sub section (1 ) has been committed by any person, every person who was at the relevant time a director, managing agent, manager, liquidator, secretary or other officer of the insurance company shall, for the purposes of that sub section, be deemed to be liable for that act in the same manner and to the same extent as the person who has committed the act, unless she proves that the act was committed without his consent or connivance and was not facilitated by any neglect or omission on his part.
(4) Where at any stage of the proceedings against any person under this section (hereinafter referred to as the delinquent), the Court is satisfied by affidavit or otherwise—
that a prima facie case has been made out against the delinquent; and
that it is just and proper so to do in the interests of the policyholders of an insurer or of the members of an insurance company, the Court may direct the attachment of
any property of the insurer in the possession of the delinquent;
any property of the delinquent which belongs to him or is deemed to belong to him with the meaning of sub section (5);
any property transferred by the delinquent within two years before the commencement of proceedings under sub section (1) or during the pendency of such proceedings/ if the Court is satisfied by affidavit or otherwise that the transfer was otherwise than in good faith and for consideration.
(5) For the purposes of sub section (4), the following classes of property shall be deemed to belong to a delinquent:
any property standing in the name of any person which by reason of the person being connected with the delinquent, whether by way of relationship or otherwise, or on account of any other relevant circumstances appears to belong to the delinquent;
the property of a private company in respect of the affairs of which the delinquent, by himself or through his nominees, relatives, partners or persons interested in any shares of the company is able to exercise or is entitled to acquire control, whether direct or indirect.
Explanation.—For the purposes of this section a person shall be deemed to be a nominee of a delinquent, if, whether directly or indirectly, he possesses on behalf of the delinquent, or may be required to exercise on the direction or on behalf of the delinquent, any right or power which is of such a nature as to enable the delinquent to exercise or to entitle the delinquent to acquire control over the company's affairs.
(6) Any claim to any property attached under this section or any objection to such attachment shall be made by an application to the Court, and it shall be for the claimant or object or to adduce evidence to show that the property is not liable to attachment under this section, and the Court shall proceed to investigate the claim or objection in a summary manner.
(7) When disposing of an application under sub section (1), the Court shall, after giving all persons who appear to it to be interested in any property attached under this section an opportunity of being heard, make such order as it thinks fit respecting the disposal of any such property for the purpose of effectually enforcing any liability under this section, and all such persons shall be deemed to be parties to the proceedings under this section.
(8) In any proceedings under this section the Court shall have full power and exclusive jurisdiction to decide all questions of any nature whatsoever arising there under and, in particular, with respect to any property attached under this section, and no other court shall have jurisdiction to decide any such question in any suit or other legal proceeding.
(9) In making any order with respect to the disposal of the property of any private company referred to in C1ause (b) of sub section (5), the Court shall have due regard to the interests of all persons interested in such property other than the delinquent and persons referred to in that clause.
(10) This section shall apply notwithstanding that the act is one for which the person concerned may be criminally liable.
(11) In proceedings under this section the Court shall have all the powers which a court has under Section 237 of the Indian Companies Act, 1913 (7 of 1913).
(12) This section shall apply in respect of a provident society as defined in Part III as it applies in respect of an insurer.
(13) On and from the commencement of the Insurance (Second Amendment) Act, 1955 (54 of 1955), the Court entitled to exercise jurisdiction under this section shall be the High Court within whose jurisdiction the registered office of the insurer is situate (hereinafter referred to as the High Court) and any proceedings under this section pending at such commencement in any Court other than the High Court shall, on such commencement, stand transferred to the High Court.
(14) The High Court may make rules providing for
the manner in which enquiries and proceedings may be held under this section,
any other matter for which provision has to be made for enabling the High Court to effectively exercise its jurisdiction under this section.