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GENERAL INSURANCE BUSINESS (NATIONALIZATION) ACT, 1972
57 of 1972
20th September, 1972
"By the General Insurance (Emergency Provisions) Ordinance, 1971, which was later replaced by an Act of Parliament the management of the undertakings of all insurers carrying on general insurance business was vested in the Central Government, pending Nationalization. The object of the present Bill is to complete the process of Nationalization which is sought to be effected in the following manner. On a day to be appointed by the Central Government, the shares in insurance companies carrying on general insurance business, which are incorporated in India and having a share capital, would automatically stand transferred to and vested in, the Central Government. A few shares, however, would thereafter be formally transferred to the nominees of the Central Government in order to enable each of the Indian Insurance Companies to function as a Government company. On the appointed day, the undertakings of all other insurers, including foreign insurers, and the LIC insofar as it relates to the general insurance business carried on by it, would also stand transferred to, and vested in, such one or other of the Indian Insurance Companies as the Central Government may specify. It is also proposed to form under the Companies Act, 1956, a government Company, to be called General Insurance Corporation of India, which will be entrusted with the task of supervising, controlling and carrying on the business of general insurance. On the formation of the Corporation, the shares of the Indian Insurance Companies, vested in the Central Govt. would stand automatically transferred to the Corporation and all the Indian Insurance Companies would become the subsidiaries of the Corporation. The Bill further provides for the framing of one or more schemes whereby the Indian Insurance Companies would so get merged in one another that ultimately there will be only four Indian Companies, so situated as to promote competition between them so that effective services in the field of general insurance may be rendered by them in all parts of India." -Gaz. of India, 29-5-72, Pt. II, S. 2, Ext., p. 527. Act 3 of 1985.- In Ajay Kumar Banerjee v. Union of India (AIR 1984 SC 1130) the Supreme Court held that section 16of the General Insurance Business (Nationalization) Act, 1972 does not permit the framing of any scheme which is unconnected with, or unrelated to, the merger of one insurance company with another insurance company or the formation of a new company by the amalgamation of two or more insurance companies. In order to control the cost of administration in the interests of the General Insurance Corporation of India and the acquiring companies and their policy holders. Government considered it necessary to vest itself with powers to frame further schemes of nationalization or revision of pay scales and other conditions of service applicable to officers and other employees and also to confer on the Central Government other necessary power and to revalidate the existing scheme and other actions taken in the past. Hence the President promulgated on the 17th September, 1984, the General Insurance Business (Nationalization), Amendment Ordinance, 1984 to amend the General Insurance Business (Nationalization) Act, 1972 to empower the Central Government to frame further schemes of nationalization or revision of pay scales and other terms and conditions of service of all officers and other employees of the Corporation and of the acquiring companies and for matters connected therewith or incidental thereto. 2. The Bill seeks to replace the said Ordinance. -Gaz. of Ind., 18-1-85, Pt. II, S. 2, Ext., P.4 Act 38 of 1989.- The authorized capital of the General Insurance Corporation of India is at present rupees seventy-five crores as provided in sub-section (2) ofsection 9of the General Insurance Business (Nationalization) Act, 1972 (57 of 1972). There has been a substantial accretion to the free reserves of the General Insurance Corporation of India on account of its continued good performance. As a result of the said accretion, the General Insurance Corporation of India has made two bonus issues and at present the paid-up capital of the said Corporation stands at rupees sixty-four crores and fifty lakhs. The said Corporation is also expected to make further bonus issues in the near future and as a _ result of such issues, the paid-up capital of the Corporation would go up beyond the existing authorized capital of rupees seventy-five crores. It is, therefore, necessary that the present authorized capital of rupees seventy-five crores is increased to rupees two hundred and fifty crores to enable the said Corporation to make further bonus issues over a period of next ten years. 3. The Bill seeks to achieve the above object. -Gaz. of Ind., 2-5-89, Pt. II, S. 2, Ext., p. 11 (No. 17).
An Act to provide for the acquisition and transfer of shares of Indian Insurance companies and undertakings of other existing insurers in order to serve better the needs of the economy by securing the development of general insurance business in the best interests of the community and to ensure that the operation of the economic system does not result in the concentration of wealth to the common detriment, for the regulation and control of such business and for matters connected therewith or incidental thereto. Be it enacted by Parliament in the Twenty-third Year of the Republic of India as follows :-
SECTION 01: SHORT TITLE
This Act may be called the General Insurance Business (Nationalisa- tion) Act, 1972.Clause 1. - "The Committee feel that in view of the changes proposed in the Bill, it is necessary to ensure that the Act may come into force as soon as it received the assent of the President, Sub-clause (2) of this clause has therefore been omitted."- J.C.R. Gaz. of Ind., 1972, Pt. II, S. 2, Extra., pp. 834 (838).
SECTION 02: DECLARATION AS TO THE POLICY OF THE STATE
- It is hereby declared that this Act is for giving effect to the policy of the State towards securing the principles specified in clause (c) of article 39 of the Constitution
Explanation.- In this section "State" has the same meaning as in Article 12 of the Constitution.
SECTION 03: DEFINITIONS
- In this Act, unless the context otherwise requires,-
(a) "acquiring company" means any Indian insurance company and, where a scheme has been framed involving the merger of one Indian insurance company in another or the amalgamation of two or more such companies means the Indian insurance company in which any other company has been merged or the company which has been formed as a result of the amalgamation;
(b) "appointed day"2means such day not being a day later than the 2nd day of January, 1973, as the Central Government may by notification appoint;
(c) "Companies Act" means the Companies Act, 1956;
(d) "Corporation" means the General Insurance Corporation of India formed under section 9-;
(e) "existing insurer" means every insurer the management of whose undertaking has vested in the Central Government under section 3 of the General Insurance (Emergency Provisions) Act 1971, arid includes the undertaking of the Life Insurance Corporation in so far as it relates to the general insurance business carried 6n by it;
(f) "foreign insurer" means an existing insurer incorporated under the law of any country outside India;
(g) "general insurance business" means fire, marine or miscellaneous insurance business, whether carried on singly or in combination with one or more of them but does not include capital redemption business and annuity certain business;
(h) "Government company" means a Government company as defined in Section 617 of the Companies Act;
(i) "Indian insurance company" means an existing insurer having a share capital who is a company within the meaning of the Companies Act;
(j) "Insurance Act" means the Insurance Act, 1938;
(k) Life Insurance Corporation" means the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956;
(l) "notification" means a notification published in the Official Gazette; (m) "prescribed" means prescribed by rules made under this Act; (n) "Schedule" means the Schedule to this Act;
(o) "scheme" means the scheme framed under section 16-3[and also includes a scheme framed under section 17A-];
(p) words and expressions used in this Act but not defined herein and defined in the Insurance Act, shall have the meanings respectively assigned to them in that Act;
(q) words and expressions used in this Act but not defined herein or in the Insurance Act and defined in the Companies Act, shall have the meanings respectively assigned to them in the Companies Act.
Clause 3.- "The Committee feel that the Act should be made effective as early as possible and, for that purpose, there should be an overall time limit beyond which the implementation of the Act may not be delayed. Therefore, in the definition of appointed day' in part (b) of this clause they have inserted the words 'not being a day later than the 2nd day ' of January 1973."-J.C.R.
SECTION 04: TRANSFER OF SHORES OF INDIAN INSURANCE COMPANIES
(1) On the appointed day,4 all the shares in the capital of every Indian Insurance company shall, by virtue of this Act, stand transferred to and vested in the Central Government free of all trusts, liabilities and encumbrances affecting them.
(2) Out of the shares so transferred and vested, the Central Government shall, immediately thereafter, by notification, provide for the transfer of not less than ten shares of every such company to such persons as may be specified in the notification to enable the Indian insurance company to function as a Government company.
(3) Every notification made under sub-sec. (2) shall specify the names and description of the persons to whom the shares are transferred and the particulars of the shares which are transferred to each such person.
(4) A copy of every notification made under sub-section (2) shall, as soon as may be after it is made, be sent by the Central Government to the concerned Indian insurance company, who shall, on receipt of such copy, and notwithstanding anything contained in the Companies Act or in its articles of association, forthwith rectify its register of members by including therein the persons mentioned in the notification as the holders of the shares specified therein.
(5) For the removal of doubts it is hereby declared that the transfer and vesting of shares effected under sub-section (1) shall not be deemed to affect any right of the Indian insurance company subsisting immediately
before the appointed day4against any shareholder to recover from him any sum of money on the ground that that shareholder has not paid or credited to the insurer the whole or any part of the value of the shares held by him or on any other ground whatsoever.
SECTION 05: TRANSFER OF UNDERTAKINGS OF OTHER EXISTING INSURERS
(1) On the appointed day,5the undertaking of every existing insurer who is not an Indian insurance company shall stand transferred to and vested in the Central Government and the Central Government shall immediately thereafter provide, by notification, for the transfer to and vesting in such Indian insurance company, as it may specify in the notification, of that undertaking.
(2) Any notification made under sub-section (1) may provide that any of the undertakings aforesaid may be transferred to and vested in more than one Indian insurance company In such manner and subject to such conditions as may be specified in the notification.
SECTION 06: EFFECT OF TRANSFER OF UNDERTAKINGS
(1) The undertaking of every such existing insurer as is referred to in Section 5-shall be deemed to include all assets, rights, powers, authorities and privileges and all property, movable and immovable, cash balances, reserve funds, investments and all other rights and interests, in, or arising out of, such property as were immediately before the appointed day in the ownership, possession, power or control of such existing insurer in relation to the undertaking, whether within or without India, and all books of accounts, registers, records and all other documents of whatever nature relating thereto, and shall also be deemed to include all borrowings, liabilities and obligations of whatever kind then subsisting of the existing insurer in relation to the undertaking.
(2) Unless otherwise expressly provided by this Act, all deeds, bonds, agreements, powers of attorney, grants of legal representation and other instruments of whatever nature subsisting or having effect immediately before the appointed day and to which any such insurer as is referred to in S. 5 is a party or which are in favour of such existing insurer shall be of as full force and effect against or in favour of the Indian insurance company in which the undertaking or the part to which the instrument relates has vested and may be enforced or acted upon as fully and effectually as if, in the place of the existing insurer referred to in Section 5-, the Indian insurance company in which the undertaking or any part thereof has vested had been a party thereto, or as if they had been issued in its favour.
(3) If, on the appointed day, any suit, appeal or other proceeding of whatever nature in relation to any business of the undertaking which has been transferred under Section 5-is pending by or against any such existing insurer as is referred to in that section, the same shall not abate, be discontinued or be in any way prejudicially affected by reason of the transfer of the undertaking or of anything contained in this Act, but the suit, appeal or other proceeding may be continued, prosecuted and enforced by or against the Indian insurance company in which the undertaking or the part to which the proceeding relates has vested.
(4) For the removal of doubts it is hereby declared that in the case of a foreign insurer or, as the case may be, the Life Insurance Corporation, the provisions of Section 5-and of the preceding sub-sections shall only apply to the extent to which any property appertains, in the former case, to the general insurance business carried on in India and, in the latter case, to the general insurance business carried on, whether within or without India, and to rights and powers acquired, and to debts, liabilities and obligations incurred and to contracts, agreements and other instruments made by the foreign insurer or the Life Insurance Corporation, as the case may be, for the purpose of such general insurance business and to legal proceedings relating to those purposes, and the said provisions shall be construed accordingly.
(5) If any question arises as to whether any property appertains to any such general insurance business as is referred to in this section or whether any rights, powers, liabilities or obligations were acquired or incurred or any contract, agreement or other instrument was made by the foreign insurer or the Life Insurance Corporation, as the case may be, for the purposes of any such business or whether any documents relate to those purposes, the question shall be referred to the Central Government which shall, after giving an opportunity of being heard to the persons interested in the matter, decide it in such manner as it thinks fit.
SECTION 07: TRANSFER OF SERVICE OF EXISTING EMPLOYEES IN CERTAIN CASES
.OBJECTS AND REASONS Clause 7(1).- It has been made clear that the reference is to the Indian insurance company.- Clause 7(1) Proviso.- The Committee feel that every employee should decide before the appointed day as to whether he would like his services to be transferred to the Indian insurance company. The proviso has been amended accordingly, Clause 7(2).- The Committee feel that there should be some time limit within which a question can be referred to the Central Government for decision. They feel that a period of two years from the appointed day (S. 3 (b)) would be reasonable for the purpose. The sub-clause has been amended accordingly. Other amendments are of a clarificatory nature.- J. C. R.
SECTION 08: PROVIDENT, SUPERANNUATION, WELFARE AND OTHER FUNDS
OBJECTS AND REASONS Clause 8.- The Committee feel that there should be some provision that if any employee of the exiting insurer does not become an employee under the nationalized set-up, there should be suitable apportionment of the assets belonging to the provident, superannuation or other funds in which he has interest. A new sub-clause (1A) has accordingly been inserted..- J. C. R.
SECTION 09: FORMATION OF GENERAL INSURANCE CORPORATION OF INDIA
(1) As soon as may be after the commencement of this Act, the Central Government shall form a Government company in accordance with the provisions of the Companies Act, to be known as the General Insurance Corporation of India for the purpose of superintending, controlling and carrying on the business of general insurance.
7Provided that on and from the commencement of the General Insurance Business (Nationalization) Amendment Act, 2002, the provisions of this subsection shall have effect as if for the words "superintending, controlling and carrying on the business of general insurance", the words "carrying on reinsurance business" had been substituted.
(2) The authorized capital of the Corporation shall be6[rupees two hundred and fifty crores, divided into two hundred and fifty lakhs fully paid-up shares] of one hundred rupees each, out of which rupees five crores shall be the initial subscribed capital of the Corporation.
7"Provided that the Central Government may, by notification, increase or reduce the authorised capital or subscribed capital, as the case may be, as it deems fit.
(3) Notwithstanding anything contained in the Companies Act, 1956, it shall not be necessary to add the word "Limited" as the last word of the name of the Corporation.
SECTION 10: TRANSFER OF CORPORATION OF SHARES VESTED IN CENTRAL GOVERNMENT
All the shares in the capital of every Indian insurance company which stand transferred to and vested in the Central Government by virtue of section 4-[with the exception of the shares transferred to any person under sub-section (2) of that section] shall immediately after such vesting, stand transferred to and vested in the Corporation and every Indian insurance company shall forthwith give effect to such transfer, of shares and rectify its register of members by including therein the Corporation as the holder of such shares.
SECTION 10A: TRANSFER TO CENTRAL GOVERNMENT OF SHARES VESTED IN CORPORATION
9All the shares in the capital of the acquiring companies, being— (a) the National Insurance Company Limited; (b) the New India Assurance Company Limited; (c) the Oriental Insurance Company Limited;
(d) the United India Insurance Company Limited, and vested in the Corporation before the commencement of the General Insurance Business (Nationalization) Amendment Act, 2002 shall, on such commencement, stand transferred to the Central Government.
SECTION 11: AMOUNTS TO BE PAID FOR TRANSFER AND VESTING OF SHARES OR UNDERTAKINGS
(1) For the transfer of the shares of each Indian insurance company to, and vesting in, the Central Government, under section 4-, there shall be paid by the Central Government to the Corporation, for distribution to the shareholders of each such company, the amount specified against such company in the corresponding entry under column 3 of Part A of the Schedule.
(2) For the transfer to, and vesting in, the Central Government, under section 5-, of the undertaking of each existing insurer, who is not an Indian Insurance Company there shall be paid by the Central Government to the Corporation, for payment to each such existing insurer, the amount specified against such insurer in the corresponding entry under column 8 of Part B of the Schedule.
SECTION 12: DUSBURSEMENT OF AMOUNTS BY CORPORATION
(1) The total amount paid by the Central Government under section 11-shall be treated as additional contribution to the subscribed capital of the Corporation and such additional subscribed capital shall stand allotted to, and vested in, the Central Government.
(2) The Corporation shall distribute the amount paid to it under section 11-, to the shareholders of each Indian insurance company and to each existing insurer, who is not an Indian insurance company, in accordance with their rights and interests, and, if there is any doubt or dispute as to the right, or extent of the right, of any person to receive the whole or any part of such amount, refer such doubt or dispute to the Central Government for determination and thereafter, act in accordance with the determination made by that Government.
(3) Save as otherwise provided in sub-section (2), the amount referred to in section 11-shall be given in accordance with the provisions of section 13-,section 14-orsection 45, as the case may be.
SECTION 13: MODE OF PAYMENT
OBJECTS AND REASONS Clause 13.- "The existing clause empowers the full payment to shareholders whose claims do not exceed Rs. 25,000 / - but in the case of shareholders whose claim exceeds Rs. 25,000/ - the amount is to be paid to them in three equal installments. The Committee feel that this provision would result in discrimination between small shareholders and ing shareholders and the discrimination should be removed by providing that every shareholder, whose claim does not exceed Rs. 25,000/ -, be paid in full, and where the claim exceed Rs. 25,000/ - he should be paid Rs. 25,000/ - and the balance should be paid to him in three equal installments. Amendments have also been made in this clause to clarify that the amount payable to Indian insurance company should be paid in cash; the payment of the amount will fail due on the appointed day; and interest would be payable on all delayed payments. Further, the Committee feel that there should be time limit within which payment of amount is to be made to foreign insurers. They consider that the payment should be made within three months from the appointed day. The clause has been amended accordingly. "-J.C.R.
SECTION 14: AMOUNT PAYABLE TO SHAREHOLDERS MAY BE PAID TO NAMED PERSONS INSTEAD IN CERTAIN CASES
OBJECTS AND REASONS Clause 14. - "The Committee feel that practical difficulties with regard to the distribution of the amount would arise unless the resolution is passed before the appointed day or the meeting is convened thereafter with the approval of the Central Government. The amendment seeks to avoid that difficulty. The other amendment in the clause is of a clarifying nature."-J. C. R.
SECTION 15: PAYMENT INTO COURT IN CASE OF RIVAL CLAIMS
Where a claim to the amount payable under section 11-is made by two or more persons adversely to one another, the corporation may cause the amount to be deposited in any civil Court having jurisdiction in that behalf and the Court shall decide as to whom the payment shall be made. OBJECTS AND REASONS Clause 15.- "Since it is the Corporation which will distribute the amount, the amendment clarifies that the responsibility for depositing the amount in Court would rest with the Corporation." -J.C.R.
SECTION 16: SCHEMES FOR MERGERS OF COMPANIES, ETC
OBJECTS AND REASONS Clause 16.- "Since the General Insurance Corporation is also a company, the amendment clarifies that the four companies referred to in this clause are in addition to the Corporation." -J. C. R.
SECTION 17: LAYING OF SCHEMES AND NOTIFICATIONS BEFORE PARLIAMENT
Every scheme framed under sub-section CD of section 16-and every notification issued under sub-section (3) of that section shall be laid, as soon as may be after it is framed or issued, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the scheme or notification or both Houses agree that the scheme or notification should not be framed or issued, the scheme or notification shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however that any such modification or annulment shall be without prejudice to the validity of anything previously done under that scheme or notification.]
SECTION 17A: POWER OF CENTRAL GOVERNMENT TO REGULATE THE TERMS AND CONDITIONS OF SERVICE OF OFFICERS AND OTHER EMPLOYEES
(1) The Central Government may, by notification in the Official Gazette, frame one or more schemes for regulating the pay scales and other terms and conditions of service of officers and other employees of the Corporation of any acquiring company.
(2) A scheme framed under sub-section (1) may add to, amend or vary any scheme framed under Section 16-11[including any addition, amendment or variation made therein by notification under sub-section (6) of Section 16-] with respect to rationalization or revision of pay scales and other terms and conditions of service of officers and other employees of the Corporation or of any acquiring company, to provide for further rationalization or revision of such pay scales and other terms and conditions of service notwithstanding that such further rationalization or revision is unrelated to, or unconnected with, the amalgamation of insurance companies or merger consequent on nationalization of general insurance business,
(3) The Central Government may, by notification, add to, amend or vary any scheme framed under this section.
(4) The power to frame a scheme under sub-section (1), and the power conferred by sub-section (3) to add to, amend or vary any scheme framed under this section, shall include the power to frame such scheme, or, as the case may be, to make such addition, amendment or variation in any scheme framed under this section, with retrospective effect from a date not earlier than the appointed day.
(5) A copy of every scheme, and every amendment thereto, framed under this section shall be laid, as soon as may be after it is made, before each House of Parliament.
(6) The provisions of this section and of any scheme framed under it shall have effect notwithstanding anything to the contrary contained in any other law 6r any agreement, award or other instrument for the time being in force.]
SECTION 18: FUNCTIONS OF CORPORATION
(1) The functions of the Corporation shall include -
(a) the carrying on of any part of the general insurance business, if it thinks it desirable to do so;
(b) aiding, assisting and advising the acquiring companies in the matter of setting up of standards of conduct and sound practice in general insurance business and .in the matter of rendering; efficient service to holders of policies of general insurance;
(c) advising the acquiring companies in the matter of controlling their expenses including the payment of commission and other expenses;
(d) advising the acquiring companies in the matter of the investment of their funds;
(e) issuing directions to acquiring companies in relation to the conduct of general insurance business.
13Provided that all the functions of the Corporation specified in this subsection, on and from the commencement of the General Insurance Business
(Nationalization) Amendment Act, 2002, shall be performed by the Central Government.
(2) In issuing any directions under sub-section (1), the14"Central Government" shall keep in mind the desirability of encouraging competition amongst the acquiring companies as far as possible in order to render their services more efficient.
SECTION 19: FUNCTIONS OF ACQUIRING COMPANIES
(1) Subject to the rules, if any, made by the Central Government in this behalf and to its memorandum and articles of association, it shall be the duty of every acquiring company to carry on general insurance business.
(2) Each acquiring company shall so function under this Act as to secure that general insurance business is developed to the best advantage of the community.
(3) In the discharge of any of its functions, each acquiring company shall act so far as may be on business principles and where any directions have been issued by the15"Central Government or the Insurance Regulatory and Development Authority established under sub-section (1) of 'Section 3 of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999)" shall be guided by such directions.
(4) For the removal of doubts it is hereby declared that the Corporation and any acquiring company may, subject to the rules, if any, made by the Central Government in this behalf, enter into such contracts of reinsurance or reinsurance treaties as it may think fit for the protection of its interests.
SECTION 20: BALANCE OF PROFIT HOW TO BE UTILISED
(1) After making provision for bad and doubtful debts, depreciation in assets, provident, superannuation, welfare and other funds, debts due to Government and all other matters for which provision is necessary under any law or which are usually provided for by insurance companies, every acquiring company shall distribute the balance of profit as dividends.
(2) Any profit made by the Corporation and any sums received by the Corporation by way of dividends or otherwise shall be dealt with by it in such manner as may be prescribed.
SECTION 21: INTERIM PROVISIONS FOR MANAGEMENT OF INDIAN INSURANCE COMPANIES
(1) Notwithstanding anything contained in the Companies Actor in the memorandum and. articles of association of any Indian insurance company, on and from the appointed day and until a new board of directors of the Indian insurance company is duly constituted, the management of the company shall continue to vest in the Custodian in charge of the management of the undertaking of that company immediately before the appointed day by virtue of the provisions contained in the General Insurance (Emergency Provisions) Act, 1971, and the Custodian shall be entitled, subject to such directions as the Central Government may issue in this behalf, to exercise all the powers and do all acts and things as may be exercised or done by the company or by its board of directors.
(2) Nothing contained in sub-section (1) shall be deemed to prevent the Central Government from appointing any other person to take charge of the management of the undertaking of any Indian insurance company during the period referred to in that sub-section if for any reason it becomes necessary so to do, and any person so appointed may exercise all the powers and do all acts and things which a Custodian may exercise or do under sub-sec. (1).
(3) The Custodian referred to in sub-section (1) and the person appointed under sub- section (2) shall be entitled to such salaries and other allowances as the Central Government may specify in this behalf and shall hold office during the pleasure of the Central Government.
SECTION 22: POWER OF CENTRAL GOVERNMENT TO TRANSFER EMPLOYEES
-16"The Central Government or any person authorised by it may at any time transfer any officer" or employee from an acquiring company or the Corporation to any other acquiring company or the Corporation, as the case may be, and the officer or employee so transferred, shall continue to have the same terms and conditions of service as were applicable to him immediately before such transfer.
SECTION 23: POWER OF CENTRAL GOVERNMENT TO ISSUE DIRECTIONS
The Corporation and every acquiring company shall, in the discharge of its functions, be guided by such directions in regard to matters of policy involving public interest as the Central Government may give.
SECTION 24: ACQUIRING COMPANIES TO HAVE THE EXCLUSIVE PRIVILEGE OF CARRYING ON GENERAL INSURANCE BUSINESS
(1) Except to the extent expressly provided in this Act, on and from the appointed day, the Corporation and the acquiring companies shall have the exclusive privilege of carrying on general insurance business in India.
(2) Subject to the provisions of section 36, any certificate of registration granted under the Insurance Act to any insurer other than an insurer referred to in sub-section (1) shall, on and from the appointed day, cease to have effect:
Provided that nothing in this sub-section shall apply to the carrying on by the Life Insurance Corporation of life insurance business and capital redemption and annuity certain business.
SECTION 24A: SECTION 24A
[* * *] 17Provided that the Corporation shall, on and from the commencement of the General Insurance Business (Nationalization) Amendment Act, 2002, cease to carry on general insurance business.
SECTION 25: PROPERTIES IN INDIA NOT TO BE INSURED WITH FOREIGN INSURERS EXCEPT WITH PERMISSION OF CENTRAL GOVERNMENT
(1) No person shall take out or renew any policy of insurance in respect of any property in India or any ship or other vessel or aircraft registered in India with an insurer whose principal place of business is outside India save with the prior permission of the Central Government.
(2) If any person contravenes any provision of sub-section (1), he shall be punishable with imprisonment for a term which may extend to one year, or with fine which may extend to one thousand rupees, or with both.
SECTION 26: ACQUIRING COMPANIES AND INCOME-TAX
For the purposes of the Income-tax Act, 1961, every acquiring company shall be deemed to be an Indian company and a company in which the public are substantially interested.
SECTION 27: POWER TO REDUCE AMOUNTS OF INSURANCE IN CERTAIN CASES
An acquiring company may, having regard to its financial condition on the 13th day of May, 1971 or the financial condition on the said date of any existing insurer whose undertaking has been transferred to and vested in it under this Act reduce the liabilities which have arisen under contracts of general insurance entered into before the said date in such manner and subject to such conditions as it thinks fit:
Provided that no such reduction shall be made except in accordance with specific proposals made by the acquiring company in 'this behalf and approved by the Central Government.
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