LIIL INSURANCL CORPORA1ION AC1, J9S6*

PRLAMBLL

An Act to proide or the nationalization o lie insurance business in India by transerring
all such business to a Corporation established or the purpose and to proide or the
regulation and control o the business o the Corporation and or matters connected
therewith or incidental thereto.
Be it enacted by Parliament in the Seenth \ear o the Republic o India as ollows:-

CHAP1LR I : PRLLIMINARY
J. Short title and commencement.
,1, 1his Act may be called the Lie Insurance Corporation Act, 19561.
,2, It shall come into orce on such date2 as the Central Goernment may, by
notiications in the Oicial Gazette, appoint.
2. Definitions.-- In this Act, unless the context otherwise requires,
,1, "appointed day` means the date on which the Corporation is established under
section 3,
,2, "composite insurer" means an insurer carrying on in addition to controlled business
any other kind o insurance business,
,3, "controlled business" means-
,i, in the case o any insurer speciied in sub-clause ,a, ,ii, or sub-clause ,b, o clause ,9,
o section 2 o the Insurance Act and carrying on lie insurance business-
,a, all his business, i he carries on no other class o insurance business,
,b, all the business appertaining to his lie insurance business, i he carries on any other
class o insurance business also,
,c, all his business i his certiicate o registration under the Insurance Act in respect o
general insurance business stands wholly cancelled or a period o more than six months on
the 19th day o January, 1956,
,ii, in the case o any other insurer speciied in clause ,9, o section 2 o the Insurance
Act and carrying on lie insurance business-
,a, all his business in India, i he carries on no other class o insurance business in India,
,b, all the business appertaining to his lie insurance business in India, i he carries on
any other class o insurance business also in India,.
,c, all his business in India i he certiicate o registration under the Insurance Act in
respect o general insurance business in India stands wholly cancelled or a period o more
than six months on the 19th day o January, 1956.
Lxplanation.- An insurer is said to carry on no class o insurance business other than lie
insurance business, i in addition to lie insurance business, he carries on only capital
redemption business or annuity certain business or both, and the expression "business
appertaining to his lie insurance business" in sub-clause ,i, and ,ii, shall be construed
accordingly,
,iii, in the case o a proident society, as deined in section 65 o the Insurance Act, all its
business,
,i, in the case o the Central Goernment or a State Goernment, all lie insurance
business carried on by it, subject to the exceptions speciied in section 44,

________________________________
19-06-1956
1his Act has been extended to Dadra and Nagar laeli by Reg. 6 o 1963, section 2 and Sch. I to Goa, Daman and Diu by
Reg. 11 o 1963, section 3 and Sch. And to Pondicherry by Act. 26 o 1968, section 3 and Sch.
1. \ord Authority` substituted or Controller`, wheneer it occurs, in the Lie Insurance Corporation Act, 1956 by the
Insurance Regulatory Deelopment Authority Act, 1999.
2. 1--56 ide Notiication NO. SRO 1456 dated 26-6-1956
,4, "Corporation" means the Lie Insurance Corporation o India established under
section 3,
,5, "Insurance Act" means the Insurance Act, 1938 ,4 o 1938,,
,6, "insurer" means an insurer as deined in the Insurance Act who carries on lie
insurance business in India and includes the Goernment and a proident society as deined
in section 65 o the Insurance Act,
,, "member" means a member o the Corporation,
,8, "prescribed" means prescribed by rules made under this Act,
,9, "1ribunal" means a 1ribunal constituted under section 1 and haing jurisdiction in
respect o any matter under the rules made under this Act,
,10, all other words and expressions used herein but not deined and deined in the
Insurance Act shall hae the meanings respectiely assigned to them in that Act.

CHAP1LR II : LS1ABLISHMLN1 OI LIIL INSURANCL CORPORA1ION OI
INDIA
3. Lstablishment and incorporation of Life Insurance Corporation of India.
,1, \ith eect rom such date1 as the Central Goernment may, by notiication in the
Oicial Gazette, appoint, there shall be established a Corporation called the Lie Insurance
Corporation o India.
,2, 1he Corporation shall be a body corporate haing perpetual succession and a
common seal with power subject to the proisions o this Act, to acquire, hold and dispose
o property, and may by its name sue and be sued.

4. Constitution of the Corporation.-
,1, 1he Corporation shall consist o such number o persons not exceeding 2|sixteen| as
the Central Goernment may think it to appoint thereto and one o them shall be
appointed by the Central Goernment to be the Chairman thereo.
,2, Beore appointing a person to be a member, the Central Goernment shall satisy
itsel that that person will hae no such inancial or other interest as is likely to aect
prejudicially the exercise or perormance by him o his unctions as a member, and the
Central Goernment shall also satisy itsel rom time to time with respect to eery member
that he has no such interest, and any person who is, or whom the Central Goernment
proposes to appoint and who has consented to be, a member shall, wheneer required by the
Central Goernment so to do, urnish to it such inormation as the Central Goernment
considers necessary or the perormance o its duties under this sub-section.
,3, A member who is in any way directly or indirectly interested in a contract made or
proposed to be made by the Corporation shall as soon as possible ater the releant
circumstances hae come to his knowledge, disclose the nature o his interest to the
Corporation and the member shall not take part in any deliberation or discussion o the
Corporation with respect to that contact.

S. Capital of the Corporation.-
,1, 1he original capital o the Corporation shall be ie crores o rupees proided by the
Central Goernment ater due appropriation made by Parliament by law or the purpose,
and the terms and conditions relating to the proision o such capital shall be such as may be
determined by the Central Goernment.
,2, 1he Central Goernment may, on the recommendation o the Corporation, reduce
the capital o the Corporation to such extent and in such manner as the Central Goernment
may determine.

______________________________
1. 01-09-1956, ide Notiication No. SRO 193, dated 30-08-1956
2. Substituted or ,iteen, by the Public linancial Institutions Laws ,Amendment, Act, 195, w.e.. 16-02-196.


CHAP1LR III : IUNC1IONS OI 1HL CORPORA1ION

6. Iunctions of the Corporation.-
,1, Subject, to the rules, i any, made by the Central Goernment in this behal, it shall
be the general duty o the Corporation to carry on lie insurance business, whether in or
outside India, and the Corporation shall so exercise its powers under this Act as to secure
that lie insurance business is deeloped to the best adantage o the community.
,2, \ithout prejudice to the generality o the proisions contained in sub-section ,1, but
subject to the other proisions contained in this Act, the Corporation shall hae power -
,a, to carry on capital redemption business, annuity certain business or reinsurance
business in so ar as such re insurance business appertains to lie insurance business,
,b, subject to the rules, i any, made by the Central Goernment in this behal, to inest
the unds o the Corporation in such manner as the Corporation may think it and to take all
such steps as may be necessary or expedient or the protection or realisation o any
inestment, including the taking oer o and administering any property oered as security
or the inestment until a suitable opportunity arises or its disposal,
,c, to acquire, hold and dispose o any property or the purpose o its business,
,d, to transer the whole or any part o the lie insurance business carried on outside
India to any other person or persons, i in the interest o the Corporation it is expedient so
to do,
,e, to adance or lend money upon the security o any moable property or otherwise,
,, to borrow or raise any money in such manner and upon such security as the
Corporation may think it,
,g, to carry on either by itsel or through any subsidiary any other business in any case
where such other business was being carried on by a subsidiary o an insurer whose
controlled business has been transerred to an ested in the Corporation under this Act,
,h, to carry on any other business which may seen to the Corporation to be capable o
being coneniently carried on in connection with its business and calculated directly or
indirectly to render proitable the business o the corporation,
,i, to do all such things as may be incidental or conducie to the proper exercise o any
o the powers o the Corporation.
,3, In the discharge o any o its unctions the Corporation shall act so ar as may be on
business principles.

JPower to impose conditions, etc.
6A,1, In entering into any arrangement, under section 6, with any concern, the Corporation
may impose such conditions as it may think necessary or expedient or protecting the
interest o the Corporation and or securing that the accommodation granted by it is put to
the best use by the concern.
,2, \here any arrangement entered into by the Corporation under section 6 with any
concern proides or the appointment by the Corporation o one or more directors o such
concern, such proision and any appointment o directors made in pursuance thereo shall
be alid and eectie notwithstanding anything to the contrary contained in the Companies
Act,
1956 ,1 o 1956,, or in any other law or the time being in orce or in the memorandum,
articles o association or any other instrument relating to the concern, and any proision
regarding share, qualiication, age limit, number o directorships, remoal rom oice o
directors and such like conditions contained in any such law or instrument aoresaid, shall
not apply to any director appointed by the Corporation in pursuance o the arrangement as
aoresaid.
____________________________
1. Inserted by the Public linancial Institutions Laws ,Amendment, Act, 195 w.e.. 16.02.196.

,3, Any director appointed as aoresaid shall-
,a, hold oice during the pleasure o the Corporation any may be remoed or substituted
by any person by order in writing by the Corporation,
,b, not incur any obligation or liability by reason only o his being a director or or
anything done or omitted to be done in good aith in the discharge o his duties as a director
or anything in relation thereto,
,c, not be liable to retirement by rotation and shall not be taken into account or
computing the number o directors liable to such retirement.|

CHAP1LR IV : 1RANSILR OI LXIS1ING LIIL INSURANCL BUSINLSS 1O
1HL CORPORA1ION
7. 1ransfer of assets and liabilities of existing insurers carrying on controlled
business.
,1, On the appointed day1 there shall be transerred to and ested in the Corporation all
the assets and liabilities appertaining to the controlled business o all insurers.
,2, 1he assets appertaining to the controlled business o an insurer shall be deemed to
include all rights and powers, and all property, whether moable or immoable, appertaining
to his controlled business, including, in particular, cash balances, resere unds, inestments,
deposits and all other interests and rights in or arising out o such property as may be in the
possession o the insurer and all books o account or documents relating to the controlled
business o the insurer, and liabilities shall be deemed to include all debts, liabilities and
obligations o whateer kind then existing and appertaining to the controlled business o the
insurer.
Lxplanation.-1he expression "assets appertaining" to the controlled business o an
insurer"-
,a, in relation to a composite insurer, includes that part o the paid-up capital o the
insurer or assets representing such part which has or hae been allocated to the controlled
business o the insurer in accordance with the rules made in this behal,
,b, in relation to a Goernment, means the amount lying to the credit o that business
on the appointed day.
,3, \here any such assets are subject to any trust reerred to in sub-section ,6, o
section 2 o the Insurance Act or to any other trust or the beneit o policy-holders, the
assets shall be deemed to hae ested in the Corporation ree rom any such trust.

8. Provident, superannuation and other like funds.-
,1, \here an insurer whose controlled business is to be transerred to and ested in the
Corporation under section , has established a proident or superannuation und or any
other like und or the beneit o his employees and constituted a trust in respect thereo
,hereinater in this section reerred to as an existing trust,, the moneys standing to the credit
o any such und on the appointed day, together with any other assets belonging to such
und, shall, subject to the proisions o sub-section ,2, stand transerred to and est in the
Corporation on the appointed day ree rom any such trust.
,2, \here all the employees o any such insurer do not become employees o the
Corporation under section 11, the moneys and other assets belonging to any such und as it
reerred to in sub-section ,1,, shall be apportioned between the trustees o the und and the
Corporation in the prescribed manner, and in case o any dispute regarding such
apportionment, the decision o the Central Goernment thereon shall be inal.
,3, 1he Corporation shall, as soon as may be ater the appointed day, constitute in
respect o the moneys and other assets which are transerred to and ested in it under this
section, one or more trusts haing objects as similar to the objects o the existing trusts as in
the circumstances may be practicable.
_____________________
1. 1-9-1956

,4, \here all the moneys and other assets belonging to an existing trust are transerred
to and ested in the Corporation under this section, the trustees o such trust, except as
respects things done or omitted to be done beore the appointed day.

9. General effect of vesting of controlled business.
,1, Unless otherwise expressly proided by or under this Act, all contracts, agreements
and other instruments o whateer nature subsisting or haing eect immediately beore the
appointed day and to which an insurer whose controlled business has been transerred to
and ested in the Corporation is a party or which are in aour o such insurer shall in so ar
as they relate to the controlled business o the insurer be o as ull orce and aect against or
in aour o the Corporation, as the case may be, and may be enorced or acted upon as ully
and eectually as i, instead o the insurer, the Corporation had been a party thereto or as i
they had been entered into or issued in aour o the Corporation.
,2, I on the appointed day any suit, appeal or other legal proceeding o whateer nature
is pending by or against an insurer, then, in so ar as it relates to his controlled business, it
shall not abate, be discontinued or be in any way prejudicially aected by reason o the
transer to the Corporation o the business o the insurer or anything done under this Act,
but the suit, appeal or other proceeding may be continued prosecuted and enorced by or
against the Corporation.

J0. Provisions as to composite insurers.-
,1, lor the remoal o doubts it is hereby declared that in any case where an insurer
whose controlled business has been transerred to an ested in the corporation under this
Act is a composite insurer, the proisions o the preceding sections shall only apply to the
extent to which any property appertains to his controlled business and to rights and powers
acquired, and to debts, liabilities and obligations incurred, and to contracts, agreements and
other instruments made by the insurer or the purposes o his controlled business and to
legal proceedings relating to those purposes, and the proisions o those sections shall be
construed accordingly.
,2, 1he Central Goernment may, by rules made in this behal proide-
,a, or the determination o the question whether any property appertains to his
controlled business or whether any rights, powers, debts, liabilities or obligations were
acquired or incurred or any contract, agreement or other instrument was made by the
insurer or the purposes o his controlled business or whether any documents relate to those
purposes,
,b, or the allocation o the paid-up capital or assets representing such paid-up capital, as
the case may be, between the controlled business o the insurer and any other business,
,c, or substituting or any agreements entered into by any insurer partly or the
purposes o his controlled business and partly or other purposes separate agreements in the
requisite terms and or any apportionments and indemnities consequent thereon,
,d, or the seerance o leases comprising property o which part only is transerred to
And ested in the Corporation by irtue o this Act and or apportionment consequent on
such seerance,
,e, or the apportionment and the making o inancial adjustments with respects to any
debts, liabilities o obligations incurred by any such insurer partly or the purposes o his
controlled business and partly or other purposes and or any necessary ariation o
mortgages and encumbrances relating to such debts, liabilities or obligations,
,, or the apportionment o the moneys and other assets belonging to any proident or
superannuation und or any other like und to which the proisions o section 8 do not
apply between persons employed in connection with the controlled business o an insurer
and other persons,
,g, or any other matters supplementary to or consequential on the matters aoresaid or
which proision appears to be necessary or expedient.
,3, All rules made under this section shall be laid or not less than thirty days beore
both louses o Parliament as soon as possible ater they are made and shall be subject to
such modiications as Parliament may make during the session in which they are so laid or
the session immediately ollowing.
,4, \here at any time beore the expiration o six months rom the appointed day a
question has arisen under this section or under any rules made there under as to whether any
property is or was held or used by the insurer or the purposes o his controlled business, the
question shall be reerred to the 1ribunal or decision.

JJ. 1ransfer of service of existing employees of insurers to the Corporation.-
,1, Lery whole-time employee o an insurer whose controlled business has been
transerred to and ested in the Corporation and who was employed by the insurer wholly or
mainly in connection with his controlled business immediately beore the appointed day
shall, on and rom the appointed day, become an employee o the Corporation, and shall
hold his oice therein by the same tenure, at the same remuneration and upon the same
terms and conditions and with the same rights and priileges as to pension and gratuity and
other matters as he would hae held the same on the appointed day i this Act had not been
passed, and shall continue to do so unless and until his employment in the Corporation is
terminated or until his remuneration terms and conditions are duly altered by the
Corporation:
Provided that nothing contained in this sub-section shall apply to any such employee who
has, by notice in writing gien to the Central Goernment prior to the appointed day,
intimated his intention o not becoming an employee o the Corporation.
1,2, \here the Central Goernment is satisied that or the purpose o securing
uniormity in the scales o remuneration and the other terms and conditions o serice
applicable to employees o insurers whose controlled business has been transerred to, and
ested in, the Corporation, it is necessary so to do, or that, in the interests o the
Corporation and its policy-holders, a reduction in the remuneration payable, or a reision o
the other terms and conditions o serice applicable to employees or any class o them is
called or, the Central Goernment may, notwithstanding anything contained in sub-section
,1,, or in the Industrial Disputes Act, 194 ,14 o 194,, or in any other law or the time
being in orce, or in any award, settlement or agreement or the time being in orce, alter
,whether by way o reduction or otherwise, the remuneration and the other terms and
conditions o serice to such manner as it thinks it, and i the alteration is not acceptable to
any employee, the Corporation may terminate his employment by giing him compensation
equialent to three months ' remuneration unless the contract o serice with such employee
proides or a shorter notice o termination.
Lxplanation.- 1he compensation payable to an employee under this sub-section shall be in
addition to and shall not aect any pension, gratuity proident und money or any other
beneit to which the employee may be entitled under this contract o serice.|
,3, I any question arises as to whether any person was a whole time employee o an
insurer or as to whether any employee was employed wholly or mainly in connection with
the controlled business o an insurer immediately beore the appointed day the question shall
be reerred to the Central Goernment whose decision shall be inal.
,4, Notwithstanding anything contained in the Industrial Disputes Act, 194 ,14 o
194,, or in any other law or the time being in orce, the transer o the serices o any
employee o an insurer to the Corporation shall not entitle any such employee to any
compensation under that Act or other law, and to such claim shall be entertained by any
court, tribunal or other authority.
________________________
1. Substituted by the Lie Insurance Corporation ,Amendment, Act, 195


J2. 1ransfer of services of existing employees of chief agents of insurers to the
Corporation in certain cases.-
Subject to such rules as the Central Goernment may make in this behal, eery whole-time
salaried employee o a chie agent o an insurer whose controlled business has been
transerred to and ested in the Corporation and,-
,a, who was employed by the chie agent wholly or mainly in connection with the
controlled business o the insurer,
,b, whose salary on the appointed day did not exceed ie hundred rupees per mensem,
and
,c, who was in the employment o the chie agent or a continuous period o not less
than one year immediately beore the appointed day, shall, on and rom the appointed day,
become, an employee o the Corporation and the proisions o section 11 shall, so ar as
may be apply in relation to such employee as they apply in relation to such employee as they
apply in relation to a whole-time employee o the insurer:
Provided that this section shall not apply except in cases where the chie agent o the
insurer was required under the terms o his contract with the insurer to render the prescribed
serices to policy holders o the insurer.
Lxplanation.-In the case o a whole-time salaried employee o a chie agent who has been
retrenched by the chie agent on or ater the 19th day o January, 1956 the proisions o this
section shall apply as i or the words the appointed day` the words and igures 'the 19
th
day
o January, 1956' had been substituted.

J3. Duty to deliver possession of property and documents relating thereto.-
,1, \here any property appertaining to the controlled business o an insurer has been
transerred to and ested in the Corporation under this Act, then,-
,a, eery person, in whose possession, custody or control any such property may be,
shall delier the property to the corporation orthwith,
,b, any person who, on the appointed day, has in his possession, custody or control any
books, documents or other papers relating to such controlled business shall be liable to
account or the said books, documents, and papers to the Corporation, and shall delier
them to the Corporation or to such person as the Corporation may direct.
,2, In particular, all the assets o an insurer appertaining to lie insurance business held
in deposit by the Resere Bank o India under the Insurance Act or by trustees in trust shall
be deliered to the Corporation.
,3, \ithout prejudice to the other proisions contained in this section, it shall be lawul
or the Corporation to take all necessary steps or securing possession o all properties which
hae been transerred to and ested in it under this Act.

J4. Power of Corporation to modify contracts of life insurance in certain cases.-
1he Corporation may, haing regard to the inancial condition on the appointed day o any
insurer whose controlled business has been transerred to an ested in the Corporation,
reduce the amounts o insurance under contracts o lie insurance entered into by such
insurer beore the 19th day o January 1956, in such manner and subject to such conditions
as it thinks it:

Provided that no such reduction shall be made except in accordance with a scheme
prepared by the Corporation in this behal and approed by the Central Goernment.



JS. Right of Corporation to seek relief in respect of certain transactions of the
insurer.-
,1, \here an insurer whose controlled business has been transerred to and ested in
the Corporation under this Act has, at any time within ie years beore the 19th day o
January, 1956.-
,a, made any payment to any person without consideration,
,b, sold or disposed o any property o the insurer without consideration or or an
inadequate consideration,
,c, acquired any property or rights or an excessie consideration:
,d, entered into or aried any agreement so as to require an excessie consideration to
be paid or gien by the insurer,
,e, entered into any other transaction o such an onerous nature as to cause a loss to, or
impose a liability on, the insurer exceeding any beneit accruing to the insurer,
,, i a composite insurer, transerred any property rom his lie department to his
general department without consideration or or an inadequate consideration, and the
payment, sale, disposal, acquisition, agreement or ariation thereo or other transaction or
transer was not reasonably necessary or the purpose o the controlled business o the
insurer or was made with an unreasonable lack o prudence on the part o the insurer,
regard being had in either case to the circumstances at the time, the Corporation may apply
or relie to the 1ribunal in respect o such transaction, and all parties to the transaction
shall, unless the 1ribunal otherwise directs, be made parties to the application.
,2, 1he 1ribunal may make such order against any o the parties to the application as it
thinks just haing regard to the extent to which those parties were respectiely responsible
or the transaction or beneited rom it and all the circumstances o the case.
,3, \here an application is made to the 1ribunal under this section is respect o any
transaction and the application is determined in aour o the Corporation, the 1ribunal shall
hae exclusie jurisdiction to determine any claims outstanding in respect o the transaction.

J6. Compensation for acquisition of controlled business.-
,1, \here the controlled business o an insurer has been transerred to and ested in the
Corporation under this Act, compensation shall be gien by the Corporation to that insurer
in accordance with the principles contained in the lirst Schedule.
,2, 1he amount o the compensation to be gien in accordance with the aoresaid
principles shall be determined by the Corporation in the irst instance, and i the amount so
determined is approed by the Central Goernment it shall be oered to the insurer in ull
satisaction o the compensation payable to him under this Act, and i, on the other hand,
the amount so oered is not acceptable to the insurer he may within such time as may be
prescribed or the purpose hae the matter reerred to the 1ribunal or decision.

J7. Constitution of 1ribunals.-
,1, 1he Central Goernment may or the purposes o this Act constitute one or more
1ribunals and each o the 1ribunals shall consist o three members appointed by the Central
Goernment one o whom shall be a person who is, or has been, a Judge o a ligh Court or
has been a Judge o the Supreme Court, and he shall be the Chairman thereo.
,2, A 1ribunal may choose one or more persons possessing special knowledge o any
matter relating to any case under inquiry to assist the 1ribunal in determining any question
which has to be decided by it under this Act.
,3, Lery 1ribunal shall hae the powers o a ciil court while trying a suit under the
Code o Ciil Procedure, 1908 ,5 o 1908,, in respect o the ollowing matters:
,a, summoning and enorcing the attendance o any person and examining him on oath,
,b, requiring the discoery and production o documents,
,c, receiing eidence on aidaits,
,d, issuing commissions or the examination o witnesses or documents.
,4, Lery 1ribunal shall hae power to regulate its own procedure and decide all matters
within its competence, and may reiew any o its decisions in the eent o there being a
mistake on the ace o the record or correct any arithmetic or clerical error therein.

CHAP1LR V : MANAGLMLN1
J8. Offices, branches and agencies.--
,1, 1he central oice o the Corporation shall be at such place as the Central
Goernment may, by notiication in the Oicial Gazette, speciy.
,2, 1he Corporation shall establish a zonal oice at each o the ollowing places,
namely, Bombay, Calcutta, Delhi, Kanpur and Madras, and, subject to the preious approal
o the Central Goernment, may establish such other zonal oices as it thinks it.
,3, 1he territorial limits o each zone shall be such as may be speciied by the
Corporation.
,4, 1here may be established as many diisional oices and branches in each zone as the
Zonal Manager thinks it.

J9. Committees of the Corporation.--
,1, 1he Corporation may entrust the general superintendence and direction o its aairs
and business to an Lxecutie Committee consisting o not more than ie o its members
and the Lxecutie Committee may exercise all powers and do all such acts and things as may
be delegated to it by the Corporation.
,2, 1he Corporation may also constitute an Inestment Committee or the purpose o
adising it in matters relating to the inestment o its unds, and the Inestment Committee
shall consist o not more than 1|eight members o whom not less than our| shall be
members o the Corporation and the remaining members shall be persons ,whether
members o the Corporation or not, who hae special knowledge and experience in inancial
matters, particularly, matters relating to inestment o unds.
,3, 1he Corporation may constitute such other Committees as it may think ir or the
purpose o discharging such o its unctions as may be delegated to them.

20. Managing Directors.-
1he Corporation may appoint one or more persons to be the Managing Director or
Directors o the Corporation, and eery Managing Director shall be a whole-time oicer o
the Corporation and shall exercise such powers and perorm such duties as may be entrusted
or delegated to him by the Lxecutie Committee or the Corporation.

2J. Corporation to be guided by the directions of Central Government.-
In the discharge o its unctions under this Act, the Corporation shall be guided by such
directions in matters o policy inoling public interest as the Central Goernment may gie
to it in writing, and i any question arises whether a direction relates to a matter o policy
inoling public interest the decision o the Central Goernment thereon shall be inal.

22. Zonal Managers.-
,1, 1he Corporation may entrust the superintendence and direction o the aairs and
business o a zonal oice to a person whether a member or not, who shall be known as the
Zonal Manager and the Zonal Manager shall perorm all such unctions o the Corporation
as may be delegated to him with respect to the area within the jurisdiction o the Zonal
oice.
,2, 1he Corporation may constitute or each zone a Board consisting o such number o
persons as it thinks it to appoint thereto or the purpose o adising the Zonal Manager in
respect o such matters as are reerred to it under the regulations made by the Corporation.
________________
1. Substituted or the words seen members o whom not less than three` by the Public linancial Institutions Laws
,Amendment, Act, 195, w.e.. 16.02.196

,3, 1he Corporation shall constitute in the prescribed manner or each zonal oice an
Lmployees and Agents Relations Committee consisting o such number o persons as it
thinks ir and eery such Committee shall consist o representaties o the Corporation and
o its employees and agents, so howeer, that the number o representaties o the
employees o the employees and agents on the Committee shall not be less than the number
o representaties o the Corporation and shall be duty o the Committee to adise the
Zonal Manager on matters which relate to the welare o the employees and agents o the
Corporation or which are likely to promote and secure amity and good relations between
them and the Corporation.

23. Staff of the Corporation.-
,1, lor the purpose o enabling it to discharge its unctions under this Act, the
Corporation may employ such number o persons as it thinks it.
,2, Lery person employed by the Corporation or whose serices hae been transerred
to the Corporation under this Act, shall be liable to sere anywhere in India.

CHAP1LR VI : IINANCL, ACCOUN1S AND AUDI1

24. Iunds of the Corporation.--
1he Corporation shall hae its own und and all receipts o the Corporation shall be credited
thereto and all payments o the Corporation shall be made thererom.

2S. Audit.-
,1, 1he accounts o the Corporation shall be audited by auditors duly qualiied to act as
auditors o companies under the law or the time being in orce relating to companies, and
the auditors shall be appointed by the Corporation with the preious approal o the Central
Goernment and shall receie such remuneration rom the Corporation as the Central
Goernment may ix.
,2, Lery auditor in the perormance o his duties shall hae at all reasonable times
access to the books, accounts and other documents o the Corporation.
,3, 1he auditors shall submit their report to the Corporation and shall also orward a
copy o their report to the Central Goernment.

26. Actuarial valuations.-1he Corporation shall, once at least in eery two years,
cause an inestigation to be made by actuaries into the inancial conditions o the 1|lie
insurance business o the Corporation, including a aluation o the liabilities o the
Corporation in respect thereto|, and submit the report o the actuaries to the Central
Goernment.

27. Annual report of activities of Corporation.-
1he Corporation shall, as soon as may be, ater the end o each inancial year, prepare and
submit to the Central Goernment in such orm as may be prescribed a report giing an
account o its actiities during the preious inancial year, and the report shall also gie an
account o the actiities, i any, which are likely to be undertaken by the Corporation in the
next inancial year.

_____________________________
1. Substituted by the Lie Insurance Corporation ,Amendment, Act, 1965.





28. 1Surplus from life insurance business how to be utilized.--
I as a result o any inestigation undertaken by the Corporation under section 26 any
surplus emerges, ninety-ie per cent o such surplus or such higher percentage thereo as
the Central Goernment may approe shall be allocated to or resered or the lie insurance
policy-holders o the Corporation and ater meeting the liabilities o the Corporation, i any,
which may arise under section 9, the remainder shall be paid to the Central Goernment or,
i that Goernment so directs, be utilised or such purposes and in such manner as that
Goernment may determine.|

28A. 2Profits from any business (other than life insurance business) how to be
utilized.-- I or any inancial year proits accrue rom any business ,other than lie
insurance business, carried on by the Corporation, then, ater making proision or reseres
and other matters or which proision is necessary or expedient, the balance o such proits
shall be paid to the Central Goernment.|

29. Reports to be laid before Parliament.--
1he Central Goernment shall cause the report o the auditors under section 25, the report
o the actuaries under section 26 and the report giing an account o the actiities o the
Corporation under section 2 to be laid beore both louses o Parliament as soon as may be
ater each such report is receied by the Central Goernment.

CHAP1LR VII : MISCLLLANLOUS

30. Corporation to have exclusive privilege of carrying on life insurance
business.-
Lxcept to the extent otherwise expressly proided in this Act, on and rom the appointed
day the Corporation shall hae the exclusie priilege o carrying on lie insurance business
in India, and on and rom the said day any certiicate to registration under the Insurance Act
held by any insurer immediately beore the said day shall cease to hae eect in so ar as it
authorises him to carry on lie insurance business in India.

30A. 3Lxclusive privilege of Corporation to cease.-
Notwithstanding anything contained in this Act, the exclusie priilege o carrying on lie
insurance business in India by the Corporation shall cease on and rom the commencement
o the Insurance Regulatory and Deelopment Authority Act, 1999 and the Corporation
shall, thereater, carry on lie insurance business in India in accordance with the proisions
o the Insurance Act, 1938.

3J. Lxception in the case of insurance business in respect of persons residing
outside India.-
,1, Notwithstanding anything contained in section 30 or in the Insurance Act, the
Central Goernment may, by order, permit person who has made an application in that
behal, to carry on lie insurance business in India, in respect o the lies o persons
ordinarily resident outside India, subject to such restrictions and conditions as may be
speciied in the order and any such order shall be deemed to hae eect as i it were a
certiicate o registrations issued by the Controller to such person under section 3 o the
Insurance Act in respect o that class o business.


1. Substituted by the Lie Insurance Corporation ,Amendment, Act, 1965
2. Inserted, ibid
3. Inserted by the Insurance Regulatory and Deelopment Authority Act, 1999.

,2, Nothing in sub-section ,1, shall authorise any person permitted to carry on lie
insurance business o the nature reerred to in that sub-section, to insure the lie o any
person ordinarily resident outside India, during any period o his temporary residence in
India.

32. Power of Corporation to have official seal in certain cases.-
1he Corporation may hae or use in any zonal oice diisional oice or in any oice
outside India an oicial seal which shall be a acsimile o the common seal o the
Corporation, with the addition on its act o the name o the zonal oice, diisional oicer
or other oice where it is to be used, and any such oicial seal may be aixed to any deed or
document to which the Corporation is a party.

33. Requirement of foreign laws to be complied with in certain cases.-
\here any property or rights appertaining to the controlled business o an insurer are
transerred to and ested in the Corporation under this Act or would be so transerred and
ested but or the act that such transer and esting are goerned otherwise than by the law
o India, the insurer shall comply with such directions as may be gien to him by the
Corporation or the purpose o securing that the ownership o the property or, as the case
may be, that the right is eectiely transerred to the Corporation.

34. Revesting of certain shares vested in the Administrator General.-
Notwithstanding anything contained in the Insurance Act, all shares which hae
ested in the Administrator General o any State under Sub-section ,8, o the section 6A o
that Act and which hae not been disposed o in accordance with the proisions o that sub-
section beore the appointed day, shall, in payment o the amount o expenditure, i any,
incurred by the Administrator General in relation to such shares by the persons who would
hae been entitled to those shares i the said sub-section had not been enacted, reest in
such persons.

3S. Repatriation of assets and liabilities in the case of foreign insurers in certain
cases.-
,1, Any insurer incorporated outside India may, beore the appointed day, make an
application to the Central Goernment stating that among the assets appertaining to the
controlled business o the insurer o building up his lie insurance business in India, which,
notwithstanding anything contained in section , should not be transerred to and ested in
the Corporation.
,2, On receipt o an application under sub-section ,1,, the Central Goernment shall
determine the alue o the assets o the insurer appertaining to his controlled as at that date
in accordance with the proisions contained in paragraph 3 o Part B o the lirst Schedule,
and deduct thererom the total amount o the liabilities o the insurer appertaining to his
controlled business in existence on the 31st day o December 1955, computed as at that date
in accordance with the proisions contained in the Second Schedule, and i there is any
excess, the Central Goernment may, by order, direct that such assets equialent in alue to
the excess as may be speciied in the order shall not be transerred to or ested in the
Corporation, or where the order is made ater the appointed day, that the Corporation shall
be diested o the said assets.
,3, In the case o any insurer incorporated outside India, the Central Goernment may
also, by order, direct that any such liabilities in respect o lie insurance policies expressed in
any oreign currency issued on the lies o persons who are not citizens o India as are
speciied in the order together with any such assets necessary to meet the liabilities, as may
be so speciied, shall not be transerred to or ested in the Corporation or, i the order is
made ater the appointed day, that the Corporation shall be diested o such liabilities and
assets as aoresaid.
,4, 1he amount o liabilities in respect o the policies reerred to in an order made under
sub-section ,3, shall be computed as at the 31st day o December, 1955,-
,a, in any case where in respect o the insurer concerned an order has been made under
sub-section ,2,, in accordance with the proisions contained in clause ,b, o the Second
schedule, and
,b, in any other case, in accordance with method A speciied in the Second Schedule.
Lxplanation.-In computing the amount o liabilities in respect o the policies reerred to in
this sub-section, allowances shall be made or receipts and payments in respect o such
policies rom the 31st day o December, 1955, up to the date o the order.
,5, Lery order made by the Central Goernment under this section shall be carried out
by the Corporation in such manner as the Central Goernment may direct.

36. Contracts or chief agents and special agents to terminate.-
Notwithstanding anything contained in the Insurance Act or in any other law or the time
being in orce eery contract appertaining to controlled business subsisting immediately
beore the appointed day,-
,a, between an insurer and his chie agent or between an insurer and a special agent, or
,b, between the chie agent o an insurer and a special agent,
shall, as rom the appointed day, cease to hae eect and all rights accruing to the chie
agent or the special agent under any such contract shall terminate on that day:
Provided that in eery such case compensation shall be gien by the Corporation to the
chie agent or the special agent, as the case may be, in accordance with the principles
contained in the 1hird Schedule, and the proisions o sub-section ,2, o section 16 shall, so
ar as may be, apply in eery such case

37. Policies to be guaranteed by Central Government.--
1he sums assured by all policies issued by the Corporation including any bonuses declared in
respect thereo and, subject to the proisions contained in section 14 the amounts assured
by all policies issued by any insurer the liabilities under which hae ested in the Corporation
under this Act, and all bonuses declared in respect thereo, whether beore or ater the
appointed, day shall be guaranteed as to payment in cash by the Central Goernment.

38. Liquidation of Corporation.--
No proision o law relating to the winding up o companies or corporations shall apply to
the corporation established under this Act, and the Corporation shall not be placed in
liquidation sae by order o the Central Goernment and in such manner as that
Goernment may direct.

39. Special provisions for winding up of certain insurers.--
\here any insurer being a company ,other than a composite insurer, whose controlled
business has been transerred to and ested in the Corporation under this Act has in
accordance with the proisions o this Act collected and distributed any moneys paid to him
by the Corporation by way o compensation or otherwise and has also complied with any
direction gien to him by the Corporation or the purpose o securing that the ownership
o any property or any right is eectiely transerred to the Corporation, the Central
Goernment may on application being made to it in this behal by such insurer grant a
certiicate to the insurer that there is no reason or the continued existence o the insurer
and where such a certiicate has been granted shall cause the certiicate to be published in
the Oicial Gazette and upon the publication thereo the insurer shall be dissoled.

40. Penalty for withholding property, etc.--
I any person wilully withholds or ails to delier to the Corporation as required by section
13, any property or any books, documents or other papers which may be in his possession or
unlawully retains possession o any property o an insurer which has been transerred to
and ested in the Corporation under this Act or wilully applies any such property to
purpose other than those expressed in or authorised by this Act, he shall, on the complaint
o the Corporation, be punishable with imprisonment which may extent to one year, or with
ine which may extend to one thousand rupees, or with both.

4J. 1ribunal to have exclusive jurisdiction in certain matters.--
No ciil court shall hae jurisdiction to entertain or adjudicate upon any matter which a
1ribunal is empowered to decide or determine under this Act.

42. Lnforcement of decisions of 1ribunals.--
Any decision o a 1ribunal may be enorced in any ciil court within the local limits o
whose jurisdiction the person against whom the decision is to be enorced actually and
oluntarily resides or carries on business or personally works or gain or owns any property,
as i it were a decree passed by that court.

43. Application of the Insurance Act.-
,1, 1he ollowing section o the Insurance Act shall, so ar as may be, apply to the
Corporation as they apply to any other insurer, namely:-Sections 2, 2B, 3, 18, 26, 33, 38, 39,
31, 45, 46, 4A, 50, 51, 52, 110A, 110B, 110C, 119, 121, 122 and 123.
,2, 1he Central Goernment shall as soon as may be ater the commencement o this
Act, by notiication in the Oicial Gazette, direct that the ollowing sections o the
Insurance Act shall apply to the Corporation subject to such conditions and modiications as
may be speciied in the notiication, namely:-Sections 2D, 10, 11, 13, 14, 15, 20, 21, 22, 23,
25, 2A, 28A, 35, 36, 3, 40, 40A, 43, 44, 102 to 106, 10 to 110, 111, 113, 114 and 116A.

1|,2A,|Section 42 o the Insurance Act shall hae eect in relation to the issue to any
indiidual o a licence to act as an agent or the purpose o soliciting or procuring lie
insurance business or the Corporation as i the reerence to an oicer authorised by the
Controller in this behal in sub-section ,1, thereo included a reerence to an oicer o the
Corporation authorised by the Controller in this behal.|
,3, 1he Central Goernment may, be notiication in the Oicial Gazette, direct that all
or any o the Insurance Act other than those speciied in sub-section ,1, or sub-section ,2,
shall apply to the Corporation subject to such conditions and modiications as may be
speciied in the notiication.
,4, Lery notiication issued under sub-section ,2, or sub-section ,3, shall be laid or not
less than thirty days beore both louses o Parliament as soon as possible ater it is issued,
and shall be subject to such modiications as Parliament may make during the session in
which it is so laid or the session immediately ollowing.
,5, Sae as proided in this section, nothing contained in the Insurance Act shall apply
to the Corporation.
2Deduction of income tax not to be made on interest or dividend

43A. Notwithstanding anything contained in section 193 or section 194 o the Income
1ax Act, 1961, ,43 o 1961,, no deduction o income tax shall be made on any interest or
diidend payable to the Corporation in respect o any securities or shares owned by it or in
which it has ull beneicial interest.

______________
1. Inserted by the Lie Insurance Corporation ,Amendment, Act, 195.
2. Inserted by the linance Act, 196, w.e.. 1-6-196





44. Act not to apply in certain cases.-
Nothing contained in this Act shall apply in relation to-
,a, any insurer whose business is being oluntarily would up or is being wound up under
the orders o the Court,
,b, any insurer to whom the Insurance Act does not apply by reason o the proisions
contained in section 2L thereo,

,c, any composite insurer in respect o the management o whose aairs an
Administrator has been appointed under section 52A o the Insurance Act,
,d, the scheme run by the Central Goernment known as the Post Oice Lie Insurance
lund,
,e, any approed superannuation und as deined in clause ,a, o section 58N o the
Indian Income-tax Act, 1922 ,11 o 1922,, which is in existence on the appointed day,
,, any scheme in existence on the appointed day or any scheme ramed ater the
appointed day with the approal o the Central Goernment whereby, in consideration o
certain compulsory deductions made by Goernment rom the salaries o its employees as
part o the conditions o serice, the payment o money is assured by Goernment on the
death o the employee concerned or on the happening o any contingency dependent on his
lie.
1,g, any lamily Pension Scheme ramed by the Coal Mines Proident lund, lamily
Pension and Bonus Schemes Act, 1948 ,46 o 1948, or the Lmployes` Proident lunds and
lamily Pension lund Act, 1952 ,19 o 1952, or the purpose o proiding amily pension
and lie assurance beneits to the employees coered by the said Scheme.

4S. 2Special provisions regarding transfer of controlled business of certain
composite insurer.-
Notwithstanding anything contained in clause ,c, o section 44,
the Central Goernment may, by notiication in the Oicial Gazette, direct that on and with
eect rom such date as may be speciied in the notiication the assets and liabilities
appertaining to the controlled business o a composite insurer in respect o the management
o whose aairs an Administrator has been appointed under section 52A o the Insurance
Act shall be transerred to the ested in the Corporation, and on the issue o such a
notiication the proisions o this Act shall, so ar as may be, apply in relation to such insurer
and to the transer and esting o the assets and liabilities o his controlled business in the
Corporation as they apply in relation to all other insurers and to the transer and esting o
assets and liabilities o their controlled business in the Corporation, subject to the
modiication that reerences in this Act to the appointed day shall be construed as reerences
to the day speciied in the notiication.

46. Defects in constitution of Corporation or committees not to invalidate acts or
proceedings.--
No act or proceeding o the Corporation or o any Committee o the Corporation shall be
called in question on the ground merely o the existence o any acancy or deect in the
constitution o the Corporation or Committee, as the case may be.|

47. Protection of action taken under Act.--
No suit, prosecution or other legal proceeding shall lie against any member or employee o
the Corporation or anything which is in good aith done or intended to be done under this
Act.
______________
1. Inserted by the Labour Proident lund Laws ,Amendment, Act, 191
2. Substituted by the Lie Insurance Corporation ,Amendment, Act, 195
48. Power to make rules.-
,1, 1he Central Goernment may, by notiication in the Oicial Gazette make rules to
carry out the purposes o this Act.
,2, In particular, and without prejudice to the generality o the oregoing power, such
rules may proide or all or any o the ollowing matters, namely:-
,a, the term o oice and the conditions o serice o members,
,b, the manner in which the moneys and other assets belonging to any such und as is
reerred to in section 8 shall be apportioned between the trustees o the und and the
Corporation,
,c, the serices which the chie agent should hae rendered or the purpose o the
proiso to section 12,
1|,cc, the terms and conditions o serice o the employees and agents o the Corporation,
including those who became employees and agents o the
Corporation on the appointed day under this Act,|
,d, the jurisdiction o the 1ribunals constituted under section 1,
,e, the manner in which, and the persons to whom, any compensation under this Act
may be paid,
,, the time within which any matter which may be reerred to a 1ribunal or decision
under this Act may be so reerred,
,g, the manner in which and the conditions subject to which inestments may be made
by the Corporation,
,h, the manner in which an Lmployees and Agents Relations Committee may be
constituted or each zonal oice,
,i, the orm in which the report giing an account o the actiities o the Corporation
shall be prepared,
,j, the conditions subject to which the Corporation may appoint employees,
,k, the ees payable under this Act and the manner in which they are to be collected,
,l, any other matter which has to be or may be prescribed,

1a|,2A 1he regulation and other proisions as in orce immediately beore the
commencement o the Lie Insurance Corporation ,Amendment, Act, 1981, with respect to
the terms and conditions o serice o employees and agents o the Corporation including
those who became employees and agents o the Corporation on the appointed day under
this Act, shall be deemed to be rules made under clause ,cc, o sub-section ,2, and shall,
subject to the other proisions o this section, hae eect accordingly.
,2B, 1he power to make rules conerred by clause ,cc, o sub-section ,2, shall include-
,i, the power to gie retrospectie eect to such rules, and
,ii, the power to amend by way o addition, ariation or repeal, the regulations and other
proision reereed to in sub-section ,2A,, with retrospectie eect, rom a date not earlier
than the twentieth day o June, 199.
,2C, 1he proisions o clause ,cc, o sub-section ,2, and sub-section ,2B, and any rules
made under the said clause ,cc, shall hae eect, and any such rule made with retrospectie
eect rom any date shall also be deemed to hae had eect rom the date, notwithstanding
any judgement, decree or order o any court, tribunal or other authority and notwithstanding
anything contained in the Industrial Disputes Act, 194 ,14 o 194,, or any other law or any
agreement, settlement, award or other instrument or the time being in orce.|


_______________________

1. Inserted by the Lie Insurance Corporation ,Amendment, Act, 1981, w.e.. 20-6-199.
1a. Inserted, ibid, w.e.. 31-1-1981


1|,3, Lery rule made by the Central Goernment under this Act shall be laid, as soon as
may be ater it is made, beore each louse o Parliament while it is in session, or a total
period o thirty days which may be comprised in one session or in two or more successie
sessions, and i, beore the expiry o the session immediately ollowing the session or the
successie sessions aoresaid, both louses agree in making any modiication in the rule or
both louses agree that the rule should not be made, the rule shall thereater hae eect only
in such modiied orm or be o no eect, as the case may be, so, howeer, that any such
modiication or annulment shall be without prejudice to the alidity o anything preciously
done under that rule.|

49. Power to make regulations.
,1, 1he Corporation may, with the preious approal o the Central Goernment, by
notiication in the Gazette o India, make regulations not inconsistent with this Act and the
rules made there under to proide or all matters or which proision is expedient or the
purpose o giing eect to the proisions o this Act.
,2, In particular, and without prejudice to the generality o the oregoing power, such
regulations may proide or-
,a, the powers and unctions o the Corporation which may be delegated to the Zonal
Managers,
,b, the method o recruitment o employees and agents o the Corporation 2 ,,
,bb, 3||
,c, the number, term o oice and conditions o serice o members o Boards
constituted under section 22,
,d, the territorial limits o each zone established under this Act and the business to be
transacted in each Zone,
,e, the manner in which the lund o the Corporation shall be maintained,
,, the maintenance o separate unds and accounts at each o the zonal oices,
,g, the jurisdiction o each diisional oice and the establishment o Councils
representatie o policy-holders in each area sered by a diisional oice or the purpose o
adising the diisional oice in respect o any matter which may be reerred to it,
,h, the conduct o business at meetings o the Corporation,
,i, the ormation o Committees o the Corporation and the delegation o powers and
unctions o the Corporation to such Committees, and the conduct o business at meetings
o such Committees,
,j, the orm and manner in which policies may because and contracts binding on the
Corporation may be executed,
,k, the classiication o policies, whether issued by the Corporation or by any insurer
whose controlled business has been transerred to and ested in the Corporation, or the
purposes o declaring dierential bonuses, whereer necessary,
,l, the manner in which and the interals within which the accounts o the arious zonal
oices, diisional oices and branch oices may be inspected and their accounts audited,
,m, the conditions subject to which any payment may be made by the Corporation.


______________________________________________

1 Substituted by the Public inancial Institutions Laws ,Amendment, Act, 195, w.e.. 16.02.196
2 \ords and the terms and conditions o serice o such employees or agents` omitted by the Lie Insurance Corporation
,Amendment, Act, 1981, w.r.e.. 31-1-1981
3 Omitted by the Lie Insurance Corporate ,Amendment, Act, 1981 w.r.e.. 31-1-1981.





1,3, Lery regulation made under this section shall be laid, as soon as may be ater it is made,
beore each louse o Parliament, while it is in session, or a total period o thirty days which
may be comprised in one session or in two or more successie sessions, and i, beore the
expiry o the session immediately ollowing the session or the successie sessions aoresaid,
both louses agree in making any modiication in the regulation or both louses agree that
the regulation should not be made, the regulation shall thereater hae eect only in such
modiied orm or be o no eect, as the case may be, so, howeer, that any such
modiication or annulment shall be without prejudice to the alidity o anything preiously
done under that regulation|.

1HL IIRS1 SCHLDULL,See section 16,
PAR1 A: PRINCIPLLS IOR DL1LRMINING COMPLNSA1ION

1he compensation to be gien by the Corporation to an insurer haing a share capital on
which diidend or bonus is payable, who has allocated as bonus to policy-holders the whole
or any part o the surplus as disclosed in the abstracts prepared in accordance with Part II o
the lourth Schedule to the Insurance Act in respect o the last actuarial inestigation relating
to his controlled business as at a earlier than the 1st day o January, 1955, shall be computed
in accordance with the proisions contained in paragraph 1 or paragraph 2, whicheer is
more adantageous to the insurer.

Paragraph J.-
1wenty times the annual aerage o the share o the surplus allocated to share-holders as
disclosed in the abstracts aoresaid in respect o the releant actuarial inestigations
multiplied by a igure which represents the proportion that the aerage business in orce
during the calendar years 1950 to 1955 bears to the aerage business in orce during the
calendar years comprised in the period between the date as at which the actuarial
inestigation immediately preceding the earliest o the releant actuarial inestigations was
made and the date as at which the last o such inestigations was made.

Paragraph 2.-
lal the amount payable under paragraph 1 plus the paid-up capital or assets equialent
thereto, or, in the case o a composite insurer, that part o the paid-up capital or assets
equialent thereto which has or been transerred to and ested in the Corporation under this
Act less the amount, i any o expenses or losses or both capitalised by the insurer or the
purposes o lorm A in the lirst Schedule to the Insurance Act.

Lxplanation 1.-
lor the purposes o paragraph 1,-
,a, "releant actuarial inestigations" means such minimum number o latest actuarial
inestigations as at dates earlier than the 1st day o January, 1955 ,not being less than two in
any case,, as would leae the period interening between the date as at which the actuarial
inestigation immediately preceding the irst o such inestigations was made and the date
as at which the last o such inestigations was made and the date as at which the last o such
inestigations was made, to be not less than our years,
,b, "aerage business in orce" means the aerage o total sums assured by the insurer
,including any bonus, in respect o his controlled business as on the 31st day o December
o each o the releant calendar years.

_________________________________

1. Inserted, ibid


Lxplanation 2.-
lor the purposes o paragraph 2, where an insurer has allocated to share-holders more than
5 per cent, o any such surplus as is reerred to therein, the insurer shall be deemed to hae
allocated only 5 per cent, o the surplus and where an insurer has not allocated any such
surplus to share-holders or has allocated to share-holders less than 31,2 per cent, o any
such surplus, the insurer shall be deemed to hae allocated 31,2 per cent, o the surplus.

Lxplanation 3.-
In the case o any insurer incorporated outside India, the annual aerage o the share o the
surplus allocated to share-holders or the purposes o paragraph 1 shall be deemed to be the
annual aerage o the surplus as disclosed in the abstracts prepared in accordance with Part
II o the lourth Schedule to the Insurance Act in respect o the releant actuarial
inestigations multiplied by a igure which is the aerage o the two igures mentioned
below:-
a igure representing the proportion which the share allocated to share-holders out o the
surplus in respect o the world business o the insurer ,such share being computed subject to
the proisions o Lxplanation 2, bears to the whole o such surplus as ascertained with
reerence to the last actuarial inestigation relating to such business as at a date earlier than
the 1st day o January, 1955, and a igure representing the proportion which the share
allocated to share-holders out o the surplus in respect o the world business o the insurer
,such share being computed subject to the proisions o Lxplanation 2, bears to the whole
o such surplus as ascertained with reerence to the actuarial inestigation relating to such
business immediately preceding the actuarial inestigation reerred to in clause ,i,:
Provided that in the case o any such insurer in respect o whom an order has been made
under section 35 the amount computed as ollows shall be deemed to be the annual aerage
o the surplus:-
,a, there shall be deducted rom the annual aerage o the surplus, interest at 31,2 per
cent, per annum or one year calculated on the assets speciied in any order made under sub-
section ,2, o section 35,
,b, with respect to the balance arried at under clause ,a,, there shall be computed an
amount that bears the same proportion to the said balance as the liability on policies
appertaining to the controlled business o the insurer, other than those expressed in any
oreign currency issued on the lies o persons who are citizens o India, bears to the liability
in respect o all policies appertaining to such business, the liabilities on policies being
computed as at the 31st day o December, 1955, in accordance with the proisions
contained in clause ,b, o the Second Schedule:
Provided urther that-
,a, in any case where the order made under section 35 is with reerence to sub-section
,2, only, the preceding proiso shall hae eect as i clause ,b, had been omitted thererom,
and
,b, in any case where the order made under section 35 is with reerence to sub-section
,3, only, the preceding proiso shall hae eect as i -
,i, clause ,a, has been omitted,
,ii, in clause ,b,, the words, brackets and letter "with respect to the balance arried at
under clause ,a," had been omitted, or the words "the said balance" the words "annual
aerage o the surplus" had been substituted, and or the words, brackets and letter "with the
proisions contained in clause ,b, o", the words and letter "with method a speciied in" had
been substituted.
Lxplanation 4.-
\here an insurer incorporated outside India whose paid-up capital is outside India-
,a, the proisions contained in paragraph 1 shall hae eect as i the words "less a sum
equal to that part o the paid-up capital o the insurer as may be determined by the Central
Goernment to be allocable to the controlled business o the insurer" were inserted at the
end o that paragraph, and
,b, the proisions contained in paragraph 2 shall hae eect as i,-
,i, the words "without making the deduction reerred to in clause ,a, o Lxplanation 4"
had been inserted ater the words "hal the amount payable under paragraph 1", and
,ii, the words beginning with "plus the paid-up capital" and ending with "in the lirst
Schedule to the Insurance Act, had been omitted.

PAR1 B
1he compensation to be gien by the Corporation to an insurer haing a share capital on
which diidend or bonus is payable who has not made any such allocation as is reerred to in
Part A in respect o the last actuarial inestigation as at a date earlier than the 1st day o
January, 1955, shall be an amount equal to the alue o the assets o the insurer appertaining
to his controlled business in existence, on the 19
th
day o January, 1956, computed as at that
date in accordance with the proisions o paragraph 3 less the amount o liabilities o the
insurer appertaining to such business in existence on the 19th day o January, 1956,
computed as at that date in accordance with the proisions o paragraph 4.

Paragraph 3.
Assets..-
,a, 1he market alue o any land or buildings.
,b, 1he market alue o any shares, securities or other inestments held by the insurer.
,c, 1he total amount o the premiums paid by the insurer in respect o all leasehold
properties reduced in the case o each such premium by an amount which bears to such
premium the same proportion as the expired term o the lease in respect o which such
premium shall hae been paid bears to the total term o the lease.
,d, 1he amount o debts due to the insurer, whether secured or unsecured, to the extent
to which they are reasonably considered to be recoerable.
,e, 1he amount o premiums which hae allen due to the insurer on policies o lie
Insurance but hae not been paid and the days o grace or payment o which hae not
expired.
,, 1he amount o cash held by the insurer whether in deposit with a bank or otherwise.
,g, 1he alue o all tangible assets other than those alling within any o the preceding
clauses.

Paragraph 4.
Liabilities.-
,a, 1he total amount o liabilities o the insurer to holders o policies in respect o his
controlled business on account o matured claims on which payment has to be made.
,b, 1he total amount o liabilities o the insurer to holders o policies in respect o his
controlled business which hae not matured or payment, the liabilities in respect thereo
being calculation on the ollowing actuarial bases:-
,i, in respect o whole-lie assurances and endowment assurances, the mortality table to
be used shall be the Oriental ,23-35, ultimate mortality table, and an interest rate o 31,4 per
cent, per annum shall be assumed and or expenses 20 per cent o oice premiums in the
case o with-proit policies and 15 per cent o oice premiums in the case o non-proit
policies shall be resered,
,ii, in respect o other policies such actuarial bases determined by the actuary making the
aluation as may be consistent with the basis speciied in clause ,i,, and
,iii, in determining the liabilities o insurers under clause ,b, the actuary shall make all the
usual proisions and reseres as are ordinarily done in such cases.
,c, 1he total amount o all other liabilities o the insurer.
,d, \here, as a result o the actuarial aluation o policy liabilities made under clause, ,b,
the lie insurance und is shown to be in surplus, a sum equal to 96 per cent o such surplus
shall be deemed to be a liability under this paragraph.
Lxplanation.-lor the purposes o this Part, in the case o an insurer incorporated outside
India in respect whom an order under section 35 has been made, the assets or the assets and
liabilities as the case may be, speciied in the order shall be excluded.

Paragraph S.-
I the insurer to whom compensation is to be gien under this part is a displaced insurer, the
compensation to be gien shall be computed in accordance with ollowing proisions:-
lirstly, there shall be ascertained the losses incurred by the displaced insurer in respect o
claims arising by deaths established by the displaced insurer to hae been caused by the ciil
disturbances which took place on the occasion o the setting up o the Dominions o India
and Pakistan, the total loss being taken as the dierence between the amounts paid as claims
in respect o such deaths and the total amount o the actuarial resere in respect o the
releant policies,
Secondly, there shall be ascertained the dierence between the market alue as at the 15th
day o August 194, o any immoable property in \est Pakistan belonging to the displaced
insurer and the market alue thereo determined under Paragraph 3 o this part, or, where
any such immoable property has been sold beore the 19th day o January, 1956, the
dierence between the market alue thereo as at the 15th day o August 194, and the sale
price,
1hirdly, there shall be ascertained the amount o deposits held by the displaced insurer in
banks which could not be withdrawn on account o a moratorium declared under any law
or the time being in orce, to the extent to which such deposits hae become losses,
lourthly, there shall be ascertained the dierence between the market alue as at the 15th
day o August, 194, o any shares in any company now carrying on business in \est
Pakistan held by the displaced insurer and which had been acquired beore the 15th day o
August, 194, and the market alue o such shares as at the 19th day o January, 1956.
1he amount o compensation to be gien to the displaced insurer under this part shall be-
,a, the amount which would hae to be gien to him i this Paragraph had not been
enacted, plus
,b, an amount which represents one-hal o the dierence between the compensation
which would hae to be gien to him i to the alue o the assets reerred to in Paragraph 3
there had been added the sum o the our items reerred to in this Paragraph and with
respect to the liabilities reerred to in Paragraph 4, the lie insurance und had been
increased by a like sum, and the compensation which would hae to be gien to him i this
Paragraph had not been enacted.
or
one hal o the paid-up capital o the displaced insurer whicheer is less.
Lxplanation.-
lor the purposes o this Paragraph "displaced insurer" means an insurance company whose
registered oice during any part o the year 194 was in any area now orming part o \est
Pakistan and whose registered oice is now in India.

PAR1:C
1he compensation to be gien by the Corporation to an insurer:
,a, haing no share capital, or
,b, haing a share capital on which a diidend or bonus is not payable,
shall be in the orm o an addition at the rate o rupee one per thousand in respect o the
sun assured ,excluding bonuses, under each with-proit policy, and in the case o an insurer
alling under clause ,b,, such compensation shall also include a sun equialent to the paid-up
capital o the insurer to be paid to him.

1HL SLCOND SCHLDULL ,See section 35,
PRINCIPLLS IOR DL1LRMINING 1HL VALUL OI LIABILI1ILS IN
CLR1AIN CASLS
1he total amount o the liabilities o an insurer incorporated outside India or the purposes
o sub-section ,2, o section 36 shall be the sum o the amounts computed in accordance
with the ollowing proisions:-
,a, the total amount o liabilities o the insurer to holders o policies in respect o his
controlled business on account o matured claims on which payment has to be made:
,b, the total amount o liabilities o the insurer to holders o policies in respect o his
controlled business which hae not matured or payment, the liabilities in respect thereo
being the liabilities calculated in accordance with method B below or the mean o the
liabilities calculated in accordance with method A and method B below, whicheer is greater.
Method A.-
Actuarial liability calculated on the same bases as adopted by the insurer at the last actuarial
inestigation as at a date earlier than the 1st o January, 1955.
Method B.-
Actuarial liability calculated on the methods knows as the modiied net premium method o
aluation, the mortality table to be used being the Oriental ,25-35, ultimate mortality table,
an interest rate o 21,2 per cent, per annum being assumed and the allowance or irst year
expenses being Rs.40 per thousand rupees o the sum assured by the policy.
Lxplanation 1.-
Beore ascertaining the liability under method A and method B, there shall be added to each
with-proit policy in orce on the 31st day o December, 1955 ,unless such addition has
already been made, bonus at the same rate as declared at the said last actuarial inestigation
in respect o each year or part o a year the policy had been in orce since the date as at
which the said last actuarial inestigation was made.
Lxplanation 2.-
In calculating the liabilities in accordance with method A or method B,
,i, in respect o policies other than whole-lie assurance and endowment assurance,
such actuarial basis determined by the actuary making the aluation as may be consistent
with the basis speciied in the method shall be employed, and
,ii, the actuary shall make all the usual proisions and reseres as are
ordinarily done in such cases,
,c, the total amount o all other liabilities o the insurer,

1HL 1HIRD SCHLDULL ,See section 36,
PRINCIPLLS IOR DL1LRMINING COMPLNSA1ION PAYABLL 1O CHILI
AGLN1S
1he compensation payable to a chie agent shall consist o seenty-ie per cent, o the
oerriding commission speciied in the contract relating to chie agency with the insurer on
the renewal premiums receied by the Corporation during a period o ten years rom the
appointed day in respect o the business procured by the chie agent beore the appointed
day, and such compensation shall be determined and paid annually or the said period.

PRINCIPLLS IOR DL1LRMINING COMPLNSA1ION PAYABLL 1O
SPLCIAL AGLN1S
1he compensation payable to a special agent shall consist o one eighth o his annual aerage
earnings during the period beginning on the 1st day o January, 1952, and ending on the 31st
day o December, 1955, in the orm o oerriding commissions in respect o business
procured by him through insurance agents.