  the insurance (amendment) bill, 1955- (as introduced in lok sabha)  the insurance (amendment) bill, i955 (as introduced in lok sabha)a bill further to amend the insurance act, 1938 be it enacted by parliament in the sixth year of the republic of india as follows:-1 (1) this act may be called th~ insurance (amendment) act, slort title and com-1955 \ mencement ~ (2) it shall be deemed to have come into force on the first day - of november, 1955 iv ':if 1938 2 in the insurance act, 1938 (hereinafter referred to as the insertion of princ~pal act), after sectiori 52b, the following section shall be ~;bbc:ction inserted, namely:-10 "52bb (1) if the administrator is satisfied that any person powers of has rendered himself liable to be proceeded against under section adminiltra-106, he may, pending the institution of proceedings against such ~~~ r~:~~;ty person under that section, by order in writing, prohibit him or liable to any ot~er person from transferring or otherwise disposing of any ~m:::-15 property which, in the opinion of the administrator, would be tion 106 liable to attachment in proceedings under that section 20 (2) any person aggrieved by an order made by the administrator under sub-section (1) may, within fourteen days from the date on which the order is served on him, appeal against such order to the central government, and the central government may pass such order thereon as it thinks fit (3) an order made by the administrator under sub-section (1) shall, subject to any order made by the central government on appeal, be in force fur a period of three months from the date of the order unless, before the expiry of the said period, an application is made under sub-section (1) of section 106 to the court competent to exercise jurisdiction under that subsection, and when such an application is made, the order shall, 5 subject to any order made by that court, continue in force as if it were an order of attachment made by that court in proceedings under that section (4) an order made by the administrator under this section 10 shall,-(a) in the case of an order affecting a corporation or firm, be served in the manner provided for the service of summons in rule 2 of order xxix or rule 3 of order xxx, as the case may be, in the first schedule to the code of civil procedure, 1908, and is vii of 1908 (b) in the case of an order affecting a person not being a corporation or firm, be served on such person-(i) personally, by delivering or tendering to him the order, or 20 (ii) by post, or (i'ii) where the person cannot be found, by leaving a copy of the order with some adult male member of his  family or by affixing such copy to some conspicuous part of the permises in which he is known to have last resided or carried on business or personally worked for gain, 2s and every such order shall also be published in the official gazette (5) if any question arises whether a person was duly served with an order under sub-section (4), the publication of the order in the official gazette shall be conclusive proof that the order 30 was so served, and a failure to comply with the provisions of clause (a) or clause (b) of sub-section (4) shall not affect the validi ty of the order (6) notwithstanding anything contained in this section, any property in respect of which an order has been made by the 35 administrator may, with the previous permission of the administrator and subject to such terms and conditions as he may impose, be transferred or otherwise disposed of (1) notwithstanding anything contained in any other law for the time being in force, the transfer or other disposition of 40 any property in contravention of any order made by the administrator under this section or of any terms and conditions imposed by him shall be void s )0 xlv of 1860 (8) for the purpose of enabling him to form an opinion as to whether anyproperty would be liable to attachment in proceedings under section 106 or for the purpose of enabling him to institute proceedings under that section, the administrator may require any person to furnish information on such points or matters as, in thz opinion of the administrator, may be relevant for thz purpose, and any person so required shall be deemed to be legally bound to furnish such information within the meaning of section 176 of the indian penal code vof 1908 is (9) the administrator shall have all the powers of a civil court under the code of civil procedure, 1908, while trying a suit in respect of the following matters, namely:-(a) summoning and enforcing the attendance of witnesses and examining them on oath; (b) requiring the production of documents; and (c) receiving evidence on affidavits; 20 and any proceeding before the administrator under this section shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228 of the indian penal code xlvofi860 (10) save as provided in this section or in section 106, and notwithstanding anything contained in any other law for the time being in force,-(a) no suit or other legal proceeding shall lie in any court to set aside or modify any order of the administrator or the central government made under this section, and ~o (b) no court shall pass any dzcree, grant any injunction or make any other order which shall have the effect of nullifying or affecting in any way any such order" 3 in section 52g of the principal act, in sub-section (1), for the amendment words and figures "sections 52a to 52c inclusive", the following shall of section be substituted, namely: _ )2g "section 52a, section 52b, section 52bb or section 52c" 3s substitution 4 for section 106 of the principal act, the following section shall ~~:efur':_ be, and shall b~ deemed always to have been, substituted, namely:-don 106 "106 (1) if, on the application of the controller or an administrator appointed under section 52a or an insurer or any policy-holder or any member of an insurance company or the 5 liquidator of an insurance company (in the" event of the insurance company b~ing in liquidation), the court is satisfied-power of court to order restoratiol1 of property of insurer or compensadod in certain cases (a) that any insurer (including in any case where the insurer is an insurance company any person who has taken part in the promotion or formation of the insurance com- 10 pany or any past or present director, managing agent, manager, secretary or liquidator) or any officer, employee or agent of the insurer,-(i) has misapplied or retained or become liable or become accountable for any money or property of the i ~ insurer; or (ii) has been guilty of any misfeasance or breach of trust in relation to the insurer; or (b) that any person, whether he is or has been in any way connected with the affairs of the insurer or not, is in 20 wrongful possession of any money or property of the insur~r or having any such money or property in his possession wrongfully withholds it or has converted it to any use other than that of the insurer; or (c) that by reason of any contravention of the provi- 25 sions of this act, the amount of the life insurance fund has been diminished; the court may examine any such insurer, director, managing agent, manager, secretary or liquidator or any such officer, employee or agent of the insurer or such other person, as the case may be, 30 and may compel him to contribute such sums to the assets of the insurer by way of compensation in respect of the misapplication, retainer, misfeasance or breach of trust as the court thinks fit, or to pay such sum as may be found due from him in respect of any money or property of the insurer for which he is liable 35 or accountable or to restore any money or property of the insurer or any- part thereof, as the case may be; and where the amount of the life insurance fund has been diminished by reason of any contravention of the- provisions of this act, the court shall have power to assess the sum by which the amount of the fund has been 40 diminished and to order the person guilty of such contravention to contribute to the fund the whole or any part of that sum by way of compensation; and in any of the aforesaid cases the court shan have power to order interest to be paid at such rate and from such time as the court may deem fit (2) without prejudice to the provisions contained in sub-, section (1) or sub-section (3), where it is proved that any money or property of an insurer has disappeared or has been lost, the court shall presume that every person in charge of, or having a disposing power over, such money or property at the relevant time (whether a director, manager, principal officer or, any other 10 officer) has become accountable for such money or property within the meaning of sub-clause (i) of clause (a) of subsection (1), and the provisions of that sub-section shall apply accordingly, unless such person proves that the money or property has been utilised or disposed of in the ordinary course of is  the business of the insurer and for the purpose of that business or that he took all reasonable steps to prevent the disappearance or loss of such money or property or otherwise satisfactorily accounts for such disappearance or loss (3) where the insurer is an insurance company and any of ~o the acts referred to in clauses (a), (b) and (c) of sub-section (1) has been committed by any person, every person who was at the relevant time al director, managing agent, manager, liquidator, secretary ·or other officer of the insurance company shall, for the purposes of that sub--section, be deemed to be liable for 2s that act in the same manner and to the same extent as the person who has committed the act, unless he proves that the act was committed without his consent or connivance and was not facllitated by any neglect or omission on his part (4) where at any stage of the proceedings against any person 30 under this section (hereinafter referred to as the delinquent), the court is satisfied by affidavit or otherwise-(a) that a: ptima facie case has been made out against ~he delinquent; and  (b) that it is just and proper so to db in the interests 3' of the policy-holders of an insurer or of the members of an insurance company, the court may direct the attachment of-(i) any property of the insurer in the possession of the delinquent; (it) any property of the delinquent which belongs to him or is deemed to belong to him within the meaning of sub-section (5); (iii) any property transferred by the delinquent within two years before the commencement of proceedings under sub-section (1) or during the pendency of such proceedings, if the court is satisfied by affidavit or otherwise that the transfer was otherwise than in good s faith and for consideration (5) for the purposes of sub-section (4), the following classes of property shall be deemed to belong to a delinquent,-(a) any property standing in the name of any person which by reason of the person being connected with the ic> delinquent, whether by way of relationship or otherwise, or on account of any other relevant circumstances a'ppears to belong to the delinquent; (b) the property of a private company in respect of the affairs of which the delinquent, by himself or through hisls nominees, relatives, partners or persons interested in any shares of the company is able to exercise or i~ entitled to acquire control, whether direct or indirect explanation-for the purposes of this section a person shall be deemed to be a nominee of a delinquent, if, whether directly 20-or indirectly, he possesses on behajf of the delinquent, or may be required to exercise on the direction or on behalf of the delinquent, any right or power which is of such a nature as to enable the delinquent to exercise or'to entitle the delinquent to acquire control over the company's affairs los (6) any claim to any property attached under this section or any objection to such attachment shall be made by an applicatiojl to the court, and it shall be for the claimant or objector to adduce evidence to show that the property is not liable to attachment under thjs section, and the court shall proceed to 3c> investigate the claim or objection in a' summary manner (7) when disposing of an application under sub-section (1), the court shall, after giving all persons who appear to it to be interested in any property attached under this section an opportunjty of being heard, make such order as it thinks fit respecting the 35 disposal of any such property for the purpose of effectually enforcing any liability  under this section, and all such persons shall be deemed to be parties to the proceedings under this section    (8) in any proceedings under this section the court shall 40' have full power and exclusive jurisdiction to decide all questions of any nature whatsoever arising thereunder and, in particula,r, with respect to any property attached under this section, and no other court shall have jurisdjction to decide any such question in any suit or other legal proceeding (9) in making any order with respect to the disposal of the property of any private company referred to in clause (b) of sub-section (5), the court shall have due regard to the interests of all persons interested in such property other than the delinquent and persons referred to in that clause 10 (10) this section shall apply notwithstanding that the act is one for which the person concerned may be criminally liable vii of 1913· (11) in proceedings under this section the court shall have au the powers which a court has under section 237 of the indian companies act, 1913 is (12) this section shall apply jn respect of a provident society as defined in part iii as it applies in respect of an insurer 20 (13) on and from the commencement of the insurance  (amendment) act, 1955, the court entitled to exercise jurisdiction under this section shall be the high court within whose jurisdiction the registered office of the insurer is situate (hereinafter referred to as the high court) and any proceedings under this section pending at such commencement in any court other than the high court shall, on such commencement, stand transferred to the high court - 2s (14) the high court may make rules providing for-(a) the manner in which enquiries and proceedings may be held under this section; (b) any other matter for which provision has to be made for enabling the high court to effectively exercise its jurisdiction under this section  5 in section 107 of the principal act, in sub-section (1),-amendment of section 107· (a) after the words "the controller", the words and figures "or an administrator appointed under section 52a" shall be 3s inserted~  (b) fof the words, brackets and figures "any director, manager ot other officer of an insurer or any person who is liable under sub-section (2) of section 41", the words, brackets and figures "any director, managing agent, manager, secretary or other officer of an insurer or any liquidator or any employee or agent of an insurer or any person who is liable under sub-section (2) of section 41 or any other person" shall be substituted ~ 6 6 the insurance (amendment) ordinance, 1955, is hereby 5 of i9!is repealed  statement of objects and reasonsthe scope of the existing section 106 of th~ insurance act is somewhat limited it has proved inadequate for dealing with cases where the diminution of the life insurance fund has occurred because of some action other than a contravention of the act or by a person who is not in any way connected with the insurer there is also the danger that a delinquent in order to evade any decree that may be passed against him in proceedings under section 106 may fraudulently conceal or transfer his property the scope of section 106 is, therefore, being enlarged to include within its ambit all possible cases of misfeasance the court exercising jurisdiction under that sectjon is also being empowered to attach-(a) any property of the insurer in the possession of the delinquent; (b) any property of the delinquent which belongs to him or which although ostensibly standing in the name of any other person (including a private company which is controlled by the delinquent) really belongs to him; and (c) any property transferred by the delinquent within two years before the commencement of the proceedings against him or during the pendency of such proceedings 2 it is possible that in' certain cases the delinquent may conceal or transfer his property before any proceedings are instituted against him' under section 106 in order to meet such a situation, an administrator appointed under section 52a is being empowered, pending the institution of proceedings by him under section 106 against the delinquent, to attach any property which may be liable to attachment by the court in proceedings under that section an order of attachment made by the administrator whl have effect for a period of two months only but subject to any order made by the court will continue in force if proceedings under section 106 are instituted before the expiry of that period 3 since section 106 in its revised form confers very wide powers upon the court, the jurisdictjon under that section will henceforth' be exercised by a high court 4 the bill makes certain  other incidental and consequential amendments in the principal act new delhi; c d deshmukh the 28th november, 1955  annexure extracts from the insurance act, 1938 (iv of 1938) - •  - •pr~tectioll of 520 (1) no suit, prosecution or other legal proceeding shall lie ~d~~ ra:! against an administrator for anything which is in good faith done tions s2a to or intended to be done in pursuance of sections 52a to 52c inclusive 520  - - - - wrongfully 106 (1) if on the application of the controller or an insurer or ~}~:~=ce any member of an insurance company or any policy-holder or the fund liquidator of an insurance company (in the event of the insurer being in liquidation) the court is satisfied that by reason of any contravention of the provisions of this act the amount of the life insurance fund has been diminished, every person who was at the time of the contravention a director, manager, liquidator or an officer of the insurer shall be deemed in respect of the contravention to have been guilty of misfeasance in relation to the insurer unless he proves that the contravention occurred without his consent or connivance and was not facilitated by any neglect or omission on his part; and the court shall have au the powers which a court has under sections 235 and 237 of the indian' companies act, 1913, and vii of 1913 shall also have the power to assess the sum by which the amount of the life insurance fund has been diminished by reason of the misfeasance and to order any person guilty thereof to contribute to that fund the whole or any part of that sum ~ way of compensation (2) this section shall apply in respect of a provident society as defined in part iii as it applies in respect of an insurer - - -   1 previous 107 (1) except where proceedings are instituted by the con-~=teof  troller no proceedings under this act against an insurer or any ~er&! cor director, manager ot other officer of an insurer or any person who ;=:p~f is liable under sub-section (2) of section 41 shall be instituted by any person unless he has previous thereto obtained the sanction of the advocate general of the state where' the principal place of business in the states of such insurer is situate to the institution of such proceedings: provided that where the principal place of business of such insurer is situated in a part c state references in this section to advocate general of the province shall be construed as references to the attorney general for india - - - - - a bill funher to amend the insurance act,· 1938 (shri c d deshmukh, minister of finance) gipd-lad-i401 ls-3o-ii-ss-i600 