 bid no 67 or inl the general insurance (emergency provisions) bal, 1971to provide fm tlm taking 0nf" ita the p1o&blic interest of the mgftclgement of general insu"lflce bumaela pending ftcitiotaazilation 01 auch wainess witereas it is expedieat in the public interest that general insurance buskle&s should be natloaalised; and wiizrzas it is expedient that pending such nationalisation adequate steps should be taken to protect the interests of the policy-hojder:'!: be it enacted by parlilullent in the twenty-second year of the republic of india as follows:-1 (i) this act may be called the general insurance (emergency pro-short title visiodl) act, urll and coin-s (2) it ahad be deemed to bave c:ome into force oil the 13th day of may, menc:emen\ 1971 -----z in tbls aet unl  the context otherw~ requires,-(a) "appointed d8'_ , means the 13th day of may, 1971; (b) "custodian" ldeans the person appointed under section 4 to take over the management of the undertaking of any insurer; (c) "general insurance business" means fire, marine or miseella-5 neous insurance business whether carried on singly or in combination with one or more of them, but does not include capital redemption business and annuity certain business; (d) "insurance act" means the insurance act, 1938; fotl'" (e) "insurer" means an insurer, as defined in the insurance act, 10 who carries ad general insurance business in india, and includes an insurer whose registration under that act has not remalded wholly cancelled for a period of six months immediately before the appoihted day, but does not include the life insurance corporation of india established under the life insurance corporation act, 1958, or any 15 31 of 1158 state government which carries on general insurance business; (1) "notified order" means an order notified in the ot1idal gazette; (g) "prescribed" means prescribed by rules made under this act; (h) "undertaking", in relation to an insurer incorporated outside india, means the undertaking of that insurer in india; 20 (i) words and expressions used herein but not defined, and defin-' ed in the insurance act, have the meanings respectively assigned to them in that act i'l~ management of undertakings to vest in government on commen- cement of ,this act 3 (i) on and from the appointed day, the management of the undertakings of all insurers shall vest in the central government, and, pending 25 the appointment of a custodian for, the undertaking of any insurer, the persons in charge of the management of such undertaking immediately before the appointed day shan, on and from the appointed day be in charge of the management of the undertaking far and on behalf of the central government; and the management of the undertaking of the insurer 30 shall be carried on by them subject to the provisions contained in subsections (3) and (5) and to such further directions, if any, a'l the central government may give to them by notice addressed and sent to the principal officer of the insurer (2) any contrkt, whether express or implied, providing for the ma- 35 nagement of the 1ndertaking of an insurer, made before the appointed day between the insurer and any person in charge of the management of such undertaking immeciiately before the appointed day, shall be deemed to have terminated 011 t:1c :lppointed day_ , (3) no insurer shall, without the previous approval of the person s  40 clfied by the central government in this behalf in respect of that insurer (hereinafter h!ferr~ to as the "authorised person") ,_ (a) make any payment or grant any loan otherwise than in accordance with the normal practice obscrvl'cf by him in respect of such mutters immediatdy before the appointt'cf day; (b) incur any expenditure from the assets appertiining to the undertaking otherwise than for the purpose of making routine payments of salaries ot commissions to employees, insurance agents or for the purpose of meeting the routine day to day expenditure; 5 ~ ~: (c) transfer or otherwise dispose of any such assets or create any charge, hypothecation, lien or other encumbrance thereon; ~ \" (d) invest in any manner any moneys forming part of such assets; jo (e) acquire any immovable property out of any moneys forming part of such assets; (f) enter into any contract of service or agency, whether expressly or by implication, for purposes connected wholly or partly with the undertaking or vary the terms and conditions uf any such contract subsisting on the appointed day; j s (g) enter into any other transaction relating to the undertaking f1f the insurer other than a contract relating to the transaction of general insurance business or vary the terms and conditions of any agreement relating to any such transaction subsisting at the commencement of this act ::0 (4) the approval of the authorised person may be given either generally in relation to certain classes of transactions of the insurer or speciauy in relation to any of his transactions (5) every insurer shall deposit all securities and documents of title to any assets appertaining to the undertaking in any scheduled bank or 25 nationalised bank in which the insurer had an account immediately before the appointed day or in any branch of the state bank in the place where the head office or the principal oftlce of the insurer is situated or, where there is no branch of the state bank in such place, the nearest branch of the state bank; and do such security or document shall be 30 withdrawn from the scheduled bank, the natiodaliaed bank or the state bank, 81 the cue may be, except with the permission of the autbgriaecl person: provided that nothing contaiiled in this su1hection shall apply to any security or document of title kept in trust with an oftlcial trustee in 35 pursuance of the articles of association of an inaurer unleas the central government, by notifted order, otherwise direetl ezplcmgtion-in this sub-section,-~ uf 1934 (a) "scheduled bank" means" bank idcluded for the time being in the second schedule to the rc:erve bank of india act, 1  ; :!3 \if 1955 40 (b) "state bank" means the state bank of india codstituted under the state bank of india act, 1955; (c) '"nationaused bank" means a coi'nipoddin, new bank  debeci jd the benldn companies (acquisition and tnnafer of undertajddp) act, lino : "111170 (6) every insurer shall deliver forthwith ,, the penon  tpeelftecl m this behalf by the central government in' respect of that iasurer the following documents, namely:-(4) the minutes book or any other book in india containing all resolutions up to the appointed day of the perlons in charge of the 5 management of the undertaking before the appointed day; (b) the current cheque books relating to the undertaking which are at the head office or the principal office of the insurer; (c) all registers or other books containing particulars relating to the investment of any moneys appertaining to the undertaking in-10 eluding investments on mortgaged properties add d·loans granted and advances made; (d) all brokers' notes or certificates in the posseslion of the insurer in respect of any orders far the investment of anyjdodi, appertlining to the undertaking 15 (7) without prejudice tb the generality of the powers conferred by sub-section (1) and to the provisions contained in sub-sections (3), (1) ~nd (6), any direction issued under sub-section (/) may require the per-stlns in charge of the management of the undertaking of an insurer under this act to furnish to the central government or to the authorised per-20 son such returns, statements and other information relating to the undertaking as may be mentioned in the direction (8) the persons in charge of the management of 'the undertaking of bll insurer under this act shall be entitled to such remuneration, whether by way of allowance or salary or perquisites as the central gov-25 ernment may fix; and any such person may, by giving one month's notice in writing to the central government of his intention so to do, relinquish chal'ge of the management of the undertaking 4 (1) the central government may, as soon asit is convenient administratively so to do, appoint any person as custodian for' the purpose of 30 taking over the management of the· undertaking of an insurer and: the person so appointed shall carry on the li18il8pident of the undertaldng of the insurer for and on behalf of the central govenunent power of central gov-rnment to appoint custodians to toke over the mdn-(2) on the appointment of a custodian under sub-section (1), the charge of management of the undertaking of the insurer shall vest in bim 35 and all persons in charge of the management of such undertaking immediately before such appointment shall cease to be in charge of such man-:l~ement and shall be bound to deliver to' the custodian all boob of account, registers or other documents in their custody relating to the un1~rtaking of the insurer 40 cl~('ment of the unrlcrtak-ing of the insurer (3) nothing contained in sub-sections (3), (5) and (6) of section 3 iihau apply to any insurer the charge of management of whose undertaking has been taken over by the custodian, but the central government mlly issue such directions to the custodian as to his powers and duties as it deemed desirable in the circumstances of the case, and the custodian '145 m:jy apply to the central government at any time for instructions as t, the manner in which he shall conduct the management of the underlhkmg of the insurer or in relation to any matter ariin, in the course of such management (4) the cuslou,olu shall rcct!ivc (rum the (unds 01 the undertaking for the charge o( management of which he is appointed under subsection (i) such remuneratiun as the central government may fix (5) rrhe cust'odian shall hold office during the pleasure of the central ~ g(lv~rnment 5 the custodian may, in relation to the undertaking of any insurer tile charge of management of which has been taken over by him, exercise-(a) all or any of the powers which the controller of insurance )0 may exercise under section 106 or sectt:jll 107 of the insurance act; | power    ||----------|| custodi- || all      || to       || insmute  || proceed- || ings,    || etc,     |(b) all or any of the powers under section 52b, section 52bb, section 52c or section 52d of the insurance act which an administrator appointed under section 52a of that act could have exercised in relation to life insurance business of an insurer 15 g (i) every insurer shall be given by the central government compensation for the vesting in it, under section 3, of the manalemelt of the undertakinlof the insurer payment of eampen  -tion, (2) for every month durin, which the manalement of the ulldertaking of the insurer remains vested in tbe centrol government, tlte 20 amount of compensation referred to in !liub-section (1) sholl be-(a) in the case of an insurer  ·  ferred to in dau~ (b) of sub seelion (9) of section 2 of the insur: :tce act,-(i) where the insurer hos de lared a dividend durin: at lea!!t one of the three calendar year" 1967, 1968 and j9ii-25 (a) a sum equal to one-twelfth of the annual average (for the three years) of the amount distributed to shareholders as dividend; or ,(b) a'luid ,ual to two-and-ahalf rupees for eve, tho  nd ", or part tile,f of the dei pl'llldhun income of the under-30 ~ of'iasarer tlariac the year till, 'w  is pemeri (it) ia ad, etiier cue, a iriid equal to two-add  ·half rupees for every tho  d  or part thereof of the det premiam idcemeof tbe  ertakin& of the insver duri  tile ,ear lmt; 25 (b) ill tbe am , ad insurer referred to in ell'die (a) of subseetiod (9)of  tloa z·of tbe insul'8llee act, a sum eqal to two-anda-half rupees for emri thousand rupee& or part thereof of the net pnmium lneome of tbe undertwnr of the insurer in india durinl the year i • 40 7 (1) the·compensation referred to in section 6 shall be paid by the central government in cash to every insurer compensauon how to be paid  (2) the compensation received by an insurer under section 8 shall be dealt' with by him in such manner as may be prescribed  nalu t ii ill)' penon-ca) fan to deuver to the custodian any books of acecnuit, rep tars or any other documents in his custody reiafng to the undertaking of an insurer in reaped of the management of which the custodian has been appointed, or (b) retains any property of such insurer appertaining to the, undertaking of the insurer, or (c) fails to comply with the provisions contained in sub-leetion (3) or sub-section (5) or sub-section (6) of section 3, or (d) fads to comply with any c:lirections issued under iub-aec:tion (1) or sub-section (7) of section 3, 10 he shall be punishable with imprisomnedt for a term which may atend to six molltba, or with fine which may extend to one thoululd rupees, or with both nsurer lot to ~ wound :;up by t no proceeding for the winding up of an inlurer, the jdildilieidedt of whose undertaking has vested in the central government under this i, act, or for the appointment of a receiver in respect of iuch business, shall lie in any court 10 in computing the period of limitation prescribed by any law for the time being in force for any suit or application against any penon by an insurer in respect of any matter arising out of his undertaking, the 20 time during which this act is in force shall be excluded j, ourt ,kxciu-(sion of ''time of act for rom put-:1n, period ;of limita-'lion effect of act on other laws 11 the provisi-ms of this act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this act 25 , delcga-lion of  powers 12 the central government may, by notified order, direct that all or any of the powers exercisable by it under this act may alaa be exerciled by any such person as may be specified in the order 13 (1) no suit, prosecution or other legal proceeding lhalllie against any custodian or authorised person in respect of anything which is in 30 good faith done or intended to be done under this aet i protection  of action taken under this act (2) no suit or other legal proceeding shall lie against the central government or any custodian or authorised person for any damage caused or likely to be caused by anything which is in good faith dane or intended to be done under this acl 35 14 notwithstanding the provisions of section 3 of the insurance act, the controller of insurance shall not, after the appointed day, issue any new certificate of registration under that section to any person new certificate of 1'eiistration not to be i!l!lued is nothing contained in this act shall apply to-act where not ~o apply (a) any insurer whose business is being voluntarily wound up 40 or is being wound up by a court; (b) any insurer to whom the insurance act does not apply by reason of the provisions contained in section 2£ thereof; (c) the calcutta hospital and nursing home beneftt association, limited; (d) the export credit guarantee corporation; (e) the deposit insurance scheme; (i) any scheme of insurance which might be exempted by the central government relating to-(i) crop and cattle, (ii) war risks, (iii) emergency risks; !, 10 (g) general insurance business carried on by a state government or by the life insurance corporation of india iti (i) the central government may, by notiftcation in the oftlcial power to gazette, make rules to carry out the provisions of this act make rules (2) in particular, and without prejudice to the generality of the fore-is going power, such rules may provide for all oc any of the following matters, namely:-(a) the form and manner in which books elf account appertaining to undertakings shall be maintained by insurers; (b) the manner in which any compensation payable under thil 20 act shall be dealt with by an insurer; (e) the circumstances in which the remuneration payable to persons in charge of the management of the undertaking of an insurer under this act (if to custodians shall be met by the central government, whether who'lly or in part; 2s (d) any other matter which is required to be, or may be, prescribed 11 (1) the general insurance (emergency provisions) ordidadce, repul 1971, is hereby repealed aad sayijld, (2) notwithstanding such repeal, anything done or any ac:tiod taken 30 (including any direction given and orders and rules made) under the said ordinance shall be deemed to hav~ been done or taken udder the ~orresponding provisions of this act  ~'fatement of objects and reasonsthe general insurance (emergency provisions) ordinance, 117l (6 of 1971) was promulgated by the president of tbe 13th may, 19'71, and came into force at once the said ordinance provides for the taking over, in the public interest, of the management of the undertakinp of inaurel'l carrying on general insurance business, pending nationalisation of lucb business government proposes to introduce in parliament,  early as possible, a bm providing for the nationalilation of general lnburance business since preparation and introductiod of such bill would' take some time, it ij necessary to ensure that the action taken under the above-mentioned ordinance may not expire before the, enaetment·, by parliament of the proposed law for the nationalisatiod of the auwi'!: insurance business 2 the present bill seeks to achieve the said object new delhi; y b chavan the ~th may 1971  president's recommendation under article 117 of the constitution of india[copy of letter no 51 (7)-ins-1171-iii, dated the 21st may, 1971 from shri y b chavan, vitta mantri to the secretary lok sabha) the president having been informed of the subject matter of the proposed general insurance (emergency provisions) bill, 1971, recommends the introduction of the bill in the lok sabha under clause (1) of article 117 and its consideration under clause (3) of article 117 of the constitu tion clause 6 of the bill provides for the payment by the central government of compensation for the taking over of the management of the undertakings 01 insurers carrying on general insurance in india until such time as the undertakings of insurers carrying on genera) insurance business is nationalised by an act of parliam~nt the l:xpenditure on account of the payment of compensation under claus~ 6 of the bill is likely to be of the order of ri 33 lakhs pel" month 2 the authorised person!; mentioned in clause 3 of the bill pending appointment of custodians, will be central government offieials and, as such, no additional expenditure would be incurred to meet, by reason of the provisions of the bm, the expenditure on their pay and allowanees  memorandum regarding delegated legislationclause 16 of the bill empowers the central government to make rules to carry out the provisions of the bill such rules may provicle for all or any of the following matters, namely:-ca> the form and manner in which books of account appertainine to undertakings shall be maintained by insurers; (b) the idiulilef in which any compensation payable under this' act shall be dealt with by an insurer; (c) the drcumstanc:es in which the remuneration payable to persons in charge of the management of the undertaking of an insurer under this act or to custodians shall be met by the central government, whether wholly or in part 2 the matters in respect of which such rules may be made are generally matters of procedure and administrative detail and it is not practicable to provide for them in the bill itself the delegation of the legislative power is therefore of a normal character a bill to provide for the wking over, in the public interest, of the management of genera) inc;urance business pending nationalisation at such business (shri y b chmiqii, villa ma"rn) 