Section 37. Statements required after amalgamation and transfer

37. Statements required after amalgamation and transfer.— Where an amalgamation takes place between any two or more insurers, or[7] [where any business of an insurer is transferred], whether in accordance with a scheme confirmed by the[3] [Authority] or otherwise, the insurer carrying on the amalgamated business or[8] [the person to whom the business is transferred], as the case may be, shall, within three months from the date of the completion of the amalgamation or transfer,[9] [furnish in — duplicate to the[3] [Authority]] (a) a certified copy of the scheme, agreement or deed under which the amalgamation or transfer has been effected, and 1. Subs. by Act 5 of 2015, s. 42, for clauses (b) and (c) (w.e.f. 26-12-2014). 2. Subs. by Act 41 of 1999, s. 30 and the First Schedule, for "the amalgamation or transfer if sanctioned" (w.e.f. 19-4-2000). 3. Subs. by s. 30 and the First Schedule, ibid ., for "Controller" (w.e.f. 19-4-2000). Earlier subs. by Act 47 of 1950, s. 26, for "Court" (w.e.f. 1-6-1950). 4. Ins. by Act 13 of 1941, s. 22 (w.e.f. 8-4-1941). 5. Sub-section (4) omitted by Act 47 of 1950, s. 26 (w.e.f. 1-6-1950). 6. Subs. by Act 5 of 2015, s. 43, for section 36 (w.e.f. 26-12-2014). 7. Subs. by Act 13 of 1941, s. 24, for "where any business of one insurer is transferred to another" (w.e.f. 8-4-1941). 8. Subs. by s. 24, ibid ., for "the insurer to whom the business is transferred" (w.e.f. 8-4-1941). 9. Subs. by s. 24, ibid ., for "furnish to the Central Government" (w.e.f. 8-4-1941). (b)[1] [ a declaration signed by every party concerned] or in the case of a company by the chairman and the principal officer that to the best of their belief every payment made or to be made to any person whatsoever on account of the amalgamation or transfer is therein fully set forth and that no other payments beyond those set forth have been made or are to be made either in money, policies, bonds, valuable securities or other property by or with the knowledge of any parties to the amalgamation or transfer, and 2 3 [(c) where the amalgamation or transfer has not been made in accordance with a [scheme approved] — by the[4] [Authority] under section 36 (i) balance-sheets in respect of the insurance business of each of the insurers concerned in such amalgamation or transfer, prepared in the Form set forth in Part II of the First Schedule and in accordance with the regulations contained in Part I of that Schedule, and (ii) certified copies of any other reports on which the scheme of amalgamation or transfer was founded.] 5[37A. Power of 4[Authority] to prepare Scheme of Amalgamation.— (1) If the 4[Authority] is satisfied that — (i) in the public interest; or (ii) in the interests of the policy-holders; or (iii) in order to secure the proper management of an insurer; or (iv) in the interest of insurance business of the country as a whole, it is necessary so to do, he may prepare a scheme for the amalgamation of that insurer with any other insurer (hereinafter referred to in this section as the transferee insurer): Provided that no such scheme shall be prepared unless the other insurer has given his written consent to the proposal for such amalgamation. - (2) The scheme aforesaid may contain provisions for all or any of the following matters, namely: — (a) the constitution, name and registered office, the capital, assets, powers, rights, interests, authorities and privileges, and the liabilities, duties and obligations of the transferee insurer; (b) the transfer to the transferee insurer of the business, properties, assets and liabilities of the insurer on such terms and conditions as may be specified in the scheme; (c) any change in the Board of Directors, or the appointment of a new Board of Directors of the transferee insurer and the authority by whom, the manner in which, and the other terms and conditions on which, such change or appointment shall be made, and, in the case of appointment of a new Board of Directors or of any director, the period for which such appointment shall be made; 1. Subs. by Act 13 of 1941, s. 21, for "a declaration signed by every insurer concerned" (w.e.f. 8-4-1941). 2. Subs. s. 24, ibid ., for clause (c) (w.e.f. 8-4-1941). 3. Subs. by Act 41 of 1999, s. 30 the First Schedule, for "scheme sanctioned" (w.e.f. 19-4-2000). 4. Subs. by s. 30, and the First Schedule, ibid., for "Controller" (w.e.f. 19-4-2000). 5. Ins. by Act 62 of 1968, s. 17 (w.e.f. 1-6-1969). (d) the alteration of the memorandum and articles of association of the transferee insurer for the purpose of altering the capital thereof or for such other purposes as may be necessary to give effect to the amalgamation; (e) subject to the provisions of the scheme, the continuation by or against the transferee insurer, of any actions or proceedings pending against the insurer; (f) the reduction of the interest or rights which the shareholders, policy-holders and other creditors have in or against the insurer before the amalgamation to such extent as the[1] [Authority] considers necessary in the public interest or in the interests of the shareholders, policy-holders and other creditors or for the maintenance of the business of the insurer; (g) the payment in cash or otherwise to policy-holders, and other creditors in full satisfaction of their claim, — (i) in respect of their interest or rights in or against the insurer before the amalgamation; or (ii) where their interest or rights aforesaid in or against the insurer has or have been reduced under clause (f) in respect of such interest or rights as so reduced; (h) the allotment to the shareholders of the insurer for shares held by them therein before the amalgamation whether their interest in such shares has been reduced under clause (f) or not] of shares in the transferee insurer and where any shareholders claim payment in cash and not allotment of shares, or where it is not possible to allot shares to any shareholders, the payment in cash to those shareholders in full satisfaction of their claim — (i) in respect of their interest in shares in the insurer before the amalgamation; or (ii) where such interest has been reduced under clause (f) in respect of their interest in shares as so reduced; (i) the continuance of the services of all the employees of the insurer (excepting such of them as not being workmen within the meaning of the Industrial Disputes Act, 1947 (14 of 1947), are specifically mentioned in the scheme) in the transferee insurer at the same remuneration and on the same terms and conditions of service, which they were getting or, as the case may be, by which they were being governed, immediately before the date of the amalgamation: Provided that the scheme shall contain a provision that the transferee insurer shall pay or grant not later than the expiry of the period of three years, from the date of the amalgamation, to the said employees the same remuneration and the same terms and conditions of service as are applicable to the other employees of corresponding rank or status, of the transferee insurer subject to the qualifications and experience of the said employees being the same as or equivalent to those of such other employees of the transferee insurer: Provided further that if in any case any doubt or difference arises as to whether the qualification and experience of any of the said employees are the same as or equivalent to the qualifications and experience of the other employees of corresponding rank or status of the transferee insurer, the doubt or difference shall be referred to the Controller whose decision thereon shall be final; (j) notwithstanding anything contained in clause (i) where any of the employees of the insurer not being workmen within the meaning of the Industrial Disputes Act, 1947 (14 of 1947), are specifically mentioned in the scheme under clause (i) of where any employees of the insurer have by notice in writing given to the insurer or, as the case may be, the transferee insurer at any time before 1. Subs. by Act 41 of 1999, s. 30 and the First Schedule, for "Controller" (w.e.f. 19-4-2000). the expiry of one month next following the date on which the scheme is sanctioned by the Central Government, intimated their intention of not becoming employees of the transferee insurer, the payment to such employees of compensation, if any, to which they are entitled under the Industrial Disputes Act, 1947 (14 of 1947), and such pension, gratuity, provident fund, or other retirement benefits ordinarily admissible to them under the rules or authorisations of the insurer immediately before the date of the amalgamation; (k) any other terms and conditions for the amalgamation of the insurer; (l) such incidental, consequential and supplemental matters as are necessary to secure that the amalgamation shall be fully and effectively carried out. (3)(a) A copy of the scheme prepared by the[1] [Authority] shall be sent in draft to the insurer and also to the transferee insurer and any other insurer concerned in the amalgamation, for suggestions and objections, if any, within such period as the[1] [Authority] may specify for this purpose. (b) The[1] [Authority] may make such modifications, if any, in the draft scheme as he may consider necessary in the light of the suggestions and objections received from the insurer and also from the transferee insurer and any other insurer concerned in the amalgamation and from any shareholder, policyholder or other creditor of each of those insurers and the transferee insurer. 2[(4) The scheme shall thereafter be placed before the Central Government for its sanction and the Central Government may sanction the scheme without any modification or with such modifications as it may consider necessary, and the scheme as sanctioned by the Central Government shall come into force on such date as the Central Government may notify in this behalf in the Official Gazette: Provided that different dates may be specified for different provisions of the scheme. (4A) Every policyholder or shareholder or member of each of the insurers, before amalgamation, shall have the same interest in, or rights against the insurer resulting from amalgamation as he had in the company of which he was originally a policyholder or shareholder or member: Provided that where the interests or rights of any shareholder or member are less than his interest in, or rights against, the original insurer, he shall be entitled to compensation, which shall be assessed by the Authority in such manner as may be specified by the regulations. (4B) The compensation so assessed shall be paid to the shareholder or member by the insurance company resulting from such amalgamation. (4C) Any member or shareholder aggrieved by the assessment of compensation made by the Authority under sub-section (4A) may within thirty days from the publication of such assessment prefer an appeal to the Securities Appellate Tribunal.] (5) The sanction accorded by the Central Government under sub-section (4) shall be conclusive evidence that all the requirements of this section relating to amalgamation have been complied with and a copy of the sanctioned scheme certified in writing by an officer of the Central Government to be a true copy thereof shall, in all legal proceedings (whether in appeal or otherwise) be admitted as evidence to the same extent as the original scheme. (6) The[1] [Authority] may, in like manner, add to amend or vary any scheme made under this section. (7) On and from the date of the coming into operation of the scheme or any provision thereof, the scheme or such provision shall be binding on the insurer or, as the case may be, on the transferee insurer 1. Subs. by Act 41 of 1999, s. 30 and the First Schedule, for "Controller" (w.e.f. 19-4-2000). 2. Subs. by Act 5 of 2015, s 44, for sub-section (4) (w.e.f. 26-12-2014). and any other insurer concerned in the amalgamation and also on all the shareholders, policy-holders and other creditors and employees of each of those insurers and of transferee insurer, and on any other person having any right or liability in relation to any of those insurers or the transferee insurer. (8) On and from such date as may be specified by the Central Government in this behalf, the properties and assets of the insurer shall, by virtue of and to the extent provided in the scheme, stand transferred to, and vest in, and the liabilities of the insurer shall, by virtue of and to the extent provided in the scheme, stand transferred to and become the liabilities of the transferee insurer. (9) If any difficulty arises in giving effect to the provisions of the scheme, the Central Government may by order do anything not inconsistent with such provisions which appears to it necessary or expedient for the purpose of removing the difficulty. (10) Copies of every scheme made under this section and of every order made under sub-section (9) shall be laid before each House of Parliament, as soon as may be, after the scheme has been sanctioned by the Central Government, or as the case may be, the order has been made. (11) Nothing in this section shall be deemed to prevent the amalgamation with an insurer by a single scheme of several insurers. (12) The provisions of this section and of any scheme made under it shall have effect notwithstanding anything to the contrary contained in any other provisions of this Act or in any other law or any agreement, award or other instrument for the time being in force. (13) The provisions of section 37 shall not apply to an amalgamation given effect to under the provisions of this section.] ASSGNMENT OR TRANSFER OF POLICIES AND NOMINATIONS 1[38. Assignment and transfer of insurance policies. — (1) A transfer or assignment of a policy of insurance, wholly or in part, whether with or without consideration, may be made only by an endorsement upon the policy itself or by a separate instrument, signed in either case by the transferor or by the assignor or his duly authorised agent and attested by at least one witness, specifically setting forth the fact of transfer or assignment and the reasons thereof, the antecedents of the assignee and the terms on which the assignment is made. (2) An insurer may, accept the transfer or assignment, or decline to act upon any endorsement made under sub-section (1), where it has sufficient reason to believe that such transfer or assignment is not bona fide or is not in the interest of the policyholder or in public interest or is for the purpose of trading of insurance policy. (3) The insurer shall, before refusing to act upon the endorsement, record in writing the reasons for such refusal and communicate the same to the policyholder not later than thirty days from the date of the policyholder giving notice of such transfer or assignment. (4) Any person aggrieved by the decision of an insurer to decline to act upon such transfer or assignment may within a period of thirty days from the date of receipt of the communication from the insurer containing reasons for such refusal, prefer a claim to the Authority. (5) Subject to the provisions in sub-section (2), the transfer or assignment shall be complete and effectual upon the execution of such endorsement or instrument duly attested but except, where the transfer or assignment is in favour of the insurer, shall not be operative as against an insurer, and shall not confer upon the transferee or assignee, or his legal representative, any right to sue for the amount of such (6) The date on which the notice referred to in sub-section (5) is delivered to the insurer shall regulate the priority of all claims under a transfer or assignment as between persons interested in the policy; and where there is more than one instrument of transfer or assignment the priority of the claims under such instruments shall be governed by the order in which the notices referred to in sub-section (5) are delivered: Provided that if any dispute as to priority of payment arises as between assignees, the dispute shall be referred to the Authority. (7) Upon the receipt of the notice referred to in sub-section (5), the insurer shall record the fact of such transfer or assignment together with the date thereof and the name of the transferee or the assignee and shall, on the request of the person by whom the notice was given, or of the transferee or assignee, on payment of such fee as may be specified by the regulations, grant a written acknowledgement of the receipt of such notice; and any such acknowledgement shall be conclusive evidence against the insurer that he has duly received the notice to which such acknowledgement relates. (8) Subject to the terms and conditions of the transfer or assignment, the insurer shall, from the date of the receipt of the notice referred to in sub-section (5), recognise the transferee or assignee named in the notice as the absolute transferee or assignee entitled to benefit under the policy, and such person shall be subject to all liabilities and equities to which the transferor or assignor was subject at the date of the transfer or assignment and may institute any proceedings in relation to the policy, obtain a loan under the policy or surrender the policy without obtaining the consent of the transferor or assignor or making him a party to such proceedings. Explanation. — Except where the endorsement referred to in sub-section (1) expressly indicates that the assignment or transfer is conditional in terms of sub-section (10) hereunder, every assignment or transfer shall be deemed to be an absolute assignment or transfer and the assignee or transferee, as the case may be, shall be deemed to be the absolute assignee or transferee respectively. (9) Any rights and remedies of an assignee or transferee of a policy of life insurance under an assignment or transfer effected prior to the commencement of the Insurance Laws (Amendment) Act, 2015 (5 of 2015) shall not be affected by the provisions of this section. (10) Notwithstanding any law or custom having the force of law to the contrary, an assignment in favour of a person made upon the condition that — (a) the proceeds under the policy shall become payable to the policyholder or the nominee or nominees in the event of either the assignee or transferee predeceasing the insured; or (b) the insured surviving the term of the policy, shall be valid: Provided that a conditional assignee shall not be entitled to obtain a loan on the policy or surrender a policy. (11) In the case of the partial assignment or transfer of a policy of insurance under sub-section (1), the liability of the insurer shall be limited to the amount secured by partial assignment or transfer and such policyholder shall not be entitled to further assign or transfer the residual amount payable under the same policy.