The Insurance Act, 1938

 
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THE INSURANCE ACT, 1938 ACT NO. 4 OF 1938

[26th February, 1938.]

An Act to consolidate and amend the law relating to the business of insurance.

WHEREAS it is expedient to consolidate and amend the law relating to the business of insurance ; It is hereby enacted as follows:--

PART

PRELIMINARY

PART I

PRELIMINARY

1.

Short title, extent and commencement.

1. Short title, extent and commencement. (1) This Act may be called the Insurance Act, 1938.

1*[(2) It extends to the whole of India 2***.]

(3) It shall come into force on such date 3* as the Central Government may, by notification in the Official Gazette, appoint in this behalf.

2.

Definitions.

2. Definitions. In this Act, unless there is anything repugnant in the subject or context,--

(1) "actuary" means an actuary possessing such qualifications as may be prescribed ;

4*[(2) "policy-holder" includes a person to whom the whole of the interest of the policy-holder in the policy is assigned once and for all, but does not include an assignee thereof whose interest in the policy is defeasible or is for the time being subject to any condition ;]

5*[(3) "approved securities" means--

(i) Government securities and other securities charged on the revenues of the Central Government or of the Government of a 6*** State or guaranteed fully as regards principal and interest by the Central Government, or the Government of any 6* State ;

Extended to Goa, Daman and Diu with modifications, by Reg. 12 of 1962, s. 3 & Sch.

The Act comes into force in Pondicherry on 1.10.1963 vide Reg. 7 of 1963, s. 3 and Sch. I.

Extended to and brought into force in Dadra and Nagar Haveli (w.e.f.

1.7.65) by Reg. 6 of 1963, s. 2 & Sch. I.

Extended to Laccadive, Minicoy and Amindivi Islands (w.e.f.

1.10.1967): vide Reg. 8 of 1965, s. 3 & Sch.

Extended to and brought into force in the State of Sikkim (w.e.f.

1.7.1975) vide Notifn. No. S.O. 274(E), dated 24.6.1975.

[See footnote 1 for this section]

(ii) debentures or other securities for money issued under the authority of any Central Act or Act of a State Legislature by or on behalf of a port trust or municipal corporation or city improvement trust in any presidency-town ;

(iii) shares of a corporation established by law and guaranteed fully by the Central Government or the Government of a 1* State as to the repayment of the principal and the payment of dividend ;

(iv) securities issued or guaranteed fully as regards principal and interest by the Government of any Part B State and specified as approved securities for the purposes of this Act by the Central Government by notification in the Official Gazette ; and (v) subject to the limitations contained in the proviso hereto, securities guaranteed fully as regards principal and interest by a Provincial Government in Pakistan or charged on the revenues of any part of that Dominion, and debentures or other securities for money issued by or on behalf of the trustees of the port of Karachi :

Provided that securities or debentures specified in item (v) shall be recognished as approved securities only for such purposes and for such period and subject to such conditions as may be prescribed ;]

2*[Explanation.-- In sub-clauses (i) and (iii), "Government of a State" in relation to any period before the 1st November, 1956, means the Government of a Part A State.]

3*[(4) "auditor" means a person qualified under the Chartered Accountants Act, 1949 (38 of 1949), to act as an auditor of companies;]

4*[(4A) "banking company" and "company" shall have the meanings respectively assigned to them in clauses (c)

and (d) of sub-section (1) of section 5 of the Banking Companies Act, 1949 (10 of 1949)5*;]

(5) "certified" in relation to any copy or translation of a document required to be furnished by or on behalf of

[See footnote 2 for this section]

1*[an insurer or a provident society as defined in Part III] means certified by a principal officer of 2*[such insurer or provident society] to be a true copy or a correct translation, as the case may be;

3*[(5A) "chief agent" means a person who, not being a salaried employee of an insurer, in consideration of any commission--

(i) performs any administrative and organising functions for the insurer, and (ii) procures life insurance business for the insurer by employing or causing to be employed insurance agents on behalf of the insurer;

(5B) "Controller of Insurance" or "Controller" means the officer appointed by the Central Government to perform the duties of the Controller of Insurance under this Act;]

(6) "Court" means the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction;

3*[(6A) "fire insurance business" means the business of effecting, otherwise than incidentally to some other class of insurance business, contracts of insurance against loss by or incidental to fire or other occurrence customarily included among the risks insured against in fire insurance policies;

(6B) "general insurance business" means fire, marine or miscellaneous insurance business, whether carried on singly or in combination with one or more of them;]

4*[(7) "Government security" means a Government security as defined in the Public Debt Act, 1944 (18 of 1944);]

(8) "insurance company" means any insurer being a company, association or partnership which may be wound up under the Indian Companies Act, 1913 (7 of 1913) 5*, or to which the Indian Partnership Act, 1932 (9 of 1932), applies;

[See footnote 3 for this section]

(9) "insurer" means--

(a) any individual or unincorporated body of individuals or body corporate incorporated under the law of any country 1*[other than India, 2***] carrying on insurance business (not being a person specified in sub-clause (c) of this clause) which--

(i) carries on that business in 3*[India], or (ii) has his or its principal place of business or is domiciled in 3*[India], 4*[or (iii) with the object of obtaining insurance business, employs a representative, or maintains a place of business, in 3*[India];]

(b) any body corporate (not being a person specified in sub-clause (c) of this clause) carrying on the business of insurance, which is a body corporate incorporated under any law for the time being in force in 3*[India]; or stands to any such body corporate in the relation of a subsidiary company within the meaning of the Indian Companies Act, 1913 (7 of 1913), as defined by sub-section (2) of section 2 of that Act, and (c) any person who in 3*[India] has a standing contract with underwriters who are members of the Society of Lloyd's whereby such person is authorized within the terms of such contract to issue protection notes, cover notes, or other documents granting insurance cover to others on behalf of the under-

writers, 5*[but does not include a principal agent, chief agent, special agent, or an insurance agent] or a provident society 6*[as defined in Part III];

(10) "insurance agent" means an insurance agent licensed under section 42 7*** who receives or agrees to receive payment by way of commission or other remuneration in consideration of his soliciting or procuring

[See footnote 4 for this section]

insurance business 1*[including business relating to the continuance, renewal or revival of policies of insurance];

1*[(10A) "investment company" means a company whose principal business is the acquisition of shares, stocks, debentures or other securities ;]

2*[(11) "life insurance business" means the business of effecting contracts of insurance upon human life, including any contract whereby the payment of money is assured on death (except death by accident only) or the happening of any contingency dependent on human life, and any contract which is subject to payment of premiums for a term dependent on human life and shall be deemed to include--

(a) the granting of disability and double or triple indemnity accident benefits, if so provided in the contract of insurance, (b) the granting of annuities upon human life ; and (c) the granting of superannuation allowances and annuities payable out of any fund applicable solely to the relief and maintenance of persons engaged or who have been engaged in any particular profession, trade or employment or of the dependents of such persons ;]

(12) "manager" and "officer" have the meanings assigned to those expressions in clauses (9) and (11) respectively of section 2 of the Indian Companies Act, 1913 (7 of 1913);

(13) "managing agent" means a person, firm or company entitled to the management of the whole affairs of a company by virtue of an agreement with the company, and under the control and direction of the directors except to the extent, if any, otherwise provided for in the agreement, and includes any person, firm or company occupying such position by whatever name called.

Explanation.--If a person occupying the position of managing agent calls himself manager or managing director, he shall nevertheless be regarded as managing agent for the purposes of section 32 of this Act ;

3*[(13A) "marine insurance business" means the business of effecting contracts of insurance upon vessels of any description, including cargoes, freights and other interests

[See footnote 5 for this section]

which may be legally insured, in or in relation to such vessels, cargoes and freights, goods, wares, merchandise and property of whatever description insured for any transit by land or water, or both, and whether or not including warehouse risks or similar risks in addition or as incidental to such transit, and includes any other risks customarily included among the risks insured against in marine insurance policies ;

(13B) "miscellaneous insurance business" means the business of effecting contracts of insurance which is not principally or wholly of any kind or kinds included in clauses (6A), (11) and (13A) ;]

(14) "prescribed" means prescribed by rules made under section 114 ; and 1* * * * *

2*[(15) "principal agent" means a person who, not being a salaried employee of an insurer, in consideration of any commission,--...

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