Full Judgment Text
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PETITIONER:
THE VANGUARD FIRE AND GENERALINSURANCE CO. LTD., MADRAS
Vs.
RESPONDENT:
M/S. FRASER AND ROSS AND ANOTHER.
DATE OF JUDGMENT:
04/05/1960
BENCH:
WANCHOO, K.N.
BENCH:
WANCHOO, K.N.
GAJENDRAGADKAR, P.B.
GUPTA, K.C. DAS
CITATION:
1960 AIR 971
CITATOR INFO :
RF 1973 SC 602 (39,40)
F 1990 SC 808 (18)
RF 1991 SC1289 (16)
ACT:
Insurance-Company closing insurance business-Government’s
order directing investigation of company’s affairs-Legality"
Insurer ", meaning of-Insurer’s liability after closing of
business --Extent-" Liabilities not satisfied and not
otherwise provided for "General Clauses Act, 1897 (10 of
1897), S. 13-lnsurancc Act, 1938 (4 Of 1938), SS. 2(9), 2D,
7, 9, 33.
HEADNOTE:
The appellant company had been carrying on various classes
of insurance business other than life insurance after its
incorporation in 1941, but in 1956 the shareholders of the
company passed a resolution by which all its insurance
business was to be closed. Accordingly, on application made
by the company to the Controller of Insurance, the
certificate granted to it for carrying on insurance business
was cancelled with effect from July 1, 1957. in the
meantime, complaints against the company were being received
by the Government of India, who, thereupon, passed an order
on July 17, 1957, under s. 33 of the Insurance Act, 1938,
directing the Controller of Insurance to investigate the
affairs of the company and to submit a report. The company
challenged
(1)(1923) L.R. 51 I.A. 129. (2) I.L.R. [1955] Nag. 744.
858
the legality of the order on the grounds, (1) that as all
its insurance business had been closed the Central
Government had no jurisdiction to pass an order under s. 33
of the Act, which only enables the investigation of the
affairs of an insurer who, as defined in s. 2(9), is one who
is actually carrying on the business of insurance, (2) that
such an order could not be sustained under s. 2D of the Act
as that section was applicable only to those cases where an
insurer was carrying on different classes of insurance
business and had closed some of them but not all of them,
(3) that even if such order could be passed under s. 33 read
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with s.2D it could not be done in the present case as the
company’s liabilities did not remain unsatisfied or not
otherwise provided for, and (4) that, in any case, the order
in question was invalid because it did not show on the face
of it that the Central Government was prima facie satisfied
that the liabilities had remained unsatisfied or not
otherwise provided for:
Held, (1) that the word " insurer " in s. 33 of the
Insurance Act, 1938, refers not only to a person who is
actually carrying on the business of insurance but also to
one who has subsequently closed it.
(2) that in s. 2D of the Act an " insurer " means a person
who was carrying on the business of insurance but has closed
it.
(3)that the word " class " in S. 2D though used in the
singular includes the plural also and the section is
applicable to the case where an insurer who was carrying on
different classes of insurance business closes all of them.
(4) that the expression " not otherwise provided for " in
s. 2D refers to liabilities in the nature of claims
against the insurer whether the insurer admits them or not
and whether a decree has been finally passed in respect of
them or not.
(5) that under s. 2D the satisfaction or " provision other-
wise " for the liabilities of insurance business which is
closed, does not refer to the deposit made under s. 7 and
has to be over and above that deposit.
(6) that though an order under s. 33 read with S. 2D of the
Act should show on the face of it that the Central
Government was prima.’ facie satisfied that the liabilities
had remained unsatisfied or not otherwise provided for, the
fact that the order does not on the face of it show that the
Central Government considered this aspect of the matter
would not make it bad, if in subsequent ,proceedings taken
to challenge it, it is shown that there were materials
before the Central Government which would justify its coming
to the prima facie conclusion that the liabilities had not
been satisfied or otherwise provided for, and therefore an
investigation into the affairs was called for.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 21 of 1960.
Appeal from the judgment and order dated January 16, 1959,
of the Madras High Court in Writ Appeal No. 67 of 1958,
arising out of the judgment
and order dated July 15, 1958, of the said High Court in
Writ Petn. No. 922 of 1957.
C. B. Aggarwala, S. N. Andley, J. B. Dadachanji and
Rameshwar Nath, for the appellant.
R. Ganapathy Iyer, H. J. Umrigar, R. H. Dhebar and T. M.
Sen, for respondent No. 2.
1960. May 4. The Judgment of the Court was delivered by
WANCHOO, J.-This is an appeal on a certificate granted by
the Madras High Court. The appellant Company had -been
carrying on various classes of insurance business other than
life insurance after its incorporation in September, 1941.
On October 15, 1956, an extraordinary general meeting of the
shareholders of the Company passed a resolution by which all
its insurance business was to cease forthwith and no further
policies of insurance of any kind were to be issued
thereafter. It was also resolved that no application should
be made for renewal of the certificate granted under s. 3 of
the Insurance Act, No. IV of 1938 (hereinafter called the
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Act), and that thence forward the Company should only carry
on the business of money-lending as a loan-Company and also
to do investment business. In consequence of these resolu-
tions, the Company informed the Controller of Insurance in
December, 1956, that it was not applying for renewal of its
registration for carrying on the business of insurance. In
May, 1957, the Controller wrote to the Company that its
certificates for carrying on insurance business would be
deemed to be cancelled from July 1, 1957, and the
cancellation was notified in the Gazette of India.
It appears that the Government of India had been receiving
complaints against the Company. Consequently on July 17,
1957, the Government of India passed an order under s. 33 of
the Act directing the Controller of Insurance to investigate
the affairs of the Company and to submit a report.
Thereupon the Controller appointed Messrs. Fraser and Ross
to act as auditors to assist him in the investigation. The
Company was informed of this order in September 1957.
Thereupon it wrote to the Controller that no order under s.
33 of the Act could be passed
860
against it, as it had closed its business of insurance and
the order in question was without jurisdiction. The
Controller sent a reply to this communication and pointed to
the provisions of s. 2D of the Act in justification of the
order. Thereupon the Company made an application under Art.
226 of the Constitution in the Madras High Court. Two main
contentions were raised by it in the petition. In the first
place it was submitted that the Company having closed all
its insurance business no order could be passed against it
under s. 33. as that section only applied to companies
actually carrying on the business of insurance and that in
any case no such order could be passed even with the help of
s. 2D of the Act. In the second place it was contended that
even if such an order could be passed under s. 33 read with
s. 2D of the Act, it could not be done in the present case,
as the Company’s liabilities in respect of its insurance
business did not remain unsatisfied or not otherwise
provided for. Messrs. Fraser and Ross as well as the
Controller were made parties to the petition. The petition
was opposed on behalf of the Controller, and his contention
was that the case was clearly covered by s. 2D of the Act
and therefore the order under s. 33 was validly passed in
this case and that it had not been shown that the
liabilities had been satisfied or had been
otherwise provided for.
The learned Single Judge held that an order under s. 33 read
with s. 2D could be passed against the Company and that it
had not been shown that the Company’s liabilities had been
satisfied or otherwise provided for. He therefore dismissed
the writ petition. This was followed by an appeal by the
Company, which was dismissed. The Division Bench sub-
stantially agreed with the view taken by the learned Single
Judge. Thereupon the Company applied for a certificate to
enable it to appeal to this Court and obtained it; and that
is how the matter has come up before us.-
Mr. Aggarwala appearing for the Company has urged the same
two points before us. The Act was passed in 1938 to control
persons carrying on the business of insurance. Section 2(9)
thereof defines an ’ insurer’ inter alia as weaning any body
corporate
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(not being a person specified in sub-cl. (c) of this clause)
carrying on the business of insurance, which is a body
corporate incorporated under any law for the time being in
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force in India or stands to any such body corporate in the
relation of a subsidiary company within the meaning of the
Indian Companies Act, 1913, as defined by sub-s. (2) of s. 2
of that Act. Section 3 provides for registration of any
person carrying on the business of insurance and no such
business can be carried on unless a certificate of
registration for the particular class of insurance business
has been obtained from the Controller. Section 3(4) gives
power to the Controller to cancel the certificate for
reasons specified therein and s. 3(5B) lays down that when a
registration is cancelled the insurer shall not after the
cancellation has taken effect, enter into new contracts of
insurance, but all rights and liabilities in respect of
contracts of insurance entered into by him before such
cancellation takes effect shall, subject to the provisions
of sub-s. (5D), continue as if the cancellation had not
taken place. In order to safeguard the interest of policy-
holders, s. 7 provides for deposits by the insurer for
various classes of his business. Section 8 lays down that
any deposit made under s. 7 shall be deemed to be part of
the assets of the insurer but shall not be susceptible of
any assignment or charge; nor shall it be available for the
discharge of any liability other than liabilities arising
out of policies of insurance issued by the insurer so long
as any such liability remains undischarged ; nor shall it be
liable to attachment in execution of any decree except a
decree obtained by a policy-holder of the insurer in respect
of a debt due upon a policy which debt the policy-holder has
failed to realise in any other way. Section 9(1) lays down
that where an insurer has ceased to carry on in India any
class of insurance business in respect of which a deposit
has been made under s. 7 and his liabilities in India in
respect of business of that class have been satisfied or are
other. wise provided for, the court may on the application
of the insurer order the return to the insurer of so much of
the deposit as does not relate to the classes of insurance.,
if any, which he continues to carry on. Under
112
862
s. 10 an insurer who carries on business of more than one
kind is required to keep a separate account of all receipts
and payments in respect of each such class of insurance
business. Section 33(1) with which we are directly
concerned, is in these terms:-
" The Central Government may at any time by order in writing
direct the controller or any other person specified in the
order to investigate the affairs of any insurer and to
report to the Central Government on any investigation made
by him:
Provided that the controller or the other person may,
wherever necessary, employ an auditor or actuary or both for
the purpose of assisting him in any investigation under this
section."
Section 2D is in these terms:
" Every insurer shall be subject to all the provisions of
this Act in relation to any class of insurance business so
long as his liabilities in India in respect of business of
that class remain unsatisfied and not otherwise provided
for."
The contention of Mr. Aggarwala is that s. 33 and s. 2D
both refer to an insurer which is defined in s. 2(9) as a
person carrying on the business of insurance. He,
therefore, contends that as soon as the insurer who was
carrying on the business of insurance closes it down
completely be no longer remains an insurer and the
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provisions of the Act do not apply to him. Therefore,
according to him, when s. 33 provides for an order of
investigation by the Central Government such an order can
only be made in respect of a, person who is actually
carrying on the business of insurance and is thus an insurer
and cannot be made against a person who was an insurer but
has closed his business. Further, according to Mr.
Aggarwala, s. 2D also speaks of an insurer and makes him
subject to all the provisions of the Act with respect to any
class of insurance business so long as his liabilities in
respect of that class remain unsatisfied or not other. wise
provided for and therefore s. 2D would only apply to those
cases where insurance business is being carried on, though
some class of insurance business might have been closed.
The contention therefore is that reading ss. 33 and 2D
together, no order under
863
s. 33 can be made in case of an insurer who has completely
closed his business of insurance.
The main basis of this contention is the definition of the
word "insurer" in s. 2(9) of the Act. It is pointed out
that definition begins with the words " insurer means" and
is therefore exhaustive. It may be accepted that generally
the word " insurer" has been defined for the purposes of the
Act to mean a person or body corporate, etc., which is
actually carrying on the business of insurance, i.e., the
business of effecting contracts of insurance of whatever
kind they might be. But s. 2 begins with the words " in
this Act, unless there is anything repugnant in the subject
or context " and then come the various definition clauses of
which (9) is one. It is well settled that all statutory
definitions or abbreviations must be read subject to the
qualification variously expressed in the definition clauses
which created them and it may be that even where the
definition is exhaustive inasmuch as the word defined is
said to mean a certain thing, it is possible for the word to
have a somewhat different meaning in different sections of
the Act depending upon the subject or the context. That is
why all definitions in statutes generally begin with the
qualifying words similar to the words used in the present
case, namely, unless there is anything repugnant in the
subject or context. Therefore in finding out the meaning of
the word " insurer " in various sections of the Act, the
meaning to be ordinarily given to it is that given in the
definition clause. But this is not inflexible and there may
be sections in the Act where the meaning may have to be
departed from on account of the subject or context in which
the word has been used and that will be giving effect to the
opening sentence in the definition section, namely, unless
there is anything repugnant in the subject or context. In
view of this qualification, the court has not only to look
at the words but also to look at the context, the
collocation and the object of such words relating to such
matter and interpret the meaning intended to be conveyed by
the use of the words under the circumstances. Therefore,
though ordinarily the word " insurer " as used in the Act
would mean a
864
person or body corporate actually carrying on the business
of insurance it may be that in certain sections the word may
have a somewhat different meaning.
A perusal of a few sections of the Act will illustrate this
and immediately show that the word " insurer " has been used
in some sections to mean not merely a person actually
carrying on the business of insurance but also a person who
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intends to carry on the business of insurance but has not
actually started it and also a person who was carrying on
the business of insurance but has ceased to do so. For
example, s. 3(2) which deals with an application for
registration which naturally has to be made before the
business of insurance actually commences, lays down in cl.
(b) that the application shall be accompanied by the name,
address and the occupation, if any, of the directors where
the insurer is a company incorporated under the Indian
Companies Act. Here the word ,insurer" has been used to
indicate the company which is not actually carrying on the
business of insurance but is intending to do so and is
applying for registration. Further in s. 3(2) (e) which
also deals with an application for registration, it is
provided that an insurer having his principal place of
business or domicile, outside India shall send along with
the application a statement verified by an affidavit of the
principal officer of the insurer setting forth various
requirements. Here again, the word " insurer " has been
used for an intending insurer, for the business of insurance
would only begin after the registration certificate is
granted on the application made under s. 3(2). Then in s. 9
it is provided that, where an insurer has ceased to carry on
business, the court may on the application of the insurer
order the return to him of the deposit made under s. 7.
This. shows that though the, insurer is not actually
carrying on the business of insurance he is still termed an
insurer and on his application the deposit may be refunded
to him. Again s. 55 which deals with a situation arising
out, of the winding-up of an insurance company or the
insolvency of any other insurer, provides that the value of
the assets and liabilities of the insurer shall be
ascertained in such manner and upon such basis as the
liquidators
865
or the receiver in insolvency thinks fit. The word "
insurer" has thus been used in this section for a person or
body corporate, etc., which is not actually carrying on the
business of insurance and has gone into liquidation or’ has
become insolvent. Therefore, though the ordinary meaning to
be given to the word "insurer " is as given in the
definition clause (s. 2(9)) and refers to a person or body
corporate, etc., carrying on the business of insurance, the
word may also refer in the context of certain provisions of
the Act to any intending insurer or quondam insurer. The
contention therefore that because the word " insurer" has
been used in s. 33 or s. 2D those sections can only apply to
insurers who are actually carrying on business cannot
necessarily succeed, and we have to see whether in the
context of these provisions an insurer will also include a
person who was an insurer but has closed his business.
As we have said already the Act was passed to control the
business of insurance in the interest of policy-holders and
the general public and s. 33 is obviously a provision by
which the Central Government can order investigation into
the affairs of any insurer in order to carry out the policy
of the Act. Could it be said in the circumstances that s.
33 only applies to insurers actually carrying on business
and not to insurers who have closed their business? If the
policy of the Act is to be carried out and the policy-
holders and the general public are to be protected, the need
for making investigation into the affairs of an insurer who
has closed his business is greater, for he may have done so
dishonestly. We are therefore of opinion that the word "
insurer" as used in s. 33 not only refers to a person who is
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actually carrying on business but in the context of that
section and taking into account the policy of the Act and
the, purposes for which the control envisaged by the Act was
imposed on insurers also refers to insurers who were
carrying on the business of insurance but have closed it.
Further if there were any doubt whether the word " insurer "
in s. 33 refers to those insurers also who had closed their
business that doubt in our opinion is completely dispelled
by s. 2D. That section
866
provides that every insurer shall be subject to all the
provisions of the Act in relation to any class of insurance
business so long as his liability in India in respect of
business of that class remains unsatisfied or not otherwise
provided for. Obviously this section applies to those
insurers who have closed their business. It was not
necessary to enact this section if the word ,insurer" here
also meant a person actually carrying on the business of
insurance, for the provisions of the Act apply to such a
person proportion vigor. Therefore, when the word " insurer
" is used in s. 2D it must mean a person who was carrying on
the business of insurance but has closed it. If that is so,
s. 33, which provides for investigation, would apply to such
an insurer who has closed his business, by virtue of s. 2D.
Mr. Aggarwala next contends that s. 2D would only apply to
those cases where an insurer was carrying on different
classes of insurance business and had closed some of them
but not all of them. He contends that the section provides
that the insurer shall remain subject to the provisions of
the Act in relation to any class of insurance business so
long as his liabilities with respect to that class of
business remain unsatisfied or not otherwise provided for.
This, according to him, contemplates a closure of only some
out of many classes of business of insurance and not of all.
We see no reason however to limit the words used in this
section only to a case where out of many classes of
business, some are closed and others are being carried on.
Under s. 13 of the General Clauses Act, No. X of 1897, in
all Central Acts and Regulations, unless there is anything
repugnant in the subject or context, words in the singular
shall include the plural and vice versa. Though therefore S.
2D- speaks of any class of insurance business in the
singular it, includes the plural also and would refer to all
classes of insurance business. Mr. Aggarwala does not
contend that where, for example, four classes of business
are being carried on and three of them are closed and one is
continued, the section will not apply; but he contends that
at least one must continue and the section will not apply if
all are closed. We do not see why if the section
867
applies, even though the word "class" is in the singular, to
a case where three out of four classes are closed and one is
continued it should not apply to a case where all four
classes are closed. We see no repugnancy in the context in
holding that if all classes of business are closed the
insurer shall be subject to all the provisions of the Act so
long as his liabilities in India in respect of any business
of all classes remain unsatisfied or not otherwise provided
for. Therefore on a plain reading of, s. 2D there can be no
doubt that an insurer who has closed all classes of his
insurance business remains subject to all the provisions of
the Act in relation to such classes so long as his
liabilities in India remain unsatisfied or not otherwise
provided for. Therefore s. 33 will certainly apply to a
case where all classes of insurance business have been
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closed so long as the liabilities remain unsatisfied or not
otherwise provided for. The first contention of the
appellant therefore that no investigation can be ordered
under s. 33 in its case because it has closed all classes of
its insurance business fails.
Turning now to the second contention, the argument on behalf
of the appellant is three-fold. In the first place it is
urged that an order can only be made under s. 33 read with
s. 2D when the Central Government is satisfied that the
liabilities have not been satisfied or otherwise provided
for, and that the order should show on the face of it that
the Central Government had considered this aspect of the
matter and had come to the conclusion that the liabilities
remained unsatisfied or not otherwise provided for. Further
there is nothing in the present order to show that the
Central Government ever considered this aspect of the matter
and was satisfied that the liabilities of the appellant
Company remained unsatisfied or not otherwise provided for.
There is no doubt that the order is utterly silent on this
point and it was only in his letter of October 15, 1957,
that the Assistant Controller pointed out s. 2D of the Act
and referred to this aspect of the matter. It seems to us
only just and proper that when an order is being passed
under s. 33 read with s. 2D of the Act it should show on the
face of it that the
868
Central Government was prima facie satisfied that the
liabilities had remained unsatisfied or not otherwise
provided for it is only when the liabilities have not been
satisfied or otherwise provided for that an order under s.
33 read with s. 2D would be justified in the case of an
insurer who has closed his business. We use the word "
prima facie " advisedly, for it seems to have been suggested
in the High Court that no order could be passed under s. 33
unless it was proved to the hilt that there were liabilities
which remained unsatisfied or otherwise unprovided for. It
is obvious that such proof would only be available after
investigation in to the affairs of the insurer. Therefore
in order that s. 2D may be workable, all that is required
under it is that the Central Government should be satisfied
after such prima facie inquiry as it considers necessary
that there are reasons to believe that the liabilities of
the insurer who has closed his business remain unsatisfied
or not otherwise provided for and in coming to this prima
facie conclusion the Central Government may make enquiry
from the insurer with respect to complaints that it may have
received against him. But the fact that the order does not
on the face of it show that the Central Government
considered this aspect of the matter would not make it bad,
if in subsequent proceedings taken to challenge it is shown
that there were materials before the Central Government
which would justify its coming to the prima facie conclusion
that the liabilities had Dot been satisfied or otherwise
provided for, and therefore an investigation into the
affairs was called for. In the present case we find from
the materials on the record that there were complaints
before the Central Government from those who had claims
against the company. Those complaints were apparently
referred to the Company and it does not appear that the
Company satisfied the Central Government that the complaints
were unjustified. It was in this situation that the order
for investigation was made in July, 1957, after the Company
had closed its insurance business. Further on the materials
available on the record it does appear that even now there
are claims pending to the tune of about one lac of rupees
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against the Company. So it cannot
869
be said that there were no liabilities of the Company
outstanding which were not satisfied or otherwise provided
for when the order was made in July, 1957. In the
circumstances the order cannot be held to be bad because it
does not show on the face of it that there were liabilities
which had remained unsatisfied or not otherwise provided
for.
In the second place it is urged that there can be no
question of satisfying or otherwise providing for
liabilities unless the liabilities are ascertained and
either admitted or proved. In other words the argument is
that it is only those liabilities which are admitted by the
insurer or which have been decreed against him and the
decrees have become final which can be taken into account in
deciding whether the liabilities have remained unsatisfied
or not otherwise provided for. It is urged that only those
liabilities which are ascertained and either undisputed or
proved can be satisfied and that the same applies to their
being otherwise provided for. It is true that only those
liabilities, which are ascertained and either admitted or
proved, can be satisfied; but it does not follow that "
provision otherwise " must also be only of liabilities which
are ascertained and either admitted or proved. If that were
go a dishonest insurer who closes his business could always
get out of the provisions of s. 33 read with s. 2D by
repudiating all claims made against him and then saying that
there are no liabilities which remained unsatisfied or
otherwise ‘unprovided for. There can be no doubt,
therefore, if these provisions have to serve the purpose for
which they were enacted, (namely, the protection of the
interest of the policy-holders and the general public), the
words ’,not otherwise provided for" in s. 2D must refer to
liabilities in the nature of claims against the insurer
whether the insurer admits them or not and whether a decree
has been finally passed in respect of them or not. The
intention of making this provision in s. 2D is to ensure
that probable claims arising out of the insurance business
that is closed are provided for before the insurer who has
closed his business can say that he is not governed by all
the provisions of the Act. There can be no doubt,
therefore,
113
870
that when " provision otherwise " has to be made it must be
with respect to probable claims also that are likely to
arise out of the insurance business which has been closed.
In the present case even the Company admits that there are
probable claims to the tune of about rupees one lac still
pending and in the circumstances until they are satisfied or
it is shown that they have been provided for otherwise, all
the provisions of the Act, including s. 33, will apply to
the Company.
The last argument in support of the second contention is
that the liabilities have been otherwise provided for. It
is said that the Company deposited Rs. 3,94,000 as security
under s. 7 of the Act, which is still available to pay off
the liabilities of the Company and therefore when such
liabilities do not appear to exceed that amount they have
otherwise been provided for. The question thus raised is
whether the Company is entitled to take into account the
security deposit under s. 7 in order to show that the
liabilities have been otherwise provided for. The
contention on behalf of the Controller is that when the Act
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envisages " provision otherwise ", this provision has to be
over and above the security deposit made by the Company
under s. 7. It appears from s. 8 that this deposit is
available for the discharge of liabilities arising out of
policies of insurance issued by the insurer so long as any
such liability remains unsatisfied. But even if a decree
has been obtained by a policy-holder on the basis of a
liability under the policy he is not entitled to attach any
part of this deposit until he shows that he has failed to
realise the decree in any other way. Further it appears
that s. 8 only contemplates policy-holders holding a decree
attaching part of the security deposit in case they fail to
realise their debt in any other way ; it does not
contemplate, for example, third parties who have decrees
against an insurer, like the Company (which in its motor
insurance business indemnifies the policy-holders against
third party risk up to a certain extent), doing so. Such
third parties cannot under any circumstances attach any part
of the deposit, for s. 8 only permits its attachment in the
last resort by a policy-holder of the
871
insurer in respect of a debt due upon a policy. But under
s. 2D the decree of a third party in such a case would be
the liability of the insurer in respect of his motor
insurance business which could not be realised by attachment
of any part of the deposit under s. 7. Besides, even with
respect to decrees of policy-holders the deposit could only
be attached when all other ways of realising the money have
failed. In these circumstances it can hardly be said that
the fact that this deposit is there is itself a " provision
otherwise " to meet the liabilities of the insurer. The
policy-holder cannot attach this deposit unless he first
exhausts all other means. Even if be has got a decree and
even if the insurer admits his claim and wants to pay it, he
cannot do so out of the money in deposit under’s. 7. As for
third parties who may have decrees against the insurer, they
can never attach this deposit in view of the provisions of
s. 8. It could not be the intention of the legislature when
it was in effect exempting the insurer from all the
provisions of the Act on his liabilities being otherwise
provided for that such provision should include the security
deposit under s. 7, when it has made it so difficult for a
policy-holder to get his debt satisfied from that deposit
and when it is clear that a third party could not in any way
attach the deposit. In these circumstances we are of
opinion that when s. 2D provides that the insurer shall be
subject to all the provisions of the Act so long as his
liabilities in India in respect of the business which is
closed remain unsatisfied or not otherwise provided for, the
satisfaction or " provision otherwise " does not refer to
the deposit under s. 7 and has to be over and above that
deposit. It is true that s. 9 provides that the insurer can
take back the deposit after satisfying the court that he has
satisfied or otherwise provided for his liabilities. But
this " provision otherwise " for the purposes of s. 9 must
obviously be other than the deposit itself. Further when
the insurer wants to take back his deposit on making "
provision otherwise " he will have to satisfy the court that
the " provision otherwise " has been fully made and the
court will be in a position to investigate into the matter.
This, however, does not mean that if the insurer does
872
not want to take advantage of s. 9 of the Act he can say
without submitting to the terms of that section that he has
made " provision otherwise ", because the deposit which is
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made under s. 7 is more than all his liabilities of the
insurance business that he has closed. It is urged that it
is hard, for example, on an insurer who has a large deposit
and whose liabilities are small that he should not be able
to fall back on his deposit for the purposes of s. 2D. We
do not, however, see any hardship in a case of this kind,
for if it is a fact that the deposit of the insurer is large
and his liabilities are small he can always take advantage
of s. 9 of the Act and submit to an investigation by the
court and take back his deposit after depositing the small
sum required to meet his liabilities. We are, therefore, of
opinion that when s. 2D speaks of satisfaction or "
provision otherwise " for the liabilities of insurance
business which is closed it contemplates such satisfaction
or " provision otherwise" over and above the deposit made
under s. 7. It is not in dispute in this case that there are
some liabilities still pending; it is also not in dispute
that they are not satisfied and no provision has been made
otherwise for them irrespective of the security deposit.
This also appears to have been the position when the order
was made in July, 1957. In the circumstances the order is
good and cannot be called in question by the Company.
The appeal therefore fails and is hereby dismissed with
costs.
Appeal dismissed.
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