Section 37 of The General Insurance Business (Nationalisation) Act, 1972
No act or proceeding of the Corporation or of an acquiring company shall be called in question merely on the ground of the existence of any vacancy in, or defect in the constitution of, the Corporation or the company.
Summary
- The legal actions, decisions, or proceedings of the General Insurance Corporation cannot be challenged or invalidated just because there is an empty seat on its board.
- The same protection applies to the acquiring companies (the insurance companies taken over by the government).
- Furthermore, if there is a legal or technical defect in how the Corporation or the company was constituted or put together, their daily acts and proceedings remain legally valid.
Practical examples
FAQ
1. If the Corporation is missing its chairman, are its new rules illegal?
No. The law specifically protects the proceedings of the Corporation from being invalidated merely because there is a vacancy.
2. Can I refuse to pay my insurance premium by arguing the insurance company's board was formed incorrectly?
No. Any defect in the constitution of the company does not make its business acts or contracts invalid.
Test yourself
Q1.Under Section 37 of The General Insurance Business (Nationalisation) Act, 1972, what happens if an acquiring company makes a major policy decision while two seats on its board of management are currently vacant?
Q2.Under Section 37 of The General Insurance Business (Nationalisation) Act, 1972, besides a vacancy, what other specific issue is legally prevented from invalidating the acts of the Corporation?
Q3.Under Section 37 of The General Insurance Business (Nationalisation) Act, 1972, which two entities are explicitly protected by this provision regarding the validity of their proceedings?
Q4.Under Section 37 of The General Insurance Business (Nationalisation) Act, 1972, if a policyholder discovers a procedural flaw in how the acquiring company was formed, can they use this flaw to cancel their insurance contract?