Section 9 of The Life Insurance Corporation Act, 1956
- (1)Unless otherwise expressly provided by or under this Act, all contracts, agreements and other instruments of whatever nature subsisting or having effect immediately before the appointed day and to which an insurer whose controlled business has been transferred to and vested in the Corporation is a party or which are in favour of such insurer shall in so far as they relate to the controlled business of the insurer be of as full force and affect against or in favour of the Corporation, as the case may be, and may be enforced or acted upon as fully and effectually as if, instead of the insurer, the Corporation had been a party thereto or as if they had been entered into or issued in favour of the Corporation.
- (2)If on the appointed day any suit, appeal or other legal proceeding of whatever nature is pending by or against an insurer, then, in so far as it relates to his controlled business, it shall not abate, be discontinued or be in any way prejudicially affected by reason of the transfer to the Corporation of the business of the insurer or anything done under this Act, but the suit, appeal or other proceeding may be continued, prosecuted and enforced by or against the Corporation.
Summary
- All contracts, agreements, and other instruments relating to the controlled business that were active right before the appointed day continue in full force.
- The Life Insurance Corporation of India replaces the original insurer as a party to these contracts, meaning they can be enforced by or against the Corporation directly.
- Any pending lawsuit, appeal, or legal proceeding relating to the controlled business is not affected, stopped, or discontinued by the business transfer.
- These ongoing legal proceedings can be continued, prosecuted, and completed by or against the Life Insurance Corporation of India as if it had always been the party involved.
Practical examples
FAQ
1. What happens to a life insurance policy contract signed with an existing company before the appointed day?
The contract remains in full force, and it will be treated as if it was originally entered into with the Life Insurance Corporation of India instead of the old insurer.
2. Do policyholders need to sign new contracts or agreements with the Corporation after the transfer?
No, all existing contracts, agreements, and instruments remain of full force and can be enforced directly without any need to sign new documents.
3. Will a legal case in court against an old insurance company be cancelled because of the nationalisation?
No, any pending lawsuit, appeal, or legal proceeding will not abate or be discontinued. It will continue with the Corporation taking the place of the old insurer.
Test yourself
Q1.Under Section 9 of The Life Insurance Corporation Act, 1956, what is the legal status of contracts relating to the controlled business that were active before the appointed day?
Q2.Under Section 9 of The Life Insurance Corporation Act, 1956, what happens to a pending lawsuit against an insurer on the appointed day?
Q3.Under Section 9 of The Life Insurance Corporation Act, 1956, which types of instruments are covered by the transfer of controlled business to the Corporation?
Q4.Under Section 9 of The Life Insurance Corporation Act, 1956, who can enforce a contract that was originally made in favour of an existing insurer before the appointed day?