CS Professional · Banking and Insurance - Laws and Practice · Life Insurance
A non-life insurer, Kaveri General Insurance Ltd., is declared insolvent. Which statement about the Tribunal's power under Section 61(1) of the Insurance Act, 1938 is correct?
The Tribunal may reduce the amount of the insurance contracts on terms and conditions it thinks just. Section 61(1) covers an insurance company in liquidation or any other insolvent insurer, so it is not limited to life insurers, and the scheme and 1956 limits belong to LIC Act Section 14.
- AThe power applies only to life insurers
- BThe power applies only where Central Government has approved a scheme
- CThe Tribunal may reduce the amount of the insurance contracts on terms it thinks just, as the power covers any other insurer that is insolventCorrect
- DThe power applies only before 19 January 1956
Explanation
Section 61(1) covers an insurance company in liquidation or any other insurer that is insolvent, so it is not confined to life business. The Tribunal acts on terms it thinks just. The scheme and 1956 date limits belong to Section 14 of the LIC Act.
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