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CS Professional · Banking and Insurance - Laws and Practice · Regulatory Framework in Insurance

A supplier had a claim of Rs 5 lakh due from the Interim Insurance Regulatory Authority immediately before the appointed day, and a separate sum of Rs 2 lakh was due to the interim body from a consultant. After the appointed day, who is treated as the debtor and who as the creditor under Section 13 of the IRDA Act, 1999?

The Authority becomes the debtor for the Rs 5 lakh because liabilities vest in it, and the Rs 2 lakh owed by the consultant is deemed due to the Authority, since sums due to the interim body are deemed due to the Authority.

  1. AThe Authority owes the Rs 5 lakh, and the Rs 2 lakh is deemed due to the AuthorityCorrect
  2. BThe Authority owes the Rs 5 lakh, but the Rs 2 lakh remains due to the interim body
  3. CThe Central Government owes the Rs 5 lakh, and the Rs 2 lakh is due to the Authority
  4. DNeither sum can be enforced until fresh contracts are signed with the Authority

Explanation

Liabilities, including all debts and obligations, vest in the Authority under clause (a), so it owes the Rs 5 lakh. Clause (c) deems all sums due to the interim body immediately before the appointed day to be due to the Authority, covering the Rs 2 lakh.

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