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CS Professional · Banking and Insurance - Laws and Practice · Inspection, Investigation, Penalty and Appellate Procedure

After an inspection of the books of Meridian Reinsurance Ltd., IRDAI receives the report. It proposes to cancel the insurer's registration. Which statement is correct under Section 33?

IRDAI may cancel registration by written order after giving the insurer such opportunity to make a representation as it considers reasonable. Section 33(6) lets it act on the report directly, without a prior court or tribunal order, and it may also require action or direct a winding-up application.

  1. AIRDAI may cancel the registration by written order after giving the insurer such opportunity to make a representation as, in its opinion, seems reasonableCorrect
  2. BIRDAI may cancel the registration without hearing, since the report is conclusive
  3. CIRDAI must first obtain a winding-up order from the court, then cancel registration
  4. DIRDAI may only require corrective action, as cancellation is possible only through the Securities Appellate Tribunal

Explanation

Section 33(6) allows the Authority, on receipt of the report and after giving the insurer such opportunity to make a representation as it considers reasonable, to order in writing corrective action, cancel registration, or direct a person to apply for winding up. Cancellation is therefore a direct power of the Authority and does not depend on a prior court or tribunal order. The report is not conclusive, since the representation opportunity precedes the order.

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