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CS Professional · Banking and Insurance - Laws and Practice · Functions in Insurance and Compliance related thereto (Part IV)

Alpha Insurance transferred part of its business to Beta Insurance, and Alpha's creditors have claims against Beta. Beta is now being wound up. Under section 57 of the Insurance Act, 1938, which statement is correct?

The Tribunal shall order Alpha, the secondary company, to be wound up in conjunction with Beta, the principal company, and may appoint one liquidator for both. Section 57 treats them as if one company, and any creditor or interested person may apply.

  1. AAlpha cannot be wound up unless its shareholders resolve so
  2. BThe Tribunal shall, subject to the section, order Alpha as secondary company to be wound up in conjunction with Beta, and may appoint the same liquidator for bothCorrect
  3. CAlpha is automatically dissolved without a Tribunal order
  4. DOnly the Central Government may apply for Alpha's winding up

Explanation

Section 57(1) directs the Tribunal to order the secondary company to be wound up with the principal and permits appointing the same liquidator. Section 57(5) allows any creditor or interested person to apply, so option D is wrong. Option C is wrong since an order is needed.

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