Skip to content

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

Interim Insurance Regulatory Authority (IRA) had entered into a lease for office premises and held cash balances of Rs 40 lakh before the appointed day. On the appointed day, the IRDA Act, 1999 came into effect and the Authority was constituted. What is the legal position under Section 13 of the IRDA Act, 1999?

On the appointed day all assets and liabilities of the interim authority, including cash balances, stand transferred to and vested in the Authority, and its contracts such as the lease are deemed to have been entered into by the Authority, so nothing lapses.

  1. AThe cash balances and the lease obligations stay with the interim body until it is wound up by the Central Government
  2. BThe assets and liabilities, including cash balances, stand transferred to and vested in the Authority, and the lease is deemed entered into by the AuthorityCorrect
  3. COnly the cash balances pass to the Authority; contracts lapse unless re-executed
  4. DThe assets pass to the Authority but liabilities stay with the Central Government

Explanation

Section 13(a) vests all assets and liabilities of the interim body in the Authority on the appointed day, and cash balances are expressly included in assets. Under clause (b) contracts entered into by the interim body are deemed entered into by the Authority. The option saying contracts lapse contradicts clause (b).

Did you get it right without looking?

One question tells you little. A timed set on Regulatory Framework in Insurance shows your real accuracy, how long you take and where you lose marks.

Practise Regulatory Framework in InsuranceFree diagnostic mock

More Regulatory Framework in Insurance questions