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

IRDAI orders an investigation into Pragati Health Insurance Ltd. under Section 33. The investigation costs Rs 12 lakh, and the insurer aggrieved by IRDAI's resulting order wishes to challenge it. Which statement is correct?

The insurer must bear the Rs 12 lakh; the expenses have priority over its debts and are recoverable as an arrear of land revenue under Section 33(9). An aggrieved insurer appeals to the Securities Appellate Tribunal under Section 33(8).

  1. AThe expenses are borne by IRDAI; appeal lies to the High Court
  2. BThe expenses are defrayed by the insurer, have priority over its debts and are recoverable as arrears of land revenue; appeal lies to the Securities Appellate TribunalCorrect
  3. CThe expenses are defrayed by the insurer but rank after its other debts; appeal lies to the Securities Appellate Tribunal
  4. DThe expenses are shared equally with IRDAI; appeal lies to the Central Government

Explanation

Section 33(9) says investigation expenses are defrayed by the insurer, have priority over the insurer's debts and are recoverable as arrears of land revenue. Section 33(8) gives the aggrieved insurer an appeal to the Securities Appellate Tribunal. The option placing the expenses after other debts reverses the priority.

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