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

On the appointed day, the Interim Insurance Regulatory Authority had a pending recovery suit against a vendor and an unpaid contractor bill of Rs 4 lakh. The vendor argues the suit abates because the Interim Authority ceased to exist. Under section 13 of the IRDA Act, 1999, what is the position?

The suit may be continued by the Authority, and the Rs 4 lakh bill is deemed a debt incurred by the Authority. Section 13 of the IRDA Act, 1999 vests the Interim Authority's assets and liabilities in the Authority and preserves its legal proceedings.

  1. AThe suit abates and the bill is extinguished
  2. BBoth the suit and the bill pass to the Central Government
  3. CThe suit may be continued by the Authority, and the bill is deemed a liability incurred by the AuthorityCorrect
  4. DThe suit continues but the bill lapses as it was not a contract with the Authority

Explanation

Section 13 transfers all assets and liabilities of the Interim Authority to the Authority, deems debts, obligations and contracts as incurred or entered into by the Authority, and allows suits and legal proceedings to be continued by or against the Authority. So the suit continues and the bill is the Authority's liability. The lapse option contradicts clause (b).

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