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

On the appointed day under the IRDA Act, 1999, the Interim Insurance Regulatory Authority had a pending suit against a vendor and a contract for office equipment signed the previous month. What is the legal effect under section 13 of that Act?

The suit may be continued by or against the Authority, and the contract is deemed to have been entered into by the Authority. All assets and liabilities of the Interim Insurance Regulatory Authority vest in the Authority on the appointed day, so nothing lapses.

  1. ABoth lapse and must be restarted by the Authority
  2. BThe suit continues and the contract is treated as entered into by the Authority, with assets and liabilities vesting in itCorrect
  3. CThe suit lapses but the contract continues
  4. DThe contract lapses but the suit continues only with Central Government approval

Explanation

Section 13 transfers all assets and liabilities of the Interim Authority to the Authority. Contracts entered into are deemed made by the Authority, and pending suits may be continued by or against it. So neither lapses.

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