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SUPREME COURT OF INDIA
S.M. SIKRI, C.J.I., A.N. RAY, D.G. PALEKAR, M.H. BEG AND S.N. DWIVEDI, JJ.
The Neptune Assurance Co. Ltd. and others, Petitioners
Versus
Union of India and another, Respondents.
Writ Petn. No. 425 of 1971, D/- 10-11-1972.
Constitution of India,1950 – Article 14 and 31-A(b) and (d) - Companies Act,1956 – Section 173 and 149(2-A) - General Insurance (Emergency Provisions) Ordinance 1971 – Section 4(1) and 4(3) - Insurance Act, 1938 – Section 3(4)(F),15(a) and 2(11)(c) – Insurance - Company carried on business as general insurers consisting of fire and miscellaneous insurance business - Insurance policies of company were in force - Board of Directors of company resolved that company would cease to underwrite any insurance business as from close of business hours - Company wrote to Controller of Insurance about decision of company to cease to do business as on close of business - Company returned its registration certificate for current year to Controller of Insurance- Whether legislative measure directly touches company of which petitioner is a shareholder – Held, Section 15 carves out an exception to Section 15 carves out an exception to Section 3 - It excludes certain insurance public companies and some other institution from operation of the Act - Ordinarily an exception is strictly construed - Technical meaning of expression "whose business is being voluntarily wound up" should be preferable to wider meaning of that expression - In the light of foregoing discussion court are of opinion that Neptune Assurance cannot get the benefit of Section 15 (a) and will be subject to provisions of Section 3 of Act which provides for the takeover of management of the insurance companies - It is also calculated to protect all interests by applying after take -over, if that course is deemed necessary, to revive the business of company - Section 2 (e) is in our view not discriminatory - As in court view the attack based on Art. 14 cannot succeed, it is unnecessary to deal with respondents contention based on Art. 31-A (b) and (d) of Constitution - In accordance with opinion of majority, writ petition is dismissed - Petition dismissed.
Judgment
RAY, J. :- (For himself and on behalf of SIKRI, C.J.I.) :- This writ petition challenges the application of the General Insurance (Emergency Provisions) Ordinance 1971, the General Insurance (Emergency Provisions) Act 1971 as well as the General Insurance (Emergency Provisions) Amendment Act 1972 to the petitioner company. The petitioners are three in numbers, viz., the company and two Directors and shareholders.
2. The petitioners asked for a declaration that the order dated 13 May 1971 made in exercise of powers conferred by Section 4 (1) of the General Insurance (Emergency Provisions) Ordinance 1971 and the directions dated 13 May 1971 given by virtue of powers conferred by Section 4 (3) of the General Insurance (Emergency Provisions )Ordinance 1971 are illegal.
3. The paid up capital of the Neptune Assurance Company referred to as the company is Rs. 10,00,000. The petitioner Jalan is a Director of the company. He holds 16,725 ordinary shares of the face value of Rs. 20 each. The petitioner Goenka is a Director of the company. He holds 2,000 ordinary shares of the face value of Rs. 20 each.
4. The company carried on business as general insurers consisting of fire and miscellaneous insurance business. In the month of September 1970 about 2343 insurance policies of the company were in force. On 17 September 1970 the Board of Directors of the company resolved that the company would cease to underwrite any insurance business as from the close of business hours on 30 September 1970. On 30 September 1970 the company wrote to the Controller of Insurance about the decision of the company to cease to do business as on the close of business on 30 September 1970. The company returned its registration certificate for the current year to the Controller of Insurance. After close of business on 30th September 1970 the company stopped doing all insurance business.
5. On 3rd October, 1970, the Controller of Insurance returned to the company its registration certificate. The Controller pointed out that there was no provision for return of certificate. The Controller advised the company not to apply for renewal of registration certificate for the year 1970.
6. In the month of October, 1979, there was an agreement between the company and the New Great Insurance Company of India Ltd. referred to as the New Great in respect of an intended transfer of the entire business of the company to the New Great. The agreement provided inter alia the following features. Before transfer of the entire general insurance business by the company it will obtain the consent of the shareholders at the general meeting for transfer of the general insurance business to the New Great. The company shall prepare a detailed list of all the claims received from policies issued by the company and which claims are outstanding and/or pending on 30th September, 1970, and give the same to the New Great with all particulars.
7. On 20 October 1970 notice was given that an extraordinary general meeting of the company would be held on 17th November, 1970. The extraordinary general meeting was inter alia to transact the business of the proposal for transfer of the company s insurance business and also of the liabilities in respect of claims relating to the insurance business to the New Great upon the terms recorded in the agreement dated 15th October, 1970. The second business to be transacted at the said extraordinary general meeting was to resolve that pursuant to Section 149 (2-A) of the Companies Act 1956 the company would do business as set out in Clause III, sub-clauses (8) and (9) of the Memorandum of Association of the Company except Banking business. The company thought of investment and finance business. As required by Section 173 of the Companies Act the company gave an explanatory statement of the extraordinary general meeting.
8. In the month of October, 1970, circular letters were issued to all policy-holders about the company ceasing to underwrite new insurance busi
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