VANGUARD FIRE AND GENERAL INSURANCE CO Vs. FRASER AND ROSS CHARTERED ACCOUNTANTS MADRAS

JUDGEMENT

(1.) THIS is an appeal against the judgment of Balakrishna Aiyar, J. dismissing a petition filed by the appellant (W. P. No. 922 of 1957) under Article 226 of the constitution in the following circumstances.

(2.) THE appellant, the Vanguard Fire and General Insurance Co. Ltd. was incorporated in Madras on 25-9-1941, under the Indian Companies Act, 1913. The object inter alia of the said company was to carry on fire, motor, marine, accident and other general insurance business. It is common ground that the company was bound by the provisions of the Insurance Act, 1938. In accordance with the requirements of that Act, the company applied for and obtained certificate of registration for carrying on the aforesaid classes of insurance business. The necessary deposit to be made under Section 7 of that Act was also made. At an extraordinary general meeting of the share-holders of the company held on 15-10-1956, the following resolutions were passed : ''resolved that the company do forthwith cease to carry on the business as Insurers in respect of fire, motor, marine and accident and other general insurance businesses. Resolved that the Board of Directors of the company be and are hereby instructed to stop the carrying on the business of insurers in all the branches of the said business and not to issue any policy of insurance, cover-notes or other contracts of insurance from and after this date. Resolved that the Board of Directors be and are hereby instructed that the company shall hereafter carry on the business of money lending as a loan company and also to do investment business. Resolved that the Directors be and are hereby authorised and instructed to notify the Controller of Insurance that this company has with effect from this date ceased to carry on the business of insurance and on the expiry of the present licence of insurers, not to apply for renewal thereof. " the company informed the Controller of Insurance by its letter dated 10-12-1956 of the resolution ceasing to carry on the business of insurance and intimated that it could not therefore apply for renewal of registration. On 14-5-1957 the controller of Insurance gave notice to the company that as the company had failed to have its registration renewed for the year 1957, the certificates of registration bearing Nos. 380 and 380/2 dated 14-3-1944 and 23-8-1944 respectively granted to the company under Section 3 of the Insurance Act were cancelled with effect from 1st July, 1957 under Sub-section (4) of that section. The notification of cancellation of registration of the company was also published in the Government of India Gazette dated 22-7-1957. On 17-7-1957 the Government of India, ministry of Finance, passed the following order:

(3.) BEFORE dealing with the contentions and arguments put forward before us, it will be useful to refer to the provisions of the Insurance Act, which have a material bearing on the questions which arise in this appeal.