LIFE INSURANCE CORPORATION OF INDIA AND S L JAIN Vs. OFFICIAL LIQUIDATOR HIGH COURT

JUDGEMENT

(1.) This judge's summons is directed against an order of the official liquidator dated 1st June, 1976, inter alia, refusing to treat the applicants as secured creditors for a sum of Rs. 3,25,08570. The official liquidator, however, admitted the said claim and held the applicants to be ordinary creditors in respect thereof.

(2.) The disputes lie in a very narrow compass. The Warden Insurance Co. Ltd. (in liquidation) carried on business, prior to 19th January, 1957, both of life insurance and general insurance. Under Section 10 of the Insurance Act, 1938, the Warden Insurance Co. Ltd. (hereinafter referred to as "the company ") was required to and did maintain separate accounts and funds in respect of its life insurance business and its other general insurance business. It appears that prior to December, 1955, a sum of Rs. 3,23,503-9-3 was transferred from the life insurance fund, of the said company to its general department. Whether this amount was transferred at one stroke or was the aggregate of various amounts transferred from time to time is not clear but as certified by the managing director and the chief accountant of the company in a letter issued to the custodian on 2nd August, 1956, that as on 31st December, 1955, a balance of Rs. 3,23,503-9-3 was shown as due to " controlled life insurance business " of the company.

(3.) On 19th January, 1956, the Life Insurance (Emergency Provisions) Ordinance, 1956, was promulgated by the President. By virtue of and under the said Ordinance the life insurance business called the "controlled business" was nationalised. The said Ordinance was replaced by the Life Insurance Corporation Act, 1956, on 1st July, 1956. Under Section 7 of the said Act on the appointed day, which was 1st September, 1956, all assets and liabilities of the insurance companies pertaining to the controlled business were transferred to and vested in the LIC, the applicants before me.