vil Appeals Nos 676 and 677 of 1962
Appeals by special leave from the judgment and order dated February 27
1960 of the Life Insurance Tribunal Nagpur in Case No 30  XII of 1959
OP Malhotra Hamendra K Shah 1
B Dadachanji OC Mathur and Ravinder Narain for the appellants in CA No 767 62
HM Thakar SN Andley Rameshwar Nath and PL Vohra for the appellant in CA No 67762
CK Daphtary Attorney General DP Mehta and KL Hathi for respondent No 1 in both the appeals
The Judgment of the Court was delivered by Raghubar Dayal J
These appeals by special leave are against the decree of the Life Insurance Tribunal Nagpur in proceedings on an application by the Life Insurance Corporation of India hereinafter called the Corporation under section 15 of the Act XXXI of 1956 shortly termed as the LIC Act for ordering the Vishwabharti Insurance Company Bombay
Damji Valji Shah and Jayantilal Hirijibhai Chawda appellants in the CA 676 of 1962 Ghanshyamdas appellant in CA 677 of 1962 the aforementioned individuals being directors of the Vishwabharti Insurance Company and another director to pay to the Corporation jointly and severally the sum of Rs 82000 together with interest there at 6  per annum from September 1 1956 till full payment
The decree ordered the company to pay a further sum
but we are not concerned with that part of the decree as the company has not appealed against it
D5SCI 4 668 The facts of the case briefly are these
The company was a composite insurer
ie an insurer who carried on
in addition to life insurance business
other classes of insurance business
The LIC Act came into force on july 1
1956 and the Corporation was established on September 1 1956 which was the appointed day according to section 21 of that Act
On that day
in view of section 7
all the assets and liabilities appertaining to the life insurance business called the controlled business vide section 23 of the Company stood transferred to and vested in the Corporation
It was found that certain amounts which had been transferred from the Life Insurance Fund in the books of the company to the General Department had not been transferred in accordance with the provisions of the Act 4 of 1938 which governed the company and should have continued to be included in the assets appertaining to the controlled business of the company
It was therefore that an application under section 15 of the LIC Act was made by the Corporation to the Tribunal
We may now state how this amount of Rs 82000 happened to be transferred from the Life Insurance Fund or the Life Fund of the company to its General Department
The company had to keep separate accounts of all receipts and payments m respect of each class of insurance business
in view of section 101 of the lnsurance Act
It had to maintain d Life Fund in connection with its life insurance business in view of section 102
Sub section
2 provided that where an insurer carried on business of life insurance
all receipts due in respect of such business be curried to and would form a separate fund called the Life insurance Fund and its assets be kept distinct and separate from all other assets c If the insurer and deposits made by the insurer in respect of life insurance business
Sub section
3 of section 10 provided that the life insurance fund would be as absolutely the security of the life policy holders as though it belonged to an insurer carrying on no other business than life insurance business and that it should not be applied directly or indirectly for any purpose other than those of the life insurance business of the insurer
The amount in this fund had to be sufficient to meet the net liabilities in regard to the life insurance policies issued by the company If it was not so maintained
the company stood the chance of being barred from carrying on life insurance business
By resolution dated December 18 1948
Rs 110000 were transferred from the General Department to the Life Department as advance to the Life Department Revenue Account for being added to the Life Fund
subject to the condition that the Life Department would not be liable to pay any interest thereon and that no repayment of the lcan would be made except out of the valuation surplus of the Life Department
The first actuarial valuation report of the company for the year 1944 48
dated July 18 669 1949 showed that the net liability of the company was Rs 6557 18and that the amount in the Life Fund was Rs 657450and therefore the fund showed a surplus of Rs 1732 over the net liabilities
If the sum of Rs 110000 had not been transferred to the Life Department Revenue Account prior to December 31 1948 this valuation report would have shown the net liability exceeding the amount in the life fund by about a lakh of rupees
It is clear that the amount was so transferred in order to avoid the consequences of the net liabilities exceeding the Life Fund
The Profit  Loss Appropriation Account for the year 1949 shows that Rs 60000 out of this amount of Rs 110000 was written off as the company had made profits
Rs 32000 were again similarly transferred to the Life Fund from the General Department with retrospective effect from December 31 1952 in order to strengthen the position of the Life Fund
The second actuarial valuation report for the period 1949 52 dated September 9 1953 showed that the policy liability amounted to Rs 1533068 that the Life Fund stood at Rs 1535890 and that thus the Life Fund exceeded the net liability by Rs 2822 
There was thus a surplus as Rs 32000 had been transferred to strengthen the Life Fund with retrospective effect in view of the resolution dated August 20 1953 which reads
Resolved that a loan of Rs 32000 thirty two thousand only bearing no interest be hereby given to Life Department by General Department with retrospective effect as on 31st December 1952 the repayment of which shall be made only out of the future Valuation Surplus or surpluses of the Life Department or it may be written off from the future profits of the General Department
This will have effect in the accounts of the Company for the year ended 31 st December 1952
 It is to be noted that this resolution itself said that the amount would be repaid only out of the future Valuation Surplus or pluses of the Life Department or might be written off from the future profits of the General Department
It was this amount of Rs 82000 Rs 50000  plus Rs 32000  which by a resolution dated January 6
1956 was transferred to the General Department from the Life Fund
The resolution reads Resolved that a loan of Rs 82000 eighty two thousand only advanced to Life Department Revenue Account by General Department be and is hereby repaid to Genera1 Department and the balance of Rs 60000 670 due to General Department by Life Department Revenue Account be and is hereby kept in reserve for future and hence no adjustment in regard to Rs 60000 will be made for the present This resolution was confirmed by the Board of Directors at its meeting dated February 6 1956
We may now refer to the changes in law with respect to life insurance business in 1956 and an anticipation of which probably led to the resolution of January 6 1956
On January 19 1956 the Life Insurance Emergency Provisions Ordinance 1956 Ord
No 1 of 1956 was promulgated by the President
It came into force from that day which was called the appointed day 
Section 31 provided that the management of the controlled business  of a11 insurers would vest in the Central Government on and from the appointed day Controlled business  according to cl
2 of section 2 meant all the business appertaining to the life insurance business if the insurer carried on any other class of insurance business also
Clause b of sub section
3 prohibited the incurring of any expenditure by the insurer without the previous approval of the person specified by the Central Government in that behalf from the assets appertaining to the controlled business otherwise than for the purpose of making routine payments etc
 specified in that clause
Those purposes do not include the repayment of an advance made from the General Department to the Life Fund or to the Life Department Revenue Account
Clause c of sub section
3 further prohibited the insurer without the previous approval of the authorised person to transfer or otherwise dispose of any such assets appertaining to the controlled business or create any charge or hypothecation lien or other encumbrance thereon
It would therefore appear that possibly the Board of Directors were not right in confirming the resolution of January 6 1959 after the Ordinance had come into force
However that is not the point raised in these proceedings
We have already referred to the coming into force of the LIC Act an July 1 1956 and of the transfer and vesting in the Corporation of all the assets and the liabilities pertaining to the life insurance business in view of section 7 of that Act
Section 15 provides that the Corporation may apply for relief to the Tribunal in respect of a transaction which is made by the insurer whose controlled business had been transferred to and vested in the Corporation under the Act at any time within 5 years before January 19 1956 and by which the composite insurer has transferred any property from his life department to his general department without consideration or for an inadequate consideration and the transfer was not reasonably necessary for the purpose of the controlled business of the insurer or was made with an unreasonable lack of prudence 671 on the part of the insurer regard being had in either case to the circumstances at the time
The Corporation in such proceedings had to make all parties to the transaction parties to the application
Sub section
2 of section 15 empowered the Tribunal to make such order against any of the parties to the application as it thought just having regard to the extent to which those parties were respectively responsible for the transaction or benefited from it and all the circumstances of the case
Section 16 provided for the payment of compensation to the insurer whose Controlled business had been transferred to and vested in the Corporation under the Act
Section 17 provided for the constitution of Tribunals which were empowered by sub section
4 to regulate their own procedure and decide all matters within their competence
Section 41 provided that no civil Court would have jurisdiction to entertain or adjudicate upon any matter which a Tribunal was empowered to decide or determine under the Act
Section 44 inter alia provided that nothing contained in the Act would apply in relation to any insurer whose business was being voluntarily wound up or was being wound up under orders of the Court
The Corporation by its application under section 15 contended that the transfer of Rs 82000 from the Life Fund to the General Department under the resolution of January 6 1956 was illegal
being contrary to and in contravention of the insurance Act and as such was inoperative bad in law and not binding on the petitioner
It was further contended that the said transfer was without consideration and was not reasonably necessary for the purpose of the controlled business of the company andor was made with unreasonable lack of prudence on the part of the company regard being had to the circumstances at the time
It was therefore that it prayed inter alia for a decree against the respondents for a sum of Rs 82000 with interest
It impleaded the company as respondent No 9 the appellants in CA 676 of 1962 as respondents Nos 1 and 4 and the appellant in CA 677 of 1962 as respondent No 2
Ghanshyamdas and Damji Valji were also parties to the resolution dated February 7 1956
Other directors who were parties to the resolution of January 6 were also impleaded
The aforesaid three directors the appellants before us contested the claim of the Corporation and justified the transfer of Rs 82000 to the General Department from the Life Fund on the ground that the amount had been lent by the General Department to the Life Department and had been paid back to the General Department by transfer from the Life Fund when the LifE Fund showed surplus according to the report of the Actuary dated July 25 1955
It was also contended before the Tribunal that the petition could not be proceeded with without the leave of the Bombay High Court in view of section 446 of the Indian Companies 672 Act and that the petition was also not maintainable by reason of section 44 of the LIC Act
Several other grounds were also taken before the Tribunal
We are not now concerned with them
The Tribunal held that the amounts of Rs 110000 and Rs 30000 were not advanced to the Life Department as loans and that the transfer of Rs 82000 was not out of the valuation surplus and that therefore the transfer of this amount could not be said to be for consideration and necessary or reasonably necessary for the purpose of the controlled business of the company or even a prudent transaction having regard to the interest of the life policy holders
It held that no leave of the Bombay High Court was necessary for proceeding with the petition and that the petition was maintainable and that section 44 of the LIC Act did not bar the applicability of the provisions of the Act to the respondent company
It therefore decreed the suit and ordered the company and the directors respondents 1 to 4 to pay to
the Corporation jointly and severally a sum of Rs 82000 together with interest thereon at 6 per cent per annum from September 1 1956 till full payment
It is against this decree that CA 676 of 1962 has been filed by special leave by Damji Valji Shah and Jayantilal Hirjibhai Chawda and CA 677 of 1962 by Ghanshyamdas
This judgment will govern both these appeals
The points raised by learned counsel for the appellants are i The Tribunal had no jurisdiction to proceed with the proceedings on the petition presented by the Corporation without the leave of the High Court in view of section 446 of the  the company having been ordered to be wound up by the High Court on November 9 1959 ii In view of section 44a of the LIC Act none of the provisions of the Act applied to the company and therefore the Tribunal could not proceed on the application of the Corporation subsequent to the company being wound up
iii The transfer of Rs 82000 from the Life Fund to the General Department of the company was for consideration and was necessary for the life insurance business
The fourth point sought to be urged was that the provisions of section 151f of the LIC Act were ultra rites as they contravened the provisions of articles 14 and 19 of the Constitution
This contention was not raised before the Tribunal during the arguments and was therefore considered by it to have been abandoned
We did not therefore allow it to be raised before us
Sub section
1 of section 446 of the provides that when a winding up order has been made or the Official Liquidator has been appointed as Provisional Liquidator
no suit or other legal proceeding shall be commenced or if pending at the date of the winding up order shall be proceeded with against the company except by leave of the Court and subject to such terms as the 673 Court may impose
Sub section
2 provides
inter alia that the Court which is winding up the company shall notwithstanding anything contained in any law for the time being in force have jurisdiction to entertain or dispose of any suit or proceeding and any claim made by or against the company
Sub section
3 provides that any suit or proceeding by or against the company which is pending in any Court other than that in which the winding up is proceeding may not withstanding anything contained in any other law for the time being in force be transferred to and disposed of by that Court
The question is whether these provisions would affect the proceedings of the Tribunal
In this connection reference may be made to section 41 of the LIC Act which provides that no civil Court shall have jurisdiction to  entertain or adjudicate upon any matter which a Tribunal is empowered to decide or determine under that Act
It is not disputed that the Tribunal had jurisdiction to entertain the application of the Corporation and adjudicate on the matters raised thereby
The Tribunal is given the exclusive jurisdiction over this matter
It is in view of the exclusive jurisdiction which sub section
2 of section 446 of the confers on the company Court to entertain or dispose of any suit or proceeding by or against a company or any claim made by or against it that the restriction referred to in sub section
1 has been imposed on the commencement of the proceedings or proceeding with such proceedings against a company after a winding up order has been made
In view of section 41 of the LIC Act the company Court has no jurisdiction to entertain and adjudicate upon any matter which the Tribunal is empowered to decide or determine under that Act
It is not disputed that the Tribunal has jurisdiction under the Act to entertain and decide matters raised in the petition filed by the Corporation under section 15 of the LIC Act
It must follow that the consequential provision of sub section
1 of section 446 of the will not operate on the proceedings which be pending before the Tribunal or which may be sought to be commenced before it
Further the provisions of the special Act ie the LIC Act will over ride the provisions of the general Act viz the which is an Act relating to companies in general
It is however contended for the appellants that in view of section 44a of the LIC Act section 41 will not apply to the company whose business was being wound up under orders of Court and that therefore the provisions of section 446 of the will affect the proceedings before the Tribunal
The contention is not sound
The question of the applicablity of the Act to a particular insurer is to be considered in relation to facts existing when the Act came into force
In view of section 44 of the LIC Act it will not apply to 674 an insurer whose business is being wound up under orders of Court at the time when that Act came into force in 1956 or on the appointed day  ie September 1 1956
when the assets and liabilities pertaining to the controlled business of the company stood transferred and vested in the Corporation
The company was not being wound up under orders of the Court on July 1 1956 when the Act came into force or on the appointed day mentioned earlier
The Act did apply to the company
It cannot cease to apply merely because subsequently the company was ordered to be wound up
The word insurer  is defined in cl
6 of section 2 of the LIC Act and means an insurer as defined in the who carries on life insurance business in India and includes the Government and a provident society as defined in section 65 of the 
On November 9 1959 when the company was ordered to be wound up it was not an insurer  within the meaning of the definition as the company did not carry on life insurance business in India on that date
Its life insurance business had been taken over by the Corporation on the appointed day and it ceased to carry on that business thereafter
It follows therefore that the company was not an insurer on November 9 1959 and cannot take advantage of the provisions of cl
a of section 44 of the LIC Act
We are therefore of opinion that the Tribunal had jurisdiction to continue the proceedings after November 9 1959 when the company was ordered to be wound up and that the provisions of section 446  or section 44a LIC Act do not in any way affect its jurisdiction to continue the proceedings
We now come to the third point raised for the appellants
We agree with the Tribunal that the amounts of Rs 110000 and Rs 32000 were not lent to the Life Department as such by the General Department
No question of lending money by one department of the company to the other can be ordinarily contemplated
The assets of the company really constitute one entity even though the company maintains separate accounts with respect to its various insurance business
It carried on other types of insurance business also
We have already shown how the provisions of the require the company to keep a separate account for the life insurance business and to have a separate fund known as the Life Insurance Fund and to which were to be creditedreceipts due in respect of the life business and the amount deposited by the insurer in respect of life insurance business
Such a deposit is to be made in view of section 71 of the 
This requires  the insurer to deposit and keep deposited with the Reserve Bank of India for and on behalf of the Central Government either in cash or in approved securities or partly in cash and partly in approved securities the sums specified in the various clauses in 675 regard to the different types of life insurance businesses
Clause a requires a deposit of Rs 200000 where the business done or to be done is life insurance only
Clause e requires a deposit of Rs 300000  where the business done or to be done is life insurance and any one of the three el
asses mentioned in clauses b to d
Clause e further provides that out of the deposit of Rs 300000  Rs 200000  shall be the deposit for life insurance business
Section 7 lays down a statutory amount which the insurer has to deposit
It does not however restrict the insurer to deposit a larger amount in respect of life insurance business
Sectionplaces certain restrictions about the use to be made of the deposits under section 7
Section 82 hewever deals with any deposit and provides that where a deposit is made in respect of life insurance business the deposit made in respect thereof shall not be available for the discharge of any liability of the insurer other than liabilities arising out of policies of life insurance issued by the insurer
This means that when an insurer puts certain money in the funds pertaining to the life insurance business and especially to a life insurance fund
such an amount can be used only for the discharge of liabilities of the insurer arising out of life insurance policies issued by him
The amounts of Rs 110000 and Rs 32000 would thus amount to deposits made by the company in respect of life insurance business in order to augment the life fund
This can be done either to bring the funds to an amount exceeding the expected net liabilities on the policies or merely to augment that fund
It makes no difference to the company how it distributed its funds so long as its statutory liabilities were satisfied
The very conduct of the company with respect to these amounts belies the alleged nature of the transfers of these amounts to the Life Department
The sum of Rs 60000 out of Rs 110000 was written off in 1949
A loan of such an amount is not usually written off
No special reason is assigned for writ ing off the loan
The resolution about the transfer of Rs 32000 itself speaks of the possibility of the amount being written off
A lender does not think in this way at the time he advances a loan
It is clear that the amount was really being transferred to the Life Fund through the Life Department Revenue Account as otherwise the Life Fund on the actuarial valuation would have stood at a figure much below the amount of the net liabilities on the policies as calculated in Form H Schedule Four to the  which is a Form giving summary and valuation of the policies of the company as at the date of the valuation
Form I is for the valuation balance sheet of the company at the corresponding date and requires in one column the net liability under business as shown in the summary and valuation of policies and in the other column the balance of life insurance fund as shown 676 in the balance sheet and also provides for noting the eventual position about the Life Fund being in surplus or in deficiency as compared to the net liability
When the amount was not lent as a loan no question of its repayment as such could have arisen in 1956
of course whenever the Life Fund showed an actuarial valuation surplus that surplus or part of it could be transferred to the General Department according to the desire of the management
The amount of Rs 82000 was not transferred as a result of the actuarial valuation as contemplated by the various resolutions which authorised the transfer of the amount from the General Department to the Life Department Revenue Account
It was definitely provided in those resolutions that no repayment of the amount would be made except out of valuation surpluses of the Life Department
The expression valuation surplus  has a technical meaning under the Act
Section 131 of the provides that every insurer carrying 0n life insurance business shall
in respect of the life insurance business transacted in India
cause once at least in every three years an investigation to be made by an actuary into the financial condition of the life insurance business carried on by him including the valuation of his liabilities in respect thereto
An abstract of the report of the actuary is to be made in accordance with the regulations contained in of the Fourth Schedule and in conformity with the requirements of of that Schedule
Section 132 provides that the provisions of sub section
1 regarding the making of an abstract shall apply whenever at any other time an investigation into the financial condition of the insurer is made with a view to the distribution of profits or an investigation is made of which the results are made public
The abstract is to be certified on behalf of the insurer to the effect that full and effective particulars of every policy under which there is a liability either actual or contingent have been furnished to the actuary for the purpose of investigation
Section 15 requires the submission of the aforesaid abstract to the Controller within the specified period
of the Fourth Schedule requires that every extract prepared in accordance with the requirements of that part of the Schedule will have the statement of a consolidated revenue account in Form G a summary and valuation in Form H a valuation balance sheet in Form I and a statement in Form DDD as set forth in Part H ofhe Third Schedule annexed to it
The valuation balance sheet in Form I requires the noting of a surplus if any of the balance of the life insurance fund as compared to the net liability in the business as shown in the summary and valuation of policies
It is the surplus no led in this 677 Form 1 which is really the valuation surplus
It was out of such surplus that the company resolved that the advances of Rs 110000and Rs 32000 could be paid to the General Department by the Life Department
No such actuarial valuation was made by the actuary prior to the transfer of Rs 82000 to the General Fund by the resolution dated January 6 1956
Reliance in this connection is placed on behalf of the appellants on the letter of the actuary dated July 25 1955
The actuary states On the above basis the valuation shows a policy liability of Rs 2020421
The Life Insurance Fund is Rs 2132455
Thus there is a surplus of Rs 112033
The surplus includes Rs 53300 being the amount of appreciation on investments taken into account by you in the past two years
Thus the net working surplus is Rs 58733 
The cost of Bonus at the rate of Rs 10 per thousand is approximately Rs 48000 
Thus the surplus is sufficient to enable a bonus declaration at the above rate even after excluding the appreciation amount or setting it apart as an additional reserve for future use
Conclusion The result is satisfactory
Continuing the same method of working as you have followed
the statutory valuation as on 31 12 55 will surely enable you to declare a higher bonus
 Firstly it does net appear that the actuary had really conducted an investigation and submitted the valuation report as required by section 13 of the 
There is nothing on the record to show that any abstract in Form I Fourth Schedule was prepared and submitted to the Controller
Further
the letter shows that the net working surplus was only Rs 58733 as the ostensible surplus of Rs 112033 included Rs 53300 by which certain investments of the company had appreciated in that period
When the net working surplus was much less than Rs 82000 which were transferred from the Life Department to the General Department the transfer of Rs 82000 cannot be said to have been in accordance with the terms on which the alleged loan was made to the Life Department from the General Department
When the Life Department had not Rs 82000 with itself there could not have been any necessity to pay that amount to the General Department
In fact the alleged loan could be paid only when there would have been a valuation surplus in the accounts of the lfie Department but this does not mean that the Life Department was bound to pay back the amount the moment it had any valuation surplus
678 Its liability to pay the alleged loan could arise only when there was a valuation surplus
Its paying the amount actually would depend upon the circumstances prevailing at the time
In the circumstances we cannot resist the conclusion that the Directors passed a resolution for the transfer of this amount January 6 1956 in anticipation of some law depriving the company of its life insurance business
It may be that it was a close secret that an Ordinance would be issued on January 19
But all the same possibly
persons in the insurance world could have had an inkling of the trend of events
The content of the resolution passed on January 6 indicates that the directors had no clear idea at the time as to how much the Life Department according to them owed to the General Department
The resolution speaks not only of the transfer of Rs 82000 to the General Department but also refers to the balance of Rs 60000 due to the General Department by the Life Department Revenue Account
The amount had been written off in 1950 and could not have thereafter been considered to be a loan advanced to the Life Department Revenue Account from the General Department
It seems that the resolution was passed in some hurry and the Directors couId not definitely decide as to how any further amount upto Rs 60000 could be taken back to the GeneraI Department from the Life Department Revenue Account
Any way such a resolution of the Directors indicates that any entries with respect to the alleged loans were made for the purpose of accounting and the necessities of the business
Money in the Life Fund had to be augmented in 1948 and 1952 in order to make the Life Fund exceed the net liabilities of the company on account of the life insurance policies
We are therefore of opinion that the Tribunal took a correct view about the nature of the transfer of Rs 110000 in 1948 and Rs 32000 in 1952 to the Life Insurance Fund and rightly held that the transfer of Rs 82000 to the General Department by  resolution dated January 6 1956 was not in accordance with the provisions of the and that consequently that amount continued to form part of the assets of the life insurance business of the company upto September 1 1956 and that as such vested in the Corporation which could recover it from the company and the directors responsible for the transfer of the amount to the General Department
The appeals therefore fail and are dismissed with costs one hearing fee
Appeals dismissed


Summary:
Indian section 10 Transfer of Funds from Life Insurance Fund to General Department of composite insurer Permissibility
The appellants were directors of an insurance company which was a composite insurer ie one carrying on other classes of life insurance business besides life insurance
Under section 101 of the Indian Life  a composite insurer had to keep separate accounts in respect of the different classes of business and its receipts in respect of life insurance business had to go into a fund called the Life Insurance Fund which could be applied only for the put the Life Insurance business and had always to be sufficient to meet the net liabilities of the Life Insurance business
By resolution dated December 18 1948 a sum of Rs 110000 was transferred from the General Department of the company to the Life Department to be added to the Life Fund if this had not been done the said fund would have shown a deficit in the actuarial valuation report dated July 18 1949
In the profit appropriation account of the company for the latter year a sum of Rs 60000 out of the above sum was written off so that the sum advanced was reduced to Rs 50000
A further sum of Rs 32000 was again similarly transferred from the General to the Life Department by resolution passed in August 1953
with retrospective effect from December 31 1952 in order to strengthen the position of the Life Fund which again would have shown a deficit if this had not been done
The advances thus made on both occasions were according to the relevant resolutions repayable only out of the valuation surplus  if any  in the life department
On January 8 1956 the Board of Directors of the company transferred a sum of Rs 82000 from the Life Department to the General Department
by way of repayment of the above loans
On January 19 1956 by Ordinance No 1 of 1956 the management of the life insurance business of all insurers in the country passed to the Central Government
On September 1
1956 the Life Insurance Corporation of India came into being under the  and the assets and liabilities of the life insurance business carried on by all insurers became vested in it
The corporation filed an application under section 15 of the said Act before the Tribunal constituted under the Act alleging that transfer of Rs 82000 from the Life Department to the General Department of the aforesaid company was without consideration and not for any 665 666 necessity of the life insurance business and prayed for a decree against appellants and the company jointly and severally for the said amount
The Tribunal overruled the defendants  objections as to its jurisdiction and granted a decree to the Corporation as prayed
The company did not appeal but the appellants came to this Court by special leave
The following contentions were raised on behalf of the appellants 1 The tribunal had no jurisdiction to proceed with the proceedings on the petition presented by the Corporation without the leave of the High Court in view of section 446 of the  the Company having been ordered to be wound up the High Court on November 9 1959 2 In view of section 44a of the LIC Act none of the provisions of the Act applied to the company and therefore the Tribunal could not proceed on the application of the Corporation subsequent to the company being wound up 3 The transfer of Rs 82000 from the Life Fund to the General Department of the company was for consideration and was necessary for the life insurance business
HELD i The provisions of section 446 of the did not affect the proceedings before the Tribunal
It is in view of the exclusive jurisdiction conferred upon the company court in sub section
2 of section 446 of the to entertain and dispose of any suit or proceeding by or against a company which is being wound up that provision has been made in subs
1 of that section that no suit or proceeding shall be filed or if pending proceeded with against such a company without permission having been taken from the Court
In view of the provision in section 41 of the LIC Act the company court has no jurisdiction to try matters which a Tribunal under the is empowered to entertain and decide
It could not be disputed that the Tribunal was empowered to try the Corporation s application under section 15 and the Company Court therefore had no jurisdiction to entertain or decide it
It must follow that the consequential provision of sub section
1 of section 446 would not operate on the proceedings before the Tribunal
673E G Further the provisions of the Special Act ie the LIC Act will over ride the provisions of the general Act viz the which is an Act relating to companies in general
673H ii The company could not take advantage of the provisions of section 44a of the LIC Act
674D E Section 44a provides that the provisions of the Act will not apply to an insurer whose business is being wound up under orders of court
But the question of the applicability of the Act to a particular insurer is to be considered in relation to facts existing at the time when the Act came into force ie July 1 1956 or on the appointed day ie September 1 1956 when the assets and liabilities of the controlled insurer of the company stood transferred and vested in the Corporation
The company was not being wound up under orders of Court on the above dates
The LIC Act and therefore section 41 thereof did apply to the company
It could not cease to apply merely because subsequently the company was ordered to be wound up
673H 674B Section 44a was not applicable to the company for the further reason that when it was ordered to be wound up in 1959 it was not an insurer  within the meaning of that word in section 26 since it was not carrying on life insurance business on that date
the said busi 667 ness having been taken over by the Corporation on the appointed day  674C D iii The Tribunal rightly passed a decree in favour of the Corporation
No question of lending money by one department of the company to the other can ordinarily be contemplated
The assets of the company really constitute one entity even though the company maintains separate accounts with respect to its various insurance businesses
From the facts it was clear that the amounts of Rs 110000 and Rs 32000 had been transferred from the General Department to the Life Fund to meet the deficit in the Life Fund which was likely to occur on both occasions
The circumstances showed that the sum of Its 82000 was transferred back to the General Department in a hurry in anticipation of some law depriving the company of its life insurance business
It was moreover a condition of the alleged loans  that they would be repaid only when there
was a valuation surplus  in the Life Fund
There was no such surplus in the Life Fund at the time when the sum was transferred from it the General Department
674G