Nos 186  195 of 1954
Under Article 32 of the Constitution of India for the enforcement of Fundamental Rights
SC Isaacs Mohan Behari Lal and P K Ghosh with him for the petitioners in both petitions
M C Setalvad Attorney General of India Porus AMehta and P G Gokhale with him for the respondents
September 22
The Judgment of the Court was delivered by IMAM J
These petitions under article 32 of the Constitution of India question the validity of the notifications issued under section 52 A of the Insurance Act of 1938 hereinafter referred to as the Act and the appointment of an Administrator
In the case of the Tropical Insurance Company Ltd an Administrator was appointed under notification dated the 14th of July 1951 and in the case of the Jupiter General Insurance Company Ltd another Administrator was appointed under notification dated the 10th of July 519 1951
These two insurance companies do insurance business of life insurance and general insurance
Admittedly previous to the appointment of the Administrators the Controller issued notices under section 52 A to the petitioners and the Finance Ministry of the Central Government sent letters to them pointing out the allegations in the report of the Controller to which they replied
The learned Counsel for the petitioners has candidly stated that he could not raise any constitutional point after the fourth amendment to the Constitution of India
He assumed therefore that the provisions of sections 52 A to 52 G of the Act were constitutional but he urged that the notifications under section 52 A and the taking over of the management of the affairs of the companies were invalid inasmuch as they were in excess of the powers conferred by section 52 A of the Act and that the notifications appointing the Administrators do not fix the period of management as required by law
He further urged that the provisions of the section 52 B of the Act had not been complied with and in consequence the management by the Administrator had been excessively prolonged and thus had become unlawful
There has therefore been a violation of the fundamental rights of the petitioners
Finally it was urged that there was no authority either under the provisions of the Act or of any other law by which the Government was empowered to take over management of the affairs of the company with respect to its general insurance business
The power of the Government under section 52 A was restricted exclusively to life insurance business
As to the first two contentions they were urged in Petitions Nos 94 of 1954 and 183 of 1954 but were not allowed to be put forward by this Court as these questions had not been specifically raised in the petitions under article 32 of the Constitution and they were accordingly dismissed
The position is similar in this respect so far as the present applications are concerned and consequently it must be held that the petitioners cannot be allowed now to urge grounds which they had not taken in their petitions
66 520 There remains however to consider the last contention urged on behalf of the petitioners
It was pointed out by Mr Isaacs that the petitioners are insurance companies doing both life insurance business and general insurance business
He contends that a section 52 A of the Act on a true interpretation of its provisions applies only to the life insurance business carried on by an insurer and not to the general insurance business done by him
The Administrator appointed under section 52 A of the Act could therefore take over management only of the life insurance business done by the insurer
The notifications authorising him to take over the management of the insurance business of the insurer including his general insurance business were thus beyond the powers conferred on Government under section 52 A of the Act and such taking over of the management of the general insurance business of the petitioners by the Administrator was therefore without lawful authority
In view of the submission made by the learned Counsel it is necessary to set out the relevant provisions of the section 52 A Sub section 1 of that section states If at any time the Controller has reason to believe that an insurer carrying on life insurance business is acting in a manner likely to be prejudicial to the interests of holders of life insurance policies he may after giving such opportunity to the insurer to be heard as he thinks fit make a report thereon to the Central Government
Sub section 2 states The Central Government if it is of opinion after considering the report that it is necessary or proper to do so may appoint an Administrator to manage the affairs of the insurer under the direction and control of the Controller
Sub section 4 states The management of the business of the insurer shall as on and after the date of appointment of the Administrator vest in such Administrator but except with the leave of the Controller the Administrator shall not issue any further policies 521 Section 52 B of the Act is concerned with the powers and duties of the Administrator
Under this section the Administrator shall conduct the management of the business of the insurer with the greatest economy  compatible with efficiency and shall as soon as may be possible file with the Controller a report stating what specified courses under the section should be taken which would be most advantageous to the general interest of the holders of life policies
One of the courses specified is the winding up of the business of the insurer
Section 52 D of the Act is concerned with termination of the appointment of the Administrator
Section 53 of the Act is concerned with the winding up by the Court and it enables the Controller to apply to the Court for winding up of an insurance company on certain grounds one of them being that the continuance of the company would be prejudicial to the interests of the policy holders
Mr Isaacs urged that the Act made a clear distinction between life insurance business and general insurance business of an insurer
He referred to various sections of the Act with reference to Registration Separation of Accounts and Funds and Balance Sheets
It was also pointed out by him that the Act defines general insurance business and life insurance business and these two kinds of businesses are quite distinct
There could be little doubt that the Act does regard life insurance business as something distinct from general insurance business
It seems to us however that while keeping this distinction in mind we have to give to the words used in section 52 A1 their ordinary and natural meaning
Insurer has been defined in section 2 of the Act
The definition speaks of an insurer carrying on an insurance business
This business may be either a life insurance business or a general insurance business or both
Under section 7 of the Act deposits have to be made by every insurer other than an insurer specified in sub clause c of clause 9 of section 2
The section specifies the amount of deposit to be made where the business done is life insurance only
Similarly it specifies the deposit to be made in the case of business 522 done which comes within the description of general insurance business only
It also contemplates a combination of life insurance business and general insurance business and specifies the deposit to be made in such event
It is clear that section 52 A1 does not apply to an insurer doing only general insurance business
The question for decision is does it apply to him when he also does along with such business insurance business Section 52_A1 speaks of an insurer carrying on life insurance business
It does not speak of only life insurance business
It is permissible for an insurer to combine in his insurance business both life and general insurance business
If he acts in a manner which is likely to be prejudicial to the interests of the holders of the life insurance policies with him he makes himself amenable to the provisions of the section 52 A of the Act and the Controller is authorised to make a report to the Central Government
The Central Government after con sidering the report may appoint an Administrator to manage the affairs of the insurer and the management of the business of the insurer shall vest in the Administrator
The words the affairs and the business of the insurer are wide enough to empower the Central Government to take over the management of the entire business of the insurer including his general insurance business
To hold otherwise would be to give an unnaturalmeaning to the words used in section 52 A of the Act
In the present case the insurers are public limitedcompanies and it is difficult to conceive that the Act intended to vest in the Administrator the management of only the life insurance business while the insurers would be free to manage the general insurance business because under section 52 B the Administrator may suggest to the Controller for the winding up of the company after managing its insurance business economically and efficiently
Under section 53 a Court may order a winding up of an insurance company if on an appli cation by the Controller it is satisfied that the con tinuance of the company is prejudicial to the interests of the policy holders
The winding up of the com 523 pany would be concerned with its entire insurance business including life and general insurance business because there could be no partial winding up of a company
It is not difficult to imagine that the affairs of the company with reference to its general insurance business may be in such a hopeless state that winding up may be the only course to be taken to protect the interests of the life policy holders
When the provisions of the Act are closely examined it will be noticed that its main policy has been to safeguard the interests of life policy holders who are deeply affected by the manner in which the insurance business of an insurer is carried on
We have no difficulty in interpreting section 52 A1 to mean that where an insurer is carrying on insurance business of various kinds which includes life insurance business he becomes amenable to the provisions of section 52 A if he is acting in a manner prejudicial to the interests of the holders of life policies and he would have to suffer the consequences following the report made by the Controller and the appointment of an Administrator by the Government
The provisions in the Act making a distinction between life insurance business and general insurance business the keeping of separate accounts and balance sheets have been enacted for the safeguard of the holders of life insurance policies and they provide an over all picture of the business done by the insurer showing the exact state of affairs concerning the life insurance business of the insurer
These provisions cannot and do not affect the provisions of of section 52 A of the Act
These petitions are accordingly dismissed with costs to be paid by Petitioners 2 3 and 4 in Petition No 186 of 1954 and Petitioners 2 and 3 in Petition No 195 of 1954


Summary:
The petitioners two Insurance Companies carrying on business both in life insurance and general insurance questioned the validity of notifications issued against them under section 52 A of the Insurance Act for appointment of Administrators to take over management of their affairs on the ground inter alia that section 52 A was exclusively restricted to life insurance business and the Government had no power to take oyer management of general insurance busi ness
Held that the Insurance Act of 1938 no doubt makes a distinction between life insurance business and general insurance business but its main concern is to protect life insurance policy holders
Although section 52 A of the Act has no application to an insurer who carries on business in general insurance alone it undoubtedly applies to an insurer who combines both and gives the Central Government the power on the report of the Controller to appoint an Administrator to take over the management of the entire business of the insurer including general insurance business when such insurer is found to act in a manner prejudicial to the interests of the life policy holders
That grounds not specifically taken in petitions under article 32 cannot be urged at the time of the hearing