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Report No. 190 Winding up by the court (Section 53) 8.9.2 The Insurance Act provides for winding up by the court under section 53. The Act does not allow voluntary winding up by the insurance company except on the grounds mentioned in section 54. It also provides for partial winding up if the scheme for the same is confirmed by the court under section 58. The provisions of section 53 enables the court to pass orders for winding up of an insurance company not only as per the provisions of the Companies Act but also if a petition is filed under sub-section 2 of this section after obtaining the previous sanction of the court in this behalf by one tenth shareholders of the company or not less than fifty policy holders. 8.9.3 This section also enables the Authority under clause (b) of sub-section (2) to apply for winding up if (i) the company fails to deposit or keep deposited the amount required under section 7 or 98, or (ii) the company has continued failure to comply with the requirements of this Act or contravention of any provisions of this act for a period of three months after notice of such contravention or non-compliance has been conveyed to it by the Authority, or (iii) returns furnished by the company or investigations made under this Act reveal that the company is or is deemed to be insolvent, or (iv) continuance of the company is prejudicial to the interest of policy holders or public interest generally. 8.9.4 These very grounds stated above in (i.- (iii) on which the authority has been empowered to apply for winding under this section are also some of the grounds for which it can cancel the registration of any insurance company under section3(4).On cancellation of registration, the company cannot carry on insurance business. Hence provisions under clauses (i), (ii)and (iii) of sub-section (2) (b) may be omitted. However, clause (iv) may be retained. 8.9.5 In sub-section (1) of section 53, reference to Companies Act, 1913 be substituted by Companies Act 1956 (Act VII of 1956). 8.9.6 In sub-clause (i) of clause (a) of sub-section (2) of s. 53, the words "or section 98" are to be omitted.    |
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