LIFE INSURANCE CORPORATION ACT, 1956

31 of 1956

18th June, 1956

"To ensure absolute security to the policy-holder in the matter of his life insurance protection, to spread insurance much more widely and in particular to the rural areas, and as a further step in the direction of more effective mobilisation of public savings Government have decided to nationalise life insurance business in India. An ordinance was promulgated in January, 1956, whereby pending the passing of a Bill to nationalise such business, the management of the life insurance business in India was vested in the Central Government. A Bill has been separately introduced to replace that Ordinance and the present Bill lays down the permanent arrangements for nationalisation. Under this

Bill a Life Insurance Corporation of India will be set up, with a share capital provided entirely by the Central Government, which will undertake life insurance business in India as a monopoly and into this Corporation will be integrated all the Insurance Companies now engaged in life business, as also the organisations functioning under the control of State Governments and conducting such business for the benefit of the public. All the contracts for assurance executed by the Corporation will be guaranteed by the Central Government. The Schedules to the Bill lay down the principles governing grant of compensation to the Insurers whose business will be taken over by the Corporation."-Gaz. Of Ind., 1956, Extra., Pt. II, sec. 2, page 36. Amending Act 1 of 1981.- In order to control the cost of administration in the interest of the Life Insurance Corporation of India and its policy-holders whose premium income the Corporation holds as a Trustee, it became necessary for Government to vest itself with powers to determine the terms and conditions of service of the employees and agents and streamline the salary structure. Hence the President promulgated on 31st January, 1981, the Life Insurance Corporation (Amendment) Ordinance, 1981 to amend the Life lnsurance Corporation Act, 1956 to empower the Central Government to frame rules regarding the terms and conditions of all classes of employees and agents of the Corporation and for matters connected therewith or incidental thereto. 2. The Bill seeks to replace the said Ordinance.-Gaz. of India, 23-2-1981, Pt. II, Sec. 2, Ext., p. 56.

An Act to provide for the nationalisation of life insurance business in India by transferring all such business to Corporation established for the purpose and to provide for the purpose and to provide for the regulation and control of the business of the Corporation and for matters connected therewith or incidental thereto. Be it enacted by Parliament in the Seventh Year of the Republic of India as follows:-

CHAPTER 1 PRELIMINARY

SECTION 01: SHORT TITLE AND COMMENCEMENT

(1) This Act may be called the Life Insurance Corporation Act, 1956.

(2) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint.

SECTION 02: DEFINITIONS

In this Act, unless the context otherwise requires,-

(1) "appointed day" means the date on which the Corporation is established under section 3.

CHAPTER 2 ESTABLISHMENT OF LIFE INSURANCE CORPORATION OF INDIA

SECTION 03: ESTABLISHMENT AND INCORPORATION OF LIFE INSURANCE CORPORATION OF INDIA

(1) With effect from such date3as the Central Government may, by notification in the Official Gazette, appoint, there shall be established a Corporation called the Life Insurance Corporation of India. (2) The Corporation shall be a body corporate having perpetual succession and a common seal with power, subject to the provisions of this Act, to acquire, hold and dispose of property, and may by its name sue and be sued.

SECTION 04: CONSTITUTION OF THE CORPORATION

(1) The Corporation shall consist of such number of persons not exceeding 4[sixteen] as the Central Government may think fit to appoint thereto and one of them shall be appointed by the Central Government to be the Chairman thereof.

(2) Before appointing a person to be a member, the Central Government shall satisfy itself that that person will have no such financial or other interest as is likely to affect prejudicially the exercise or performance by him of his functions as a member, and the Central Government shall also satisfy itself from time to time with respect to every member that he has no such interest; and any person who is, or whom the Central Government proposes to appoint and who has consented to be, a member shall, whenever required by the Central Government so to do, furnish to it such information as the Central

Government considers necessary for the performance of its duties under this sub-section.

(3) A member who is in any way directly or indirectly interested in a contract made or proposed to be made by the Corporation shall, as soon as possible after the relevant circumstances have come to his knowledge disclose the nature of his interest to the Corporation; and the member shall not take part in any deliberation or discussion of the Corporation with respect to that contract.

SECTION 05: CAPITAL OF THE CORPORATION

(1) The original capital of the Corporation shall be five crores of rupees provided by the Central Government after due appropriation made by Parliament by law for the purpose, and the terms and conditions relating to the provision of such capital shall be such as may be determined by the Central Government.

(2) The Central Government may, on the recommendations of the corporation, reduce the capital of the Corporation to such extent and in such manner as the Central Government may determine.

CHAPTER 3 FUNCTIONS OF THE CORPORATION

SECTION 06: FUNCTIONS OF THE CORPORATION

(1) Subject to the rules, if any, made by the Central Government in this behalf, it shall be the general duty of the Corporation to carry on life insurance business, whether in or outside India, and the Corporation shall so exercise its powers under this Act as to secure that life insurance business is developed to the best advantage of the community.

(2) Without prejudice to the generality of the provisions contained in sub-section (1) but subject to the other provisions contained in this Act, the Corporation shall have power-

(a) to carry on capital redemption business, annuity certain business or re -insurance business in so far as such reinsurance business appertains to life insurance business;

(b) subject to the rules, if any, made by the Central Government in this behalf, to invest the funds of the Corporation in such manner as the Corporation may think fit and to take all such steps as may be necessary or expedient for the protection or realisation of any investment; including the taking over of and administering any property offered as security for the investment until a suitable opportunity arises for its disposal;

(c) to acquire, hold and dispose of any property for the purpose of its business;

(d) to transfer the whole or any part of the life insurance business carried on outside India to any other person or persons, if in the interests of the Corporation it is expedient so to do;

(e) to advance or lend money upon the security of any movable or immovable property or otherwise;

(f) to borrow or raise any money in such manner and upon such security as the Corporation may think fit;

(g) to carry on either by itself or through any subsidiary any other business in any case where such other business was being carried on by a subsidiary of an insurer whose controlled business has been transferred to and vested in the Corporation under this Act;

(h) to carry on any other business which may seem to the Corporation to be capable of being conveniently carried on in connection with its business and calculated directly or indirectly to render profitable the business of the Corporation;

(i) to do all such things as may be incidental or conducive to the proper exercise of any of the powers of the Corporation.

(3) In the discharge of any of its functions the Corporation shall act so far as may be on business principles.

SECTION 06A: POWER TO IMPOSE CONDITIONS, ETC

(1) In entering into any arrangement, under section 6-, with any concern, the Corporation may impose such conditions as it may think necessary or expedient for protecting the interest of the Corporation and for securing that the accommodation granted by it is put to the best use by the concern.

(2) Where any arrangement entered into by the Corporation under section 6-with any concern provides for the appointment by the Corporation of one or more directors of such concern, such provision and any appointment of directors made in pursuance thereof shall be valid and effective notwithstanding anything to contrary contained in the Companies Act, 1956, or in any other law for the time being in force or in the memorandum, articles of association or any other instrument relating to the concern, and any provision regarding share qualification, age limit, number of directorship, removal from office of directors and such like conditions contained in any such law or instrument aforesaid, shall not apply to any director appointed by the Corporation in pursuance of the arrangement as aforesaid.

(3) Any director appointed as aforesaid shall-

(a) hold office during the pleasure of the Corporation and may be removed or substituted by any person by order in writing by the Corporation;

(b) not incur any obligation or liability by reason only of his being a director or for anything done or omitted to be done in good faith in the discharge of his duties as a director or anything in relation thereto;

(c) not be liable to retirement by rotation and shall not be taken into account for computing the number of directors liable to such retirement."]

CHAPTER 4 TRANSFER OF EXISTING LIFE INSURANCE BUSINESS TO THE CORPORATION

SECTION 07: TRANSFER OF ASSETS AND LIABILITIES OF EXISTING INSURERS CARRYING ON CONTROLLED BUSINESS

(1) On the appointed day there shall be transferred to and vested in the Corporation all the assets and liabilities appertaining to the controlled business of all insurers.

(2) The assets appertaining to the controlled business of an insurer shall be deemed to include all rights and powers, and all property, whether movable or immovable, appertaining to his controlled business, including, in particular, cash balances, reserve funds, investments, deposits and all other interests and rights in or arising out of such property as may be in the possession of the insurer and all books of account or documents relating to the controlled business of the insurer, and liabilities shall be deemed to include all debts, liabilities and obligations of whatever kind then existing and appertaining to the controlled business of the insurer.

(3) Where any such assets are subject to any trust referred to in sub-section (6) of section 27-of the Insurance Act or to any other trust for the benefit of policy-holders, the assets shall be deemed to have vested in the Corporation free from any such trust.

SECTION 08: PROVIDENT, SUPERANNUATION AND OTHER LIKE FUNDS

(1) Where an insurer whose controlled business is to be transferred to and vested in the Corporation under section 7-, has established a provident or superannuation fund or any other life fund for the benefit of his employees and constituted a trust in respect thereof (hereinafter in this section referred to as an existing trust), the moneys standing to the credit of any such fund on the appointed day, together with any other assets belonging to such fund, shall subject to the provisions of sub-section (2), stand transferred to and vest in the Corporation on the appointed day free from any such trust.

(2) Where all the employees of any such insurer do not become employees of the Corporation under section 11-, the moneys and other assets belonging to any such fund as is referred to in sub-section (1), shall be apportioned between the trustees of the fund and the Corporation in the prescribed manner; and in case of any dispute regarding such apportionment, the decision of the Central Government thereon shall be final.

(3) The Corporation shall, as soon as may be after the appointed day, constitute in respect of the moneys and other assets which are transferred to and vested in it under this section, one or more trusts having objects as similar to the objects of the existing trusts as in the circumstances may be practicable.

(4) Where all the moneys and other assets belonging to an, existing trust are transferred to and vested in the Corporation under this section, the trustees of such trust, shall as from the appointed day, be discharged from the trust, except as respects things done or omitted to be done before the appointed day.

SECTION 09: GENERAL EFFECT OF VESTING OF CONTROLLED BUSINESS

(1) Unless otherwise expressly provided by or under this Act, all contracts, agreements and other instruments of whatever nature subsisting or having effect immediately before the appointed day and to which an insurer whose controlled business has been transferred to and vested in the Corporation is a party or which are in favour of such insurer shall in so far as they relate to the controlled business of the insurer be of as full force and effect against or in favour of the Corporation, as the case may be, and may be enforced or acted upon as fully and effectually as if instead of the insurer, the Corporation had been a party thereto or as if they had been entered into or issued in favour of the Corporation.

(2) If on the appointed day any suit, appeal or other legal proceeding of whatever nature is pending by or against an insurer, then, in so far as it relates to his controlled business it shall not abate, be discontinued or be in any way prejudicially affected by reason of the transfer to the Corporation of the business of the insurer or of anything done under this Act, but the suit, appeal or other proceeding may be continued, prosecuted and enforced by or against the Corporation,

SECTION 10: PROVISIONS AS TO COMPOSITE INSURERS

(1) For the removal of doubts it is hereby declared that in any case where an insurer whose controlled business has been transferred to and vested in the Corporation under this Act is a composite insurer, the provisions of the preceding sections shall only apply to the extent to which any property appertains to his controlled business and to rights and powers acquired, and to debts, liabilities and obligations incurred, and to contracts, agreements and other instruments made by the insurer for the purposes of his controlled business and to legal proceedings relating to those purposes, and the provisions of those sections shall be construed accordingly.

(2) The Central Government may, by rules made in this behalf, provide-

(a) for the determination of the question whether any property appertains to his controlled business or whether any rights, powers, debts, liabilities or obligations were acquired or incurred or any contract, agreement or other instrument was made by the insurer for the purposes of his controlled business or whether any documents relate to those purposes;

(b) for the allocation of the paid -up capital or assets representing such paid-up capital, as the case may be, between the controlled business of the insurer and any other business;

(c) for substituting for any agreements entered into by any insurer partly for the purposes of his controlled business and partly for other purposes separate agreements in the requisite terms and for any apportionments and indemnities consequent thereon;

(d) for the severance of leases comprising property of which part only is transferred to and vested in the Corporation by virtue of this Act and for apportionments consequent on such severance;

(e) for the apportionment and the making of financial adjustments with respect to any debts, liabilities or obligations incurred by any such insurer partly for the purposes of his controlled business and partly for other purposes and for any necessary variation of mortgages and encumbrances relating to such debts, liabilities or obligations;

(f)'for the apportionment of the moneys and other assets belonging to any provident or superannuation fund or any other like fund to which the provisions of section 8-do not apply between persons employed in connection with the controlled business of an insurer and other persons;

(g) for any other matters Supplementary to or consequential on the matters aforesaid for which provision appears to be necessary or expedient.

(3) All rules made under this section shall be laid for not less than thirty days before both Houses of Parliament as soon as possible after they are made, and shall be subject to such modifications as Parliament may make during the session in which they are so laid or the session immediately following.

(4) Where at any time before the expiration of six months from the appointed day a question has arisen under this section or under any rules made there under as to whether any property is or was held or used by the insurer for the purposes of his controlled business the question shall be referred to the Tribunal for decision.

SECTION 11: TRANSFER OF SERVICE OF EXISTING EMPLOYEES OF INSURERS TO THE CORPORATION

(l) Every whole-time employee of an insurer whose controlled business has been transferred to and vested in the Corporation and who was employed by the insurer wholly or mainly in connection with his controlled business, immediately before the appointed day shall, on and from the appointed day, become an employee of the Corporation, and shall hold his office therein by the same tenure, at the same remuneration and upon the same terms and conditions and with the same rights and privileges as to pension and gratuity and other matters as he would have held the same on the appointed day if this Act had not been passed, and shall continue to do so unless and until his employment in the Corporation is terminated or until his remuneration, terms and conditions are duly altered by the Corporation: Provided that nothing contained in this sub-section shall apply to any such employee who has, by notice in writing given to the Central Government prior to the appointed day, intimated his intention of not becoming an employee of the Corporation.

6[(2) Where the Central Government is satisfied that for the purpose of securing uniformity in the scales of remuneration and the other terms and conditions of service applicable to employees of insurers whose controlled business has been transferred to, and7[Vested in the Corporation], it is necessary so to do, or that, in the interests of the Corporation and its policy-holders, a reduction in the remuneration payable, or a revision of the other terms and conditions of service applicable, to employees or any class of them is called for the Central Government may, notwithstanding anything contained in sub-section (1), or in the Industrial Disputes Act, 1947, or in any other law for the time being in force, or in any award, settlement or agreement for the time being in force, alter (whether by way of reduction or otherwise) the remuneration and the other terms and conditions of service to such extent and in such manner as it thinks fit, and if the alteration is not acceptable to any employee, the Corporation may terminate his employment by giving him compensation equivalent to three months remuneration unless the contract of service with such employee provides for a shorter notice of termination.

(3) If any question arises as to whether any person was a whole-time employee of an insurer or as to whether any employee was employed wholly or mainly in connection with the controlled business of an insurer immediately before the appointed day, the question shall be referred to the Central Government whose decision shall be final.

(4) Notwithstanding anything contained in the Industrial Disputes Act, 1947, or in any other law for the time being in force, the transfer of the services of any employee of an insurer to the Corporation shall not entitle any such employee to any compensation under that Act or other law, and no such claim shall be entertained by any Court, Tribunal or other authority.

SECTION 12: TRANSFER OF SERVICES OF EXISTING EMPLOYEES OF CHIEF AGENTS OF INSURERS TO THE CORPORATION IN CERTAIN CASES

Subject to such rules as the Central Government may make in this behalf, every whole-time salaried employee of a chief agent of an insurer whose controlled business has been transferred to and vested in the Corporation and,-

(a) who was employed by the chief agent wholly or mainly in connection with the controlled business of the insurer;

(b) whose salary on the appointed day did not exceed five hundred rupees per mensem; and (c) who was in the employment of the chief agent for a continuous period of not less than one year immediately before the appointed day; shall, on and from the appointed day, become an employee of the Corporation and the provisions of section 11-shall, so far as may be, apply in relation to such employee as they apply in relation to a whole-time employee of the insurer: Provided that this section shall not apply except in cases where the chief agent of the insurer was required under the terms of his contract with the insurer to render the prescribed services to policy-holders of the insurer.

SECTION 13: DUTY TO DELIVER POSSESSION OF PROPERTY AND DOCUMENTS RELATING THERETO

(1) Where any property appertaining to the controlled business of an insurer has been transferred to and vested in the Corporation under this Act, then,-

(a) every person, in whose possession, custody or control any such property may be, shall deliver the property to the Corporation forthwith ;

(b) any person who, on the appointed day, has in his possession, custody or control any books, documents or other papers relating to such controlled business shall be liable to account for the said books, documents and papers to the Corporation, and shall deliver them to the Corporation or to such person as the Corporation may direct.

(2) In particular, all the assets of an insurer appertaining to life insurance business held in deposit by the Reserve Bank of India under the Insurance Act or by trustees in trust shall be delivered to the Corporation.

(3) Without prejudice to the other provisions contained in this section, it shall be lawful for the Corporation to take all necessary steps for securing possession of all properties which have been transferred to and vested in it under this Act.

SECTION 14: POWER OF CORPORATION TO MODIFY CONTRACTS OF LIFE INSURANCE IN CERTAIN CASES

The Corporation may, having regard to the financial condition on the appointed day of any insurer whose controlled business has been transferred to and vested in the Corporation, reduce the amounts of insurance under contracts of life insurance entered into by such insurer before the 19th day of January 1956, in such manner and subject to such conditions as it thinks fit: Provided that no such reduction shall be made except in accordance with a scheme prepared by the Corporation, in this behalf and approved by the Central Government.

SECTION 15: RIGHT OF CORPORATION TO SEEK RELIEF IN RESPECT OF CERTAIN TRANSACTIONS OF THE INSURER

(1) Where an insurer whose controlled business has been transferred to and vested in the Corporation under this Act, has at any time within five years before the 19th day of January 1956,-

(a) made any payment to any person without consideration;

(b) sold or disposed of any property of the insurer without consideration or for an inadequate consideration;

(c) acquired any property or rights for an excessive consideration;

(d) entered into or varied any agreement so as to require an excessive consideration to be paid or given by the insurer;

(e) entered into any other transaction of such an onerous nature as to cause a loss to, or impose a liability on, the insurer exceeding any benefit accruing to the insurer;

(f) if a composite insurer, transferred any property from his life department to his general department without consideration or for an inadequate consideration; and the payment, sale, disposal, acquisition, agreement or variation thereof or other transaction or transfer was not reasonably necessary for the purpose of the controlled business of the insurer or was made with an unreasonable lack of prudence on the part of the insurer, regard being had in either case to the circumstances at the time, the corporation may apply for relief to the Tribunal in respect of such transaction, and all parties to the transaction shall, unless the Tribunal otherwise directs, be made parties to the application.

(2) The Tribunal may make such order against any of the parties to the application as it thinks 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.

(3) Where an application is made to the Tribunal under this section in respect of any transaction and the application is determined in favour of the Corporation, the Tribunal shall have exclusive jurisdiction to determine any claims outstanding in respect of the transaction.

SECTION 16: COMPENSATION FOR ACQUISITION OF CONTROLLED BUSINESS

(1) Where the controlled business of an insurer has been transferred to and vested in the Corporation under this Act, compensation shall be given by the Corporation to that insurer in accordance with the principles contained in the First Schedule.

(2) The amount, of the compensation to be given in accordance with the aforesaid principles shall be determined by the Corporation in the first instance, and if the amount so determined is approved by the Central Government, it shall be offered to the insurer in full satisfaction of the compensation payable to him under this Act, and if, on the other hand, the amount so offered is not acceptable to the insurer, he may, within such time as may be prescribed for the purpose, have the matter referred to the Tribunal for decision.

CHAPTER 5 MANAGEMENT

SECTION 17: CONSTITUTION OF TRIBUNAL

(1) The Central Government may for the purposes of this Act constitute one or more Tribunals and each of the Tribunals shall consist of three members appointed by the Central Government one of whom shall be a person who is, or has been, a Judge of a High Court or has been a Judge of the Supreme Court, and he shall be the Chairman thereof.

(2) A Tribunal may choose one or more persons possessing special knowledge of any matter relating to any case under inquiry to assist the Tribunal in determining any question which has to be decided by it under this Act.

(3) Every Tribunal shall have the powers of a Civil Court while trying a suit under the Code of Civil Procedure, 1908 in respect of the following matters :-

(a) summoning and enforcing the attendance of any person and examining him on oath;

(b) requiring the discovery and production of documents;

(c) receiving evidence on affidavits;

(d) issuing commissions for the examination of witnesses or documents.

(4) Every Tribunal shall have power to regulate its own procedure and decide all matters within its competence, and may review any of its decisions in the event of there being a mistake on the face of the record or correct any arithmetical or clerical error therein.

SECTION 18: OFFICES, BRANCHES AND AGENCIES

(1) The central office of the Corporation shall be at such place as the Central Government may, by notification in the Official Gazette, specify.

(2) The Corporation shall establish a zonal office at each of the following places, namely, Bombay,

Calcutta, Delhi, Kanpur and Madras, and subject to the previous approval of the Central Government, may establish such other zonal offices as it thinks fit.

(3) The territorial limits of each zone shall be such as may be specified by the Corporation.

(4) There may be established as many divisional offices and branches in each zone as the Zonal Manager thinks fit.

SECTION 19: COMMITTEES OF THE CORPORATION

(1) The Corporation may entrust the general superintendence and direction of its affairs and business to an Executive Committee consisting of not more than five of its members and the Executive Committee may exercise all powers and do all such acts and things as may be delegated to it by the Corporation.

(2) The Corporation may also constitute an Investment Committee for the purpose of advising it in matters relating to the investment of its funds and the Investment Committee shall consist of not more than 9[eight members of whom not less than four] shall be members of the Corporation and the remaining members shall be persons (whether members of the Corporation or not) who have special knowledge and experience in financial matters, particularly matters relating to investment of funds.

(3) The Corporation may constitute such other Committees as it may think fit for the purpose of discharging such of its functions as may be delegated to them.

"The Committee feel that the constitution of an Investment Committee to advice the Corporation in matters relating to the investment of its funds is very much necessary and it should find specific mention in this clause. The clause has, therefore, been recast accordingly."-S.C.R.State Amendments

SECTION 20: MANAGING DIRECTORS

The Corporation may appoint one or more persons to be the Managing Director or Directors of the Corporation, and every Managing Director shall be a whole-time officer of the Corporation, and shall exercise such powers and perform such duties as may be entrusted or delegated to him by the Executive Committee or the Corporation.

SECTION 21: CORPORATION TO BE GUIDED BY THE DIRECTIONS OF CENTRAL GOVERNMENT

In the discharge of its functions under this Act, the Corporation shall be guided by such directions in matters of policy involving public interest as the Central Government may give to it in writing; and if any question arises whether a direction relates-to a matter of policy involving public interest, the decision of the Central Government thereon shall be final.

SECTION 22: ZONAL MANAGERS

(1) The Corporation may entrust the superintendence and direction of the affairs and business of a zonal office to a person, whether a member or not, who shall be known as the Zonal Manager and the Zonal Manager shall perform all such functions of the Corporation as may be delegated to him with respect to the area within the jurisdiction of the zonal office.

(2) The Corporation may constitute for each zone a Board consisting of such number of persons as it thinks fit to appoint thereto for the purpose of advising the Zonal Manager in respect of such matters as are referred to it under the regulations made by the Corporation.

(3) The Corporation shall constitute in the prescribed manner for each zonal office an Employees and Agents Relations Committee consisting of such number of persons as it thinks fit and every such Committee shall consist of representatives of the Corporation and of its employees and agents, so however, that the number of representatives of the employees and agents on the Committee shall not be less than the number of representatives of the Corporation and it shall be the duty of the Committee to advice the Zonal Manager on matters which relate to the welfare of the employees and agents of the

Corporation or which are likely to promote and secure amity and good relations between them and the Corporation.

SECTION 23: STAFF OF THE CORPORATION

(1) For the purpose of enabling it to discharge its functions under this Act, the Corporation may employ such number of persons as it thinks fit.

(2) Every person employed by the Corporation or whose services have been transferred to the Corporation under this Act, shall be liable to serve anywhere in India.

CHAPTER 6 FINANCE, ACCOUNTS AND AUDIT

SECTION 24: FUNDS OF THE CORPORATION

The Corporation shall have its own fund and all receipts of the Corporation shall be credited thereto and all payments of the Corporation shall be made there from.

SECTION 25: AUDIT

(1) The accounts of the Corporation shall be audited by auditors duly qualified to act as auditors of companies under the law for the time being in force relating to companies, and the auditors shall be appointed by the Corporation with the previous approval of the Central Government and shall receive such remuneration from the Corporation as the Central Government may fix.

(2) Every auditor in the performance of his duties shall have at all reasonable times access to the books, accounts and other documents of the Corporation.

(3) The auditors shall submit their report to the Corporation and shall also forward a copy of their report to the Central Government.

SECTION 26: ACTUARIAL VALUATIONS

The Corporation shall, once at least in every two years, cause an investigation to be made by actuaries into the financial condition of the10[life insurance business of the Corporation, including a valuation of the liabilities of the-Corporation in respect thereto], and submit the report of the actuaries to the Central Government.

SECTION 27: ANNUAL REPORT OF ACTIVITIES OF CORPORATION

The Corporation shall, as soon as may be, after the end of each financial year, prepare and submit to the Central Government in such form as may be prescribed a report giving an account of its activities during the previous financial year, and the report shall also give an account of the activities, if any which are likely to be undertaken by the Corporation in the next financial year.

SECTION 28: SURPLUS FROM LIFE INSURANCE BUSINESS HOW TO BE UTILIZED

If as a result of any investigation undertaken by the Corporation under section 26-any surplus emerges, ninety-five per cent of such surplus or such higher percentage thereof as the Central Government may approve shall be allocated to or reserved for the life insurance policy-holders of the Corporation and after meeting the liabilities of the Corporation, if any, which may arise under section 9, the remainder shall be paid to the Central Government or if that Government so directs, be utilized for such purposes and in such manner as that Government may determine.]

SECTION 28A: PROFITS FROM ANY BUSINESS (OTHER THAN LIFE INSURANCE BUSINESS) HOW TO BE UTILIZED

If for any financial year profits accrue from any business (other than life insurance business) carried on by the Corporation, then, after making provision for reserves and other matters for which provision is necessary or expedient, the balance of such profits shall be paid to the Central Government.]

SECTION 29: REPORT TO BE LAID BEFORE PARLIAMENT

The Central Government shall cause the report of the auditors under section 25 -, the report of the actuaries under section 26 and the report giving an account of the activities of the Corporation under section 27-to be laid before both Houses of Parliament as soon as may be after each such report is received by the Central Government.

CHAPTER 7 MISCELLANEOUS

SECTION 30: CORPORATION TO HAVE THE EXCLUSIVE PRIVILEGE OF CARRYING ON LIFE INSURANCE BUSINESS

Except to the extent otherwise expressly provided in this Act on and from the appointed day, the Corporation shall have the exclusive privilege of carrying on life insurance business in India; and on and from the said day any certificate of registration under the

Insurance Act held by any insurer immediately before the said day shall cease to have effect in so far as it authorizes him to carry on life insurance business in India.

SECTION 31: EXCEPTION IN THE CASE OF INSURANCE BUSINESS IN RESPECT OF PERSONS RESIDING OUTSIDE INDIA

(1) Notwithstanding anything contained in section 30 -or in the Insurance 'Act, the Central Government may, by order, permit any person who has made an application in that behalf, to carry on life insurance business in India in respect of the lives of persons ordinarily resident outside India, subject to such restrictions and conditions as may be specified in the order and any such order shall be deemed to have effect as if it were a certificate of registration issued by the Controller to such person under section 3-of the Insurance Act in respect of that class of business.

(2) Nothing in sub-section (1) shall authorize any person permitted to carry on life insurance business of the nature referred to in that sub-section, to insure the life of any person ordinarily resident outside India, during any period of his temporary residence in India.

SECTION 32: POWER OF CORPORATION TO HAVE OFFICIAL SEAL IN CERTAIN CASES

The Corporation may have for use in any zonal office, divisional office or in any office outside India an official seal which shall be a facsimile of the common seal of the Corporation with the addition on its face of the name of the zonal office, divisional office or other office where it is to be used, and any such official seal may be affixed to any deed or document to which the Corporation is a party.

SECTION 33: REQUIREMENT OF FOREIGN LAWS TO BE COMPLIED WITH IN CERTAIN CASES

Where any property or rights appertaining to the controlled business of an insurer are transferred to and vested in the Corporation under this Act or would be so transferred and vested but for the fact that such transfer and vesting are governed otherwise than by the law of India, the insurer shall comply with such directions as may be given to him by the Corporation for the purpose of securing that the ownership of the property or, as the case may be, that the right is effectively transferred to the Corporation.

SECTION 34: REVESTING OF CERTAIN SHARES VESTED IN THE ADMINISTRATOR-GENERAL

Notwithstanding anything contained in the Insurance Act, all shares which have vested in the Administrator -General of any State under sub-section (8) of section 6A-of that Act and which have not been disposed of in accordance with the provisions of that subsection before the appointed day shall, on payment of the amount of expenditure, if any, incurred by the Administrator-General in relation to such shares by the persons who would have been entitled to those shares if the said sub-section had not been enacted, revest in such persons.

SECTION 35: REPATRIATION OF ASSETS AND LIABILITIES IN THE CASE OF FOREIGN INSURERS IN CERTAIN CASES

(1) Any insurer incorporated outside India may, before the appointed day, make an application to the Central Government stating that among the assets appertaining to the controlled business of the insurer there are assets brought into India by the insurer for the purpose of building up his life insurance business in India which notwithstanding anything contained in section 7-, should not be transferred to and vested in the Corporation.

(2) On receipt of an application under sub-section (1), the Central Government shall determine the value of the assets of the insurer appertaining to his controlled business in existence on the 31st day of December, 1955, computed as at that date in accordance with the provisions contained in paragraph 3 of Part B of the First Schedule, and deduct  there from the total amount of the liabilities of the insurer appertaining to his controlled business in existence on the 31st day of December, 1955, computed as at that date in accordance with the provisions contained in the Second Schedule; and if there is any excess, the Central Government may, by order, direct that such assets equivalent in value to the excess as may be specified in the order shall not be transferred to or vested in the Corporation or where the order is made after the appointed, day, that the Corporation shall be divested of the said assets. (3) In the case of any insurer incorporated outside India, the Central Government may also, by order, direct that any such liabilities in respect of life insurance policies expressed in any foreign currency issued on the lives of persons who are not citizens of India as are specified in the order together with any such assets necessary to meet the liabilities, as may be so specified, shall not be transferred to or vested in the Corporation or, if the order is made after the appointed day, that the

Corporation shall be divested of such liabilities and assets as aforesaid.

(4) The amount of liabilities in respect of the policies referred to in an order made under sub-section (3) shall be computed as at 31st day of December 1955,-

(a) in any case where in respect of the insurer concerned an order has been made under sub-section (2), in accordance with the provisions contained in clause (b) of the Second Schedule; and

(b) in any other case, in accordance with method A specified in the Second Schedule.

(5) Every order made by the Central Government under this section shall be carried out ' by the Corporation in such manner as the Central Government may direct.

SECTION 36: CONTRACTS OF CHIEF AGENTS AND SPECIAL AGENTS TO TERMINATE

Notwithstanding anything contained in the Insurance Act or in any other law for the time being in force, every contract appertaining to controlled business subsisting immediately before the appointed day,-

(a) between an insurer and his chief agent or between an insurer and a special agent; or

(b) between the chief agent of an insurer and a special agent; shall, as from the appointed day cease to have effect and all rights accruing to the chief agent or the special agent under any such contract shall terminate on that day: Provided that in every such case compensation shall be given by the Corporation to the chief agent or the special agent, as the case may be in accordance with the principles contained in the Third Schedule, and the provisions of sub-section (2) of section 16-shall, so far as may be apply in every such case.

SECTION 37: POLICIES TO BE GUARANTEED BY CENTRAL GOVERNMENT

The sums assured by all policies issued by the Corporation including any bonuses declared in respect thereof and, subject to the provisions contained in section 14 -the amounts assured by all policies issued by any insurer the liabilities under which have vested in the Corporation under this Act, and all bonuses declared in respect thereof, whether before or after the appointed day, shall be guaranteed as to payment in cash by the Central Government.

SECTION 38: LIQUIDATION OF CORPORATION

No provision of law relating to the winding up of companies or corporations shall apply to the Corporation established under this Act and the Corporation shall not be placed in liquidation save by order of the Central Government and in such manner as that

Government may direct.

SECTION 39: SPECIAL PROVISIONS FOR WINDING UP OF CERTAIN INSURERS

Where any insurer being a company (other than a composite insurer) whose controlled business has been transferred to and vested in the Corporation under this Act has, in accordance with the provisions of this Act, collected and distributed any moneys paid to him by the Corporation by way of compensation or otherwise and has also complied with any direction given to him by the Corporation for the purpose of securing that the ownership of any property, or any right is effectively transferred to the Corporation, the Central Government may, on application being made to it in this behalf by such insurer grant a certificate to the insurer that there is no reason for the continued existence of the insurer and where such a certificate has been granted shall cause the certificate to be published in the Official Gazette and upon the publication thereof the insurer shall be dissolved.

SECTION 40: PENALTY FOR WITHHOLDING PROPERTY, ETC

If any person wilfully withholds or fails to deliver to the Corporation as required by section 13 -, any property or any books, documents or other papers which may be in his possession or unlawfully retains possession of any property of an insurer which has been transferred to and vested in the Corporation under this Act or wilfully applies any such property to purposes other than those expressed in or authorized by this Act, he shall, on the complaint of the Corporation, be punishable with imprisonment which may extend to one year, or with fine which may extend to one thousand rupees, or with both.

SECTION 41: TRIBUNAL TO HAVE EXCLUSIVE JURISDICTION IN CERTAIN MATTERS

No Civil Court shall have jurisdiction to entertain or adjudicate upon any matter which a Tribunal is empowered to decide or determine under this Act.

SECTION 42: ENFORCEMENT OF DECISIONS OF TRIBUNALS

Any decision of a Tribunal may be enforced in any Civil Court within the local limits of whose jurisdiction the person against whom the decision is to be enforced actually and voluntarily resides or carries on business or personally works for gain or owns any property, as if it were a decree passed by that Court.

SECTION 43: APPLICATION OF THE INSURANCE ACT

(1) The following sections of the Insurance Act shall, so far as may be, apply to the Corporation as they apply to any other insurer, namely,- Sections 2,2B, 3, 18,26,33,38,39,41,45,46,47A, 50,51,52, 110A, 110B, 110C, 119, 121, 122 and 123.

(2) The Central Government shall, as soon as may be after the commencement of this Act,- by notification in the Official Gazette, direct that the following sections of the Insurance Act shall apply to the Corporation subject to such conditions and

modifications as may be specified in the notification, namely- Sections 2D, 10,11,13,14,15,20,21,22,23,25; 27A, 28A, 35,36,37,40,40A, 40B, 43,44, 102 to l06,107 to 110,111,113,114 and 116A. 14[(2A)Section 42-of the Insurance Act shall have effect in relation to the issue to any individual of a licence to act as an agent for the purpose of soliciting or procuring life insurance business for the Corporation as if the reference to an officer authorized by the Controller in this behalf in sub-section (1) thereof included a reference to an officer of the Corporation authorised by the Controller in this behalf.]

(3) The Central Government may, by notification in the Official Gazette, direct that all or any of the provisions of the Insurance Act other than those specified in sub -section (1) or sub-section (2), shall apply to the Corporation subject to such conditions and modifications as may be specified in the notification.

(4) Every notification issued under sub-section (2) or sub-section (3) shall be laid for not less than thirty days before both Houses of Parliament as soon as possible after it is issued, and shall be subject to such modifications as Parliament may make during the session in which it is so laid or the session immediately following.

(5) Save as provided in this section, nothing contained in the Insurance Act shall apply to the Corporation.

SECTION 43A: DEDUCTION OF INCOME-TAX NOT TO BE MADE ON INTEREST OR DIVIDEND

Notwithstanding anything contained in or section l94 of the Income-tax Act, 1961-, no deduction of income-tax shall be made on any interest or dividend payable to the Corporation in respect of any securities or shares owned by it or in which it has full beneficial interest.]

SECTION 44: ACT NOT TO APPLY IN CERTAIN CASES

Nothing contained in this Act shall apply in relation to-

(a) any insurer whose business is .being voluntarily wound up or is being wound up under the orders of the Court;

(b) any insurer to whom the Insurance Act does not apply by reason of the provisions contained in section 2E -thereof;

(c) any composite insurer in respect of the management of whose affairs an Administrator has been appointed under section 52A of the Insurance Act-;

(d) the scheme run by the Central Government known as the Post Office Life Insurance Fund;

(e) any approved superannuation fund as defined in clause (a) of section 58 N of the Indian Income-tax Act, 1922, which is in existence on the appointed day;

(f) any scheme in existence on the appointed day or any scheme framed after the appointed day with the approval of the Central Government whereby, in consideration of certain compulsory deductions made by Government from the salaries of its employees as part of the conditions of service, the payment of money is assured by Government on the death of the employee concerned or on the happening of any contingency dependent on his life;

16[(g) any Family Pension Scheme framed under the Coal Mines Provident Fund, Family Pension and Bonus Schemes Act, 1948, or the Employees' Provident Funds and Family Pension Fund Act, 1952, for the purpose of providing family pension and life insurance benefits to the employees covered by the said Scheme.]

SECTION 45: SPECIAL PROVISIONS REGARDING TRANSFER OF CONTROLLED BUSINESS OF CERTAIN COMPOSITE INSURERS

Notwithstanding anything contained in clause (c) of section 44-, the Central Government may, by notification in the Official Gazette, direct that on and with effect from Such date as may be specified in the notification the assets and liabilities appertaining to the controlled business of a composite insurer in respect of the management of whose affairs an Administrator has been appointed under section 52 -A of the Insurance Act-shall be transferred to and vested in the Corporation, and on the issue of such a notification

the provisions of this Act shall, so far as may be, apply in relation to such insurer and to the transfer and vesting of the assets and liabilities of his controlled business in the Corporation as they apply in relation to all other insurers and to the transfer and vesting of the assets and liabilities of their controlled business in the Corporation, subject to the modification that references in this Act to the appointed day shall be construed as references to the day specified in the notification.]

SECTION 46: DEFECTS IN CONSTITUTION OF CORPORATION OR COMMITTEES NOT TO INVALIDATE ACTS OR PROCEEDINGS

No act or proceeding of the Corporation or of any Committee of the Corporation shall be called in question on the ground merely of the existence of any vacancy or defect in the constitution of the Corporation or Committee, as the case may-be.

SECTION 47: PROTECTION OF ACTION TAKEN UNDER ACT

No suit, prosecution or other legal proceeding shall lie against any member or employee of the Corporation for anything which is in good faith done or intended to be done under this Act.

SECTION 48: POWER TO MAKE RULES

(1) The Central Government may, by notification in the Official Gazette, make rules' to carry out the purposes of this Act.

(2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely,-

(a) the term of office and the conditions of service of members;

(b) the manner in which the moneys and other assets belonging to any such fund as is referred to in section 8-shall be apportioned between the trustees of the fund and the Corporation;

(c) the services which the chief agent should have rendered for the purpose of the proviso to section 12-;

19[(cc) the terms and conditions of service of the employees and agents of the Corporation, including those who became employees and agents of the Corporation on the appointed day under this Act;]

(d) the jurisdiction of the Tribunals constituted under section 17-;

(e) the manner in which, and the persons to whom, any compensation under this Act may be paid;

(f) the time within which any matter which may be referred to a Tribunal for decision under this Act may be so referred;

(g) the manner in which and the conditions subject to which investments may be made by the Corporation;

(h) the manner in which an Employees and Agents Relations Committee may be constituted for each zonal office;

(i) the form in which the report giving an account of the activities of the Corporation shall be prepared;

(j) the conditions subject to which the Corporation may appoint employees;

(k) the fees payable under this Act and the manner in which they are to' be collected;

(1) any other matter which has to be or may be prescribed.

20[(2A) The regulations and other provisions as in force immediately before the commencement of the Life Insurance Corporation (Amendment) Act, 1981, with respect to the terms and conditions of service of employees and agents of the Corporation including those who became employees and agents of the Corporation on the appointed day under this Act, shall be deemed to be rules made under clause (cc) of sub-section (2) and shall, subject to the other provisions of this section, have effect accordingly:

(2B) The power to make rules conferred by clause (cc) of sub-section (2) shall include -

(i) the power to give retrospective effect to such rules; and

(ii) the power to amend by way of addition, variation or repeal, the regulations and other provisions referred to in sub-section (2A), with retrospective effect, from a date not earlier than the twentieth day of June, 1979,

(2C) The provisions of clause (cc) of sub-section (2) and sub-section (2B) and any rules made under the said clause (cc) shall have effect, and any such rule made with retrospective effect from any date shall also be deemed to have had effect from that date, notwithstanding any judgment, decree or order of any court, tribunal or other authority and notwithstanding anything contained in the Industrial Disputes Act, 1947 or any other law or any agreement, settlement, award or other instrument for the time being in force.]

21[(3) Every rule made by the Central Government under this Act shall be laid, as soon as may be after it is made, before each House of Parliament while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or both Houses agree that the rule should not be made, the rule shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule.]

SECTION 48A: ACT TO APPLY TO GOA, DAMAN AND DIU SUBJECT TO MODIFICATIONS

The provisions of this Act shall, in their application to the Union territory of Goa, Daman and Diu, have effect subject to the following modifications, namely,-

SECTION 49: POWER TO MAKE REGULATIONS

26(1) The Corporation may, with the previous approval of the Central government, by notification in the Gazette of India, make regulations not inconsistent with this Act and the rules made there under to provide for all matters for which provision is expedient for the purpose of giving effect to the provisions of this Act.

(2) In particular, and without prejudice to the generality of the foregoing power, such regulations may provide for

(a) the powers and functions of the Corporation which may be delegated to the Zonal Managers;

(b) the method of recruitment of employees and agents of the Corporation23[ * * * * * * * * * * * * * * * *]24 [* * * * * * * * * * * ** * * * * ]

(c). the number, term of office and conditions of service of members of Boards constituted under section 22-;

(d) the territorial limits of each zone established under this Act and the business to be transacted in each zone;

(e) the manner in which the Fund of the Corporation shall be maintained;

(f) the maintenance of separate funds and accounts at each of the zonal offices;

(g) the jurisdiction of each divisional office and the establishment of Councils representative of policy holder s in each area served by a divisional office for the purpose of advising the divisional office in respect of any matter which may be referred to it;

(h) the conduct of business at meetings of the Corporation;

(i) the formation of Committees of the Corporation and the delegation of powers and functions of the Corporation to such Committees, and the conduct of business at meetings of such Committees;

(j) the form and manner in which policies may be issued and contracts binding on the Corporation may be executed;

(k) the classification of policies, whether issued by the Corporation or by any insurer whose controlled business has been transferred to and vested in the Corporation, for the purpose of declaring differential bonuses, wherever necessary;

(l) the manner in which and the intervals within which the accounts of the various zonal offices, divisional offices and branch offices may be inspected and their accounts audited;

(m) the conditions subject to which any payment may be made by the Corporation.

25[(3) Every regulation made under this section shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry, of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the regulation or both Houses agree that the regulation should not be made, the regulation shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that regulation.]

Footnotes:

3. 1st September, 1956, see S.R.O., 1937, dated 30-8-1956 published in Gazette of India. 30-8-1956, Pt.II- sec. 3, Ext., p. 1799.

4. Substituted for the word "fifteen" by the Public Financial Institutions Laws (Amendment) Act, 1975

(52 of 1975), sec. 40 (16-2-1976).

6. Substituted for the former sub-section (2) by the Life Insurance Corporation (Amendment) Act, 1957 (17 of 1957), section 2 (6-6-1957).

7. Substituted for the words "vested in it" by the Repealing and Amending Act, 1957 (36 of 1957), section 3 and Schedule 11 (17-9-1957).

8. Bombay is the place so specified-See S.R.O. 1939, dated 30-8-1956, published in Gaz. of Ind., 1956, Extra, Pt. II, section 3, page 1799.

9. Substituted for the words "seven members of whom not less than three" by the Public Financial Institutions Laws (Amendment) Act, 1975 (52 of 1975), S. 42 (16-2-1976).

10. Substituted for the words "business of the Corporation, including a valuation of the liabilities of the Corporation", by the Life Insurance Corporation (Amendment) Act, 1965 (33 of 1965), section 2 (29-9-1965)

14. Inserted by the Life Insurance Corporation (Amendment) Act, 1957 (17 of 1957), S. 3 (6-6-1957).

16. Inserted by Labour Provident Fund Laws (Amendment) Act, 1971 (16 of 1971), Section 31 (23-4-1971).

19. Inserted and deemed to have been so inserted w.r.e.f. 20-6-1979 by Life Insurance Corporation (Amendment) Act, 1981 (1 of 1981), Section 2 (a).

20. Inserted, by Life Insurance Corporation (Amendment) Act, 1981, S. 2 (b)(31-l-81).

21. Substituted by Financial Institutions Laws (Amendment) Act, 1975 (52 of 1975), S. 43 (16-2-1976).

24. Cl. (bb) omitted, by Life Insurance Corporation (Amendment) Act, 1981, S. 3(a)(ii).

25. Added, by Life Insurance Corporation (Amendment) Act, 1981, S. 3 (b).

26. For Life Insurance Corporation of India (Agents) Regulations, 1972-See Gaz. of India, 1-5-1972, Pt.

III, S. 4, Ext., p. 1.

LIFE INSURANCE CORPORATION OF INDIA CLASS III AND GLASS IV EMPLOYEES (BONUS AND DEARNESS ALLOWANCE) RULES, 1981

In exercise of the powers conferred by Section 48 of the Life Insurance Corporation Act, 1956 (31 of 1956), as amended by the Life Insurance Corporation (Amendment) Ordinance, 1981 (Ordinance No. 3 of 1981), the Central Government hereby makes the following rules, namely:-

RULE 01: SHORT TITLE AND COMMENCEMENT

(1) These rules may be called the Life Insurance Corporation of India Class III and Glass IV Employees (Bonus and Dearness Allowance) Rules, 1981.

(2) This rule and Rule 4-shall come into force on the date of the publication of these rules in the Official Gazette and the remaining provisions of these rules shall be deemed to have come into force on the 1st day of July, 1979.

RULE 02: DEFINITIONS

-In these rules unless the context otherwise requires,-

(a) "Act" means the Life Insurance Corporation Act, 1956;

(b) " employee'' means an employee of the Life Insurance Corporation of India and includes any person who became an employee of the Corporation on the appointed day under the Act.

RULE 03: BONUS

(1) No Glass III or Class IV employee of the Corporation ahall be entitled to the payment of any profit sharing bonus or any other kind of caih bonus.

(2) Notwithstanding anything contained in sub-rule (1) every Class III and Class IV employee shall be entitled to a payment in lieu of bonus-

(a) for the period commencing from 1st day of July, 1979 and ending on 31st day of March, 1980 at the rate of fifteen per cent of his salary;

(b) thereafter for every year commencing on the first day of April and ending on the 31st day of March of the following year, at such rate and subject to such conditions as the Central Government may by notification in the Official Gazette, determine having regard to the wage level, the financial circumstances and other relevant factors:

Provided that-

(i) no payment in lieu of bonus shall be payable to any employee drawing a salary exceeding Rs. 1600/- per month;

(ii) where the salary of an employee exceeds Rs. 750/- per month but does not exceed Rs. 1600/- per month, the maximum payment in lieu of bonus payable to such employee shall be calculated as if his salary were Rs. 750/- per month.

Explanation-For the purposes of this sub-rule "salary" means basic pay, special pay, if any and Dearness Allowance.

(3) Regulation 58 of the Life Insurance Corporation of India (Staff) Regulations, 1960 and all other provisions relating to the payment of any bonus (including ex gratia payment in lieu of bonus) to the employees, to the extent that Regulation and such other provisions are inconsistent with this rule are hereby rescinded.

RULE 04: DEARNESS ALLOWANCE IN RESPECT OF GLASS LIT AND CLASS IV EMPLOYEES

Regulation 51 of the Life Insurance Corporation of India (Staff) Regulations, 1960 and all other provisions relating to dearness allowance pay- able to (3la_s III and Glass IV employees shall have effect subject to the modification that the increase or decrease, as the case may be, in the dearness allowance payable to Class III and Glass IV employees by reason of revision on quarterly basis for every four points rise or fall in the All India Average Consumer Price Index Numbers for Industrial Workers-(Base: 1960==100) shall be limited to Rs. 15.80.

RULE 05: INTERPRETATION

Where any doubt, or difficulty arises as to the interpretation of any of these rules it shall be referred to the Central Government for its decision.

LIFE INSURANCE CORPORATION OF INDIA (REGULATION OF SUPERANNUATION) RULES, 1987

In exercise of the powers conferred by clause (cc) of sub-section (2) of Section 48 of the Life Insurance Corporation Act, 1956 (31 of 1956), the Central Government hereby makes the following rules, namely:-

RULE 01: SHORT TITLE AND COMMENCEMENT

(1) These rules may be called the Life Insurance Corporation of India (Regulation of Superannuation) Rules, 1987.

(2) They shall come into force on the date of publication in the Official Gazette.

RULE 02: DEFINITIONS

(a) "Staff Rules" means the Life Insurance Corporation of India (Scaff) Regulations, 1960;

(b) words and expressions used in these rules and not defined herein but defined in the Staff Rules, shall have the meanings respectively assigned to them in the Staff Rules.

RULE 03: SUPERANNUATION AND RETIREMENT

For the purposes of Rule 19of the Staff Rules and Rule 2of the Life Insurance Corporation of India Class III and Class IV Employees (Superannuation and Retirement) Rules, 1983, where an employee is to retire on completion of 58 years or 60 years of age, he shall retire with effect from the afternoon of the last day of the month in which he so completes the age of 58 years or 60 years.

LIFE INSURANCE CORPORATION RULES, 1956

S.R.O. 1899-A.-In exercise of the powers conferred by Sec. 48 of the Life Insurance Corporation Act, 1956 (31 of 1956), the Central Government hereby makes the following rules, namely:

RULE 01: SHORT TITLE

These rules may be called the Life Insurance Corporation Rules, 1956.

RULE 02: DEFINITIONS

-In these rules-

3(1-a) "chairman" means chairman appointed by the Central Government under sub-section (1) of Sec. 4-] :

(ii) "section" means a section of the Act ;

(iii) "Tribunal" means the tribunal constituted by the notification of the Government of India in the Ministry of Finance S.R.O. No. 1734, dated the 25th May, 1957.]

RULE 03: TERM OF OFFICE OF MEMBERS

(1) An official member shall hold office during the pleasure of the Central Government.

(2) A non-official member shall hold office for a period of two years unless a shorter period is specified in the order of appointment.

(3) An outgoing member shall be eligible for re-appointment.

RULE 03A: OFFICE OF THE CHAIRMAN

The office of the chairman shall be whole-time

RULE 04: REGISTRATION OF MEMBERS

The Chairman or any member may, by writing under his hand addressed to the Central Government, resign his office, and such resignation shall take effect from the date on which it is accepted by the Central Government,4[or on the expiry of thirty days from the date of resignation whichever is earlier.)

RULE 05: ABSENCE FROM MEETINGS

Any member who absents himself from three consecutive meetings of the Corporation without leave of the corporation shall cease to be a member thereof.

RULE 06: REMOVAL OF MEMBER

(1) The Central Government may remove any member, who in the opinion of that Government, has so flagrantly abused in my manner his position as a member as to render his continuance as a member detrimental to the public interest.

(2) No member shall be removed under sub-rule (1) unless he has been given a reasonable opportunity of showing cause against his removal.

RULE 07: CASUAL VACANCIES AMONG MEMBERS

In the event of the occurrence of any vacancy in the office of a member by reason of his death, resignation or removal, or otherwise, the Central Government may appoint another person act in his place.

RULE 08: FEES OF MEMBERS

A member not being a whole-time officer of the Corporation or an officer of the Central Government shall be paid fees by the Corporation as follows:

(a) for attending meetings of the Corporation-Rs. 100 for each meeting;

5(b) for attending meetings of any Committee constituted by the Corporation6[Rs. 50] for each meeting] ;7[ * * * * ]

RULE 09: TRAVELLING AND DAILY ALLOWANCES

(1) Every non-official member shall be entitled to-

(a) travelling allowances for journey performed by him in connection with the work of the Corporation at the rates admissible to officers of the first grade in service of the Central Government:

Provided that every such member shall, when travelling by rail, be entitled to travel by air-conditioned accommodation if such accommodation is available;

6[(b) daily allowances for halts on duty at the rate of Rs. 30 per day.]

(2) The travelling and daily allowances of an official member shall be governed by the rules applicable to him for journeys performed on official duty; and in case such official member is not in the service of the Corporation, the Corporation shall make necessary reimbursement to the authority employing such official.

RULE 10: APPORTIONMENT OF PROVIDENT FUND, ETC

(1) Where all the employees of an insurer whose controlled business is transferred to and vested in the Corporation under Sec. 7-do not become employees of the Corporation under Sec. II, all the moneys and other assets belonging to the provident fund or superannuation fund or any other like fund referred to in sub-section (1) of Sec. 8-shall be apportioned between the trustees of the fund and the Corporation in the following manner, namely:

(i) the moneys and other assets of any provident fund shall be apportioned in the proportion which the total of the amounts lying to the credit of the persons becoming employees of the Corporation bears to the total of the amounts lying to the credit of the person who do not become employees of the Corporation;

(ii) the moneys and other assets of any superannuation fund shall be apportioned in the proportion which the liability of the fund in respect of the person becoming employees of the Corporation bears to a similar liability in respect of the persons who do not become employees of the Corporation, such liability to be ascertained on such basis as may be determined by the Corporation and approved by the Central Government, and

(iii) the moneys and other assets of any other like fund shall be apportioned in accordance with the principles set out in Cl. (i) or Cl. (ii), as the case may be.

(2) The provisions of sub-rule (1), shall, so far as may be, apply in relation to the valuation and apportionment of moneys and other assets belonging to any provident fund or superannuation fund or any other like fund referred to in Cl. (f) of sub-section (2) of Sec. 10-, as they apply in relation to the apportionment and valuation of moneys and other assets belonging to a provident fund, superannuation fund or any other like fund referred to in sub- section (1) of Sec. 8-.

Explanation.-For the purposes of this rule the assets of a provident fund, superannuation fund of any other like fund shall be valued at the market rates as on the appointed day.

RULE 11: TRANSFER OF SERVICE OF EXISTING EMPLOYEES OF CHIEF AGENTS

The provisions of Sec. 12-shall apply only in respect of the employees of a chief agent of an insurer who was, under the terms of his contract with the insurer, require to render the following services to the policy-holders, namely:

(a) collection of premium, from the policy-holders in respect of policies secured through his insurance agents in the area for which he was appointed chief agent ; and

(b) issuing of final (pukka) receipts for the premiums so collected.

RULE 12: REFERENCE TO THE TRIBUNAL, ETC

(1) Where the amount of compensation offered under sub-section (2) of Sec. 16-is not acceptable to an insurer, or where the compensation offered under Sec. 36-is not acceptable to a chief agent or a special agent, the insurer, the chief agent or the special agent, as the case may be, may, for the purpose of having the matter referred to the Tribunal, apply to the Corporation along with the documents specified, if any, in this behalf by the Tribunal in regulations made by it under Sec. 17(in this rule referred to as the regulation)-

(a) in cases where the compensation was offered before the 1st day of November, 1964, not later than 31st day of January, 1965, or, if the applicant is an insurer to whom compensation is payable under Part B of the First Schedule to the Act, not later than the 31st day of April, 1965 ;

(b) in all other cases within three months from the date on which the compensation is offered or, if the applicant is an insurer to whom compensation is payable under Part B of the First Schedule to the Act, within six months from the date on which the compensation is offered.

(2) The Corporation shall within three months of the date of receipt of an application under sub rule (1) refer the matter to the Tribunal for decision along with a written statement and other documents specified, if any, by the Tribunal in the regulations.

(3)(i) Where an application under sub-rule (1), is made after the expiry of the period specified therefor in that sub -rule, the Corporation shall, notwithstanding expiration of the said period, refer the matter within three months of the date of receipt of the application to the Tribunal for decision along with a written statement and other documents specified, If any, in the regulations.

(ii) The Tribunal may admit reference made under Cl. (i) if the applicant satisfies the Tribunal that he had sufficient cause for not making the application to the Corporation within the period specified therefor in sub-rule (1).

(4) An application to the Tribunal under Sec. 15-, or a reference to the Tribunal, other than reference referred to in sub-rule (2) or sub-rule (3), may be made-

(a) in cases where the cause of action arose before the 1st day of November, 1964, not later than 31st day of January, 1965,

(b) in all other cases, within a period of three months from the date on which the cause of action arose :

Provided that the Tribunal may admit an application or a reference other than reference to in sub-rule (2) or sub -rule (3) after the expiry of the relevant period referred to Cl. (a) or Cl. (b) if the persons making the application or reference satisfies the Tribunal that there was sufficient cause for not making it within that period.)

RULE 12A: JURISDICTION OF TRIBUNAL

The tribunal may exercise jurisdiction in the whole of India and shall have power to decide or determine all or any of the following matters, namely:

(i) any question whether of title or of liability or of any nature whatsoever in relation to the assets and liabilities pertaining to the controlled business of the insurer transferred to and vested in the Corporation;

(ii) any question under Sec. 10-or under any rules made there under whether any property is or was held or used by a composite insurer for the purposes of his controlled business ;

(iii) every application made under Sec. 15-and all claims outstanding in respect of any transaction which may be the subject-matter of any such application determined in favour of the Corporation;

(iv) all claims for compensation payable under the Act to insurer whose controlled business has been transferred to and vested in the Corporation ; and all matters connected with the determination, payment and distribution of such compensation;

(v) all claims for compensation payable under the Act to chief agents or special agents for contracts terminated under Sec. 36-; and all matters connected with the termination, payment and distribution of such compensation;

(vi) such supplemental, incidental or consequential matters which the Tribunal may deem it expedient or necessary to decide or determine for the purpose of securing that the jurisdiction vested in it under the Act and in respect of matters referred to above is fully and effectively exercised.)

RULE 13: COMPENSATION

The compensation payable under the Act shall be paid in cash.

RULE 14: EMPLOYEES AND AGENTS RELATIONS COMMITTEE

The representatives of the Corporation on the Employees and Agents Relations Committee constituted under sub-section (3) of Sec. 22-of the Act for each zonal office at the Corporation and the representatives of the employees and agents on such Committee shall be nominated by the Corporation.

RULE 15: TERM OF OFFICE OF MEMBERS OF EMPLOYEES AND AGENTS RELATIONS COMMITTEE

-A member of an Employee and Agents Relations Committee shall hold office for a period of two years but shall be eligible for being re nominated.

RULE 16: CASUAL VACANCIES IN EMPLOYEES AND AGENTS RELATIONS COMMITTEE

(1) If any casual vacancy occurs in the office of a member of an Employees and Agents Relations Committee by death or resignation of such member or otherwise, the Corporation shall as soon as may be after the occurrence of the vacancy take immediate steps to fill the vacancy.

(2) Every member appointed to fill a casual vacancy of such Committee shall continue in office for the unexpired term of his predecessor.

RULE 17: REPORT

The Annual report to be submitted by the Corporation to the Central Government under Sec. 27-of the Act regarding its activities during the previous financial year shall be in such form as the Central Government may, from time to time, direct, and shall inter alia contain particulars in respect of the following matters, namely:

(a) the extent of the new business ;

(b) the total amount of business in force ;

(c) the total amount of claims ;

(d) nature of investment ; and

(e) the accounts.

RULE 18: ALLOCATION OF PAID-UP CAPITAL OF COMPOSITE INSURER

-For the purposes of the Explanation to sub-section (2) of Sec. 7-and of Cl. (b) of sub- section (2) of Sec. 10-of the Act, the part of the paid-up capital, as the case may be allocated to the controlled business of an insurer shall be determined in the manner following, namely:

(1) in respect of an insurer entitled to receive compensation under Part A of the First Schedule to the Act, the paid-up capital allocable to the controlled business shall be that proportion of the total paid-up capital of the insurer which the annual average of the profits from the controlled business during the period covered by the relevant actuarial investigation bears to the total of such annual average of profits plus two times the annual average of the profits from other business during that period : Provided that the paid-up capital allocable to the controlled business shall not in any case exceed a sum of rupees six lakhs ; (1) In respect of an insurer entitled to compensation under Part B of the First Schedule to the Act, the paid-up capital allocable to the controlled business shall be the excess, if any, of the amount of liabilities of the insurer appertaining to such business in existence on the 19th day of January, 1956, computed as at that date in accordance with the provisions of paragraph 4 of Part B of the First Schedule to the Act over the value of the assets of the insurer appertaining to his controlled business (excluding the paid-up capital allocable to controlled business) in existence on the 19th day of January, 1956, computed as at the date in accordance with the provisions of paragraph 3 of Part B of the First Schedule to the Act.

Explanation 1

"Profits from controlled business" means the share of the surplus allocated to the shareholder as disclosed in the abstracts prepared in accordance with Part II of the Fourth Schedule to the Insurance Ace in respect of the relevant actuarial investigations. Explanation 2-

"Profits from other business" means the total of the profits less losses transferred to "Profit and Loss Account" from the fire, marine and' miscellaneous insurance revenue accounts prepared in accordance with Form F of the Third Schedule to the insurance Act. Explanation 3.-"Relevant Actuarial Investigations" means such minimum number of latest actuarial investigations as at dates earlier than the 1st day of January, 1956 (not being less than 2 in any case) would leave the period intervening between the date as at which the actuarial investigation immediately preceding the first of such investigations was made and the date at which the last of such investigations was made and to be not less than four years. Explanation 4.-Where an insurer has allocated to shareholders more than 5 per cent of any such surplus as is referred to in Explanation I, the insurer shall be deemed to have allocated only 5 per cent of surplus and where an insurer has not allocated any such surplus to shareholders or has allocated to shareholders less than 5 per cent. Of any such surplus, the insurer shall be deemed to have allocated 5 per cent. of the surplus.

RULE 19: TRANSFER OF BUSINESS OF CERTAIN COMPOSITE INSURER TO THE CORPORATION

Every transfer by the Administrator under Cl. (a) of Sec. 45-of the Act shall be made in pursuance of an agreement between the Administrator and the Corporation and no such agreement shall be entered into except with the previous approval of the Central Government.

RULE 20: VESTING OF THE MANAGEMENT OF THE AFFAIRS OF THE INSURER IN THE PERSONS ENTITLED THERETO

As soon as the transfer in terms of rule 19-is effected, the Administrator shall by notice call upon the persons in charge of the management of the insurer immediately prior to the appointment of the Administrator to take charge of the management of any other kind of business not transferred to and vested in the Corporation and upon such notice being given, such persons shall take the management of that other kind of business.

LIFE INSURANCE CORPORATION OF INDIA CLASS I OFFICERS REVISION

OF TERMS AND CONDITIONS OF SERVICE) RULES, 1985

G.S.R. 794 (E), dated 11th October, 1985

1-In exercise of the powers conferred Cl. (cc) of sub-section (2) of Sec. 48 of the Life Insurance Corporation Act, 1956 (31 of 1956), the Central Government hereby makes the following rules regulating certain terms and conditions of service of Class I officers (other than the Managing Directors) of the Life Insurance Corporation of India, namely

RULE 01: SHORT TITLE, COMMENCEMENT AND APPLICATION

(1) These rules ay be called the Life Insurance Corporation of India, Class I Officers (Revision of Terms and Conditions of Service) Rules, 1985.

(2) They shall be deemed to have come into force on the 1st day of October, 1983.

(3) They shall apply to every whole-time (salaried) Class I Officer of the corporation in India unless otherwise provided by the terms of any contract.

(4) Notwithstanding anything contained in sub-rule (2), where any Class I Officer gives a notice in writing to the Corporation, within thirty days of the date of publication of these rules in the official Gazette, expressing his option to be governed by the provisions of these rules with effect from the date of such publication, the Corporation may, by order, permit such officer to be governed by the said rules with effect from the said date.

RULE 02: DEFINITIONS

In these rules, unless the context otherwise requires,-

(a) "Act" means the Life Insurance Corporation Act, 1956 (31 of 1956);

(b) "Class I Officers" means an employee of the Life Insurance Corporation of India (other than the Managing Directors) working in Class I post and includes any person who became an employee of Corporation on the appointed day under the Act and is so working ;

(c) "Staff Rules" means the Life Insurance Corporation of India (Staff) Regulations, 1960;

(d) words and expressions used in these rules and not defined herein but defined in the Staff Rules, shall have the meanings respectively assigned to them in the Staff Rules.

RULE 03: CONDITIONS OF SERVICE OF CLASS I OFFICER

Notwithstanding anything contained in the Staff Rules, the terms and conditions of service of Class I Officers relating to matters covered by these rules shall be regulated in accordance with the provisions hereinafter contained in these rules.

RULE 04: SCALES OF PAY OF CLASS I OFFICERS

The scales of pay of Class I Officers shall be as under: Class I Officers : 1. (i) Zonal (a) Ordinary Scale : Managers/ Rs. 3725-125-4350 Chief of Departments at Central Office (ii) Chief Engineer/ (b) Selection Scale : Chief Architect. Rs. 4100-125-4600 Notes.- (1) Officers in selection scale posted In charge of a Department at the Central Office will be designated as Executive Directors. (2) While Chief of Departments at Central Office would normally be drawn from the cadres of Zonal Managers, where suitable officers for filling up these posts are not available from this cadre they may be drawn from the cadre of Deputy Zonal Managers/Senior Divisional Managers/Secretaries/Actuaries/ Accountants at Central Office and they will be designated as Chief-in Charge. 2. (i) Deputy Zonal Manager /Senior Divisional Managers and Secretaries/Actuaries/ Accountants at the Central Office Rs. 3245-110-3685- 115-3800 (ii) Deputy Chief Engineers/ Deputy Chief Architects. 3. (i) Divisional Managers and Secretaries/Actuaries/Accountants at the Zonal 0ffices/ Deputy Secretaries (A & 1) Deputy Secretaries Deputy Actuaries Deputy Account- ants at the Central Office. Rs. 2715-105-3 (ii) Superintending Engineers/Senior Surveyors of Works/Senior Architects. 4. (i) Assistant Divisional Managers/Senior Branch Managers and Assistant Actuaries/Assistant Account- ant at the Central and Zonal Office (ii) Executive Engineers/Surveyors of Works/Deputy Senior Architects. 5. (i) Branch Managers/

Administrative Officers. Rs. 1621 (ii) Assistant Executive Engineers/Assistant Surveyors of Works/Architects. 6. (1) Assistant Branch Managers/Assistant Administrative Officers. Rs. 1175-75-14 (ii) Assistant Engineers/Assistant Architects. Note: A separate seniority list shall be maintained in respect of Officer's appointed to posts specified in entry (ii) under various serial numbers.

RULE 05: DEARNESS ALLOWANCE

(1) The scales of dearness allowance applicable to Class I Officers shall be determined as under:

(a) Index: All India Working Class Consumer Price Index (hereinafter referred to as the "Index")

(b) Base: Index No. 332 in the series 1960-100;

(c) Rate: 2 per cent of the basic pay for every eight points in the quarterly average of the Index above 332 points, subject to a maximum of Rs. 31.60 for every 8 points (hereinafter referred to as the "specified rate").

(2) There shall be an upward revision of the dearness allowance payable at specified rate-

(i) for every eight points rise in the quarterly average of the Index above 332 points in the sequence 332-340-348-356-364-372- 380-388-396-404 and so on, for Class I Officers drawing a basic pay of not more than Rs. 1600 ;

(ii) for the first sixteen points rise in the quarterly average of the Index in a cycle of 24 points rise above 332 points and for the next eight points rise in the quarterly average of the Index in the sequence 332-348-356-372-380-396-404 and so on, for Class I Officers drawing a basic pay of Rs. 1601 and above but not more than Rs. 2445; and

(iii) for every twenty -four points rise in the quarterly average in the Index above 332 points in the sequence 332-356-380-404 and so on, for those Class I Officers drawing a basic pay of Rs. 2426 and above.

(3) Notwithstanding anything contained in sub-rule (1) or sub-rule (2),-

(a) the dearness allowance payable at any stage of basic pay for each cycle of 24 points rise in the quarterly average of the Index shall not be less than the dearness allowance payable at the rate of 3.9 per cent of the basic pay or Rs. 150 whichever is less ; and

(b) if at any time the dearness allowance payable in accordance with sub-rule (2) at any stage of basic pay is less than that admissible for a lower basic pay, the dearness allowance payable at the relevant higher stage shall be equal to that payable for the lower basic pay.

(4)(a) There shall be downward revision of the dearness allowance payable to Class I Officers in the respective ranges of basic pay if the quarterly average of the Index (hereinafter referred to as the "current average figure") falls below the index figure in the respective sequences referred to in sub-rule (2) with reference to which the dearness allowance has been paid for the last preceding quarter.

(b) On the downward revision, the dearness allowance payable shall correspond to the current average figure if such current average figure is a figure in the relevant sequence ; and the dearness allowance payable shall correspond to the figure in the relevant sequence next preceding the current average figure if such current average figure is not a figure in the sequence.

RULE 06: HOUSE RENT ALLOWANCE

(1) The scales of house rent allowance applicable to Class I Officers, except those who have been allotted staff quarters, shall be at the rate of 15 per cent. of the basic pay, subject to a minimum of Rs. 200 and a maximum of Rs. 400.

(2) Class I Officers who are allotted staff quarters, shall not be entitled to house-rent allowance but they shall pay an amount equivalent to 10 per cent. of the basic pay or the appropriate licence fee, whichever is less, for the staff quarters allotted to them.

RULE 07: CITY COMPENSATORY ALLOWANCE

The scales of City Compensatory Allowance payable to Class I Officers shall be as under;

(a) Class I Officers posted in cities with population exceeding 12 lakhs and2any city in the State of Goa], 10 per cent. of basic pay, subject a maximum of Rs. 200 per month ; and (b) Class I Officers posted in cities with a population of 5 lakhs and above but not exceeding 12 lakhs, State Capitals with population not exceeding 12 lakhs and Chandigarh, Pondicherry and Port Blair-6 per cent. of basic pay, subject to a maximum of Rs. 120 per month. Explanation.-For the purposes of this rule, the population figures as reported in 1981 Census Report shall be taken into account.

RULE 08: PROVIDENT FUND

(1) Every Class I Officer of the Corporation other than an Officer on probation or an officer appointed on temporary basis or an officer who is contributing' to an approved Superannuation Fund, shall contribute to the Provident Fund established by the Corporation at the rate of 8.33 per cent of his basic pay and the Corporation shall also contribute to the Provident Fund every month an amount equal to the actual contribution of each such officer subject to a maximum of 8.33 per cent of the basic pay of each such officer.

(2) Class I Officers who are transferred employees the Oriental Government Security Life

Assurance Company Ltd., and who are contributing to the Pension Fund of that Company, which is being continued with modifications as a separate Fund for such employees only, shall be entitled to pension according to the rules of that fund.

(3) Class I Officers referred to in sub-rule (2) may, however, be permitted to contribute to the Provident Fund established by the Corporation but the Corporation shall not be required to make any contribution to the Provident Fund in respect of such officers.

RULE 09: GRATUITY

(1)(a) A permanent Class I Officer who has been in continuous service of the Corporation (including regular salaried service with the insurer for not less than 15 years (excluding period of probation or temporary service in respect of employees recruited on or after the 1st September, 1956); and-

(i) whose service are terminated by the Corporation for any reason whatsoever; or

(ii) who voluntarily resigns from the service of the Corporation ; or

(b) A permanent Class I Officer-

(i) who dies while in the service of the Corporation ; or

(ii) who retires from the service of the Corporation ; or

(iii) whose service are determined either due to continued illness or accident incapacitating him from the proper discharge of his duties ; or

(iv) whose services are dispensed with owing to reduction of staff or reorganisation of establishment; shall be eligible for the payment of gratuity.

(2) The gratuity admissible to a Class I Officer under sub -rule (1) shall be at the rate of one month's terminal basic pay for each completed year of continuous service or part thereof in excess of six months (inclusive or regular salaried service with the insurer) subject to a maximum of 15 month's basic pay up to 30 years of service, and for service over 30 years, half-a month's terminal basic pay for each completed year of service or part thereof in excess of six months: Provided that any period spent by such officer on extraordinary leave exceeding 12 months during the entire period of his service shall be excluded.

(3) In the case of Class I Officer who has been promoted from Class II cadre on or after the 1st day of April, 1973 and who dies or retires after promotion, the gratuity payable to him shall not be less than the gratuity that would have been payable to him if his services had been terminated while he was in Class III cadre.

(4) Subject to any lien the Corporation may have on the amount of gratuity admissible to a Class I Officer, the Corporation shall pay the Officer or his nominee or nominees or if no nomination is made or is subsisting, his heirs, the amount of gratuity admissible under this rule.

(5) Notwithstanding anything in the foregoing sub-rules-

(i) where the penalty of dismissal is imposed on a Class I Officer for any act involving violence against the management or other employees or any riotous or disorderly behaviour-in or near the place of employment, the gratuity payable to him shall stand wholly forfeited; and

(ii) where the penalty of compulsory retirement, removal from service or dismissal is imposed on a Class I Officer for any act involving the Corporation in financial loss, the gratuity payable to him shall stand forfeited to the extent of such loss.

LIFE INSURANCE CORPORATION OF INDIA CLASS III AND CLASS IV

EMPLOYEES (REVISION OF TERMS AND CONDITIONS OF SERVICE)

RULES, 1985

G.S.R. 357 (E), dated 11th April, 1985 1.-In exercise of the powers conferred by Sec. 48 of the Life Insurance Corporation Act, 1956 (31 of 1956), and in super session of the Life Insurance Corporation of India Class III and Class IV Employees (Bonus and Dearness Allowance) Rules, 1981 and the Life Insurance Corporation of India (Class III and

Class IV Employees) Pay Rules, 1981 and the Life Insurance Corporation of India Class III and Class IV Employees (Superannuation and Retirement) Rules, 1983, except as respect things done or omitted to be done before such super session, the Central Government hereby makes the following rules regulating certain terms and conditions of service of Class III and Class IV employees of the Life Insurance Corporation of India, namely:

RULE 01: SHORT TITLE, COMMENCEMENT AND APPLICATIONS

(1) These rules may be called the Life Insurance Corporation of India Class III and Class IV Employees (Revision of Terms and Conditions of Service) Rules, 1985.

(2) The provisions of these rules except rule 14-shall be deemed to have come into force on the 1^st day of April, 1983 and rule 14-shall be deemed to have come into force on the 22nd day of February, 1983.

(3) Notwithstanding anything contained in sub-rule (2), where any Class III or Class IV employees gives a notice in writing to the Corporation within thirty days of the date of publication of these rules in the official Gazette, expressing his option to be governed by the provisions of these rules, except rule 14-, with effect from the 11th day of April, 1985, then the Corporation may, by order, permit such employees to be governed by the said rules with effect from the said date.

RULE 02: DEFINITIONS

-In these rules, unless the context otherwise requires,-

(a) "Act" means the Life Insurance Corporation Act, 1956 (13 of 1956);

(b) "employee" means an employee of the Life Insurance Corporation of India and includes any person who became such employee of the Corporation on the appointed day under the Act;

(c) "functional allowance" means an allowance paid to an employee for the performance of a specified function ;

2(d) "Promotion Regulations" means the Life Insurance Corporation of India Class III and Class IV employees (Promotion) Rules, 1987] ;

(e) "staff Regulation" means the Life Insurance Corporation of India (Staff) Regulation, 1960;

(f) words and expressions, used in these rules and not defined but defined in the Staff Regulations shall have the meaning assigned to them in the Staff Regulations.

RULE 03: CONDITION OF SERVICE OF CLASS III AND CLASS IV EMPLOYEES

 Notwithstanding anything contained in the Staff Regulations and the Promotion Regulations, the terms and conditions of service of Class III and Class IV employees relating to matters covered by these rules shall be regulated in accordance with the provisions of3[these rules as amended from time to time].

RULE 04: SCALES OF PAY OF CLASS III EMPLOYEES

(1) The scales of pay of Class III employees shall be as under: Superintendents: Rs. 1910-110-2020-120-3700. Higher Grade Assistants: 1470-80-1710-100-1910-110- 2020-EB-120-3460. Section Heads: 1270-80-1910-110-2020-120- 3220. Stenographers: Rs. 1240-70-1450-80-1930-100 -2130-120-2490-EB-120-3090. Assistant, Receiving and Paying Cashiers, Typists, Telephone Operators, Comptometer Operators, Protectionists Micro- processor Operators: Rs. 1000-50-1050- 60-1170-70- 1450-80-1930-100-2130-EB-120- 2850. Record Clerks: Rs. 930-30-990-40-1150-50- 1400- EB-60-2000.

(2) In addition to the scales of pay specified in sub-rule (1), the following categories of employees shall receive a special allowance to the extent specified below:

1. Higher Grade Assistants appointed as Internal Audit Assistants: (a) For the first five years Rs. 180 p.m. (b) For the next five years Rs.200 p.m. (c) For the subsequent years Rs. 225 p.m.

2. Assistants appointed as receiving and paying Cashiers Rs. 175 p.m.

(3) The special allowance referred to In sub-rule (2) shall not be treated as part of basic pay:

Provided that 60 per cent of the special allowance shall count for the purposes of provident fund, gratuity, house rent allowance and for re-fixation of salary promotion.

(4) Functional allowance to the following categories of Class III employees shall be paid as under:

(a) Banda, Duplicating and Xerox Machine Operators in the scale of pay or Record Clerks: Rs. 30 per month

(b) Microprocessor Operators in the scale of pay of Assistants : Rs. 100 per month

(c) Programers in the scale of pay of Higher Grade Assistants : Rs. 150 per month Provided that an existing

Class III employee who is in receipt of any functional allowance immediately prior to the commencement of these rules shall continue to draw the same so long as he is holding the post to which the functional allowance is attached, to be absorbed in future wage revision.

RULE 05: PROMOTIONS TO THE CADRE OF SECTION HEADS AND SUPERINTENDENTS

There shall be no fresh appointments or promotions to the cadre of Sections Heads and Superintendents on or after 1st July, 1985.

RULE 06: SCALES OF PAY OF CLASS IV SUBORDINATE EMPLOYEES

(1) The scales of pay of Class IV subordinate employees shall be as under : Drivers: Rs. 930-40-1210-50-1810 Sepoys Hamals, Rs. 815-25-840-35-1260- Head peons, Liftmen and 40-1460-50-1510. Watchmen Sweepers and Cleaners Rs. 785-25-810-1335-40-1455.

(2) In addition to the scales of pay specified in sub-rule (1), the following categories of employees shall receive a special allowance to the extent specified below, which shall count as basic pay for all purposes: Head peons, Liftmen and Watchmen Rs. 70 per month

(3) Franking machine Operators in the scale of pay of Sepoys shall be paid a functional allowance of Rs. 20 per month.]

RULE 07: ADDITION TO BASIC PAY AFTER REACHING MAXIMUM OF SCALE

-Subject to the work record found satisfactory-

(a) an employee,-

6[(i) in the scale of Record Clerk, Assistant or Stenographer in Class III or

(ii) in any of the scales in Class IV, who has reached the maximum of the scale of pay applicable to him, may be granted for every two completed years of service after reaching such maximum, an additional increment equal to the last increment drawn by him in the scale of pay, subject to a maximum of three such increments ; (b) an employee in the scale of7[* * * ] Section Head or Higher Grade Assistant who has reached the maximum of the scale, may be granted for every three completed years of service after reaching such maximum an additional increment equal to the last increment drawn by him in the scale of pay subject to a maximum of two such increments: Provided that where an employee is not granted additional increment referred to In Cl. (a) or Cl. (b) at the end of two years or as the case may be, three years of service from the date of his last increment or the last additional increment, his case shall fall due for review in each calendar year in the month following that in which he completes twelve months of service in that year, so long as he has not been allowed the increment, and if it is decided to allow the increment, it shall take effect from the first of the month in which the review has fallen due in the calendar year in which the decision is taken to allow the Increment. Explanation.-For the purpose of this rule, the competent authority to allow the additional increment shall be the authority competent to allow the employee to cross the efficiency bar as specified in Schedule IV to the Staff Regulations.

RULE 08: DEARNESS ALLOWANCES

4[(1) The scales of dearness allowance of Class III and Class IV employees shall be determined as under : Index: All India Average Consumer Price Index Number, for Industrial workers. Base : Index No. 600 in the series 1960=100 Rate : Class III employees For every four points in the quarterly average of the All India Consumer Price Index above 600 points, a Class III employee shall be paid Dearness Allowance at the following rate : Basic Salary Rate of D.A. for every 4 points (i) Upto Rs. 1650 0.67% of basic salary (ii) Rs. 1651 to 2850 0.67% of Rs. 1650 plus 0.55 of basic salary in excess of Rs. 1650. (iii) Rs. 2851 and above. 0.67% of Rs. 1650 plus 0.55% of difference between Rs. 2850 and Rs. 1650, plus 0.33% of basic salary in excess of Rs. 2850. Class IV employees 0.67 per cent of the basic pay and special allowance, if any, for every four points in the quarterly average of the All India Consumer Price Index above 600 points.]

(2) There shall be an upward revision of the dearness allowance payable for every four points rise in the quarterly average (hereinafter referred to as the "current average figure") of the All India Consumer Price Index above ^1600 points in the sequence 600-604-608-6121 and so on; and there shall be downward revision of the dearness allowance payable if the current average figure falls below the Index figure in the above sequence with reference to which the dearness allowance has been paid for the last preceding quarter. On the downward revision, the dearness allowance payable shall correspond to the current average figures if such current average figure is a figure in the above sequence ; and the dearness allowance payable shall correspond to the figure in the above sequence next preceding the current average figure if, such current average figure is not a figure in the sequence. For this purpose, quarter shall mean a period of three months ending on the last day of March, June, September or December. The final index figures as published in the Indian Labour Journal or the Gazette of India, whichever publication is available earlier, shall be the index figure which shall be taken for the purpose of calculation of dearness allowance.

(3) For the purpose of calculating dearness allowance for a particular month, the quarterly average for the last quarter for which the final index figures are available on the 15th day of that month shall be taken. Actual payment of this revised dearness allowance shall be made in the month following that in which the relevant index figures are available. 10[***]

RULE 09: HOUSE RENT ALLOWANCE

(1) The scales of house-rent allowances of Class III and Class IV employees, except those who have been allotted staff quarters, shall be at the rate of 10 per cent. of the basic pay plus the portion of special allowance specified in the proviso to sub-rule (3) of rule 4-or sub-rule (2) of rule 6-, subject to a maximum of11[three hundred rupees.

(2) Employees who are allotted staff quarters shall not be entitled to any house-rent allowance but they shall pay the appropriate licence fee for the staff quarters in their possession: Provided that employees who have been allotted staff quarters before the 1st day of April, 1983, shall continue to receive the house rent allowance paid to them as on the date preceding the date of commencement of this rule.

RULE 10: CITY COMPENSATORY ALLOWANCE

12[(1) The scale of city compensatory allowance payable to Class III and Class IV employees shall be as under; Place of Posting Rate (a) (i) Cities with population 7% of basic pay subject exceeding 12 to a maximum of Rs. 150 lacs, Faridabad, per month. Ghaziabad, Noida, Panaji and Marmugao, on and from the 1st day of August, 1987. (ii) Any city in the 7% of basic pay subject to State of Goa other a maximum of Rs. 150 per than Panaji and month. Marmugao on and from the 19th day of May, 1988. (iii) Cities of Gurgaon, 7% of basic pay subject to a Vashi and Gandhinagar- maximum of Rs. 150 per month on and from the 12th day of May, 1989. (b) (i) Cities with population- 4% of basic pay subject to a of 5 lacs and minimum of Rs. 30 per month above but not exceeding for Class IV employees and Rs. 12 lacs, 45 per month for Class III employees

State Capitals with and a maximum of Rs. population not-exceeding 100 per month in both the cases. 2 lacs, Chandigarh, Mohali, Pondicherry and Port Blair on and from the 1st day on August, 1987. (ii) City of Panchkula 4% of basic pay subject to a on and from 12th minimum of Rs. 30 per month day of May, 1989. for Class IV employees and Rs. 45 per month for Class .III employees and a maximum of Rs. 100 per month in both the cases. Notes: 1. For the purpose of this rule the population figure shall be those in the 1981 Census Report. 2. Cities shall include their urban agglomerations.]

(2) Notwithstanding anything contained in sub-rule (1), any Class III or Class IV employees in receipt of an amount of Rs. 20 per month as city compensatory allowance immediately before the 1st day of April, 1983 shall continue to receive the said amount so long as he is posted at the same place to be absorbed In future wage revision.(i) Posted at places situated At the rate of 7 per at a height of 1,500 metres cent of the basic pay and over above mean sea subject to a maximum level. of Rs. 150 per month. (ii) Posted at places situated at At the rate of 5 per cent a height of 1,000 metres and of the basic pay, subject over but less than 1,500 met- to a maximum of Rs. 125 res above mean sea level, at per month.] Mercara and at places which are specifically declared as "Hill Stations" by Central/State Governments for their employees.

RULE 11: HILL ALLOWANCE

(1) The scales of hill allowance payable to Class III and Class IV employees shall be as follows:

RULE 12

* * *.]

RULE 13: BONUS

(1) No Class III or Class IV employees shall be entitled to the payment of any profit sharing bonus or any other kind of cash bonus.

(2) Notwithstanding anything contained in sub-rule (1), every Class III and Class IV employee shall be entitled to a payment in lieu of bonus for every year commencing on the 1st day of April and ending with 31st day of March of the following year, at such rate and subject to such conditions as the Central Government may, by notification in the official Gazette determine having regard to the wage level, financial circumstances and other relevant factors: 15[Provided that

(i) no payment in lieu of bonus shall be payable to any employee drawing a salary exceeding Rs. 2,500 per month;

(ii) where the salary of an employee exceeds Rs. 1,600 per month but does not exceed Rs. 2,500 per month, the maximum payment in lieu of bonus payable to such employee shall be calculated as if his salary were Rs. 1,600 per month. Explanation.- For the purpose of this sub -rule "salary" means basic pay, special allowance, if any, and dearness allowance.]

RULE 14: SUPERANNUATION AND RETIREMENT

An employee belonging to the Class III or Class IV, appointed to the service on or after the 22^nd February, 1983, shall retire on completion of 58 years of age, provided that the competent authority specified in Schedule IV to the Staff Regulations may, if it is of the opinion that it is in the interest of the Corporation to do so, direct such employees to retire on completion of 55 years of age or at any time thereafter on giving him three months' notice or salary in lieu thereof.

RULE 15: RE--FIXATION OF SALARY

(1) On appointment on a regular basis to a higher grade, the basic pay of a Class III or Class IV employee shall be initially fixed at one stage above that stage on the higher scale which is next above his basic pay in the lower scale: Provided that where the basic pay in the lower scale is a stage in the higher scale, the basic pay shall be fixed at the stage in the higher scale which is next above his basic pay in the lower scale: Provided further that the basic pay shall be fixed at the minimum of the higher scale where such fixation results in an increase in basic pay of at least one grade increment obtaining at the minimum of the higher scale: Provided also that where a Class III (Supervisory or Clerical) employee is promoted as Class I Officer on or after the 1st April, 1983, his basic pay in the higher scale of pay shall be fixed on the basis of the basic pay which he would have drawn on the date of fixation had he continued in the lower scale of pay applicable to him immediately prior to the 1st of April, 1983.

(2) Subject to such conditions as may be imposed from time to time, a personal allowance may be granted to employees promoted to a higher cadre in consideration of the loss in remuneration drawn by them in the lower cadre at the time of promotion. Explanation.- For the purpose of this rule, the portion of special allowance specified in the proviso to sub-rule (3) of rule 4 and sub-rule (2) of rule 6 shall be treated as part of basic pay.

(3) In the case of an employee appointed to officiate in a higher grade he shall draw officiating allowance, which shall be equal to the difference between the basic pay in the lower scale and the higher scale under sub-rules (1) and (2): Provided that officiating allowance referred to in sub-rule

(3) may be reduced by the appointing authority specified in Schedule I to the Staff Regulations if the officiating arrangement is of a temporary nature and the circumstances justify it.

RULE 16: SICK LEAVE

A Class III or a Class IV employee shall be entitled to sick leave on medical certificate at the rate of one month for each completed year of service, subject to a maximum of sixteen months throughout the service in the Corporation: Provided that the casual leave and the additional casual leave admissible to such employee under sub-regulations (1) and (2) of regulation 62 of the Staff Regulations and not availed of by him, shall be converted into additional sick leave on full pay up to a maximum of two months or on half pay up to a maximum of four months, during the entire period of his service to be availed of him on production of medical certificate: Provided further that if such employee is suffering from any of the major diseases of Cancer, Leprosy, T.B., paralysis, Mental diseases, Brain tumour, Cardic ailments or kidney diseases, he may be allowed special sick leave on half pay for a period not exceeding six months if he has to his credit no sick leave admissible to him.

RULE 17: MATERNITY LEAVE

The competent authority specified in Schedule IV to the Staff Regulations may grant to a female employee maternity leave for a period which may extend up to 3 months subject to a maximum of 12 months during the entire period of an employee's service.

RULE 18: PROVIDENT FUND

(1) Every Class III or Class IV employee, other than an employee on probation or an employee appointed on temporary basis or an employee who is contributing to an approved Superannuation Fund, shall contribute every month to the Provident Fund established by the Corporation at the rate of 16[10 per cent.] of the aggregate of his basic pay including the portion of special allowance specified in the proviso to sub-rule (3) of rule 4-or sub-rule (2) of rule 6-. The Corporation shall contribute to the provident Fund every month an amount equal to the actual contribution of each such employee subject to a maximum of16[10 per cent) of the aggregate of the basic pay including the portion of special allowance specified in the proviso to sub-rule (3) or rule 4-or sub-rule (2) of rule 6-.

(2) Transferred employees of the Oriental Government Security Life Insurance Company Limited, who are contributing to the Pension Fund of that company, which is being continued with modifications as a separate Fund for company, which is being continued with modifications as a separate Fund for such employees only shall be entitled to pension according to the rules of that Fund.

(3) Employees referred to in sub-rule (2) may however, be permitted to contribute to the Provident Fund established by the Corporation but the Corporation shall not be required to make any contribution to the Provident Fund in respect of such employees.

RULE 19: GRATUITY

(1)(a) A permanent Class III or Class IV employee who has been in continuous service of the Corporation (including service with the insurer) for not less than 15 years (excluding period of probation or temporary service in respect of employees recruited on or after the 1st September, 1956) and-

(i) whose services are terminated by the Corporation for any reason whatsoever; or

(ii) who voluntarily resigns from the service of the Corporation ; or

(b) a permanent Class III or Class IV employee-

(i) who dies while in the service of the Corporation ; or

(ii) who retires from the service of the Corporation ; or

(iii) whose services are determined either due to continued illness or accident incapacitating him from the proper discharge of his duties ; or

(iv) whose services are dispensed with owing to reduction of staff for reorganisation of establishment; shall be eligible for the payment of gratuity.

(2) Gratuity admissible to an employee under sub-rule (1) shall be at the rate of one month's terminal basic pay including the portion of special allowance specified in the proviso to sub-rule (3) of rule 4-or sub-rule (2) of rule 6-, for each completed year of continuous service (inclusive of regular salaried service with the insurer) in respect of first 15 years and at the rate of half a month's terminal basic pay including the portion of special allowance specified In the proviso to sub-rule (3) of rule 4-and sub-rule (2) of rule 6-for each completed year of further continuous service ; so, however, that the total gratuity admissible shall not exceed a maximum of 20 months; terminal basic pay including portion of special allowance specified in the proviso to sub-rule (3) of rule 4-or sub-rule (2) of rule 6-17[* **].

Explanation.-For the purpose of computation of gratuity under this sub rule any period spent by an employee on extraordinary leave, exceeding 12 months during the entire period of his service shall be excluded.

(3) Gratuity admissible to a Class III or Class IV employee shall be determined in accordance with the provisions of sub -rule (2) or calculated under the Payment of Gratuity Act, 1972 (39 of 1972), whichever is more favourable to him:2[Provided that -

(a) while calculating the gratuity under the said Act, the monthly salary of an employee shall be deemed to be his terminal basic pay, dearness allowance and additional dearness allowance and the special allowance as specified in the proviso to sub-rule (3) of rule 4-and sub-rule (2) of rule 6-;

(b) the provisions of the said Act shall apply notwithstanding that monthly salary of an employee calculated in accordance with clause(a) exceeds19[two thousand five hundred rupees] ;

(c) in the case of an employee who dies while in service of the Corporation after having completed 15 years of continuous service, the gratuity under the said Act shall be calculated at the rate of one month's salary for every completed year of service ;

(d) the amount of gratuity calculated under the said Act shall in no case exceed2[fifty thousand rupees.]

(4) Subject to any lien the Corporation may have on the amount of gratuity admissible to an employee, the Corporation shall pay to the employee or to the nominee or nominees of the employees, or if no nomination has been made or is subsisting, to the heirs of the employee, the amount of gratuity admissible under this rule. 3[(5) Notwithstanding anything contained in sub-rules (1) and (4) -

(i) where the penalty of dismissal is imposed on an employee for any act involving violence against the management or other employees or any riotous or disorderly behaviour in or near the place of employment or for an offence involving moral turpitude provided that such offence is committed by him in the course of his employment, the gratuity payable to him shall stand wholly forfeited; and

(ii) where the penalty of compulsory retirement, removal from service or dismissal is imposed on an employee for any act involving the Corporation in financial loss, the gratuity payable to him shall stand forfeited to the extent of such loss.]

RULE 20: INTERPRETATION

Where any doubt or difficulty arises as to the Interpretation of these rules, it shall be referred to the Central Government for its decision.