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PETITIONER: THE VANGUARD FIRE AND GENERALINSURANCE CO.  LTD., MADRAS

       Vs.

RESPONDENT: M/S.  FRASER AND ROSS AND ANOTHER.

DATE OF JUDGMENT: 04/05/1960

BENCH: WANCHOO, K.N. BENCH: WANCHOO, K.N. GAJENDRAGADKAR, P.B. GUPTA, K.C. DAS

CITATION:  1960 AIR  971  CITATOR INFO :  RF         1973 SC 602  (39,40)  F          1990 SC 808  (18)  RF         1991 SC1289  (16)

ACT: Insurance-Company  closing  insurance  business-Government’s order directing investigation of company’s affairs-Legality" Insurer  ", meaning of-Insurer’s liability after closing  of business  --Extent-"  Liabilities  not  satisfied  and   not otherwise  provided  for "General Clauses Act, 1897  (10  of 1897), S. 13-lnsurancc Act, 1938 (4 Of 1938), SS. 2(9),  2D, 7, 9, 33.

HEADNOTE: The  appellant company had been carrying on various  classes of  insurance business other than life insurance  after  its incorporation  in 1941, but in 1956 the shareholders of  the company  passed  a  resolution by which  all  its  insurance business was to be closed.  Accordingly, on application made by   the  company  to  the  Controller  of  Insurance,   the certificate granted to it for carrying on insurance business was  cancelled  with  effect  from  July  1,  1957.  in  the meantime, complaints against the company were being received by the Government of India, who, thereupon, passed an  order on  July 17, 1957, under s. 33 of the Insurance  Act,  1938, directing  the  Controller of Insurance to  investigate  the affairs of the company and to submit a report.  The  company challenged (1)(1923) L.R. 51 I.A. 129.     (2) I.L.R. [1955] Nag. 744. 858 the  legality of the order on the grounds, (1) that  as  all its   insurance  business  had  been  closed   the   Central Government had no jurisdiction to pass an order under s.  33 of  the  Act, which only enables the  investigation  of  the affairs of an insurer who, as defined in s. 2(9), is one who is actually carrying on the business of insurance, (2)  that such an order could not be sustained under s. 2D of the  Act as that section was applicable only to those cases where  an insurer  was  carrying  on different  classes  of  insurance business  and had closed some of them but not all  of  them, (3) that even if such order could be passed under s. 33 read

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with  s.2D it could not be done in the present case  as  the company’s  liabilities  did not remain  unsatisfied  or  not otherwise provided for, and (4) that, in any case, the order in question was invalid because it did not show on the  face of it that the Central Government was prima facie  satisfied that  the  liabilities  had  remained  unsatisfied  or   not otherwise provided for: Held,  (1)  that  the  word " insurer "  in  s.  33  of  the Insurance  Act,  1938, refers not only to a  person  who  is actually  carrying on the business of insurance but also  to one who has subsequently closed it. (2)  that in s. 2D of the Act an " insurer " means a  person who was carrying on the business of insurance but has closed it. (3)that  the  word  " class " in S. 2D though  used  in  the singular  includes  the  plural  also  and  the  section  is applicable to the case where an insurer who was carrying  on different classes of insurance business closes all of them. (4)  that the expression " not otherwise provided for " in s.   2D  refers  to  liabilities in  the  nature  of  claims against  the insurer whether the insurer admits them or  not and  whether a decree has been finally passed in respect  of them or not. (5)  that under s. 2D the satisfaction or " provision other- wise  " for the liabilities of insurance business  which  is closed,  does not refer to the deposit made under s.  7  and has to be over and above that deposit. (6)  that though an order under s. 33 read with S. 2D of the Act  should  show  on  the  face  of  it  that  the  Central Government was prima.’ facie satisfied that the  liabilities had remained unsatisfied or not otherwise provided for,  the fact that the order does not on the face of it show that the Central  Government  considered this aspect  of  the  matter would  not make it bad, if in subsequent ,proceedings  taken to  challenge  it,  it is shown that  there  were  materials before the Central Government which would justify its coming to  the prima facie conclusion that the liabilities had  not been  satisfied or otherwise provided for, and therefore  an investigation into the affairs was called for.

JUDGMENT:  CIVIL APPELLATE JURISDICTION: Civil Appeal No. 21 of 1960.  Appeal  from the judgment and order dated January 16,  1959,  of  the  Madras High Court in Writ Appeal No.  67  of  1958,  arising out of the judgment  and  order  dated July 15, 1958, of the said High  Court  in  Writ Petn.  No. 922 of 1957.  C.   B.  Aggarwala,  S.  N. Andley,  J.  B.  Dadachanji  and  Rameshwar Nath, for the appellant.  R.   Ganapathy  Iyer, H. J. Umrigar, R. H. Dhebar and T.  M.  Sen, for respondent No. 2.  1960.  May 4. The Judgment of the Court was delivered by  WANCHOO,  J.-This is an appeal on a certificate  granted  by  the  Madras  High Court.  The appellant  Company  had  -been  carrying on various classes of insurance business other than  life  insurance after its incorporation in September,  1941.  On October 15, 1956, an extraordinary general meeting of the  shareholders of the Company passed a resolution by which all  its insurance business was to cease forthwith and no further  policies  of  insurance  of  any  kind  were  to  be  issued  thereafter.  It was also resolved that no application should  be made for renewal of the certificate granted under s. 3 of  the  Insurance Act, No. IV of 1938 (hereinafter  called  the

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Act), and that thence forward the Company should only  carry  on the business of money-lending as a loan-Company and  also  to do investment business.  In consequence of these  resolu-  tions,  the Company informed the Controller of Insurance  in  December, 1956, that it was not applying for renewal of  its  registration for carrying on the business of insurance.   In  May,  1957,  the Controller wrote to the  Company  that  its  certificates  for  carrying on insurance business  would  be  deemed   to  be  cancelled  from  July  1,  1957,  and   the  cancellation was notified in the Gazette of India.  It  appears that the Government of India had been  receiving  complaints  against the Company.  Consequently on  July  17,  1957, the Government of India passed an order under s. 33 of  the Act directing the Controller of Insurance to investigate  the  affairs  of  the  Company  and  to  submit  a   report.  Thereupon the Controller appointed Messrs.  Fraser and  Ross  to act as auditors to assist him in the investigation.   The  Company  was  informed  of this  order  in  September  1957.  Thereupon it wrote to the Controller that no order under  s.  33 of the Act could be passed  860  against  it, as it had closed its business of insurance  and  the  order  in  question  was  without  jurisdiction.    The  Controller sent a reply to this communication and pointed to  the  provisions of s. 2D of the Act in justification of  the  order.  Thereupon the Company made an application under Art.  226 of the Constitution in the Madras High Court.  Two  main  contentions were raised by it in the petition.  In the first  place  it was submitted that the Company having  closed  all  its  insurance business no order could be passed against  it  under  s.  33.  as that section only  applied  to  companies  actually  carrying on the business of insurance and that  in  any case no such order could be passed even with the help of  s. 2D of the Act.  In the second place it was contended that  even if such an order could be passed under s. 33 read  with  s. 2D of the Act, it could not be done in the present  case,  as  the  Company’s liabilities in respect of  its  insurance  business  did  not  remain  unsatisfied  or  not   otherwise  provided  for.   Messrs.   Fraser and Ross as  well  as  the  Controller were made parties to the petition.  The  petition  was opposed on behalf of the Controller, and his  contention  was  that the case was clearly covered by s. 2D of  the  Act  and  therefore the order under s. 33 was validly  passed  in  this  case  and  that  it  had  not  been  shown  that   the  liabilities had been satisfied or had been  otherwise provided for.  The learned Single Judge held that an order under s. 33 read  with  s. 2D could be passed against the Company and that  it  had  not been shown that the Company’s liabilities had  been  satisfied or otherwise provided for.  He therefore dismissed  the  writ petition.  This was followed by an appeal  by  the  Company,  which  was  dismissed.  The  Division  Bench  sub-  stantially agreed with the view taken by the learned  Single  Judge.   Thereupon the Company applied for a certificate  to  enable it to appeal to this Court and obtained it; and  that  is how the matter has come up before us.-  Mr.  Aggarwala appearing for the Company has urged the  same  two points before us.  The Act was passed in 1938 to control  persons carrying on the business of insurance.  Section 2(9)  thereof defines an ’ insurer’ inter alia as weaning any body  corporate  861  (not being a person specified in sub-cl. (c) of this clause)  carrying  on  the  business of insurance, which  is  a  body  corporate  incorporated under any law for the time being  in

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force  in India or stands to any such body corporate in  the  relation  of a subsidiary company within the meaning of  the  Indian Companies Act, 1913, as defined by sub-s. (2) of s. 2  of  that  Act.  Section 3 provides for registration  of  any  person  carrying  on the business of insurance and  no  such  business   can  be  carried  on  unless  a  certificate   of  registration for the particular class of insurance  business  has  been obtained from the Controller.  Section 3(4)  gives  power  to  the  Controller to  cancel  the  certificate  for  reasons specified therein and s. 3(5B) lays down that when a  registration  is cancelled the insurer shall not  after  the  cancellation  has taken effect, enter into new contracts  of  insurance,  but  all rights and liabilities  in  respect  of  contracts  of  insurance  entered into by  him  before  such  cancellation  takes effect shall, subject to the  provisions  of  sub-s.  (5D), continue as if the  cancellation  had  not  taken place.  In order to safeguard the interest of  policy-  holders,  s.  7  provides for deposits by  the  insurer  for  various  classes of his business.  Section 8 lays down  that  any  deposit made under s. 7 shall be deemed to be  part  of  the  assets of the insurer but shall not be  susceptible  of  any assignment or charge; nor shall it be available for  the  discharge  of any liability other than  liabilities  arising  out  of policies of insurance issued by the insurer so  long  as any such liability remains undischarged ; nor shall it be  liable  to  attachment in execution of any decree  except  a  decree obtained by a policy-holder of the insurer in respect  of a debt due upon a policy which debt the policy-holder has  failed to realise in any other way.  Section 9(1) lays  down  that  where an insurer has ceased to carry on in  India  any  class  of insurance business in respect of which  a  deposit  has  been  made under s. 7 and his liabilities in  India  in  respect of business of that class have been satisfied or are  other.  wise provided for, the court may on the  application  of the insurer order the return to the insurer of so much of  the deposit as does not relate to the classes of insurance.,  if any, which he continues to carry on.  Under  112  862  s.   10 an insurer who carries on business of more than  one  kind is required to keep a separate account of all  receipts  and  payments  in respect of each such  class  of  insurance  business.    Section  33(1)  with  which  we  are   directly  concerned, is in these terms:-  " The Central Government may at any time by order in writing  direct  the controller or any other person specified in  the  order  to  investigate  the affairs of any  insurer  and  to  report  to the Central Government on any investigation  made  by him:  Provided  that  the  controller or  the  other  person  may,  wherever necessary, employ an auditor or actuary or both for  the purpose of assisting him in any investigation under this  section."  Section 2D is in these terms:  "  Every insurer shall be subject to all the  provisions  of  this  Act in relation to any class of insurance business  so  long  as his liabilities in India in respect of business  of  that  class  remain unsatisfied and not  otherwise  provided  for."  The contention of Mr. Aggarwala is that s. 33 and s.   2D  both refer to an insurer which is defined in s.   2(9) as  a  person   carrying  on  the  business  of   insurance.    He,  therefore,  contends  that as soon as the  insurer  who  was  carrying  on  the  business  of  insurance  closes  it  down  completely   be  no  longer  remains  an  insurer  and   the

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provisions  of  the  Act do not apply  to  him.   Therefore,  according  to  him,  when s. 33 provides  for  an  order  of  investigation  by the Central Government such an  order  can  only  be  made  in  respect of a,  person  who  is  actually  carrying on the business of insurance and is thus an insurer  and  cannot be made against a person who was an insurer  but  has   closed  his  business.   Further,  according  to   Mr.  Aggarwala,  s.  2D also speaks of an insurer and  makes  him  subject to all the provisions of the Act with respect to any  class  of insurance business so long as his  liabilities  in  respect of that class remain unsatisfied or not other.  wise  provided  for and therefore s. 2D would only apply to  those  cases  where insurance business is being carried on,  though  some  class  of insurance business might have  been  closed.  The  contention  therefore  is that reading ss.  33  and  2D  together, no order under  863  s.   33 can be made in case of an insurer who has completely  closed his business of insurance.  The  main basis of this contention is the definition of  the  word  "insurer"  in s. 2(9) of the Act.  It is  pointed  out  that  definition begins with the words " insurer means"  and  is therefore exhaustive.  It may be accepted that  generally  the word " insurer" has been defined for the purposes of the  Act  to  mean  a person or body corporate,  etc.,  which  is  actually  carrying on the business of insurance,  i.e.,  the  business  of  effecting contracts of insurance  of  whatever  kind  they  might be.  But s. 2 begins with the words  "  in  this Act, unless there is anything repugnant in the  subject  or context " and then come the various definition clauses of  which  (9)  is one.  It is well settled that  all  statutory  definitions  or  abbreviations must be read subject  to  the  qualification variously expressed in the definition  clauses  which  created  them  and  it may be  that  even  where  the  definition  is  exhaustive inasmuch as the word  defined  is  said to mean a certain thing, it is possible for the word to  have  a somewhat different meaning in different sections  of  the Act depending upon the subject or the context.  That  is  why  all  definitions in statutes generally begin  with  the  qualifying  words similar to the words used in  the  present  case,  namely,  unless there is anything  repugnant  in  the  subject or context.  Therefore in finding out the meaning of  the  word  " insurer " in various sections of the  Act,  the  meaning  to be ordinarily given to it is that given  in  the  definition clause.  But this is not inflexible and there may  be  sections  in the Act where the meaning may  have  to  be  departed from on account of the subject or context in  which  the word has been used and that will be giving effect to the  opening  sentence in the definition section, namely,  unless  there  is anything repugnant in the subject or context.   In  view  of this qualification, the court has not only to  look  at  the  words  but  also  to  look  at  the  context,   the  collocation  and the object of such words relating  to  such  matter and interpret the meaning intended to be conveyed  by  the  use of the words under the  circumstances.   Therefore,  though  ordinarily the word " insurer " as used in  the  Act  would mean a  864  person  or body corporate actually carrying on the  business  of insurance it may be that in certain sections the word may  have a somewhat different meaning.  A perusal of a few sections of the Act will illustrate  this  and immediately show that the word " insurer " has been used  in  some  sections  to mean not  merely  a  person  actually  carrying on the business of insurance but also a person  who

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intends  to carry on the business of insurance but  has  not  actually  started it and also a person who was  carrying  on  the  business  of insurance but has ceased to  do  so.   For  example,  s.  3(2)  which  deals  with  an  application  for  registration  which  naturally  has to be  made  before  the  business  of insurance actually commences, lays down in  cl.  (b)  that the application shall be accompanied by the  name,  address  and the occupation, if any, of the directors  where  the  insurer  is  a company incorporated  under  the  Indian  Companies  Act.   Here the word ,insurer" has been  used  to  indicate  the company which is not actually carrying on  the  business  of  insurance  but is intending to do  so  and  is  applying  for  registration.  Further in s. 3(2)  (e)  which  also  deals  with  an application for  registration,  it  is  provided  that  an  insurer having his  principal  place  of  business  or domicile, outside India shall send  along  with  the application a statement verified by an affidavit of  the  principal  officer  of  the insurer  setting  forth  various  requirements.   Here  again, the word " insurer "  has  been  used for an intending insurer, for the business of insurance  would  only  begin  after the  registration  certificate  is  granted on the application made under s. 3(2).  Then in s. 9  it is provided that, where an insurer has ceased to carry on  business,  the court may on the application of  the  insurer  order  the  return to him of the deposit made  under  s.  7.  This.  shows  that  though  the,  insurer  is  not  actually  carrying on the business of insurance he is still termed  an  insurer  and on his application the deposit may be  refunded  to  him.  Again s. 55 which deals with a  situation  arising  out,  of  the  winding-up of an  insurance  company  or  the  insolvency of any other insurer, provides that the value  of  the   assets  and  liabilities  of  the  insurer  shall   be  ascertained  in  such  manner and upon  such  basis  as  the  liquidators  865  or  the  receiver  in insolvency thinks  fit.   The  word  "  insurer" has thus been used in this section for a person  or  body corporate, etc., which is not actually carrying on  the  business of insurance and has gone into liquidation or’  has  become insolvent.  Therefore, though the ordinary meaning to  be  given  to  the  word  "insurer "  is  as  given  in  the  definition  clause (s. 2(9)) and refers to a person or  body  corporate, etc., carrying on the business of insurance,  the  word may also refer in the context of certain provisions  of  the  Act to any intending insurer or quondam  insurer.   The  contention  therefore that because the word "  insurer"  has  been used in s. 33 or s. 2D those sections can only apply to  insurers  who  are  actually  carrying  on  business  cannot  necessarily  succeed,  and  we have to see  whether  in  the  context  of these provisions an insurer will also include  a  person who was an insurer but has closed his business.  As  we have said already the Act was passed to  control  the  business of insurance in the interest of policy-holders  and  the  general  public and s. 33 is obviously a  provision  by  which  the Central Government can order  investigation  into  the affairs of any insurer in order to carry out the  policy  of  the Act.  Could it be said in the circumstances that  s.  33  only applies to insurers actually carrying  on  business  and not to insurers who have closed their business?  If  the  policy  of  the  Act is to be carried out  and  the  policy-  holders and the general public are to be protected, the need  for making investigation into the affairs of an insurer  who  has closed his business is greater, for he may have done  so  dishonestly.   We are therefore of opinion that the  word  "  insurer" as used in s. 33 not only refers to a person who is

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actually  carrying  on business but in the context  of  that  section  and taking into account the policy of the  Act  and  the, purposes for which the control envisaged by the Act was  imposed  on  insurers  also  refers  to  insurers  who  were  carrying  on the business of insurance but have  closed  it.  Further if there were any doubt whether the word " insurer "  in s. 33 refers to those insurers also who had closed  their  business  that doubt in our opinion is completely  dispelled  by s. 2D.  That section  866  provides  that  every insurer shall be subject  to  all  the  provisions of the Act in relation to any class of  insurance  business  so  long as his liability in India in  respect  of  business of that class remains unsatisfied or not  otherwise  provided  for.   Obviously  this section  applies  to  those  insurers  who  have  closed  their  business.   It  was  not  necessary  to enact this section if the word ,insurer"  here  also  meant  a person actually carrying on the  business  of  insurance,  for  the provisions of the Act apply to  such  a  person proportion vigor.  Therefore, when the word " insurer  " is used in s. 2D it must mean a person who was carrying on  the business of insurance but has closed it.  If that is so,  s. 33, which provides for investigation, would apply to such  an insurer who has closed his business, by virtue of s. 2D.  Mr.  Aggarwala next contends that s. 2D would only apply  to  those  cases  where  an insurer was  carrying  on  different  classes  of insurance business and had closed some  of  them  but not all of them.  He contends that the section  provides  that  the insurer shall remain subject to the provisions  of  the  Act in relation to any class of insurance  business  so  long  as  his  liabilities with respect  to  that  class  of  business  remain unsatisfied or not otherwise provided  for.  This, according to him, contemplates a closure of only  some  out of many classes of business of insurance and not of all.  We  see  no reason however to limit the words used  in  this  section  only  to  a  case where  out  of  many  classes  of  business,  some are closed and others are being carried  on.  Under  s. 13 of the General Clauses Act, No. X of  1897,  in  all  Central Acts and Regulations, unless there is  anything  repugnant  in the subject or context, words in the  singular  shall include the plural and vice versa. Though therefore S.  2D-  speaks  of  any  class of  insurance  business  in  the  singular it, includes the plural also and would refer to all  classes  of  insurance  business.  Mr.  Aggarwala  does  not  contend  that where, for example, four classes  of  business  are being carried on and three of them are closed and one is  continued, the section will not apply; but he contends  that  at least one must continue and the section will not apply if  all are closed.  We do not see why if the section  867  applies, even though the word "class" is in the singular, to  a case where three out of four classes are closed and one is  continued  it  should  not apply to a case  where  all  four  classes are closed.  We see no repugnancy in the context  in  holding  that  if  all classes of business  are  closed  the  insurer shall be subject to all the provisions of the Act so  long as his liabilities in India in respect of any  business  of all classes remain unsatisfied or not otherwise  provided  for.  Therefore on a plain reading of, s. 2D there can be no  doubt  that  an insurer who has closed all  classes  of  his  insurance business remains subject to all the provisions  of  the  Act  in  relation  to  such  classes  so  long  as  his  liabilities  in  India remain unsatisfied or  not  otherwise  provided  for.   Therefore s. 33 will certainly apply  to  a  case  where  all  classes of insurance  business  have  been

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closed so long as the liabilities remain unsatisfied or  not  otherwise  provided  for.   The  first  contention  of   the  appellant  therefore  that no investigation can  be  ordered  under s. 33 in its case because it has closed all classes of  its insurance business fails.  Turning now to the second contention, the argument on behalf  of  the appellant is three-fold.  In the first place  it  is  urged  that an order can only be made under s. 33 read  with  s.  2D  when the Central Government is  satisfied  that  the  liabilities  have not been satisfied or  otherwise  provided  for,  and that the order should show on the face of it  that  the  Central  Government had considered this aspect  of  the  matter  and had come to the conclusion that the  liabilities  remained unsatisfied or not otherwise provided for.  Further  there  is  nothing  in the present order to  show  that  the  Central Government ever considered this aspect of the matter  and  was  satisfied that the liabilities  of  the  appellant  Company remained unsatisfied or not otherwise provided  for.  There  is no doubt that the order is utterly silent on  this  point  and  it was only in his letter of October  15,  1957,  that  the Assistant Controller pointed out s. 2D of the  Act  and  referred to this aspect of the matter.  It seems to  us  only  just  and proper that when an order  is  being  passed  under s. 33 read with s. 2D of the Act it should show on the  face of it that the  868  Central  Government  was  prima  facie  satisfied  that  the  liabilities  had  remained  unsatisfied  or  not   otherwise  provided  for it is only when the liabilities have not  been  satisfied  or otherwise provided for that an order under  s.  33  read  with s. 2D would be justified in the  case  of  an  insurer  who  has closed his business.  We use  the  word  "  prima facie " advisedly, for it seems to have been suggested  in the High Court that no order could be passed under s.  33  unless it was proved to the hilt that there were liabilities  which remained unsatisfied or otherwise unprovided for.   It  is  obvious  that such proof would only be  available  after  investigation  in to the affairs of the insurer.   Therefore  in  order that s. 2D may be workable, all that  is  required  under it is that the Central Government should be  satisfied  after  such  prima facie inquiry as it  considers  necessary  that  there are reasons to believe that the  liabilities  of  the  insurer who has closed his business remain  unsatisfied  or  not otherwise provided for and in coming to this   prima  facie  conclusion  the Central Government may  make  enquiry  from the insurer with respect to complaints that it may have  received against him.  But the fact that the order does  not  on  the  face  of  it  show  that  the  Central   Government  considered this aspect of the matter would not make it  bad,  if in subsequent proceedings taken to challenge it is  shown  that  there  were materials before  the  Central  Government  which would justify its coming to the prima facie conclusion  that  the  liabilities had Dot been satisfied  or  otherwise  provided  for,  and  therefore  an  investigation  into  the  affairs  was called for.  In the present case we  find  from  the  materials  on  the record that  there  were  complaints  before  the  Central Government from those  who  had  claims  against  the  company.   Those  complaints  were  apparently  referred  to  the Company and it does not  appear  that  the  Company satisfied the Central Government that the complaints  were  unjustified.  It was in this situation that the  order  for investigation was made in July, 1957, after the  Company  had closed its insurance business.  Further on the materials  available  on the record it does appear that even now  there  are  claims pending to the tune of about one lac  of  rupees

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against the Company.  So it cannot  869  be  said  that  there were no  liabilities  of  the  Company  outstanding  which were not satisfied or otherwise  provided  for  when  the  order  was  made  in  July,  1957.   In  the  circumstances the order cannot be held to be bad because  it  does not show on the face of it that there were  liabilities  which  had  remained unsatisfied or not  otherwise  provided  for.  In  the  second  place  it is urged that  there  can  be  no  question   of   satisfying  or   otherwise   providing   for  liabilities  unless  the  liabilities  are  ascertained  and  either  admitted or proved.  In other words the argument  is  that it is only those liabilities which are admitted by  the  insurer  or  which  have been decreed against  him  and  the  decrees have become final which can be taken into account in  deciding  whether the liabilities have remained  unsatisfied  or not otherwise provided for.  It is urged that only  those  liabilities  which are ascertained and either undisputed  or  proved  can be satisfied and that the same applies to  their  being  otherwise provided for.  It is true that  only  those  liabilities,  which are ascertained and either  admitted  or  proved,  can  be satisfied; but it does not  follow  that  "  provision otherwise " must also be only of liabilities which  are ascertained and either admitted or proved.  If that were  go a dishonest insurer who closes his business could  always  get  out  of  the provisions of s. 33 read  with  s.  2D  by  repudiating all claims made against him and then saying that  there  are  no  liabilities which  remained  unsatisfied  or  otherwise   ‘unprovided  for.   There  can  be   no   doubt,  therefore, if these provisions have to serve the purpose for  which  they  were enacted, (namely, the  protection  of  the  interest of the policy-holders and the general public),  the  words  ’,not otherwise provided for" in s. 2D must refer  to  liabilities  in  the nature of claims  against  the  insurer  whether the insurer admits them or not and whether a  decree  has  been  finally passed in respect of them  or  not.   The  intention  of  making this provision in s. 2D is  to  ensure  that  probable claims arising out of the insurance  business  that  is closed are provided for before the insurer who  has  closed  his business can say that he is not governed by  all  the  provisions  of  the  Act.   There  can  be  no   doubt,  therefore,  113  870  that when " provision otherwise " has to be made it must  be  with  respect  to probable claims also that  are  likely  to  arise  out of the insurance business which has been  closed.  In  the present case even the Company admits that there  are  probable  claims to the tune of about rupees one  lac  still  pending and in the circumstances until they are satisfied or  it is shown that they have been provided for otherwise,  all  the  provisions of the Act, including s. 33, will  apply  to  the Company.  The  last  argument in support of the second  contention  is  that  the liabilities have been otherwise provided for.   It  is said that the Company deposited Rs. 3,94,000 as  security  under  s. 7 of the Act, which is still available to pay  off  the  liabilities  of  the Company and  therefore  when  such  liabilities  do not appear to exceed that amount  they  have  otherwise  been provided for.  The question thus  raised  is  whether  the  Company is entitled to take into  account  the  security  deposit  under  s. 7 in order  to  show  that  the  liabilities   have   been  otherwise  provided   for.    The  contention on behalf of the Controller is that when the  Act

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envisages " provision otherwise ", this provision has to  be  over  and  above the security deposit made  by  the  Company  under  s.  7.  It appears from s. 8  that  this  deposit  is  available  for the discharge of liabilities arising  out  of  policies  of insurance issued by the insurer so long as  any  such  liability remains unsatisfied.  But even if  a  decree  has  been  obtained  by a policy-holder on the  basis  of  a  liability under the policy he is not entitled to attach  any  part  of this deposit until he shows that he has  failed  to  realise  the  decree in any other way.  Further  it  appears  that s. 8 only contemplates policy-holders holding a  decree  attaching part of the security deposit in case they fail  to  realise  their  debt  in  any  other  way  ;  it  does   not  contemplate,  for  example, third parties who  have  decrees  against  an  insurer, like the Company (which in  its  motor  insurance  business indemnifies the  policy-holders  against  third  party risk up to a certain extent), doing  so.   Such  third parties cannot under any circumstances attach any part  of the deposit, for s. 8 only permits its attachment in  the  last resort by a policy-holder of the  871  insurer  in respect of a debt due upon a policy.  But  under  s.  2D the decree of a third party in such a case  would  be  the  liability  of  the  insurer in  respect  of  his  motor  insurance business which could not be realised by attachment  of  any part of the deposit under s. 7. Besides,  even  with  respect to decrees of policy-holders the deposit could  only  be attached when all other ways of realising the money  have  failed.   In these circumstances it can hardly be said  that  the fact that this deposit is there is itself a "  provision  otherwise  "  to meet the liabilities of the  insurer.   The  policy-holder  cannot  attach this deposit unless  he  first  exhausts  all other means.  Even if be has got a decree  and  even if the insurer admits his claim and wants to pay it, he  cannot do so out of the money in deposit under’s. 7. As  for  third parties who may have decrees against the insurer, they  can  never attach this deposit in view of the provisions  of  s. 8. It could not be the intention of the legislature  when  it  was  in  effect  exempting  the  insurer  from  all  the  provisions  of  the Act on his liabilities  being  otherwise  provided for that such provision should include the security  deposit  under s. 7, when it has made it so difficult for  a  policy-holder  to get his debt satisfied from  that  deposit  and when it is clear that a third party could not in any way  attach  the  deposit.   In these  circumstances  we  are  of  opinion  that when s. 2D provides that the insurer shall  be  subject  to  all the provisions of the Act so  long  as  his  liabilities  in  India in respect of the business  which  is  closed remain unsatisfied or not otherwise provided for, the  satisfaction  or " provision otherwise " does not  refer  to  the  deposit  under s. 7 and has to be over and  above  that  deposit.  It is true that s. 9 provides that the insurer can  take back the deposit after satisfying the court that he has  satisfied  or otherwise provided for his  liabilities.   But  this  " provision otherwise " for the purposes of s. 9  must  obviously  be other than the deposit itself.   Further  when  the  insurer  wants  to take back his deposit  on  making  "  provision otherwise " he will have to satisfy the court that  the  "  provision otherwise " has been fully  made  and  the  court will be in a position to investigate into the  matter.  This, however, does not mean that if the insurer does  872  not  want  to take advantage of s. 9 of the Act he  can  say  without submitting to the terms of that section that he  has  made  " provision otherwise ", because the deposit which  is

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made  under  s. 7 is more than all his  liabilities  of  the  insurance business that he has closed.  It is urged that  it  is hard, for example, on an insurer who has a large  deposit  and  whose liabilities are small that he should not be  able  to  fall back on his deposit for the purposes of s. 2D.   We  do  not, however, see any hardship in a case of  this  kind,  for if it is a fact that the deposit of the insurer is large  and  his liabilities are small he can always take  advantage  of  s.  9 of the Act and submit to an investigation  by  the  court  and take back his deposit after depositing the  small  sum required to meet his liabilities.  We are, therefore, of  opinion  that  when  s.  2D  speaks  of  satisfaction  or  "  provision  otherwise  "  for the  liabilities  of  insurance  business  which is closed it contemplates such  satisfaction  or  " provision otherwise" over and above the  deposit  made  under s. 7. It is not in dispute in this case that there are  some  liabilities still pending; it is also not  in  dispute  that  they are not satisfied and no provision has been  made  otherwise  for  them irrespective of the  security  deposit.  This  also appears to have been the position when the  order  was  made in July, 1957.  In the circumstances the order  is  good and cannot be called in question by the Company.  The  appeal  therefore fails and is  hereby  dismissed  with  costs.  Appeal dismissed.  873