Section 12 of The General Insurance Business (Nationalisation) Act, 1972
- (1)The total amount paid by the Central Government under section 11 shall be treated as additional contribution to the subscribed capital of the Corporation and such additional subscribed capital shall stand allotted to, and vested in, the Central Government.
- (2)The Corporation shall distribute the amount paid to it under section 11, to the shareholders of each Indian insurance company and to each existing insurer, who is not an Indian insurance company, in accordance with their rights and interests, and, if there is any doubt or dispute as to the right, or extent of the right, of any person to receive the whole or any part of such amount, refer such doubt or dispute to the Central Government for determination and thereafter, act in accordance with the determination made by that Government.
- (3)Save as otherwise provided in sub-section (2), the amount referred to in section 11 shall be given in accordance with the provisions of section 13, section 14 or section 15, as the case may be.
Summary
- All money the government pays for acquisitions becomes part of the capital of the General Insurance Corporation.
- This additional capital is officially owned by and assigned to the Central Government.
- The Corporation is responsible for handing out this money to shareholders and insurers based on their legal rights.
- If there is any confusion or argument about who should get the money, the Central Government makes the final decision.
- The distribution of these funds must follow specific rules regarding the method of payment and handling rival claims.
Practical examples
FAQ
1. What happens to the GIC's capital when the government pays for nationalised companies under Section 12?
Under Section 12 of the General Insurance Business (Nationalisation) Act, 1972, the payments are treated as additional capital for the Corporation and are allotted to the Central Government.
2. Who decides who gets paid if there is a dispute under Section 12 of the insurance nationalisation law?
If there is a doubt or dispute about who has the right to receive payment, the Corporation must refer it to the Central Government for a final decision under Section 12.
3. Does the General Insurance Corporation have to follow any other rules when paying out money under Section 12?
Yes, Section 12(3) states that the Corporation must follow the rules in Sections 13, 14, and 15, which cover payment methods, named nominees, and court deposits.
4. Who officially owns the additional capital created in the Corporation under Section 12 of the 1972 Act?
The additional subscribed capital created by the acquisition payments stands allotted to and is owned by the Central Government according to Section 12.
Test yourself
Q1.Under Section 12 of the General Insurance Business (Nationalisation) Act, 1972, how is the money received from the Central Government categorized in the Corporation's books?
Q2.Under Section 12 of the General Insurance Nationalisation law, who has the power to settle a dispute regarding who should receive the compensation?
Q3.According to Section 12 of the 1972 Act, the Corporation must distribute money to shareholders in accordance with what?
Q4.How does Section 12 of the General Insurance Nationalisation law relate to Section 13 and Section 15?