IREC Rule No.937: Court Attachment etc Of Insurance Policy

937.  Court Attachment etc Of Insurance Policy:-

If the Accounts Officer receives notice of;

(a)   An assignment (otherwise than an assignment to the President under rule 932); or

(b)   A charge or encumbrance on; or

(c)   An order of a Court restraining dealings with the policy or any amount realized thereon;

The Accounts Officer shall note;

(i)    Re-assign or make over the policy as provided in Rule 934; or

(ii)    Realize the amount assured by the policy as provided in Rule 935.

But shall forthwith refer the matter to the Railway Board.

Government Of India’s Decision: Cases in which life-insurance policies financed from provident fund lapse or become encumbered by means of loan advanced under the non-forfeiture clause owing to subscribers’ default in paying the premium need not be referred to the Railway Board. In all cases where policies have lapsed, the provisions of rule 936 would apply and the Account Officer can recover the amount of the provident fund advance under sub-rule (4) of Rule 932 and re-assign or make over the policy in term of Rule 934.

In cases where under the operation of the non-forfeiture clause of a policy, premia within the limit of surrender value are advanced by the Life Insurance Corporation of India to keep policies in force, the Accounts Officer after receiving notice or the encumbrance arising out of the advance of the premium shall, in terms of Rule 936 read with Rule 932(4), proceed to recover the provident fund advance. Then one of the following three events may happen and the procedure indicated against each may be followed in that event;

(a)  If the recovery is complete before the policy becomes a claim by maturity or death, the Account Officer shall re-assign or make over the policy as above, without referring the matter to the Railway Board.

(b)  If the policy matures before the completion of the process of recovery, the Account Officer shall, without referring the matter to the Railway Board proceed in the following manner;

(i)   When the net proceed under the policy (i.e. the claim amount payable by Life Insurance Corporation of India minus the accumulated premia advanced by the Corporation) exceed the unrecovered advance given from the provident fund the Account Officer shall re-assign the policy or make it over to the subscriber and then ask for repayment of the unrecovered provident fund advance.

(ii)    If the net proceed under the policy as explained above fall short of the unrecovered provident fund advance, the Account Officer shall realize the net proceed and then try to recover the balance of the unrecovered provident fund advance from the subscriber.

(c)  If the policy becomes a claim by death before the completion of the process of recovery, the Accounts Officer shall, without referring the matter to the Railway Board re-assign or make over the policy as in Rule 934(2).

The cases of encumbrance arising out of the operation of the non-forfeiture clause of a policy would not come within the purview of Rule 937, but Rule 936 would continue to apply to such case.

[Authority: No.F(E)59/PF-43/8, 23.06.1960]