Analysing the General Insurance Business (Nationalisation) Amendment Bill, 2021 which was passed in the recently concluded Monsoon session of Parliament, KUDRAT MANN highlights the changes it makes to its parent act, the General Insurance Business (Nationalisation) Act, and the substantive and procedural concerns raised against it. .——.THE Parliament, without much discussion in both Houses, passed the General Insurance Business (Nationalisation) Amendment Bill, 2021 (the Bill) last week. The Lok Sabha and the Rajya Sabha passed the bill through a voice vote on August 2nd and 11th respectively. The Bill, which amends the General Insurance Business (Nationalisation) Act, 1972 (the Act), was passed amidst widespread protests in Parliament..Apart from calling for discussions over the Pegasus Project revelations and the three farm laws, the heated exchanges between the opposition parties and the government surged over the Opposition's allegations of bulldozing legislation by the government even with respect to this bill..The 1972 Act had nationalised all private companies undertaking general insurance business in India. The present Bill, on the other hand, enables greater private sector participation in the public sector insurance companies covered by the Act..The Statement of Objects and Reasons of the Bill states that it seeks "provide for greater private participation in the public sector insurance companies and to enhance insurance penetration and social protection and better secure the interests of policyholders and contribute to faster growth of the economy"..Also Read: Government Move to Privatise Insurance Companies is a Danger to India's Financial Sector .Definitional amendments.The Act defines 'general insurance business' as fire, marine, or miscellaneous insurance business, but excludes capital redemption and annuity for certain business. The Bill seeks to do away with this definition, and alludes to the definition under the Insurance Act, 1938 in which both the capital redemption and annuity certain business are included in the definition of general insurance business..Further, the 'board of directors' will be construed as per Section 2(10) of the Companies Act, 2013 to mean "a collective body of the directors of the company.".Cessation of government's 'control'.The Bill seeks to curtail the role and control of the government in insurance activities. Section 24B has been inserted into the Act to give effect to the same. It provides that the Act will not apply to the specified insurers once the government ceases control over them. 'Control' here refers to the power to appoint the majority of directors of a specified insurer, and the power over management and policy decisions..The Act mandated the central government to form terms and conditions of the service of employees of the specified insurers. The Bill aims to transfer this power of the government to the Board of Directors..Director's liability.The Bill, by inserting section 31A into the Act, provides that a director (except a whole-time director) of a specified insurer will be held liable only for certain acts. These include the acts which have been committed with the director's (a) knowledge, (b) attributable through board processes, (c) with his consent or connivance or (d) where he had not acted diligently..The said provision is in alignment with Section 149(12) of the Companies Act, 2013..Government's shareholding.Section 10B of the Act provided for a minimum 51% equity capital holding requirement in the public sector insurers by the central government. The Bill seeks to scrap this provision..The public sector insurer General Insurance Corporation of India (GIC) was set up under the Act in 1972. GIC was further compartmentalised into four subsidiaries, namely: National Insurance, New India Assurance, Oriental Insurance and United India Insurance. Since a 2002 amendment in the Act, their control was transferred from the GIC to the central government. Now, once the Bill is enacted, one or more of these subsidiaries shall be privatised..What is the motive behind the Amendment?.Since 2018, the central government has expressed keenness to privatise the public insurance sector. The late Union Finance Minister, Arun Jaitley, had proposed a merger of three of the public sector insurer subsidiaries in his budget speech in February 2018. The objective was to merge the entities for their eligible listing on a stock exchange. However, the idea never materialised due to insolvency and low profits..Moving forward to 2021, the present Union Finance Minister, Nirmala Sitharaman, in her budget speech this year pushed the privatisation agenda again by calling for the privatisation of one of the public sector insurers. The Bill is in alignment with the same agenda..Why the ruckus over the Bill?.The Bill was passed amidst unprecedented chaos in the Parliament. The Opposition had demanded that the Bill be sent to a Select Committee of the Parliament for review, but the government did not accede to the same. A Select Committee in the Parliament is formed for the proper perusal of a Bill, after analysis, it send a report of its observations back to the Parliament, which the Houses may or may not accept..Contrasting pictures can be drawn between the passage of the original Act and the amending Bill..The procedure followed for the passing of the principal Act in 1972 was equipped with due diligence, as it was discussed for a whole day in the Lok Sabha before being sent to a Joint Committee of the Parliament on May 29. The Committee, after a series of meetings over a period of three months, submitted its report on August 21. Still, further deliberations ensued in the Lok Sabha for over four hours before passing the 1972 bill. A similar set of deliberations followed in the Rajya Sabha as well, where two sittings were devoted to debating the 1972 bill before passing it..In contrasting fashion, the instant Bill was discussed in both houses for a combined 22 minutes and passed with negligible discussions via a voice vote. Large-scale security personnel was present in the Rajya Sabha during its passage, and the Opposition staged a walkout in protest..The Opposition has expressed concern about the capitalist agenda behind the Bill, and the ramifications it would have on public sector employees. An opposition MP even called the Bill "anti-people" since it aims to nurture capitalists' interests. Centrally backed insurers are necessary to ensure regular liquidity, especially since the underwriting losses accrued by both public and private insurers have risen sharply due to the pandemic..Also Read: Micro-Insurance: A lifeline for the poor.The employees of public sector insurers, too, expressed their dissatisfaction against the recent amendments by going on a strike on August 4, 2021. .Are the apprehensions expressed over the Bill justified? That remains to be seen and will come into view only once the Bill gets enforced as law. However, a comprehensive discussion between the ruling alliance and opposition MPs over Bill before its passage would have certainly helped militate against any potential ill-effects of the Bill that may manifest in the future..The Way Ahead.This was not the only bill that was passed without much discussion in little to no time in the last few years. As per the legislative research institute PRS India, in the concluded Parliament session, the Lok Sabha and the Rajya Sabha discussed bills for an average of only 34 minutes and 46 minutes respectively before passing them, with just one bill meriting discussion of over an hour in both Houses..In fact, the Coconut Development Board (Amendment) Bill, 2021 was passed after a combined 'discussion' of only 10 minutes in both Houses, the National Commission for Indian System of Medicine (Amendment) Bill, 2021 was passed after a total discussion time of 15 minutes, and the National Commission for Homoeopathy (Amendment) Bill, 2021, after merely 16 minutes..The Chief Justice of India, while addressing an Independence Day ceremony hosted by the Supreme Court Bar Association this Sunday, lamented the haste with which the Parliament is passing bills by calling it a "sorry state of affairs". He highlighted the fact that if the process continues, it would only result in ambiguities in the statutory provisions which leads to an influx of cases demanding a judicial interpretation..At this juncture, it is pertinent to initiate a discourse on whether the current Parliamentary procedure enables the circumvention of well-established norms, or whether there needs to be stricter monitoring of the proceedings in order to ensure fair procedure is being followed..(Kudrat Mann is a third-year student of B.A. LL.B (Hons.) at Dr. B.R. Ambedkar National Law University, Rai, and an intern at The Leaflet. The views expressed are personal.)
