The Hilal Mutual Insurance Company Limited, Lahore and the Commercial Mutual Insurance Company Limited, Lahore have applied under section 35 of the Insurance Act praying for permission for the merger of the business of the former into that of the latter. It has been candidly admitted in paragraph No. 2 of the petition that the Controller of Insurance has cancelled the registration of the Hilal Mutual Insurance Company Limited, Lahore under section 3 of the Insurance Act and a petition for its liquidation has been filed under section 3(5-D) of the same Act which has been registered as Civil Original No. 39 of 1968.
2. The respondents have objected to such permission being granted and have, inter alia, raised a preliminary objection that the registration of the Hilal Mutual Insurance Co. Limited, Lahore having been cancelled, it has ceased to be an "Insurer" as defined in section 2(9) of the Act because no person can carry on Insurance business unless It has a valid registration under the Insurance Act. It has been submitted that an application for amalgamation under section 35 of the Insurance Act can be presented only by an insurer. Since, it is submitted, the Company has ceased to be an insurer, it cannot even validity present an application under the Insurance Act and that the same has to be dismissed on this short ground alone.
3. The issue that arises for determination at this preliminary stage is- "Whether a person not in possession of a valid certificate of registration under the Insurance Act can be called an Insurer under section 35 of the Act and can present an application under the said section for amalgamation with another insurer."
4. It is admitted that only an insurer can apply under section 35. The definition of an `Insurer' given in section 2(9) of the Insurance Act does not recognise a Company which is not carrying on Insurance business in Pakistan or, at least, does not have its principal place of business or domicile in Pakistan. Under section 3 no person shall begin to carry on any class of Insurance business after the corning into force of the insurance Act unless he has obtained from the Controller of Insurance a Certificate of Registration; in the case of persons who were already in the insurance business when tire Act came into force the condition is that the Certificate of Registration shall be obtained within three months of the commencement of the Act and, in either case, failure to do so shall bar them from carrying on any such business. In other words, a person, who does not have a Certificate of Registration from the Controller of Insurance under section 3 of the Act, cannot carry on any insurance business, and in the light of the definition clause referred to above, he cannot be an `Insurer'.
5. It has been contended by learned counsel for the petitioner that in case of cancellation of registration by the Controller, section 3(5-B) of the Act prohibits an insurer from entering into any new contract of insurance but it is specificallylaid down that- "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 the subsection (5-D), continue as if the cancellation had not taken place."
It has been submitted that since the Company has a number of Insurance contracts which were entered into before the cancella--tion of registration, the legal status of the Company as an Insurer continues to exist vis-a-vis these contracts. It is consequently argued that the Company enjoys the status of an insurer in respect of these contracts and is entitled to file an application for amalgamation under section 35.
6. The provision quoted above restricts itself to subsisting contracts of insurance and the rights and liabilities in respect of them. In other words, the Company can only deal with those contracts in accordance with law, but so far as the question of amalgamation is concerned, that is based upon the company's status as an insurer in general. The "Rights and Liabilities" in respect of the subsisting contracts of Insurance do not give to the Company the status of an insurer for the purposes of section 35. If more clarification be required, it is contained in the extract from the subsection given above which unequivocally provides that these rights and liabilities are to continue- "subject to the provisions of subsection (5-D)."
Subsection (5-D) enjoins upon the Controller of Insurance the duty of moving the Court for liquidation of the Company within six months of the cancellation. It is not denied that the period of six months has expired. It is also not denied that a liquidation application under section 3(5-D) is pending. The question of the amalgamation of a Company in respect of which an application for liquidation has been presented does just not arise.
7. It may further be added that even the Certificate of Insurance of the Commercial Mutual Insurance Company Limited, Lahore has since been cancelled. Even, therefore, if the argument of the learned counsel for the petitioner were to be accepted, an amalgamation has now become impossible. The reason is that the Commercial Mutual Insurance Company Limited would, in accordance with the provisions already discussed above, have all rights and liabilities in respect of contracts of insurance entered into by it before the cancellation of the registration. Such contracts do not include the contracts entered into by the Hilal Mutual Insurance Company and the Commercial Mutual Insurance Company can, therefore, not, by any stretch of the law or imagination, acquire any rights or liabilities in respect of such contracts of the Hilal Mutual Insurance Company.
8. A merger or amalgamation is consequently not possible and this application is, therefore, dismissed with costs.