Report No. 67
Article 47-Policies of Marine Insurance
Article 47 levies duty on policies of insurance.
The duty varies according to the nature of the policy, the article having been divided into different divisions-A, B, C, and so on-for the purpose. We shall discuss only those portions of the article which require consideration having regard to the need for amendment in the particular portions or suggestions made for amendment of those portions.
43.2. Policies of marine insurance-Suggestion of the Insurance Association of India.-
We begin with the question of stamp duties on policies of marine insurance (described in the Act as policies of sea insurance). A suggestion for amendment of the law on the subject was received from the Insurance Companies Association of India, and the suggestion was forwarded by the Ministry of Finance to the Law Commission for its consideration. The suggestion is to substitute duty for a fixed amount in place of the present duty, which is ad valorem in most cases. The duty suggested by the Association is as follows:-
|(a) if the amount of the policy does not exceed Rs. 5,000||50 Paise.|
|(b) in other cases||1 Rupee.|
43.3. Although general insurance business has now been nationalised, we think that that would not make any difference as to the points raised and discussed below on the basis of the above suggestion.1
1. Suggestion of the Insurance Companies Association of India (Regional Councils of Delhi and Calcutta); Law Commission File No. F. 3(4), 57-L.C. Pt. I, S. No. 24; Finance Ministry File No. F. 1 /64/63-Cust. VII, S. No. 1.
43.4. Present law.-
The present law on the subject of stamp duties on policies of marine insurance is contained in Article 47-Division A, read with section 2(20) and section 7(4) and sections 66-67 of the Act.
43.5. Existing section 2(20)1 defines a "sea policy" as follows:-
"(20) Policy of sea-insurance or sea-policy.-"Policy of sea-insurance" or "sea-policY"-
(a) means any insurance made upon any ship or vessel (whether for marine or inland navigation), or upon the machinery, tackle or furniture of any ship or vessel, or upon any goods, merchandise or property of any description whatever on board of any ship or vessel, or upon the freight of, or any other interest which may be lawfully insured in, or relating to, any ship or vessel, and
(b) includes any insurance of goods, merchandise or property for any transit which includes, not only a sea risk within the meaning of clause (a), but also any other risk incidental to the transit insured from the commencement of the transit to the ultimate destination covered by the insurance:
Where any person, in consideration of any sum of money paid or to be paid for additional freight or otherwise, agrees to take upon himself any risk attending goods, merchandise or property of any description whatever while on board of any ship or vessel, or engages to indemnify the owner of any such goods, merchandise or property from any risk, loss or damage, such agreement or engagement shall be deemed to be a contract for sea-insurance."2
1. Certain drafting changes are proposed in the definition in section 2(20), see Appendix 1.
2. For revised section 2(20), please see Appendix 1.
43.6. Section 7(4) reads-
"(4) Where any sea-insurance is made for or upon a voyage and also for time, or to extend to or cover any time beyond thirty days after the ship shall have arrived at her destination and been there moored at anchor, the policy shall be charged with duty as a policy for or upon a voyage, and also with duty as a policy for time."
43.7. Article 47, Division A reads-
47. Policy of Insurance-
|If drawn singly||If drawn in duplicate for each part|
|A. Sea-insurance (See section 7)|
|(1) For or upon any voyage|
|(i) where the premium or consideration does not exceed the rate of fifteen naye paise or one-eighth per centum of the amount insured by the policy;||Ten naye paise||Five naye paise|
|(ii) in any other case, in respect of every full sum of one thousand five hundred rupees and also any fractional part of one thousand five hundred rupees insured by the policy;||Ten naye paise||Five naye paise|
|(2) For time-|
|(iii) in respect of every full sum of one thousand rupees and also any fractional part of one thousand rupees insured by the policy-|
|where the insurance shall be made for any time not exceeding six months;||Fifteen naye paise||Ten naye paise|
|where the insurance shall be made for any time exceeding six months.||Twenty-five naye paise||Fiufteen naye paise|
43.8. Sections 66-67 read-
"66. Penalty for not making out policy or making one not duly stamped.-Any person who-
(a) receives, or takes credit for, any premium or consideration for any contract of insurance and does not, within one month after receiving, or taking credit for, such premium or consideration, make out and execute a duly stamped policy of such insurance; or
(b) makes, executes or delivers out any policy which is not duly stamped, or pays or allows in account, or agrees to pay or allows in account, any money upon, or in respect of, any such policy; shall be punishable with fine which may extend to two hundred rupees.
67. Penalty for not drawing full number of bills or marine policies purporting to be in sets.- Any person drawing or executing a bill of exchange payable otherwise than on demand or a policy of marine insurance purporting to be drawn or executed in a set of two or more, and not at the same time drawing or executing on paper duly stamped the whole number of bills or policies of which such bill or policy purports the set to consist, shall be punishable with fine which may extend to one thousand rupees."
43.9. and 43.10. Provision in the Marine Insurance Act.-
Mention may also be made of sections 25 and 27 of the Marine Insurance Act,1 which have a bearing on the subject.
1. The Marine Insurance Act, 1963 (11 of 1963).