24. Acquiring companies to have the exclusive privilege of carrying on general insurance
business.—(1) Except to the extent expressly provided in this Act, on and from the appointed day, the
Corporation and the acquiring companies shall have the exclusive privilege of carrying on general
insurance business in India.
(2) Subject to the provisions of section 36, any certificate of registration granted under the Insurance
Act to any insurer other than an insurer referred to in sub-section (1) shall, on and from the appointed day,
cease to have effect:
Provided that nothing in this sub-section shall apply to the carrying on by the Life Insurance
Corporation of life insurance business and capital redemption and annuity certain business.
2
[24A. Exclusive privilege of Corporation and acquiring companies to cease.—Notwithstanding
anything contained in this Act, the exclusive privilege of the Corporation and the acquiring companies of
carrying on general insurance business in India shall cease on and from the commencement of the
Insurance Regulatory and Development Authority Act, 1999 and the Corporation and the acquiring
companies shall, thereafter, carry on general insurance business in India in accordance with the provisions
of the Insurance Act, 1938 (4 of 1938):]
3
[Provided that the Corporation shall, on and from the commencement of the General Insurance
Business (Nationalisation) Amendment Act, 2002, cease to carry on general insurance business.]
4
[24B. Cessation of application of Act.—(1) On and from the date on which the Central
Government ceases to control any specified insurer, after the commencement of the General Insurance
Business (Nationalisation) Amendment Act, 2021, the provisions of this Act shall cease to apply in
respect of that specified insurer.
(2) Notwithstanding anything contained in sub-section (1), on the date of cessation of applicability
referred to in sub-section (1),—
(a) any scheme framed by the Central Government under sub-section (1) of section 17A in
respect of the specified insurer referred to in sub-section (1) shall be deemed to have been adopted by
the board of directors of such specified insurer:
Provided that the board of directors may make such additions, amendments or variations thereto,
or frame new policy in place of such scheme, as it may deem appropriate;
(b) without prejudice to the generality of the power of the board of directors of the specified
insurer under clause (a), all powers exercisable by the Central Government under a scheme framed by
it in sub-section (1) of section 17A shall be exercisable by that board of directors.
1. Subs. by Act 40 of 2002, s. 6, for “The Corporation may at any time transfer any officer” (w.e.f. 21-3-2003).
2. Ins. by Act 41 of 1999, s. 32and the Third Schedule (w.e.f. 19-4-2000).
3. Ins. by Act 40 of 2002, s. 7 (w.e.f. 21-3-2003).
4. Ins. by Act 37 of 2021, s. 5 (w.e.f. 27-8-2021).
13
Explanation 1.—For the purposes of this section, the expression "control" means the right of the
Central Government, in relation to a specified insurer,—
(i) to appoint a majority of its directors; or
(ii) to have power over its management or policy decisions,
by virtue of its shareholding rights or management rights under its articles of association or shareholders
agreements or voting agreements or any other agreements executed with the specified insurer or any other
person in relation to the specified insurer.
Explanation 2.—For the removal of doubts, it is hereby clarified that—
(i) the provisions of this section shall also apply to any rule, scheme, direction or notification
made under this Act before the cessation of applicability;
(ii) the cessation of applicability shall not revive anything that was not already in force or in
existence under this Act or affect anything previously done or suffered under this Act;
(iii) the board of directors of the specified insurer shall exercise the powers referred to in
sub-section (2), subject to any requirement under any law for the time being in force.]
25. [Properties in India not to be insured with foreign insurers except with permission of Central
Government.] Omitted by the Insurance Laws (Amendment) Act, 2015 (5 of 2015), s. 104 (w.e.f. 26-12-
2014).
26. Acquiring companies and income-tax.—For the purposes of the Income-tax Act, 1961 (43 of
1961), every acquiring company shall be deemed to be an Indian company and a company in which the
public are substantially interested.
27. Power to reduce amounts of insurance in certain cases.—An acquiring company may, having
regard to its financial condition on the 13th day of May, 1971 or the financial condition on the said date
of any existing insurer whose undertaking has been transferred to and vested in it under this Act reduce
the liabilities which have arisen under contracts of general insurance entered into before the said date in
such manner and subject to such conditions as it thinks fit:
Provided that no such reduction shall be made except in accordance with specific proposals made by
the acquiring company in this behalf and approved by the Central Government.
28. Right of acquiring company to seek relief in respect of certain transactions.—(1) Where an
existing insurer has at any time within five years before the 13th day of May, 1971—
(a) made any payment to any person without consideration,
(b) sold or disposed of any property of the insurer without consideration or for an inadequate
consideration,
(c) acquired any property or rights for an excessive consideration,
(d) entered into or varied any agreement so as to require an excessive consideration to be paid or
given by the insurer,
(e) entered into any other transaction of such an onerous nature as to cause a loss to, or impose a
liability on, the insurer exceeding any benefit accruing to the insurer,
and the payment, sale, disposal, acquisition, agreement or variation thereof or other transaction was not
reasonably necessary for the purpose of the general insurance business of the insurer or was made with an
unreasonable lack of prudence on the part of the insurer, regard being had in either case to the
circumstances at the time, the acquiring company may apply for relief to the court in respect of such
transaction, and all parties to the transaction shall, unless the court otherwise directs, be made parties to
the application.
(2) The court may make such order against any of the parties to the application as it thinks just having
regard to the extent to which those parties were respectively responsible for the transaction or benefited
from it and all the circumstances of the case.
14
(3) Where an application is made to the court under this section in respect of any transaction and the
application is determined in favour of the acquiring company, the court shall have exclusive jurisdiction
to determine any claim outstanding in respect of the transaction.
29. Duty to deliver possession of property and documents relating thereto.—(1) Where any
property appertaining to an existing insurer has been transferred to and vested in an Indian insurance
company under section 5,—
(a) every person in whose possession, custody or control any such property may be, shall deliver
the property to the Indian insurance company forthwith,
(b) any person who immediately before such vesting has in his possession, custody or control any
books, documents or other papers relating to an existing insurer shall be liable to account for the said
books, documents and papers to the Indian insurance company, and shall deliver them to that
company or to such person as that company may direct.
(2) In particular, all the assets of an existing insurer appertaining to the undertaking held in deposit by
the Reserve Bank of India under the Insurance Act or by trustees in trust shall be delivered to the Indian
insurance company.
(3) Without prejudice to the other provisions contained in this section, it shall be lawful for each
Indian Insurance company to take all necessary steps for taking possession of all properties which have
been transferred to and vested in it under this Act.
30. Penalty for withholding property, etc.—If any person wilfully withholds or fails to deliver to an
Indian insurance company as required by section 29 any property or any books, documents or other
papers which may be in his possession or unlawfully retains possession of any property of an existing
insurer which has been transferred to and vested in an Indian insurance company under section 5 or
wilfully applies any such property to purposes other than those expressed in or authorised by this Act, he
shall, on the complaint of the Indian insurance company, be punishable with imprisonment for a term
which may extend to one year, or with fine which may extend to one thousand rupees, or with both.
31. Officers and employees of Corporation or of acquiring companies to be public
servants.—Every officer or other employee of the Corporation or of an acquiring company shall be
deemed to be a public servant for the purposes of Chapter IX of the Indian Penal Code (45 of 1860).
1
[31A. Liability of director of specified insurer.—A director of a specified insurer who is not its
whole-time director shall be held liable only in respect of such acts of omission or commission of the
specified insurer which had been committed with his knowledge, attributable through board processes,
and with his consent or connivance or where he had not acted diligently.
Explanation.—For the purposes of this section, the reference to "board" shall include committees of
the board.]
32. Indemnity.—Every officer of the Central Government and every officer or other employee of the
Corporation and of any acquiring company shall be indemnified by the Central Government or the
Corporation or the acquiring company, as the case may be, against all losses and expenses incurred by
him in, or in relation to, the discharge of his duties under this Act except such as have been caused by his
own wilful act or default.
33. Dissolution of Corporation and acquiring companies.—No provision of law relating to the
winding up of companies shall apply to the Corporation or to an acquiring company, and neither the
Corporation nor any such company shall be placed in liquidation save by order of the Central Government
and in such manner as it may direct.
34. Reference to existing insurer in other laws.— Any reference to an existing insurer in any law
other than this Act or any contract or other instrument shall, in so far as it relates to an acquiring
company, be construed as a reference to that company.
35. Application of Insurance Act.—Subject to such exceptions, restrictions and limitations, if any,
as the Central Government may, by notification, specify in this behalf, the Insurance Act shall apply to or
in relation to the Corporation and every acquiring company as if the Corporation or the acquiring
1. Ins. by Act 37 of 2021, s. 6 (w.e.f. 27-8-2021).
15
company, as the case may be, were an insurer carrying on general insurance business within the meaning
of that Act.
35A. [Deduction of income-tax not to be made on interest or dividend payable to the Corporation,
etc.] Omitted by The Finance Act 2002 (20 of 2002), s. 158 (w.e.f. 1-6-2002).
36. Exemptions.—(1) Nothing contained in this Act shall apply in relation to—
(a) any general insurance business carried on by a State Government, to the extent to which such
insurance relates to properties belonging to it or undertakings owned wholly or mainly by the State
Government or to properties belonging to semi-government bodies, or any Board or body corporate
established by the State Government under any statue or any industrial or commercial undertaking in
which the State Government has substantial financial interest, whether as shareholder, lender or
guarantor;
(b) any general insurance business not falling within clause (a) which has been carried on by a
State Government before the commencement of this Act, to the extent to which it is necessary to
allow such business to run off:
Provided that nothing contained in this clause shall be deemed to authorise the State Government
to issue any new policies or renew any existing policies;
(c) any insurer whose business is being voluntarily wound up or is being wound up by a court;
(d) the insurance business carried on by the Calcutta Hospital and Nursing Home Benefits
Association Limited;
(e) the insurance business carried on by the Export Credit and Guarantee Corporation Limited and
the Deposit Insurance Corporation established under section 3 of the Deposit Insurance Corporation
Act, 1961 (47 of 1961);
(f) any scheme in existence immediately before the 14th day of May, 1971 or any scheme framed
after the said day with the approval of the Central Government for the insurance of crops or of cattle
or of flood risks or of war or emergency risks.
(2) If the Central Government is satisfied that an insurer, whether established before or after the
appointed day, carries on only such general insurance business as is not carried on ordinarily by insurers,
it may, by notification, direct that nothing contained in this Act shall apply to such insurer.
37. Vacancies, etc., not to invalidate proceedings.—No act or proceeding of the Corporation or of
an acquiring company shall be called in question merely on the ground of the existence of any vacancy in,
or defect in the constitution of, the Corporation or the company.
38. Protection of action taken in good faith.—No suit, prosecution or other legal proceeding shall
lie against any officer of the Central Government or officer or other employee of the Corporation or of the
acquiring company for anything which is in good faith done or intended to be done under this Act.
1
[38A. Powers of Insurance Regulatory and Development Authority of India not to apply to
International Financial Services Centre.—Notwithstanding anything contained in any other law for the
time being in force, the powers exercisable by the Insurance Regulatory and Development Authority of
India under this Act,—
(a) shall not extend to an International Financial Services Centre set up under sub-section (1) of
section 18 of the Special Economic Zones Act, 2005 (28 of 2005);
(b) shall be exercisable by the International Financial Services Centres Authority established
under sub-section (1) of section 4 of the International Financial Services Centres Authority Act, 2019,
in so far as regulation of financial products, financial services and financial institutions that are permitted
in the International Financial Services Centres are concerned.]
39. Power to make rules.—(1) The Central Government may, by notification, make rules to carry
out the provisions of this Act.
(2) In particular, and without prejudice to the generality of the foregoing power, rules made under this
section may provide for—
1. Ins. by Act 50 of 2019, s. 33 and the second Schedule (w.e.f. 1-10-2020).
16
(a) the manner in which the profits, if any, and other moneys received by the Corporation may be
dealt with;
1
[(b) the conditions, if any, subject to which the Corporation shall carry on re-insurance business;
(ba) the conditions, if any, subject to which the acquiring companies shall carry on general
insurance business;]
(c) the terms and conditions subject to which any reinsurance contracts or treaties may be entered
into;
(d) the form and manner in which any notice or application may be given or made to the Central
Government;
(e) the reports which may be called for by the Central Government from the Corporation and the
acquiring companies;
(f) any other matter which is required to be, or may be, prescribed.
(3) Every rule made under this section and every notification issued under section 35 shall be laid, as
soon as may be after it is made, before each House of Parliament, while it is in session, for a total period
of thirty days which may be comprised in one session or in two or more successive sessions, and if,
before the expiry of the session immediately following the session or the successive sessions aforesaid,
both Houses agree in making any modification in the rule or notification or both Houses agree that the
rule or notification should not be made, the rule or notification shall thereafter have effect only in such
modified form or be of no effect, as the case may be; so, however, that any such modification or
annulment shall be without prejudice to the validity of anything previously done under that rule or
notification.
40. [Omission of section 14 of Act 17 of 1971.] Rep. by the Repealing and Amending Act, 1978 (38 of
1978), s. 2 and the First Schedule (w.e.f. 26-11-1978).