THE GENERAL INSURANCE BUSINESS (NATIONALISATION) ACT, 1972 
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ARRANGEMENT OF SECTIONS 

Last updated: 24-9-2021 
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CHAPTER I 

PRELIMINARY 

SECTIONS 

1.  Short title. 
2.  Declaration as to the policy of the State. 
3.  Definitions. 

TRANSFER TO PUBLIC OWNERSHIP OF GENERAL INSURANCE BUSINESS 

CHAPTER II 

4.  Transfer of shares of Indian insurance companies. 
5.  Transfer of undertakings of other existing insurers. 
6. 
7. 
8.  Provident, superannuation, welfare and other funds. 

 Effect of transfer of undertakings. 
 Transfer of service of existing employees in certain cases. 

CHAPTER III 

GENERAL INSURANCE CORPORATION OF INDIA 

9.  Formation of General Insurance Corporation of India. 
10.  Transfer to Corporation of shares vested in Central Government. 
10A. Transfer to Central Government of shares vested in Corporation. 
10B. Enhancement of equity capital of General Insurance companies. 

CHAPTER IV 

AMOUNTS TO BE PAID FOR ACQUISITIONS 

11.   Amounts to be paid for transfer and vesting of shares or undertakings. 
12.  Disbursement of amounts by Corporation. 
13.   Mode of payment. 
14.   Amount payable to shareholders may be paid to named persons instead in certain  cases. 
15.  Payment into court in case of rival claims. 

SCHEME FOR REORGANISATION OF GENERAL INSURANCE BUSINESS 

CHAPTER V 

16.  Schemes for mergers of companies, etc. 
17.  Laying of schemes and notifications before Parliament. 

CHAPTER VA 

TERMS AND CONDITIONS OF SERVICE OF OFFICERS AND OTHER EMPLOYEES 

17A. Power of Central Government to regulate the terms and conditions of service of officers and 

other employees. 

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FUNCTIONS OF CORPORATION AND ACQUIRING COMPANIES AND THEIR MANAGEMENT 

CHAPTER VI 

SECTIONS 

18.  Functions of Corporation. 
19.  Functions of acquiring companies. 
20.  Balance of profit how to be utilised. 
21.  Interim provisions for management of Indian insurance companies. 
22.  Power of Central Government to transfer employees. 
23.  Power of Central Government to issue directions. 

CHAPTER VII 

MISCELLANEOUS 

24.  Acquiring companies to have the exclusive privilege of carrying on general insurance business. 
24A. Exclusive privilege of Corporation and acquiring companies to cease. 
24B. Cessation of application of Act. 
25.  [Omitted.] 
26.  Acquiring companies and income-tax. 
27.  Power to reduce amounts of insurance in certain eases 
28.  Right of acquiring company to seek relief in respect of certain transactions. 
29.  Duty to deliver possession of property and documents relating thereto. 
30.  Penalty for withholding property, etc. 
31.  Officers and employees of Corporation or of acquiring companies to be public servants. 
31A. Liability of director of specified insurer. 
32.  Indemnity. 
33.  Dissolution of Corporation and acquiring companies. 
34.  Reference to existing insurer in other laws. 
35.  Application of Insurance Act. 
35A. [Omitted.] 
36.  Exemptions. 
37.  Vacancies, etc., not to invalidate proceedings. 
38.  Protection of action taken in good faith. 
38A.  Powers  of  Insurance  Regulatory  and  Development  Authority  of  India  not  to  apply  to 

International Financial Services Centre. 

39.  Power to make rules. 
40.  [Repealed.] 

THE SCHEDULE. 

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THE GENERAL INSURANCE BUSINESS (NATIONALISATION) ACT, 1972 

ACT NO. 57 OF 1972 

[20th September, 1972.] 

An Act to provide for the acquisition and transfer of shares of Indian insurance companies and 
undertakings of other existing insurers in order to serve better the needs of the economy by 
securing  the  development  of  general  insurance  business  in  the  best  interests  of  the 
community  and  to  ensure  that  the  operation  of  the  economic  system  does  not  result  in  the 
concentration  of  wealth  to  the  common  detriment,  for  the  regulation  and  control  of  such 
business and for matters connected therewith or incidental thereto. 

BE it enacted by Parliament in the Twenty-third Year of the Republic of India as follows:— 

CHAPTER I 

PRELIMINARY 

1. Short title.—This Act may be called the General Insurance Business (Nationalisation) Act, 1972. 

2. Declaration as to the policy of the State.—It is hereby declared that this Act is for giving effect to 
the  policy  of  the  State  towards  securing  the  principles  specified  in  clause  (c)  of  article  39  of  the 
Constitution. 

Explanation.—In this section, “State” has the same meaning as in article 12 of the Constitution. 

3. Definitions.—In this Act, unless the context otherwise requires,— 

(a)  “acquiring  company”  means  any  Indian  insurance  company  and,  where  a  scheme  has  been 
framed involving the merger of one Indian insurance company in another or the amalgamation of two 
or more such companies, means the Indian insurance company in which any other company has been 
merged or the company which has been formed as a result of the amalgamation; 

(b) “appointed day” means such day not being a day later than the 2nd day of January, 1973, as 

the Central Government may, by notification, appoint; 

1[(ba)  “board  of  directors”  or  “board”,  in  relation  to  a  specified  insurer,  shall  have  the  same 

meaning as assigned to it in clause (10) of section 2 of the Companies Act, 2013 (18 of 2013);] 

(c) “Companies Act” means 2[the Companies Act, 2013 (18 of 2013)]; 

(d) “Corporation” means the General Insurance Corporation of India formed under section 9; 

(e)  “existing  insurer”  means  every  insurer  the  management  of  whose  undertaking  has  vested  in 
the Central Government under section 3 of the General Insurance (Emergency Provisions) Act, 1971 
(17 of 1971), and includes the undertaking of the Life Insurance Corporation in so far as it relates to 
the general insurance business carried on by it; 

(f) “foreign insurer” means an existing insurer incorporated under the law of any country outside 

India; 

3[(g) “general insurance business" shall have the same meaning as assigned to it in the Insurance 

Act, 1938 (4 of 1938);] 

(h) “Government company” means a Government company as defined in 4[clause (45) of section 

2] of the Companies Act; 

(i)  “Indian  insurance  company”  means  an  existing  insurer  having  a  share  capital  who  is  a 

company within the meaning of the Companies Act; 

(j) “Insurance Act” means the Insurance Act, 1938 (4 of 1938); 

1. Ins. by Act 37 of 2021, s. 2 (w.e.f. 27-8-2021). 
2. Subs. by s. 2, ibid., for "the Companies Act, 1956 (1 of 1956)” (w.e.f. 27-8-2021). 
3. Subs. by s. 2, ibid., for clause (g) (w.e.f. 27-8-2021). 
4. Subs. by s. 2, ibid., for “section 617” (w.e.f. 27-8-2021). 

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(k) “Life Insurance Corporation” means the Life Insurance Corporation of India established under 

the Life Insurance Corporation Act, 1956 (31 of 1956); 

(l) “notification” means a notification published in the Official Gazette; 

(m) “prescribed” means prescribed by rules made under this Act; 

(n) “Schedule” means the Schedule to this Act; 

(o)  “scheme”  means  the  scheme  framed  under  section  16  1[and  also  includes  a  scheme  framed 

under section 17A]; 

2[(oa) “specified insurer” means the Corporation as defined in clause (d) or any of the insurance 

companies specified in section 10A;] 

(p)  words  and  expressions used in  this  Act  but  not  defined  herein  and  defined in  the  Insurance 

Act, shall have the meanings respectively assigned to them in that Act; 

(q)  words  and  expressions  used  in  this  Act  but  not  defined  herein  or  in  the  Insurance  Act  and 
defined  in  the  Companies  Act,  shall  have  the  meanings  respectively  assigned  to  them  in  the 
Companies Act. 

TRANSFER TO PUBLIC OWNERSHIP OF GENERAL INSURANCE BUSINESS 

CHAPTER II 

4. Transfer of shares of Indian insurance companies.—(1) On the appointed day, all the shares in 
the capital of every Indian insurance company shall, by virtue of this Act, stand transferred to and vested 
in the Central Government free of all trusts, liabilities and encumbrances affecting them. 

(2) Out of the shares so transferred and vested, the Central Government shall, immediately thereafter, 
by notification, provide for the transfer of not less than ten shares of every such company to such persons 
as  may  be  specified  in  the  notification  to  enable  the  Indian  insurance  company  to  function  as  a 
Government company. 

(3)  Every  notification  made  under  sub-section  (2)  shall  specify  the  names  and  description  of  the 
persons to whom the shares are transferred and the particulars of the shares which are transferred to each 
such person. 

(4) A copy of every notification made under sub-section (2) shall, as soon as may be after it is made, 
be sent by the Central Government to the concerned Indian insurance company, who shall, on receipt of 
such copy, and notwithstanding anything contained in the Companies Act or in its articles of association, 
forthwith rectify its register of members by including therein the persons mentioned in the notification as 
the holders of the shares specified therein. 

(5)  For  the  removal  of  doubts  it  is  hereby  declared  that  the  transfer  and  vesting  of  shares  effected 
under sub-section (1) shall not be deemed to affect any right of the Indian insurance company subsisting 
immediately before the appointed day against any shareholder to recover from him any sum of money on 
the ground that that shareholder has not paid or credited to the insurer the whole or any part of the value 
of the shares held by him or on any other ground whatsoever. 

5. Transfer of undertakings of other existing insurers.—(1) On the appointed day, the undertaking 
of every existing insurer who is not an Indian insurance company shall stand transferred to and vested in 
the  Central  Government  and  the  Central  Government  shall  immediately  thereafter  provide,  by 
notification,  for  the  transfer  to  and  vesting  in  such  Indian  insurance  company,  as  it  may  specify  in  the 
notification, of that undertaking. 

(2) Any notification made under sub-section (1) may provide that any of the undertakings aforesaid 
may be transferred to and vested in more than one Indian insurance company in such manner and subject 
to such conditions as may be specified in the notification. 

6.  Effect  of  transfer  of  undertakings.—(1)  The  undertaking  of  every  such  existing  insurer  as  is 
referred to in section 5 shall be deemed to include all assets, rights, powers, authorities and privileges and 
all property, movable and immovable, cash balances, reserve funds, investments and all other rights and 

1. Ins. by Act 3 of 1985, s. 2 (w.e.f.17-9-1984). 
2. Ins. by Act 37 of 2021, s. 2 (w.e.f. 27-8-2021). 

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interests  in,  or  arising  out  of,  such  property  as  were  immediately  before  the  appointed  day  in  the 
ownership, possession, power or control of such existing insurer in relation to the undertaking, whether 
within or without India, and all books of accounts, registers, records and all other documents of whatever 
nature relating thereto, and shall also be deemed to include all borrowings, liabilities and obligations of 
whatever kind then subsisting of the existing insurer in relation to the undertaking. 

(2)  Unless  otherwise  expressly  provided  by  this  Act,  all  deeds,  bonds,  agreements,  powers  of 
attorney,  grants  of  legal  representation  and  other  instruments  of  whatever  nature  subsisting  or  having 
effect immediately before the appointed day and to which any such insurer as is referred to in section 5 is 
a  party  or  which are in favour  of  such  existing  insurer shall  be  of  as  full  force  and  effect against  or in 
favour  of  the  Indian  insurance  company  in  which  the  undertaking  or  the  part  to  which  the  instrument 
relates  has  vested and  may  be  enforced  or acted  upon  as  fully  and effectually  as  if,  in the place  of  the 
existing insurer referred to in section 5, the Indian insurance company in which the undertaking or any 
part thereof has vested had been a party thereto, or as if they had been issued in its favour. 

(3) If, on the appointed day, any suit, appeal or other proceeding of whatever nature in relation to any 
business of the undertaking which has been transferred under section 5 is pending by or against any such 
existing insurer as is referred to in that section, the same shall not abate, be discontinued or be in any way 
prejudicially affected by reason of the transfer of the undertaking or of anything contained in this Act, but 
the suit, appeal or other proceeding may be continued, prosecuted and enforced by or against the Indian 
insurance company in which the undertaking or the part to which the proceeding relates has vested. 

(4) For the removal of doubts it is hereby declared that in the case of a foreign insurer or, as the case 
may  be,  the  Life  Insurance  Corporation,  the  provisions  of  section  5  and  of  the  preceding  sub-sections 
shall  only  apply  to  the  extent  to  which  any  property  appertains,  in  the  former  case,  to  the  general 
insurance business carried on in India and, in the latter case, to the general insurance business carried on, 
whether  within  or  without  India,  and  to  rights  and  powers  acquired,  and  to  debts,  liabilities  and 
obligations incurred and to contracts, agreements and other instruments made by the foreign insurer or the 
Life Insurance Corporation, as the case may be, for the purpose of such general insurance business and to 
legal proceedings relating to those purposes, and the said provisions shall be construed accordingly. 

(5)  If  any  question  arises  as  to  whether  any  property  appertains  to  any  such  general  insurance 
business  as  is  referred  to  in  this  section  or  whether  any  rights,  powers,  liabilities  or  obligations  were 
acquired or incurred or any contract, agreement or other instrument was made by the foreign insurer or 
the Life Insurance Corporation, as the case may be, for the purposes of any such business or whether any 
documents relate to those purposes, the question shall be referred to the Central Government which shall, 
after giving an opportunity of being heard to the persons interested in the matter, decide it in such manner 
as it thinks fit. 

7.  Transfer  of  service  of  existing  employees  in  certain  cases.—(1)  Every  whole-time  officer  or 
other employee of an existing insurer other than an Indian insurance company who was employed by that 
insurer  wholly  or  mainly  in  connection  with  his  general  insurance  business  immediately  before  the 
appointed day shall, on the appointed day, become an officer or other employee, as the case may be, of 
the Indian insurance company in which the undertaking of that insurer or that part of the undertaking to 
which the service of the officer or other employee relates has vested, and shall hold his office or service 
under  the  Indian  insurance  company  on  the  same  terms  and  conditions  and  with  the  same  rights  to 
pension,  gratuity  and  other  matters  as  would  have  been  admissible  to  him  if  there  had  been  no  such 
vesting, and shall continue to do so unless and until his employment in the Indian insurance company in 
which the undertaking or part has vested is terminated or until his remuneration, terms and conditions are 
duly altered by that Indian insurance company: 

Provided that nothing in this sub-section shall apply to any such officer or other employee who has 
given,  in  writing,  notice  to  the  Central  Government  or  to  any  person  nominated  in  this  behalf  by  that 
Government before the appointed day intimating his intention of not becoming an officer or employee of 
the Indian insurance company in whom the undertaking or part thereof to which  his service relates has 
vested. 

(2)  If  any  question  arises as  to  whether  any  person  was  a  whole-time  officer  or employee,  or as to 
whether  any  officer  or  employee,  was  employed  wholly  or  mainly  in  connection  with  the  general 
insurance business of the existing insurer referred to in sub-section (1) immediately before the appointed 
day, the question shall be referred within a period of two years from the appointed day and not thereafter 

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to  the  Central  Government  which  shall,  after  giving  an  opportunity  of  being  heard  to  the  person 
concerned in the matter, decide it in such manner as it thinks fit and such decision shall be final. 

(3) Notwithstanding anything contained in the Industrial Disputes Act, 1947 (14 of 1947) or in any 
other law for the time being in force, the transfer of the services of any officer or other employee under 
sub-section (1) shall not entitle any such officer or other employee to any compensation under that Act or 
such other law, and no such claim shall be entertained by any court, tribunal or other authority. 

8.  Provident,  superannuation,  welfare  and  other  funds.—(1)  Where  an  existing  insurer  has 
established a provident, superannuation, welfare or any other fund for the benefit of his employees and 
constituted a trust in respect thereof (hereafter in this section referred to as an existing trust), the moneys 
standing to the credit of such fund on the appointed day, together with any other assets belonging to such 
fund,  shall  stand  transferred  to  and  vested  in  the  Indian  insurance  company  on  the  appointed  day  free 
from any such trust. 

(2) Where all the employees of the Life Insurance Corporation or any other existing insurer do not 
become employees of an Indian insurance company, the monies and other assets belonging to any such 
fund  as  is  referred  to  in  sub-section  (1),  shall  be  apportioned  between  the  trustees  of  the  fund  and  the 
Indian insurance company in the prescribed manner; and in case of any dispute about such apportionment 
the decision of the Central Government thereon shall be final. 

(3)  Where  the  undertaking  of  an  existing  insurer  has  vested  in  more  than  one  Indian  insurance 
company,  the  Central  Government  may,  by  order,  provide  for  the  apportionment  among  such  Indian 
insurance  companies  of  monies  and  other  assets  belonging  to  any  existing  trust  relating  to  that 
undertaking in such manner as in its opinion may be appropriate. 

(4)  The  Indian  insurance  company  shall  as  soon  as  may  be  after  the  appointed  day  constitute  in 
respect of the moneys and other assets which are transferred to and vested in it under this section one or 
more trusts having objects as similar to the objects of the existing trusts as in the circumstances may be 
practicable. 

(5) Where all the moneys and other assets belonging to an existing trust are transferred to and vested 
in an Indian insurance company under this section, the trustees of such trust shall, as from the appointed 
day,  stand  discharged  from  the  trust,  except  as  respects  things  done  or  omitted  to  be  done  before  the 
appointed day. 

CHAPTER III 

GENERAL INSURANCE CORPORATION OF INDIA 

9.  Formation  of  General  Insurance  Corporation  of  India.—(1)  As  soon  as  may  be  after  the 
commencement  of  this  Act,  the  Central  Government  shall  form  a  Government  company  in  accordance 
with the provisions of the Companies Act, to be known as the General Insurance Corporation of India for 
the purpose of superintending, controlling and carrying on the business of general insurance: 

1[Provided that on and from the commencement of the General Insurance Business (Nationalisation) 
Amendment  Act,  2002,  the  provisions  of  this  sub-section  shall  have  effect  as  if  for  the  words 
“superintending, controlling and carrying on the business of general insurance”, the words “carrying on 
re-insurance business” had been substituted.] 

(2) The authorised capital of the Corporation shall be  2[rupees two hundred and fifty crores, divided 
into two hundred and fifty lakhs fully paid-up shares] of one hundred rupees each, out of which rupees 
five crores shall be the initial subscribed capital of the Corporation: 

1[Provided that the Central Government may, by notification, increase or reduce the authorised capital 

or subscribed capital, as the case may be, as it deems fit.] 

(3) Notwithstanding anything contained in  3[the Companies Act, 2013 (18 of 2013)], it shall not be 

necessary to add the word “Limited” as the last word of the name of the Corporation.  

1.The proviso inserted by Act 40 of 2002, s. 2 (w.e.f. 21-3-2003). 
2. Subs. by Act 38 of 1989, s. 2, for “rupees seventy-five crores, divided into seventy-five lakhs fully paid-up shares” (w.e.f. 22-

10-1989). 

3. Subs. by Act 37 of 2021, s. 3, for “"the Companies Act, 1956 (1 of 1956)” (w.e.f. 27-8-2021). 

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10.  Transfer  to  Corporation  of  shares  vested  in  Central  Government.—All  the  shares  in  the 
capital  of  every  Indian  insurance  company  which  stand  transferred  to  and  vested  in  the  Central 
Government by virtue of section 4 [with the exception of the shares transferred to any person under sub-
section  (2)  of  that  section]  shall  immediately  after  such  vesting,  stand  transferred  to  and  vested  in  the 
Corporation and every Indian insurance company shall forthwith give effect to such transfer of shares and 
rectify its register of members by including therein the Corporation as the holder of such shares. 

1[10A. Transfer to Central Government of shares vested in Corporation.—All the shares in the 

capital of the acquiring companies, being— 

(a) the National Insurance Company Limited; 

(b) the New India Assurance Company Limited; 

(c) the Oriental Insurance Company Limited; 

(d) the United India Insurance Company Limited, 

and  vested  in  the  Corporation  before  the  commencement  of  the  General  Insurance  Business 
(Nationalisation) Amendment Act, 2002 shall, on such commencement, stand transferred to the Central 
Government.] 

2[10B. Enhancement of equity capital of General Insurance companies.—The General Insurance 
Corporation and the insurance companies specified in section 10A may, raise their capital for increasing 
their business in rural and social sectors, to meet solvency margin and such other purposes, as the Central 
Government may empower in this behalf: 

3* 

* 

* 

* 

*] 

CHAPTER IV 

AMOUNTS TO BE PAID FOR ACQUISITIONS 

11. Amounts to be paid for transfer and vesting of shares or undertakings.—(1) For the transfer 
of the shares of each Indian insurance company to, and vesting in, the Central Government, under section 
4, there shall be paid by the Central Government to the Corporation, for distribution to the shareholders of 
each such company, the amount specified against such company in the corresponding entry under column 
(3) of Part A of the Schedule. 

(2) For the transfer to, and vesting in the Central Government, under section 5, of the undertaking of 
each  existing  insurer,  who  is  not  an  Indian  insurance  company  there  shall  be  paid  by  the  Central 
Government to the Corporation, for payment to each such existing insurer, the amount specified against 
such insurer in the corresponding entry under column (3) of Part B of the Schedule. 

12.  Disbursement  of  amounts  by  Corporation.—(1)  The  total  amount  paid  by  the  Central 
Government under section 11 shall be treated as additional contribution to the subscribed capital of the 
Corporation  and  such  additional  subscribed  capital  shall  stand  allotted  to,  and  vested  in,  the  Central 
Government. 

(2) The Corporation shall distribute the amount paid to it under section 11, to the shareholders of each 
Indian  insurance  company  and  to  each  existing  insurer,  who  is  not  an  Indian  insurance  company,  in 
accordance with their rights and interests, and, if there is any doubt or dispute as to the right, or extent of 
the right, of any person to receive the whole or any part of such amount, refer such doubt or dispute to the 
Central Government for determination and thereafter, act in accordance with the determination made by 
that Government. 

(3) Save as otherwise provided in sub-section (2), the amount referred to in section 11 shall be given 

in accordance with the provisions of section 13, section 14 or section 15, as the case may be. 

13. Mode of payment.—(1) Where the amount referred to in section 11 is to be given— 

(a) to the members of an Indian insurance company, the amount due to each such member shall 
be paid in full, where it does not exceed twenty-five thousand rupees, and where it exceeds twenty-

1. Ins. by Act 40 of 2002, s. 3(w.e.f. 21-3-2003). 
2. Ins. by Act 5 of 2015, s. 103 (w.e.f. 26-12-2014). 
3. The proviso omitted by Act 37 of 2021, s. 4 (w.e.f. 27-8-2021). 
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five thousand rupees, each such member shall be paid twenty-five thousand rupees and the balance of 
the amount  due to  such  member  shall  be  paid to him  in  three  equal  annual  instalments, the  first  of 
which shall fall due on the appointed day; 

(b) to a foreign insurer, it shall be given to him in cash within three months from the appointed 

day; 

(c) to the Life Insurance Corporation, it shall be given to it in three equal annual instalments, the 

first of which shall fall due on the appointed day; 

(d) to an existing insurer who is a co-operative society, it shall be distributed as soon as may be 
after  the  appointed  day  in  accordance  with  the  rules  of  the  society  which  will  apply  in  case  of 
dissolution of the society; 

(e) to an existing insurer not falling within any of the foregoing provisions, it shall be apportioned 
by the acquiring company among the individual policy-holders of the insurer whose policies with that 
insurer were in force on the appointed day and were comprised in the undertaking of such insurer in 
proportion to the premiums paid by the  policy-holders under such policies and every such payment 
shall be made either— 

(i) in cash, to be sent by postal money order, or 

(ii) at the option of the policy-holder, as a deduction in the premium due at the time of the 
renewal of the policy and such option shall be exercised by the policy-holder before the expiry of 
three months from the appointed day (or within such further time not exceeding three months as 
the Central Government may, on the application of the policy-holder, allow); and the option so 
exercised shall be final and shall not be altered or rescinded after it has been exercised: 

Provided that if any policy-holder fails to exercise his option within the time allowed, he shall be 

deemedto have exercised his option in favour of payment in cash by postal money order. 

(2)  Where  any  amount  is  payable  whether  in  instalments  or  otherwise  under  the  provisions  of  this 
section, the unpaid amount, where its payment has become due shall carry interest at the rate of four per 
cent. per annum from the appointed day. 

14. Amount payable to shareholders may be paid to named persons instead in certain cases.—
(1)  Notwithstanding  anything  contained  elsewhere  in  this  Act,  if  a  majority  in  number  of  the  persons, 
who, immediately before the appointed day, were registered in the books of an Indian insurance company 
as  the  members  thereof,  and  representing  two-thirds  in  value  of  the  amount  payable  to  the  Indian 
insurance company, agree either in person or by proxy at a meeting specially convened for the purpose 
that the amount so payable instead of being distributed among the  members shall be given to any such 
person or body of persons as the members may nominate either at that meeting or subsequently for the 
purpose of carrying on any business, and the Central Government is satisfied that due provision has been 
or  will  be  made  for  the  payment  of  the  value  of  their  respective  shares  to  persons  who  have  dissented 
from  the  reasolution,  the  amount  may  be  given  to  the  person  or  body  of  persons  so  nominated in  such 
manner and subject to such conditions as the Central Government may think fit. 

(2)  No  resolution  passed  at  any  such  meeting  as  is  referred  to  in  sub-section  (1)  held  after  the 
appointed day shall have any effect unless the meeting has been convened after obtained the approval of 
the Central Government. 

15.  Payment  into  court  in  case  of  rival  claims.—Where  a  claim  to  the  amount  payable  under 
section  11  is  made  by  two  or  more  persons  adversely  to  one  another,  the  corporation  may  cause  the 
amount to be deposited in any civil court having jurisdiction in that behalf and the court shall decide as to 
whom the payment shall be made. 

SCHEME FOR REORGANISATION OF GENERAL INSURANCE BUSINESS 

CHAPTER V 

16. Schemes for mergers of companies, etc.—(1) If the Central Government is of opinion that for 
the  more  efficient  carrying  on  of  general  insurance  business  it  is  necessary  so  to  do,  it  may,  by 
notification, frame one or more schemes providing for all or any of the following matters:— 

(a) the merger in one Indian insurance company  of any other Indian insurance company, or the 

formation of a new company by the amalgamation of two or more Indian insurance companies; 

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(b)  the  transfer  to  and  vesting  in  the  acquiring  company  of  the  undertaking  (including  all  its 
business, properties, assets and liabilities) of any Indian insurance company which ceases to exist by 
reason of the scheme; 

(c) the constitution, name and registered office and the capital structure of the acquiring company 

and the issue and allotment of shares; 

(d) the constitution of a board of management by whatever name called for the management of 

the acquiring company; 

(e)  the  alteration  of  the  memorandum  and  articles  of  association  of  the  acquiring  company  for 

such purposes as may be necessary to give effect to the scheme; 

(f) the continuance in the acquiring company of the services of all officers and other employees of 
the Indian insurance company which has ceased to exist by reason of the scheme, on the same terms 
and  conditions  which  they  were  getting  or,  as  the  case  may  be,  by  which  they  were  governed 
immediately before the commencement of the scheme; 

(g)  the  rationalisation  or  revision  of  pay  scales  and  other  terms  and  conditions  of  service  of 

officers and other employees wherever necessary; 

(h)  the  transfer  to  the  acquiring  company  of  the  provident,  superannuation,  welfare  and  other 
funds relating to the officers and other employees of the Indian insurance company which has ceased 
to exist by reason of the scheme; 

(i)  the  continuance  by  or  against  the  acquiring  company  of  legal  proceedings  pending  by  or 
against  any  Indian  insurance  company  which  has  ceased  to  exist  by  reason  of  the  scheme,  and  the 
initiation  of  such  legal  proceedings,  civil  or  criminal,  as  the  Indian  insurance  company  might  have 
initiated if it had not ceased to exist; 

(j) such incidental, consequential and supplemental matters as are necessary to give full effect to 

the scheme. 

(2) In framing schemes under sub-section (1), the object of the Central Government shall be to ensure 
that ultimately there are 1[up to four companies] (excluding the Corporation) in existing and that they are 
so situate as to render their combined services effective in all parts of India.  

(3) Where a scheme under sub-section (1) provides for the transfer of any property or liabilities, then, 
by virtue of the scheme, the property shall stand transferred to and vested in, and those liabilities shall be 
transferred to and become the liabilities of, the acquiring company. 

(4) If the rationalisation or revision of any pay scale or other terms and conditions of service under 
any scheme is not acceptable to any officer or other employee, the acquiring company may terminate his 
employment by giving him compensation equivalent to three months’ remuneration, unless the contract of 
service with such employee provides for a shorter notice of termination. 

Explanation.—The compensation payable to an officer or other employee under this sub-section shall 
be in addition to, and shall not affect, any pension, gratuity, provident fund or other benefit to which the 
employee may be entitled under his contract of service. 

(5) Notwithstanding anything contained in the Industrial Disputes Act, 1947 (14 of 1947) or in any 
other law for the time being in force, the transfer of the services of any officer or  other employee of an 
Indian insurance company to the acquiring company shall not entitled any such officer or other employee 
to  any  compensation  under  that  Act  or other law,  and  no  such  claim  shall be  entertained by  any  court, 
tribunal or other authority. 

(6) The Central Government may, by notification, add to, amend or vary any scheme framed under 

this section. 

1. Subs. by Act 23 of 2019, s. 149, for the words “only four companies” (w.e.f. 1-8-2019.) 

9 

 
                                                           
(7) The provisions of this section and of any scheme framed under it shall have effect notwithstanding 
anything to the contrary contained in any other law or any agreement, award or other instrument for the 
time being in force. 

1[(8) The power to frame a scheme under sub-section (1), and the power conferred by sub-section (6) 
to  add  to,  amend  or  vary  any  scheme  framed  under  this section,  shall  include the  power  to  frame  such 
scheme with retrospective effect from a date not earlier than the appointed day.]  

2[17. Laying of schemes and notifications before Parliament.—Every scheme framed under sub-
section (1) of section 16 and every notification issued under sub-section (3) of that section shall be laid, as 
soon as may be after it is framed or issued, 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  scheme  or  notification  or  both  Houses 
agree  that  the  scheme  or  notification  should  not  be  framed  or  issued,  the  scheme  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 scheme or notification.] 

3[CHAPTER VA 

TERMS AND CONDITIONS OF SERVICE OF OFFICERS AND OTHER EMPLOYEES 

17A. Power of Central Government to regulate the terms and conditions of service of officers 
and other employees.—(1) The Central Government may, by notification in the Official Gazette, frame 
one or more schemes for regulating the pay scales and other terms and conditions of service of officers 
and other employees of the Corporation or of any acquiring company. 

(2)  A  scheme  framed  under  sub-section  (1)  may  add  to,  amend  or  vary  any  scheme  framed  under 
section  16  [including  any  addition,  amendment  or  variation  made  therein  by  notification  under  sub-
section  (6)  of  section  16]  with  respect  to  rationalisation  or  revision  of  pay  scales  and  other  terms  and 
conditions of service of officers and other employees of the Corporation or of any acquiring company, to 
provide for further rationalisation or revision of such pay scales and other terms and conditions of service 
notwithstanding  that  such  further  rationalisation  or  revision  is  unrelated  to,  or  unconnected  with,  the 
amalgamation  of  insurance  companies  or  merger  consequent  on  nationalisation  of  general  insurance 
business. 

(3) The Central Government may, by notification, add to, amend or vary any scheme framed under 

this section. 

(4) The power to frame a scheme under sub-section (1), and the power conferred by sub-section (3) to 
add  to,  amend  or  vary  any  scheme  framed  under  this  section,  shall  include  the  power  to  frame  such 
scheme,  or,  as  the  case  may  be,  to  make  such  addition,  amendment  or  variation  in  any  scheme  framed 
under this section, with retrospective effect from a date not earlier than the appointed day. 

(5) A copy of every scheme, and every amendment thereto, framed under this section shall be laid, as 

soon as may be after it is made, before each House of Parliament. 

(6) The provisions of this section and of any scheme framed under it shall have effect notwithstanding 
anything to the contrary contained in any other law or any agreement, award or other instrument for the 
time being in force.] 

CHAPTER VI 

FUNCTIONS OF CORPORATION AND ACQUIRING COMPANIES AND THEIR MANAGEMENT 

18. Functions of Corporation.—(1) The functions of the Corporation shall include— 

(a) the carrying on of any part of the general insurance business, if it thinks it desirable to do so; 

1. Ins. by Act 3 of 1985, s. 3 (w.e.f. 17-9-1984). 
2. Subs. by Act 4 of 1986, s. 2 and the Schedule, for section 17 (w.e.f. 15-5-1986)  
3. Ins. by Act 3 of 1985, s. 4 (w.e.f. 17-9-1984). 

10 

 
                                                           
(b) aiding, assisting and advising the acquiring companies in the matter of setting up of standards 
of conduct and sound practice in general insurance business and in the matter of rendering efficient 
service to holders of policies of general insurance; 

(c)  advising  the  acquiring  companies  in  the  matter  of  controlling  their  expenses  including  the 

payment of commission and other expenses;  

(d) advising the acquiring companies in the matter of the investment of their funds; 

(e)  issuing  directions  to  acquiring  companies  in  relation  to  the  conduct  of  general  insurance 

business: 

1[Provided that all the functions of the Corporation specified in this sub-section, on and from the 
commencement of the General Insurance Business (Nationalisation) Amendment Act, 2002, shall be 
performed by the Central Government.] 

(2) In issuing any directions under sub-section (1), the 2[Central Government] shall keep in mind the 
desirability  of  encouraging  competition  amongst  the  acquiring  companies  as  far  as  possible  in  order  to 
render their services more efficient. 

19.  Functions  of  acquiring  companies.—(1)  Subject  to  the  rules,  if  any,  made  by  the  Central 
Government in this behalf and to its memorandum and articles of association, it shall be the duty of every 
acquiring company to carry on general insurance business. 

(2)  Each  acquiring  company  shall  so  function  under  this  Act  as  to  secure  that  general  insurance 

business is developed to the best advantage of the community. 

(3)  In  the  discharge  of  any  of  its  functions,  each  acquiring  company  shall  act  so  far  as  may  be  on 
business  principles  and  where  any  directions  have  been  issued  by  the  3[Central  Government  or  the 
Insurance  Regulatory  and  Development  Authority  established  under  sub-section  (1)  of  section  3  of  the 
Insurance  Regulatory  and  Development  Authority  Act,  1999  (41  of  1999)],  shall  be  guided  by  such 
directions. 

(4) For the removal of doubts it is hereby declared that the  Corporation and any acquiring company 
may, subject to the rules, if any, made by the Central Government in this behalf, enter into such contracts 
of reinsurance or reinsurance treaties as it may think fit for the protection of its interests. 

20. Balance of profit how to be utilised.—(1) After making provision for bad and doubtful debts, 
depreciation in assets, provident, superannuation, welfare and other funds, debts due to Government and 
all  other  matters  for  which  provision  is  necessary  under  any  law  or  which  are  usually  provided  for  by 
insurance companies, every acquiring company shall distribute the balance of profit as dividends. 

(2)  Any  profit  made  by  the  Corporation  and  any  sums  received  by  the  Corporation  by  way  of 

dividends or otherwise shall be dealt with by it in such manner as may be prescribed. 

21.  Interim  provisions  for  management  of  Indian  insurance  companies.—(1)  Notwithstanding 
anything contained in the Companies Actor in the memorandum and articles of association of any Indian 
insurance  company,  on  and  from  the  appointed  day  and  until  a  new  board  of  directors  of  the  Indian 
insurance  company  is  duly  constituted,  the  management  of  the  company  shall  continue  to  vest  in  the 
Custodian  in  charge  of  the  management  of  the  undertaking  of  that  company  immediately  before  the 
appointed day by virtue of the provisions contained in the General Insurance (Emergency Provisions) Act, 
1971  (17  of  1971),  and  the  Custodian  shall  be  entitled,  subject  to  such  directions  as  the  Central 
Government  may  issue  in  this  behalf,  to  exercise  all  the  powers  and  do  all  acts  and  things  as  may  be 
exercised or done by the company or by its board of directors. 

(2)  Nothing  contained  in  sub-section  (1)  shall  be  deemed  to  prevent  the  Central  Government  from 
appointing any other person to take charge of the management of the undertaking of any Indian insurance 
company during the period referred to in that sub-section if for any reason it becomes necessary so to do, 

1.Ins. by Act 40 of 2002, s. 4 (w.e.f. 21-3-2003). 
2. Subs. by s. 4, ibid., for “Corporation” (w.e.f. 21-3-2003). 
3. Subs. by s. 5, ibid., for “Corporation” (w.e.f. 21-3-2003). 

11 

 
                                                           
 
and any person so appointed may exercise all the powers and do all acts and things which a Custodian 
may exercise or do under sub-section (1). 

(3) The Custodian referred to in sub-section (1) and the person appointed under sub-section (2) shall 
be entitled to such salaries and other allowances as the Central Government may specify in this behalf and 
shall hold office during the pleasure of the Central Government. 

22.  Power  of  Central  Government  to  transfer  employees.—1[The  Central  Government  or  any 
person authorised by it may at any time transfer any officer] or employee from an acquiring company or 
the Corporation to any other acquiring company or the Corporation, as the case may be, and the officer or 
employee  so  transferred,  shall  continue  to  have  the  same  terms  and  conditions  of  service  as  were 
applicable to him immediately before such transfer. 

23.  Power  of  Central  Government  to  issue  directions.—The  Corporation  and  every  acquiring 
company  shall,  in  the  discharge  of  its  functions,  be  guided  by  such  directions  in  regard  to  matters  of 
policy involving public interest as the Central Government may give. 

CHAPTER VII 

MISCELLANEOUS 

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). 

12 

 
                                                           
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. 

13 

 
(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). 

14 

 
                                                           
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). 

15 

 
                                                           
(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). 

1. Subs. by Act 40 of 2002, s. 8, for clause (b) (w.e.f. 21-3-2003). 
16 

 
 
 
 
                                                           
THE SCHEDULE 

(See section 11) 

Amounts to be paid 

PART A 

Serial 
Number 
(1) 

Name of Indian Insurance company 

(2) 

1. 

2. 

3. 

4. 

5. 

6. 

7. 

8. 

9. 

10. 

11. 

12. 

13. 

14. 

15. 

16. 

17. 

18. 

19. 

All India General Insurance 
Company Ltd. 

Anand Insurance Company Ltd. 

Bhabha Marine Insurance Company 
Ltd. 

Bharat General Reinsurance Ltd. 

British India General Insurance 
Company Ltd. 

Calcutta Insurance Limited 

Central Mercantile Assurance 
Company Ltd. 

Clive Insurance Company Ltd.  

Commonwealth Assurance 
Company Ltd.  

Concord of India Insurance 
Company Ltd.  

DevkaranNanjee Insurance 
Company Ltd. 

General Assurance Society Ltd.  

Hercules Insurance Company Ltd.  

Hindusthan General Insurance 
Society Ltd. 

Hindusthan Ideal Insurance 
Company Ltd.  

Howrah Insurance Company Ltd.  

Hukumchand Insurance Company 
Ltd.  

India Reinsurance Corporation Ltd.  

Indian Guarantee &General 
Insurance Company Ltd. 

. 

. 

. 

Preference 
Shares 

Equity Shares 

. 

. 

. 

Preference  
Shares 

Ordinary Shares 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

17 

Amount to  
be paid 
(3) 
Rs. 

10,00,000 

3,50,000 

2,00,000 

54,448 

 8,18,000 

13,49,844 

37,50,000 

7,49,442 

3,38,499 

26,12,600 

1,000 

39,77,100 

16,80,000 

8,06,000 

87,48,000 

15,52,500 

25,20,605 

975 

10,00,000 

2,05,02,200 

1,95,69,760 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Serial 
Number 
(1) 

Name of Indian Insurance company 

(2) 

Amount to  
be paid 
(3) 

Rs. 

20. 

21. 

22. 

23. 

24. 

25. 

26. 

27. 

28. 

29. 

30. 

31. 

32. 

33. 

34. 

35. 

36. 

37. 

38. 

39. 

Indian Mercantile Insurance 
Company Ltd.  

Indian Merchants’Marine Insurance 
Company Ltd.  

Indian Ocean Insurance Company 
Ltd.  

Indian Trade & General Insurance 
Company Ltd.  

Jalanath Insurance Ltd.  

Jupiter General Insurance Company 
Ltd.  

Kalyan Marine Insurance Company 
Ltd. 

Liberty Insurance Company Ltd.  

Madras Motor and General 
Insurance Company Ltd.  

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

Madura Insurance Company Ltd. 

Preference  Shares 

 Ordinary Shares 

Deferred Shares 

Marine & General Insurance 
Company Ltd.  

Mother India Fire & General 
Insurance Company Ltd.  

Motor Owners’ Insurance Company 
Ltd.  

NaranjiBhanabhai& Company Ltd. 

Narhari Marine Insurance Company 
Ltd.  

National Insurance Company Ltd.  

Neptune Assurance Company Ltd.  

New Great Insurance Company of 
India Ltd.  

New India Assurance Company 
Limited.  

New Merchants Insurance 
Company Ltd.  

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

18 

50,33,195 

2,28,753 

1,00,000 

61,21,200 

10,42,955 

26,24,445 

1,79,880 

1,000 

1,77,69,600 

700 

15,83,900 

12,500 

8,95,300 

7,44,345 

1,65,575 

49,200 

2,36,400 

60,58,150 

10,00,000 

43,50,000 

8,20,37,678 

68,912 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
40. 

41. 

42. 

43. 

44. 

45. 

46. 

47 

48. 

49. 

50. 

51 

52. 

53. 

54. 

55. 

Serial 
Number 
(1) 

Name of Indian Insurance company 

(2) 

New Premier Insurance Company 
Ltd.  

Northern India General Insurance 
Company Ltd. 

Oriental Fire & General Insurance 
Company Ltd.  

Pandyan Insurance Company Ltd.  

Pioneer Fire & General Insurance 
Company Ltd. 

Porbandar Insurance Company Ltd.  

Prachi Insurance Company Ltd.  

Ruby General Insurance Company 
Ltd. 

Shree MahasagarVima Company 
Ltd.  

South Indian Insurance Company 
Ltd. 

Sterling General Insurance 
Company Ltd. 

Amount to  
be paid 
(3) 

Rs. 

1,21,110 

998 

2,43,98,000 

90,00,000 

11,82,610 

59,194 

21,375 

1,38,74,000 

1,18,252 

60,63,000 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

Preference Shares  

23,000 

Ordinary Shares 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

Triton Insurance Company Ltd.  

United India Fire & General 
Insurance Company Ltd.  

Universal Fire & General Insurance 
Company Ltd.  

Vanguard Insurance Company Ltd. 

Vulcan Insurance Company Ltd.  

. 

. 

. 

. 

. 

PART B 

Serial 
Number 
(1) 

1. 

2. 

Name of insurer 

(2) 

Co-operative Fire & General 
Insurance Society Ltd.  

Co-operative General Insurance 
Society Ltd.  

. 

. 

19 

16,08,139 

47,07,180 

21,39,991 

24,71,618 

896 

32,49,617 

Amount to  
be paid 
(3) 

Rs. 

18,69,000 

5,93,000 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Name of insurer 

Serial 
Number 
(1) 

(2) 

3. 

4. 

5. 

6. 

7. 

8. 

9. 

10. 

11. 

12. 

13. 

14. 

15. 

16. 

17. 

18. 

19. 

20. 

21. 

22. 

23. 

24. 

25. 

26. 

27. 

Indian Mutual General Insurance 
Society Ltd. 

Life Insurance Corporation of India 

Millowners’ Mutual Insurance 
Association Ltd.  

Orissa Co-operative Insurance 
Society Ltd.  

Reinsurance Association of India 
(International) Ltd.  

Union Co-operative Insurance 
Society Ltd.  

Alliance Assurance Company Ltd.  

American Insurance Company  

Atlas Assurance Company Ltd.  

Baloise Insurance Company Ltd.  

British Aviation Insurance 
Company Ltd. 

Caledonian Insurance Company  

Century Insurance Company Ltd. 

Commercial Union Assurance 
Company Ltd. 

Eagle Star Insurance Company Ltd. 

Gerling Global Reinsurance 
Company Ltd.  

Great American Insurance 
Company 

Guardian Assurance Company Ltd.  

Hanover Insurance Company 

Hartford Fire Insurance Company  

Home Insurance Company  

Legal & General Assurance Society 
Ltd.  

Liverpool and London and Globe 
Insurance Company Ltd. 

London Assurance  

London Guarantee & Accident 
Company Ltd.  

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

20 

Amount to  
be paid 
(3) 

Rs. 

1,40,000 

2,81,34,000 

12,89,000 

2,83,000 

13,000 

37,60,000 

36,65,000 

3,30,000 

64,85,000 

22,67,000 

1,000 

81,000 

6,04,000 

85,20,000 

37,12,000 

1,000 

3,81,000 

19,98,000 

42,13,000 

2,96,000 

3,73,000 

5,28,000 

8,23,000 

12,30,000 

40,000 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Serial 
Number 
(1) 

Name of insurer 

(2) 

Amount to  
be paid 
(3) 

Rs. 

28. 

29. 

30. 

31. 

32. 

33. 

34. 

35. 

36. 

37. 

38. 

39. 

40. 

41. 

42. 

43. 

44. 

45. 

46. 

47. 

48. 

49. 

50. 

51. 

52. 

London & Lancashire Insurance 
Company Ltd.  

L’Union Fire, Accident and General 
Insurance Company Ltd. 

National Employers’ Mutual 
General Insurance Association Ltd. 

National Insurance Company of 
New Zealand Ltd. 

New Hampshire Insurance 
company 

New Zealand Insurance Company 
Ltd.  

Norwich Union Fire Insurance 
Society Ltd.  

Phoenix Assurance Company Ltd.  

Provincial Insurance Company Ltd.  

Queensland Insurance Company 
Ltd.  

Royal Exchange Assurance  

Royal Insurance Company Ltd.  

Scottish Union & National 
Insurance Company  

Skandia Insurance Company Ltd. 

South British Insurance Company 
Ltd.  

Sun Insurance Office Ltd. 

Switzerland General Insurance 
Company Ltd.  

Threadneedle Insurance Company 
Ltd.  

Tokio Marine &Fire Insurance 
Company Ltd.  

Union Insurance Society of Canton 
Ltd.  

United Scottish Insurance Company 
Ltd.  

Welfare Insurance Company Ltd.  

Western Assurance Company 

Yorkshire Insurance Company Ltd.  

Zurich Insurance Company Ltd. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

21 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

47,70,000 

1,000 

3,17,003 

1,000 

19,08,000 

10,84,000 

31,43,000 

2,63,000 

1,000 

10,31,000 

49,62,000 

73,28,000 

43,15,000 

1,000 

18,42,000 

25,86,000 

6,35,000 

 1,000 

92,000 

5,89,000 

83,000 

1,000 

13,92,000 

16,31,000 

1,000 

 
 
 
 
 
 
 
 
 
 
 
 
 
