INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY ACT, 1999
(1) This Act may be called the Insurance Regulatory and Development Authority Act, 1999.
(2) It extends to the whole of India.
(3) It shall come into force on such date,1 as the Central Government may, by notification in the Official Gazette, appoint:
Provided that different dates may be appointed for different provisions of this Act and any reference in any such provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision.
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1. Came into force on 19th April, 2000 vide S.O. 397(E), dated 19th April, 2000 published in the Gazette of India, Extra., Pt. II, Sec. 3(ii), dated 19th April, 2000.
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(1) In this Act, unless the context otherwise requires,—
(a) “appointed day” means the date on which the Authority is established under sub-section (1) of section 3;
(b) “Authority” means the Insurance Regulatory and Development Authority established under sub-section (1) of section 3;
(c) “Chairperson” means the Chairperson of the Authority;
(d) “Fund” means the Insurance Regulatory and Development Authority Fund constituted under sub-section (1) of section 16;
(e) “Interim Insurance Regulatory Authority” means the Insurance Regulatory Authority set up by the Central Government through Resolution No. 17(2)/94-Ins.-V, dated the 23rd January, 1996;
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(1) With effect from such date as the Central Government may, by notification, appoint, there shall be established, for the purposes of this Act, an Authority to be called “the Insurance Regulatory and Development Authority”.
(2) The Authority shall be a body corporate by the name aforesaid having perpetual succession and a common seal with power, subject to the provisions of this Act, to acquire, hold and dispose of property, both movable and immovable, and to contract and shall, by the said name, sue or be sued.
(3) The head office of the Authority shall be at such place as the Central Government may decide from time to time.
(4) The Authority may establish offices at other places in India.
The Authority shall consist of the following members, namely:—
(a) a Chairperson;
(b) not more than five whole-time members;
(c) not more than four part-time members,
to be appointed by the Central Government from amongst persons of ability, integrity and standing who have knowledge or experience in life insurance, general insurance, actuarial science, finance, economics, law, accountancy, administration or any other discipline which would, in the opinion of the Central Government, be useful to the Authority:
Provided that the Central Government shall, while appointing the Chairperson and the whole-time members, ensure that at least one person each is a person having knowledge o
(1) The Chairperson and every other whole-time member shall hold office for a term of five years from the date on which he enters upon his office and shall be eligible for reappointment:
Provided that no person shall hold office as a Chairperson after he has attained the age of sixty-five years:
Provided further that no person shall hold office as a whole-time member after he has attained the age of sixty-two years.
(2) A part-time member shall hold office for a term not exceeding five years from the date on which he enters upon his office.
(3) Notwithstanding anything contained in sub-section (1) or sub-section (2), a member may—
(a) relinquish his office by giving in writing to the Central Gove
(1) The Central Government may remove from office any member who—
(a) is, or at any time has been, adjudged as an insolvent; or
(b) has become physically or mentally incapable of acting as a member; or
(c) has been convicted of any offence which, in the opinion of the Central Government, involves moral turpitude; or
(d) has acquired such financial or other interest as is likely to affect prejudicially his functions as a member; or
(e) has so abused his position as to render his continuation in office detrimental to the public interest.
(2) No such member shall be removed under clause (d) or clause (e) of sub-section
(1) The salary and allowances payable to, and other terms and conditions of service of, the members other than part-time members shall be such as may be prescribed.
(2) The part-time members shall receive such allowances as may be prescribed.
(3) The salary, allowances and other conditions of service of a member shall not be varied to his disadvantage after appointment.
The Chairperson and the whole-time members shall not, for a period of two years from the date on which they cease to hold office as such, except with the previous approval of the Central Government, accept—
(a) any employment either under the Central Government or under any State Government; or
(b) any appointment in any company in the insurance sector.
The Chairperson shall have the powers of general superintendence and direction in respect of all administrative matters of the Authority.
(1) The Authority shall meet at such time and places and shall observe such rules and procedures in regard to transaction of business at its meetings (including quorum at such meetings) as may be determined by regulations.
(2) The Chairperson, or if for any reason he is unable to attend a meeting of the Authority, any other member chosen by the members present from amongst themselves at the meeting, shall preside at the meeting.
(3) All questions which come up before any meeting of the Authority shall be decided by a majority of votes by the members present and voting, and in the event of an equality of votes, the Chairperson, or in his absence, the person presiding shall have a second or casting vote.
(4) The Authority may make regulations for the transaction of business at its meetings.
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No act or proceeding of the Authority shall be invalid merely by reason of—
(a) any vacancy in, or any defect in the constitution of, the Authority; or
(b) any defect in the appointment of a person acting as a member of the Authority; or
(c) any irregularity in the procedure of the Authority not affecting the merits of the case.
(1) The Authority may appoint officers and such other employees as it considers necessary for the efficient discharge of its functions under this Act.
(2) The terms and other conditions of service of officers and other employees of the Authority appointed under sub-section (1) shall be governed by regulations made under this Act.
On the appointed day,—
(a) all the assets and liabilities of the Interim Insurance Regulatory Authority shall stand transferred to, and vested in, the Authority;
Explanation.—The assets of the Interim Insurance Regulatory Authority shall be deemed to include all rights and powers, and all properties, whether movable or immovable, including, in particular, cash balances, deposits and all other interests and rights in, or arising out of, such properties as may be in the possession of the Interim Insurance Regulatory Authority and all books of account and other documents relating to the same; and liabilities shall be deemed to include all debts, liabilities and obligations of whatever kind;
(b) without prejudice to the provisions of clause (a), all d
(1) Subject to the provisions of this Act and any other law for the time being in force, the Authority shall have the duty to regulate, promote and ensure orderly growth of the insurance business and re-insurance business.
(2) Without prejudice to the generality of the provisions contained in sub-section (1), the powers and functions of the Authority shall include,—
(a) issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such registration;
(b) protection of the interests of the policy-holders in matters concerning assigning of policy, nomination by policy-holders, insurable interest, settlement of insurance claim, surrender value of policy, and other terms and conditions of contracts of insurance;
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The Central Government may, after due appropriation made by the Parliament by law in this behalf, make to the Authority grants of such sums of money as the Government may think fit for being utilised for the purposes of this Act.
(1) There shall be constituted a fund to be called “the Insurance Regulatory and Development Authority Fund” and there shall be credited thereto—
(a) all Government grants, fees and charges received by the Authority;
(b) all sums received by the Authority from such other source as may be decided upon by the Central Government;
(c) the percentage of prescribed income received from the insurer.
(2) The Fund shall be applied for meeting—
(a) the salaries, allowances and other remuneration of the members, officers and other employees of the Authority;
(b) the other expenses of the Authority in connection with the dischar
(1) The Authority shall maintain proper accounts and other relevant records and prepare an annual statement of accounts in such form as may be prescribed by the Central Government in consultation with the Comptroller and Auditor-General of India.
(2) The accounts of the Authority shall be audited by the Comptroller and Auditor-General of India at such intervals as may be specified by him and any expenditure incurred in connection with such audit shall be payable by the Authority to the Comptroller and Auditor-General.
(3) The Comptroller and Auditor-General of India and other person appointed by him in connection with the audit of the accounts of the Authority shall have the same rights and privileges and authority in connection with such audit as the Comptroller and Auditor-General generally has in connection with the audit of the Gover
(1) Without prejudice to the foregoing provisions of this Act, the Authority shall, in exercise of its powers or the performance of its functions under this Act, be bound by such directions on questions of policy, other than those relating to technical and administrative matters, as the Central Government may give in writing to it from time to time:
Provided that the Authority shall, as far as practicable, be given an opportunity to express its views before any direction is given under this sub-section.
(2) The decision of the Central Government, whether a question is one of policy or not, shall be final.
(1) If, at any time the Central Government is of the opinion—
(a) that, on account of circumstances beyond the control of the Authority, it is unable to discharge the functions or perform the duties imposed on it by or under the provisions of this Act; or
(b) that the Authority has persistently defaulted in complying with any direction given by the Central Government under this Act or in the discharge of the functions or performance of the duties imposed on it by or under the provisions of this Act and as a result of such default the financial position of the Authority or the administration of the Authority has suffered; or
(c) that circumstances exist which render it necessary in the public interest so to do,
the Central
(1) The Authority shall furnish to the Central Government at such time and in such form and manner as may be prescribed, or as the Central Government may direct to furnish such returns, statements and other particulars in regard to any proposed or existing programme for the promotion and development of the insurance industry as the Central Government may, from time to time, require.
(2) Without prejudice to the provisions of sub-section (1), the Authority shall, within nine months after the close of each financial year, submit to the Central Government a report giving a true and full account of its activities including the activities for promotion and development of the insurance business during the previous financial year.
(3) Copies of the reports received under sub-section (2) shall be laid, as soon as may be after they are received,
The Chairperson, members, officers and other employees of the Authority shall be deemed, when acting or purporting to act in pursuance of any of the provisions of this Act, to be public servants within the meaning of section 21 of the Indian Penal Code (45 of 1860).
No suit, prosecution or other legal proceedings shall lie against the Central Government or any officer of the Central Government or any member, officer or other employee of the Authority for anything which is in good faith done or intended to be done under this Act or the rules or regulations made thereunder:
PROVIDED that nothing in this Act shall exempt any person from any suit or other proceedings which might, apart from this Act, be brought against him.
(1) The Authority may, by general or special order in writing, delegate to the Chairperson or any other member or officer of the Authority subject to such conditions, if any, as may be specified in the order, such of its powers and functions under this Act as it may deem necessary.
(2) The Authority may, by a general or special order in writing, also form Committees of the members and delegate to them the powers and functions of the Authority as may be specified by the regulations.
(1) The Central Government may, by notification, make rules for carrying out the provisions of this Act.
(2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely:—
(a) the salary and allowances payable to, and other terms and conditions of service of the members other than part-time members under sub-section (1) of section 7;
(b) the allowances to be paid to the part-time members under sub-section (2) of section 7;
(c) such other powers that may be exercised by the Authority under clause (q) of sub-section (2) of section 14;
(d) the form of annual statement of accounts to be
(1) The Authority may, by notification, establish with effect from such date as it may specify in such notification, a Committee to be known as the Insurance Advisory Committee.
(2) The Insurance Advisory Committee shall consist of not more than twenty-five members excluding ex-officio members to represent the interests of commerce, industry, transport, agriculture, consumer fora, surveyors, agents, intermediaries, organisations engaged in safety and loss prevention, research bodies and employees’ association in the insurance sector.
(3) The Chairperson and the members of the Authority shall be the ex-officio Chairperson and ex-officio members of the Insurance Advisory Committee.
(4) The objects of the Insurance Advisory committee shall be to advise the Authority on matters relating to the mak
(1) The Authority may, in consultation with the Insurance Advisory Committee, by notification, make regulations consistent with this Act and the rules made thereunder to carry out the purposes of this Act.
(2) In particular, and without prejudice to the generality of the foregoing power, such regulations may provide for all or any of the following matters, namely:—
(a) the time and places of meetings of the Authority and the procedure to be followed at such meetings including the quorum necessary for the transaction of business under sub-section (1) of section 10;
(b) the transaction of business at its meetings under sub-section (4) of section 10;
(c) the terms and other conditions of service of officers and other employee
Every rule and every regulation made under this Act 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 regulation or both Houses agree that the rule or regulation should not be made, the rule or regulation 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 regulation.
The provisions of this Act shall be in addition to, and not in derogation of, the provisions of any other law for the time being in force.
(1) If any difficulty arises in giving effect to the provisions of this Act, the Central Government may, by order published in the Official Gazette, make such provisions not inconsistent with the provisions of this Act as may appear to be necessary for removing the difficulty:
Provided that no order shall be made under this section after the expiry of two years from the appointed day.
(2) Every order made under this section shall be laid, as soon as may be after it is made, before each House of Parliament.
Section 29 of the Insurance Regulatory and Development Authority Act, 1999 (IRDA Act) is a transitional provision that confers upon the Central Government the "Power to remove difficulties" in giving effect to the provisions of the Act. This section serves as a mechanism to address any practical or legal challenges that may arise during the implementation of the Act, particularly in its early stages.
Section 29 of the IRDA Act, 1999 states:
(1) If any difficulty arises in giving effect to the provisions of this Act, the Central Government may, by order published in the Official Gazette, make such provisions not inconsistent with the provisions of this Act as may appear to it to be necessary or expedient for removing the difficulty:Provided that no order shall be made under this section after the expiry of two years from the appointed day.
(2) Every order made under this section shall be laid, as soon as may be after it is made, before each House of Parliament.
From the sources, the following elements of Section 29 can be identified:
Section 29 operates as a "savings clause" or "difficulty removal" provision. Its scope includes:
Section 29 does not prescribe any punishment. It is an administrative/regulatory provision that empowers the Central Government to resolve implementation difficulties. No penal consequences arise from this specific section.
Power to Remove Difficulties - Section 29 grants the Central Government authority to remove difficulties arising in implementing the IRDA Act, 1999, through orders published in the Official Gazette, subject to a two-year limitation period from the appointed day and consistency with the Act's provisions.
Limitation Period - No order under Section 29 can be made after the expiry of two years from the appointed day, making this a transitional provision with a finite operational window.
Parliamentary Scrutiny - Every order made under Section 29(2) must be laid before each House of Parliament, ensuring legislative oversight of the government's exercise of this removal power.
Consistency Requirement - The provisions made by the Central Government under Section 29 must not be inconsistent with the IRDA Act, 1999, limiting the scope of the removal power.
Substitution of Authority - A source indicates that for "Central Government" in Section 29, the term "Authority" may be substituted, suggesting a potential transfer of this power to the Insurance Regulatory and Development Authority.
Transitional Nature - Section 29 is distinct from penal or regulatory sections of the IRDA Act, serving purely as an implementation facilitation mechanism during the Act's initial operational period.
No Penal Provision - Unlike Section 29 of the Trade Marks Act, 1999, which deals with infringement and passing off with significant legal consequences, Section 29 of the IRDA Act is administrative in nature with no punitive elements.
Appointed Day Reference - The two-year limitation is calculated from the "appointed day," which refers to the date the IRDA Act came into force, making Section 29 a time-bound transitional provision.
Legislative Intent - Section 29 reflects the legislature's foresight in providing a mechanism to address practical difficulties that might arise during the initial implementation of a comprehensive regulatory framework for the insurance sector.
Subordinate Legislation - Orders under Section 29 constitute subordinate legislation, subject to parliamentary oversight through the laying requirement, thereby maintaining legislative control.
Administrative Flexibility - The section provides administrative flexibility to the government to make necessary provisions without requiring formal amendments to the Act, but only for two years from the appointed day.
Protection of Policyholder Interests - While Section 29 itself is mechanical, the overall objective of the IRDA Act is to protect policyholder interests, and this removal power facilitates achieving that objective.
Regulatory Framework - Section 29 complements the regulatory framework established under the IRDA Act by ensuring that any implementation gaps can be addressed promptly through governmental orders.
No Direct Applicability to Insurance Business - Unlike substantive provisions of the IRDA Act, Section 29 does not directly regulate insurance business conduct but rather facilitates the Act's operationalization.
Historical Context - The two-year limitation indicates that Section 29 was intended for the transitional period when the new regulatory authority was being established and operationalized.
Distinction from Other Sections - Section 29 differs from other provisions of the IRDA Act that deal with the Authority's powers, duties, and regulatory functions (such as making regulations under other sections).
Rule of Law - The requirement that orders must be laid before Parliament ensures that the government's exercise of this power remains transparent and subject to democratic oversight.
Non-Obstante Clause Absence - Section 29 does not contain a non-obstante clause, meaning its provisions are subject to other laws in force, as clarified by Section 28 of the Act regarding application of other laws not being barred.
Practical Utility - Section 29 has been recognized as a mechanism for resolving difficulties that may arise in giving effect to the IRDA Act's provisions, ensuring smooth implementation of insurance sector reforms.
Constitutional Validity - The provision for laying rules and orders before Parliament (Section 29(2)) ensures constitutional compliance regarding delegated legislation and parliamentary control.
The Third Schedule
(See section 32)
(57 of 1972)
After section 24, insert the following:—
“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 (4 of 1999) and the Corporation and the acquiring companies shall, thereafter, carry on general insurance business in India in accordance with the provision
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