Section 114 of IA : Section 114: Power Of Central Government To Make Rules

Explanation using Example

Imagine a scenario where the Central Government decides to update the regulations on how foreign investment in the Indian insurance sector is to be handled, particularly in response to emerging economic trends and international trade agreements. To implement these changes, the government drafts new rules that specify the conditions and manner of foreign investment in insurance companies.

These new rules are published in the Official Gazette after a period of previous publication, allowing for public comment and review. The rules clearly define the processes for foreign entities to invest in Indian insurance firms, ensuring compliance with Section 2, clause 7A(b) of the Insurance Act, 1938.

Once these rules are finalized, they are laid before both houses of Parliament to ensure democratic oversight. If Parliament does not suggest any modifications or annul the rules within the specified period, they become legally binding. This ensures that the process of foreign investment in the insurance sector is transparent, regulated, and in line with the national interest, as per the provisions of Section 114 of the Insurance Act, 1938.