"The stinging remarks against the Member (Non-Life) by name, with due respect to the SAT, are quite unfortunate and seem to be crossing swords with the repeated and well advised principle of 'judicial restraint' by the Supreme Court of India," D. Varadarajan, a Supreme Court advocate specialising in company/competition/insurance laws, told IANS.
Going by a SAT order dated March 16, the concerned IRDAI official was not even arraigned as a party. Only IRDAI is one of the respondents, Varadarajan said.
"The SAT's order also does not say whether the Member concerned was given an opportunity to defend himself before coming down heavily on him personally, by paying due homage to the edifying principles of natural justice," Varadarajan added.
The IRDAI is planning to file an appeal against the SAT order in the Supreme Court.
"We were not given an opportunity to present our case," a senior IRDAI official told IANS on condition of anonymity.
It is settled law, as propounded by the apex court, that judicial pronouncements must be judicial in nature and "should not normally depart from sobriety, moderation and reserve" even from provocation at times, and should not be in the realm of sweeping generalisations, Varadarajan said.
Hence the scathing insinuations of the SAT such as 'dereliction of duty', 'aiding and abetting corruption in the insurance business by the regulator', etc., require to be expunged, Varadarajan said.
"Further, inasmuch as SAT expressly states that it has not expressed any opinion on the merits of the complaint while remanding the matter back, how far it is justified in dubbing the order passed by the Member (Non-Life) 'virtually' amounts to aiding and abetting corruption in the insurance business by the regulator," Varadarajan said.
The IRDAI on January 9, disposed off the complaint by London based reinsurance broker Atkins Special Risks Ltd's against rival Marsh India Insurance Brokers Pvt Ltd of poaching its reinsurance business offering unlawful payment to Jagdish Pershad Gupta, Chairman, Jagson International Ltd.
Atkins complaint is that between 2002 to 2012 it provided international reinsurance cover to Jagson. From 2010 onwards Jagson's Gupta started demanding, through email, a cut in Atkins commission.
In 2012, Jagson's reinsurance business was given to Marsh.
Atkins hired a private investigation firm to find out any payment of kick-backs by Marsh to Gupta.
As per the SAT's order, the investigation firm had confirmed kick-backs to Gupta for diverting the reinsurance business to Marsh from Atkins.
Atkins alleged that during the telephonic conversation, Gupta had said that Marsh had agreed to pay him $4,00,000 in order to obtain Jagson's business.
The SAT, in its order, said Atkins had relied on documentary evidence in support of the contention that Gupta had sought a bribe and was bribed by the officers of Marsh for diverting the reinsurance business from the appellant to Marsh.
The IRDAI stand that Atkins did not submit any documentary proof is false, said SAT.
"We fail to understand as to how Member (non-life) could make such false statement in the impugned order. In our opinion, the impugned order passed by P.J. Joseph (non-life) virtually amounts to aiding and abetting corruption in the insurance business by the regulator which cannot be tolerated."
Setting aside the IRDAI's order, the SAT directed the insurance regulator to entrust the matter to a competent officer other than Joseph for fresh orders on Atkins complaint on merits.
"When a complaint against a regulated entity like an insurer or broker is received, IRDAI has powers to cause a focused investigation/inspection to find out facts relating to the complaint," K. K. Srinivasan, former member, IRDAI told IANS.
An IRDAI official told IANS that the proof given by Atkins was not strong and hence focused investigation on Marsh's books were not made.
"The right to appoint or change reinsurance broker vests with the insurer. Only the insurer can clarify or provide reasons for appointing/changing the reinsurance broker," Srinivasan added.
Neither the IRDAI's order nor the SAT order mentions the name of the primary insurer for Jagson or the reason for the change in reinsurance broker.
"Reinsurance plays a major role in insuring huge risks. Many private general insurers are happy to front the business as the primary insurer passing on the lion's portion of the risk to reinsurers. As a result the reinsurance brokers gain importance," a senior insurance industry official told IANS on condition of anonymity.
(This story has not been edited by Social News XYZ staff and is auto-generated from a syndicated feed.)
