The Supreme Court today issued notices to the Centre and 14 life insurers on a petition by market regulator Sebi seeking transfer of cases from High Courts relating to Unit Linked Insurance Products (ULIPs).
Sebi is locked in a turf battle with insurance regulator IRDA over who has jurisdiction over ULIPs.
A bench headed by Justice S. H. Kapadia also sought response from some PIL litigants who have raised the issue concerning ULIPs in various High Courts.
During a brief hearing, when the petition filed by Sebi was mentioned by Attorney General G. E. Vahanvati, the bench questioned Sebi’s move to file the petition before the apex court.
Sebi is in Mumbai, insurance companies are in Mumbai, LIC is in Mumbai,” the bench remarked and indicated that the matter could have been heard by the Bombay High Court.
Mr. Vahanvati, in his submission, said that the issue of jurisdiction too has to be settled by the apex court.
The bench said, basically, both the regulators are fighting and wondered “why not appoint a super regulator.” It later posted the matter for hearing on July 8.
The dispute over jurisdiction of ULIPs between Sebi and IRDA snowballed into a major controversy after the market regulator banned 14 life insurers, including those belonging to SBI and Reliance Anil Ambani Group, from raising any further money from ULIPs unless they are registered with the market watchdog.
Responding to Sebi’s directive, IRDA asked insurance companies to ignore the order of the market regulator and continue with business as usual.
Amid the conflicting orders, the Finance Ministry brokered peace between the two regulators and asked them to jointly seek legally binding order from an “appropriate” court over jurisdiction on ULIPs. Till then, status quo ante was restored.
Following the government directive, Sebi allowed insurers to raise money from existing ULIPs, but asked them not to issue fresh ULIPs after April 9, the date when it issued the order banning 14 life insurance companies from raising funds through ULIPs.
ULIPs are insurance products but part of the premium raised through them is invested in stock market. While Sebi regulates the stock market, the working of the insurance companies is overseen by IRDA.