IRDAI, currently without a chairman, is facing a crisis after the Securities Appellate Tribunal described an order passed by a member of the regulator as one that “virtually amounts to aiding and abetting corruption.”
The legal department of the Insurance and Regulatory and Development Authority is examining options to appeal against the Tribunal’s order in the Supreme Court and a decision is likely by the weekend, sources familiar with the matter said.
‘Chairman’s post vacant’
IRDAI has remained without a Chairman since February 21, when T.S. Vijayan demitted office on completing five years. Though candidates, many from the insurance sector, were interviewed, no announcement has yet been made.
On Friday, while disposing an appeal filed by Atkins Special Risks, the SAT bench comprising presiding officer Justice J.P. Devadhar and member Dr. C.K.G. Nair questioned an order passed by IRDAI Member (Non-Life) P.J. Joseph and directed the regulator to conduct a probe by a “competent officer” and pass a fresh order.
“We fail to understand as to how Member (Non-Life) could make such false statement... the impugned order... virtually amounts to aiding and abetting corruption in the insurance business...” the Bench said. In the complaint filed with IRDAI in August 2015, Atkins said between 2002 and 2012 it had provided international reinsurance cover to Jagson International on annual brokerage or commission basis. Atkins accused Jagson International chairman Jagdish Gupta of demanding a cut, from 2010, in the commission it earned. In 2012, the re-insurance business of Jagson went to Marsh India Insurance Brokers.
Detailing the sequence leading to the complaint to the IRDAI, the SAT order said Atkins had engaged a global investigating firm as it suspsected that illegal means were used to divert the business. In its report, the agency said kickbacks were given to Mr. Gupta.
“As no action was taken,” on its complaint filed with IRDAI, Atkins filed a writ petition in the High Court in Hyderabad, which disposed the petition in September 2017 with a direction to IRDAI to consider the complaint filed by the firm in accordance with law.
Mr. Joseph heard the appellant on November 16, 2017 and passed an order on January 9, disposing of the complaint by “simply stating that the appellant has not submitted any documentary proof, material information or evidence in support of its contention.” Following this, Atkins filed an appeal at SAT.
‘Abuse of process of law’
According to SAT, the IRDAI order was a “gross abuse of the process of law and dereliction of duty.”
The Tribunal, however, said: “We make it clear that we have not expressed any opinion on the merits of the complaint...”
In a statement on Monday, a Marsh India spokesperson said: “We strongly deny any wrongdoing and find the complaint, filed by the competing broker who lost the business to Marsh India, as baseless and without merit.”
