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SAT sets aside Irdai order to transfer Sahara's insurance business

The administrator's order was not submitted to Sahara Life Insurance, which according to SAT, was breach of justice

Chirag Madia  |  Mumbai 

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The (SAT) on Thursday set aside an order passed by Insurance Regulatory and Development Authority of India (Irdai), directing transfer of insurance business of India Life Insurance Company to ICICI Prudential Life Insurance Company. The tribunal asked the insurance regulator to once again give a hearing opportunity to Life Insurance and pass a fresh order in the matter within three months. The SAT, however, upheld Irdai’s June 2017 order, directing appointment of an administrator to run the affairs of Life Insurance. Later that month, the insurance regulator had directed Life Insurance to stop underwriting new business.

In July 2017, passed another order seeking transfer of the insurance business of to ICICI Prudential Life Insurance. The said the action taken by in July 2017 was in breach of the principles of natural justice as a report prepared by the administrator was not submitted to India Life Insurance. This order was passed following a report submitted by the administrator to on June 22. The administrator’s order was not submitted to Life Insurance, which according to the SAT, was a breach of natural justice. “In any event, the report and its outcome have potentially and adversely affected the appellant (India Life), therefore, the must have supplied a copy of the report to the appellant before passing the impugned order dated July 28, 2017,”the order stated. “The impugned order dated July 28, 2017, therefore, deserves to be quashed and set aside.” The tribunal, which hears appeals by entitles aggrieved by orders passed by Irdai, criticised the process followed by the insurance regulator while handling the India Life Insurance matter. “As hereinabove noted, the must apply the principles of proportionality before resorting to such extreme measures of transfer, merger or winding up of an insurance business altogether. The action must commensurate with the nature of the violation in a given case. is obligated to look into as to whether the violation is technical, venial in nature or is a serious violation which would gravely jeopardize the interest of policyholders of the said Insurance Company,” said the In June 2017, had appointed administrator stating that, “India Life Insurance is acting in a manner likely to be prejudicial to the interests of holders of life insurance policies".

First Published: Fri, January 12 2018. 00:59 IST
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