The Supreme Court has stayed the March 16 order of the Securities Appellate Tribunal (SAT) in the Atkins Special Risks case, providing interim relief to P J Joseph, a member (non-life) of the Insurance Regulatory and Development Authority of India (Irdai), accused of 'aiding and abetting' corruption.
Atkins Special Risks, a UK-based insurance broker, had in August 2015 filed a complaint with Irdai, alleging Jagdish Gupta, chairman of Jagson International, began demanding a cut from the commission it earned for providing a reinsurance cover.
The yearly commission stood at 27.5 per cent of the premium paid for reinsurance cover. Atkins said it refused to pay the cut. Subsequently, Jagsons' reinsurance contract was taken away from them and given to Marsh India Insurance Brokers.
Because Irdai did not take any action, Atkins approached the high court of Telangana and Andhra, which directed the regulator to look into the matter.
In January, Joseph presided over the investigation into the Atkins allegations, and passed an order disposing of the complaint, saying there was inadequate evidence for the contentions.
On March 16, the appellate tribunal in Mumbai came down heavily on the regulator and directed it to "entrust the matter to an officer other than Joseph for passing a fresh order."
"In our opinion, the order passed by P J Joseph, member (non-life), Irdai, on January 9, was in gross abuse of the process of law and dereliction of duty," said Justice J P Devadhar, presiding officer at SAT.
SAT was cautious in its order, saying they had clearly not expressed any opinion on the merit of the complaint filed by appellant.
In its complaint with Irdai, Atkins listed specific dates on which Gupta allegedly sent emails requesting kickbacks (Of the commissions earned by Atkins). Further, in the complaint they allege Gupta told them (Atkins) that Marsh agreed to pay him $400,000 (Rs 26 million) to transfer Jagson's re-insurance business.
"We fail to understand as to how a member (non-life) could make such false statements in the impugned order. In our opinion, the order passed by Joseph virtually amounts to aiding and abetting corruption in the insurance business by the regulator, which cannot be tolerated," SAT said in its March 16 order.
According to the SC website, the matter will (tentatively) be heard next on August 17.