SAT quashes IRDA's order to transfer Sahara Life's business to ICICI Pru Life
``SAT has defended our earlier orders: to appoint an administrator in the company, not allowing Sahara Life to do any business further, and referring the matter back to the IRDAI so that Sahara Life can get an oppootunity to represent its stand properly,’’ said the IRDAI sources.
Giving partial relief to the Subrat Roy promoted Sahara India Life Insurance Company, the Securities Appellate Tribunal (SAT) on Thursday has quashed an order passed by the insurance regulator IRDAI in July 2017 to transfer the insurance business of financially embattled life inurer to ICICI Prudential Life Insurance Company.
Moreover, the tribunal has asked the insurance regulator to once again give a hearing opportunity to Sahara Life Insurance on the basis of the finding of the administrator and pass a fresh order in the matter within three months.
However, it has upheld the decision of the insurance regulator in June 2017 to appoint an Administrator by dislodging the management of the company.
``We will be abiding by the Sat order,’’ said Nilesh Sathe, member, IRDAI.
IRDAI sources claims that the Sat’s verdict on Thursday has justified the set of actions by the insurance regulator in the matter of Sahara Life.
.``SAT has defended our earlier orders: to appoint an administrator in the company, not allowing Sahara Life to do any business further, and referring the matter back to the IRDAI so that Sahara Life can get an oppootunity to represent its stand properly,’’ said the IRDAI sources.
SAT said the action taken by the insurance regulator in July 2017 was in breach of the principles of natural justice as a report prepared by the Administrator was not submitted to Sahara India Life Insurance. .
However, the appointment of Administrator was not in violation of the principles of natural justice, as contended by the Sahara Life. Since the order appointing an Administrator is more in the nature of an administrative order, the opportunity which was given by the IRDAI is technically not incorrect and irregular in the facts and circumstances of the case., said the SAT order.
``During the fresh hearing to be offered by the IRDAI to the Sahara Life, any of the parties, if it wishes to produce some documents or summon it from the other party, the said request shall also be considered as per law by affording an opportunity in this regard,’’ said the SAT order.
Based on the facts reported by the Administrator in his report dated 22 June, Irdai came to the conclusion that continuation of Sahara India Life to transact life insurance business is not in the interest of the holders of life insurance policies in general, and considered it to be a fit case to transfer the life insurance portfolio of Sahara India Life to some other insurer under section 52B (1) of the Insurance Act, 1938, the IRDAI's earlier order had said.
The IRDAI before passing an order to transfer the Sahara Life's business ICICI Pu Life had said the report of the administrator indicated that there is total failure of the governance system of Sahara India Life and the interests of the policyholders are at stake.
Promoters of the company are no more ‘fit and proper’, a sum of Rs78 crore has already been syphoned off in name of security deposits, and the shareholders and board of directors are not keen in recovery plan, IRDAI had said.
Moreover, the Irdai report said, the company is mainly surviving on release of reserves. The situation may not continue for long as the new premium of the company has come down significantly.
Sahara India Life Insurance Company had launched its operations on 30 October 2004 after being granted license to operate as a life insurer in India by IRDAI on 6 February 2004 .