Chennai : In a setback for the Securities Appellate Tribunal (SAT), the Supreme Court has expunged the former’s uncalled remarks against former Member (Non-Life), Insurance Regulatory and Development Authority of India (IRDAI) P.J. Joseph.
The Supreme Court in its recent order on an appeal filed by IRDAI against Atkins Special Risks Ltd and others said: “Having heard learned counsel for the parties and on perusal of record, we are of the opinion that the remarks made by the Tribunal against Mr. P.J. Joseph in paragraphs 8 and 9 of the impugned order dated March 16, 2018 as well as the comments in paragraph 1 of the said order were uncalled for and deserve to be set aside.”
“I am happy that the uncalled remarks by SAT in its order has been expunged,” Joseph told IANS.
The SAT on March 16, 2018 setting aside an IRDAI order had said: “We fail to understand as to how Member (non-life) could make such false statement in the impugned order. In our opinion, the impugned order passed by P.J. Joseph (non-life) virtually amounts to aiding and abetting corruption in the insurance business by the regulator which cannot be tolerated.”
The SAT had directed the insurance regulator to entrust the matter to a competent officer other than Joseph for fresh orders on Atkins complaint on merits.
The SAT’s remarks were questioned by legal eagles then.
“The stinging remarks against the Member (Non-Life) by name, with due respect to the SAT, are quite unfortunate and seem to be crossing swords with the repeated and well advised principle of ‘judicial restraint’ by the Supreme Court of India,” D. Varadarajan, a Supreme Court advocate specialising in company/competition/insurance laws, had told IANS.
Going by an SAT order dated March 16, the concerned IRDAI official was not even arraigned as a party, Varadarajan added.
The IRDAI on January 9, 2018, disposed off the complaint by London-based reinsurance broker Atkins Special Risks Ltd against rival Marsh India Insurance Brokers Pvt Ltd of poaching its reinsurance business offering unlawful payment to Jagdish Pershad Gupta, Chairman, Jagson International Ltd.
Atkins’ complaint was that between 2002 to 2012 it provided international reinsurance cover to Jagson. From 2010 onwards Jagson’s Gupta started demanding, through email, a cut in Atkins commission.
In 2012, Jagson’s reinsurance business was given to Marsh.
Atkins hired a private investigation firm to find out any payment of kick-backs by Marsh to Gupta.
As per the SAT’s order, the investigation firm had confirmed kick-backs to Gupta for diverting the reinsurance business to Marsh from Atkins.
Atkins alleged that during the telephonic conversation, Gupta had said that Marsh had agreed to pay him $4,00,000 in order to obtain Jagson’s business.
The SAT, in its order, said Atkins had relied on documentary evidence in support of the contention that Gupta had sought a bribe and was bribed by the officers of Marsh for diverting the reinsurance business from the appellant to Marsh.
The IRDAI stand that Atkins did not submit any documentary proof is false, said SAT.
An IRDAI official had then told IANS that the proof given by Atkins was not strong and hence focused investigation on Marsh’s books were not made.
The right to appoint or change reinsurance broker vests with the primary insurer. Interestingly, neither the IRDAI’s order nor the SAT order mentions the name of the primary insurer for Jagson or the reason for the change in reinsurance broker.
Reinsurance plays a major role in insuring huge risks. Many private general insurers are happy to front the business as the primary insurer passing on the lion’s portion of the risk to reinsurers. As a result the reinsurance brokers gained importance, a senior industry official had told IANS.