Aggrieved by a SAT order, the IRDAI and its former member PJ Joseph had filed an appeal in the SC ,which the insurance regulator claimed was issued without giving it a proper hearing. The other parties in the long drawn case are few insurance brokers including Atkins and Marsh India and a company called Jagson International and its promoter Jagdish Gupta
SC has scheduled the final hearing of the matter on March 2
New Delhi:
In a major victory for the insurance regulator IRDAI and its former member (Non-Life) PJ Joseph,the Supreme Court(SC) on Feb 16 has finally allowed setting aside of a few comments made by the Securities Appellate Tribunal(SAT) in its order that had made strong charges against the latter including “aiding and abetting corruption.”
The IRDAI and Joseph had filed an appeal in the SC aggrieved by an SAT order, in a long drawn case involving few insurance brokers including Atkins and Marsh India and a company called Jagson International’s and its promoter, Jagdish Gupta, which the insurance regulator had claimed that it was issued without giving it(IRDA) a proper hearing.
Earlier in July 2018, the SC had stayed a SAT order and has scheduled the final hearing of the matter on March 2.
Passing an interim order, the two-member SC bench of Justice Vineet Saran, and Justice Anirudha Bose said, “ The appellants in both the appeals are not aggrieved by the merits of the order of the SAT but are only concerned with regard to the remarks made against Joseph. We are of the opinion that the remarks made by the Tribunal (SAT) against Joseph in its order dated 16.03.2018 as well as the comments in paragraph 1 of the said order were uncalled for and deserve to be set-aside. Accordingly, we allow these appeals to the extent that the observations/remarks made in the order dated 16.03.2018 by the SAT against. Joseph are expunged.’’
The SAT order had charged Joseph, who had passed an order 9 January, 2018 on certain disputes, “gross abuse of the process of law and dereliction of duty” and had accused Joseph of aiding and abetting corruption’.
The order related to a case filed by a UK-based broker Atkins Special Risks Ltd, which had gone to Mumbai based SAT challenging IRDA’s order passed by Joseph on certain business dispute.
Background of the case
Between 2002 and 2012 UK based insurance broker Atkins, specializing on marine and energy insurance, had arranged international reinsurance cover for Jagson International Ltd. on yearly brokerage / commission of 27.5% of the premium that was paid for the cover.
Atkins alleged that from 2010 onwards Jagdish Gupta, chairman of Jagson started demanding, via email written to the Atkins, a cut from commission earned by it but was rejected by Atkins.
In 2012, Jagson dropped Atkins as its broker and diverted the reinsurance business to Marsh India Insurance Brokers Pvt Ltd. Suspecting Marsh has bribed Jagson to get the business, Atkins did a detailed investigation by a globally reputed investigating firm.
Reports submitted by that firm had claimed that kickbacks were given to Jagdish Gupta by Marsh for diverting the reinsurance business from the appellant to Marsh.
It was also alleged that during the telephonic conversation, Gupta has told Atkins that Marsh had agreed to pay him US$4,00,000 in order to obtain Jagson’s business.
Atkins filed a complaint on 11 August 2015 before the IRDAI. In that complaint, specific dates on which Gupta had sent his emails demanding kickbacks were set out.
The complaint argued that in view of evidence gathered as also the third party evidence regarding kickbacks, it is apparent that Section 41(1) of the Indian Insurance Act, 1938 and Regulation 37(1) of the Insurance Regulatory and Development Authority (Insurance Brokers) Regulations, 2013 have been violated. But the IRDAI took no action.
Atkins then filed a writ petition in the Telangana and Andhra Pradesh High Court which was disposed of on 19 September 2017 by directing IRDAI to consider the complaint filed by the appellant in accordance with law.
Thereafter, Joseph as member (non-life) heard the appellant on 16 November 2017 and passed an order on 9 January 2018, disposing of the complaint by simply stating that the Atkins has not submitted any documentary proof, material information or evidence in support of its contention.
Then Atkins had challenged the IRDA’s decision with the SAT.
SAT had set aside the IRDAI order and directed IRDAI to entrust the matter to a competent officer other than Joseph, for passing a fresh order.
SAT presiding officer Justice J P Devadhar in its verdict had said “perusal of the complaint filed by the appellant clearly shows that the appellant(Atkins) had relied on documentary evidence in support of the contention that Jagdish Gupta, chairman of Jagson had sought bribe and was bribed by the officers of Marsh for diverting the reinsurance business from the appellant to Marsh. In such a case, to hold that the appellant has not submitted any documentary proof would be totally false. 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 PJ Joseph (non-life) virtually amounts to aiding and abetting corruption in the insurance business by the regulator, which cannot be tolerated,” said a part SAT’s verdict which has been now stricken out by the SC.