“The SAT has, ex-facie, gone wrong in observing that Atkins had relied on documentary evidence in support of the complaint. We have referred to the nature of the documents but we accept the argument of the IRDAI that these cannot constitute materials to trigger off an inquiry on the aspect of bribery being indulged into by Marsh to obtain the business from Jagson” , the two-member SC bench of Justice Anirudha Bose and Justice Sudhanshu Dhulia observed

New Delhi:

In a major victory for the insurance regulator IRDAI and its former member (Non-Life) PJ Joseph, and Marsh India Insurance Brokers, the Supreme Court(SC) has finally  set aside rulings against them earlier passed by Mumbai based the Securities Appellate Tribunal(SAT) on `Marsh bribery case’.

Marsh India Insurance Brokers, is the subsidiary of New York headquartered Marsh, the largest re/insurance broker in the world.

The SAT, in its order on 16th March, 2018, had set aside a decision of the IRDAI dismissing a complaint made by UK based insurance broker Atkins alleging adoption of illegal means by Marsh in obtaining business of international re-insurance cover of Jagson International Limited on yearly brokerage/commission.

Jagson is involved in the business of oil exploration and such insurance is mainly with regard to its exploration equipments.

A series of judicial trials, involving different Courts and the IRDAI and other domestic and international entities, had began after Atkins in a complain to the IRDAI had alleged that Marsh had used an India based direct insurance broker to pay out money to Jagdish Gupta, chairman of Jagson as part of Marsh’s commission, in violation of existing regulations, which the SAT in its 16th March order had asked the IRDAI to probe.

Earlier, Atkins had appealed to SAT against a IRDAI’s stand, decided by PJ Joseph, member, Non-Life, which had rejected its(Atkins) complain against Marsh on `bribery charges’.

Afterwards, Marsh had challenged the SAT order in the SC.

Atkins, IRDAI and P Joseph, Jagdish Gupta were respondents in the SC case.

Passing the final judgment on the case on March 24, the two-member SC bench of Justice Anirudha Bose and Justice Sudhanshu Dhulia observed , “The SAT in its order had directed the IRDA, to revisit the complaint made by insurance broker Atkins and passed a fresh order. Substance of the complaint made by Atkins was that Marsh had paid bribe to Gupta for obtaining the brokerage contract. But, on going through the materials made available before us at the time of hearing, we are of the opinion that there was no occasion for interfering with the order of the IRDA by the SAT. It is a fact that the order of the SAT is in the nature of a remand order and this order in effect has only directed a fresh inquiry. Atkins has argued that they had discharged their onus by raising sufficient suspicion as regards the deal between Gupta and Marsh . But, we find that barring the fact that Marsh had been given the brokerage contract, there is no other cogent material which would warrant a detailed investigation. The SAT has, ex-facie, gone wrong in observing that Atkins had relied on documentary evidence in support of the complaint. We have referred to the nature of the documents but we accept the argument of the IRDAI that these cannot constitute materials to trigger off an inquiry on the aspect of bribery being indulged into by Marsh to obtain the business from Jagson.”

Barring a statement of a telephonic conversation of one Graham Atkins, managing director of the Atkins in which Gupta was alleged to have mentioned that Marsh had agreed to pay him certain sum of money to obtain the business, there was no other material showing any illegality being committed by Marsh in obtaining the contract, from Jagson, the SC said.

“The fact finding body has already come to its conclusion on lack of evidence. In the given circumstances, we do not find any useful purpose that would be served in subjecting Marsh or their contract with Jagson to another round of inquiry. In the order under appeal, the SAT has observed that the complaint showed that Atkins had relied on documentary evidence in support of the contention that Jagdish Gupta had sought bribe and was bribed by the officers of Marsh for diverting their re-insurance business. But we fail to find any such document from which such a conclusion could be reached. Under these circumstances, we set aside the order of the SAT and allow the present appeals. The order of the IRDA passed on 9th January 2018 is sustained,” said the SC’s order.

Earlier, in another victory for the IRDAI and Joseph, the SC on Feb 16, 2022 had finally allowed setting aside of a few comments made by the SAT in its order that had made strong charges against Joseph including “aiding and abetting corruption.”

Sources at Atkins have said they have accepted SC judgement and wouldn’t go further for any review petition of the verdict.

Industry observers have hailed the SC judgement to clear Joseph from all charges including unusually critical comments by the SAT judge. They feel SAT shouldn’t have cast aspersion on Joseph personally as he was discharging his official duties.

In the final hearing in the SC, senior counsel Abhisek Manu Singhvi argued for Marsh, Arvind P Dattar for IRDAI and T Srinivasa Murthy for Atkins.

Background of the case

Between 2002 and 2012 UK based insurance broker Atkins, specialising on marine and energy insurance, had arranged international reinsurance cover for Jagson International Ltd. on yearly brokerage / commission of 27.5 per cent 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 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.”