File Affidavit If You Were Not Heard When SAT Said Your Member's Order Abetted Graft: SC to IRDAI

New Delhi: The Supreme Court has sought an affidavit from the IRDAI on whether it was represented through a lawyer when the Securities Appellate Tribunal (SAT) called an order passed by its member as one that “virtually amounts to aiding and abetting corruption”.

Hearing an appeal filed by the Insurance and Regulatory and Development Authority of India (IRDAI), a bench headed by Justice Ranjan Gogoi asked the competent authority in the regulator to file an unequivocal affidavit.

“We would like a detailed narration of what has transpired in the proceedings before the learned SAT is be brought on record by means of an affidavit of the Competent Authority of the Regulator,” stated the Court order issued recently.

The occasion for calling the affidavit arose when the IRDAI’s lawyer argued that the SAT passed the order ex parte, without hearing its lawyer or issuing a formal notice. The IRDAI asked for a stay of the Tribunal’s order, too.

But the bench, after going through the order, noted that the impugned order recorded the appearance of the SAT’s layer in the proceedings.

“However, reading the order of the learned SAT, we find that the Regulator which is respondent No.1 in the proceedings before the learned SAT had been represented by its counsel,” underlined the bench, and sought a categorical affidavit from the IRDAI.

The top court said that there was no question of granting a stay on the SAT’s order until this contention was made clear.

While disposing an appeal filed by UK-based Atkins Special Risks, the SAT bench, comprising presiding officer Justice JP Devadhar and member CKG Nair, had reproached an order passed by IRDAI Member (Non-Life) PJ Joseph.

It said the order passed by Joseph in the case relating to commission “virtually amounts to aiding and abetting corruption in the insurance business by the regulator which cannot be tolerated”

SAT directed the regulator to conduct a probe by some other “competent officer” and pass a fresh order.

In the complaint filed with IRDAI in August 2015, Atkins alleged that between 2002 and 2012 it had provided international reinsurance cover to Jagson International on annual brokerage or commission basis.

Atkins accused Jagson International chairman Jagdish Gupta of demanding a cut, from 2010, in the commission it earned. In 2012, the re-insurance business of Jagson went to Marsh India Insurance Brokers, which has denied any wrongdoing or foul play in the matter.

Detailing the sequence leading to the complaint to the IRDAI, the SAT order said Atkins had engaged a global investigating firm as it suspsected that illegal means were used to divert the business. In its report, the agency said kickbacks were given to Gupta.

“As no action was taken,” on its complaint filed with IRDAI, Atkins filed a petition in the High Court in Hyderabad, which disposed it in September 2017 with a direction to IRDAI to consider the complaint filed by the firm in accordance with law.

Joseph heard the appellant on November 16, 2017 and passed an order on January 9, disposing of the complaint by “simply stating that the appellant has not submitted any documentary proof, material information or evidence in support of its contention.” Following this, Atkins filed an appeal at SAT.

According to SAT, the IRDAI order was a “gross abuse of the process of law and dereliction of duty”.