Tribunal Revokes IRDAI Order To Transfer Sahara Life Business To ICICI Prudential
The Securities Appellate Tribunal revoked the insurance regulator’s decision to transfer struggling Sahara Group’s life insurance business to ICICI Prudential Life Insurance Company. Ltd. to protect policyholders.
The tribunal today asked the Insurance Regulatory and Development Authority of India to hear the case afresh by giving Sahara India Life Insurance Company Ltd. an opportunity to respond “in consonance with the principles of natural justice”, according to the order uploaded on the tribunal’s website. The IRDAI should decide on the matter within three months of getting Sahara Group’s response, it said.
“Sahara Life Insurance got a major respite and its stand was vindicated by SAT,” the company said in a statement after the order.
The insurance regulator had ordered the transfer of the life insurance business saying the promoter Sahara India didn’t satisfy “fit and proper” criteria and around Rs 78 crore was siphoned off from the insurer to the parent. The Sahara Group has been facing a financial crunch after the Supreme Court sent its chief Subrata Roy to jail on March 4, 2014 for not complying with orders to refund Rs 24,000 crore along with interest to more than 2 crore investors. He was released in May 2016 after his mother died and has since been out on parole.
On June 12 last year, the regulator appointed RK Sharma, general manager at IRDAI, as an administrator for Sahara Life. Over the next fortnight, he submitted his report, IRDAI barred the company from underwriting new business and then ordered the transfer of its business—with a policyholder liability of Rs 900 crore—to ICICI Prudential.
The insurer moved the tribunal saying a copy of the administrator's report was never shared with the company. The undue haste with which the administrator was appointed showed that none of the explanations provided by the company were considered, Sahara Life argued.
“There is no legal obligation for the regulator to submit the administrator's report to the appellant. We submitted it to the SAT as soon as we were asked to do so,” Nilesh Sathe, member (finance and accounts) at IRDAI, told BloombergQuint over the phone. The regulator will abide by the SAT's order and hear Sahara Life’s appeal afresh after providing a copy of the report, he said.