In a big relief to Sahara India Life Insurance Co Ltd, the Securities Appellate Tribunal (SAT) on Tuesday stayed regulator IRDAI's order directing the transfer of policy liabilities of around two lakh policies along with assets of Sahara Group firm to SBI Life Insurance Company.
The order comes after Sahara India Life filed an appeal against an order passed by the Insurance Regulatory and Development Authority of India (IRDAI).
IRDAI, in its order on June 2, ordered for transferring the entire business of Sahara India Life to SBI Life. Further, the books of accounts, bank accounts, etc were also been directed to be transferred.
The decision was taken at the meeting of the IRDAI given the deteriorating financial health of Sahara India Life.
In its order on Tuesday, the appellate tribunal stayed "the effect and operation of the impugned order dated June 2, 2023, till further orders of this Tribunal". The matter is now listed for further consideration and arguments on August 3.
Sahara India Life, in a separate statement, said that prima facie principles of natural justice weren't adhered to. It, further said that Sahara India Life is taking all possible actions as per applicable law to ensure that the best interest of its policyholders is secured.
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In March 2017, a show cause notice was issued after that IRDAI appointed an administrator under the Insurance Act on June 12, 2017. Besides, another order was passed on June 23, 2017, directing the appellant (Sahara India Life) to only serve the existing policyholders and collect renewal premiums but was restrained from collecting new deposits.
A third order was passed on July 28, 2017, directing the transfer of the business of the appellant to ICICI Prudential Life Insurance Company.
All these three orders were challenged before the SAT wherein a composite order was passed in January 2018 and the order dated that directed the transfer of the business of the appellant to ICICI Prudential Life Insurance Company was quashed.
Also, the matter was sent back to IRDAI to pass a fresh order within three months.
Subsequently, on December 30, 2020, a fresh order was passed holding that Sahara India Life was no longer a "fit and proper" promoter and that the shareholding of the promoters should be transferred to any other "fit and proper" promoter within six months and further directed the appellant to recover a sum of Rs 78 crore. from Sahara India Life.
This order was challenged by Sahara India Life, which is pending consideration before the tribunal.
Pending consideration of this appeal, the order dated June 2, 2023, was passed mainly on the ground that the order dated December 30, 2020, has not been complied with by Sahara India Life, SAT said.
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"The fact that the earlier direction of the respondent (IRDAI) in transferring the business to ICICI Prudential Life Insurance Company was set aside in 2018 and since then no steps had been taken to transfer the policies, we find it strange that such steps have been taken after a gap of 5 years and that too without granting an opportunity of hearing," SAT observed.
"There was no tearing urgency in transferring the policies when the respondent had earlier directed by its order dated June 23, 2017, to service existing policyholders and collect renewal premium was continuing," it added.
Consequently, SAT stayed IRDAI order.
Sahara India Life Insurance was granted a Certificate of Registration in 2004 to transact the business of life insurance.
In its order passed on June 2, IRDAI mentioned that the action was warranted to protect the interest of the policyholders of Sahara India Life.
Given the certain serious issues on the financial propriety and governance aspects of the insurer, the authority had appointed an administrator to manage the business of the insurer in 2017, IRDAI had said.