SAT asks Irdai to hear Sahara Life transfer afresh

Mumbai, Jan 11 (PTI) The Securities Appellate Tribunal(SAT) today quashed insurance regulator Irdai's directionasking ICICI Prudential to take over life insurance businessof the embattled Sahara group and asked it to pass a freshorder after hearing the company.But the tribunal upheld the insurance watchdog(Insurance Regulatory Development Authority) decision toappoint an administrator to run the affairs of Sahara Life.Irdai on July 28, 2017 had ordered the transfer of thelife insurance portfolio of Sahara India Life to ICICIPrudential Life with a view to protect the interests of thepolicyholders of the embattled life insurer.The tribunal today quashed this order and asked theregulator to hear the matter afresh and complete the processwithin three months.The order was held void as the tribunal felt thatIrdai did not provide a copy of the report of theadministrator which had suggested sale of Sahara Life's assetsto another player."The report and its outcome have potentially andadversely affected Sahara Life. Irdai should have supplied acopy of the report to the appellant before passing the July28, 2017 order transferring its businesses to ICICI PrudentialLife, so as to enable it to make a representation on thereport," SAT said in a 43-page order."This action (of Irdai) is clearly in breach of theprinciples of natural justice...the impugned July 28 ordertherefore, deserves to be quashed," the SAT said today.The tribunal accordingly asked Irdai to issue a freshdirection on the matter after hearing the appellant inconsonance with the principles of natural justice. However,the tribunal upheld Irdai order appointing an administrator tomanage the affairs of Sahara Life.In June 2017, Irdai had appointed an administrator,citing failure of corporate governance at Sahara Life. Basedon the administrator's report on June 22, 2017, Irdai had onJuly 28 ordered transfer of Sahara Life's business to ICICIPrudential Life.SAT upheld appointment of the administrator anddismissed Sahara's claim that it violated the principles ofnatural justice.Among others, SAT also observed that "appointment ofan administrator is purely a temporary measure by Irdai,primarily to bring the affairs of the insurer back on righttrack and thereby protect the interests of the policyholders".The report had found the Sahara Life promoters werenot 'fit and proper' to run the company and that they hadsiphoned off Rs 78 crore in the name of security deposits,among other serious management lapses.Reacting to the SAT order, Irdai counsel SomasekharSundaresan said the regulator will study the order and takethe next course of action."A view will be taken on larger policy issues, as for Irdai this is not just a situation in one case but a stance that will have implications in all future cases," he added.

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