The Supreme Court has set aside the Securities Appellate Tribunal’s (SAT) order against the Indian insurance regulator and Marsh India Insurance Brokers Private Ltd and restored the sector regulator’s order dated January 9, 2018.
The apex court, in its order, said it could not find any documentary evidence on which the SAT had come to the conclusion that the reinsurance business of Jagson International Ltd was obtained by Marsh India by illegal means as alleged by its rival, the London-based reinsurance broker Atkins Special Risks Ltd.
The Marsh India Insurance Brokers had approached the Supreme Court against the SAT’s order. The apex court’s recent order is the final setback for SAT in the case.
Earlier the Supreme Court had expunged the SAT’s remarks against the former Member (Non-Life), Insurance Regulatory and Development Authority of India (IRDAI) P.J. Joseph as `uncalled for and deserve to be set aside” on an appeal by the IRDAI.
The SAT, on March 16, 2018, setting aside an IRDAI order, had said: “We fail to understand as to how Member (non-life) could make a such false statement in the impugned order. In our opinion, the impugned order passed by P.J. Joseph (non-life) virtually amounts to aiding and abetting corruption in the insurance business by the regulator which cannot be tolerated.”
It had directed the insurance regulator to entrust the matter to a competent officer other than Joseph for fresh orders on Atkins’ complaint on merits.
The basic case is about Marsh India Insurance Brokers getting the reinsurance business of Jagson International – having interests in oil exploration and aviation – which was earlier handled by Atkins Special Risks.
The Atkins Special Risks had complained to IRDAI stating that between 2002-2012, it provided international reinsurance cover to Jagson International. From 2010 onwards Jagson International’s Chairman Jagdish Pershad Gupta started demanding, through email, a cut in Atkins Special Risks’ reinsurance commission.
In 2012, Jagson International’s reinsurance business was given to Marsh India Insurance Brokers.
The IRDAI on January 9, 2018, disposed of the Atkins Special Risks complaint of Marsh India Insurance poaching its business by offering unlawful payment to Gupta.
Atkins hired a private investigation firm to find out any payment of kickbacks by Marsh to Gupta.
As per the SAT’s order, the investigation firm had confirmed kickbacks to Gupta for diverting the reinsurance business to Marsh India Insurance Brokers from Atkins Special Risks.
Atkins Special Risks had alleged that during the telephonic conversation, Gupta had said that Marsh India Insurance Brokers had agreed to pay him $4,00,000 in order to obtain Jagson International’s business.
The SAT, in its order, said Atkins Special Risks had relied on documentary evidence in support of the contention that Gupta had sought a bribe and was bribed by the officers of Marsh India Insurance Brokers to get Jagson International’s business.
The IRDAI stand was that Atkins did not submit any documentary proof is false, said the SAT.
An IRDAI official had then told IANS that the proof given by Atkins Special Risks was not strong and hence focused investigation on Marsh India Insurance Brokers books was not made.
Then the matter was taken to the SAT by Atkins Special Risks. Be that as it may, the right to appoint or change reinsurance broker vests with the primary insurer.
Curiously, neither the IRDAI’s order nor the SAT order mentions the name of the primary insurer for Jagson International or the reason for the change in reinsurance broker.