Supreme Court Sets Aside SAT’s Order in Marsh India vs Atkins Special Risks

Supreme Court Sets Aside SAT’s Order in Marsh India vs Atkins Special Risks

The Supreme Court while adjudicating the appeal filed in the matter of Marsh India Insurance Brokers Private Limited vs. M/s Atkins Special Risks, by its division bench of Justices Aniruddha Bose and Sudhanshu Dhulia, has set aside the Securities Appellate Tribunal’s (SAT) order against the Indian Insurance regulator and Mash India Insurance Brokers Private Ltd and restored the sector regulator’s order.

In the present case the appellant- Marsh India Insurance Brokers Private Limited firm questioned the legality of an order passed by the Securities Appellate Tribunal (“Tribunal”), Mumbai on 16th March 2018.

By that order, the Tribunal had set aside a decision of the Insurance Regulatory and Development Authority of India (“IRDA”) dismissing a complaint made by the first respondent alleging adoption of illegal means by the appellant in obtaining business of international re-insurance cover of another firm, Jagson International Limited (“Jagson”) on yearly brokerage/commission.

The first respondent had such business with Jagson for the years between 2002-2012.

By the impugned order, the Tribunal had directed the IRDA, in effect, to revisit the complaint made by the respondent no.1 and pass a fresh order.

Substance of the complaint made by the first respondent, which also an Insurance and Re-insurance Brokerage entity was that the appellant had paid bribe to one Mr. Jagdish Gupta (“respondent no.5”), the Chairman of Jagson for obtaining the brokerage contract.

Jagson was submitted to be involved in the business of oil exploration and such insurance is mainly with regard to its exploration equipment’s.

The respondent was represented by learned counsel Mr. T. Srinivasa Murthy, submitted that the appellant had used an India based direct insurance broker to pay money to respondent no.5, as part of the appellant’s commission to India.

The case of the first respondent was that the payment, was alleged to have been made to the respondent no.5, was violative of the provisions of Section 41(1) of the Insurance Act, 1938 as also Clause 37(1) of the Insurance Regulatory and Development Authority (Insurance Brokers) Regulations, 2013.

A complaint to that effect was made with the IRDA on 11th August 2015 on behalf of the first respondent, which was followed by a writ petition in the High Court (at that time it was the High Court for the State of Telangana and the State of Andhra Pradesh), seeking an inquiry in respect of the said complaint.

This writ petition was disposed of on 19th September 2017 with a direction on the IRDA to consider the complaint of M/s. Atkins Special Risk Limited by following due process; preferably within a period of four weeks from the date of receipt of copy of the Order.

In the ensuing hearing, IRDA disposed of the complaint finding lack of any evidence substantiating the complaint. In its order it recorded that it was established that no proof of evidence was brought in by the representative of the first respondent to prove his allegations and the authority could not further proceed with the complaint.

The Insurance Regulator i.e., IRDA, represented by Mr. Arvind Datar, learned senior counsel had reiterated this stand before the Apex Court.

Dr. Abhishek Manu Singhvi, learned senior counsel appearing for the appellant, argued that there was no foundation of the complaint made by the first respondent. As a result, there was no scope of interference by the Tribunal with the order of the IRDA.

He drew Court’s attention towards various e-mails referred to by Mr. Murthy, it was argued on behalf of the appellant that none of them related to any illegal demand made by the appellant from Jagson or respondent no.5. Further, there was no other material showing any illegality being committed by his client in obtaining the contract from Jagson.

Mr. Murthy on the other hand submitted that the scope and power of the investigation of IRDA is very wide and his client had obtained an investigation report by a private investigator which hinted at ‘illegality’ being committed by the appellant.

Argument was also made as to whether the IRDA could enter into this controversy having regard to the scope of their intervention delineated in Section 14(2) of the Insurance Regulatory and Development Authority Act, 1999.

The Apex Court however, refuted to the contention raised regarding the jurisdiction of the IRDA and commented, “we are not getting into that controversy as regards jurisdiction of the IRDA to conduct investigation as such investigation was directed by an order of the High Court, particulars of which we have given earlier. So far as jurisdiction or power of IRDA is concerned, we accept the submission of Mr. Murthy that it is of wide amplitude.”

The bench while going through the materials available before it, was of the opinion that there was no occasion for interfering with the order of the IRDA by the Tribunal.

It is a fact that the order of the Tribunal was in the nature of a remand order and this order in effect has only directed a fresh inquiry, the bench stated.

The Court noted, “Mr. Murthy had argued that so far as his client’s complaint is concerned, they had discharged their onus by raising sufficient suspicion as regards the deal between the respondent no.5 and the appellant. But we find that barring the fact that the appellant had been given the brokerage contract, there is no other cogent material which would warrant a detailed investigation.”

The Court remarked that the Tribunal had, ex- facie, gone wrong in observing that the respondent no.5 had relied on documentary evidence in support of the complaint.

The Court accepted the arguments of Mr. Datar that these cannot constitute materials to trigger off an inquiry on the aspect of bribery being indulged into by the appellant to obtain the business from Jagson.

In the given circumstances, the Court did not find any useful purpose would be served in subjecting the appellant or their contract with Jagson to another round of inquiry.

Accordingly, the Court set aside the order of Tribunal and allowed the appeals.