Supreme Court Vacates SAT Stay On IRDAI Order To Transfer Policies From Sahara Life Insurance to SBI Life Insurance

The Supreme Court recently set aside the order of the Securities Appellate Tribunal (SAT) that had stayed an order of the Insurance Regulatory and Development Authority Of India (IRDAI) directing transfer of policies from Sahara India Life Insurance Company Limited to SBI Life Insurance Company Limited.

A division bench of Justice Abhay S Oka and Justice Sanjay Karol stayed the order of SAT in an appeal filed by the IRDAI calling it a ‘drastic order’.

The appeal before SAT was filed by Sahara India Life Insurance Company Limited, against the order dated 2nd June 2023 passed by the IRDAI which directed the transfer of policies of Sahara India Life Insurance to SBI Life Insurance Company Limited. The books of accounts, bank accounts etc. of Sahara India Life Insurance were also directed to be transferred to SBI Life Insurance.

The aforesaid order dated June 2, 2023 was passed ex parte by IRDAI on the ground that the order dated December 30, 2020 had not been complied with by Sahara Life Insurance.

The order dated December 30, 2020 was passed by the IRDAI holding that Sahara Life Insurance was no longer a “fit and proper” promoter and that its shareholding should be transferred to any other “fit and proper” promoter within 6 months. It further directed the Sahara Life Insurance to recover a sum of Rs. 78 crore from Sahara India.

“Prima facie, we find that drastic order of interim stay has been passed by the Tribunal without adverting to the merits of the case and that also when the order dated 30.12.2020 was not complied with by the appellant for more than two and half years.” The Apex Court observed while staying SAT’s order.

SAT in its order dated 13 June 2023, that stayed the operation of the order dated June 2, 2023 of the IRDAI had said that there was no urgency to transfer the policies of Sahara to SBI:

“..the fact that the earlier direction of the respondent 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. We find that 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 policy holders and collect renewal premium was still continuing.”

The Apex Court while staying the order of SAT made it clear that the Tribunal was free to proceed with the hearing of the appeal before it on merits. The Top Court directed the Tribunal to hear the application for stay afresh.

Case Title: Insurance Regulatory And Development Authority Of India V. Sahara India Life Insurance Company Limited, Civil Appeal No(s). 4074/2023

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