The Securities Appellate Tribunal (SAT) has quashed IRDAI's order directing ICICI Prudential to take over the life insurance business of the Sahara group.
Insurance Regulatory and Development Authority of India (IRDAI) had appointed an administrator, citing failure of corporate governance at Sahara Life. On July 28, 2017, IRDAI had ordered the transfer of the life insurance portfolio of Sahara India Life to ICICI Prudential Life with a view to protect the interests of policyholders of the embattled life insurer.
The tribunal quashed this order and asked IRDAI to hear the matter afresh, as it did not provide a copy of the report of the administrator for sale/ transfer of Sahara Life's assets to another player. Accordingly, the tribunal asked IRDAI to complete the process and pass an order within three months of the receipt of the company's reply to the administrator's report.
According to the tribunal, IRDAI should have applied the principles of proportionality before resorting to such extreme measures of transfer, merger or winding up of an insurance business altogether. “The action must commensurate with the nature of the violation in a given case,” SAT said in its order on January 11, 2018.
SAT also observed that "appointment of an administrator is purely a temporary measure by IRDAI, primarily to bring the affairs of the insurer back on right track and thereby protect the interests of the policyholders".
ICICI Prudential Life Insurance Company Ltd is currently trading at Rs410.7, up by Rs3.7 or 0.91% from its previous closing of Rs407 on the BSE.