Securities Appellate Tribunal (SAT) Stays Irdai's Order to Transfer Sahara's Life Insurance Business to SBI Life

14 Jun 2023 , 12:16 PM

The Securities Appellate Tribunal (SAT) has granted a stay on the Insurance Regulatory and Development Authority of India’s (Irdai) order, which directed the transfer of policy liabilities and assets of Sahara India Life Insurance Co Ltd to SBI Life Insurance Company.

The decision came after Sahara India Life filed an appeal against Irdai’s order, which was issued on June 2. Irdai’s order had instructed the transfer of Sahara India Life’s entire business to SBI Life, including books of accounts and bank accounts, citing the deteriorating financial health of the company.

In response, SAT has stayed the effect and operation of Irdai’s order until further notice. The matter is scheduled for further consideration and arguments on August 3.

Sahara India Life has raised concerns about the violation of principles of natural justice, stating that it is taking all necessary actions to protect the best interests of its policyholders in accordance with applicable laws.

The dispute between Sahara India Life and Irdai dates back to 2017 when Irdai issued a show cause notice and appointed an administrator for Sahara India Life under the Insurance Act.

As per the data, Several subsequent orders were passed, including one directing the transfer of Sahara India Life’s business to ICICI Prudential Life Insurance Company. However, this order was overturned in January 2018 by SAT, and the matter was sent back to Irdai for a fresh order.

In December 2020, a new order was passed by Irdai, declaring Sahara India Life as an unfit promoter and directing the transfer of shareholding to another suitable promoter. This order is also under consideration by SAT.

SAT observed that the urgency to transfer policies after a five-year gap without granting an opportunity for a hearing was unwarranted. It further noted that previous orders allowed Sahara India Life to service existing policyholders and collect renewal premiums.

As a result, SAT stayed Irdai’s order, providing temporary relief to Sahara India Life Insurance.

Sahara India Life Insurance received a Certificate of Registration in 2004 to operate as a life insurance company.

Irdai justified its action as necessary to protect the interests of Sahara India Life’s policyholders due to concerns about financial propriety and governance aspects. An administrator was appointed by Irdai in 2017 to manage the company’s business.

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