Summary
A re-insurance broker that had lost the brokerage of an oil exploration company complained to the Insurance Regulatory and Development Authority that a rival broker had obtained the contract by bribing the company's chairman, in breach of Section 41(1) of the Insurance Act, 1938. On a High Court direction the regulator heard the complaint and dismissed it for want of evidence, but the Securities Appellate Tribunal set that order aside and in effect directed a fresh inquiry. The Supreme Court allowed the rival broker's appeals: though the regulator's investigative power is wide, the emails and a reported telephone conversation relied upon could not trigger an inquiry into bribery, the Tribunal was wrong to say documentary evidence supported the complaint, and no purpose would be served by another inquiry after the fact-finding body had found no evidence.
Issues
- Whether the Securities Appellate Tribunal was justified in setting aside the IRDA's order dismissing a complaint of bribery against an insurance broker for lack of evidence and directing the regulator to reconsider it.
Provisions considered
- Section 41(1), Insurance Act, 1938The complaint alleged that payments made to procure the brokerage contract violated this provision and Regulation 37(1) of the IRDA (Insurance Brokers) Regulations, 2013, but no cogent material was produced to substantiate the alleged payment. (¶¶ 3, 10)
- Section 14(2), Insurance Regulatory and Development Authority Act, 1999The Court did not decide the challenge to the IRDA's jurisdiction to investigate, since the inquiry had been directed by the High Court, but accepted that the regulator's power is of wide amplitude. (¶¶ 8, 9)
Held
- Barring the fact that the appellant was awarded the brokerage contract, there was no cogent material warranting a detailed investigation; the emails relied upon did not relate to any illegal demand by the appellant, and the Tribunal went wrong ex facie in observing that the complainant had relied on documentary evidence of bribery, since no such document exists on record. (¶¶ 6, 10, 11)
- The fact-finding regulator having concluded that there was no evidence, no useful purpose would be served by subjecting the appellant or its contract to another round of inquiry; the Tribunal's remand order is set aside and the IRDA's order sustained. (¶¶ 11, 12)
Result
Appeals allowed; order of the Securities Appellate Tribunal dated 16.03.2018 set aside; order of the IRDA dated 09.01.2018 dismissing the complaint sustained; pending applications disposed of.