IRDAI counters SC power to hear appeals against SAT verdict

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The Insurance Regulatory and Development Authority of India (IRDAI) has vetoed the Supreme Court’s power to hear appeals against the judgments delivered by the Securities Appellate Tribunal (SAT) under its Insurance Marketing Firm (IMF) regulations for no-grant of fresh and renewal license to operate.

IRDAI happens to be the apex body responsible for regulating India’s insurance sector. According to reports, the IMF regulations prescribed by the IRDAI recently were not in agreement with the provisions of the Insurance Act.

Experts familiar with the situation further claim that IRDAI is trying to venture into the unchartered territory of determining the pay levels for sales persons that may invoke fresh demands from the employees of other regulated entities.

Under existing IMF regulations, an individual whose applications – whether it be a new application or one for renewal – is rejected by the insurance regulator can first appeal to the IRDAI chairperson. If the ruling still goes against him, then he can appeal to the SAT.

If the application is rejected by the SAT, then he can submit a fresh application after a year from the date of the final rejection.

“This is not in tandem with the provisions of the newly-substituted Section 110 of the Insurance Act 1938 by the Insurance Ordinance 2014,” D. Varadarajan, Supreme Court advocate and an expert in insurance/company/competition laws, said in a statement to the IANS.

“It is not for the IRDAI to truncate this very important statutory appellate mechanism against the order of SAT by way of Regulations, that too against the express provisions of the Insurance Act,” Varadarajan  added.  “Would it imply that an ISP should be kept on the rolls for three years, even if his performance is not at the desired levels or he misconducts himself or fails to discharge the lawful orders of the superiors or indulges in activities subversive of office decorum or decency or commits any act involving moral turpitude.”

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