MUMBAI: The Securities Appellate Tribunal on Monday ordered 'status quo' for a week on insurance regulator IRDAI's direction for transfer of embattled Sahara group's life insurance business to ICICI Prudential Life Insurance.
The tribunal fixed the next hearing in the matter on August 7 when it will decide on the maintainability of the petition filed by Sahara Life Insurance against the IRDAI order.
Last Friday, the Insurance Regulatory and Development Authority of India (IRDAI) had asked ICICI Prudential to take over the assets and liabilities of Sahara Life from July 31.
Sahara Life today approached the Securities Appellate Tribunal (SAT), which is mandated to hear pleas against orders passed by financial sector regulators like Sebi, IRDAI and PFRDA, against the insurance regulator's order.
A two-member bench of SAT, comprising Justices C K G Nair and Jog Singh, ordered a status quo in the matter.
Sahara Life Insurance was represented by law firm Markand Gandhi & Co.
Following the SAT decision, Sahara group also said in a statement that the tribunal has granted "status quo" until it completes the hearing on August 7. This means, the order passed by IRDAI has been stopped from being implemented until further orders, Sahara said.
Earlier, the IRDAI had appointed administrator to take over the control of business of Sahara Life. IRDAI subsequently directed ICICI Prudential to take over the business of Sahara life. Sahara alleged that the IRDAI order was passed "to benefit a third party and in violation of principles of natural justice".
Challenging the order, Sahara Life said its business was continuously in profit and the company has been in "absolute and strict compliance of all regulatory norms/directions issued by IRDAI and that there has not been even a single case of any complaint of non-payment of any claim to any policy holder".
Though the regulatory requirement of solvency margin is only 1.5, Sahara Life has been maintaining solvency margin of more than 8 which reflects the sound financial health of the company," Sahara said.
"However, it was unfortunate that IRDAI has stopped Sahara Life from selling new life insurance policies and to underwrite new business and directed ICICI Prudential to take over the existing life insurance business portfolio of Sahara Life.
"IRDAI had not even framed any scheme, to safeguard the interest of policy holders, which is a statutory requirement before transferring the business to ICICI Prudential.
"The order was passed in great hurry and there was neither any transparency in the action of IRDAI nor the legal provisions were complied with," the group said.
Yesterday, the group had alleged that the regulator "wrongly concluded" that the promoter was no more 'fit and proper' and a sum of Rs 78 crore was syphoned of. It further said Sahara Life's asset was more than its liability and there is not a single complaint of non-payment by any policy holder.
Earlier in 2015, markets regulator Sebi had ordered cancellation of mutual fund licence of Sahara group.
The group had challenged this Sebi order also before the SAT, which last week upheld the regulator's order but granted a stay of six weeks to allow the company file an appeal before the Supreme Court, which is already hearing a long-running case regarding the group.
Sahara group chairman Subrata Roy had met IRDAI chairman on July 24 to seek more time to resolve the crisis at his group's life insurance arm.