The embattled group, which was ordered to repay millions of dollars to investors in bonds that were ruled to have been mis-sold in a separate court case, alleged that the insurance regulator has “wrongly concluded” that Sahara Life was not “fit and proper” for business, Indian newspaper The Economic Times reported.
The country’s regulator last week asked ICICI Prudential (IPRU) to take over the life insurance business portfolio of Sahara Life.
IPRU said that it would not be a merger between the two companies but purely a transfer of customers.
Last month, IRDAI appointed its own officer as an official administrator of Sahara Life, who subsequently ordered the company to stop accepting new business.
In a statement following IRDAI’s order on 28 July, the group challenged the regulators’ action by saying Sahara Life is being “wrongfully” given to IPRU, adding that its business was continuously in profit and the company has been in absolute and strict compliance of all regulatory norms and directions issued by IRDAI.
It further said Sahara Life’s assets are more than its liabilities and there is not a single complaint of non-payment by any policyholder.
“However it is unfortunate that IRDAI has handed over Sahara Life’s business to insurance company ICICI Prudential,” the Sahara group said.
“The company has never acted in any manner prejudicial to the interest of the policy holders. Sahara will pursue its remedy against such approach of IRDAI in the court of law,” the statement added.
Time to breathe
Earlier in the week, the Securities Appellate Tribunal (SAT) provided one week’s relief to Sahara Life against the IRDAI order to transfer its life insurance policy portfolio to ICICI Prudential, by ordering the status quo to be kept until it completes its review and hearings on Monday, 7 August.
“The SAT is going to decide a landmark case in the liberalised Indian insurance industry. This is going to be an important case under the Insurance Act,” said D. Varadarajan, a Supreme Court advocate specialising in company, competition and insurance law.
“The harsh and extreme order of IRDAI against Sahara India Life can be likened to a staged shooting by trigger-happy and overzealous cops,” Varadarajan told Indian news agency IANS.
“How far the IRDAI is justified in acting on the basis of the report of the administrator who happens to be its own employee will be decided by SAT.”
Earlier in February, India’s Supreme Court ordered the seizure of the Aamby Valley hill city estate owned by the Sahara conglomerate.
In the long-running dispute, Sahara, a former main sponsor of India’s national cricket team, had been ordered to deposit the estate as part of a court order that it refund the sum it raised from millions of small investors in a bond selling scheme that was later deemed to be illegal by the Securities and Exchange Board of India (SEBI), another market regulator.
Sahara founder Subrata Roy was arrested in March 2014 for failing to appear at a hearing in the long-running dispute with SEBI, international news agency Reuters reported at the time.
Roy has been on parole since May 2016 after spending more than two years in jail.