Marsh India Insurance Brokers Private Limited vs M/S Atkins Special Risks Ltd.

CIVIL APPEAL NO(S).4678-4681 OF 2018

MARSH INDIA INSURANCE BROKERS PRIVATE LIMITED …APPELLANT(S)

VERSUS

M/S ATKINS SPECIAL RISKS LTD. & ORS. …RESPONDENT(S)

JUDGMENT

ANIRUDDHA BOSE, J.

The appellant before us is an Insurance and Re-insurance

Brokerage firm questioning the legality of an order passed by the

Securities Appellate Tribunal (“Tribunal”), Mumbai on 16 th March

2018. By that order, the Tribunal has set aside a decision of the

Insurance Regulatory and Development Authority of India (“IRDA”)

dismissing a complaint made by the first respondent alleging

adoption of illegal means by the appellant in obtaining business of

international re-insurance cover of another firm, Jagson

International Limited (“Jagson”) on yearly brokerage/commission. Signature Not Verified Digitally signed by SNEHA DAS Date: 2023.04.05 16:27:27 IST Reason: The first respondent had such business with Jagson for the years

between 2002-2012.

2. By the impugned order, the Tribunal has directed the IRDA, in

effect, to revisit the complaint made by the respondent no.1 and

pass a fresh order. Substance of the complaint made by the first

respondent, also an Insurance and Re-insurance Brokerage entity

was that the appellant had paid bribe to one Mr. Jagdish Gupta

(“respondent no.5”), the Chairman of Jagson for obtaining the

brokerage contract. Jagson is involved in the business of oil

exploration and such insurance is mainly with regard to its

exploration equipments.

3. The basis of complaint of the first respondent was certain

emails referred to by the first respondent by which the respondent

no.5 allegedly had made demand for illegal gratification in exchange

of handing over the brokerage contract to the appellant. There is

also allegation against the respondent no.5 of informing the

respondent no.1, through telephonic conversation, about demand of

bribe from the appellant. We find from pleadings that there was

increase in the number and size of rigs of Jagson subsequent to the

year 2012, which required enhanced coverage. Contention of the

respondent represented by Mr. T. Srinivasa Murthy, learned counsel

is that the appellant has used an India based direct insurance broker to pay money to respondent no.5, as part of the appellant’s

commission to India. The case of the first respondent is that the

payment, as is alleged to have been made to the respondent no.5, is

violative of the provisions of Section 41(1) of the Insurance Act,

1938 as also Clause 37(1) of the Insurance Regulatory and

Development Authority (Insurance Brokers) Regulations, 2013.

4. A complaint to that effect was made with the IRDA on 11 th

August 2015 on behalf of the first respondent, which was followed

by a writ petition in the High Court (at that time it was the High

Court for the State of Telangana and the State of Andhra Pradesh)

seeking an inquiry in respect of the said complaint. This writ

petition, registered as W.P. No. 27220 of 2017, was disposed of on

19th September 2017 with a direction on the IRDA to consider the

complaint of M/s. Atkins Special Risk Limited by following due

process; preferably within a period of four weeks from the date of

receipt of copy of the Order. In the ensuing hearing, IRDA disposed

of the complaint finding lack of any evidence substantiating the

complaint. In its order passed on 9 th January 2018, P.J. Joseph,

Member (Non-Life) of IRDA who heard the complaint recorded that it

was established that no proof of evidence had been brought in by

the representative of the first respondent to prove his allegations

and the authority could not further proceed with the complaint.

5. The Insurance Regulator i.e., IRDA, represented by Mr. Arvind

Datar, learned senior counsel has reiterated this stand before us.

6. Dr. Abhishek Manu Singhvi, learned senior counsel appearing

for the appellant has argued that there was no foundation of the

complaint made by the first respondent. As a result, there was no

scope of interference by the Tribunal with the order of the IRDA.

Drawing our attention towards various e-mails referred to by Mr.

Murthy, it has been argued on behalf of the appellant that none of

them related to any illegal demand made by the appellant from

Jagson or respondent no.5. Barring a statement of a telephonic

conversation of one Mr. Graham Atkins, managing director of the

respondent no.1, in which respondent no.5 was alleged to have

mentioned that appellant had agreed to pay him certain sum of

money to obtain the business, there was no other material showing

any illegality being committed by his client in obtaining the contract

from Jagson.

7. Mr. Murthy on the other hand submitted that the scope and

power of the investigation of IRDA is very wide and his client had

obtained an investigation report by a private investigator which

hinted at ‘illegality’ being committed by the appellant.

8. Argument was also made as to whether the IRDA could enter

into this controversy having regard to the scope of their intervention

delineated in Section 14(2) of the Insurance Regulatory and

Development Authority Act, 1999.

9. In this judgment, however, we are not getting into that

controversy as regards jurisdiction of the IRDA to conduct

investigation as such investigation was directed by an order of the

High Court, particulars of which we have given earlier. So far as

jurisdiction or power of IRDA is concerned, we accept the

submission of Mr. Murthy that it is of wide amplitude.

10. But, on going through the materials made available before us

at the time of hearing, we are of the opinion that there was no

occasion for interfering with the order of the IRDA by the Tribunal.

It is a fact that the order of the Tribunal is in the nature of a

remand order and this order in effect has only directed a fresh

inquiry. Mr. Murthy had argued that so far as his client’s complaint

is concerned, they had discharged their onus by raising sufficient

suspicion as regards the deal between the respondent no.5 and the

appellant. But, we find that barring the fact that the appellant had

been given the brokerage contract, there is no other cogent material

which would warrant a detailed investigation. The Tribunal has, ex- facie, gone wrong in observing that the respondent no.5 had relied

on documentary evidence in support of the complaint. We have

referred to the nature of the documents but we accept the argument

of Mr. Datar that these cannot constitute materials to trigger off an

inquiry on the aspect of bribery being indulged into by the appellant

to obtain the business from Jagson.

11. The fact finding body has already come to its conclusion on

lack of evidence. In the given circumstances, we do not find any

useful purpose that would be served in subjecting the appellant or

their contract with Jagson to another round of inquiry. In the order

under appeal, the Tribunal has observed that the complaint showed

that the appellant had relied on documentary evidence in support

of the contention that Jagdish Gupta had sought bribe and was

bribed by the officers of Marsh for diverting their re-insurance

business. But we fail to find any such document from which such a

conclusion could be reached.

12. Under these circumstances, we set aside the order of the

Tribunal and allow the present appeals. The order of the IRDA

passed on 9th January 2018 is sustained.

13. Pending application(s), if any, shall stand disposed of.

…………………………………………J. [ANIRUDDHA BOSE]

…………………………………………J. [SUDHANSHU DHULIA]

NEW DELHI;

MARCH 24, 2023.