Order under Reg. 38 of IRDA (Insurance Brokers) Regulation, 2002, Feb 2006
- Order No.IRDA/CB212/03
Ratio decidendi
The rule this decision rests on
Where an applicant for an insurance broker's licence has suppressed material information or furnished false information in the application, he thereby proves himself unfit to be granted the licence, and this is all the more so where he is to act as an intermediary dealing with the public. The antecedent information called for from an applicant is sought to verify, cross-check and judge the applicant's suitability for licensing, so that suppression or misstatement of material facts bearing on those antecedents is to be viewed seriously. Where a promoter and director of the applicant company has been prosecuted for false statements and misstatements in a public prospectus, and has been charged under the Special Court (Trial of Offences relating to Transactions in Securities) Act, 1992, the disqualification under section 42D of the Insurance Act, 1938 is attracted in respect of that person. Having regard to the nature and gravity of the charges established, cancellation of the broker's certificate of registration is the appropriate consequence.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
To The Principal Officer, M/s. Sage Insurance Brokers Pvt. Ltd., 11/11, Sarvapriya Vihar, NEW DELHI-110 016. Dear Sir, Re : Order under Reg. 38 of IRDA (Insurance Brokers) Regulations, 2002.
M/s Sage Insurance Brokers Pvt. Ltd. have been granted Insurance Brokers Composite License No.231 by this Authority. The Competent Authority had, in accordance with Regulation 36 read with Regulation 37 of IRDA (Insurance Brokers) Regulations, 2002, appointed Shri.J.P.Jain as the Enquiry Officer vide Notice No. IRDA/CB212/03 dated 1.8.05 to inquire into and report to the Authority on the allegations, inter alia, of suppression of material information while making an application to obtain certificate of registration as an insurance broker. Following is a summarization of the charges framed against you : 1. Non disclosure and concealment of material facts relating to Ms. Preeti N. Aggarwala, one of the promoters of the broking company, in the application submitted by you for grant of insurance brokers licence. 2. Submitting declaration to the effect that all questions have been truthfully and fully answered in the broking application which was materially incorrect. 3. Submitting affidavit dated 2nd August, 2003 by Mr. Rajit Seth to the effect that none of your Directors or key management personnel suffers from disqualifications under section 42D of Insurance Act, 1938 which was materially incorrect.
It may be noted that you had the opportunity of participating in the enquiry proceedings. A copy of the enquiry report was also sent to you vide this office letter No. IRDA/CB212/03 dated 23.11.05 and you were also called upon to show cause as to why the certificate of registration granted to you be not cancelled having regard to the nature and gravity of the charges established. You have vide your letter dated 14.12.05 submitted your comments on the findings of the Enquiry Officer and have also requested for a personal hearing to explain the position and make your submissions. You have been, vide our office letter No. IRDA/CB212/03 dated 3.1.06, given an opportunity of personal hearing before the undersigned on 16.01.2006. Pursuant to the personal hearing, you have also submitted certain documents in support of your contentions which were received on 24.01.2006. I have carefully examined the enquiry report, your submissions thereto and other material on record. From the materials on record it may be seen that the DCA (Department of Company Affairs) had launched prosecution proceedings against M/s. ICP Securities Limited for the alleged violation of Section 62, 63, 68 & 628 of the Companies Act, 1956 against the company and also its promoters namely Smt. Preeti N.Aggarwala, Shri. Kersasp S.Avari, Shri.Arminder Sawhney, Shri.Ranbir Singh Saluja.
The complaint was filed for criminal liability for a mistatement and false statement in the prospectus under Section 63 & 628 of the Companies Act, 1956. From the complaint of DCA it is seen that one of the Directors Mrs.Preeti N. Aggarwala was also charged for offences notified under the Special Court (Trail of offences in transactions relating to Securities) Act, 1992 (i.e. relating to Stock Market Scam of 1992). The company had also raised an amount of Rs.126 Lakhs through public by issue of shares and the aforesaid persons were signatories to the prospectus that invited subscriptions from the public. The above information clearly establishes that Ms. Preeti N. Aggarwala attracted the disqualification provision under section 42 D of Insurance Act, 1938. When information with regard to the antecedents of an applicant is called for by the Authority, it is intended to verify and cross check the information and to judge the suitability of the applicant for granting license as insurance broker. If the applicant indulges in suppresso veri and suggestio falsi, he proves himself unfit to be granted with a license, all the more so, if he is in the business of insurance as an intermediary dealing with public.
Furnishing of false information or suppression of material information in the application made to the Regulator to obtain license as an intermediary has to be viewed seriously. Therefore, having regard to the nature and the gravity of the charges established, I am of the considered view that the Certificate of Registration granted to M/s. Sage Insurance Brokers Pvt. Ltd. is required to be cancelled and is hereby cancelled.
(K.K.Srinivasan) Member
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