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2020 (3) TMI 573 - AT - SEBIViolation of Section 6A(4)(b)(iii) of the Insurance Act, 1938 - transfer of shares made without previous approval of the authority and, therefore, such transfer of shares are null and void ab initio - HELD THAT:- Referring to communication of IRDAI vide their letter dated February 4, 2020 and their reply filed before this Tribunal, it is apparently clear that damage control measures have been adopted by Respondent No. 1 subsequent to the impugned orders dated December 4, 2019 and December 27, 2019. The communication/order of IRDAI dated February 4, 2020 has largely diluted its own order dated December 4, 2019 and December 27, 2019. The stand of the Respondent No. 1 as depicted in paragraph No. 21 of their reply makes is apparently clear that prior to any transfer of the shares in question, the authority is required to be in a position to carry out due diligence in order to ascertain fulfillment of Fit and Proper criteria and financial soundness of the transferee. Stand of the respondent No. 1 that the use of the word "transfer" as depicted as per the provisions of Section 6A(4)(b)(iii) of the Insurance Act would also include any form of transfer of shares including a pledge is not being considered at this stage and is left open. Dispose of the appeal with the direction that the observation in the impugned orders that the transfer/pledge of the shares in question are null and void ab initio is incorrect and to that extent, the order is set aside. We also record that IDBI Trusteeship Services Ltd. Respondent No. 2 is holding the pledged shares as a custodian and will make every endevour to find a suitable buyer. As and when a suitable buyer is found suitable application would be made before IRDAI for appropriate approval to enable the IRDAI to carry out due diligence and to ascertain fulfillment of Fit and Proper criteria, financial soundness, etc. We also make it clear that so long as the IDBI Trusteeship Services Ltd. Respondent No. 2 is holding the shares in the capacity as a trustee/custodian, IDBI Trusteeship Services Ltd. Respondent No. 2 will not exercise any control over RGIC or make changes or have a say in the management or decision making process of RGIC or exercise any voting rights in respect of the said RGIC shares.
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