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2018 (2) TMI 1133 - AT - Companies LawScheme of the Insurance Act read with that of IRDA Act - appointment of Administrator to manage the affairs of the Insurer under the control of the IRDAI by invoking powers conferred upon it under provisions of Section 52 (A) of the Insurance Act, 1938 - transfer the insurance business of the Appellant to an outside insurer - Held that:- The report and its outcome have potentially and adversely affected the appellant, therefore, the IRDAI must have supplied a copy of the report to the appellant before passing the impugned order dated July 28, 2017 seeking to transfer the insurance business of the Appellant to an outside insurer, namely – ICICI Prudential Life Insurance Co. Ltd., to enable the appellant to make a representation on the Administrator’s report in question. This action of the IRDAI is clearly in breach of the principles of natural justice. The same cannot be countenanced when we look at the larger scheme of the Insurance Act and the place the Respondent occupies in regulating the insurance business in the country. The impugned order dated July 28, 2017, therefore, deserves to be quashed and set aside and we order accordingly. In fact, it is not the case of the IRDAI that whenever an Administrator is appointed to manage the affair of an Insurance Company on account of certain alleged irregularities, transfer and merger of the said Insurer with another outside Insurer is the only consequence which shall invariably flow. IRDAI must apply the principles of proportionality before resorting to such extreme measures of transfer, merger or winding up of an insurance business altogether. The action must commensurate with the nature of the violation in a given case. IRDAI is obligated to look into as to whether the violation is technical, venial in nature or is a serious violation which would gravely jeopardize the interest of policyholders of the said Insurance Company. In the instant case, the order is passed mechanically rather than by due application of mind on the facts and circumstances of the case, including the overall scheme of the Insurance Act read with that of IRDA Act. While upholding the appointment of the Administrator and the consequential order we hereby quash the impugned order impugned and restore the whole matter to the file of the IRDAI with a direction to proceed from the stage of seeking a representation/response from the Appellant on the Administrator’s report in question as well as providing opportunity of being heard to the Appellant in consonance with the principles of natural justice. During the fresh hearing to be offered by the IRDAI to the appellant under this order, any of the parties, if it wishes to produce some documents or summon it from the other party, the said request shall also be considered as per law by affording an opportunity in this regard. IRDAI shall make an endeavor to complete the above said process as per law preferably within a period of three months from the date of receipt of the appellant’s reply/response to the Administrator’s report in question as per law and after giving opportunity of hearing to the Appellant.
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