TMI Blog2020 (3) TMI 573X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a (hereinafter referred to as 'IRDAI') - respondent No. 1 by which IRDAI held that the transfer of shares made by respondent No. 2 was in violation of Section 6A(4)(b)(iii) of the Insurance Act, 1938 (hereinafter referred to as 'Insurance Act') read with Regulation 3 of the Insurance Regulatory Development Authority of India (Transfer of Equity Shares of Insurance Companies) Regulations, 2015 (hereinafter referred to as 'Transfer of Equity Shares Regulations'), as the same was made without previous approval of the authority and, therefore, such transfer of shares are null and void ab initio. By the impugned order dated December 27, 2019 IRDAI reiterated its directions contained in its earlier order of December 4, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IDBI Trusteeship Services Ltd. (Respondent No. 2) is a duly registered debenture trustee registered with SEBI and acts as a debenture trustee for the issue of Non-Convertible Debentures (NCDs) issued by Reliance Home Finance Ltd. (hereinafter referred to as 'RHFL'). In this regards, a debenture trust deed dated January 10, 2018 was issued between RHFL and IDBI Trusteeship Services Ltd. - Respondent No. 2. 5. RHFL issued an Information Memorandum dated March 28, 2018 for private placement for issue of 8000 NCDs aggregating ₹ 400 crores. Appellant No. 2 subscribed to 8000 NCDs and currently holds 6369 NCDs. These NCDs were to mature on June 28, 2019. RHFL were unable to redeem the NCDs and consequently, RHFL requested Appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber 31, 2019, Appellant No. 1 exercised its put option to sell 6369 NCDs for approximately ₹ 331 crore and gave notice to Reliance Capital on October 11, 2019 to purchase the NCDs in accordance with the guarantee deed. Upon failure of Reliance Capital to purchase the NCDs of RHFL, Appellant No. 1 wrote to IDBI Trusteeship Services Ltd. Respondent No. 2 to invoke the pledge under the pledge agreement on October 17, 2019. Accordingly, IDBI Trusteeship Services Ltd. Respondent No. 2 issued a notice to Reliance Capital on October 18, 2019 and, on October 24, 2019, invoked the pledge of 25,15,49,920 shares of RGIC. Based on the aforesaid, Appellant No. 1 informed IRDAI Respondent No. 1 vide letter dated November 20, 2019 with regard to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsfer of RGIC shares to an identified confirmed eligible buyer, suitable application for approval would be made to IRDAI in accordance with the applicable Insurance laws. 9. Respondent No. 2 i.e. IDBI Trusteeship Services Ltd. vide letter dated January 14, 2020 also reiterated that the holding of the shares of RGIC by them in their demat account was in the capacity as a trustee and that the said share have not been transferred to them. 10. An affidavit has also been filed by Respondent No. 2 before this Tribunal giving an undertaking that prior to the transfer of shares by way of sale to a transferee, Respondent No. 2 will take approval from IRDAI in accordance with law. 11. Based on the aforesaid letter sent by the appellant, IRDA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lude any form of transfer of shares including a pledge is not being considered at this stage and is left open. 14. We however 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 soundne ..... X X X X Extracts X X X X X X X X Extracts X X X X
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