MARSH INDIA INSURANCE BROKERS PRIVATE LIMITED versus M/S ATKINS SPECIAL RISKS LTD. & ORS. on 24 March 2023

[2023] 9 S.C.R. 1301 : 2023 INSC 293

1301

MARSH INDIA INSURANCE BROKERS PRIVATE LIMITEDA

v.

M/S ATKINS SPECIAL RISKS LTD. & ORS.

(Civil Appeal No(s).4678-4681 of 2018)

MARCH 24, 2023

B

[ANIRUDDHA BOSE AND SUDHANSHU DHULIA, JJ.]

Insurance Act, 1938: s.41(1) – Insurance Regulatory andDevelopment Authority (Insurance Brokers) Regulations, 2013– Clause 37(1) – Complaint by the first respondent-insurancebroker alleging adoption of illegal means by appellant inobtaining business of international reinsurance cover of J firm,it paid bribe to Chairman of the J firm to obtain brokeragecontract, thus the appellant violated s.41(1) of the Act of 1938and Clause 37(1) of the 2013 Regulations – Basis of the complaintwas certain emails by which the Chirman allegedly made demandsfor illegal gratification in exchange of handing over thebrokerage contract to the appellant as also a telephonicconversation against the Chaiman informing the respondent no.1 about demand of bribe from the appellant – Dismissed by theRegulatory Authority-IRDA – Tribunal set aside the decision ofthe IRDAI – Held: Order of the tribunal is in the nature of aremand order which in effect only directed a fresh inquiry andsince the fact finding body has already come to its conclusionon lack of evidence, no useful purpose would be served insubjecting the appellant or their contract with J to another roundof inquiry – Barring the fact that the appellant had been giventhe brokerage contract, no other cogent material showing anyillegality being committed by the appellant in obtaining thecontract from J – Order of the tribunal set aside – Order of theIRDA is sustained – Insurance Law.

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CIVIL APPELLATE JURISDICTION : Civil Appeal Nos.4678-4681 of 2018.

From the Judgment and Order dated 16.03.2018 and 21.03.2018of the Securities Appellate Tribunal, Mumbai in Misc. ApplicationNo.02 of 2018 and IRDA Appeal No.02 of 2018.

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Dr. Abhishek Manu Singhvi, Gopal Jain, Sr. Advs., IndranilDeshmukh, Raunak Dhillon, Ms. Isha Malik, Ms. Saloni Kapadia,Ms. Niharika Shukla, M/s Cyril Amarchand Mangaldas, Advs. forthe Appellant.

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AArvind Datar, Sr. Adv., T. Srinivasa Murthy, Senthil Jagadeesan,Ms. Shruti Iyer, Ms. Nishita Jagetia, M/s Bhave and Associates,Harihar Bhave, Dr. Shashwat Bajpai, Rohit Amit Sthalekar, Advs.for the Respondents.

The Judgment of the Court was delivered by ANIRUDDHA BOSE, J.B

The appellant before us is an Insurance and Re-insuranceBrokerage firm questioning the legality of an order passed by theSecurities Appellate Tribunal (“Tribunal”), Mumbai on 16[th ]March2018. By that order, the Tribunal has set aside a decision of theInsurance Regulatory and Development Authority of India (“IRDA”)Cdismissing a complaint made by the first respondent alleging adoptionof illegal means by the appellant in obtaining business of internationalre-insurance cover of another firm, Jagson International Limited(“Jagson”) on yearly brokerage/commission. The first respondenthad such business with Jagson for the years between 2002-2012.

2. By the impugned order, the Tribunal has directed the IRDA,Din effect, to revisit the complaint made by the respondent no.1 andpass a fresh order. Substance of the complaint made by the firstrespondent, also an Insurance and Re-insurance Brokerage entitywas that the appellant had paid bribe to one Mr. Jagdish Gupta(“respondent no.5”), the Chairman of Jagson for obtaining thebrokerage contract. Jagson is involved in the business of oil explorationEand such insurance is mainly with regard to its exploration equipments.

3. The basis of complaint of the first respondent was certainemails referred to by the first respondent by which the respondentno.5 allegedly had made demand for illegal gratification in exchangeof handing over the brokerage contract to the appellant. There isFalso allegation against the respondent no.5 of informing the respondentno.1, through telephonic conversation, about demand of bribe fromthe appellant. We find from pleadings that there was increase in thenumber and size of rigs of Jagson subsequent to the year 2012, whichrequired enhanced coverage. Contention of the respondentrepresented by Mr. T. Srinivasa Murthy, learned counsel is that theGappellant has used an India based direct insurance broker to paymoney to respondent no.5, as part of the appellant’s commission toIndia. The case of the first respondent is that the payment, as isalleged to have been made to the respondent no.5, is violative of theprovisions of Section 41(1) of the Insurance Act, 1938 as also Clause37(1) of the Insurance Regulatory and Development AuthorityH(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 followedby a writ petition in the High Court (at that time it was the HighCourt 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 19[th]September 2017 with a direction on the IRDA to consider the complaintof M/s. Atkins Special Risk Limited by following due process;preferably within a period of four weeks from the date of receipt ofcopy of the Order. In the ensuing hearing, IRDA disposed of thecomplaint 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 wasestablished that no proof of evidence had been brought in by therepresentative of the first respondent to prove his allegations and theauthority 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 beforeus.

6. Dr. Abhishek Manu Singhvi, learned senior counselappearing for the appellant has argued that there was no foundationof the complaint made by the first respondent. As a result, there wasno 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 ofthem related to any illegal demand made by the appellant from Jagsonor respondent no.5. Barring a statement of a telephonic conversationof one Mr. Graham Atkins, managing director of the respondent no.1,in which respondent no.5 was alleged to have mentioned that appellanthad agreed to pay him certain sum of money to obtain the business,there was no other material showing any illegality being committedby his client in obtaining the contract from Jagson.

7. Mr. Murthy on the other hand submitted that the scope andpower of the investigation of IRDA is very wide and his client hadobtained an investigation report by a private investigator which hintedat ‘illegality’ being committed by the appellant.

8. Argument was also made as to whether the IRDA couldenter into this controversy having regard to the scope of theirintervention delineated in Section 14(2) of the Insurance Regulatoryand Development Authority Act, 1999.

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A9. In this judgment, however, we are not getting into thatcontroversy as regards jurisdiction of the IRDA to conductinvestigation as such investigation was directed by an order of theHigh Court, particulars of which we have given earlier. So far asjurisdiction or power of IRDA is concerned, we accept the submissionof Mr. Murthy that it is of wide amplitude.B

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10. But, on going through the materials made available beforeus at the time of hearing, we are of the opinion that there was nooccasion 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 remandorder 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,Cthey had discharged their onus by raising sufficient suspicion asregards the deal between the respondent no.5 and the appellant. But,we find that barring the fact that the appellant had been given thebrokerage contract, there is no other cogent material which wouldwarrant a detailed investigation. The Tribunal has, ex-facie, goneDwrong in observing that the first respondent had relied on documentaryevidence in support of the complaint. We have referred to the natureof the documents but we accept the argument of Mr. Datar thatthese cannot constitute materials to trigger off an inquiry on the aspectof bribery being indulged into by the appellant to obtain the businessfrom Jagson.E11. The fact finding body has already come to its conclusionon lack of evidence. In the given circumstances, we do not find anyuseful purpose that would be served in subjecting the appellant ortheir contract with Jagson to another round of inquiry. In the orderunder appeal, the Tribunal has observed that the complaint showedthat the first respondent had relied on documentary evidence in supportFof the contention that Jagdish Gupta had sought bribe and was bribedby the officers of Marsh for diverting their re-insurance business.But we fail to find any such document from which such a conclusioncould be reached.

12. Under these circumstances, we set aside the order of theTribunal and allow the present appeals. The order of the IRDA passedGon 9[th]January 2018 is sustained.

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

Nidhi Jain

Appeals allowed.

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