New clause (16C) of section 2 inserted by the Amendment Act defines ‘Securities Appellate Tribunal’ as under: (16C). Securities Appellate Tribunal means the Securities Appellate Tribunal established under section 15K of the Securities and Exchange Board of India Act, 1992 (15 of 1992). The Amendment Act has adopted ‘the SEBI – Model of adjudication and appeals’ recommended by the 190th Report of the Law Commission with the following modifications:
Adjudication of complaints by policy holders against the insurers shall be by IRDAI whereas the Law Commission had recommended adjudication of these complaints by a Grievance Redressal Authority.
Appeals against orders of IRDAI (on policy holders complaints) and against order of adjudicating officers imposing penalties, shall be heard by SAT whereas Law Commission had recommended setting up Insurance Appellate Authority (IAT) to hear these appeals.
The Amendment Act provides for appeal against SAT’s order to Supreme Court except in case of SAT’s order under section 6B(2). The Recommendations of the 190th Report of Law Commission in this regard are as under
The Securities and Exchange Board of India Act, 1992 (SEBI Act) established the Securities and Exchange Board of India (SEBI) is entrusted the functions of a regulator of the stock markets. Chapter VI-A of the said Act provides for penalties in adjudication.
Sections 15A and 15H provide for penalties for contravention or failure to follow the regulations prescribed by the SEBI and penalties will be adjudicated by adjudicating officers appointed under section 15-I of the Act. The adjudicating officers shall be appointed from amongst the officers of the SEBI not below the rank of a Division Chief who will hold an inquiry in the prescribed manner and after giving a reasonable opportunity of being heard, impose a penalty. Section 15J spells out the factors to be taken into account by the adjudicating officer.
Appeals from the orders of the Adjudicating Officers will lie to the Securities Appellate Tribunal (SAT) presided over by a sitting or a retired Judge of the Supreme Court or a sitting or a retired Chief Justice of a High Court.
The other Members of the Tribunal shall be appointed from persons who have expertise in dealing with problems relating to securities market and having qualifications and experience of corporate law, securities law, finance, economics and accountancy. Under s.15 Z of the SEBI Act, as amended in 2002, a further appeal to the Supreme Court from the decision of the SAT has been provided.
It is proposed to adopt SEBI model with certain modifications and additions. In addition to redress the grievance of the policy holders, it is proposed to provide for the establishment of a three-member Grievance Redressal Authority (GRA) in the major cities to hear complaints from policy holders/consumers against the insurers. The GRA will be presided over by a sitting or a retired district judge and in addition will consist of two members who have expertise in the field of insurance.
Further, on similar lines as the SEBI Act, it is proposed to provide for adjudication in matters involving contravention of the Act, Rules and Regulations made by the IRDA with maximum penalties specified in the Insurance Act, 1938 itself. In addition, ss. 102-105C of the Insurance Act 1938 prescribe penalties for contravention of or default in compliance with the provisions of the Act.
It appears from the reading of the provisions that the penalty will be determined by the criminal courts since it appears to be in the nature of a fine. It is proposed to modify these provisions and provide that these penalties will be levied after an adjudication/inquiry by adjudicating officers on the pattern of the SEBI Act.
These adjudicating officers will be appointed from amongst the officers of the IRDA above a certain level like the Adjudicating Officers of the SEBI. The Adjudicating Officers will be positioned in different locations in the country to facilitate the widest geographical access to insurers, insurance intermediaries and insurance agents.
It is also proposed to provide for the establishment of an Insurance Appellate Tribunal (IAT) to hear appeals from the orders of the adjudicating officers and also from the decisions of the GRAs. The IAT will also hear appeals from the orders of the IRDA on matters involving insurers and insurance agents including registration and grant of licences. The IAT will have a retired or sitting judge of the Supreme Court or a retired or sitting Chief Justice of a High Court as its Presiding Officer.
Two other members of the IAT will be persons of integrity, ability and standing and having requisite qualifications and experience in the field of insurance. It is proposed that there should be a further appeal to the Supreme Court from the decisions of the IAT similar to s.15Z of the SEBI Act.