The Securities Appellate Tribunal (SAT) on Thursday upheld the appointment of an administrator for Sahara Life Insurance by the IRDAI and a ban on new business in the segment.

But it asked the Insurance Regulatory and Development Authority of India (IRDAI) to give a fresh hearing to Sahara with regard to the transfer of business to ICICI Prudential Life Insurance and pass an order in three months.

“We are studying the order and will decide the next course of action. The Tribunal has upheld the control over the business in the hands of the administrator but has said we must give another hearing.

“A view will be taken on the larger policy issues since for the IRDAI this is not just a situation in one case but a stand that will have implications in all future cases,” said Somasekhar Sundaresan, counsel, IRDAI.

In June last year, IRDAI took over the insurance business of Sahara and said that the Subrata Roy-led firm was ‘acting in a manner’ prejudicial to the interest of subscribers. RK Sharma, general manager, IRDAI, was appointed as the administrator. Later, IRDAI allowed ICICI Prudential Life Insurance Co to take over Sahara’s insurance business.

Sahara challenged IRDAI’s orders in SAT on the grounds that the regulator did not follow the principles of natural justice. IRDAI was of the view that Sahara was not interested in reviving its business.

The insurance regulator also added that it observed two risks at play at Sahara — financial and governance. Financial risks were in the form of siphoning of funds from the books of the company, and governance due to lack of a chairman for four years.

It further alleged that ₹78 crore was siphoned off from the books of the firm in 2014-15 and transferred to the parent company Sahara India on the pretext of opening 650 new offices, in violation of the Insurance Act.

While upholding the appointment of the administrator by IRDAI into Sahara’s insurance business, SAT asked the insurance regulator to re-hear the case of Sahara with regard to transfer of its business to ICICI Prudential Life Insurance.

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