1 os-wpl-2179-10 pdp IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION (LODGING) NO. 2179 OF 2010 1. Willis India Insurance Brokers Pvt. Ltd. and ors. .. Petitioners Vs. Insurance Regulatory and Development Authority and ors. .. Respondents Mr. Navroz Seervai, Senior Counsel a/w Mr. Shyam Mehta and Mr. Ranbeer Singh i/by M/s. Bachubhai Munim and Co. for petitioners. Mr. Zal Andhyarjuna a/w Mr. Santosh Srivas i/by Earnest Legal Associates for IRDA – respondent nos.1 and 2. Mr. Suresh Kumar a/w Mrs. Purnima Awasthi for respondent no.3 – UOI. Mr. I. M. Chagla, Senior Counsel with Mr. Nikhil Sakhardande, Mr. Tejas Karia, Mr. Karan Mehta and Mr. Tapan Deshpande i/by Amarchand Mangaldas and S.A. Shroff and Co. for respondent no.4. CORAM: B. H. MARLAPALLE & U. D. SALVI, JJ. OCTOBER 21, 2010. P.C. 1. This petition filed under Article 226 of the Constitution 2 os-wpl-2179-10 impugns the order dated 1/9/2010 passed by respondent no.2 and on behalf of the respondent no.1 – Authority, thereby rejecting the application submitted by the petitioner no.1-company for renewal of its license. It is also not in dispute that the petitioner no.1-company was issued a show cause notice under the signature of respondent no.2 on 6/1/2010 and the and the petitioner no.1-company has submitted its reply to the show cause notice on 15th and 20th January, 2010. While the decision of the show cause notice was pending, the impugned order has been passed. 2. It is also not in dispute that petitioner no.1 – company is the joint venture of petitioner no.2 and respondent no.4 with petitioner no.2 having 74% share holding and respondent no.4 with 26% share holding in the said joint venture. Mr. Chagla, the learned Senior Counsel, has placed before us a copy of the joint venture agreement, which also indicates that the petitioner no.1 – company would have five directors, three of them being petitioner nos.3 to 5 and the remaining two, the nominees of respondent no.4. It was also brought to our notice that on 19/5/2010, the respondent no.4 has issued a notice of termination of the joint venture agreement and its nominee directors have resigned from the Board of petitioner no.1 on 30/9/2010. Mr. Chagla also informed that Company 3 os-wpl-2179-10 Petition No.369 of 2010 has been filed by respondent no.4 for the widening of the joint venture i.e. petitioner no.1, before this court. 3. Be that as it may, Mr. Andhyarjuna the learned counsel for respondent nos.1 and 2, by relying upon the scheme of Regulation No.14 of the Insurance Regulatory and Development Authority (Insurance Brokers) Regulations 2002 (for short the Regulations 2002), submitted that he has instructions to state before us the decision of the authority to hear the petitioner no.1-company afresh for renewal of its license and more so when the proviso below Regulation No.14(1) of the said Regulations states that no renewal application shall be rejected unless the applicant has been given a reasonable opportunity of being heard. He also stated, on instructions, that the show cause notice dated 6/1/2009 will also stand withdrawn when the petitioner no.1-company is being heard afresh on the application for renewal of its license. 4. The petitioner no.1-company was initially issued a license by the authority i.e. the Insurance Regulatory and Development Authority constituted under the Insurance Regulatory and Development Authority Act, 1999 (for short the Act) for the period from 3/6/2003 to 2/4/2006 4 os-wpl-2179-10 under the Regulations 2002 and the said license was subsequently extended upto 2/4/2009. Without waiting for the expiry of the renewed license period, the petitioner no.1-company has submitted an application for renewal of its license beyond 2/4/2009, on 16/2/2009 and as noted earlier the said application has been rejected by the impugned order. 5. Mr. Seervai, the learned Senior Counsel appearing for the petitioners, has raised various grounds in support of his challenge to the impugned order, including the grounds that respondent no.2 did not have the authority in law to pass the impugned order, the order was required to be passed by the authority or its properly delegated body and not an officer of the authority. He also alleged that the impugned order has been passed under malafide intentions and it is founded on the complaints made by the respondent no.4. It was also pointed out that without taking the show cause notice to its logical conclusion, it was not permissible to pass the impugned order and for the very same reasons for which the show cause notice was issued. 6. We need not deal with all these issues raised by Mr. Seervai in support of his challenge to the impugned order and more so when Mr. 5 os-wpl-2179-10 Andhyarjuna, the learned counsel appearing for respondent nos.1 and 2 has put before us a fair and reasonable proposal that the show cause notice and the impugned order would be withdrawn and the petitioner no.1-company will be given a reasonable opportunity of hearing when the renewal application is being considered afresh. He also submitted that the application will be considered on its own merits. The only issue that remains to be resolved is about the authority to hear and decide the renewal application. Without going into the rival arguments advanced before us, we have referred to the definition of “Authority” under Regulation No.2(c) of the Regulations 2002, Sections 3, 4, 23 and 26 of the Act and we are satisfied that the application, in this case and without making precedence in law, should be heard by a committee of two members of respondent no.1. As per Section 4 of the Act, the Authority consists of (a) a Chairperson, (b) not more than five whole-time members and (c) not more than four part- time members, to be appointed by the Central Government. Section 23(2) of the Act states that the Authority may, by a general or special order in writing, also form Committees of the members and delegate to them the powers and functions of the Authority as may be specified by the regulations. 6 os-wpl-2179-10 7. Mr. Seervai then submitted that the petitioner no.1-company be allowed to renew the policies and more particularly those which are likely to come to an end during this month or the next month. He has placed before us a list of such clients/accounts. We have noted that at least in the case of five of them, the policy period has expired by now. Regulation No.15 of the Regulations 2002 states that in case the application for renewal is refused by the Authority, on and from the date of receipt of the communication to the said effect, the applicant shall cease to act as an insurance broker. However, the insurance broker shall continue to be liable to provide services in respect of contracts already entered into through him/it and such a service shall continue only upto the period of expiry of those current contracts, details of which shall be disclosed to the Authority on receipt of the communication under regulation 13. It is also not in dispute that the impugned order was received by the petitioners on 6/9/2010 and from there onwards the petitioner no.1 has not been allowed to renew any insurance account/policy. We are, therefore, not inclined to allow the prayer made by Mr. Seervai except the statutory obligation as set out in Regulation No.15. 8. We must also deal with the prayers made by Mr.Chagla for 7 os-wpl-2179-10 respondent no.4-company. He submitted that in view of the peculiar circumstances and the uncertainty regarding the fate of the joint venture, respondent no.4 must also be heard by the Authority when the application dated 16/2/2009 is being considered afresh. Mr.Chagle has referred to various clauses of the joint venture agreement and also submitted that irrespective of the percentage of the share holding, both petitioner no.2 and respondent no.4 are equally responsible for the decision making on behalf of the petitioner no.1-company. However, Regulation No.14(1) contemplates that a reasonable opportunity of being heard is given to the applicant and the application has been submitted by the petitioner no.1 – company way back on 16/2/2009 and if the parties have fallen apart thereafter, it will not be permissible for this court to say that respondent no. 4 – a joint venture partner must also be heard. 9. Mr. Andhyarjuna informed us that the de novo hearing process and the decision would be completed within five weeks. In our opinion, the application for renewal has been pending for a fairly long period and in the peculiar circumstances of this case, we deem it appropriate to shorten the period suggested by Mr. Andhyarjuna. 8 os-wpl-2179-10 10. Hence, we pass the following order:- (a) The show cause notice dated 6/1/2010 and the impugned order dated 1/9/2010 stand withdrawn by the Authority (respondent no.1) and the renewal application dated 16/2/2009 stands restored to the file of respondent no.1. (b) A Committee of two members of the respondent no.1 and preferably those who were not associated with this matter, shall hear and decide the renewal application dated 16/2/2009 on its own merits and without being influenced by any of the grounds set out in the impugned order. (c) The Committee shall be constituted by the respondent no.1 within one week from today and the said Committee shall complete the hearing within two weeks from its constitution and pass the final order within one week so that the whole process is completed within four weeks from today. (d) The rights of petitioner no.1-company under Regulation 9 os-wpl-2179-10 No.15 of the Regulations 2002 will continue to operate during the intervening period and we have declined the prayer to allow the petitioner no.1 to renew insurance policy/account that may be due for renewal any time from now onwards. 10. By way of clarifications, we state that all issues on merits are left open and we have noted down the undertaking of Mr.Seervai that the constitution of the Committee and its authority to decide the renewal application shall not be brought in question by the petitioners in future. 11. Petition stands disposed off accordingly. 12. All concerned to act on an authenticated copy of this order. (U.D. SALVI, J.) (B. H. MARLAPALLE, J.)