The Securities Appellate Tribunal (SAT) has stayed an order of the Insurance Regulatory and Development Authority of India (Irdai) that suspended the registration of third-party administrator E-Meditek Insurance TPA.
SAT also directed IRDAI Member (Non-Life) to give an opportunity of hearing to E-Meditek “as expeditiously as possible and pass such order as he deems fit”. In its order, the Tribunal said Irdai had passed the order without giving an opportunity of hearing to E-Meditek. Irdai, in an order passed on Tuesday, said it had received a whistle-blower complaint on April 4, 2017 against E-Meditek, accusing the TPA of misconduct, corruption, malpractice, money laundering and financial irregularities.
According to SAT, on receipt of a whistleblower complaint on September 4, 2017, Irdai officials visited the office of E-Meditek between November 13 and 17, 2017 and inspected the books of accounts. After analysing the books of account the Member (Non-Life) found serious violations committed by the company and accordingly by the impugned order dated March 20, 2018 suspended certificate of registration granted to E-Meditek by recording a finding that permitting the appellant to continue their activities as TPA will have adverse impact on the policyholders and insurers, the Tribunal said.
“The basic argument advanced on behalf of E-Meditek is that under Regulation 16(3) certificate of registration can be suspended without notice only if the four conditions are fulfilled. In the present case, it is contended that none of the four conditions are satisfied and therefore the impugned order deserves to be stayed forthwith,” SAT said.
“The ex-parte order is passed after four months delay on March 20, 2018. The very fact that IRDAI could wait for four months after conducting inspection clearly shows that immediate action as contemplated under Regulation 16(3) of the 2016 Regulations was not warranted in the present case,” the Securities Appellate Tribunal said.
“It is the case of the appellant that in the present case the whistle-blower would be none other than Sunil Sharma who was Vice President (Claims) against whom and several others, the appellant (E-Meditek) has filed criminal case for defrauding the company even before the inspection by IRDAI commenced,” SAT said. In these circumstances, assuming that there are some inconsistencies/ irregularities noticed in the accounts maintained by the appellant during the course of inspection the proper course for IRDAI is to give an opportunity of hearing and pass appropriate order thereon,” SAT said.