Irda, Sebi likely to approach Delhi High Court in 2 days

Regulators show urgency of purpose for a legally binding ruling on Ulip regulation.

In a bid to resolve the controversy over unit-linked insurance plan (Ulip) regulation soon, the Insurance Regulatory & Development Authority (Irda) has drafted the contours of the joint application and sent a copy to the market regulator, the Securities & Exchange Board of India (Sebi).

“We have written down the modalities of the joint application, sent a copy to Sebi and informed the government about it,” said a senior Irda official.

The two regulators are yet to decide on which court to approach, but they may approach the Delhi High Court (Delhi HC).

“We suggested to them that it should not offer any locational advantage to any of us. We have to agree to one location. We will not go to the Bombay or the Hyderabad High Court,” added the official. Earlier, they had agreed to go to the Bombay High Court.

Both regulators are likely to approach the court within 24 hours of Sebi’s reply.

“Once the agreement is signed, we will approach the court within 24 hours. They are expected to revert tomorrow. We are having some urgency, as whatever doubt has been created should be dispelled fast,” he added. Finance Minister Pranab Mukherjee has asked the two regulators to jointly seek a legally binding mandate from an appropriate court to resolve the controversy.

After Sebi banned 14 companies from selling Ulips on Friday last week, Irda on Saturday issued a circular asking insurance companies to ignore the Sebi order and carry on business as usual. On Tuesday, the market regulator had asked insurance companies not to issue new Ulips after April 9 without Sebi registration.

While IRDA maintains it has the jurisdiction to regulate Ulips, Sebi wants to regulate these products since they invest in the stock market. The capital market watchdog moved the Supreme Court and some high courts to guard against any ex-parte decision. This comes in the face of Irda’s decision of moving court to challenge a ban on Ulips.

According to sources, Sebi on Thursday filed caveats including in High Courts of Delhi, Bombay and Hyderabad.

The caveat came a day after the government asked both regulators - Sebi and Irda - to move court immediately to resolve differences over who will have jurisdiction over Ulips.