Bench suggests ‘super regulator’ to sort out Sebi, Irda differences
The Supreme Court (SC) today signalled a cooling off period of more than two months in the turf war between the Securities and exchange Board of India (Sebi) and the Insurance Regulatory and Development Authority (Irda) over regulating unit-linked insurance plans (Ulips). The SC issued notices to the Centre, Irda and the 14 life insurance companies which were barred by Sebi from issuing fresh Ulips.
The SC will take up the issue of transfer of related cases pending in Bombay and Allahabad high courts on July 8. The transfer was sought by Sebi yeterday.
Meanwhile, all the parties, including Irda, have been allowed time to file replies.
Public interest suits filed in the two high courts will not be heard anytime soon because of the approaching summer vacation. Further, since the SC has taken up the transfer petition filed by Sebi, the high courts will await the proceedings in the apex court.
The SC bench, headed by Justice SH Kapadia, was initially of the view that the cases should be heard by the Bombay High Court as the main players —Sebi and most insurance companies — were in Mumbai. However, Attorney General GE Vahanvati said Irda was based in Hyderabad.
During the hearing, Justice Kapadia, who would become the Chief Justice of India by the time of the next hearing, suggested the appointment of a “super regulator” in view of the conflict between the two regulators. He also raised the issue of income tax rebates for mutual funds, which Vahanvati said were huge.
A public interest petition was filed in the Bombay High Court seeking to set aside the Sebi ban on fresh Ulips. A lawyer in Allahabad moved the high court there against Irda, alleging violation of consumer interests.
Earlier, on prodding from the finance ministry, Sebi and Irda were thinking of moving a court with a joint petition to sort out their differences. But yesterday, Sebi moved the SC with the transfer petition on its own.
However, the issues have to be sorted out by either one high court or the SC (if the petitions are transferred to it). The only problem is that it will take months before the SC takes a decision on transferring the cases, hears them and delivers a judgment. And, in case a high court is asked to decide the issue, it is inevitable that an appeal will come to the SC, further delaying the decision.
