2010 (9) TMI 226 - HC - Companies Law

Insurer - Petitioner company was a tour operating agency and facilitating travel arrangement for tourists

Summary

Issues Involved:
1. Legality of IRDA's order directing the Petitioner to stop insurance-related activities.
2. Whether the Petitioner was carrying on insurance business in India.
3. Applicability of the IRDA Act and Insurance Act to the Petitioner's activities.
4. Validity of permissions granted by RBI and DEA.
5. Requirement for the Petitioner to obtain a license from IRDA.

Issue-wise Detailed Analysis:

1. Legality of IRDA's Order:
The Petitioner, a tourist agent company, challenged an IRDA order dated 30-4-2010, which directed it to stop issuing, marketing, or selling insurance policies. The IRDA warned of initiating action under the IRDA Act and the Insurance Act, 1938 if the Petitioner failed to comply.

2. Whether the Petitioner was Carrying on Insurance Business in India:
The Petitioner had an agreement with Ukrinmedstrakh, a Ukrainian insurance company, to sell certificates of emergency medical aid to foreigners visiting Ukraine. The Petitioner argued it was merely collecting premiums on behalf of Ukrinmedstrakh and not issuing insurance certificates or settling claims itself. However, the court found that the Petitioner was collecting premiums and delivering insurance certificates in India, thus carrying on insurance business in India as per section 2(10) and section 2(9)(a)(iii) of the Insurance Act.

3. Applicability of the IRDA Act and Insurance Act to the Petitioner's Activities:
The IRDA Act came into force on 19-4-2000, after the Petitioner had obtained necessary permissions from the Government of India and RBI. The Petitioner argued that the IRDA Act was not applicable to Ukrinmedstrakh and that the permissions obtained should be deemed valid certificates under the third proviso to section 3 of the Insurance Act. However, the court held that the Petitioner was required to obtain a license from IRDA since it was engaged in insurance business in India.

4. Validity of Permissions Granted by RBI and DEA:
The Petitioner had obtained permissions from RBI and DEA to collect and remit insurance premiums. The IRDA contended that these permissions did not exempt the Petitioner from obtaining a license from IRDA. The court agreed with IRDA, stating that the permissions did not obviate the need for the Petitioner to be licensed under the IRDA Act.

5. Requirement for the Petitioner to Obtain a License from IRDA:
The court concluded that the Petitioner was acting as an agent of Ukrinmedstrakh and was engaged in insurance business in India. Therefore, it was obligatory for the Petitioner to obtain a license from IRDA under section 42 of the Insurance Act and section 30 of the IRDA Act. The court dismissed the Petitioner's argument that it was merely a post office for collecting and remitting premiums.

Conclusion:
The court found no error in the IRDA's order dated 30-4-2010 and dismissed the writ petition. The court held that the Petitioner was carrying on insurance business in India and was required to obtain a license from IRDA, despite the permissions previously granted by RBI and DEA. The pending applications were also dismissed with no order as to costs.