{"id":6559,"date":"2011-03-07T00:00:00","date_gmt":"2011-03-06T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/wills-india-insurance-brokers-vs-insurance-regulatory-and-on-7-march-2011"},"modified":"2017-02-28T07:29:52","modified_gmt":"2017-02-28T01:59:52","slug":"wills-india-insurance-brokers-vs-insurance-regulatory-and-on-7-march-2011","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/wills-india-insurance-brokers-vs-insurance-regulatory-and-on-7-march-2011","title":{"rendered":"Wills India Insurance Brokers … vs Insurance Regulatory And … on 7 March, 2011"},"content":{"rendered":"
Bombay High Court<\/div>\n
Wills India Insurance Brokers … vs Insurance Regulatory And … on 7 March, 2011<\/div>\n
Bench: P. B. Majmudar, A.A. Sayed<\/div>\n
    KPP                                 -1-                             WP No. 2468 of 2010\n\n\n                                                \n\n\n\n\n                                                                                  \n                     IN THE HIGH COURT OF JUDICATURE AT BOMBAY\n\n                            ORDINARY ORIGINAL CIVIL  JURISDICTION\n\n\n\n\n                                                          \n                            WRIT PETITION  NO. 2468 OF 2010\n                                               \n    1.      Wills India Insurance Brokers Pvt. Ltd.                        )\n\n\n\n\n                                                         \n            a Company incorporated and registered under the                )\n            Companies Act, 1956, which has its registered office at        )\n            111,  Free Press House, Free Press Journal Marg,               )\n            Nariman Point, Mumbai-400 021                                  )\n\n\n\n\n                                              \n    2.      Bhaichand Amoluk Consultancy Pvt. Ltd.                         )\n            a Company incorporated and registered under the \n                                    ig                                     )\n            Companies Act, 1956, which  has its registered office          )\n            at Commercial Union House, 2nd floor,                          )\n            9, Wallace Street, Fort, Mumbai-400 001                        )\n                                  \n    3.      Jayant Vora, Mumbai Indian Inhabitant having his               )\n            office at Commercial  Union House, 2nd floor,                  )\n            9, Wallace Street, Fort, Mumbai-400 001                        )\n        \n\n\n    4.      Mitul Vora, Mumbai Indian Inhabitant, having his           )\n            office at 111, Free Press House,  Free Press Journal Marg, )\n     \n\n\n\n            Nariman Point, Mumbai-400 0021.                            )\n\n    5.      Rushabh Vora, Mumbai Indian Inhabitant having his              )\n            office at Commercial Union House, 2nd floor,                   )\n\n\n\n\n\n            9 Wallace Street, Fort, Mumbai-400 001                         )...Petitioners\n\n                          versus\n\n    1.      Insurance Regulatory and Development Authority,                )\n            established under the provisions of the Insurance              )\n\n\n\n\n\n            Regulatory and development Act, 1999, having its               )\n            Office at Parisrama Bhavanam, 5-9-68\/B, 3rd floor,             )\n            Basheer Bagh, Hyderabad-500 004                                )\n\n    2.      Mr. G. Prabhakara, Member (Life), IRDA,                        )\n            having his office at Parisrama Bhavanam, 5-9-68\/B,             )\n            3rd floor, Basheer Bagh, Hyderabad-500 004                     )\n\n\n\n\n                                                          ::: Downloaded on - 09\/06\/2013 17:02:49 :::\n     KPP                                          -2-                                    WP No. 2468 of 2010\n\n\n    3.      Mr. M. Ramaprasad, Member (Non Life), IRDA,                                    )\n\n\n\n\n                                                                                                  \n            having his office at Parisrama Bhavanam, 5-9-68\/B,                             )\n            3rd floor, Basheer Bagh, Hyderabad-500 004                                     )\n\n\n\n\n                                                                         \n    4.      Suresh Mathur, Joint Director, IRDA                                            )\n            having his office at Parisrama Bhavanam, 5-9-68\/B,                             )\n            3rd floor, Basheer Bagh, Hyderabad-500 004                                     )\n\n    5.      Union of India                                                                 )\n\n\n\n\n                                                                        \n    6.      Willis Europe B.V., a company incorporated under the                           )\n            laws of Netherlands, having its registered office at                           )\n            51, Lime Street, London EC3M 7 DQ, 1234512 England                             )\n\n\n\n\n                                                        \n            and Wales.                                                                     ).Respondents\n                                    \n    Mr. N.H. Seervai, Senior   Advocate, with Mr. Shyam Mehta, Mr. Ranbir Singh \n    and   Mrs.   Deepa   Mani,   instructed   by   M\/s.   Bachubhai   Munim   &   Co.,   for   the \n    petitioners. \n                                   \n    Mr. Zal Andhyarujina with Mr. Paritosh Jaiswal, instructed by M\/s. Earnest legal \n    Associates, for respondent Nos. 1 to 4. \n\n    Ms. Poornima Awasthi for respondent No.5.\n        \n\n\n    Dr. V.V. Tulzapurkar, Senior Advocate, with Mr. Nikhil Sakhardande, Mr. Tejas \n    Karia, Mr. Karan Mehra, Mr. Nitesh Jain and Mr. Tapan Deshpande, instructed \n     \n\n\n\n    by M\/s. Amarchand Mangaldas & S.A. Shroff & Co., for respondent No.6. \n\n      \n                                                            CORAM:  P.B. MAJMUDAR  &\n\n\n\n\n\n                                                                            A.A. SAYED\n                                                                                       , JJ.\n<\/pre>\n
                                                   DATE:     MARCH 07, 2011.\n<\/p>\n
    ORAL JUDGMENT: (Per P.B. Majmudar, J.)<\/p>\n
                   Rule.   Learned Counsel appearing for the respondents waive service <\/p>\n
    of rule.  With the consent of the learned counsel appearing in the matter, Rule is <\/p>\n
    made returnable forthwith.\n<\/p>\n
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     KPP                                        -3-                                  WP No. 2468 of 2010<\/p>\n
    2.            By  way of  this  petition,  the   petitioners have  challenged   the   order <\/p>\n
    passed   by   the   Insurance   Regulatory   and   Development   Authority   (hereinafter <\/p>\n
    referred to as the “IRDA”) dated 26th November, 2010.  By the impugned order, <\/p>\n
    the Committee constituted by the authority while exercising powers vested upon <\/p>\n
    them under Section 14 of the Insurance Regulatory and Development Authority <\/p>\n
    Act, 1999 (hereinafter referred to as “the IRDA Act”), read with Regulation 14 <\/p>\n
    (1) of the Insurance Regulatory and Development Authority (Insurance Brokers) <\/p>\n
    Regulations, 2002 (hereinafter referred to as “the IRDA Regulations”), refused to <\/p>\n
    grant   renewal   of   license   earlier   granted   to   the   first   petitioner   to   act   as   a <\/p>\n
    composite broker.\n<\/p>\n
    3.            The first petitioner is a company registered in India  on 21st October, <\/p>\n
    2000 by respondent No.6, Willis Europe, B.V., which is a Company incorporated <\/p>\n
    under the laws of Netherlands.  The first petitioner for the period from 2003 till <\/p>\n
    18th August, 2010 was a joint venture amongst the second petitioner (hereinafter <\/p>\n
    referred   to   as   “the   Bhaichand”)   which   held   74%   of   the   issued   capital.\n<\/p>\n
    Respondent   No.6 held 26 per cent of the issued capital of the company.   The <\/p>\n
    first respondent, IRDA, established under Section   3 (1) of the IRDA Act is the <\/p>\n
    authority within the meaning of the IRDA Regulations. The IRDA consists of a <\/p>\n
    Chairman and not more than 5 whole time members  and not more than 4 part-\n<\/p>\n
    time members. The second and third respondents are permanent members (life <\/p>\n
    and   non-life)   of   the   first   respondent.   They   are   also   the   members   of   the   two <\/p>\n
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\n     KPP                                     -4-                                 WP No. 2468 of 2010<\/p>\n
    persons Committee which was  appointed\/constituted by the authority to hear an <\/p>\n
    application   for   renewal   of   composite   broking   license,   which   Committee   was <\/p>\n
    constituted in view of the order passed by a Division Bench of this Court vide <\/p>\n
    order dated 21st October, 2010 in Writ Petition (Lodging) No. 2197 of 2010.\n<\/p>\n
    4.            Since the earlier license granted to the first petitioner was to expire <\/p>\n
    in 2009, the first petitioner applied vide its application dated 16 th February, 2009 <\/p>\n
    for the renewal of their composite broking license.  It seems that at the time of <\/p>\n
    submitting the said renewal application, a show cause notice was issued to the <\/p>\n
    first   petitioner   under   Regulation   34   of   the   IRDA   Regulations   for <\/p>\n
    cancellation\/suspension of the composite broking license of the first petitioner.\n<\/p>\n
    The said show cause notice dated 6th January, 2010 as well as the order dated 1st <\/p>\n
    September,   2010   were   challenged   by   the   petitioners   by   way   of   Writ   Petition <\/p>\n
    (Lodging)   No. 2179 of 2010. The Division Bench of this Court disposed of the <\/p>\n
    said writ petition on 21st October, 2010 by taking note of the contentions made <\/p>\n
    by   the   learned   counsel   Mr.   Andhyarujina   for   the   respondent-IRDA   that   show <\/p>\n
    cause notice issued would be withdrawn and the first petitioner will be given a <\/p>\n
    reasonable   opportunity   of   hearing   when   the   renewal   application   is   being <\/p>\n
    considered afresh.  A statement was also made that the renewal application shall <\/p>\n
    be decided on its own merits. The Division Bench observed that such renewal <\/p>\n
    application   should   be   decided   by   a   Committee   of   two   Members   of   the   first <\/p>\n
    respondent. The Division Bench also rejected the prayer on the part of the first <\/p>\n
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\n     KPP                                       -5-                                 WP No. 2468 of 2010<\/p>\n
    petitioner that till such renewal application is decided, the first petitioner should <\/p>\n
    be   allowed   to   renew   the   policies   of   its   customers.     The   list   of   such <\/p>\n
    clients\/accounts   was   also   submitted   before   the   Division   Bench.   The   Division <\/p>\n
    Bench,   however,   did   not   accept   the   request   on     behalf   of   the   Petitioners   to <\/p>\n
    continue   the   business   except   to   the   limited   extent   of   fulfilling   statutory <\/p>\n
    obligations as per Regulation 15 of the IRDA Regulations.   Before the Division <\/p>\n
    Bench, on  behalf of respondent No.6, a  request was made that respondent No.6 <\/p>\n
    also should be heard at the time of deciding the renewal application of the first <\/p>\n
    petitioner. The said request was made in view of the cancellation of the joint <\/p>\n
    venture   agreement   entered   into   between   the   first   petitioner     and   the   sixth <\/p>\n
    respondent. However, the Division Bench observed that as per Regulation 14 (1) <\/p>\n
    of the IRDA Regulations, a reasonable opportunity of  being heard is to be given <\/p>\n
    to the applicant   and the application has been submitted by the first petitioner <\/p>\n
    way back on 16th  February, 2009 and  if the parties have fallen apart thereafter, <\/p>\n
    it would not be permissible for the Court to say that respondent No. 6 must also <\/p>\n
    be heard.   The Division Bench thereafter disposed of the said writ petition by <\/p>\n
    holding that the show cause notice dated 6th  January, 2010 and the impugned <\/p>\n
    order   which   was   challenged   in   that   writ   petition   stood   withdrawn   by   the <\/p>\n
    authority and the renewal application dated 16th February, 2009 stands restored <\/p>\n
    to   the   file   of   the   first  respondent.    The   Committee   of   two     members  of  first <\/p>\n
    respondent was directed to hear and decide the renewal application dated 16th <\/p>\n
    February,   2009   on   its   own   merits,   without   being   influenced   by   any   remarks <\/p>\n
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\n     KPP                                     -6-                                WP No. 2468 of 2010<\/p>\n
    mentioned   in   the   impugned   order   in   the   writ   petition.   The   Division   Bench <\/p>\n
    directed   the   Committee   to   take   an  appropriate   decision  within  the  stipulated <\/p>\n
    time.  As stated earlier, the Division Bench, however, declined the prayer made <\/p>\n
    by the first petitioner to continue with the business. The Division Bench also <\/p>\n
    observed that all the issues on merits are left open.\n<\/p>\n
    5.           After   the   aforesaid   order   of   the   Division   Bench,   the   2   Members <\/p>\n
    Committee of  the IRDA passed the impugned order dated  26th November, 2010.\n<\/p>\n
    The   authority   ultimately   came   to   the   conclusion   that   since   the   broker   has <\/p>\n
    violated the rules and regulations and having regard to the gravity of the same <\/p>\n
    and in view of the facts and circumstances of the case,  the broker has failed to <\/p>\n
    adhere to the applicable and relevant regulations while carrying out the activities <\/p>\n
    as an insurance broker and has acted in a manner prejudicial to the interest of <\/p>\n
    the policy holders. The authority was of the opinion that the application of the <\/p>\n
    broker   seeking grant of renewal of license that was earlier granted to them to <\/p>\n
    carry   out   the   functions   as   a   composite     insurance   broker     be   rejected.\n<\/p>\n
    Accordingly, by the impugned order, prayer for renewal  of the license  has been <\/p>\n
    rejected by the first respondent. The said impugned order is the subject matter of <\/p>\n
    this petition.\n<\/p>\n
    6.           Mr. Seervai, learned  Senior  Counsel  appearing  for  the petitioners, <\/p>\n
    vehemently submits that the  impugned order is absolutely arbitrary, illegal and <\/p>\n
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\n     KPP                                     -7-                                WP No. 2468 of 2010<\/p>\n
    contrary to the principles of natural justice. He submits that   the relevant facts <\/p>\n
    were not even brought to the notice of the petitioners as to on what  ground the <\/p>\n
    authority has decided not to   renew the license of the first petitioner and the <\/p>\n
    grounds mentioned in the impugned order have not been brought to the notice <\/p>\n
    of the petitioners even at the time of deciding the renewal application.   It is <\/p>\n
    submitted that in a very casual manner, the renewal   application was rejected <\/p>\n
    and the hearing was nothing but a farce and no questions were even put to the <\/p>\n
    petitioners in any manner.  It is submitted by Mr. Seervai that in the impugned <\/p>\n
    order  certain grounds are mentioned which were never put to the notice of the <\/p>\n
    petitioners   when   renewal   application   was   under   consideration.     Mr.   Seervai <\/p>\n
    further submits that even on merits, the grounds mentioned in the impugned <\/p>\n
    order   are not sustainable at all and whatever particulars which the petitioners <\/p>\n
    were required to give at the time of filling the format  were submitted.  Whatever <\/p>\n
    materials   required   by   the   authority,   the   same   had   been   submitted   by   the <\/p>\n
    petitioners.     Learned   counsel   further   submitted   that   by   deciding   the   renewal <\/p>\n
    application in such a casual manner, the fundamental right of the petitioners <\/p>\n
    under Article 19 (1) (g) of the Constitution has been violated and the impugned <\/p>\n
    order resulted into an economic death  of the petitioners as they would be out of <\/p>\n
    insurance business in which they actively associated.  It is further submitted that <\/p>\n
    in the past the petitioners license was also renewed in 2006 and the grounds <\/p>\n
    mentioned in the impugned  order were also available at that time, still the same <\/p>\n
    were not taken into consideration and the license was renewed in 2006. The said <\/p>\n
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\n     KPP                                      -8-                                 WP No. 2468 of 2010<\/p>\n
    license   is   not     renewed   on   mala   fide   grounds   as,   according   to   the   learned <\/p>\n
    Counsel,   the   Chairman   of   the   first   respondent   was   keeping   bias   and   grudge <\/p>\n
    against the petitioners in connection with the dispute between Bhaichand   and <\/p>\n
    the   Export   Credit   Guarantee   Corporation   of   India   Limited   (“ECGC”).     It   is <\/p>\n
    submitted that Bhaichand   had some transactions with ECGC for which some <\/p>\n
    dispute was going on which was ultimately settled   before this Court. The said <\/p>\n
    fact weighed with the Chairman of the first respondent and same has resulted <\/p>\n
    into non renewal of the license of the petitioners.  It is submitted that so far as <\/p>\n
    the petitioner No.1 is concerned, it is an independent body and is a Company <\/p>\n
    and it has no bearing with any of the transaction which might have been carried <\/p>\n
    out by Bhaichand.  It is submitted by Mr. Seervai that even otherwise it was not <\/p>\n
    required on the part of the first petitioner to mention anything in connection <\/p>\n
    with the so-called dispute between Bhaichand and ECGC as it had no connection <\/p>\n
    in the matter of renewal of the license  and ultimately irrelevant facts were taken <\/p>\n
    into   consideration   by   the   first   respondent   in   not   renewing   the   license.\n<\/p>\n
    Petitioners   have   also   made   certain   averments   alleging   mala   fide   against   the <\/p>\n
    Chairman as, according to the petitioners, since  Bhaichand  had some dispute <\/p>\n
    with ECGC and in which the Chairman was personally interested and was asking <\/p>\n
    Bhaichand to pay up the dues of ECGC which ultimately the petitioners have <\/p>\n
    paid. It is further submitted by the learned counsel that in any case, the first <\/p>\n
    petitioner   has   nothing   to   do   with   Bhaichand   and   at   the   time   of   renewal <\/p>\n
    application no dispute was pending before any forum.   Even otherwise, it was <\/p>\n
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\n     KPP                                      -9-                                 WP No. 2468 of 2010<\/p>\n
    not necessary to mention the said aspect of dispute in the renewal application <\/p>\n
    which prescribe particular formats. It is submitted that the first petitioner has <\/p>\n
    nothing to do with Bhaichand as first petitioner is an independent Company. It is <\/p>\n
    also pointed out that though respondent No. 6  has subsequently terminated  the <\/p>\n
    joint venture agreement, the same will have no bearing  so far as the question of <\/p>\n
    renewal  is concerned. It is further  submitted  that non-renewal of license will <\/p>\n
    have serious consequences as the sixth respondent has taken out winding up <\/p>\n
    proceedings on the said ground and by not renewing the license, the petitioners <\/p>\n
    are likely to suffer    economic  death and the  action of the first respondent is <\/p>\n
    violative of Article 19 (1) (g) of the Constitution of India as the petitioners are <\/p>\n
    deprived of their right to carry out its business. It is further submitted by Mr. <\/p>\n
    Seervai that Bhaichand is merely a shareholder with the first petitioner.  He has <\/p>\n
    also   submitted   that   one   of   the   issues   raised   against   the   petitioner   in   the <\/p>\n
    impugned order was regarding charging of interest which was also rectified in <\/p>\n
    2006   when   the   license   was   renewed.   It   is   submitted   that   on   all   irrelevant <\/p>\n
    grounds,   prayer   for   renewal   of   license   has   not   been   granted.     In   order   to <\/p>\n
    substantiate his say, Mr. Seervai has also relied  upon the  Regulations framed by <\/p>\n
    the first respondent in this behalf.  It is pointed out by Mr. Seervai that assuming <\/p>\n
    that there was some dispute between  Bhaichand and ECGC, that ground should <\/p>\n
    not have weighed with the authority in taking such a view against the petitioners <\/p>\n
    in the matter of renewal of the license. It is submitted that even otherwise the <\/p>\n
    grounds   which   have   been   taken   into   consideration   for   non   renewal     are   the <\/p>\n
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\n     KPP                                     -10-                                WP No. 2468 of 2010<\/p>\n
    grounds which were in existence prior to 2006 and so far as the point regarding <\/p>\n
    ECGC is concerned, the same was taken for the first time in 2008.  It is submitted <\/p>\n
    that even if there is any complaint against Bhaichand, it is not a ground for not <\/p>\n
    renewing the license of the first petitioner. It is further submitted that in any <\/p>\n
    case,   the   dispute   between   Bhaichand   and   ECGC   is   already   settled   by   filing <\/p>\n
    consent terms, which are at page 458 of the compilation. It is further submitted <\/p>\n
    that at the time of so-called hearing, nothing  was brought to the notice of the <\/p>\n
    petitioners   in   any   manner   otherwise   the   petitioners   could   have   given <\/p>\n
    explanation, if it was brought  to the notice of the petitioners that authority may <\/p>\n
    not renew the license on certain grounds.    It is submitted that if Section 9 of the <\/p>\n
    IRDA Act is interpreted in a wide manner, it may amount to giving unfettered <\/p>\n
    powers to the first respondent and in that case Section 9 is required to be struck <\/p>\n
    down on the ground  that unfettered and arbitrary powers are given to the first <\/p>\n
    respondent in this behalf. Mr. Seervai has also relied upon the  format prescribed <\/p>\n
    under the Rules. According to Mr. Seervai, as per the prescribed format, the first <\/p>\n
    petitioner was required to give particulars and not   beyond that. It is further <\/p>\n
    submitted   by   Mr.   Seervai   that   in   any   case   when   the   transaction   between <\/p>\n
    Bhaichand and ECGC took place, Bhaichand was not the shareholder of the first <\/p>\n
    petitioner   as Bhaichand became the shareholder in April, 2003.   Mr. Seervai <\/p>\n
    further   submitted   that   there   is   no   alternate   efficacious   remedy   available <\/p>\n
    especially when petitioners have made allegations against the Chairman.   Mr. <\/p>\n
    Seervai also tried to justify the stand taken by Bhaichand in connection with the <\/p>\n
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\n     KPP                                      -11-                                 WP No. 2468 of 2010<\/p>\n
    dispute     with   ECGC   on   the   ground   that   the   transaction   in   question   between <\/p>\n
    Bhaichand and ECGC was of 1996 for which ECGC     had filed a complaint in <\/p>\n
    2008. It is further submitted that ECGC was not   supposed to inform the first <\/p>\n
    Respondent in this behalf but the said aspect was brought to the notice of the <\/p>\n
    first respondent only with a view to see that the Chairman may intervene in the <\/p>\n
    matter for settlement   and Chairman took personal interest in the said dispute <\/p>\n
    and ultimately even though Bhaichand had settled the dispute, yet the license <\/p>\n
    has not been renewed.  On the aforesaid grounds the impugned order is attacked <\/p>\n
    by Mr.  Seervai.   It is also submitted by Mr. Seervai  that  since respondent No.1 <\/p>\n
    has acted in an absolutely arbitrary  manner in not considering the request of the <\/p>\n
    petitioners for renewal of the license, this Court may issue mandamus by asking <\/p>\n
    the first respondent to renew the license of the petitioners. It is lastly submitted <\/p>\n
    by Mr. Seervai that Bhaichand had settled  the dispute with ECGC even though <\/p>\n
    the claim of ECGC was time barred and considerable amount was paid towards <\/p>\n
    settlement. Inspite of the same,  the impugned order came to be passed.\n<\/p>\n
    7.            Mr. Seervai  further submits that even though allegations have been <\/p>\n
    made  against respondent No.6, he is not pressing any of the allegations against <\/p>\n
    respondent   No.6   in   the   instant   matter   and   seeks   liberty   to   take   out   other <\/p>\n
    appropriate proceedings in this behalf against respondent No.6.\n<\/p>\n
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     KPP                                        -12-                                  WP No. 2468 of 2010<\/p>\n
    8.            Mr. Andhyarujina, learned counsel appearing for respondent Nos. 1 <\/p>\n
    to   4,   in   his   turn   has   submitted   that   since   the   impugned   order   is   passed   at <\/p>\n
    Hyderabad,   this   Court     is   not   having   territorial   jurisdiction   as   the   matter   is <\/p>\n
    required to be filed at Hyderabad. It is further submitted by Mr. Andhyarujina <\/p>\n
    that no cause of action has arisen within the territorial jurisdiction of this Court <\/p>\n
    and this petition is not maintainable. It is further submitted that simply because <\/p>\n
    this Court has entertained the petition when it came at the show cause notice <\/p>\n
    stage,   it   cannot   be   said   that   the   first   respondent   has   waived   the     point   of <\/p>\n
    jurisdiction.   It is further submitted by   Mr. Andhyarujina that the petitioners’ <\/p>\n
    have a right to make representation under the   IRDA Regulations and in view <\/p>\n
    thereof, this Court may not entertain the petition. It is further submitted that no <\/p>\n
    bias is attributed to the members of the Committee who passed the impugned <\/p>\n
    order.  It is submitted that it is not correct to say that the Chairman was biased <\/p>\n
    or having malice against the petitioners in any manner.  It is further submitted <\/p>\n
    by  Mr. Andhyarujina that reasonable opportunity  of being heard was given to <\/p>\n
    the petitioners and in the matter of considering the application for renewing the <\/p>\n
    license, it is not necessary to give any show cause notice to the petitioners. It is <\/p>\n
    further submitted that the charges were known to the petitioners which were the <\/p>\n
    subject matter of earlier show cause notice. The petitioners could have pointed <\/p>\n
    out   the   said   aspect   to   the   two   members   Committee     by   giving   appropriate <\/p>\n
    explanation     in   this   behalf     but   nothing   was   brought   to   the   notice   of   the <\/p>\n
    Committee.  It is submitted  that since  no  legal   practitioner     is  allowed   at  the <\/p>\n
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\n     KPP                                        -13-                                  WP No. 2468 of 2010<\/p>\n
    hearing, the grievance of the petitioners that they were not permitted to engage <\/p>\n
    Advocate is not justified.   Mr. Andhyarujina further pointed out that the affairs <\/p>\n
    of the second petitioner and its conduct are relevant for deciding the application <\/p>\n
    for renewal as they are having 74 per cent shareholding in the Company and as a <\/p>\n
    regulatory   body,   first   respondent   is   supposed   to   know   the   consequences   of <\/p>\n
    renewal of license in case ultimately it is found that the affairs of first petitioner <\/p>\n
    are not properly conducted. It is submitted that over and above the aforesaid <\/p>\n
    aspects, other factors were are also taken into consideration such as charging <\/p>\n
    interest which is not permissible by the broker and in that view of the matter, the <\/p>\n
    decision taken by the Regulatory Authority is not required  to be interfered with <\/p>\n
    by   this   Court   in   its   extraordinary   jurisdiction   under   Article   226   of   the <\/p>\n
    Constitution of India. It is further submitted by   Mr. Andhyarujina that though <\/p>\n
    the first petitioner is a company registered under the Companies Act it is a sort of <\/p>\n
    glorified partnership and, therefore, the relationship of partners as well as the <\/p>\n
    conduct of one   of the partners i.e. second petitioner who is having majority <\/p>\n
    shareholding is also required to be taken into consideration before granting the <\/p>\n
    renewal.     It   is   further   submitted   that   even   a   subsequent   development   viz.\n<\/p>\n
    Respondent No.6 having terminated the joint venture agreement is also required <\/p>\n
    to be taken into consideration. The licensing authority is not required to decide <\/p>\n
    the   matter   in   a   mechanical   manner.     It   is   submitted   that   in   the   past   simply <\/p>\n
    because   license   was   renewed   from   time   to   time   itself   is   not   a   ground   for <\/p>\n
    renewing the license. If some additional material is brought on the record, it may <\/p>\n
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\n     KPP                                       -14-                                   WP No. 2468 of 2010<\/p>\n
    justify   the   action   of   first   respondent   in   not   renewing   the   license.       Mr. <\/p>\n
    Andhyarujina   has   further   submitted   that   in   any   case   if   this   Court   is   of   the <\/p>\n
    opinion that the first petitioner is required to   be given further opportunity of <\/p>\n
    being heard in the matter of renewal application,  first respondent is willing to <\/p>\n
    give such hearing and is   also willing to take decision with open mind and if <\/p>\n
    appropriate   things   are   brought   to   the   notice   of   the   first   respondent   while <\/p>\n
    deciding such  renewal application, first respondent may consider the said aspect <\/p>\n
    objectively as there is no question of any bias on the part of the first respondent.\n<\/p>\n
    Mr. Andhyarujina, however, submitted   that if the matter is remitted back, the <\/p>\n
    authority shall reconsider the same and pass an appropriate order after giving an <\/p>\n
    opportunity of hearing to the petitioners and whatever material   is placed, the <\/p>\n
    same shall also be considered again.   Mr. Andhyarujina further submitted that <\/p>\n
    this Court cannot straightway issue mandamus directing the authority to renew <\/p>\n
    the license and in a given case even if such directions can be given, this is not  a <\/p>\n
    fit   case   which   justifies   giving   such   mandatory   direction   directing   the   first <\/p>\n
    respondent to   renew the license as at the most   this Court may ask the first <\/p>\n
    respondent to reconsider the matter afresh.   On the said aspect, both the sides <\/p>\n
    have  also   relied  upon  certain  decisions  regarding   the   powers of  the   Court  to <\/p>\n
    issue such writ and\/or directions.\n<\/p>\n
    9.            Dr. Tulzapurkar, learned   senior Counsel appearing for respondent <\/p>\n
    No. 6, states that since     Mr. Seervai has given up the allegation of mala fides <\/p>\n
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\n     KPP                                       -15-                                  WP No. 2468 of 2010<\/p>\n
    against respondent No.6, he   is not required to say anything more in the matter <\/p>\n
    except     that     respondent   No.6   has   already   filed   winding   up   petition   of   first <\/p>\n
    petitioner   Company   and   that     joint   venture   agreement   has   already   been <\/p>\n
    terminated by the   respondent No. 6 company. It is also submitted that suit is <\/p>\n
    also filed by respondent No.6 in connection with breach of trade mark and trade <\/p>\n
    name which is pending.\n<\/p>\n
    10.           We have heard the  learned counsel appearing in the matter at great <\/p>\n
    length.       We   have   considered   voluminous     documents   forming   part   of   the <\/p>\n
    petition. We have also gone through the reply and rejoinder.\n<\/p>\n
    11.           So far as the preliminary objection taken up by   Mr. Andhyarujina <\/p>\n
    regarding territorial jurisdiction of this Court is concerned, it is required to be <\/p>\n
    noted   that   the   registered   office     of   the   Company   is   located   at   Mumbai,   the <\/p>\n
    application for renewal  is made at Mumbai, the decision was taken  by the first <\/p>\n
    respondent   at   Hyderabad   as   the   office   of   first   respondent   is   located   at <\/p>\n
    Hyderabad. At this stage, reference is required to be made to Article 226 (2) of <\/p>\n
    the Constitution of India which reads thus:\n<\/p>\n
             “(2)   The   power   conferred   by     clause   (q)   to   issue   directions,
\n             orders  or   writs  to   any  Government,   authority  or   person  may
\n             also be exercised by any High Court exercising jurisdiction in
\n             relation   to   the   territories   within   which   the   cause   of   action,
\n             wholly   or   in   part,   arises   for   the   exercise   of   such   power,
\n             notwithstanding that the seat of such  Government or authority <\/p>\n
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\n     KPP                                        -16-                                   WP No. 2468 of 2010<\/p>\n
             or the residence of such person is not within those territories.”\n<\/p><\/blockquote>\n
    12.           In   view   of   the   above,   it   cannot   be   said   that   the   first   petitioner <\/p>\n
    company   is   not   affected   by   the   impugned   decision   within   the   territorial <\/p>\n
    jurisdiction of this Court. Simply because the head office of respondent No.1 is <\/p>\n
    located at Hyderabad and since the decision was taken at Hyderabad which is <\/p>\n
    communicated   to   the   first   petitioner   at   Mumbai,   it   cannot   be   said   that   only <\/p>\n
    Hyderabad High Court will have jurisdiction to decide the dispute.  It  can safely <\/p>\n
    be   said   that   part   of   the   cause   of   action   has   arisen   within   the   territorial <\/p>\n
    jurisdiction of this Court.  We are, therefore, of the opinion that substantial part <\/p>\n
    of the cause of action can be said to have arisen within the jurisdiction of this <\/p>\n
    Court and  the  petition  before   this  Court  is  maintainable.    At this stage     Mr. <\/p>\n
    Andhyarujina has relied upon the decision of the Supreme court in the case of <\/p>\n
    State of Rajasthan   and others vs. M\/s. Swaika Properties and<\/a> another1  . In the <\/p>\n
    aforesaid case, the proceedings regarding acquisition of the land were initiated <\/p>\n
    by Rajasthan State Government. The land was located at Jaipur. The Company <\/p>\n
    was   located   at   Calcutta.   The   Company   representative   appeared   before   the <\/p>\n
    authority   at   Jaipur.   The   acquisition   of   the   land   was   recommended   by   the <\/p>\n
    authority   to   the   State   Government.   The   notification   acquiring   the   land   was <\/p>\n
    issued   by   the   Rajasthan   State   Government.   The   petition   challenging   the <\/p>\n
    acquisition proceedings and notification   was filed in the Calcutta High Court <\/p>\n
    and considering the facts   of the case it was held that the petition before the <\/p>\n
    1 (1985) 3 SCC 217<\/p>\n
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\n     KPP                                        -17-                                   WP No. 2468 of 2010<\/p>\n
    Calcutta High Court was not maintainable.   In the aforesaid case it was noted <\/p>\n
    that the cause of action arose in Jaipur. As pointed out earlier, the land was <\/p>\n
    situated   at   Jaipur.     The   notification   was   issued   at   Jaipur.   Considering   the <\/p>\n
    aforesaid factual background, it was held that the Calcutta High Court had no <\/p>\n
    jurisdiction to enter into the matter.  In the instant case, as pointed out earlier, <\/p>\n
    the   first   petitioner’s   registered   office   is   located   at     Mumbai,   it   operates   its <\/p>\n
    business from Mumbai but since the office of first respondent is at Hyderabad <\/p>\n
    that the renewal application was required to be preferred at Hyderabad. In our <\/p>\n
    view, part of the cause of action can be said to have arisen within the territorial <\/p>\n
    jurisdiction of this Court.\n<\/p>\n
    13.              Mr. Andhyarujina   next relied upon the decision of the Supreme <\/p>\n
    Court in the case of Union of India and others vs. Adani Exports Ltd. and<\/a> another 1.\n<\/p>\n
    In   the   aforesaid   case   the   Company   filed   Special   Civil   Application   before   the <\/p>\n
    Gujarat High Court claiming the benefit of passbook scheme established under <\/p>\n
    the import export policy in relation to certain credits to be given  on export of <\/p>\n
    shrimps. It was found that none of the respondents in the   Civil Application <\/p>\n
    (Union of India) was stationed at Ahmedabad. The passbook in question, benefit <\/p>\n
    of   which   the   respondents   sought   in   the   civil   applications   was   issued   by   an <\/p>\n
    authority stationed at Chennai. The entries in the passbook under the scheme <\/p>\n
    concerned   were to be made by the authorities at Chennai. The export of the <\/p>\n
    prawns made by the respondents and the import of the inputs, benefit of which <\/p>\n
    1 (2002) 1 SCC 567<\/p>\n
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\n     KPP                                         -18-                                    WP No. 2468 of 2010<\/p>\n
    the respondents had sought in the applications  also  were to be made through <\/p>\n
    Chennai. Considering the said factual aspect of the matter, the Supreme Court <\/p>\n
    found   that   no   part   of   the   cause   of   action   had   arisen   within   the   territorial <\/p>\n
    jurisdiction of  Gujarat High  Court and   under  the  circumstances,  the  decision <\/p>\n
    taken by  the High  Court entertaining the  petition was set aside  by the  High <\/p>\n
    Court.\n<\/p>\n
    14.            Mr. Andhyarujina has also relied upon the decision of the Supreme <\/p>\n
    Court in the case of  Alchemist Ltd. and another vs. State Bank of Sikkim  and  <\/p>\n
    others1.     In   the   said   judgment,   it   is   held   that   the   writ   petition   can   now   be <\/p>\n
    instituted  in the High Court within the territorial jurisdiction of which the cause <\/p>\n
    of action in whole or in part arises. In the aforesaid case, the State of Sikkim <\/p>\n
    invited offers for strategic partnership  with the respondent Bank functioning in <\/p>\n
    the said State. The appellant Company in the said case was having its registered <\/p>\n
    office at Chandigarh. Respondent bank accepted the offer of the appellant  Bank.\n<\/p>\n
    Subsequently   the   Government   of   the   State   of   Sikkim   rejected   the   said <\/p>\n
    acceptance. Writ Petition was filed  by the appellant at   Punjab and Haryana <\/p>\n
    High Court. The said petition was dismissed by the High Court   for want of <\/p>\n
    territorial jurisdiction.   The Supreme Court found that no part of the cause of <\/p>\n
    action arose within the territorial jurisdiction of the High Court at Chandigarh.\n<\/p>\n
    It was found that the facts pleaded by the appellant were not essential, integral <\/p>\n
    or material facts so  as to  constitute  a  part  of  the  cause  of  action  within the <\/p>\n
    1 (2007) 11 SCC 335<\/p>\n
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\n     KPP                                       -19-                                  WP No. 2468 of 2010<\/p>\n
    meaning of Article 226 (2) of the Constitution.\n<\/p>\n
    15.          On behalf of the petitioners, Mr. Seervai on the point of jurisdiction <\/p>\n
    has relied upon the decision of the Supreme Court in the case of  Navinchandra  <\/p>\n
    N. Majithia vs. State  of Maharashtra and others<\/a>1. It has been held that the High <\/p>\n
    Court will have jurisdiction, if any part of the cause of action arises within the <\/p>\n
    territorial   limits   of   its   jurisdiction,   even   though   the   seat   of   Government   or <\/p>\n
    authority or residence  of person against whom direction, order or writ is sought <\/p>\n
    to be issued is not within the said territory.   It was held that writ petition filed <\/p>\n
    before   the   Bombay   High   Court     for   quashing   of   criminal   complaint   filed   at <\/p>\n
    Shillong on the ground that it was false and had been filed with a mala fide <\/p>\n
    intention   of   causing   harassment   and   putting   pressure   on   the   petitioner   to <\/p>\n
    reverse   the   transaction   relating   to   transfer   of   company   shares,   which   had <\/p>\n
    entirely taken place at Mumbai, was found to be maintainable and it was held <\/p>\n
    that the Bombay High Court had erred in dismissing   the writ petition on the <\/p>\n
    ground that it had no jurisdiction to quash the complaint filed at Shillong as <\/p>\n
    prayed for.\n<\/p>\n
    16.             Mr. Seervai  thereafter referred to the decision of the Supreme Court <\/p>\n
    in   the   case   of  Dinesh   Chandra   Gahtori   vs.   Chief   of   Army   Staff   and   another 2 <\/p>\n
    wherein the Supreme Court has observed in para as follows:<\/p>\n
\n\n\n    1 (2000) 7 SCC 640\n    2 (2001) 9 SCC 525\n\n\n\n\n                                                                     ::: Downloaded on - 09\/06\/2013 17:02:50 :::<\/span>\n     KPP                                      -20-                                  WP No. 2468 of 2010\n\n\n<\/pre>\n
            “4.   The writ petition was filed in 1992. The impugned order <\/p>\n
            was passed in 1999. This is a fact that the High Court should
\n            have taken into consideration.  More importantly, it should have
\n            taken into  consideration the fact that the  Chief  of Army  Staff <\/p>\n
            may be sued anywhere in the country.  Placing reliance only on
\n            the cause of action, as the High Court did, was not justified.”\n<\/p>\n
    17.             Mr. Seervai has also relied upon the decision of the Supreme Court <\/p>\n
    in the case of  Dinesh Chandra Gahtori vs. Chief of Army Staff and another1. In <\/p>\n
    paragraph 4 it has been held as under:\n<\/p>\n
             “4. The writ petition was filed in 1992. The impugned order was
\n             passed in 1999. This is   a fact that the High Court should have
\n             taken into consideration. More importantly, it should have taken <\/p>\n
             into consideration the fact that the Chief of Army Staff may be
\n             sued anywhere in the country. Placing reliance only on the cause
\n             of action, as the High Court did, was not justified.”\n<\/p><\/blockquote>\n
    18.          Mr. Seervai has cited another judgment of the Supreme Court  int he <\/p>\n
    case   of  Om   Prakash   Srivastava   vs.   Union   of   India   and<\/a>   another2  wherein   the <\/p>\n
    Supreme Court has observed in para 7 as under:\n<\/p>\n
            “7. The question whether or not cause of action wholly or in
\n            part for  filing  a  writ petition has arisen within the territorial
\n            limits of any High Court has to be decided in the light of the <\/p>\n
            nature and character of the proceedings under Article 226 of
\n            the   Constitution.  In  order   to  maintain  a  writ  petition,   a   writ
\n            petitioner has to establish that a legal right claimed by him has
\n            prima facie either been infringed or is threatened to be infringed
\n            by   the   respondent   within   the   territorial   limits   of   the   Court’s
\n            jurisdiction and such infringement may take place by causing
\n            him actual injury or threat thereof.”\n<\/p><\/blockquote>\n
    1 (2001) 0 SCC 525
\n    2 (2006) 6 SCC 207<\/p>\n
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\n     KPP                                         -21-                                    WP No. 2468 of 2010<\/p>\n
    19.            Considering the issue involved in the matter  and considering the fact <\/p>\n
    that the office of   respondent No.1 is located at Hyderabad   from where the <\/p>\n
    decision is required to be taken in connection with the renewal application, the <\/p>\n
    person who is likely to be affected in connection with his business on the basis of <\/p>\n
    such decision taken by the head office   can approach the Court where he   is <\/p>\n
    affected by such decision.  By no stretch of imagination it can never be said that <\/p>\n
    no   part  of   the   cause   of   action   arose   within   the   territorial   jurisdiction   of   this <\/p>\n
    Court.   We   accordingly   negative   the   preliminary   contention   raised   by     Mr. <\/p>\n
    Andhyarujina     and,   in   our   view,   the   petition   filed   before   this   Court   is <\/p>\n
    maintainable.\n<\/p>\n
    20.                   The next submission is regarding alternate remedy.  It is required  <\/p>\n
    to be noted that in view of the fact that the Court has already decided to dispose <\/p>\n
    of the matter finally, this Court has heard the matter on   merits at length and <\/p>\n
    considering the fact that there are serious allegations even against the Chairman <\/p>\n
    of the first respondent, of which there may or may not be any foundation, we <\/p>\n
    would not like to relegate the petitioner to alternate remedy. Accordingly both <\/p>\n
    the   sides   have   advanced   lengthy   arguments   on   merits   of   the   issue.   Even <\/p>\n
    otherwise, since the matter is heard at great length, it would not be proper to <\/p>\n
    dispose of the matter only on the ground that the petitioners have to approach <\/p>\n
    the authority by way of an alternate remedy.  In view of the various averments <\/p>\n
    made   against  the   Chairman,   it   would   not  be   just   and   proper   to   relegate   the <\/p>\n
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\n     KPP                                      -22-                                  WP No. 2468 of 2010<\/p>\n
    petitioner to approach the authority by way of revision. Apart from the above, <\/p>\n
    earlier also the Division Bench had not relegated the matter to the Chairman in <\/p>\n
    view     of   the   controversy   involved   and     had   directed   the   first   respondent   to <\/p>\n
    constitute a   Committee consisting of two members which decided the renewal <\/p>\n
    application of the petitioners in which the impugned order is passed. This Court, <\/p>\n
    therefore, would not like to relegate the petitioners to the alternate forum by <\/p>\n
    way of making representation to the Chairman.\n<\/p>\n
    21.           So far as the main issue involved in the petition is concerned, we have <\/p>\n
    heard the counsel at great length. So far as the impugned order is concerned, <\/p>\n
    para 3 of the impugned order refers to certain instances while considering the <\/p>\n
    application for renewal. Point one is regarding settlement of dispute with ECGC.\n<\/p>\n
    It pertains to the role played by Bhaichand   who owed considerable amount of <\/p>\n
    Rs. 5.08 crores as due to ECGC as recovery from reinsurers on claims lodged by <\/p>\n
    them and also that  Bhaichand had received substantial amount of dues from the <\/p>\n
    foreign brokers which they had failed to remit  to ECGC. ECGC had also filed a <\/p>\n
    suit against petitioner No.2 for recovery of the dues. There is a reference about <\/p>\n
    the said transaction in clauses (b), (c), (d) and (e) of the said impugned order. It <\/p>\n
    has   been   observed   that   Bhaichand   being   a   dominant   partner     of   the   first <\/p>\n
    petitioner has failed to discharge the responsibilities of a broker as specified in <\/p>\n
    the  IRDA Regulations and they have  failed to disclose the disputes with ECGC <\/p>\n
    at the time of submitting the requirements during the renewal of the  license in <\/p>\n
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\n     KPP                                         -23-                                    WP No. 2468 of 2010<\/p>\n
    the years 2006 as well as 2009.   It is further observed that the petitioners by not <\/p>\n
    furnishing the required information in item 5.1 of Form-A under Regulation 13 <\/p>\n
    of the Regulations, have violated the said provisions. Another ground mentioned <\/p>\n
    in  the   said   order   is  that  the   first  petitioner   invested   the   money  belonging   to <\/p>\n
    Insurance Bank Account  in fixed deposits  during the financial years 2003-2004, <\/p>\n
    2004-2005, 2005-2006 and 2006-2007 and thereby earned interest.     Thus the <\/p>\n
    broker violated the provisions of Regulation  23 of the Regulations and the said <\/p>\n
    fact has been admitted by the petitioners in their letter dated 23rd July, 2010  to <\/p>\n
    the   authority.       Accordingly,   on   the   aforesaid   grounds,   the   respondent   No.1 <\/p>\n
    refused to grant renewal license.\n<\/p>\n
    22.               Mr. Seervai vehemently argued that the factum regarding dispute <\/p>\n
    between Bhaichand and ECGC is absolutely irrelevant in the matter of renewal of <\/p>\n
    license. It is     submitted   that since irrelevant point has been considered, the <\/p>\n
    order   deserves   to   be   set   aside.   It   is   further   submitted   that   this   fact   was   not <\/p>\n
    brought to the notice of the petitioners when renewal application was heard by <\/p>\n
    the   Committee   of   the   first   Respondent.   Form-A   of   Schedule-1   of   IRDA <\/p>\n
    Regulations prescribes the format  in connection with the grant of license as an <\/p>\n
    insurance broker and\/or for renewal of license.     It is not in dispute that the <\/p>\n
    dispute between Bhaichand and ECGC was settled by a consent decree in Suit <\/p>\n
    No.   1268   of   2009   and   even   the   criminal   complaint   which   was   filed   against <\/p>\n
    Bhaichand was also quashed by the High Court.   Both the aforesaid aspects had <\/p>\n
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\n     KPP                                        -24-                                   WP No. 2468 of 2010<\/p>\n
    taken   place   before   the   impugned   order   was   passed   by   the   authority.   It   is <\/p>\n
    required to be noted that as per the   format prescribed, whatever information <\/p>\n
    was required to be disclosed was disclosed by the petitioners. In our view, it <\/p>\n
    cannot   be said that at the relevant time when the petitioners had applied for <\/p>\n
    renewal in 2009,   any dispute was pending before any authority or before any <\/p>\n
    court   of   law   in   any   manner.     It   is   true   that   Bhaichand   is   having   major <\/p>\n
    shareholding in the first petitioner Company but while considering the renewal <\/p>\n
    application of the first petitioner, disputes between Bhaichand and ECGC which <\/p>\n
    was not pending even before any Court at the relevant time had no bearing.\n<\/p>\n
    Simply because the first petitioner failed to mention about the so-called dispute <\/p>\n
    between Bhaichand and ECGC, the said ground, in our view was not relevant in <\/p>\n
    rejecting the renewal application of first petitioner  on the ground of suppression <\/p>\n
    of material facts.   Section   9 of the IRDA Act though gives wide powers to the <\/p>\n
    regulatory authority but such power has to be exercised in a reasonable manner <\/p>\n
    and only relevant aspects are required to be considered while taking decision. It <\/p>\n
    is required to be noted that the petitioner No.1 is a legal entity and as per the <\/p>\n
    format   prescribed,   what   is   required   to   be   given   is   details   of   all   settled   and <\/p>\n
    pending disputes by the applicant \/proprietor  or any of the partners, directors or <\/p>\n
    key   managerial   personnel     in   the   last   three   years.   At   the   time   when   the <\/p>\n
    petitioners applied for renewal, no dispute was pending before any authority or <\/p>\n
    any Court between Bhaichand and ECGC.\n<\/p>\n
                                                                      ::: Downloaded on – 09\/06\/2013 17:02:50 :::<\/span><\/p>\n
     KPP                                          -25-                                     WP No. 2468 of 2010<\/p>\n
    23.                 Considering the aforesaid aspect, we are of the opinion that the  <\/p>\n
    Committee   of   the   first   Respondent   has   not     properly   applied   its   mind   while <\/p>\n
    rejecting   the   renewal   application.   It  is   also   required   to   be   noted   that   in  fact <\/p>\n
    dispute between Bhaichand and ECGC was pending since long even before 2006.\n<\/p>\n
    When   the   renewal   was   granted   in   2006,   simply   because   ECGC   might   have <\/p>\n
    complained to the first respondent and it is pointed out that the Chairman of the <\/p>\n
    first   respondent   tried   to   see   that   the   dispute   is   settled     and   assuming   that <\/p>\n
    because  of his intervention  that Bhaichand  has ultimately  settled  with  ECGC, <\/p>\n
    that fact should not have been weighed in the mind of the first respondent in not <\/p>\n
    renewing the license on the said ground. The rejection of the renewal application <\/p>\n
    on the aforesaid ground about non-disclosure of the dispute  between Bhaichand <\/p>\n
    and   ECGC,   therefore,   was   not   a   relevant   aspect   which   was   required   to   be <\/p>\n
    considered at the time  of considering the renewal application. In any case, it is <\/p>\n
    not   in   dispute   that   the   said   fact   was   not   brought     to   the   notice   of   the   first <\/p>\n
    petitioner     when   renewal   application   was   under   consideration   and   when <\/p>\n
    petitioner No.1 was given hearing in this behalf. Considering the material on <\/p>\n
    record and other relevant documents, we are of the opinion that rejection of the <\/p>\n
    renewal  application on the aforesaid ground is not justified.\n<\/p>\n
    24.               However, there is an additional ground for rejecting the renewal <\/p>\n
    application and that is in connection with the petitioners having invested the <\/p>\n
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\n     KPP                                    -26-                                 WP No. 2468 of 2010<\/p>\n
    money belonging to the Insurance Bank Account in FD during the financial years <\/p>\n
    2003-2004, 2004-2005, 2005-2006 and 2006-2007 and thereby earned interest.\n<\/p>\n
    In this connection, it is alleged that the petitioner No.1 has violated Regulation <\/p>\n
    23 of IRDA Regulations. The said Regulation reads as under.\n<\/p>\n
            ” 23. Segregation of  insurance money:- (1)  The provisions of <\/p>\n
            Section   64VB   of   the   Act   shall     continue   to   determine   the
\n            question of assumption of risk by an insurer.\n<\/p><\/blockquote>\n
            (2)           In the case of reinsurance contracts, it may be agreed <\/p>\n
            between   the   parties   specifically   or   as   part   of   international
\n            market   practices   that   the   licensed   reinsurance   broker   or <\/p>\n
            composite   broker   can   collect   the   premium   and   remit     to   the
\n            reinsurer and\/or collect the claims due   from the   reinsurer to
\n            be passed on to the insured. In these circumstances the money
\n            collected by the licensed insurance broker shall be dealt with in <\/p>\n
            the following manner:-\n<\/p><\/blockquote>\n
            (a) he shall act as the trustee of the insurance  money that he
\n                is required to handle in order to discharge his function as <\/p>\n
                a   reinsurance   broker   and   for   the   purposes   of   this
\n                regulation it shall be deemed that a payment made to the
\n                reinsurance broker shall be considered as payment made <\/p>\n
                to the reinsurer;\n<\/p><\/blockquote>\n
            (b) ensure   that   ‘insurance   money’   is   held   in   an   “Insurance
\n                Bank Account’ with one or more of the Scheduled Banks or <\/p>\n
                with   such   other   institutions   as  may   be   approved   by  the
\n                Authority;\n<\/p><\/blockquote>\n
            (c) give   written   notice   to,   and   receive   written   confirmation
\n                from, a bank, or other institution that he is not entitled to <\/p>\n
                combine   the   account   with   any   other   account,   or   to
\n                exercise any right of set off, charge or lien against money
\n                in that account;\n<\/p><\/blockquote>\n
            (d)    ensure that all monies received from or on behalf of an
\n                insured  is paid  into  the  ‘Insurance  Bank  Account’ which
\n                remains   in   the   ‘Insurance   Bank   Account’   to   remain   in
\n                deposit until it is transferred on to the reinsurer or to the
\n                direct insurer;\n<\/p><\/blockquote>\n
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     KPP                                         -27-                                    WP No. 2468 of 2010<\/p>\n<\/blockquote>\n
              (e) ensure   that   any   refund   of   premium   which   may   become
\n                  due to a direct insurer on account of the cancellation of a
\n                  policy   or   alteration   in   its   terms   and   conditions   or <\/p>\n
                  otherwise   shall   be   paid   by   the   reinsurer   directly   to   the
\n                  direct insurer;\n<\/p><\/blockquote>\n
              (f)    interest   on   recovery\/payment   received   shall   be   for   the
\n                     benefit of the direct insurer or reinsurer;\n<\/p><\/blockquote>\n
              (g) only remove from the ‘Insurance Bank Account’ charges,
\n                  fees or commission earned and interest received from any
\n                  funds comprising the account;\n<\/p><\/blockquote>\n
              (h) take immediate steps to restore the required position if at <\/p>\n
                  any   time   he   becomes   aware   of   any   deficiency   in   the
\n                  required ‘segregated amount’.”\n<\/p><\/blockquote>\n
    25.                     It   is   argued   by       Mr.   Andhyarujina   that   the   petitioners   cannot <\/p>\n
    appropriate the interest amount  for its own purpose and it was required to be <\/p>\n
    deposited in a separate account. He submits that the petitioners also admit the <\/p>\n
    said fact.  Mr. Seervai however submitted that the said fact was also there even <\/p>\n
    earlier in 2006, yet the license was renewed. He states that other brokers   are <\/p>\n
    also doing similar thing by putting the interest in their own FD account. So far as <\/p>\n
    this aspect is concerned, at the time of hearing of the renewal application, it <\/p>\n
    should have been brought to the notice of the first petitioner  so that  the first <\/p>\n
    petitioner   could   have   pointed   out   the   same   to   the   respondents.   Hearing   of <\/p>\n
    renewal application is not a formality but is a matter of substance as it affects <\/p>\n
    the rights of the petitioners to carry on  its business.  It is required to be noted <\/p>\n
    that there is   reference to certain documents in para 3 (d)   of the impugned <\/p>\n
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\n     KPP                                        -28-                                   WP No. 2468 of 2010<\/p>\n
    order. The first respondent should  have brought to the notice of the petitioners <\/p>\n
    by informing the first petitioner to give its explanation in connection with the <\/p>\n
    aforesaid aspect so that the petitioners, if they had any reasonable or plausible <\/p>\n
    explanation, could have furnished the same.  Reference of some correspondence <\/p>\n
    is made without bringing the same to the notice of the petitioners and without <\/p>\n
    placing the same before the first respondent.  Mr. Seervai points out that if the <\/p>\n
    attention of the petitioner was focussed, the petitioners could have explained the <\/p>\n
    aforesaid   aspects  so   that  the   authority  might  have   been  convinced   about  the <\/p>\n
    explanation of the petitioners. It is required to be noted that once the license is <\/p>\n
    not renewed on any particular ground, at least the material on which reference <\/p>\n
    is   made   is  required   to  be  pointed   out  to   the   person   so   affected.   It  is  not  in <\/p>\n
    dispute that from the earlier order of the Division Bench, decision was required <\/p>\n
    to   be   taken     in   consonance   with   the   principles   of   natural   justice   and   after <\/p>\n
    hearing the petitioners. Since that has not been done, in our view, in connection <\/p>\n
    with the aforesaid  alleged violation of Rule 23, the matter is required to be sent <\/p>\n
    back to the authority for re-consideration and to pass appropriate order after <\/p>\n
    affording   an   opportunity   of     hearing   to   the   petitioner   in   this   behalf.         Mr. <\/p>\n
    Seervai   tried   to   justify   his   argument   that   there   is   no   violation   of   Rule   23.\n<\/p>\n
    However, we would not like to go in detail about this aspect as it is for the <\/p>\n
    authority to   apply its mind and take an appropriate decision after hearing the <\/p>\n
    petitioners in this behalf.\n<\/p>\n
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     KPP                                        -29-                                  WP No. 2468 of 2010<\/p>\n
    26.                  On the point of principles of natural justice, Mr. Seervai has relied <\/p>\n
    upon the decision of the House of Lords in the case of B. Surinder Singh Kanda  <\/p>\n
    vs. Government of the Federation of Malaya1 wherein  it is observed as under:\n<\/p>\n
             “In   the   opinion   of   Their   Lordships,   however,   the   proper
\n             approach is somewhat different. The rule against bias is one
\n             thing. The right to be heard is another. These two rules are the <\/p>\n
             essential characteristics of what is often called natural justice.
\n             They are the twin pillar supporting it. The Romans put them in <\/p>\n
             the two maxims:  nemo judex in causa sua  : and  audi alteram
\n             partem.   They   have   recently   been   put   in   the   two   words,
\n             impartiality and fairness. But they are separate concepts and
\n             are governed  by  separate  considerations. In the  present case <\/p>\n
             Inspector Kanda complained of a breach of the second.  He said
\n             that his constitutional right had been infringed. He had been
\n             dismissed   without   being   given   a   reasonable   opportunity   of
\n             being heard.\n<\/p><\/blockquote>\n
                   If the right to be heard is to be a real right which is worth <\/p>\n
             anything, it must carry with it a right in the accused man to
\n             know the case which is made against him. He must know that
\n             evidence has been given and what statements have been made
\n             affecting him: and then he must be given  a fair opportunity to
\n             correct or contradict them. This appears in all the cases from <\/p>\n
             the   celebrated   judgment   of   Lord   Loreburn   L.C.   in   Board   of
\n             Education   v.   Rice2  down   to   the   decision   of   Their   Lordship’s
\n             Board in Ceylon University vs. Fernando3 It follows, of course,
\n             that   the   judge   or   whoever   has   to   adjudicate   must   not   hear
\n             evidence or receive representations from one side behind the <\/p>\n
             back   of   the   other.     The   court   will   not   inquire   whether   the
\n             evidence   or   representations   did   work   to   his     prejudice.
\n             Sufficient that they might do so. The Court will not go into the
\n             likelihood   of prejudice. The risk of it is enough. No one who
\n             has lost  a   case   will   believe  he   has  been  fairly   treated   if   the
\n             other side has had access to the judge without his knowing.”\n<\/p><\/blockquote>\n
    1 1962 PC 322
\n    2 (1911) AC 179, 182 : 27 T.L.R. 378 J.L.\n<\/p>\n
    3 (1960) 1 W.L.R. 223 : (1960) 1 All E.R. 631 P.C.\n<\/p>\n
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     KPP                                        -30-                                   WP No. 2468 of 2010<\/p>\n
             “…   Applying   these   principles,   their   Lordships   are   of   opinion <\/p>\n
             that Inspector Kanda was not in this case given a reasonable
\n             opportunity of being heard. They find themselves in agreement
\n             with the view   expressed by Righby J. in these words “In my <\/p>\n
             view, the furnishing of a copy of the findings of the Board of
\n             inquiry   to   the   adjudicating   officer   appointed   to   hear   the
\n             disciplinary charges, coupled with the fact that no such copy
\n             was furnished   to the plaintiff, amounted to such a denial of
\n             natural   justice   as   to   entitle   this   court   to   set   aside   those <\/p>\n
             proceedings  on this  ground.  It amounted,  in my  view,    to  a
\n             failure to afford the plaintiff a reasonable opportunity  of being
\n             heard   in   answer   to   the   charge   preferred   against   him   which
\n             resulted in his dismissal.”  The mistake of the police authorities <\/p>\n
             was no doubt made entirely in good faith. It was quite proper
\n             to   let   the   adjudicating   officer   have   the   statements   of   the <\/p>\n
             witnesses. The Regulations show that it is necessary for him to
\n             have them. He will then read those out in the presence of the
\n             accused. But Their Lordships do not think it was correct to let
\n             him have the report of the Board of Inquiry unless the accused <\/p>\n
             also   had   it   so   as   to   be   able   to   correct   or   contradict   the
\n             statements in it to his prejudice.”\n<\/p>\n
    27.           Mr. Seervai has vehemently submitted that since the authority has <\/p>\n
    acted in an absolutely arbitrary manner, this Court, instead of sending the matter <\/p>\n
    back, issue mandamus for which he has relied upon the decision of the Madras <\/p>\n
    High Court in the case of Government of Tamil Nadu represented by its Secretary,  <\/p>\n
    Health and Family Welfare  Department and the Director of Medical Education vs.  <\/p>\n
    Sri Nandha Educational Trust rep. by its Chairman and Managing Trustee, Mr. V.\n<\/p>\n
    Shanmugham1.   In the aforesaid case, there was delay in granting no objection <\/p>\n
    certificate for seven years despite the compliance by the writ petitioner therein <\/p>\n
    with   the   directives  of   the   respondents.   Considering   the   facts  of   the   case,   the <\/p>\n
    Court   directed   the   appellants   therein   to   grant   no   objection   certificate.   In <\/p>\n
    1 MANU\/TN\/1117\/2005<\/p>\n
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\n     KPP                                       -31-                                   WP No. 2468 of 2010<\/p>\n
    paragraph 33 it was observed as follows:-\n<\/p>\n
             “33. In the present case, the grant of “No Objection Certificate
\n             has been delayed   or rejected for the past seven years despite
\n             compliance by the writ petitioner on ten occasions of directives
\n             of   the   respondents   to   remove   the   alleged   deficiencies,   and
\n             inspection   by   the   inspection   teams   on     three   occasions,   and <\/p>\n
             filing of three writ petitions on three occasions. We are satisfied
\n             that   all   the   requirements   of   the   State   Government   for
\n             establishing   the   Nursing   College   and   grant   of   No   Objection
\n             Certificate have been complied with. Hence we  agree with the <\/p>\n
             learned   single   Judge   that   it   is   not   necessary   for   us   to   again
\n             remand the matter   to the appellants to consider the grant of <\/p>\n
             “No Objection Certificate” to the respondent\/trust as that will
\n             only lead to further delay, and further arbitrariness.”\n<\/p><\/blockquote>\n
    28.          Reference   is  required   to   be   made   to   the   decision   of   the   Supreme <\/p>\n
    Court in the case of   Al-Karim Educational Trust and another vs. State of Bihar  <\/p>\n
    and others1  wherein it has been held as under.\n<\/p>\n
             ” 11.   In the matter of grant of affiliation, it is ordinarily for <\/p>\n
             the State Government  after consulting the Medical Council of
\n             India to arrive at a decision. However, if it is found that the
\n             affiliation   is   being   withheld   unreasonably   or   the   decision   is
\n             being prolonged for one reason or the other, this court would,
\n             though reluctantly, be constrained to exercise jurisdiction. We <\/p>\n
             must make it clear that we are not diluting the importance of
\n             fulfilling the essential prerequisite set by the Medical Council
\n             before granting recognition.   The facts of this case are very
\n             special and exceptional”.<\/p><\/blockquote>\n
             12.   In the totality of the circumstances disclosed in the case
\n             and   having   regard   to   the   fact   that   at   each   stage   new
\n             deficiencies are being pointed out, the latest being the report
\n             dated 28-6-1995 (explained by the subsequent  affidavit of the
\n             appellants   dated   4-9-1995),   we   are   satisfied   beyond   any
\n             manner of doubt that the deficiencies have been substantially
\n             complied with and minor deficiencies pointed out in the last
\n             mentioned   report   of   28-6-1995   are   not   such   as   to   permit <\/p>\n
    1 (1996) 8 SCC 330<\/p>\n
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\n     KPP                                      -32-                                 WP No. 2468 of 2010<\/p>\n
              withholding   of   the   affiliation   to   which   the   appellants’ <\/p>\n
              institution   is   entitled.   From   the   manner   in   which   the
\n              deficiencies  have   been  pointed   out  from  time   to   time,   each
\n              time   the   old   deficiencies  are   shown   to   have   been   removed, <\/p>\n
              new   deficiencies     are   shown,   gives   the   impression   that   the
\n              affiliation is unnecessarily delayed.   For the removal of minor
\n              deficiencies   pointed   out   in   the   report   of   28-6-1995,   a
\n              compliance   affidavit   dated   4-9-1995   is   filed.   Once   the
\n              institution feels secure on the question of affiliation, we have <\/p>\n
              no doubt  that these minor deficiencies, if they exist, shall be
\n              taken care of by those in charge of the Institution. For taking
\n              such further steps, the grant of affiliation need not wait. We
\n              make this position clear. The steps for the grant of affiliation <\/p>\n
              to the appellants’ institution may now be expedited and we
\n              direct the respondents   to issue the necessary orders without <\/p>\n
              loss of time. The appeal is disposed of accordingly. In the facts
\n              and circumstances of the case, we make no order as to costs.”\n<\/p>\n
    29.         Mr. Andhyarujina has relied  upon the decision of the Supreme Court in <\/p>\n
    the   case   of  Union   of   India   and   another   vs.   Bilash   Chand   Jain   and   another1 <\/p>\n
    wherein the Supreme Court has held that even if High Court in writ petition <\/p>\n
    against   the   Central   Government’s   order   refusing   to   grant   consent   to   execute <\/p>\n
    decree under Section 86 (3) of the CPC, considers the order to be arbitrary, it <\/p>\n
    can remand the matter   to the Government for reconsideration in accordance <\/p>\n
    with law instead of itself directing the Government to give consent under Section <\/p>\n
    86 (3).  In paras 5 and 6, the Supreme Court has  observed as under:\n<\/p>\n
            “5.   It may be   mentioned that there is a distinction between
\n            “judicial review” and “appellate jurisdiction”.  The High Court
\n            in a writ petition when examining an administrative order is
\n            not exercising the appellate power but exercising the power of
\n            judicial   review   which   is   much   narrower   than   the   appellate <\/p>\n
    1 (2009) 16 SCC 601<\/p>\n
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\n     KPP                                        -33-                                     WP No. 2468 of 2010<\/p>\n
            power.   Such   judicial   review   can   only   be   exercised   on <\/p>\n
            Wednesbury principles.\n<\/p><\/blockquote>\n
            6.    It is well settled by a series of decisions of this Court that <\/p>\n
            the   High   Court     cannot   itself   perform   the   functions   of   a
\n            statutory authority. Thus in  G. Veerappa Pillai v. Raman and
\n            Raman Ltd.1<\/a> it  was held that the High Court under Article 226
\n            of     the   Constitution   of   India   cannot   direct   the   Regional <\/p>\n
            Transport Authority to grant bus permits as the grant of the
\n            permit   is   entirely   within   the   discretion   of   the   Regional
\n            Transport   Authority.   Of   course,   if   the   Regional   Transport
\n            Authority rejects the application for grant of permits arbitrarily
\n            or   illegally,   the   High   Court   can   s   et   aside   the   order   of   the <\/p>\n
            Regional   Transport   Authority   and   direct   the   Regional
\n            Transport Authority to pass a fresh order in accordance with <\/p>\n
            law, but the High Court cannot itself order grant of permits, in
\n            that case it will  be taking over the function of the Regional
\n            Transport Authority.”\n<\/p><\/blockquote>\n
    30.            Considering the case law on the subject, we are of the opinion that <\/p>\n
    the court can, in an appropriate case, issue mandamus directing the authority to <\/p>\n
    take a particular decision such as directing them to renew license or in a service <\/p>\n
    matter to pass a particular order regarding punishment. However, this is not one <\/p>\n
    of   such   an   exceptional   case   that   this   Court   would   like   to   issue   mandamus <\/p>\n
    directing the first Respondent to renew the license of the first petitioner. Instead <\/p>\n
    this Court is of the opinion that considering the facts and circumstances of the <\/p>\n
    case, the first respondent should take a fresh decision on the renewal application <\/p>\n
    of the first petitioner. While taking fresh decision, the first ground mentioned <\/p>\n
    which   is   in   our   view   is   not   relevant   i.e.   non-disclosure   of   dispute   between <\/p>\n
    Bhaichand and ECGC, the same shall not be taken into consideration   but the <\/p>\n
    1 AIR 1952 SC 192<\/p>\n
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\n     KPP                                        -34-                                  WP No. 2468 of 2010<\/p>\n
    petitioners may be given hearing on the question about the alleged violation of <\/p>\n
    Regulation 23 which  is  in connection  with charging of interest.   After  giving <\/p>\n
    appropriate opportunity to the petitioners, an appropriate decision may be taken <\/p>\n
    within   a   period   of   four   weeks   from   today   and   that   too   after   hearing   the <\/p>\n
    petitioners.\n<\/p>\n
    31.                 During the course of hearing, Mr. Seervai has frankly pointed out <\/p>\n
    that  in a given case if the authority has got any other material, the same can be <\/p>\n
    considered while considering the case for renewal of license but such material <\/p>\n
    should   be   brought   to   the   notice   of   the   petitioners   asking   the   petitioners   to <\/p>\n
    submit   its   say   in   connection   with   any   queries   which   are   in   the   mind   of   the <\/p>\n
    authority   concerned.     In   view   of   the   same,   while   deciding   the   renewal <\/p>\n
    application afresh, it will be open to the authority to consider any other relevant <\/p>\n
    material by which it may not be possible to renew the license such as any legal <\/p>\n
    impediments in this behalf.  The authority  to take a fresh decision in accordance <\/p>\n
    with law.  In the meanwhile, it would not be proper to allow the first petitioner <\/p>\n
    to continue with its business especially in view of the earlier order passed by the <\/p>\n
    Division Bench  of this Court wherein the Division Bench declined to grant such <\/p>\n
    relief.     The earlier Committee which took the decision now may take a fresh <\/p>\n
    decision on the renewal application in accordance with law. It is clarified that if <\/p>\n
    there is any other ground available with the authority, the same may also be <\/p>\n
    considered provided the same should be brought to the notice of the petitioners.\n<\/p>\n
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     KPP                                        -35-                                   WP No. 2468 of 2010<\/p>\n
    It   is,   however,   clarified   that   since   we   have   found   that   non-disclosure   of   the <\/p>\n
    dispute between Bhaichand and ECGC was not a relevant aspect, the same may <\/p>\n
    not be taken into consideration while deciding the renewal application afresh.\n<\/p>\n
    It is needless to state that the decision may be taken objectively and  after giving <\/p>\n
    opportunity   of   hearing   to   the   petitioner     and   such   decision   may   be <\/p>\n
    communicated to the petitioners forthwith.\n<\/p>\n
    32.            Mr.   Seervai   has   frankly   submitted   that   since   the   petitioners   are <\/p>\n
    aware about the ground on which renewal application is not granted, it would <\/p>\n
    not be necessary to give any show cause notice to the petitioners and asking <\/p>\n
    explanation regarding Regulation 23 of the IRDA Regulations.   The petitioners <\/p>\n
    may   submit   its   appropriate   explanation   regarding   Regulation   23   by   giving <\/p>\n
    written submission in writing. As pointed out earlier, if any additional ground on <\/p>\n
    which the authority wants to rely and if there is any legal impediment in passing <\/p>\n
    the order of renewal, the same may be brought to the notice of the petitioners.\n<\/p>\n
    Mr. Seervai submits that while taking such a decision, Advocates may be heard.\n<\/p>\n
    We   are   not   in   a   position   to   accede   to   the   said   request.   However,   if   written <\/p>\n
    submissions  are  given,  the   authority  shall  consider   the   same   and   appropriate <\/p>\n
    decision may be taken within four weeks from today in accordance with law. We <\/p>\n
    are sure the authority will not ask for further extension in this behalf.\n<\/p>\n
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     KPP                            -36-                                 WP No. 2468 of 2010<\/p>\n
    33.       Rule is made absolute to the aforesaid extent with no order as to <\/p>\n
    costs.\n<\/p>\n
                                                         P. B. MAJMUDAR, J.\n<\/p>\n
                                                                  A.A. SAYED, J.\n<\/p>\n
                                                         ::: Downloaded on – 09\/06\/2013 17:02:50 :::<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"
Bombay High Court Wills India Insurance Brokers … vs Insurance Regulatory And … on 7 March, 2011 Bench: P. B. Majmudar, A.A. Sayed KPP -1- WP No. 2468 of 2010 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 2468 OF 2010 1. Wills India Insurance Brokers Pvt. Ltd. […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[11,8],"tags":[],"class_list":["post-6559","post","type-post","status-publish","format-standard","hentry","category-bombay-high-court","category-high-court"],"yoast_head":"\nWills India Insurance Brokers ... vs Insurance Regulatory And ... on 7 March, 2011 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/wills-india-insurance-brokers-vs-insurance-regulatory-and-on-7-march-2011\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Wills India Insurance Brokers ... vs Insurance Regulatory And ... on 7 March, 2011 - 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