With fading hopes of the regulators jointly moving the appropriate court as suggested by finance minister Pranab Mukherjee North Block on Thursday referred the issue to the law ministry for advice. Official sources told FE that the law ministry was approached to find a way to craft a joint petition.
Giving unqualified powers to market regulator Securities and Exchange Board of India (Sebi) was seen as one of the ways to resolve the turf war over unit-linked insurance plans.
On April 9, Sebi banned 14 life insurers from selling Ulips without its permission. The very next day, Irda issued a statement asking insurers to ignore the Sebi order and carry on with the business of Ulips. The finance ministry later stepped in to restore status quo ante, asking both regulators to move the appropriate court for a mandate over regulation of Ulips.
It was expected that Sebi and Irda would jointly move court under Section 90 of the Civil Procedure Code.
However, when contacted, Irda chairman J Hari Narayan told FE: We had told Sebi that a joint application may be filed in a court of law under Section 90 of Civil Procedure Code (CPC) to resolve the issue. However, Sebi has told us that it was not possible under the particular section as it didnt relate to any criminal issue. Also, Sebi has told us that the same issue cant be discussed in any court other than the Supreme Court.
HariNarayan added that Irda was firm in its demand that the matter be resolved through a legally binding mandate. We have already written to them (Sebi) and there was no need for us to write anything further, at the moment, to them, he said.
Meanwhile, Sebi on Thursday moved the Supreme Court seeking transfer of petitions relating to the issue pending before high courts in Mumbai and Allahabad to a single court to avoid multiplicity of petitions which could lead to conflicting judgements. It sought to restrain the high courts from proceeding further on these petitions or pass any further orders. The matter is slated to come up for hearing during the mentioning (when only urgent cases are taken up) on Friday.