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Informist, Monday, Aug 12, 2024

 

NEW DELHI – The Delhi High Court today asked the Securities and Exchange Board of India and the Reserve Bank of India to expedite their probe into the alleged "fraudulent acts" by Max Life Insurance Co Ltd and Max Financial Services. The court also turned down a petition by former Rajya Sabha member Subramanian Swamy, seeking to set up a committee to probe the alleged fraud transactions. 

 

Swamy had said that the alleged transaction by Max Life Insurance and Max Financial helped shareholders Axis Bank and its group companies make undue profits from the purchase and sale of equity shares in Max Life. The court passed the order to expedite the probe after noting that SEBI and RBI were already investigating the case. 

 

 

Swamy today posted on X, formerly Twitter, that he was also exploring the possibility to move a criminal court and invoke the Prevention of Money Laundering Act, 2002, to further proceed in the matter "on a scam of more than 40 bln rupees". In the petition, Swamy had said the share transfer happened in a non-transparent manner, thereby violating the mandatory directions of the Insurance Regulatory and Development Authority of India. 

 

Advocate Mukul Rohatgi, appearing for Axis Bank, said Swamy's PIL was not maintainable as the issue squarely fell under the realm of a commercial transaction between private entities. The public interest litigation did not state the class or individuals for whose benefit it was filed when the aggrieved shareholders, if any, were capable of coming to the high court.

 

The counsel for the Insurance Regulatory Authority said that the regulator had already imposed penalties of 20 mln rupees and 30 mln rupees on Axis Bank and Max Life respectively. The copy of that penalty had been forwarded to the RBI and SEBI for examination and necessary action.

 

Meanwhile, the SEBI said that it had initiated preliminary examinations into the case which had reached an advanced stage. SEBI's counsel said that the petitioner's letter seeking probe into the case has been forwarded to the RBI. Further, the RBI's counsel said that it will examine the letter forwarded by the insurance regulatory authority and SEBI if not already examined. 

 

There was a clear misrepresentation by Axis Bank and its group companies, Axis Securities Ltd and Axis Capital Ltd, before the insurance regulator, along with non-compliance with its directions, to obtain prior approval for the transfer of the shares, Swamy had said. The undue profits from the purchase and the sale of equity shares of Max Life in a non-transparent manner, amounting to approximately 40 bln rupees, are evidently proceeds of crime, he had said. Hence, the amount pocketed by Axis Bank in collusion with Max is proceeds of crime, which deserves to be attached immediately, he added.

 

Today, shares of Axis Bank ended 1.9% higher at 1,164.30 rupees on the National Stock Exchange, while those of Max Financial Services ended 1.4% lower at 1076.85 rupees.   End

 

Reported by Surya Tripathi

Edited by Akul Nishant Akhoury

 

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