Case Title: DR. SUBRAMANIAN SWAMY v. UNION OF INDIA AND OTHERS
Summary
Dr. Subramanian Swamy, a leader of the Bharatiya Janata Party (BJP), has filed a public interest litigation against Axis Bank for alleged fraud involving over Rs. 5,100 crores in transactions involving Max Life Insurance shares. The Delhi High Court heard the petition, and Swamy argued that no significant measures have been implemented. The court postponed the hearing until March 13. Swamy claims that Axis Bank and its group companies allowed Max Life to generate excessive profits through the opaque purchase and sale of equity shares, violating directives from the Insurance Regulatory and Development Authority of India (IRDAI). The court has been ordered to establish an Expert Committee to investigate the contested transactions and develop guiding principles.
About the case
Dr. Subramanian Swamy, leader of the Bharatiya Janata Party (BJP), has petitioned the Delhi High Court in the name of public interest litigation to expose an alleged Rs. 5,100 crores fraud involving Axis Bank’s improper profit-making from transactions involving Max Life Insurance shares. Today, a bench consisting of Justice Manmeet Pritam Singh Arora and Acting Chief Justice Manmohan heard the petition. Senior Advocate Rajshekhar Rao, who was representing Swamy, argued that despite the alleged undue profits in the current case amounting to over Rs. 5,100 crores, no significant measures have been implemented.
Requesting that Swamy’s attorney serve the Bank with a copy of the petition, the court postponed the hearing until March 13. Swamy asserts that Max Life Insurance Co. Ltd. and Max Financial Services Ltd. engaged in fraudulent activities by permitting Axis Bank, a shareholder of Max Life, and its group companies (Axis Securities Limited and Axis Capital Limited) to generate excessive profits or gains through the opaque purchase and sale of equity shares. This conduct was in violation of the directives issued by the Insurance Regulatory and Development Authority of India (IRDAI).
There are allegations that the selling price of shares in transactions involving Max Life and Axis Bank was significantly higher than their purchase price. By virtue of its dual role as shareholder and corporate agent of Max Life, the Bank profited significantly from the aforementioned transactions. Furthermore, in 2021, IRDAI issued directives that were in direct opposition to the aforementioned transactions. According to the petition, “it is evident from the above that, 12.002 % of shareholding in Maxlife is bought by the Axis Bank group companies at Rs. 31.51 / Rs. 32.12 per share at total consideration of 736 Crores, which is evidently below the fair market value.”
According to the document, IRDAI fined Max Life Rs. 3 crores for noncompliance with the authority’s directives, misrepresentation to obtain prior approval of the authority for the transfer of shareholders, and registering transfer of shares in violation of the authority’s directives, which resulted in the transfer of substantial undue monetary consideration to Axis Bank.
According to Swamy, however, this penalty is insignificant in comparison to the total undue gains involved; therefore, the court must intervene. There is an appeal for the Court to establish an Expert Committee with the responsibility of conducting an investigation into the contested transactions and developing guiding principles.
