Case Title: DR. SUBRAMANIAN SWAMY v. UNION OF INDIA AND OTHERS
Summary
Dr. Subramanian Swamy has filed a public interest litigation against Axis Bank, accusing them of ill-gotten gains from transactions involving Max Life Insurance shares. The case, filed with the Delhi High Court, alleges that Max Life Insurance and its group companies violated the Insurance Regulatory and Development Authority of India (IRDAI) directives by fraudulently allowing Axis Bank and its group companies to generate excessive profits through the opaque purchase and sale of equity shares. Swamy argues that the penalty imposed by IRDAI is insignificant compared to the total undue gains involved and requests the court to establish an Expert Committee to investigate the contested transactions and issue guidelines.
About the case
Axis Bank allegedly made ill-gotten gains from transactions involving Max Life Insurance shares, according to a public interest litigation initiated by BJP leader Dr. Subramanian Swamy, which has been filed with the Delhi High Court in opposition to the alleged Rs. 5,100 crore fraud. Acting Chief Justice Manmohan and Justice Manmeet Pritam Singh Arora were assigned the case today on the bench. In support of Swamy, Senior Advocate Rajshekhar Rao argued that despite the alleged disproportionate 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. violated the directives of the Insurance Regulatory and Development Authority of India (IRDAI) by fraudulently 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. The transactions involving Max Life and Axis Bank allegedly involved the sale of shares for a substantial premium over their purchase price.
Thus, the Bank derived substantial profits from the transactions by utilizing its dual capacity as a shareholder and corporate agent of Max Life. Furthermore, in 2021, IRDAI issued directives that were in direct opposition to the aforementioned transactions. To paraphrase 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.” It is noted that IRDAI imposed a Rs.3 crore penalty on Max Life 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 contravention of the Authority’s directives, which resulted in the Axis Bank receipt of substantial undue monetary consideration. According to Swamy, however, this penalty is insignificant in comparison to the total undue gains involved; therefore, the court must intervene. In order to investigate the contested transactions and issue guidelines, it is requested that the Court establish an Expert Committee.
