October 27, 2021

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The World Live Breaking News Coverage & Updates IN ENGLISH

Delhi HC sets aside insurer appointments by BBB

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Delhi HC sets aside insurer appointments by BBB
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Delhi HC sets aside insurer appointments by BBB
Delhi HC sets aside insurer appointments by BBB

MUMBAI: The Delhi high court has set aside appointments made by the Bank Board Bureau (BBB) in public sector general insurance companies stating that the same is ultra vires of the Banking Companies Act 1980. The order could have implications for the board’s role in the selection of senior management for the insurance industry.
The order was in a petition filed by a senior executive of National Insurance Company on the ground that the BBB is not a body competent to make the selections. According to the petition, the BBB is a banking body established under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980.
“The very jurisdiction of BBB to make the selections to PSU general insurance boards is questioned and selection and appointments set aside. In my view, this should equally apply to CMD selections by BBB,” said K K Srinivasan, former member of insurance regulator Irdai. Recently, the BBB had shortlisted candidates for the post of MD in the Life Insurance Corporation of India (LIC) as well.
The petition also stated that the appointments committee of the Cabinet has no role in appointing an employee of a public sector insurance company on the board as these appointments are made ex-officio. It also stated that the board contains banking experts but none from the insurance sector. In its order, the court said that the BBB should exercise its jurisdiction within the four corners of the Banking Companies Act 1980.
“If the BBB could not have undertaken the process of selection of GM/directors in public sector insurers, then the selection by BBB would not conform with the law,” the order said. It added that the process of selection must be undertaken in terms of the provisions of the memorandum and articles of association of each public sector insurer, through the circulars already issued or validly framed rules relating to the criteria and composition of the committee.

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