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Petitioners Cite Physical, Financial Pain And Loss Of One Level Of Appeal

Petitioners who have filed public interest litigations (PILs) on unit linked insurance plans (Ulips) with various High Courts, plan to oppose capital market regulator Sebi's plea that all those cases be transferred to the Supreme Court. Sumedha Rao, lawyer for Rajendra Thacker, one of the litigants, said that they would be deprived of one level of appeal if the matter is heard in the Supreme Court. A verdict by the Supreme Court is final. "Also, since Sebi and most of the insurance companies are headquartered in Mumbai, why should the case be transferred to Delhi?" asks Ms Rao.

"We will oppose the transfer as it will cause physical and financial difficulties for us," she said. Another petitioner, a lawyer himself, has filed a public interest litigation against Sebi with the Allahabad High Court. He too plans to oppose the Sebi move. The Supreme Court on Friday issued notices to the Centre, Insurance Regulatory and Development Authority (Irda), 14 life insurance companies and litigants who filed the PILs, seeking their response to Sebi's petition. The matter will come up for hearing on July 8, after the summer break.

Both the financial sector regulators - Sebi and Irda - are fighting over the right to regulate Ulips, and securities lawyers say the legal battle is likely to be a long-drawn affair. Eminent jurist Fali S Nariman is advising Irda, and Attorney General of India Goolam E Vahanvati, is advisor to Sebi. It is learnt that some of the insurance companies have sought the advice of law firm J Sagar Associates. Securities lawyers are keenly watching as to who would be representing the Centre.

People familiar with the legal proceedings say that the Supreme Court, after ascertaining every party's response, may transfer the case to a High Court to look into the basic arguments. Irda had proposed to Sebi that both could jointly approach any one of the four chartered high courts - Bombay, Delhi, Calcutta and Madras - under Section 90 of the Civil Procedure Code. However, Sebi chose to take up the matter with the Supreme Court. It did so as there was no provision in the law to jointly approach a court. Also, the matter was not a mediation case, said a legal expert.

On Friday, Sebi's representative Mr Vahanvati said that the Supreme Court will be the appropriate forum as civil courts lack authority under Section 90 to resolve jurisdictional disputes. The PILs, however, do not deal with the jurisdiction issue. Ulips, the star product of the insurance industry, are a combination of investment and insurance cover and Sebi wants to regulate the investment part of it. However, since insurance companies are regulated by Irda, it doesn't want the capital market regulator to interfere with these companies. On April 9, Sebi barred 14 insurance companies from selling Ulips, but later softened its stance and said the ban would apply only to new launches.

Source: http://epaper.timesofindia.com/