This became a bone of contention when various Benches of the National Company Law Tribunal (NCLT) approved the proposals to merge Shriram GI Holdings Private Limited (SGIH) with Shriram General Insurance Company Limited (SGIC) and Shriram LI Holdings Private Limited (SLIH) with Shriram Life Insurance Company Limited (SLIC).
The insurance regulator promptly moved the National Company Law Appellate Tribunal (NCLAT) against the orders of NCLT benches.
The National Company Law Appellate Tribunal (NCLAT), however, rejected the submissions made by the Insurance Regulatory and Development Authority of India (IRDAI) against the approval given for merger proposals of the insurance arms of Shriram Group.
The NCLT benches had given their approval as per the provisions of Section 230 to 232 of the Companies Act, 2013. SGIH undertakes the business of investments, facilitate strategic, private equity and third-party investors, and to carry on consultancy business, including in particular in relation to the general insurance products sector, The main objective of SLIH is to undertake investment business, as per a statement issued last year announcing Competition Commission of India’s nod for the proposals.
The IRDAI had petitioned the NCLAT against the NCLT orders, arguing that it is mandatory to get approvals under Section 35 (1) of the Insurance Act when a firm in the insurance business merges with one that is outside the sector.
In its order dated March 10, the appellate tribunal has held that Section 35 of the Insurance Act does not place a statutory bar against such mergers when undertaken under Sections 230 to 232 of the Companies Act, 2013.
“After having heard the learned counsels for the parties, and having given a thoughtful consideration to the grounds taken by the learned counsels for the parties and particularly owing to the percept of “Amalgamation’’, which we have dealt with herein above, as there happens to be no statutory bar created under the Insurance Act, which could have called for a prior compliance of Section 35 of Insurance Act, for Amalgamation in the instant cases to be carried under Section230 to 232 of the Companies Act, 2013, the Amalgamation as made by the Impugned Orders do not suffer from any apparent legal error which could call for an interference in the exercise of our Appellate powers under Section 421 of the Companies Act, 2013,” the NCLAT order said.
