Mumbai: In a relief for thousands of persons who pledge their insurance policies to raise loans, the Bombay High Court quashed a three-year-old rule by the countrys biggest insurance provider, Life Insurance Corporation, to charge a fee for assigning insurance policies to financial companies. The service charge/fee is not authorised by law, said a division bench of Justice FI Rebello and Justice JH Bhatia, while ruling that LICs demand for a fee violated the fundamental right of financial companies who advance loans on insurance policies to carry on trade and business. The circular levying a fee of Rs 250 if a policy holder assigns his insurance policy in favour of financial organisations also infringed on the Constitutional right of petitioner Dravya Finance Pvt Ltds by depriving it of its property without the authority of law, the high court held.As per rules, a policy holder can transfer his interest in the life insurance policy to another person or institution as a security for a house loan or just emergency cash. These institutions reap windfall gains in the form of tax-exempted returns, according to LIC. Trading in life insurance policies, where a company purchases insurance policies from policy holders and then sells it to banks and financial institutions,is a lucrative business worldwide.
Earlier in 2003, LIC tried to rein in the practice by banning trading in insurance policies. The HC in 2007, however, set aside the rule and held that insurance policies are movable property that can be traded and assigned freely. According to Dravyas lawyers, rule was intended to make the assignments of life insurance policies in favour of finance organisations so onerous that it restricts and prohibits the practice. LIC contended that it was right to charge the fees for administrative purposes. The insurance company pointed to 2005-06 figures showing that in the Western Zone alone, it had received over 77000 applications to transfer assignment of insurance policies. They said that the assignment of policies involved tremendous manpower and high cost of administration, which justified the nominal service fee of Rs 250 per assignment.
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CBI arrests CMD of coal firm for graft
New Delhi: In a major embarassment for Coal India Limited,CMD of South Eastern Coalfields Limited (SECL) in Bilaspur has been arrested by the CBI for seeking Rs 1 crore from a private firm. CMD MP Dixits four bank lockers in Delhi yielded Rs 1.55 crore. It has been alleged that the CMD demanded and agreed to accept an amount of Rs 1 crore from the officials of one of the companies (Bilaspur based) which agreed to pay this amount to a person nominated by the CMD. The agency said that this amount was to be paid as a reward for showing favour to the private company in its matters pending with SECL. CMD of SECL has asked managing director of another private company having official dealings with SECL, to detail one of his employee based in Delhi, to collect the money in Delhi on his behalf. CMD also gave a pseudo name to the said employee. In the follow-up of this conspiracy,an amount of Rs 80 lakh exchanged hands, a CBI official said. The managing directors of two private firms have been arrested. They were identified as Sanjay Singh and Surojit Samanta.
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(source-toi)
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