Former MP and BJP leader Subramanian Swamy on Thursday moved Delhi High Court allegeing a scam of nearly Rs 5,100 crore in Max Life Insurance and Max Financial Services (MFSL) allowing their shareholders Axis Bank Ltd and its group companies Axis Securities Ltd and Axis Capital Ltd to make undue profits/gains from the purchase and sale of equity shares of Max Life in non-transparent manner. The petition says that this is a violation of mandatory directions issued by the Insurance Regulatory and Development Authority of India (IRDAI).
Swamy filed a Writ petition under Article 226 seeking orders from court for appointing a committee consisting of experts in public interest, to investigate into the matter.
Swamy has alleged that Axis Bank misused its dual relationship of a shareholder as well as corporate agent of Max Life and MFSL. He further alleged "misrepresentation" and "non-compliance" by the respondents before the IRDAI to obtain prior approval for transfer of the shares.
"...fraudulent acts of M/s Max Life Insurance Co. Ltd. (“Max Life”) and M/s Max Financial Services Ltd. (“MFSL”) that enabled shareholder Axis Bank Ltd., and its group entities to make undue profits/gains from purchase and sale of equity shares of Max Life in a non-transparent manner, by violating the directions of the Insurance Regulatory and Development Authority of India (IRDAI) and moreover, in relation to handing over the management of bank(s) to non-banking professionals having no banking experience who are attempting to acquire shareholding by unfair and non-transparent ways, by manipulating records and books, that directly impacts the economic right of the citizens, and especially the customers and shareholders of the banks, being violative of the Constitution of India." the petition filed in the court read.
The former MP submitted in the high court that the Axis Bank sold its stake of 0.998% shares of Max Life in March 2021 to MFSL & Mitsui Sumitomo International at INR 166/- per share. Subsequently, in a very short span of time i.e., in March-April 2021 itself, Axis Bank Limited and its group entities acquired 12.002% shares from MFSL at price range of INR 31.51-INR 32.12 per share.
"Meaning thereby, Axis Bank has gained substantially while selling shares as the selling price has been exponentially more than the purchasing price. Thus, apart from being completely inexplicable, is also entirely contrary to the directions issued by the IRDAI in its letter dated 28.01.2021." the petition read.
He further stated that promoters of the insurer i.e. MFSL and MSI have been engaging in transfer of shares of the insurer to Axis bank at a price, which is substantially lower than the fair market value and subsequently buying the same share from Axis bank at a substantially higher price.
Counsel appearing for Axis Bank told the court that he could not access the copy of the petition and needed time to go through it.
A bench of Chief Justice of High Court Manmohan and Justice Manmeet Pritam Singh Arora adjourned the case till March 13.