Former MP and BJP leader Subramanian Swamy filed a petition in Delhi High Court accusing Max Life Insurance and Max Financial Services (MFSL) of involvement in a scam amounting to approximately Rs 5,100 crore. The alleged scam revolves around Axis Bank Ltd and its group companies, Axis Securities Ltd and Axis Capital Ltd, making undue profits from equity shares of Max Life in a non-transparent manner.
Describing the fraud, Swamy stated, “There was a blatant fraud in Max Life Insurance and Max Financial Services.”
“This allowed their shareholder Axis Bank and its group companies Axis Securities and Axis Capital to make undue profits or gains from the purchase and sale of equity shares of Max Life in a non-transparent manner,” he added.
What is the scam?
Swamy claims a violation of mandatory directives issued by the Insurance Regulatory and Development Authority of India (IRDAI). He contends that Axis Bank misused its dual role as a shareholder and corporate agent of Max Life and MFSL.
Swamy claimed that Axis Bank group firms purchased a 12.02% stake in Maxlife Insurance for Rs. 31.51- 32.12 per stock, at a total consideration of Rs. 736 crore. This was much below the fair market value. He also claimed that though IRDAI imposed Rs. 3 crore penalty on Max Life Insurance for misrepresenting facts, it was a negligible sum compared to the size of the “fraud.”
Petition for Investigation
In response, Swamy filed a Writ petition under Article 226, seeking court orders to appoint a committee of experts to investigate the matter in the public interest.
Allegations of Fraudulent Acts
The petition alleges fraudulent acts by Max Life and MFSL, enabling Axis Bank and its entities to gain undue profits through the purchase and sale of equity shares. It also accuses these entities of attempting to acquire shareholding through unfair and non-transparent means, impacting the economic rights of citizens.
Axis Bank’s Share Transactions
Swamy points out that Axis Bank sold its stake in Max Life in March 2021 and, shortly after, acquired a significant percentage of shares from MFSL at a substantially lower price, violating IRDAI directives.
Court Proceedings
During the court proceedings, Axis Bank’s counsel mentioned difficulty accessing the petition and requested time for a thorough review. The bench, consisting of Chief Justice Manmohan and Justice Manmeet Pritam Singh Arora, adjourned the case until March 13.
Instead of blaming the Bank, it’s regulators duty to oversee these kind of transaction, as it’s requires their approval.