Petition Seeks To Bar State-Run Insurers From Investing In ITC, Other Cigarette Makers

PIL wants LIC and other insurers to divest stake in cigarette makers like ITC.

Boxed of ITC’s tobacco cigarette brand, Gold Flake, are displayed for a picture in Mumbai, India. (Photographer: Poorbita Baagchi/IIJNM)

State-owned insurers like Life Insurance Corporation of India should not be allowed to invest in cigarette makers such as ITC Ltd., according to a public interest litigation filed in the Bombay High Court. The petition wants the companies to divest their shareholding in cigarette companies.

The petitioners are led by Sumitra Hooda Pednekar, wife of the late Satish Pednekar, former Maharashtra home and labour minister, who died of throat cancer. Others include R Venkataramanan, the managing trustee of Tata Trusts, and doctors of Tata Memorial Hospital.

The PIL, a copy of which has been reviewed by BloombergQuint, alleges that the investments made by insurance companies like LIC are not only contrary to the state’s objectives, but also against the constitutional mandate vested in the public sector companies.

According to the PIL, Venkataramanan wants the court to examine the conduct of insurance companies making investments in tobacco-related products, which are hazardous to public health.

A spokesperson for Tata Trusts clarified to BloombergQuint that the PIL has been filed in individual capacity, led by Pednekar. An ITC spokesperson declined to comment on the petition when contacted over the phone. The state-run insurers could not be reached for a comment.

The petition says insurance companies along with the Specific Undertaking of Unit Trust of India (SUUTI) hold a 32 percent stake in ITC, which is primarily a tobacco company. Five state-owned insurance companies alone have an investment to the tune of Rs 76,505 crore in ITC and other cigarette companies, according to the petition.

The Petitioners are perturbed at the investments made by these companies (five Insurers) in tobacco companies including ITC. These investments are to the tune of Rs 1,07,000 crore, which is more than even budgets of some of the states in India.

Besides LIC, other state-run insurers are Oriental Insurance Company Ltd., New India Assurance Co. Ltd., National Insurance Company Ltd. and General Insurance Corporation of India Ltd.

The petition seeks directions asking insurers to divest their shareholdings from the tobacco companies and not make such investments in the future. It also wants the government and the insurance regulator, Insurance Regulatory and Development Authority of India, to frame a code of conduct to prevent such investments in the future.

The petition, filed on April 13, has made the five insurance companies, IRDAI and the government as respondents.

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WRITTEN BY
Sajeet Manghat
Sajeet Kesav Manghat is Executive Editor at NDTV Profit. He is a graduate i... more
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