Court halts IB intervention in EIC till Sunday

KATHMANDU:

The Patan Appellate Court has stayed the insurance regulator’s dismissal of Everest Insurance Company (EIC)’s CEO and the suspension of the executive board, till Sunday.

Back on October 8, the regulator — Insurance Board (IB) — had suspended the company’s directors from being involved in any insurance business for the next five years and fired then CEO Kebal Krishna Shrestha, while taking over the management of EIC. The annulled board’s members and CEO had lodged a writ petition at Patan Appellate Court to reverse the regulator’s moves.

“The Court has issued a stay order on today’s hearing on a writ petition till October 27,” informed registrar at Patan Appellate Court Nirpa Dhoj Niraula.

For the first time in Nepal’s insurance history, IB had taken over the management of an insurance firm, drafting its own team to handle the management after the company failed to run its business since the past three months. Despite being in good financial state, EIC had run into trouble as it was found to have flouted regulations on 18 different counts more than a year ago.

Following the stay order, the IB’s management team is forbidden to be engaged with EIC affairs till the final verdict.

“The court will give a final verdict only after hearing from both sides —petitioner and petitionee are summoned to be present on October 27 for the hearing,” informed Niraula.

In addition, the then dismissed board has also filed an appeal for interlocutory order against IB for taking over the management of EIC.

“Today, the hearing for the appeal could not take place due to limitation of court time,” informed Niraula.

However, the regulator is yet to get a confirmed report about the court’s decision to stay EIC’s CEO and board dismissal, according to IB chairman, Dr Fatta Bahadur KC. “After we receive formal summon and notice from the court, we will take action accordingly,” he informed.

IB had also not renewed Everest Insurance’s operating licence for this year as the non-life insurer failed to get the suspension on its fire portfolio revoked. Moreover, the management and then board are accused by their own employees of trying to shut down the company instead of getting their act straight.

The non-life insurance company ran into trouble more than a year ago after it was found to have made payments to an insurance claim worth Rs 40 million made by Himalayan Snax before the surveyor submitted the final report. Since Himalayan Snax and Everest Insurance are promoted by Khetan Group, the regulator was suspicious of the hasty transaction.

“We have already started to work on the claim settlements among others,” informed IB’s chartered accountant Santosh Prasai who is heading IB’s team at EIC. There are more than 1500 cases of outstanding claims.

The IB’s team is supposed to hold an annual general meeting and elect a new executive board, investigate the amount of loss that the company has incurred due to the ongoing problem, and make the people responsible compensate the loss.

IB has also directed to freeze the shares owned by the directors — including former chairman Rajendra Khetan — and their family members until the loss to the company is assessed and compensated, as per the law.

Source: THT