Friday, November 1, 2013

Court denies interim order against Insurance Board decision

The court allowed the Insurance Board to handle the Everest Insurance until the final verdict is out as Patan Appellate Court today denied interim order on separate writs petitioned by the chairman Rajendra Khetan and chief executive Kebal Krishna Shrestha of Everest Insurance.
The court – responding to separate appeals filed by chief executive
Shrestha and a board member of the insurance company Madhusudan Agrawal – also said there was no need of directing Insurance Board to rollback its decision.
Shrestha, who was sacked by the regulator, will also not be able to assume his position and board members will also be continued to be barred from carrying out insurance-related business until the court issues the final verdict.
They had sought interim order against Insurance Board decision to take over the management of the non-life insurance company. Earlier on October 23, the court had stayed the board's decision to dismiss chief executive and suspend the executive board. But the very next day, it had issued another stay order on the Board’s decision to take over the management of the insurance company.
But today's decision of joint bench of Judges Shivaraj Adhikari and Baburam Regmi has paved the way for the insurance regulator to intervene at the insurance company until it gives the final verdict.
The Insurance Board had taken over the management of Everest Insurance on October 9, removed the chairman, suspended chief executive and board members from carrying out insurance business for the next five years citing it had failed to effectively run its business for the last three months despite repeated calls ‘to correct mistakes of the past’.
The court has also directed the defendants to furnish clarifications in writing for the final hearing.
Khetan and Shrestha had filed separate writ petitions on October 23 seeking interim order against the regulator's decision.
The board had also decided to disqualify Khetan and his family members form holding any positions in any insurance company for five years, apart from freezing Khetan's stake – that stands at 22 per cent – in the non-life insurance company.
The board took over the management of the company – the first such move by the insurance board regulator – after the management and executive board, according to the board, flouted multiple directives issued by it, including a claim payment of Rs 40 million made to Himalayan Snax that is promoted by the Khetans.
Everest Insurance had released the claim to Himalayan Snax without following due procedure at a time when more than 2,300 claims were pending at the company. But its employees say that the claim amount is worth over Rs 400 million.
Following the tug of the war between the insurance company and the board, Everest Insurance was closing the shop gradually and not taking new business.
A team led by Chartered Accountant Santos Prasai has resumed regular works at the company.

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