The appellate court issued the order responding to separate writ petitions filed by Khetan and Shrestha. The duo had sought court order against the insurance sector regulator´s decision.[break]
A single bench of Judge Shivaraj Adhikari issued the order on Wednesday. The IB had taken over the management of the non-life insurer and suspended all board members on October 9, saying that the board and the EIC management repeatedly flouted its directions.
The court has summoned both the petitioners and the defendant for discussion on Sunday. The IB had also decided to disqualify members of the Khetan family from holding any posts in the company for the next five years. It had also frozen shares that Khetan hold in the company until he reimburses fire insurance claim of Rs 40 million paid to Himalayan Snax. Himalayan Snax is promoted by the Khetan family. Khetan has 22 percent stake in EIC.
Earlier, the IB had penalized the company by suspending its fire portfolio in July, 2012. Instead of following the IB direction, the board and the management had threatened to shut down the company if the suspension on fire portfolio was not lifted.
Before the IB took over the management, the company had remained shut for 14 months. Employees of the company organized sit-in protest at the company for over 60 days to press the management to resume business. They even organized sit-in at the IB, demanding the regulator to intervene in EIC.
The IB intervention is the first in the history of Nepali insurance industry. The IB officials said they had to intervene in the company as its multiple directions were flouted by the management. The management had even turned deaf ear to the IB´s repeated calls for talks.
The IB on October 10 sent a team led by Chartered Accountant Santosh Prasai to look after the management of the company. The team has been given six months to bring the company into normalcy.
Meanwhile, EIC board member Madhusudan Agrawal has filed separate petition at the court, seeking revocation of the IB decision.
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