SECP appellate bench rejects appeals by United Insurance and SPI Insurance

The Appellate Bench of the Securities and Exchange Commission of Pakistan (SECP) has dismissed appeals filed by United Insurance Company of Pakistan Limited and SPI Insurance Company Limited, now fully merged into United Insurance. 

The appeals challenged SECP’s directives regarding the encashment of an insurance guarantee and a subsequent penalty for non-compliance.

The first appeal pertained to SECP’s direction under Section 60 of the Insurance Ordinance to encash a Rs50 million insurance guarantee issued in favor of Sukh Chayn Valley Limited. 

The second appeal contested a penalty imposed for failing to comply with the order.

The case originated from a land purchase agreement between Sukh Chayn and contractors, secured by an insurance guarantee issued by SPI Insurance. 

Following a dispute, the agreement was canceled, and Sukh Chayn demanded encashment of the guarantee. 

Despite court rulings at various levels, including the Supreme Court, SPI Insurance and United Insurance did not comply with the orders for encashment.

The Bench referred to the Islamabad High Court (IHC) ruling by Justice Mohsin Akhtar Kayani, which stated that the obligation under the insurance guarantee was absolute and independent of any disputes between the parties. 

The Supreme Court upheld the IHC’s decision, reaffirming the obligation of the insurers to settle the claim.

The Bench rejected objections raised about SECP’s jurisdiction, deeming them without merit. 

It further dismissed two additional appeals filed by United Insurance, reiterating the company’s responsibility to honor the court and SECP directives.