The Appellate Body of the Securities and Exchange Commission of Pakistan (SECP) has dismissed the appeals filed by United Insurance Pakistan Limited and SPI Insurance Limited, which have now been fully merged into United Insurance.
The appeals challenged the SEC’s guidance regarding the collection of insurance security and the subsequent penalty for noncompliance.
The first appeal relates to a direction by the Securities and Exchange Commission of Pakistan under Section 60 of the Insurance Act to encash an insurance guarantee of Rs 50 million issued in favor of Sukh Chayn Valley Limited.
The second appeal challenged the penalty imposed for failure to comply with the order.
The case arose from a land purchase agreement between Sukh Chayn and the contractors, guaranteed by insurance issued by SPI Insurance.
After a dispute, the agreement was cancelled, and Sukh Chin demanded the guarantee back.
Despite rulings by courts at various levels, including the Supreme Court, SPI Insurance and United Insurance have not complied with the disbursement orders.
The Council referred to the Islamabad High Court (IHC) ruling by Justice Mohsin Akhtar Kayani, which stated that the obligation under the insurance guarantee is absolute and independent of any disputes between the parties.
The Supreme Court upheld the IHC’s decision, reaffirming the insurers’ obligation to settle the claim.
The court rejected the objections raised regarding the jurisdiction of the Securities and Exchange Commission, considering them unfounded.
It also denied two additional appeals filed by United Insurance, reiterating the company’s responsibility to respect court and SEC directives.