High Court orders suspension of USD 22.78M compensation payment to Yacht Tours

The High Court, on Thursday, issued an injunction to suspend the implementation of a Civil Court ruling against Allied Insurance to pay USD 22.78 million (MVR 351 million) as compensation to Kaashidhoo MP Abdulla Jabir’s Yacht Tours.

Yacht Tours sued Allied over lack of compensation for extensive damages to water villas in H. A. Alidhoo – a resort leased to Yacht Tours for development as a tourist resort - due to bad weather, back in 2014.

The Civil Court issued its ruling in the case on July 19, finding that Yacht Tours had the right to make an insurance claim to cover the damages under a fire insurance policy taken for the resort from Allied, and should be compensated for the damages.

The court ordered Allied to pay the USD 22,784,837.59 as compensation over a period of six months.

Yacht Tours filed a subsequent motion with the Civil Court, asking for action to enforce the ruling, citing failure to make the USD 3.8 million compensation payment due within the first month.

However, Allied later appealed the ruling with the High Court, and asked for an injunction to suspend the implementation of the ruling.

Allied argued that failure to grant an injunction will have a significant impact on the company, which may result in irrevocable damages.

ARGUMENTS PRESENTED BY ALLIED:

• If the Civil Court’s ruling implementation section issues an order to freeze Allied’s bank accounts, it will disrupt the services to Allied customers and violate their rights.
• If Allied pays the compensation to Yacht Tours in accordance with the Civil Court ruling, and if the ruling is later overturned upon appeal, there is high chance Allied will not be reimbursed.
• If Civil Court takes action to enforce its ruling, it will lead to loss of confidence among Allied’s customers and hinder future business.
• Given that the insurance business is heavily reliant on reinsurance, there is high chance of agreements with reinsurance partners falling through, and loss of confidence in insurance business and loss of business.
• It will hinder Allied’s ability to pay its creditors, leading to the company getting blacklisted.
• It will hinder payment of salaries to Allied’s employees, leaving them destitute.

After Allied presented the arguments, the High Court noted that all except for one point pertained to the fear of losses the company may suffer; the fear of halt or disruption to business, the fear of losing customers or losing customer confidence, the fear of losing reinsurance, the fear of losing company reputation or goodwill, and the fear of being rendered unable to settle debts.

The court said it believed it warrants an injunction to suspend the implementation of the ruling as requested by Allied Insurance, and ordered Civil Court to refrain from taking any action to implement the ruling pending the outcome of the appeal, or until the High Court states otherwise.