High Court in Blantyre on Friday ruled that the Reserve Bank of Malawi (RBM) decision to takeover the management of Prime Insurance Company should be judicially reviewed.
Judge Kenyatta Nyirenda also sustained stay of statutory management and injunction against the takeover which Prime Insurance obtained on June 5 this year.
On June 3 this year, RBM Governor Charles Chuka in his capacity as Registrar of Financial Institutions announced that he was putting Prime Insurance under the Central Bank’s administration after months of monitoring the company’s financial records amidst reports of its failure to honour claims.
But Prime Insurance through their lawyers, Destone & Company, challenged the decision with an application for judicial review and an injunction to stop the Central Bank from controlling the insurance company in the interim.
Nyirenda said in the circumstances, he is very much persuaded that leave to commence judicial review was properly granted and that the issues which the court is being asked to determine can only be best addressed through judicial review and not otherwise.
The applicants, Prime Insurance Company Limited and Goss Katoki Mwalilino argue that RBM has no authority and jurisdiction to place a prudentially regulated financial institution under statutory management unless requested by a prudentially regulated financial institution.
“I see no merit in the Respondent’s complaint against the said leave. The said leave is, accordingly, sustained.
“As a matter of summing up and also so that I do not leave anybody by the wayside, it is my holding that the substantive matter herein will proceed to full judicial review in line with the Directions made on 5th June 2016 and 10th June 2016. I further direct that the hearing of the originating motion for judicial review herein shall take place on 21st July, 2016 at 9 o’clock in the forenoon,” Kenyatta ruled.
He also said he sees no merit in allowing the Central Bank to implement the very decision that Prime Insurance Company Limited and Mwalilino seek to be judicially reviewed.
“Until a decision is made in the substantive judicial review proceedings, the parties have to revert to the position immediately prior to the making of the challenged decision. In the premises, the ancillary orders were properly granted and, accordingly, the Respondent’s application for the discharge of ancillary orders has also to be dismissed. It is so ordered.
“This means that the stay order and the order of injunction granted herein shall, as qualified by the Court’s Directions of 10th June 2016, continue until the determination of the substantive judicial review proceedings or until a further order of the Court,” he said.
As to the costs, Nyirenda said such issues normally follow the event and since Prime Insurance and Mwalilino have succeeded, RBM will have to bear the costs of the proceedings.
According to the affidavit that RBM tendered in court, the bank had received complaints from some Prime Insurance clients and other insurance companies that the company was failing to settle claims long time after the stipulated time had elapsed.
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