Kathmandu- CG Electronics, a subsidiary of the Chaudhary Group, has been found guilty of insurance fraud following a fire at its Satungal warehouse.

After 12 years of legal battles, the Supreme Court upheld the Patan High Court’s ruling on Tuesday, ordering the company to return Rs. 32.19 million that was overpaid by the insurer.

The controversy began after the warehouse fire on October 14, 2012, when CG Electronics filed a claim for damages amounting to Rs. 587.33 million.

An investigation later revealed that United Insurance Company Limited had  over paid the company Rs. 381.8 million instead of the correct amount of Rs. 349.6 million—an excess of Rs. 32.19 million.

The Insurance Board (now the Insurance Authority) initially determined that the claim had been settled incorrectly, a finding that was supported by the Patan High Court.

On Tuesday, Supreme Court Justices Nahkul Suwedi and Mahesh Sharma Paudel confirmed this decision, directing the insurer to immediately recover the surplus funds from CG Electronics.

In addition to the ruling against CG Electronics, penalties were imposed on other parties involved in the irregularity. Two senior officials at United Insurance and two surveyors were each fined Rs. 3,000, while the license of an insurance agent operating without a valid license was cancelled.

The Chaudhary Group was accused of receiving an illegal payment from an insurance company in which it held a majority stake. The insurer, which was once known as United Insurance, is now called United Ajod. The case started because the group insured its own company and manipulated the claim to get more money than it should have.