High Court Directs Kamala Bridge Insurance Dispute to Commercial Court, NPR 130 million claim from Neco insurance

Kathmandu, The Patan High Court has ordered that the ongoing insurance dispute between Neco insurance and Lumbini Builders regarding the Kamala Bridge project be referred to the commercial court for a full hearing.  Lumbini Builders, part of the joint venture responsible for the bridge’s construction, has filed a claim against NECO insurance seeking NPR 130 million in compensation for a damage caused by flooding.

The joint bench of justices Khadananda Tiwari and Hemanta Rawal issued the order on the Sunday, moving the case forward after the months of the stalemate between the two parties. The dispute arose after the flooding damaged 160 meters of the 470 meter long bridge, as well as 200 meters of the approach road and 500 meters of the river control wall.

Lumbini Builders claim that it is entitled to at least 130 million in compensation from Neco insurance to cover these damages. However, NECO insurance has contested the claim, leading to a prolonged legal battle. The issue was initially brought to the attention of the Nepal Insurance Authority but has now escalated to the courts.

The delay in resolving the insurance dispute has caused significant setbacks in the construction of the Kamala Bridge, which is critical for the local communities of Sihara and Dhanusha districts. According to the project’s Chiarman and Managing Director, Sharma, an estimated NPR 150 million is needed to repair the damage caused by the floods. Without the insurance payout, work on the bridge has slowed considerably.

The Kamala Bridge project, initially contracted to the Pappu Construction in 2011 (2068 BS), has faced numerous delays and setbacks. Lumbini Builders, which was part of the joint venture with Pappu, took over the construction after Pappu failed to meet deadlines. The bridge was originally scheduled to be completed by November 2016 (2073 BS), but has remained unfinished for years, causing frustration and protests from local residents.

The lack of a functioning bridge has severely impacted the local economy and daily life in Siraha and Dhanusha. Residents are forced to take long detours via the East West Highway to cross the Kamala River, as the river remains impassable for much of the year due to water flow. The delay in bridge construction has hindered economic development and left communities isolated.

The government had mandated compulsory insurance for all infrastructure projects to protect against such risks. This policy was designed to ensure that any damages incurred during or after construction, particularly due to natural disasters, could be covered by insurance. However, the ongoing dispute between Lumbini Builders and Neco Insurance highlights challenges in implementing this system effectively.