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Kudakwashe Mhundwa Business Reporter
RioZim Limited has lost its legal battle to have the loan it obtained from Trust Bank reduced to $500 000 from $1,8 million after the High Court reversed a default judgment the mining company had secured against the bank. Trust had in 2013 obtained a court order against RioZim for $1,8 million plus interest, which the bank had advanced to the company. A year later, the bank was placed under liquidation with the Depositors Protection Corporation subsequently appointed the liquidator. In May 2015, RioZim applied to the High Court for variation of the court order, which the bank had earlier obtained to recover $1,8 million.

A default judgment was subsequently granted where the original order was varied and substitution thereof with the sum of $634 336.

The interest of 45 percent per annum was also reduced to 25 percent. This was done without the leave of the court in terms of the Companies Act.

This prompted DPC to dash to the High Court for rescission of judgment citing several illegalities that culminated in the erroneous order.

Judge President Justice George Chiweshe after hearing arguments from both counsel ruled that RioZim’s application for variation was made without the leave of the court as required by the Companies Act. He found Rio Zim’s opposition of the rescission to be without merit.

“As a result the application for variation was not properly done before the court, rendering the resultant order a nullity,” said Justice Chiweshe.

“If the court had been informed that leave had not been sought to issue the application, it would have declined to entertain the matter. Clearly the variation order was granted in error and thus liable to being set aside.”

The Judge President said the fact that the variation order was granted in the absence of DPC was beyond dispute. It was a default judgment, noted the judge. Given the provisions of the Banking Act, Justice Chiweshe said it was beyond doubt that the liquidator’s rights and interest would have been affected one way or the other, hence the need to have cited DPC.

Rio Zim, through its lawyer, Advocate Firoz Girach raised several preliminary points to persuade the court to throw out DPC’s application.

It challenged DPC chief executive John Chikura’s authority to depose to the founding affidavit in the absence of a resolution from the corporation conferring authority to act on its behalf. The mining concern also challenged the legal standing of DPC to bring such an application. Rio Zim further argued that DPC had no direct and substantial interest in the proceedings, hence no reason to cite it.