Zambian bank ordered to pay Shah US$139m Jayesh Shah

Fidelis Munyoro Chief Court Reporter

The Bank of Zambia has been ordered to pay over US$139 million to Harare business mogul Jayesh Shah and his company Al Shams Building Materials Limited, the latest total of what was seized in 1998, to start a 24-year bruising legal battle.

The ruling by the High Court of Zambia on Wednesday comes after Zambia’s Drug Enforcement Commission in January 1998 informed Al Shams Building Materials Limited’s bankers, First Merchant Bank Zambia Limited, and the Attorney General that it had seized the firm’s accounts worth over US$1 million pending investigations.

A few months later, the bank was placed under receivership and on March 16, 1999, the Bank of Zambia ordered its liquidation.

In between, Mr Shah and Al Shams Building Materials Limited instituted legal proceedings in the Zambia High Court and Supreme Court, with Mr Shah winning all his court cases to have the money returned to the owners since the seizure was “unlawful and illegal”.

In the present case, Mr Shah and his company had approached the top court seeking an order for the Bank of Zambia to perform its obligation after several court judgments held it liable to pay the debt.

Justice Edward Luputa Musona, the Judge-in-Charge of the Zambia High Court Commercial Division yesterday ruled in favour of Mr Shah noting that the Bank of Zambia had breached the contract between the parties.

“I am satisfied that the Bank of Zambia breached the agreement of July 18, 2014 made between themselves and the plaintiffs (Mr Shah and his company),” said the judge.

He then ordered the Bank of Zambia to liquidate the judgment debt now standing at US$139 191 386,74 owed to Mr Shah and the company by the bank on 30 June, 2020.

The judge also ordered the bank to pay interest in the manner agreed by the parties in their meeting held on July 18, 2014 to be assessed by the deputy registrar of the court in default of agreement.

At the July 18, 2014 meeting the parties agreed to have all outstanding judgments and court orders consolidated and become part of the settlement agreement and the Bank of Zambia making some payments to the plaintiffs to liquidate the judgment debt.

Justice Musonda, in his judgment, also said he was bound by the decision of the Zambia Supreme Court in another case delivered on March 28, 2006 which found that Bank of Zambia had already made some payments to Mr Shah and his company and queried why the payments were halted mid-stream.

He warned the Bank of Zambia that the payment of the judgment debt was an order of court and court orders must be complied with.

“It does not matter whether the Bank of Zambia Board or Zambia Ministry of Finance approves payment or not,” said Justice Musona.

“Court orders are superior to the Bank of Zambia Board and Ministry of Finance, Bank of Zambia and Ministry of Finance have no choice but to abide by such orders unless they successfully appeal against it. No appeal was successful against this judgment debt.”

Justice Musona awarded costs of suit in favour of Mr Shah to be taxed by the deputy registrar in default of agreement.

On leave to appeal against his decision by the Bank of Zambia, Justice Musona considered the history of litigation in the case, which dates back to 1998 and is now 24 years old in the courts.

He ordered the Bank of Zambia to deposit into court 30 percent of the judgment sum of US$139 million within the period during which an appeal may be lodged.

He criticized the Bank of Zambia for unduly and unjustly perpetuating the case.

“This dispute has been in a back and forth movement, from High Court to Supreme Court,” said Justice Musona.

“This is sad. Litigation must have an end. 24 years in court is too long. The Bank of Zambia has abused its immunity against execution. This should end because it is not good governance.”

In the previous judgments, both the Zambia High Court and Zambia Supreme Court ruled that in the case of First Merchant Bank failing to reimburse Mr Shah and his company, the Bank of Zambia was held liable and in the alternative the Attorney General was ordered to pay if the funds could not be found.

The bank and the Attorney General appealed to the Zambia Supreme Court against the ruling and on November 2, 2000, the appeal was dismissed and the Supreme Court held that Mr Shah’s money did not form part of the liquidation process and thus liquidation laws did not apply in his case.

Fourteen years later, the Bank of Zambia again approached the Zambia Supreme Court, and its case was once again dismissed on May 2, 2014.

After being unsuccessful on appeal twice, thereafter, the Bank of Zambia on October 6, 2014 now filed a motion on the May 2, 2014 appeal Judgment, 157 days out of time in terms of the laws of Zambia seeking to re-open the 2000 Appeal.

Regardless, the Supreme Court of Zambia heard the matter and on July 6, 2018, delivered its Judgment and held that all issues are res judicata and refused the re-opening of the 2000 Judgment or any other previous decisions.

However, the Supreme Court of Zambia in their 2018 judgment after dismissing the Bank of Zambia’s motion and refusing to re-open the 2000 judgment went to make new findings that Mr Shah should be paid, but from the liquidation proceeds and applying the liquidation laws and not be paid from Bank of Zambia’s own resources or state coffers.

Mr Shah has vast business interests in Zimbabwe, Zambia and India, among other countries.

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