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United Bank has won an over 10.2 million Br case
against Simachew Demissie Investment Plc, a local
company engaged in coffee exports.
The Ninth Civil Bench of the Federal High Court gave
the verdict in favour of the private bank on July 1,
2009.
The case was brought to the attention of the court
with the application by United Bank S.C. that claimed
more than 10.2 million Br from the coffee exporter;
the Bank claimed it had advanced the over 10.2
million Br to Simachew Demissie Investment and the
latter defaulted on the loan.
United Bank, which began operation in 1998, argued
that it advanced the loan based on the
pre-shipment loan agreement signed between the two
parties on October 28, 2004 and February 7, 2005.
Based on the agreement, Simachew Demissie Investment
was entitled to borrow as much as 12 million Br from
the Bank. The lender had started to disburse the
loan in rounds in accordance with the agreement.
The arrangement under the pre-shipment loan
agreement was the coffee exporter takes the
amount of money it wants for a single round to buy
coffee from suppliers. When the coffee is exported,
the borrowers service the loan from the foreign
currency earned from the export. Accordingly, the
arrangement had gone well for the first rounds with
both sides observing their obligations.
Nevertheless, after the Bank had disbursed the
slightly more than 10.2 million Br in about five
rounds, the borrower defaulted to service these last
rounds and then came the legal battle.
Lawyers of the private bank stated that the company
failed to constantly service consecutive payments of
the loans in the last rounds, despite successive
notices from the lender. They annexed five receipts
with indicating that 10,219,739.50 Br had been
transferred to the coffee exporter's account.
The Bank also accused Simachew Demise, general
manager of the company by the same name, of making
the bank's efforts to recover the loan onerous by
transferring ownership of company properties to his
own. The Bank had, therefore, alleged that the
coffee exporting company and its General Manager
were jointly and severally liable for the loss the
bank incurred.
The lawyers of the defendants submitted their
statement of defence to the court on which they
pleaded their clients did not owe the said amount to
the Bank, rather it is less than that, and they are
not jointly and severally liable.
But the court was convinced that they failed to
expressly deny the allegation of the Bank which is
proven by the five receipts annexed by the Bank.
They just said the paperworks (documents) are
fiction.
This point led the judge at the Ninth Civil Bench of
the Federal High Court, Dereje Eticha, to conclude
that the money listed on the receipts was added to
the account of the coffee exporter. The court
absolved the second defendant, Simachew Demisie,
because the Bank failed to prove whether his actions
had caused actual harm to the Bank. The Bank had
accused him of transferring the ownership of 10
trucks of the coffee exporting company to his own
and issued them as guarantee bonds; the claimant had
argued this act complicated the banks effort to
recover the loan.
The court has, thus, ordered Simanchew Demisie
investment plc to pay the said 10.2 million Br with
nine per cent legal interest and three per cent
penalty for failing to honour the agreement; this
based on the very agreement breached by the
borrower. The legal interest and the penalty are to
be calculated from August 7, 2009, the day the case
was instituted, to the day the loan is totally
recovered.
One of the lawyers of the defendants said he is
obviously not happy with the ruling. But he is
unsure of whether to file an appeal.
The lawyers of United Bank were not available for
comment. |
Owner Goes Free at the Expense of the Plc