Conrad Mwanawashe Business Reporter
THE Supreme Court has turned down an application by Alshams Global to force Savanna Tobacco to pay almost $3 million plus interest for banker’s acceptances which the tobacco company issued as security for a loan about four years ago.
The ruling overturned an earlier ruling by the High Court which had granted Alshams a summary judgment ordering Savanna to pay $2 789 137,02 plus interest at 25 percent annum being the face value of BAs issued by the tobacco company as security for a loan from Afrexim Bank which it accessed through Interfin.
Interfin later sold the BAs to businessman Mr Jayesh Shah’s Alshams Global on a buyback basis. On maturity, it is alleged that Alshams presented the BAs for payment by Savanna who failed or refused to honour the BAs upon which Alshams instituted legal action.
The High Court then granted Alshams a summary judgment forcing Savanna to pay up, a ruling which was overturned by the Supreme Court last week.
The matter was presided over by Justices Paddington Garwe, Bharat Patel and Anne-Marie Gowora.
“As a consequence, the order of the High Court is hereby set aside and replaced with the following order: The application for summary judgment be and is hereby dismissed with costs. Savanna is hereby granted unconditional leave to defend the claim; Alshams to pay Savanna’s costs,” the Supreme Court order says.
Alshams was ordered to pay the costs of the matter. The Supreme Court ruled that the lower court erred in granting Alshams summary judgment.
Savanna argued that it accessed a loan from Afrexim Bank through Interfin. As a condition of the loan the BAs in issue were issued by the tobacco company and were in support of the loan facility.
The company said it was not aware of any transfer or negotiation of the BAs to Alshams and that the transfer was unlawful, fraudulent and in breach of the banker/client relationship between Savanna and Interfin.
But Alshams filed an answering affidavit where it argued that it had no knowledge of the dealings between Savanna and Afrexim Bank. It denied that Interfin had no authority to negotiate or trade the BAs in its favour.
Advocate Adrian de Bourbon, instructed by Mr Addington Chinake of Kantor and Immerman appeared for Savanna Tobacco while Mr Edwin Manikai and Advocate Lewis Uriri represented Alshams Global.