Court orders Dar based company to pay 10bn/- for expelling shareholder

DAR ES SALAAM: THE High Court has ordered two brothers and directors of Dar es Salaam Cement Co. Limited to pay their Chairman and Managing Director, Mr Pardeep Hans, over 10bn/- for expelling him from the company and selling it to Amsons Industries (T) Limited.

Judge Amir Mruma reached into a decision after granting the suit lodged by Advocate Joseph Rutabingwa, for Mr Hans, the plaintiff, who was also the majority shareholder of the company, against the two brothers, Merey Saleh and Ismail Saleh, the minority shareholders.

He declared that the sale and transfer of the landed property situated at Mbagala Industrial Area to Amsons Industries by the two brothers and the Cement Company, the defendants in the case, was null and void.

The judge pointed out that the evidence tendered established that the alleged sale did not follow the procedure and law and was conducted by the minority shareholders without involving the chairman, managing director and majority shareholder of company.

Judge Mruma sniffed some fraud in the transaction, notably the move by the two brothers to file another case and subsequently obtaining deed of settlement decree, which left the court a lot to be desired.

“These acts were done without involving the plaintiff as the managing director and majority shareholder of the Dar es Salaam Cement Company.  It is these acts and conducts of Merey Saleh and Ismail Saleh, which may border fraudulent acts,” he said.

Judge Mruma also ordered the two brothers to pay the plaintiff 72.5m/- being the amount paid to the Tanzania Revenue Authority (TRA) in the form of taxes towards the transfer of shares to him. He also ordered each of them to pay the plaintiff 1bn/- being amount paid to them for purchase of the shares.

He further directed the two brothers to pay the plaintiff 5.25bn/- as part of share purchase price which was to be realised from dividends due to him. He also directed them to pay 3,079,580,175/- as a refund of the money paid to Exim Bank (T) Limited in discharge of loan advanced to the Cement Company.

The judge also ordered the defendants to pay costs at the rate of 15 per cent per annum from the date of filing the suit to the date of judgment and further interest at court’s rate of three per cent per annum from the date of judgment to the payment in full.

Before granting the suit in question, the judge had to determine some issues, including whether the agreement for the sale of and transfer part of shares held by the two brothers to the plaintiff was subject to any pre-conditions and if were met.

He also considered whether the credit facilities extended by Exim Bank and guaranteed by plaintiff as primary obligor were utilised for the benefit of the Dar es Salaam Cement Company and that the decision made by the company in absence of the plaintiff was valid.

The judge also considered whether Amson Industries Limited lawfully acquired the land property of Cement Company at Mbagala Industrial areas and to what reliefs the parties were entitled to.

In his judgment delivered in Dar es Salaam recently, Judge Mruma revisited the evidence tendered by the parties and found the agreement for sale and transfer of part of shares was subjected to some conditions and not pre-conditions as the defendants will love the court to believe.

“The alleged requirement of substantial investment before sale of shares to the plaintiff does not feature anywhere in the evidence adduced in this court. Both Merey Saleh and Ismail Saleh admitted that they signed all documents exhibiting sale and transfer of the shares to the plaintiff, ” he said.

The judge pointed out that the search report to Business Registrations and Licensing Agency (BRELA) indicates that particulars of the Cement Company were to the effect that the two brothers had 5,000 shares each while the plaintiff had 10, 000 shares, thus he was the majority shareholder of company.

Thus, he said, the decision to sell the Cement Company without involving him as majority shareholder, managing director and Chairman cannot be valid. “The decision made by Merey Saleh and Ismail Saleh, who are minority shareholders to sell the company to Amsons Industries was invalid,” he said.