CorporateConflictResolution: High Court Orders Brothers to Compensate Expelled Chairman with 10 Billion TZS

CorporateConflictResolution: High Court Orders Brothers to Compensate Expelled Chairman with 10 Billion TZS

In a significant legal victory, the High Court has ruled that two brothers and directors of Dar es Salaam Cement Co. Limited must pay their Chairman and Managing Director, Mr. Pardeep Hans, more than 10 billion TZS for his expulsion from the company and the subsequent sale of the company to Amsons Industries (T) Limited.

Advocate Joseph Rutabingwa represented Mr. Hans, the plaintiff and majority shareholder of the company, in this legal battle against the two brothers, Merey Saleh and Ismail Saleh, who are minority shareholders.

Judge Amir Mruma delivered a decisive ruling, declaring the sale and transfer of the landed property located at Mbagala Industrial Area to Amsons Industries, orchestrated by the two brothers and the Cement Company, null and void. This decision highlights a critical issue in the case—the sale didn’t adhere to proper legal procedures and was carried out without the involvement of the chairman, managing director, and majority shareholder of the company.

The Smell of Fraud

Judge Mruma didn’t mince words when he suggested that there may have been fraudulent elements at play in this transaction. Notably, the two brothers filed another case and subsequently obtained a deed of settlement decree, actions that raised suspicions about the transparency of the proceedings.

The court’s ruling is not only a vindication of Mr. Hans but also a substantial financial victory for him. The judge ordered the two brothers to pay Mr. Hans 72.5 million TZS, which represents the amount paid to the Tanzania Revenue Authority (TRA) as taxes for the transfer of shares to him. Additionally, each of them is required to pay the plaintiff 1 billion TZS, which corresponds to the amount paid to them for the purchase of the shares.

However, the compensation doesn’t stop there. Judge Mruma further directed the two brothers to pay Mr. Hans 5.25 billion TZS as part of the share purchase price. This amount is to be realized from dividends due to him. The judge also instructed them to pay a substantial sum of 3,079,580,175 TZS as a refund for the money paid to Exim Bank (T) Limited to discharge the loan advanced to the Cement Company.

The Cost of Legal Battles

Legal battles often come with a financial cost beyond the core dispute, and this case is no different. The judge ordered the defendants to pay costs at the rate of 15 percent per annum from the date of filing the suit to the date of judgment. Furthermore, they will incur additional interest at the court’s rate of three percent per annum from the date of judgment until the full payment is made.

Before granting this decisive ruling, the judge had to address several key legal questions. One of the crucial issues was whether the agreement for the sale of and transfer of shares held by the two brothers to the plaintiff was subject to any pre-conditions and, if so, whether these conditions were met.

This landmark legal victory underscores the importance of adhering to proper legal procedures and transparency in corporate dealings. It also serves as a reminder that the justice system is a recourse for those who believe they have been wronged in the corporate world.

This case serves as a reminder of the critical role that proper legal procedures and transparency play in corporate dealings. It also highlights the significance of shareholder rights and the legal system’s role in upholding them.