Tthe Supreme Court of Appeal in Blantyre yesterday set aside a High Court judgement that allowed Malawi Savings Bank (MSB) to sell property belonging to Mulli Brothers Limited (MBL) to recover a K3.3 billion loan.
The Supreme Court, therefore, ordered that a consent order, as per agreement entered between MSB and MBL to reschedule payments after negotiations, be drawn and entered.
High Court judge Michael Mtambo earlier declined to hear an application for an injunction MBL wanted to file to stop execution of the order the bank obtained to sell the property.
The court proceeded to enter the judgement in favour of MSB, a wholly State-owned bank then, but now under the new ownership of FDH Financial Holdings Limited after its controversial sale on July 2 this year.
But in his latest judgement, single Malawi Supreme Court of Appeal judge, Dunstain Mwaungulu, said there was a letter from MBL on court record, rescheduling payments, apparently after negotiations with MSB.
Mwaungulu, who was also being asked by MBL to stay the lower court’s judgement pending an appeal, observed that the parties, after assessing risks and implications, compromised, and that from the look of things, agreed terms on which they would deal with the matter.
Said Mwaungulu in his ruling: “That agreement, un-retracted, the power of sale is not exercisable except when the mortgagor does not abide by the agreement and the mortgagee withdraws the forbearance.
“That to me is a matter that tilts justice in favour, of course, allowing the parties to do what, in the light of their financial circumstances, they conceive to be the best solution to their problem.”
The judge said it would be inconsistent to justice that parties, having agreed to their dispute, should be saddled by a judgement which is inconsequential on their compromise.
He said it was actually an opportunity for the court below to do the needful and actually follow what lawyers for MBL, Chancy Gondwe and Madalitso Mmeta, had submitted or been requested to submit.
Mwaungulu said: “Were it not for want of jurisdiction, this is an appropriate case for granting an injunction restraining the respondent from exercising the power of sale under the mortgage.
“The compromise recorded by the court settled the dispute. The court below, however, in refusing the application for stay of execution, missed the opportunity to justify delivery of the judgement which probably, was already written at the time of the notice. The delivered judgement has no consequences on the compromise.”
The judge, while dismissing the application by MBL for stay of execution of the order as granted at the lower court pending appeal, ordered that the parties must abide by the consent, judgement and compromise.
The court learnt that MBL borrowed money from MSB under the mortgage covering property in the Southern Region, outside Blantyre City.
After necessary notices, the court learnt, the bank exercised its power of sale.
MSB, through newspapers in May this year, advertised sale of an estate in Thyolo at K466 million, tea estate in Mulanje at K1.7 billion, estate and tourism lodge along Mulanje-Phalombe Road at K584 million, among others.
Before MSB was finally sold, government in April this year issued K6 billion promissory notes to clear toxic assets at the bank.
Government asked the Reserve Bank of Malawi (RBM) to write off toxic assets in MSB books. n