News Column

ABC (t) Bank Sues Indian Company Over 20 Billion/ - Loan

May 12, 2014



THE African Banking Corporation (ABC) Tanzania Limited has sued an Indian Construction firm, Progressive Constructions Limited, demanding repayment of loan facility amounting to 11,905,433 US dollars (about 19bn/-).

Plaintiff (Bank) filed the commercial suit at the High Court's Commercial Division in Dar es Salaam and has been set for hearing before Judge Kassim Nyangarika on Wednesday.

It is alleged that the Minister for Textile in India, one KavuruSambasiva Rao, who is also a Member of Parliament and Indian National Congress member, is a shareholder of the defendant company that had obtained the loan facility for executing a road construct.

"The plaintiff (Bank) claims against the defendant (Company) is for payment of USD 11,905,433.22 being an amount owing from the defendant inclusive of interest due and payable as of May 14, 2013 under a guarantee dated August 11, 2011," reads one of prayers in the suit.

It is alleged that the Company issued the guarantee as security for repayment of certain interest bearing credit facilities extended by the bank pursuant to a letter dated August 9, 2011.

Furthermore, it is alleged, the credit facilities extended to the borrower and guaranteed by the defendant were in relation to the performance of a road construction contract between the company jointly with another party on the one hand and Tanzania Roads Agency (Tanroads).

"It was the term of the guarantee that if the borrower defaults in the repayment of the credit facilities to the plaintiff then the defendant would immediately on demand pay any outstanding amounts," states the plaint of the suit.

On January 21, 2003, the bank served the company a demand notice for payment of 7,612,623.48 US dollars being principle and interest accrued as on that date following the termination by Tanroads of the construction contract.

In spite of the demand by the plaintiff the borrower, until the date of the filing of the suit, has neglected or failed or refused to pay the money.

However, in its written statement of defence, the construction company has denied the allegations and requested the court to dismiss the suit in question with costs.

The company alleges that the documents relied upon by the plaintiff in support of his case do not show that in fact the loans were duly advanced and they were never made aware of any advances, only to be surprised with the demand notice served upon them.


For more stories on investments and markets, please see HispanicBusiness' Finance Channel



Source: AllAfrica


Story Tools






HispanicBusiness.com Facebook Linkedin Twitter RSS Feed Email Alerts & Newsletters