Business / Companies
Mayhem looms in Zimbabwe banks
14 Oct 2013 at 05:17hrs | Views
In a landmark ruling likely to send shockwaves in the banking sector, the Supreme Court on Friday ordered Standard Chartered Bank to pay back a client's funds which it surrendered to the RBZ following central bank governor Gideon Gono's directive 6 years ago.
The judgement which came about after China Shougang International, took Standard Chartered bank to court seeking to recover thousands of dollars the latter had refused to pay argued it surrendered the funds to the central bank.
This could come as a relief to a lot of companies that lost millions of dollars when they woke up to find their bank accounts empty after the RBZ took a raid on them at the behest of Gono
Part of the ruling by Justice Vernanda Ziyambi read: "The general rule relating to deposits made in a bank account by a customer is that the money becomes the property of the bank which can use such deposit as it pleases so long as it pays to the depositor, on demand, the equivalent of the amount deposited in the account."
The Supreme Court added that when the bank surrendered the funds to the RBZ it did so at its own peril and has a legal obligation to pay its clients on demand.
The Standard Chartered bank had argued that having made payment to the RBZ in terms of its directive, it no longer had China Shougang International's money in its possession and was consequently discharged from its obligation to make payment upon demand by the firm.
"But as has been demonstrated above, the dealings by the appellant (Standard Chartered) with the deposits in the accounts, namely, the payment to the RBZ, were made at its own risk and did not affect its obligation in law to pay its debt to the respondent (China Shougang international) on demand. The appeal is accordingly dismissed with costs," Justice Ziyambi said.
Standard Chartered Bank had, through its lawyer, Advocate Adrian De Bourbon, filed an appeal at the Supreme Court after losing the same case at the High Court early this year.
The judgement which came about after China Shougang International, took Standard Chartered bank to court seeking to recover thousands of dollars the latter had refused to pay argued it surrendered the funds to the central bank.
This could come as a relief to a lot of companies that lost millions of dollars when they woke up to find their bank accounts empty after the RBZ took a raid on them at the behest of Gono
Part of the ruling by Justice Vernanda Ziyambi read: "The general rule relating to deposits made in a bank account by a customer is that the money becomes the property of the bank which can use such deposit as it pleases so long as it pays to the depositor, on demand, the equivalent of the amount deposited in the account."
The Supreme Court added that when the bank surrendered the funds to the RBZ it did so at its own peril and has a legal obligation to pay its clients on demand.
The Standard Chartered bank had argued that having made payment to the RBZ in terms of its directive, it no longer had China Shougang International's money in its possession and was consequently discharged from its obligation to make payment upon demand by the firm.
"But as has been demonstrated above, the dealings by the appellant (Standard Chartered) with the deposits in the accounts, namely, the payment to the RBZ, were made at its own risk and did not affect its obligation in law to pay its debt to the respondent (China Shougang international) on demand. The appeal is accordingly dismissed with costs," Justice Ziyambi said.
Standard Chartered Bank had, through its lawyer, Advocate Adrian De Bourbon, filed an appeal at the Supreme Court after losing the same case at the High Court early this year.
Source - newsday
