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RTGS is legal tender, says High Court

by Staff reporter
18 Nov 2019 at 06:26hrs | Views
Real Time Gross Settlement (RTGS) is  legal tender in the country, the High Court has ruled in a case in which an investment company lost its claim for provisional sentence against Fly Africa executive chairperson Mr Cassidy Mugwagwa and his company Nu Aero (Private) Limited over  US$50 000.

Justice Zhou rejected Temprac Investments' claim for provisional sentence against Mr Mugwagwa and his company, and ordered the dispute to "stand over for trial".

"In the result, it is ordered that provisional sentence be and is hereby refused," said Justice Zhou.

The judge said Statutory Instrument 133, which introduced RTGs early this year, was meant to convert into RTGS dollars the US$50 000, which Mr Mugwagwa and his company owed to Temprac with effect from February 22.

The new regulations were incorporated within the Finance Act, 2019, in June this year. Temprac's claim was based on an acknowledgement of debt signed by Mr Mugwagwa on behalf of Nu Aero (Private) Limited.

Mr Mugwagwa failed to honour his obligation to settle the debt with Temprac by November 30 last year, in terms of the agreement. However, following the promulgation of Statutory Instrument 133, which introduced RTGS on February 22, Mr Mugwagwa tendered payment in RTGS currency citing the legal development that took place after the expiry of the date of payment.

Temprac refused to accept payment.

This is despite the fact that the legal instrument prescribed that the balances expressed in the United States dollar immediately before the effective date be deemed to be the opening balances in RTGS dollars at par with the United States dollars.

The issue for determination in the High Court was whether by tendering the payment of RTGS, Mr Mugwagwa and his company had acquitted their obligation in terms of the acknowledgment of debt and the deed of surety.

Justice Zhou ruled that the RTGS dollar was decreed to be legal tender in the country from the effective date of the regulations. The judge also made it clear that any contract or term of an agreement should be read subject to the express provisions of a law which affects its performance.

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Source - the herald