ALLIED BANK LTD v DENGU & ANOR

SUPREME COURT, HARARE

[Civil Appeal SC 52-16]

June 30, 2016

MALABA DCJ, GOWORA AND MAVANGIRA JJA

Company law – Companies Act [Chapter 24:03] – Sections 213 and 221– Company being placed under liquidation in the course of court proceedings – Whether such a company may continue with proceedings without the leave of the court.

The respondents bound themselves to the appellant as sureties and co-principal debtors under a credit facility between the appellant and the principal debtor. The principal debtor defaulted and the appellant sued the respondents. Before the matter was set down for trial, the appellant was placed under liquidation. At the commencement of the trial, the respondents raised, as a point in limine, that the appellant could not continue with the proceedings without the leave of the court. This point in limine was upheld by the High Court. On appeal:

Held, that where a company placed under liquidation after the commencement of proceedings is the plaintiff/applicant, it does not require leave of the court to continue with the proceedings. Leave of court to continue with the proceedings is only required where the company placed under liquidation is a defendant/respondent.

Cases cited:

Ndlovu v Marufu HH 480-15 (unreported), referred to

Trade Bank Ltd & Anor v Elysium Ltd & Ors Civ Case 1848/97; [2012] eKLR (unreported) (Kenya), not followed

Western Assurance Co v Caldwell’s Trustee 1918 AD 262, referred to

Legislation considered:

Companies Act [Chapter 24:03], ss 213, 221

High Court Rules, 1971 (RGN 1047 of 1971), O 13 r 85A (1), O 21 r 137, 139

Book cited:

Cilliers AC, Loots C and Nel HC Herbstein and Van Winsen, The Civil Practice of the High Courts and the Supreme Court of Appeal of South Africa (5th edn, Juta & Co Ltd, Cape Town, 2009) vol 1 p 601

Article cited:

Dixey N and Flanagan C “A Guide to the Effect of a Winding-Up Order on Existing Litigation” http://nellaw.com/a-guide-to-the-effect-of-a-winding-up-order-on-existing-litigation/

SM Hashiti, for the appellant

ET Matinenga, for the respondents

MALABA DCJ:

At the end of hearing argument for both parties, the court allowed the appeal with costs. It was indicated that the reasons for the decision would follow in due course. These are they.

The appeal is from the decision of the High Court which upheld a point in limine that the appellant which was placed under liquidation in the course of proceedings had no locus standi “to continue” with proceedings brought at its instance without the leave of the court.

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