High Court Orders Tobacco Firm To Repay US$1,6m MTC Debt

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By Mary Taruvinga

THE High Court has ordered Pamuka Leaf Tobacco and its directors to pay back US$400 000 owed to Mashonaland Tobacco Company Private Limited (MTC).

Pamuka received a loan of US$1,6 million from MTC in 2019 and was supposed to settle the debt within 90 days of the 2019-2020 tobacco selling season as agreed by parties.

However, Pamuka and its directors Frank Trevor Mushininga and Tinashe Gibson Sithole, who bound themselves as surety failed repay the loan resulting MTC resorting to legal recourse.

High court judge, Justice Webster Chinamhora dismissed an application for opposition by Pamuka and its directors ordering that they must settle the debt and pay costs of the suit.

“The notice of opposition filed by the respondents on November 2, 2021 be and is hereby struck off. The respondents jointly and severally the one paying the others to be absolved pay to applicant US$419 435 payable in Zimbabwean dollars at inter-bank rate applicable on the date of payment, together with interest thereon at the rate of 10% per annum calculated from the 6th August 2019 to date of payment in full,” justice Chinamhora ruled ruled.

MTC also instituted court proceedings through Trevor Mapiye, its treasury and accountant who deposed an affidavit stating their request is that the respondents pay them US$419 435 together with interest thereon at the rate of 10% per annum calculated from August 6 2019 to date of full payment.

The claim arises from a tobacco buying agreement entered into between the parties in terms of which MTc agreed to advance US$1,6 million to the respondents.

Parties agreed that MTC would make payments on behalf of Pamuka to fertilizer suppliers in settlement of invoices advanced by the plaintiff.

Pamuka was obliged to produce and deliver to Mashonaland tobacco, 4 million kilograms of green tobacco.

It was a further term of the agreement that the amount advanced to Pamuka would be repaid as 30 percent of the capital on or before 30 days after commencement of 2020 selling season.

The court heard 60 percent was to be paid before the 60th day after the commencement of the 2020 selling season and the money was to be paid back in full on or before 90 days after the commencement of 2019/2020 tobacco selling season.

“In breach of the terms and conditions of the agreement, the respondents failed and refused to pay the money due to Mashonaland Tobacco,” said Mapiye.

According to court papers, Pamuka Leaf Tobacco acknowledged its indebtedness in November 2020.

They promised to pay US$209 717 on or before August 1 2021 and US$209 717 together with interest on or before August 1 2022.

The total was as per that promise was US$419 435.

Mushininga and Sithole bound themselves as sureties  and co-principal debtors.

However no money was paid as promised on August 1 last year causing the present litigation.