ANOTHER Gupta-owned company has lost its legal challenge to a North Gauteng High Court order, forcing it to pay almost R89 million of a R123m loan it received from the Bank of Baroda.
Annex Distribution’s bid was to try to overturn the judgment of the North Gauteng High Court forcing it to pay back the money.
The lengthy legal battle between the sister company of the controversial family’s Sahara Computers started when it borrowed R123m from India's international bank.
Annex Distribution’s failure to pay led to the bank launching a bid to liquidate the company, which was granted in May 2020.
North Gauteng High Court Judge Mandla Mbongwe said that since May 2020 both parties have tried unsuccessfully to resolve the matter until they agreed that another Gupta company, Confident Concepts, is substituted as the Bank of Baroda’s debtor and the deal was struck in July 2020.
Sahara Computers and Confident Concepts also owe the bank millions of rand.
”It is envisaged that the debts of these three companies, owned by the Gupta family, would be consolidated in the agreement of substitution of debtor and paid Confident Concepts from the proceeds of the sale of another sister company Islandsite 180 (which is also in liquidation),” the judge explained.
In total, the Guptas owe Bank of Baroda R123m and Annex Distribution is responsible for R88m of the debt.
It also emerged in court that the Guptas were counting on Sahara Computers’ almost R20m held by the SA Reserve Bank (SARB) to in part settle their debt.
Some of their companies’ business rescue practitioners had hoped that the SARB would release the money and promised the Bank of Baroda that they would sell their aircraft to repay the financial institution, which was previously sanctioned by the central bank for weaknesses in their controls to counter potential money laundering and terrorist financing.
Last year, the high court found that Confident Concepts had failed to fulfil the conditions set out for it to take over the debt.
Judge Mbongwe later found that there was no valid substitution of Annex Distribution as a debtor of the Bank of Baroda flowing from the agreement, which had in any case lapsed due to non-fulfilment of the conditions.
”Satisfied that the respondent (Bank of Baroda) had proved that the applicant (Annex Distribution) remained incapable of paying its debt in the amount in the order of R88 824 232.42, I granted an order for the final liquidation of the applicant in terms of section 344(f) read with section 345(1)(a) of the Companies Act 1973,” the judge explained.
The Guptas later appealed the ruling, but Judge Mbongwe was unconvinced.
He found that a lapsed agreement could not beget a valid substitution of debtor and that Annex Distribution remained indebted to the Bank of Baroda in the circumstances.
”I find, in the present matter, that the appeal has no reasonable prospect of success; that there are no compelling circumstances for the appeal to be heard and, finally, that there are no conflicting judgments with regard to the finding that an agreement containing conditions precedent becomes void ab initio (no legal effect from inception) where there has been none fulfilment of conditions precedent and waiver of non-compliance has neither been alleged nor established.
“Leave to appeal is, consequently, refused,” Judge Mbongwe said.