Former shareholders of Guilders Bank have won a long-running court case over the takeover of the lender by Guardian Bank two decades ago, earning them a payout of over Sh1 billion.
High Court Judge Alfred Mabeya directed Guardian Bank to pay the shareholders of four companies who sold their 200,000 shares when the lender took over Guilders in 1999. The amount will be paid with a 12 per cent interest backdated to 2001. The net worth of the bank is Sh196 million as of December 31, 1998.
He also directed Guardian Bank to release the securities belonging to Guilders. “In the premises, I find that the plaintiffs have proved their case to the required standards against the defendants, jointly and severally for Sh196 million being the consideration price for the sale of 200,000 shares in Guilders International Bank as per the memorandum of understanding,” he said.
One of the Guardian Bank’s administrators Amit Chandaria has, however, filed a notice to appeal the judgement.
“Take notice that Amit Chandaria…herein being dissatisfied with the judgment and decree of the High Court delivered virtually on February 17, 2023, intends to appeal to the Court of Appeal against the whole judgment and decree,” the notice reads.
Rajendra Sanghani, a director of Guilders sued Guardian through Shivali Investments, Naval Holdings, Ketty Investments, and Saaf Holdings, as CEO of the four companies, which he claimed were instrumental in the sale.
Shareholders sued
He sued the shareholders of the bank and executors of the estate of Chandaria, including the bank’s executive director Hetul Chandaria and the lender’s shareholders including Conifers Trading Ltd, Dima Ltd, Kevis Investment and Chandaria Holdings.
Mr Sanghani claimed that Guardian Bank agreed to pay Sh196 million and made him sign a “money receipt” but he and other directors never received any funds from the sale of the shares. He also claimed that Guardian shareholders were allowed to collect all dues from its debtors as part of the agreement.
The court heard that the two banks merged after approval from the Finance minister through a gazette notice in 1999.
The ministry, in a Gazette Notice 7413 of 1999, authorised the takeover under the Restrictive Trade Practices, Monopolies, and Price Control Act.
Former shareholders of Guilders International Ltd, however, sued to say the buyers never paid a shilling even after the takeover.
The two institutions entered a deal where Guardian took over the assets and business of Guilders including its premises.
But Guardian breached the deal and failed to make the payments as agreed and refused to table full accounts and disclose receipts and proceeds from the disposal of securities and debts recovered on their behalf, Mr Shanghani testified.
He said they fulfilled their contractual obligations and transferred their shares in the bank but the defendants breached the contract. BY DAILY NATION