SBM seeks to escalate battle over Fidelity sale to Court of Appeal

State Bank of Mauritius (SBM) Bank Holdings Ltd has asked the High Court to escalate its battle over the sale of Fidelity Commercial Bank (FCB) to the Court of Appeal.

In its new application filed before Commercial Court Judge Alfred Mabeya, seeking permission to appeal, SBM argues that the judge disregarded its argument that the alleged sale deal between it and Fidelity shareholders was to go through arbitration.

The lender also wants the Court of Appeal to determine whether FCB’s former shareholder Sultan Khimji’s failure to include in his case SBM Africa Holdings (SBM Africa) was fatal to his case.

Its lawyers Abbas Email and Zillah Moka argue that since Justice Afred Mabeya ruled that the Share Purchase Agreement (SPA) was between SBM Africa and Fidelity shareholders, then he ought to have included the subsidiary in the case.

They claim that they were not aware of the judge issuing a ruling on July 28, 2023, and only learned of the same when it was published in the media.

“The learned judge erred in law and in fact by determining the stay application without joinder of the applicant herein SBM Africa Holdings Ltd (SBM) Africa. Having found that the SPA dated March 28, 2017, was between the plaintiff (Khimji) and its shareholders on one part and SBM on the other part, the learned judge erred in proceeding to determine the stay application without making SMB Africa a party,” Esmail and Zillah argued.

SBM argues that Justice Mabeya failed to factor in that there was an agreement between the two parties that they would settle any grievance under the SPA through arbitration.

“This court erred in fact and law by disregarding the first defendant’s evidence demonstrating that the dispute falls within the scope of the throw-away price,” SBM lawyers continue.

On September 16, 2022, the lender applied to the same judge, seeking to halt Khimji’s case and refer the same to the agreement dated March 28, 2017.

Throw-away price

At the heart of the battle between Khimji, SBM Holdings Ltd and the Central Bank of Kenya (CBK) is the sale of FCB. Khimji claims that FCB shareholders were allegedly forced by CBK to sell the bank at a throw-away price.

SBM Holdings Ltd also asserts that it had provided disposal accounts and a full list of impaired loans to Khimji as of November 17, 2016.

­In this case, Khimji is seeking compensation from both SBM and CBK. He argued that FCB shareholders ought to have been paid the full value of the bank as of December 2016.

On the other hand, SBM argues that Khimji had not established that the shares that were transferred were under his name. At the same time, it has attached an agreement that dictated its deal over the sale.

Justice Mabeya directed Khimji to reply within 14 days, and thereafter SBM to file rejoinders. SBM’s application will be heard on October 13, 2023.