Time Bank’s licence was cancelled in 2006, two years after the bank was placed under the care of a curator — Tinashe Rwodzi — on the grounds that the shareholders did not have enough “resources to enable the institution to be returned to viability”.
In his judgment on the appeal by the bank, Biti said the registrar of banks did not comply with sections of the Banking Act requiring that a 30-day grace period be given from the time of notification of intent to cancel and the actual cancellation.
A bank may lodge an appeal with the Finance minister, who is the highest level of appeal under the Banking Act, within 30 days which would set aside the intent to cancel a licence pending the outcome of the appeal.
“Instead, the registrar cancelled Time Bank’s registration after a mere two days,” said Biti in his judgment. “This is odd because the registrar was very much aware of the 30- day period for lodging the appeal with the minister. In my view, failure to wait for the stipulated time is fatal.”
The Administrative Court when determining whether the registrar of banks had complied with sections of the Banking Act and whether or not the curator had consented to the “purported cancellation of the appellant’s licence” ruled in favour of Time Bank.
Biti said the duties of the curator were clearly spelt out in the Banking Act.
“I find nothing implicit and explicit in this section that allows the curator to consent to the drastic action of the cancellation of the banking licence,” said Biti. “If anything, the curator is an agent of the shareholders and creditors, whose duty is to hold in trust the concerned bank on behalf of the shareholders, creditors and depositors.”
Biti said there was no need to refer the matter to him.
“What concerns me in this matter is that the Administrative Court, having found for the appellant on these critical points, proceeded to refer the matter to myself as opposed to declaring that the registrar acted improperly and therefore restoring the appellant’s licence,” said Biti. “In my view, the (Administrative) Court puts the minister in an invidious position. How does the minister override the decision of the court?”Biti attacked the Administrative Court saying they referred to him issues they had pronounced judgment on.
“Clearly, therefore, I am at a loss as to why the matter was referred to me. Be that as it may, it is therefore my ruling and finding that the registrar did not comply with the mandatory requirements of Section 14 of the Banking Act (requiring that 30 days pass before a licence is cancelled.)
Biti said he was aware of the operating difficulties courts face which include uncompetitive remuneration levels, political pressures or perception which created an “unhealthy matrix”.
“However, executive overbearance or fear cannot and should not be a factor in the administration of justice,” said Biti. “Justice is supposed to be blind and fearless. The courtroom should be an arena of truth and fairness and litigants should approach the bench without any subjective predetermination of the judge’s mindset.”
Time Bank was one of the financial institutions which were caught in a crisis that claimed the scalps of five banking institutions after the Reserve Bank of Zimbabwe Governor Gideon Gono’s maiden monetary policy tightened liquidity on the market.
Other banks that fell by the wayside at the height of a banking crisis include Trust, Barbican, Royal and Century.