HomeLocal NewsRedan, MetBank in fuel wrangle

Redan, MetBank in fuel wrangle

REDAN Coupon (Pvt) Ltd has dragged Metropolitan Bank (MetBank) and ACME Trading (Pvt) Ltd to court for allegedly failing to pay US$424 000 owed for 362 900 litres of diesel coupons supplied early this year.

By Wongai Zhangazha

MetBank, cited as the first defendant, acted as a guarantor for ACME trading (second defendant) which purchased diesel coupons from Redan Coupon.

Redan Coupon, represented by Messrs Mapondera and Company Legal Practitioners, filed summons at the High Court last week under case number 7664/17.

The fuel company states that sometime in March, ACME approached it seeking to purchase 362 900 litres of diesel that were supposed to be dispensed in the form of coupons on credit. ACME committed to pay for the fuel within six weeks.

“The plaintiff’s condition to give second defendant the facility was that there be a bank guarantee for due performance by second defendant from a bank. On the third of April 2017 the first defendant proceeded to issue a performance guarantee for the sum of US$450 000 in favour of the plaintiff guarantying the due performance by the second defendant the terms of which were:

“The undertaking was irrevocable to pay plaintiff any sums not exceeding US$450 000; such payment would be made upon first demand in writing accompanied by a written statement stating second defendant was in breach of its obligation(s) under the contract; plaintiff would not need to prove or show first defendant grounds for the demand and sums specified therein; the guarantee was valid up to and including 30 November 2017 and demand must be received before the date; the Bank’s first defendant liability is neither transferable nor negotiable and is limited to one of a financial responsibility only and payment under the guarantee shall be upon the presentation of the original guarantee,” writes Redan in the court papers.

Redan said on production of the performance guarantee their representatives sought and secured confirmation from MetBank that the guarantee was issued by the bank and was in order, hence MetBank “duly gave the confirmation”.

“Second defendant proceeded to place an order for 362 900 litres of diesel coupons from plaintiff at US$1,24 per litre and took delivery of the coupons. It was a material term of the contract that payment was to be made within six weeks of collection of the coupons,” Redan states.

“The second defendant only paid US$25 000 on diesel coupons supplied valued at US$449 996 leaving a balance of US$424 996 unpaid. The plaintiff on the 20th of June 2017 and in terms of the conditions of performance guarantee it had issued after default by the second defendant.” The fuel company said despite the written demand and return of guarantee letter to MetBank, the bank has “refused, neglected and or failed to honour the guarantee”.

“The plaintiff would not have given the second defendant the credit facility but for the guarantee given by the first respondent. The second defendant has failed to pay for the diesel coupons as per plaintiff’s invoice within the stipulated period,” Redan says.

“The first and second defendant are jointly and severally the one paying the other to be absolved, liable to the plaintiff for the sum of US$424 996.

“Plaintiff further claims interest on the amount at the prescribed rate from date of demand to date of payment in full together with costs of suit.”

Recent Posts

Stories you will enjoy

Recommended reading