Tuesday, October 15, 2024

Sun Pharmaceuticals owners win case again.

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SUN PHARMACEUTICALS OWNERS WIN CASE AGAIN

The Livingstone High Court has thrown out an application to Stay the execution of its earlier Judgment to squash the appointment of an Interim Business Rescue Administrator for Sun Pharmaceuticals Ltd.

In a ruling dated 9th September 2024, the Livingstone Court ruled that there was no remedy to warrant a stay of execution.

“Additionally, this Court is not convinced that the refusal to grant a stay where there is nothing to stay, will render the appeal an academic exercise.”

Kalenga’s proxy, Mr. John Musheta, applied to stay, or suspend, the dismissal of their case and the squashing of the appointment of an Administrator pending their alleged appeal to the Court of Appeal.

In trying to suspend the Administrator’s dismissal, lawyers for the applicant, Lewis Nathan Advocates, tried to argue to the court that “the grounds of appeal had high prospects of success as they were anchored on points of law and no prejudice would be occasioned.”

Lewis Nathan Advocates emphasised the argument that the Court should grant the Applicant a Stay of Execution as the Ruling was capable of being enforced.

On 15th April 2024, Lewis Nathan Advocates and Bernard Kang’ombe Associates obtained an ex parte order to place Sun Pharmaceuticals under supervision and commence business rescue proceedings under the Corporate Insolvency Act. They intended to appoint Treshod Kabanga as Business Rescue Administrator via a default Judgment after the Ndola High Court stayed his ex parte appointment as Provisional Liquidator on 2nd April 2024.

They attempted to secretly place Sun Pharmaceuticals in business administration and had it not been thwarted, the Solicitor General could have used the Administration Order to syphon off the 117 million Swiss francs owed to Sun Pharmaceuticals.

But Livingstone High Court Judge Hon. Mbila Wina ruled in favour of the owners of Sun Pharmaceuticals, as in their previous successful cases. The Sadhu’s, in part, relied upon the law as found in the case of Hakainde Hichilema and Others vs the Government of the Republic of Zambia.

It is clear that Lewis Nathan Advocates attempted to sustain the earlier ex-parte order in order to keep the scheme viable, which was designed to syphon the judgment debt owed to the Sadhus, the owners. Thre goal was to ensure that by the time the wheels of Justice inevitably dismissed their Appeal, the judgment debt due to the actual beneficaries, would have been pillaged. This would included the expenditure of millions in the ‘professional fees’ of the Administrator, which would have been safe from reimbursement, even if the Kalenga’s lost in the Court of Appeal.

BRIEF BACKGROUND

Lewis Nathan and Advocates on 15th April 2024, obtained an Ex-parte Order on behalf of a Mr. John Musheta, an alleged former employee of Sun Pharmaceuticals, to attempt to appoint Zambia’s Administrator General as Business Rescue Administrator of Sun Pharmaceuticals Limited.

The Ex-parte Order obtained appointing the Administrator General as Interim Business Rescue Administrator was dubiously not served on the Shareholders and Directors of Sun Pharmaceuticals.

This led to orchestrated attempts to divert monies owed to the Company under a Judgment against the Development Bank of Zambia and the Attorney General of Zambia.

The company’s advocates, SimezaSangwa & Associates, discovered the litigation was underway though its sources and immediately filed court process days before Lewis Nathan Advocates and Kang’ombe & Associates were to enter a default Judgment to usurp the companies’ rights.

This is a modus operandi similar to that undertaken by Lewis Nathan Advocates in winding up the affairs of The Post Newspapers, and other cases of legally dubious liquidations and takeovers commenced ex parte and by blockling the shareholders from participating in the subsequent proceedings.

On the 11th day of June 2024, Mr Sadhu, the majority shareholder and 1st Affected Person, through his Advocates, filed a Notice of Intention to appear in the proceedings and went on to file an application for an Order to set aside the Originating Summons and steps taken for:

i. irregularity,
ii. lack of jurisdiction and
iii. abuse of Court process.

On the 23rd day of July 2024, the Court rendered two Rulings pertaining to the majority shareholder Mr Sadhu’s [1st Affected Person’s], application to set aside the originating summons, finding that:

i. That the 1st Affected Person was properly before the Court to participate in the business rescue proceedings; and

ii. The Applicant’s matter was dismissed for being statute-barred.

In her Judgment dismissing the application for a Stay, Judge Wina ruled that :

“The Supreme Court in the case of Zambia Revenue Authority vs Post Newspaper stated that:

“Where a Judgment or Ruling refuses Judicial Review or an injunction, there is nothing to stay; because such a Judgment or Ruling does not award a remedy, such as money or property which can be obtained by Court execution. In short, a failed Judgment or Ruling cannot be stayed because it does not award anything.”

“If there is nothing to execute about such a Judgment or Ruling, then there is nothing to stay about it. Only a Judgment or Ruling which awards a remedy and which can be enforced by Court process, can be stayed.”

“The reason why any litigant applies for a stay is to prevent enforcement of a Judgment as elucidated by the Supreme Court in the above cited case”.

“In this case, this Court’s Ruling did not award a remedy and the said Ruling is not capable of enforcement.”

The Applicant as he has done, is well within his legal right to appeal and in fact leave was accordingly granted.

In the Zambia Revenue Authority and Post Newspaper case, the Supreme Court stated thus:

“Further, where a Judgment or Ruling is stayable, the principles state that stay of execution pending appeal, is a discretionary remedy. A party is not entitled to it as of right.” (underlined for emphasis).

“In this case as earlier indicated, this Court’s Ruling is not stayable as no remedy was awarded to warrant an execution. Additionally, this Court is not convinced that the refusal to
grant a stay where there is nothing to stay, will render the appeal an academic exercise.”

“In the Zambia Revenue Authority vs Post Newspaper case the Supreme Court stated as proof amounting to good and sufficient grounds warranting a stay; where the Judgment appealed against involves payment of money, and the Appellant has shown that such money is paid, there will be no reasonable prospects of recovering the same, should the appeal succeed.”

“In this case, there is nothing to execute and thus no risk of irreparable damage.”

“For the foregoing reasons, the application for stay of execution is therefore denied.”

Cause number : 2024/ HL/29

Following the dismissal of the case by the High Court at Livingstone, Simeza Sangwa and Associates acting for Sun Pharmaceuticals Ltd have demanded a full account of all actions taken, monies received or paid out in the name of Sun Pharmaceuticals Limited during the period when Lewis Mosho’s ex parte order appointing the Administrator General as Interim Administrator was in place.

Simeza Sangwa & Associates has demanded for the Administrator General to render an account to include all receipts and payments made and where funds have been disbursed, at whose instance this was done.

Disclaimer: The contents of this article are  provided by correspondent Pranab Rajan, Lusaka Times does not assume responsibility of the article and does not vouch for their accuracy. For any responses or rebuttals, please contact us at [email protected] or [email protected].

38 COMMENTS

  1. This case establishes a crucial judicial precedent. The ruling affirms that company shareholders cannot be excluded from proceedings initiated by vexatious litigants without their knowledge. A group misusing judicial orders targeted Sun Pharma, and if the scheme had succeeded, the negative impact on the administration of justice in Zambia would have been significant.

    21
    • @ Dr Ngulube – Chief Justice Mumba Malila’s ruling in the M’membe and Post Newspapers in February 2022 has positively influenced this case. The Supreme Court reversed Lewis Mosho’s improper liquidation of the newspaper. It further remanded the case back to the High Court, directly implicating and attaching Lewis Mosho to account for his unlawful actions in the proceedings.

      17
    • @ Dr, Justice Wina of Livingstone High Court has acted diligently in upholding the law; what is more remarkable is that she is a recent addition to the bench and has been appointed under this government. There are more senior Judges who have been given the run around by Lewis Mosho and his ilk. They, too, can learn something from this case.

      14
      1
    • @ Patrick Chirwa , the courts saw through these schemes, followed the law strictly and dispensed justice. Kudos to the Judge for acting professionally even as Attorney General Chambers misconducted themselves.

      11
    • @ Nguluble, This is a win for the legal process – I distinctly recall the Chinese-run Kingphar Pharmaceuticals Limited being placed under supervisory liquidation following another suspicious Consent Order, which placed the company under business rescue without the owners even being aware of the consent order! Lewis Mosho of Lewis Nathan Associates was appointed as provisional liquidator in respect of all assets belonging to the company. He has yet to account for his actions to date. This is nothing but fraud under the cover of the Court, and it is excellent to read that not all courts in Zambia will particapote in such plots.

    • The controversial practice of securing default judgments must be addressed to uphold the rule of law in Zambia. The Judiciary urgently needs to implement specific safeguards to prevent this practice from continuing. Not everyone has been so fortunate as to be saved at the last moment by a firm like Simeza Sangwa.

      12
    • It is disheartening to learn about the situation in which State Chambers are being used in corrupt schemes to deprive the owners of the company from benefiting from the judgment.

      It is a fact that Mr Vinod Sadhu fought DBZ on his own, enduring 12 years of litigation to obtain a final judgment in Sun Pharmaceuticals favor, which matter was concluded 17 years ago!

      It’s unfortunate that the greed of the Kalenga family has led to their lame attempts of appropriation for what they didn’t rightfully earn, which has even influenced others.

      Nevertheless, it’s comforting to believe that justice will prevail in the end.

      16
    • The Honorable Chief Justice has a duty to prevent the judiciary from becoming knowing or unknowing accomplices to serious white-collar crimes. To prevent the misuse of orders, guidelines must be issued regarding the circumstances under which ex parte orders are issued. In exceptional cases when they are issued, an inter-parte hearing must be held within 7 days to provide the affected person or entity with an opportunity to be heard. This is natural principle of Justice which cannot be casually discarded.

      12
    • Further, entering into consent orders secretly without the knowledge of a company being placed in liquidation or business rescue is a fraudulent practice that Zambia must cease entirely. ECL Mall, Post Newspapers, KingPharma, Sun Pharma, and others have been targeted by this practice.

      There needs to be thorough accountability for lawyers who intentionally mislead courts. Without this, the corruption will continue to spread and negatively impact the rule of law. Judges must refer such lawyers to the Law Association of Zambia (LAZ) for prompt hearings, and licenses should be permanently revoked where appropriate.

    • @ DR, this ruling undoubtedly sets a valuable judicial precedent to assist Courts in the future. Still, the questionable action of appointing the Administrator General of Zambia, a department of the Ministry of Justice, remains unanswered! Without fixing responsibility for the abuse of public offices to facilitate the Kalenga theft of the Judgment Debt, this may repeat itself soon.

  2. The simultaneous filing of cases in Courts on opposite sides of the country, Ndola and Livingstone High Courts prompts concern regarding the true intent and motives of the involved parties. Such actions may be construed as a concerted effort by unscrupulous lawyers to deceive the Judiciary.

    16
    • @ Tiki, well said. Is it ethical for legal practitioners to present a matter without disclosing all the relevant facts to the Court? Surely, LAZ must double down on its role to safeguard the legal profession!

      10
    • The High Court of Livingstone has shored up the legal system against misuse by notorious lawyers and litigants infamous for abuse of our Courts.

    • @Tiki, it is crucial to address the lingering questions surrounding the actions of Solicitor General Muchende and his alleged efforts to redirect compensation fund payments to the Kalengas. This type of insider corruption must not be disregarded, even if a court order was obtained under false pretenses.

      13
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    • @Gunner In Zambia, you’re absolutely right, but it’s highly unlikely that the case will be investigated under UPND. Marshal Muchende seems to be a protected man. The party went to great lengths to protect him even after his exposure at the Anti-Corruption Commission. The former DG Shamakamba lost his job for initiating investigations into the Solicitor General while Muchende looks as smug and content as ever!

      7
      1
    • @ UPND Crime Spree- let us remember it was under Patriotic Front that the liquidator for KCM was illegally appointed and tens of millions of dollars diverted from the company! The fact the judiciary under UPND has been able to deal with this issue within the four corners of the law tells us things are different today.

      3
      3
    • @ Tiki— The suspicious instigation of liquidation and business rescue cases has only added to the intrigue surrounding the company. But who is the mastermind behind it all? This question has been on my mind since I read the Guardian’s report on the kidnapping of the company owners.

    • @ Rob : These are the intrigues of a republic whose institutions are being undermined from the inside. The UPND, a key silent player in this saga, appears divided. A powerful faction aligned with the security services is allegedly attempting to take control of the company to divert its receivables from the Government, using lawyers from Lewis Mosho Nathan, Bernard Kangombe, Keith Mweemba Advocates, and Mwiimbu and Company reportedly involved in the scheme. On the other hand, key personnel in different departments inside the government have distanced themselves from the Kalenags and their associates. This is primarily an underground operation targeting funds held in an escrow account for the company at the Ministry of Finance.

  3. President Hichlema is travelling the world to seek international investment in Zambia. However, it’s important to note that a robust judicial system is crucial for such investments. Without assurances that companies will be protected from the dubious application of laws and white-collar crime, we will struggle to attract the much-needed foreign direct investment and assure our partners that Zambia is a safe place to do business.

    • @Patrick, the judiciary is part of the ‘soft infrastructure’ of the country, and adequate resources must be allocated to its administration. Our Judges are working in touch conditions often with limited infrastructure. The government will not secure sustained levels of investment from bona fide investors without independent, effective and timely access to Justice.

  4. We all remember the disruption caused by the Ex Parte Order to halt the FAZ AGM, which the Ndola High Court granted due to Damiano Mutale’s and Mabvuto Phiri’s actions. It was understood that Mr Keith Mweemba, who was aiming to take over FAZ, was the ultimate beneficiary in that matter. This lawyer may not be acting honestly and his political connections may be why he is involved in such cases now with UPND in Government.

    10
    • @Greg, there is an insatiable appetite for politically connected law firms under any government… AG Chambers is a friendly force for Keith Mweemba…and so certain types of crooks look him up for pulling off fast moves ..

      3
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  5. If I understand this matter right, the liquidator appointed ex parte in Ndola was also appointed ex parte as the business rescue administrator via Livingstone for the same company, eating the money owed to the Company under an earlier Judgment won by the company against the GRZ. Such a complex set of actions can only be attempted with insider help from within the government machinery.

    • @ Chula, anyone would be astounded to comprehend the pre mediated mind of a group willing to go to such lengths but what is disappointing to me is to read the role of the attorney general in this matter. That office is supposed to be above such illegalities and abuses of the judicial system. They are the legal advisor to the government; how can they abet such a scheme and join with Lewis Mosho to allow the appointment of their own department to move the payments away from the company?

    • @CHULA This action was an abuse of process at the bare minimum but due to President Hichlema’s current policy of restoring the rule of law, the plot did not succeed. The Administrator General, Ms Celine Nair, was dismissed from office two weeks back and this shows an accountability that was entirely absent under the past government.

  6. Mosho did something similar to DPP Nchito by obtaining orders from out of town against Nchito without his knowledge. He similarly obtained orders against the DEC commissioner without serving him any court process! Mosho’s expertise lies in securing ex parte orders and default judgments without the targets being made aware of the proceedings. This abuse of the court process has caused many miscarriages of justice, which was prevented in this case it seems.

  7. I am not a lawyer but what about the issue of waking up a judge at 3am to deliver a consent judgement which other parties had not consented to. Was that legally correct? Can someone educate me.

  8. John Musheta was a useful ***** for the desperate Kalenga family, but now he’s on the hook for the Legal costs! Perhaps useful *****s should consider the consequences next time they sign up to be someone’s proxy in court. Curiously, genuine litigants struggle for hearings, but malicious actors can secure early court dates, ex parte orders, and even expect default judgments!

  9. The bent officers interested in Sun Pharma must be devising a new plan now that the High Court has removed the Administrator General of Zambia from the company’s affairs! I am impressed by the Livingstone High Court’s actions, which demonstrate the expected integrity of our honourable judges, especially when facing political pressure to influence court decisions.

    • @Dr John – Are you referring to Mubita Nawa? He is a bootlicking errand boy who they tried to clean up and send to Interpol. Zambian Whilstblower has the real juice on this story.

  10. Forum shopping, a deplorable practice akin to a thief trying to break into a house through a window after being locked out of the main door, constitutes a grave abuse of the court process. The kalenga claims are utterly absurd and have been rightfully and decisively rejected by the courts with the contempt they deserve.

    • @A – This is an extreme case of forum shopping. The individuals even went to LAZ to file a complaint against the Late Hon George Kunda for representing the company, but their complaints were dismissed. The law firm clearly stated that they had only taken instructions from Mr. Vinod Sadhu on behalf of Sun Pharmaceuticals since 1995 and that the Kalengas were strangers to them. However, the individuals falsely claimed to be involved in the cases. This behavior is shameless and unabashed.

    • @Ngoma the law association’s ruling on this matter received wide coverage both in print and online. The ruling explicitly stated that the complainants failed to prove their status as ever being directors in Sun Pharmaceuticals or even to demonstrate their proper appointment as administrators of the estate! It’s unfortunate that this kind of harassment is becoming a growing business model and profit center, even for fake NGOs etc

  11. In Zambia, the legal system is derived from common law and closely aligns with the UK’s legal framework. These cases appear to deviate from accepted norms and practices within the Commonwealth. It is highly irregular for a company to undergo administration without the knowledge of the firm’s directors. In the UK, a liquidator or administrator may be required to provide cash as security to the court. However, in Zambia, these legal provisions seem to serve as a pretext to raid and deplete the company’s assets. This lack of due process resembles a situation where ” might makes right “. Despite the court’s ruling, the overall situation is disconcerting, particularly for potential investors who would fear the arbitrary seizure of their investments.

    10
    • @ Devon… There are challenges but the tide is turning. Years of institutional neglect created a vacuum filled by bad actors, even some wearing robes or wigs!! The Judicial Complaints Commission has acted firmly in recent cases and removed at least two sitting High Court Judges for unprofessional conduct, Justices Nkonde and Banda were dismissed by President Hichlema following advice from the JCC. If funds were removed from Sun’s accounts using the ex parte order reported above, I expect action will be taken at AG chambers too.

  12. In a nutshell, State chambers were involved in a plan to transfer funds from one department of theirs, which had debts to SUN, to another department of theirs, which would control the same funds! Enter Lewis Mosho and Kalengas to raid the second department, obviously in cahoots with government officials who orchestrated the plan. :-/

  13. The Ruling affirms sound principles of justice, particularly to not exclude affected parties from legal proceedings. Lewis Mosho is famous for collaborating with politicians in Zambia in suspect maneuvers and since Kalenga was a politician, their family probably still has connections to some present day politicians. Plus, they’re from the North Western province which is one of the traditional support bases of the ruling UPND.

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