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Bank Saderat Iran to get over Dh2m from 4 firms

DUBAI — Four business establishments and an individual have been ordered by the Court of Cassation to jointly pay Dh2,213,057 plus nine per cent interest to a bank operating in the country.

The lawsuit was filed by Bank Saderat Iran against: (i) A. S. Readymade Clothes Establishment (ii) A. J. Construction Materials (iii) A. M. Readymade Clothes Establishment, (iv) A. A. M. A , and 5) A. M. Trading Company. The bank demanded in its suit that the five companies jointly pay Dh2,213,057, in addition to 12 per cent interest, stating that according to the request of the defendant A. A. M. A, the owner of the A. S. Establishment, opened a current account and signed the activation. The establishment was granted Dh2,200,000 of bank facilities, and the guarantee was signed by A. J. Construction Materials Establishment, also owned by the defendant (iv), and the defendants (iii) & (v), in addition to the defendant (4) himself, where he offered his personal guarantee.

However, the Court of First Instance decided to reject the lawsuit on October 16, 2005, but the bank appealed against the verdict and the court ordered the defendants to jointly pay the dues to the bank in February 22, 2005. A. M. Establishment filed an appeal before the Court of Cassation, stating that if the establishment’s owner guaranteed himself, the debt doesn’t transfer to the new establishment owner, according to a law article, so the new owner ‘the son’ is not obligated with the previous debt.

The Court of Cassation clarified the claims of the appellant, saying that the owner of the establishment is responsible for its obligations and debts, and the transfer of ownership doesn’t free the owner from the obligations of the establishment, as long as the obligation or the debt occurred during his previous ownership of the establishment. The establishment’s licence copy showed that it was transferred from Abdul Azeez Mohammad Abdulrahman Huwair to Mohammad Abdul Azeez Mohammad Abdulrahman Huwair, in addition to the fact that Abdul Azeez Mohammad provided a letter to the bank promising to cover the debt for his account. So, the court decided to reject the appeal and uphold the verdict of the Court of Appeal.

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