Dar es Salaam. Picolo Beach Hotel Ltd and its managing director, Pascal Rutalala, never thought that their act of suing TIB Development Bank Limited for Sh1.1 billion over alleged failure to post their loan repayments would backfire.
The two have found themselves condemned to pay the bank Sh552.3 million in outstanding loans taken from the bank.
The hotel sued the bank in 2019 after accusing it of deducting money from its operational account and maliciously failing to post them into its loan account.
The plaintiff could find themselves in more difficult times after the Commercial Division of the High Court accepted TIB’s request to attach and sell personal properties of the guarantor of the loan to recover the amount.
Picolo secures loan
In October 2010 and September 2011, the bank approved and granted Picolo two credit facilities of Sh600million and Sh500million respectively to be repaid within six years.
The loans were secured by Mr Rutalala’s land on plot number 123, Mbezi Beach in Kinondoni Municipality and jointly guaranteed by Dar Coast Enterprises Limited, Organized Labour Pool (T) Limited and Tricon Investment Limited.
The banker/customer relationship went well until November 2019 when the bank pressed for payment of Sh552.3 million in the outstanding loan amount. Mr Rutalala is on record that the bank demanded the payments despite the repayment of the loan facilities.
According to Mr Rutalala, Picolo consulted an expert in accounts, Simon Byanyuma, to ascertain the amount that was debited from its operational account and what was actually posted to loan account.
According to Mr Rutalala, the expert discovered huge amounts of money deducted from its bank account but not posted to the loan account between November 2010 and November 2015, causing them Sh1.1 billion loss.
Having been served with the plaint, TIB bank raised a counter claim. It asked the court to declare that the hotel was in breach of loan agreement and order it to pay outstanding loan amount of Sh561.5 million.
It also sought an order for attachment and sale of guarantor’s personal properties to recover the money.
Suit backfires
In his recent decision, Judge Stephen Magoiga said the plaintiff has failed to convince the court that the money was unlawfully deducted from its account and used for unintended purposes.
“I have perused the bank statement on the current and loan accounts of Picolo Beach Hotels Limited starting October 11, 2010 to November 4, 2019. It is my considered opinion that the plaintiff has failed to prove that the amount in dispute was deducted unlawfully and used for purposes other than the intended ones,” said the judge.
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