Court of Appeal rejects Vedanta application to discharge KCM liquidator

COURT of Appeal president justice Fulgency Chisanga has declined to discharge Milingo Lungu as the provisional liquidator of Konkola Copper Mines.

On November 20, 2020, the Court of Appeal, in its judgement ordered that the liquidation proceedings involving KCM before the Lusaka High Court be stayed to allow ZCCM-IH and Vedanta Resources Limited proceed to arbitration.

This is in a matter where ZCCM-IH has petitioned KCM for liquidation, seeking an order that it be wound up for engaging in tax evasion and being managed in a manner detrimental to the interest of government.

Following the Court of Appeal’s judgement directing the parties to proceed to arbitration, Vedanta Resources Holding limited prepared an order asking the court to relieve Lungu of his duties as the provisional liquidator of KCM.

However, the state and other lawyers representing ZCCM-IH and the provisional liquidator of KCM refused to approve the order on grounds that it contained an order that was foreign to the judgement of the court.

Vedanta’s advocates issued summons pursuant to Order 10 Rule 23 (4) of the Court of Appeal Rules against the respondents.

In an affidavit in opposition, the provisional liquidator of KCM Milingo Lungu said that no other order was made by the court in its judgement except from those it outlined.

During hearing, Mulenga Mundashi said the bone of contention was the status of the provisional liquidator on wether he should continue when the winding up proceedings had been stayed and the matter referred to arbitration.

Vedanta argued that once a matter is referred to arbitration, proceedings are terminated.

It argued that Lungu should be discharged as provisional liquidator because when proceedings are stayed, automatically the winding up proceedings stop and the order appointing the liquidator loses effect pending determination of the matter.

Vedanta said when a matter is referred to arbitration, the mandatory stay suspends everything and since the court did not impose conditions, Lungu cannot continue functioning as provisional liquidator.

In response, Abyudi Shonga, on behalf of the state, argued that the issue relating to the discharge of the provisional liquidator was not addressed by the court.

On behalf of KCM provisional liquidator, Bonaventure Mutale argued that the procedure for settlement of an order was not a mechanism for parties to go beyond the terms of the judgement delivered by the court.

He said the authority of a single judge was not to discharge or reverse the judgement of the court made in its appellate jurisdiction.

Mutale said the procedure under Order 10 Rule 23 cannot be used to enable the court to have second or additional thoughts.

The respondents argued that the provisional liquidator was appointed to take control of the company.

In her ruling justice Chisenga said in the High Court, the removal of Lungu as provisional liquidator was not raised as justice Annessie Banda-Bobo was asked to stay the winding up proceedings and refer the matter to arbitration.

She said the appeal against justice Banda-Bobo’s refusal was equally silent on the fate of the provisional liquidator.

Judge Chisanga said in the judgement, the fate of the provisional liquidator was not addressed because the court does not address issues which were not included in the memorandum of appeal or not addressed by the concerned parties in the arguments.

She said the prayer to have Lungu discharged as the provisional liquidator was not raised during hearing and the respondents had not had prior notice of the same and had not addressed it.

“It is contended that the stay of proceedings automatically meant the discharge of the provisional liquidator. This argument does not sit well on the procedure to draw up the order by the single judge to interpret the judgement or its effect. It merely allows them to reduce what the court said into an order,” said judge Chisanga. “I reject the order discharging the provisional liquidator as I do not seem to have power to include the proposed order as a single judge under the rule invoked by the parties. I direct that the order relating to the discharge of the provisional liquidator be removed from the settled order”.

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