November 22, 2011

Insufficient Funds for Bitumen

DMC Construction Plc has been ordered to pay 11.7 million Br by the Federal High Court Ninth Civil Bench in the past two weeks after it lost two suits brought against it by the National Oil Company (NOC) and Liby Oil for issuing a cheque that bounced. 

 NOC and Libya Oil brought their suits in September and October, 2001, respectively. NOC, established in April 2007 by Mohammed Ali Al-Amoudi and partners including its current CEO, Tadesse Tilahun, filed its suit in summery procedure in the beginning of September claiming 6.7 million Br for a cheque that was issued to it without having sufficient funds. The cheque, which was issued from United Bank, Lebu-Lafto branch, was presented as evidence along with a letter from the bank stating insufficient funds for not being able to pay on the cheque. 

NOC had asked for the payment of the money including a nine per cent interest on the amount from August 30, 2011, the date payment was denied by the bank for lack of sufficient funds.  While the suit was pending hearing, NOC had asked the court to freeze the assets of DMC claiming that the construction company was trying to transfer its assets to avoid liability. 

Nuredin Keder, the presiding judge at the time, on October 11, 2011, had ordered bitumen asphalt mix found on road construction sites of the company in the Southern Regional State to be frozen during the litigation. The litigation came to end with the court, presided by Mekonnen G. Hiwot ruling, who replaced Nuredin after he was transferred, ruling in favour of NOC. 

Three days after the court had ordered the freeze on DMC, owned by Daniel Mamo and Bethlehem Abebe, Oil Libya had brought a similar suit against it. The oil company, which entered into the local market after it has acquired all assets and downstream operations including liabilities and privileges of Shell Ethiopia Ltd in 2009, sued DMC for issuing a bounced cheque for five million Birr. 

The payment was supposed to be for the supply of fuel products as agreed on a contract signed in December last year. However, the cheque issued from Nib International Bank (NIB) bounced when it tried to withdraw the money on September 20, 2011, the oil company said in its charge. Oil Libya also asked for the amount to payment of the amount it with interest calculated from this date it bounced.
Mekonnen, who also presided in the suit brought by Oil Libya, ruled in favour of the oil company.
DMC has been involved in many construction projects in the country, notable among which is the construction of asphalt roads in Hawassa town, 276Km south of Addis Abeba, which was created to change the face of the city. Although it was summoned in both cases to respond to the suits, the construction company did not. 

It is to pay a three per cent commission until the money is paid back in full, the court also ruled. The plaintiffs have to file a judgement execution to collect the money they are owed by DMC.    


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