Judge orders release of jailed directors

TWO directors of a private construction firm renovating the Julius Nyerere International Airport have been released from prison where they were committed to serve two months civil imprisonment each for failure to pay 554,941 US dollars loan.

Mr Phillip Grissel and Mr Pradeep Gajjar, directors of P.G. Associates Limited obtained the loan from Barclays Bank Tanzania Limited in 2003, but they failed to pay back as required.

Judge Salum Massati of the High Court’s Commercial Division, who had committed them to jail, ordered their release from prison after granting an application made by counsel for the bank, Mr Paschal Kamala.

Mr Kamala had told the court that his client made arrangements with other creditors of the two directors and agreed that since the duo was sole directors of the company it would be in the interest of all creditors to release them.

He said such development would enable the directors to execute two contracts they entered with the Tanzania Airports Authority and other subsisting contracts to enable them to discharge the bank and other creditors’ liabilities.

On October 10, this year, Judge Massati committed the two directors to civil jail as way to compel them pay the bank’s loan after rejecting their plea for at least a week to settle the debt, saying it lacked merit.

The court had originally ordered them to settle the debt in April last year.

Mr Grissel and Mr Gajjar had acted as guarantors for a loan advanced to their company apparently without collateral.

On August 30, last year, the bank filed an application for the duo to show cause why they should not be committed to prison for defaulting the court’s settlement order issued on April 24, last year.

The court had ordered them to settle the loan on installments of 30,000 dollars each on August 1, 2006, November 1, 2006 and February 1, 2007 and would have paid 40,000 dollars on April 1, July 1, October 1 and January 1 of each calendar year.

However, the debtors paid 30,000 dollars only by two separate installments of 15,000 dollars in November and December last year and issued a dishonoured banker’s cheque of 30,000 dollars for February installment.

SOURCE: DAILY NATION