Company drags UMB to court for ‘unlawful’ credit reference posting on Xdsdata

A distribution company, Sudhir Cash and Carry Limited, has sued Universal Merchant Bank (UMB), alleging that the bank has indulged in acts that has collapsed its business.

In the suit filed at the Commercial Division of the Accra High Court, Sudhir claims that in 2007, UMB “unlawfully” posted on Xdsdata, a credit reference bureau, that it (Sudhir) owed the bank Gh₵204,638.

The company averred that as a result of UMB’s action, its business has collapsed because it cannot access credit facility from any financial institution in the country.

According to the company, banks in the country have blacklisted it because they now see it as a “chronic loan defaulter.’’

The plaintiff’s Managing Director is Mr Pankaj Pyne.

Damages

Sudhir Cash and Carry is, therefore, praying the court to order UMB to pay it Gh1.8 million, which is the profit the company would have accrued from 2007 till date.

It also wants a declaration from the court that the company does not owe UMB the amount it (UMB) posted on Xdsdata and, therefore, it was unlawful for the bank to have posted such information.

The company is also seeking a declaration that UMB’s action had led to its inability to access credit facility from any financial institution and also an order directed at UMB to retract the said publication on Xdsdata.

Sudhir further wants UMB to pay interest and general damages for all the money it had lost since 2007.

Sudhir’s case

In its statement of claim, Sudhir said it was a key distributor of Nestle and Unilever products, and it opened an account with UMB, formally known as Merchant Bank, based on a proposal the bank made to Unilever key distributors.

The proposal, the company claim, was that the distributors would enjoy a 21.5 per cent interest on loan facilities among other benefits.

Sudhir, however, averred that the bank reneged on its promise and rather charged it 36 per cent on loan facilities.

According to the company, UMB granted it a Gh₵100,000 overdraft, based upon which it issued cheques to Unilever.

“The defendant (UMB), however, returned the cheques issued to Unilever Ghana Limited and imposed a 10 per cent penal charge on each cheque when the ceiling of the facility had not been exceeded,’’ it said.

The statement of claim stated that Sudhir complained to UMB and the bank paid Unilever the amount but it refused to reverse the said 10 per cent penal charges.

Afterwards, the company said the penal charges accumulated to which UMB dragged it to court to claim the sum of Gh₵77,192.55, but the bank did not pursue the matter after Sudhir filed its defence and a counterclaim.

After the incident, Sudhir claims it decided to seek credit facility from other banks to run its business, but the banks turned down its requests despite the company meeting all the necessary requirements.

“Investigations by the plaintiff (Sudhir) revealed that as of February 21, 2007, the defendant (UMB) posted on the register of Xdsdata, Ghana that the plaintiff was indebted to it in the sum of Gh₵204,638 contrary to the applicable law,’’ the statement of claim noted.

UMB’s defence

UMB in its statement of defence rejected all the claims of Sudhir and explained that the company had an overdraft limit of Gh₵100,000, but it constantly exceeded the limit without informing the bank.

According to the bank, it warned the distribution company on countless occasions to make adequate preparation to fund the accounts in order to satisfy the cheques drawn on it.

‘A penalty was charged by the defendant (UMB) against the plaintiff whenever the plaintiff exceeded its overdraft limit in accordance with normal banking practice,’’ it said.

UMB also stated that Sudhir did not qualify to access the package it had for the distributors because Sudhir’s tittle deeds were still in the possession of another bank due to its indebtedness to that bank.

Writer’s email: emma.hawkson@graphic.com.gh