The plaintiff, John Mafungei Chikura, in his capacity as liquidator of Royal Bank Zimbabwe Limited, issued summons against nine defendants claiming that they ran the business of Royal Bank Zimbabwe Limited recklessly and with gross negligence, making them personally liable for the bank's debts totaling US$11,383,031.00. Royal Bank Zimbabwe Limited had surrendered its banking licence on 27 July 2012. On 20 February 2013, Makoni J placed the bank under provisional liquidation and appointed John Mafungei Chikura of the Deposit Protection Corporation as provisional liquidator. This order was subsequently confirmed by Zhou J. The 1st, 4th, 6th and 7th defendants entered appearance to defend and filed a special plea in bar on 22 May 2017, challenging the liquidator's locus standi to bring the claim.
The defendants' special plea was dismissed with costs.
The provisions of the Banking Act, including section 57 requiring the Reserve Bank to appoint the Deposit Protection Corporation as liquidator, only apply to companies that hold a valid banking licence issued by the Reserve Bank and for as long as that licence remains in force. Once a banking licence is surrendered or revoked, the company ceases to be a bank in terms of the Banking Act and its affairs are governed by the Companies Act and Insolvency Act. A court is functus officio regarding orders made by judges of parallel jurisdiction and cannot revisit, vary or alter such orders.
The court noted that even if the liquidator's description was defective (as "John Mafungei Chikura of Deposit Protection Unit" or "John Mafungei Chikura N.O." rather than as liquidator of the specific company), this would not have been sufficient grounds to uphold the special plea given the other findings. The court also observed that the defendants wisely did not rely on Rule 449(1)(a) in support of their prayer, implicitly suggesting such reliance would have been misplaced as that rule only applies to correction of judgments made in error in the absence of other affected parties.
This case clarifies the important distinction between the application of the Banking Act and the Companies Act in liquidation proceedings. It establishes that once a banking licence is surrendered or revoked, a former bank is no longer governed by the Banking Act but falls under the ordinary company law regime. The case reinforces the functus officio doctrine and the principle that a judge cannot vary or alter orders made by a judge of parallel jurisdiction. It provides guidance on the proper appointment of liquidators for former banking institutions and confirms that the special liquidation provisions in the Banking Act cease to apply once the banking licence is no longer in force.