Mazowe Mining Company Pvt Ltd v Hungwe Mining Syndicate and Others

Mazowe Mining Company (the applicant) is a registered company and holder of mining lease 35 in Mazowe. The respondents (19 mining syndicates and two companies) were allegedly illegally occupying and mining on the applicant's lease without consent. The applicant sought an urgent eviction order. The applicant's directors passed a resolution on 28 July 2025 authorizing the institution of these proceedings. However, a pending corporate rescue application (case HCH 84/24) had been filed against the applicant on 15 February 2024 by other parties seeking to place the applicant under corporate rescue in terms of section 121 read with sections 124 and 131 of the Insolvency Act. The respondents raised a preliminary point challenging the applicant's locus standi to institute proceedings, arguing that the filing of the corporate rescue application divested the directors of their powers.

• When do corporate rescue proceedings commence under the Insolvency Act?
• What is the effect of the commencement of corporate rescue proceedings on the powers of a company's board of directors?
• Whether directors retain capacity to pass valid resolutions authorizing litigation after a corporate rescue application has been filed but before it is determined?
• Whether the deeming provisions of section 130(2) of the Insolvency Act apply immediately upon filing of a corporate rescue application or only after a court order is granted?
• Whether the applicant had locus standi to institute the proceedings given the pending corporate rescue application?

1. The application is struck out. 2. No order as to costs.

Corporate rescue proceedings commence immediately upon the filing of an application for corporate rescue under section 124(1) of the Insolvency Act, as provided in section 125(1)(b). Upon commencement of corporate rescue proceedings, the board of directors is deemed dissolved and directors are divested of their powers to act on behalf of the company by operation of section 130(2) of the Insolvency Act. Any action purported to be taken by directors during corporate rescue proceedings is void unless approved by the corporate rescue practitioner (section 130(4)). A company resolution passed by directors after the filing of a corporate rescue application but before appointment of a corporate rescue practitioner is invalid and does not confer locus standi to institute legal proceedings. Directors may still act for the company during corporate rescue proceedings but only with leave of court under section 126(1)(b) of the Insolvency Act.

The court observed that directors are not left without recourse when divested of their powers, as they can approach the court for leave to institute or defend proceedings under section 126(1)(b). The court noted that directors are typically not the company's day-to-day management/operatives, so their removal does not create a complete vacuum in company operations. The court acknowledged that if the law's limitation on directors' powers raises constitutional concerns (such as the right to be heard), such challenges should be brought separately as constitutional applications. The court made no order as to costs, noting that the matter involved competing judicial precedents and both counsel had been assistive in interrogating a difficult legal question. The court did not address the substantive merits of the eviction application regarding the alleged illegal mining activities.

This case clarifies an important question in Zimbabwean corporate rescue law: the point at which directors lose their powers when corporate rescue proceedings are instituted. The judgment follows and applies the Supreme Court precedent in Metallon Gold, establishing that the mere filing of a corporate rescue application (not the granting of an order) commences corporate rescue proceedings and immediately divests directors of their powers under section 130(2) of the Insolvency Act. This has significant practical implications for companies subject to corporate rescue applications, as directors cannot validly authorize litigation without first obtaining leave of court under section 126(1)(b). The judgment also demonstrates judicial disagreement on this issue, with Chitapi J respectfully departing from the reasoning in the Rio Zim case (Dembure J), creating potential uncertainty that may require Supreme Court clarification.