Minister of Justice, Legal and Parliamentary Affairs v Juliana Muskwe & 4 Others

Hwange Colliery Company Ltd, a state-owned coal mining conglomerate and strategic national asset, suffered financial losses between 2013-2016, accumulating debts of US$353 million. On 26 April 2017, shareholders and creditors approved a Scheme of Arrangement under s 191(1) of the Companies Act. The scheme was sanctioned by the High Court on 10 May 2017. On 26 October 2018 (17 months after the scheme was sanctioned), the Minister of Justice issued a Reconstruction Order (RO) under s 4 of the Reconstruction of State-Indebted Insolvent Companies Act, divesting the directors of their powers. On 22 November 2018, the Minister applied for confirmation of the RO. The High Court dismissed the application on 12 February 2020, finding the RO violated s 2(a) of the Act, which required any RO to be issued within 30 days of filing the scheme application. The Minister appealed.

• Whether the Minister could lawfully issue a Reconstruction Order 17 months after a Scheme of Arrangement application was filed with the High Court
• The proper interpretation of s 2(a) of the Reconstruction of State-Indebted Insolvent Companies Act
• Whether failure to register the sanctioned scheme with the Registrar of Companies rendered it ineffective
• Whether the scheme had been abandoned by conduct or breach
• Whether a court-sanctioned scheme must be set aside before a Reconstruction Order can be issued
• The effect of non-compliance with peremptory statutory provisions

The appeal was dismissed. The order of the High Court was set aside and substituted with an order striking the application off the roll with costs. The appellant was ordered to pay the respondents' costs on the ordinary scale.

Where an application for sanctioning a scheme of arrangement has been filed with the High Court under s 191(2) of the Companies Act, s 2(a) of the Reconstruction of State-Indebted Insolvent Companies Act operates as a peremptory bar preventing the Minister from issuing a Reconstruction Order unless done within 30 days of the filing of that application. Any action done in contravention of peremptory statutory provisions is invalid and constitutes a nullity. A court-sanctioned scheme of arrangement remains valid and effective until set aside by a court, regardless of whether it has been registered with the Registrar of Companies. The registration requirement does not affect the validity of the court order itself, which binds all parties by virtue of s 164(3) of the Constitution.

The Court observed that it would be illogical and undesirable to have multiple corporate rescue mechanisms operating in parallel or in competition. The legislature provided a 30-day window for the Minister to intervene precisely to prevent such conflicts. The Court noted that like reconstruction orders, schemes of arrangement, liquidation and judicial management all fall within the genre of corporate rescue measures. The Court severely reprimanded the Director of the Civil Division of the Attorney-General's Office for improperly attempting to submit evidence after the hearing without leave of court and without opposing counsel's consent, describing this conduct as "highly irregular and profoundly objectionable." The Court also commented that the difference between dismissal and striking off is significant, as s 8(4) of the Act allows the Minister to make fresh applications based on new evidence, giving him a "second bite at the cherry."

This judgment establishes important principles regarding the interaction between schemes of arrangement under the Companies Act and reconstruction orders under the Reconstruction of State-Indebted Insolvent Companies Act. It confirms that peremptory statutory time limits must be strictly observed and that government ministers cannot circumvent corporate rescue mechanisms sanctioned by courts outside statutory timeframes, even for state-owned strategic assets. The judgment reinforces the principle that court orders remain valid and binding until set aside, that parties cannot approbate and reprobate, and that an applicant's case must be made in the founding affidavit. It also emphasizes the constitutional command that court orders must be obeyed by all, including government. The case protects shareholder rights and the integrity of judicial processes against executive overreach.