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Civil Court orders Lily Enterprises to settle MVR 9.3M to third-party

Mohamed Rehan
04 June 2023, MVT 17:54
[File] A Civil Court trial hall -- Photo: Nishan Ali
Mohamed Rehan
04 June 2023, MVT 17:54

The Maldives Civil Court has ordered Lily Enterprises to fulfill its financial obligations by settling outstanding cheques totaling MVR 9.3 million to a third-party, with whom the company entered into a contract.

According to the court's ruling, Lily Enterprises had entered into an agreement with Asim Abdul Raheem, the third-party involved, to borrow USD 600,000 as an investment.

With an exchange rate of MVR 15.52, Lily Enterprises had issued five bank cheques amounting to the total MVR 9.3 million, to Asim. According to the contract, Asim stood to receive MVR 600,000 in profits per month.

Lily Enterprise had honored the agreement until April 2020, and continued paying Asim with the agreed monthly payout. However, starting from May 2020, Lily stopped the payments and requested to terminate the agreement.

In November 2020, Asim presented a proposal to Lily Enterprises, suggesting that the company pay a lump sum of MVR 11.6 million after deducting a significant amount from the profits. Asim stated that once Lily pays the proposed amount, their contract would come to a conclusion.

Following the proposal, Lily had paid MVR 300,000 on two separate occasions. However, when Lily failed to meet the payment terms outlined in Asim's proposal, he had demanded the company to fulfill the original agreement, and pay him the MVR 600,000 monthly payout.

Asim filed a lawsuit against Lily Enterprises after four out of the five cheques he received from the company bounced, and he received the check return notification from the bank.

While Asim maintained that the transaction with Lily Enterprises was an investment, the company argued that it was a simple currency exchange transaction. Lily Enterprises claimed that they had not provided any investment opportunities to a third-party. According to the company, the cheques were issued to Asim as a guarantee for their exchange transactions, and it is common practice for the cheques to be collected once the seller receives payment in cash. Lily Enterprises said that the cheques in Asim's possession were guarantees for the transactions that had not been collected back.

The court determined that while there was a dispute regarding the nature of the transaction, the existence of a transaction between Lily Enterprises and Asim was not contested. Additionally, the court noted that Lily Enterprises' payment vouchers did not provide evidence that Asim was compensated for the guarantee cheques issued to him.

Based on the evidence presented by both parties, the Civil Court issued an order requiring Lily Enterprises to settle the outstanding amount of the unpaid cheques with Asim before June 15.

While the court has ordered Lily Enterprises to pay an outstanding payment for a USD 600,000 agreement, another party has filed a lawsuit against the company seeking compensation for a USD 650,000 currency exchange deal.

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