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Constitutional law — Constitution of Zimbabwe 1980 — Consolidated Revenue Fund (ss 101, 102 and 103) — absolute terms of sections — revenues collected must be deposited in Fund — transfer of such revenue to anyone else prohibited — transfer of funds collected by Revenue Authority to Reserve Bank — transfer unlawful
The appellant and the respondent were legal entities, established by statute for the achievement of specific purposes, with a right to sue and be sued. The respondent was established in terms of the Revenue Authority Act [Chapter 23:11] to act as an agent of the State in assessing, collecting and enforcing the payment of all revenues due to the state and the transfer of that revenue to the Consolidated Revenue Fund for appropriation by Government. It was authorised to open accounts with banks to receive deposits by individuals of the revenue due to the State. It was under an obligation, as an agent, to account for all the money deposited into the accounts and generally collected by it, by transferring the money into the Consolidated Revenue Fund. Under s 101 of the Constitution of Zimbabwe 1980 and s 28(2) of the Act, the respondent was under an obligation not to transfer that money to any body, other than the Consolidated Revenue Fund. Under s 102(3) of the Constitution, no money can be withdrawn from the Consolidated Revenue Fund unless an act of Parliament authorizes such withdrawal and prescribes the exact manner and form of such withdrawal.
The appellant was established under the Reserve Bank of Zimbabwe Act [Chapter 22:15] for the purposes of managing the financial affairs of private banking institutions and those of the State in terms of the law. The powers which appellant exercised in the execution of its functions in respect of private banking institutions are set out in s 45 of the Banking Act [Chapter 24:20]. The appellant received into its own account from two commercial banks money held by those banks on behalf of the respondent. This was pursuant to a directive issued to the banks to transfer the money from accounts held with them by the respondent. The directive was purportedly made in terms of s 6(1)(d) of the Reserve Bank of Zimbabwe Act (the paragraph was later repealed), which imposed on the respondent the duty to advance the general economic policies of the Government by doing those things which are permitted by the law. Under s 8(1) of the Act, the respondent could be called upon to meet the settlement by Government of its obligations towards its debtors. In pursuance of this objective, the respondent's Governor issued, through a monetary policy statement announcement, a directive to all commercial banks to transfer all foreign currency held by individuals and institutions with them, into appellant's own account.
The respondent demanded the refund of the money; the appellant did not respond to the demand, and proceedings were instituted by the respondent to recover the money. The appellant opposed the claim, onthree grounds: (a) that it had a right under ss 6(1)(d) and 8(1) of the Act, to issue the directive; (b) that the respondent should have sued the commercial banks, as opposed to itself, for the recovery of the money, there being no privity of contract between the two; and (3) that s 18 of the Act granted it immunity from proceedings of this nature.
Held, that the obligation imposed by the Constitution applies to all concerned, including the respondent, the commercial banks, and the appellant. The obligation prohibits, in absolute terms, any transfer of revenue collected by the respondent to any other recipient except the Consolidated Revenue Fund. Any act which has the effect of transferring the money to any other recipient, prior to it getting into the Consolidated Revenue Fund, would be unlawful under the Constitution, regardless of who authorized that transfer. It would not be a valid defence to say that the money was used by government or that the directive came from Government because the Constitution is binding on the Government.
Held, further, that the appellant overshot the scope of its powers under ss 6(1)(d) and 8(1) of the Act. The sections placed on the appellant an obligation, limited to the exercise of the powers of monitoring financial systems. The obligation to advance the economic policies of the Government by making funds available to it is limited to the appellant having monies in its own accounts. The obligation does not authorize the appellant to force transfers of money from other people's accounts.
Held, further, that the immunity the appellant claimed was limited to a situation where the appellant has acted within the confines of the statute. If the appellant were to be sued for a debt, the defence of immunity would only be available to it if the action complained of, or the debt was incurred, in the proper exercise of the powers conferred upon it by the statute. At the time the directive was issued, the immunity provision had not yet come into force.
Held, further, that the unlawful directive issued by the appellant to the commercial banks was the causa sine qua non of the respondent's loss and the appellant was therefore liable to make good the loss. Under s 17 of the Banking Act a commercial bank is under an obligation to comply with any directions given to it by the Reserve Bank in terms of the Act. Whilst the commercial banks were not obliged to obey the directive because it was unlawful, the fact that they acted in accordance with its demands did not absolve the appellant from liability for the consequences of its unlawful conduct.
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