THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable
Case No: 170/2014
In the matter between:

LODHI 5 PROPERTIES INVESTMENTS CC                      FIRST APPELLANT
LODHI 4 PROPERTIES INVESTMENTS (PTY) LTD   SECOND APPELLANT
MUHAMMED ISLAM LODHI                                             THIRD APPELLANT

and

FIRSTRAND BANK LIMITED                                                       RESPONDENT

Neutral citation:  Lodhi 5 Properties Investments v Firstrand Bank Limited
(170/14)[2015] ZASCA 72 (22 May 2015)
Coram:

Maya, Majiedt, Pillay, Mbha JJA and Schoeman AJA
Heard:
4 MARCH 2015
Delivered:
22 May 2015
Summary:
Loan agreement – respondent bank entitled to restitution in light
of lapse of loan and agency agreements in terms of which loan
lent and advanced to first appellant before debt extinguished –
mora interest payable in respect of loan agreement governed by
Shari’ah (Islamic) law which prohibits the charging of interest
for a loan – order granting appellants’ final winding up
justified.

___________________________________________________________

ORDER
__________________________________________________________

On appeal from: Gauteng Division of the High Court, Pretoria (Molefe J
sitting as court of first instance):

1 Save to the extent below, the appeal is dismissed with costs,
including the costs of two counsel.
2 Paragraphs 38 (i) and (ii) of the order of the court below are set aside
and replaced with the following:
‘Muhammad Islam Lodhi shall pay to the applicant R2 642 006.98
together with interest thereon at the rate of 15,5 per cent per annum as
from 15 June 2012 to date of payment.’

___________________________________________________________

JUDGMENT
___________________________________________________________

Maya JA (Majiedt, Pillay, Mbha JJA and Schoeman AJA concurring):

[1] This is an appeal against orders granted against the appellants by
the Gauteng Division of the High Court, Pretoria (Molefe J) in three
separate applications brought by the respondent, FirstRand Bank Limited
(the bank). In terms of these orders, the first and second appellants, Lodhi
5 Properties Investments CC (Lodhi 5) and Lodhi 4 Properties
Investments (Pty) Limited (Lodhi 4) were placed under final winding up.
The third appellant (Mr Lodhi) was ordered to pay the bank a sum of
R10 328 574, 25 together with interest at the rate of 15,5 per cent per

annum from 18 April 2011 until date of payment. The appeal seeks a
dismissal of the applications with costs and serves before this court with
the leave of the court below.

[2] Lodhi 5 is a close corporation registered in accordance with the
laws of the Republic of South Africa. Its sole asset is immovable
property, Erf 24 Kramerville Township, Johannesburg. It is one of a
group of entities, the Lodhi Group, which include Lodhi 4, through which
Mr Lodhi, the sole member of Lodhi 5, conducts business involving rare
and fine art, sporting goods, auctioneering and textile industries.

[3] The bank offers its Islamic customers certain specialised services
and products compliant with Shari’ah (Islamic) law which cater for
Islam’s prohibition on the charging of interest. These include an Islamic
Finance Residential Property Offering which includes an agency
agreement that allows the bank to act as an agent when purchasing
property on behalf of its customers in return for a fixed agency fee. In
June 2008 the bank lent and advanced to Lodhi 5, without interest, a sum
of R9,6 million repayable in 120 monthly instalments of R88 000, in
terms of this dispensation. The loan was for the purchase of Erf 24,
Kramerville Township and a neighbouring property, Erf 29 (the
property). On 7 May 2008 Lodhi 4 and Mr Lodhi had executed a
suretyship bond in the bank’s favour securing the indebtedness of Lodhi
5. And on 19 June 2008 Lodhi 5 and Lodhi 4 respectively registered a
covering mortgage bond and a suretyship bond in the bank’s favour.

[4] Lodhi 5 made regular payments to the bank in discharge of the loan
until May 2009 and from July to September 2009. During the ensuing
lull, in November 2009, the Registrar of the Companies and Intellectual

Property Registration Office (CIPRO) placed Lodhi 5 in deregistration,
which was made final in July 2010, for failing to submit its annual return.
However, the deregistration was subsequently reversed1 at the instance of
the bank which sought to safeguard its interests as Lodhi 5’s creditor. In
May 2010 Lodhi 5 made a large payment towards the discharge of the
loan in the sum of R5 million from an insurance pay-out, which will be
discussed later in the judgment. No further payments were made
thereafter.

[5] On 18 April 2011 the bank sent a statutory demand to Lodhi 5 in
terms of s 69 of the Close Corporations Act 69 of 1984 (the Close
Corporations Act)2 and a letter of demand to Mr Lodhi. On 25 May 2011
it sent a statutory demand to Lodhi 4 in terms of s 345 of the Companies
Act 61 of 1973 (the Companies Act).3 The statutory demands stated that
if payment of the sums claimed was not made within 21 days of receipt

1 In terms of section 26(6) and (7) of the Close Corporations Act which provide:
‘(6) The Registrar may on application by any interested person, if he or she is satisfied that a
corporation was at the time of its deregistration carrying on business or was in operation, or that it is
otherwise just that the registration of the corporation be restored, restore the said registration.
(7) The Registrar shall give notice of the restoration of the registration of a corporation in the Gazette,
and as from the date of such notice–
(a) the corporation shall be deemed to have continued in existence as from the date of deregistration as
if it had not been deregistered.’
2 The section provides for circumstances under which a corporation may be deemed unable to pay its
debts for purposes of its winding up. The relevant part reads:
‘Circumstances under which corporation deemed unable to pay debts
(1)  For the purposes of section 68 (c) a corporation shall be deemed to be unable to pay its debts, if –
(a) a creditor, by cession or otherwise, to whom the corporation is indebted in a sum of not less than
two hundred rand then due has served on the corporation, by delivering it at its registered office, a
demand requiring the corporation to pay the sum so due, and the corporation has for 21 days thereafter
neglected to pay the sum or to secure or compound for it to the reasonable satisfaction of the creditor.’
3 The section provides for circumstances under which a company is deemed unable to pay its debts for
purposes of its winding up and reads in relevant part:
‘When company deemed unable to pay its debts
(1) A company or body corporate shall be deemed to be unable to pay its debts if –
(a)  a creditor, by cession or otherwise, to whom the company is indebted in a sum not less than one
hundred rand then due –
(i)  has served on the company, by leaving the same at its registered office, a demand requiring the
company to pay the sum so due; or
(ii)  …
and the company or body corporate has for three weeks thereafter neglected to pay the sum, or to
secure or compound for it to the reasonable satisfaction of the creditor.’

thereof, Lodhi 5 and Lodhi 4 would be deemed unable to pay their debts.
The appellants did not respond to the letters of demands.

[6] On 5 July 2011 the bank launched the court proceedings in which it
mainly sought to have Lodhi 5 and Lodhi 4 placed under final winding up
and Mr Lodhi ordered to pay the outstanding amount on the loan. The
bank relied on the written, interest free loan agreement (the loan
agreement) in terms of which it alleged to have lent and advanced to
Lodhi 5 a sum of R9,6 million. The bank further relied upon a written
‘Agency and
Administration
Services Agreement’ (the agency
agreement). In terms of the agency agreement, the bank, acting as Lodhi
5’s exclusive agent, would purchase the property on its behalf. An
administration fee for those services was payable by Lodhi 5 to the bank
in a sum of R7 600 560 (plus VAT) payable in 120 equal monthly
instalments. The bank alleged that Lodhi 5 had fallen into arrears in terms
of both agreements and that sums of R3 609 331,52 and R6 773 242,73
remained owing as capital in terms of the loan agreement and the balance
of administration fees in terms of the agency agreement, respectively.

[7] The appellants did not dispute the loan agreement which they
admitted Mr Lodhi had signed. They also admitted that a capital sum of
R2 682 627 remained owing under the agreement. But they contended
that this debt was not yet due and payable because the bank had not
accelerated the repayment of instalments in terms of the loan agreement
and that the payment of R5 million amounted to prepayment of 62
instalments and years’ worth of instalments in advance. Furthermore, a
suspensive condition to which the loan agreement was subject was never
fulfilled to bring the agreements into effect.  Regarding the agency
agreement, they denied that it came into effect on the ground that it was

never signed. They argued further that even if the agency agreement had
been signed it was, nevertheless, not implemented according to its terms
because the bank did not perform any of the obligations it undertook as
their agent in terms thereof. Thus, it was contended that the bank earned
no agency fee which amounted to interest in breach of Shari’ah law in
any event.

[8] In response, the bank averred in a supplementary affidavit (one of
several allowed by the high court) filed late into the proceedings, that the
agency agreement, which it alleged it could not locate, had been signed
by an official who was no longer in its employ and was unavailable to
comment. The bank accepted that if the court below found that the
agency agreement never came into force and effect by reason of non-
signature, in light of the absence of proof that it was signed, then the loan
agreement would be similarly affected by reason of clause 4. The latter
provision required that the agency agreement be signed and become
unconditional. But the bank contended that even if the loan and agency
agreements were invalid it was still entitled to the restitution of the
outstanding balance of R7 007 297,51 (a claim which the appellants
unsuccessfully argued had prescribed in the high court and which they
wisely did not raise on appeal). This amount comprised the initial capital
loan of R9,6 million less all payments made by Lodhi 5 under both
agreements, together with interest at 15,5 per cent from June 2008, the
date of the initial advance of the loan.

[9] The court below found that both agreements were valid and
enforceable as they had been signed and were compliant with Shari’ah
law. The court accordingly granted judgment against Mr Lodhi in the full
amount and interest initially claimed. The court below also granted the

liquidation applications against Lodhi 4 and Lodhi 5. This was on the
basis that these entities had no valid defence and were clearly unable to
pay their debts, which were due and payable.

[10] On appeal the issues crystallised to whether (a) Lodhi 4 and Lodhi
5 were correctly placed under winding up, (b) the appeal should succeed
partially by the reduction of the amount in the order granted against Mr
Lodhi to the capital amount of R2 642 006,98 admitted as outstanding,
and (c) Mr Lodhi is liable to pay interest on such amount and if so, from
which date.

[11] The appellants challenged all the conclusions of the court below.
They argued that the bank’s main claims were wrongly granted on an
unfounded premise that the agreements came into effect. This was not
proved, they argued, because the agency agreement was not signed and
the bank itself had ultimately conceded that the issue had to be decided
on the appellants’ version. It was further contended that the appellants’
resistance to the claims was justified as the bank subsequently abandoned
them and claimed restitution. In terms of the loan agreement, this position
conflicted with the bank’s allegation that the suspensive conditions had
been fulfilled (which the bank failed to prove in any event). Thus the
amounts claimed in the letters of demand were not due and payable at the
time. And the bank could claim restitution of the capital outstanding from
Lodhi 5 only and not against the sureties. It was further argued that the
award of interest had no basis in law even if the outstanding debt was due
and payable. This was so because the parties’ intention to conclude an
interest free loan agreement governed by Shari’ah law excluded the

application of the Prescribed Rate of Interest Act 55 of 1975 (the Act)4
upon which the bank relied. It was then contended that the bank’s success
in its main claim meant that its alternative claim for restitution had failed
and could not be pursued on appeal in the absence of a cross-appeal as the
bank sought to do.

The winding-up proceedings
[12] As indicated above, the liquidation applications were based on the
deeming provisions in s 69 of the Close Corporations Act and s 345 of the
Companies Act – that Lodhi 5 and Lodhi 4 should be deemed unable to
pay their debts by neglecting to pay, secure or compound their debts
demanded by the bank and should therefore be wound up in terms of s
344(f) of the Companies Act.5 In its supplementary affidavit the bank also
alleged that the financial statements of Lodhi 5 and Lodhi 4 showed that
their liabilities exceeded their assets. They were also unable to pay their
debts and were therefore commercially insolvent.

[13] The bank’s locus standi as Lodhi 5’s creditor was not in dispute.
The appellants only denied neglecting to pay the debt. They contended
that it was not yet due and payable when the bank demanded payment in
view of the loan and agency agreements’ lapse, the advance payment of
R5 million and the bank’s failure to accelerate payment of the instalments
in terms of the loan agreement. In their supplementary replying affidavits
they contended that Lodhi 5’s financial situation had since stabilised.

4 Section 1(1) of the Prescribed Rate of Interest Act 55 of 1975 provides that ‘[i]f a debt bears interest
and the rate at which the interest is to be calculated is not governed by any other law or by an
agreement or a trade custom or in any other manner, such interest shall be calculated at the rate
prescribed under subsection (2) as at the time when such interest begins to run, unless a court of law,
on grounds of special circumstances relating to that debt, orders otherwise.’
5 Section 344(f) of the Companies Act provides: ‘A company may be wound up by the Court if –
. . . the company is unable to pay its debts as described in section 345’.

[14] The contention that the bank did not invoke the acceleration clause
under the loan agreement may be dealt with shortly. Clause 18.2 of the
loan agreement gave the bank the right in the event of a breach of its
terms, by written notice, to ‘declare all or any part of the Capital
Outstandings to be immediately due and payable whereupon the Capital
Outstandings shall become immediately due and payable; and/or enforce
any or all of its rights under the Security Documents’6. The bank
expressly invoked these provisions in its letter of demand of 18 April
2011 which stated that ‘[i]n light of the aforesaid breach, [the bank] has
instructed us to declare all the Capital Outstandings of the Loan
Agreement … to be immediately due and payable’.

[15] There is similarly no merit in the appellants’ contentions
concerning the R5 million insurance pay-out. Clause 17.2.2 of the loan
agreement specifically provided for the manner in which such funds
(arising from insurance that it took out as cover against damage to or
destruction of the property) were to be utilised. If any event which gave
rise to a claim under the insurance occurred, the bank would, at its sole
discretion, be entitled to apply the insurance proceeds against the ‘capital
outstandings’. And to the extent that any balance of the ‘capital
outstandings’ remained thereafter, such balance would remain a debt due
by Lodhi 5 to the bank. Even on Lodhi 5’s case, after its loan account was
credited with the payment of the R5 million, a substantial balance
nevertheless remained outstanding on the capital debt. Needless to say, on
the above provisions such payment certainly did not absolve Lodhi 5
from discharging its obligations in the terms specified in the loan

6 The loan agreement defines ‘capital outstandings’ as the aggregate of all amounts of principal and all
and any other amounts due and payable to the bank under the loan agreement and ‘security documents’
as the mortgage bond and any further agreements entered into at any time by or on behalf of Lodhi 5 or
any other person as security for its obligations to the bank under the loan agreement.

agreement. The bank was wholly entitled to insist on the continued
payment of instalments, and upon the full debt becoming due and
payable, to insist on payment in full.

[16] As for the statutory notices to which the appellants did not respond,
the background leading to their issue was not disputed. Pursuant to a
meeting between the parties’ representatives, including Mr Lodhi, on 10
February 2010, the bank recorded that the arrears on Lodhi 5’s debt stood
at R725 074,40 which it was unable to pay arising from cash flow
problems. Mr Lodhi subsequently confirmed the correctness of these
statements in writing and made certain proposals to the bank regarding
payment of the arrears.  The debt was not settled and a year later, on 21
February 2011, the bank sent Lodhi 5 a letter of demand which was
followed by the statutory notice of 18 April 2011 to which there was no
response as already mentioned. This gave rise to the deemed inability to
pay.

[17] In addition to this, the financial statements of both Lodhi 5 and
Lodhi 4 and their failure to make any payment barring the R5 million
since 2009, despite their insistence that they were able to pay their debts,
subsequently showed their actual inability to pay their debts. According
to their financial statements, as at 28 February 2010 Lodhi 5 owed the
bank R2 682 675 and Lodhi 4, which carried a further liability on the
basis of its suretyship, was trading at a loss. The situation had not
changed by July 2012. Quite clearly, the two entities are commercially
insolvent and the court below correctly ordered their final winding-up.

The suretyships’ liability
[18] For the assertion that the restitution claim lies only against Lodhi 5,
Lodhi 4 and Mr Lodhi relied on clause 4.4 of the loan agreement on
which the claim for restitution is based. The clause reads:
‘In the event that the Suspensive Conditions are not fulfilled on or before 31 May
2008, or such other date as may be agreed in writing between the Parties on or before
that date, then this Agreement, save for the provisions of this clause and of clauses 1,
2, 20, 22, 23, 24, 25, 26, 27 and 28 which shall remain of full force and effect, shall
never become of any force or effect, and no Party shall have any claim against any
other Party for anything done hereunder or arising herefrom, save as a result of a
breach of any of the provisions of this clause 4 by any party, and the parties shall be
restored to the status quo ante.’

[19] It was argued on the appellants’ behalf that it was clear from the
wording of the clause that if the suspensive conditions were not fulfilled
after the advance of the loan, the claim would be limited to one of
restitution between the bank and Lodhi 5 only. The words ‘no Party shall
have any claim against any other Party’ in the clause referred to parties
such as the sureties, so it was contended. And a claim would not lie
against the sureties here because to claim restitution, the bank would first
have to tender release of all securities in terms of the loan agreement,
which it had not done.

[20] This argument however ignores the provisions of the deed of
suretyship. In terms of clause 1 thereof, Mr Lodhi and Lodhi 4 bound
themselves jointly and severally as sureties for and co-principal debtors
with Lodhi 5 ‘for the due and punctual performance by [Lodhi 5] and
each of the sureties of all their obligations to the bank … now due, owing
and payable or becoming due, owing and payable in the future from any

cause whatsoever’. Clause 3 made provision for the sureties to ‘be bound
by all admissions or acknowledgements of indebtedness made or given at
any time by [Lodhi 5] to the [bank] now or in the future in regard to any
obligation or liability for which [the] suretyship is given’. These
provisions obviously impose no condition on the bank to first release the
suretyship to be able to claim against Lodhi 5 and its sureties. The rights
and the obligations of the parties must be determined with reference to
the terms of the deed of suretyship.7 Furthermore, it does not appear that
clause 4.4 itself requires the bank to tender release of the securities if the
loan agreement lapsed, as seems to have happened here, in the absence of
satisfactory proof that the bank signed the agency agreement.

Mr Lodhi’s liability
[21] Regarding Mr Lodhi’s liability as Lodhi 5’s surety, it was
conceded on the bank’s behalf at the outset that the amount in the order
granted by the court below against him should be reduced to the admitted
outstanding capital sum. The bank however insisted that he was liable for
interest on the reduced sum at the legal rate at the material time, 15,5 per
cent, calculated from the date of delivery of the supplementary affidavit
in which restitution was claimed. I find nothing wrong with this stance.

[22] The contention that the bank should have cross-appealed against
the finding of the court below, that the agreements were valid and binding
to sustain its claim for restitution, need only be stated to be rejected. An
appeal lies only against a judgment or order of court and not its

7 Bock & others v Duburoro Investments (Pty) Ltd 2004 (2) SA 242 (SCA) para 29.

reasoning.8 Therefore, quite apart from the fact that the bank had no
reason to appeal against the order which granted the precise relief it
sought, it could not have challenged the finding of the court below on the
status of the two agreements even if it so wished. It is not necessary for a
plaintiff to cross-appeal where a reduction of the quantum of damages
awarded by a trial court is sought by a defendant because such reduction
is not a substantive judgment or order but rather a finding or ruling which
the court is required to make in its assessment of damages to be awarded.9
By parity of reasoning, there was no basis for a cross-appeal here too.
The judgments of this court in Giliomee v Cilliers and Southern Sun
Hotel Corporation (Pty) Ltd v G & W Leases CC upon which the
appellants relied in this regard are clearly distinguished by their own
facts.10

[23] On the question of interest, it seems to me that the appellants’
argument misconceives the nature of the interest sought here – that it was
not based on the enforcement of a contractual undertaking but rather on
Lodhi 5’s default. It is trite that a party which has been deprived of the
use of its capital for a period of time has suffered a loss which, in the
normal course of events, will be compensated by an award of mora
interest.11 The term mora simply means delay or default; interest a
tempore morae constitutes the damages that flow naturally (without the
need to place the debtor in mora) from the contract itself by reason of a

8 Western Johannesburg Rent Board & another v Ursula Mansions (Pty) Ltd 1948 (3) SA 353 (A) at
355.
9 Bay Passenger Transport Ltd v Franzen 1975 (1) SA 269 (A); Gentiruco AG v Firestone SA (Pty) Ltd
1972 (1) SA 589 (A).
10 Giliomee v Cilliers 1958 (3) SA 97 (A); Southern Sun Hotel Corporation (Pty) Ltd v G & W Leases
CC [1999] 1 All SA 497 (A).
11 Crookes Brothers Ltd v Regional Land Claims Commission, Mpumalanga 2013 (2) SA 259 (SCA)
para 16; Thoroughbred Breeders’ Association v Price Waterhouse 2001 (4) SA 551 (SCA) para 85;
Bellairs v Hodnett& another 1978 (1) SA 1109 (A) at 1145D-G.

debtor having failed to perform a contractual obligation within the agreed
time.12 Lodhi 5 unlawfully delayed payment of its outstanding debt to the
bank. It is therefore liable to compensate the bank for its failure to
perform on the due date at the legal rate as prescribed by s 1(2) of the
Act.13 This obligation, which arose on 15 December 2012 when the bank
claimed restitution in its supplementary affidavit, has nothing to do with
and is not affected by the Shari’ah law’s prohibition against payment of
interest on a loan debt.

[24] In the result the following order is made:
1 Save to the extent below, the appeal is dismissed with costs, including
the costs of two counsel.
2 Paragraph 38 (i) and (ii) of the order of the court below are set aside
and replaced with the following:
‘Muhammad Islam Lodhi shall pay to the applicant R2 642 006.98
together with interest thereon at the rate of 15,5 per cent per annum as
from 15 June 2012 to date of payment.’

____________________________
MML Maya
Judge of Appeal

12 Scoin Trading(Pty) Ltd v Bernstein 2011 (2) SA 118 (SCA).
13 Davehill (Pty) Ltd & others v Community Development Board 1988 (1) SA 290 (A) at 299B; Land
and Agricultural Development Bank of South Africa v Ryton Estates (Pty) Ltd & others [2013] All SA
385 (SCA) paras 19 and 20.

APPEARANCES:

For the Appellants:
JD Maritz SC (with him PL Uys)
Instructed by:
Savage Jooste & Adams, Pretoria
AP Pretorius & Partners, Bloemfontein

For Respondent:
A Subel SC (with him JE Smit)

Instructed by:

Edward Nathan Sonnenbergs Inc, Pretoria

Rosendorff Reitz Barry Attorneys, Bloemfontein
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA

MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

FROM

The Registrar, Supreme Court of Appeal

DATE

22 May 2015

STATUS

Immediate

Please note that the media summary is for the benefit of the media and does not form part of
the judgment.

Lodhi 5 Properties Investments v Firstrand Bank Limited (170/14) [2015] ZASCA 72

MEDIA STATEMENT

Today, the Supreme Court of Appeal (SCA) partially dismissed the appeal against a judgment of
Gauteng Division, Pretoria brought by Lodhi 5 Properties Investments CC (Lodhi 5), Lodhi 4
Properties Investments (Pty) Ltd (Lodhi 4) against a winding-up order granted against them but
reduced the amount payable by their co-appellant, Mr Muhammed Islam Lodhi, to Firstrand Bank
Limited (the Bank) from R10 328 574,25 to R2 642 006,98. The appellants were ordered to pay the
costs of the appeal including the costs of two counsel.

The issues before the SCA were whether (a) Lodhi 4 and Lodhi 5 were correctly placed under
liquidation; (b) whether the amount that Mr Lodhi had been ordered to pay to the Bank should be
reduced; and (c) whether Mr Lodhi was liable to pay interest on the outstanding balance.

In June 2008, Lodhi 5 concluded a loan agreement with Firstrand Bank in terms of which the bank
granted him a loan structured to comply with Shari’ah (Islamic) law, which prohibits the charging of
interest on a loan debt.  As security for this debt, Lodhi 4 and Mr Lodhi executed suretyship bonds in
the bank’s favour.  Lodhi 5 defaulted on repayments and, following demand to which there was no
response , the bank applied for an order that Mr Lodhi pay the outstanding balance together, and for
the winding up of Lodhi 4 and Lodhi 5.

As to issue (a), the SCA found that Lodhi 4 and Lodhi 5 were both clearly commercially insolvent and
upheld the winding up order.  As to issue (b), the Bank conceded that the amount payable should be
reduced to the capital amount admitted as outstanding by the appellants and so, to that extent, the
SCA altered the order granted against Mr Lodhi.  As to issue (c), the SCA held that Mr Lodhi was

liable to pay the interest claimed by the bank. This was so despite the Shari’ah law prohibition against
the charging of interest on loan debts because the mora interest ordered in this matter was not
interest in terms of a loan contract.  Rather, it was a form of damages that flow naturally from the
contract itself by reason of the debtor having failed to perform a contractual obligation within the
agreed time (here Lodhi 5’s delayed payment of its outstanding debt to the bank). It has nothing to do
with and is not affected by the Shari’ah law prohibition against payment of interest on a loan debt.
Accordingly, the application of the Prescribed Rate of Interest Act 55 of 1975 was not excluded.

--- ends ---