A supplier of building materials has dragged Nsanje District Council to court, demanding interest of $1.7 million (about $4 250) for late settlement of his K2.2 million (about $5 500) owed to him.
In 2010, the supplier, Raymond Ngulube, supplied the council with construction materials which were paid for in 2010, Weekend Nation has learnt.
Ngulube, trading as Trust and Praise General Dealers, is demanding 76 percent overall interest on his payment because the council delayed to pay him for about two years.
The interest claim comes few months after the High Court in Blantyre placed a garnishee order on three banks that hold accounts for the council, a development which resulted in council officials there failing to access any money for their operations.
A garnishee order is a court judgement that authorises a creditor to seize and access money held by any person or institution on behalf of a debtor.
Some council officials on Monday told Weekend Nation that they fear another garnishee order to force the council pay the claimed interest would further paralyse the its operations and derail implementation of development projects in the district.
In an interview on Tuesday, Nsanje district commissioner Barnet Nkasala said he was new at the council; hence, could not comment on the claimed amount of interest.
However, some senior council officials Weekend Nation talked to on Monday said the council has referred the matter to the Attorney General Antony Kamanga for possible challenge of the demanded interest, claiming the amount has been calculated outside the period when the council delayed the payment.
“We paid everything by December 24 2012 but the supplier is claiming interest covering the period up to January 2013. We want our bank to give us their figures as well so that we can compare with the amount that they have calculated because we feel the figure is just too much,” said the official.
Ministry of Justice spokesperson Apoche Itimu had not yet responded to our questionnaire on Friday on whether the Attorney General would indeed challenge the interest claim.
Malawi Law Society (MLS) secretary Felisah Kilembe said there is nothing illegal in demanding interest on overdue payments.
“The general principle of law is that when a party that is owed money is driven to have recourse to legal proceedings to recover the amount due to him, the party who is wrongfully withholding the money in his possession and enjoying the use of it should be liable to pay interest on the sum owing,” she said.