Maldives Civil Court has ordered Lily Enterprises to settle outstanding checks 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 entered into an agreement with Asim Abdul Raheem, the third-party involved, to borrow USD 600,000 in investment.
With an exchange rate of MVR 15.52, Lily Enterprises issued five bank checks amounting to the total MVR 9.3 million to Asim. As per the contract, Asim will receive MVR 600,000 in profits per month.
Lily Enterprises honored the agreement until April 2020, and continued paying Asim with the agreed monthly payout. However, from May 2020 onwards the company stopped paying Asim and requested to terminate their agreement.
Later in November 2020, Asim presented a proposal to Lily suggesting the company to pay a lump sum of MVR 11.6 million after deducting a significant amount from the profits. Asim stated that once the company pays the proposed amount, their contract will end.
Post this proposal, Lily paid MVR 300,000 on two separate occasions but failed to meet the payment terms outlined in Asim’s proposal. After the company failed to fulfill the payment terms Asim proposed, he had then demanded the company to revert back to the original agreement and pay him the MVR 600,000 monthly payout.
Asim filed a lawsuit against Lily when four out of the five checks he received from the company bounced, and received the check return notification from the bank.
While Asim maintained that the transaction with Lily Enterprises was an investment, the company however, argued that it was a simple currency exchange transaction. Lily went as far as to claim that it did not provided any investment opportunities to a third-party.
As per Lily Enterprises, the checks were issued as a guarantee for their exchange transactions, and it was a common practice to collect the checks once the seller receives the payment in cash. The company said that checks in Asim’s possession were guarantees for the transactions that not been collected back.
Civil Court determined that while there was a dispute regarding the nature of the transaction, the existence of the said transaction between the parties cannot be refuted. The court also noted that Lily Enteprises’ payment vouchers did not provide evidence that Asim was paid for the guarantee checks issued to him.
Based on evidence presented by both parties, the court issued an order demanding Lily Enterprises to settle the outstanding unpaid checks amount with Asim before June 15.