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<!DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"> <html xmlns="http://www.w3.org/1999/xhtml"> <head> </head> <body> <div style="font-family:Verdana, Geneva, sans-serif; font-size:12px; text-align:justify"> <table width="800" border="0" style="border:1px solid #ccc;padding:5px;" align="center" cellpadding="6" cellspacing="0"> <tr> <td align="left" valign="top"> As the blocking orders were still extant at the time of the winding-up of the companies, it is competent for the Reserve Bank to issue the relevant forfeiture orders - (23 Jan 2023) </td> </tr> <tr> <td align="left" valign="top">Reserve Bank and Another vs. Johnine Winsome Elisie Maddocks N O and another</td> </tr> <tr> <td align="left" valign="top" style="background-color:#FDEDCE">The Reserve Bank issued three separate forfeiture orders relating to the monies standing to the credit of Sun Candle Products (Pty) Limited (Sun Candle) and Xinming Mountain Textile (Pty) Limited (Xinming) in various South African Banks. The Reserve Bank ordered that the monies be declared forfeited to the State and be paid into the National Revenue Fund. The forfeiture orders were made after the liquidation of the companies and in terms of Regulation 22B of the Exchange Control Regulations promulgated under Section 9 of the Currency and Exchanges Act, 1933. 
The Respondents which are liquidators of the companies (liquidators), demanded that the forfeited monies be paid to them to be administered in terms of the insolvency laws. The Reserve Bank refused to accede to the demand contending that the forfeiture orders were validly made pursuant to the blocking orders made prior to the liquidation of the companies. As a result, the liquidators brought an application to the high court, for an order declaring the forfeiture orders null and void and directing the National Revenue Fund to pay the forfeited monies into the liquidators’ bank account. The high court granted the orders as sought by the liquidators. Aggrieved by the outcome, the Reserve Bank and the National Treasury, sought and obtained from the high court leave to appeal against its judgement. 
The enabling legislation – the Act – empowers the President to make regulations providing for the blocking and forfeiture orders to be made in respect of any money or goods which are suspected by the Treasury on reasonable grounds to be involved in the commission of an offence. The fact that the forfeiture orders issued in terms of Regulation 22B provided for the targeted funds to be forfeited to the State and for such monies to be paid into the National Revenue Fund, rather than to the liquidators, did not render such orders unlawful. The companies in issue were already subject to the blocking orders long before their liquidation. The operation of the blocking orders did not result in the creation of a debtor-creditor relationship between the companies and the Reserve Bank. The Act and the Regulations must be interpreted purposively. As the blocking orders were still extant at the time of the winding-up of the companies, it was competent for the Reserve Bank to issue the relevant forfeiture orders. 
The liquidation of the two companies did not nullify the blocking order which was in existence at the time. As a blocking order was not nullified, it was competent for the Reserve Bank after the liquidation of the companies to issue the forfeiture orders which made it mandatory for the banks which held the accounts in which monies were kept, to pay such monies into the National Revenue Fund. 
The forfeiture orders issued after the liquidation of the companies were not affected by the liquidation and the monies which were declared forfeited to the State did not fall into the estates of the insolvent companies. The high Court erred in declaring the three forfeiture orders null and void and directing the National Revenue Fund to pay the forfeited monies into the liquidators’ bank account. The liquidators were therefore not entitled to demand that the funds be paid out to them for distribution. The orders of the high court are set aside. Appeal allowed.</td> </tr> <tr> <td align="left" valign="top" ></td> </tr> <tr> <td align="left" valign="top" >Tags : Liquidation, Forfeiture orders, Validity</td> </tr> <tr> <td align="left" valign="top">&nbsp;</td> </tr> <tr>  <td align="left" valign="top">Source : newsroom.manupatra.com</td> </tr> <tr> <td align="left" valign="top">&nbsp;</td> </tr> <tr> <td align="left" valign="top">Regards</td> </tr> <tr> <td align="left" valign="top">Team Manupatra</td> </tr> <tr> <td align="left" valign="top">&nbsp;</td> </tr> </table> </div> </body> </html>