MASERU — Select Management Services suffered another blow on Friday when the High Court ordered the money-lending company to stop receiving payments from civil servants who owe the company millions in loans.
The order comes after 1 382 civil servants asked the High Court to declare the loan contracts they signed with Select Management Services null and void on the grounds the company was charging interest rates above what is stipulated by law.
The civil servants said the company was charging up to 62 percent interest on capital loans, instead of the lawful 25 percent.
Select Management Services argued the additional charges beyond the 25 percent stipulation were administrative costs.
This led to a stalemate and the subsequent legal showdown.
Justice ‘Maseshophe Hlajoane on Friday issued an interim order barring Select Management Services from accepting money being deducted from the civil servants’ salaries for the next two months — March and April.
Lawyers representing the two parties will then argue the case in the High Court on May 10.
“The first respondent (Select Management Services) will, without prejudice to its rights, suspend the salary deductions in respect of the applicants who have active loan accounts with the first respondent solely for the months of March and April 2010 respectively, on the basis the repayment period of each of the active loan accounts will be extended at the end thereof by two months so as to facilitate the recovery of such suspended payments, in the event of the applicants’ application being withdrawn or dismissed,” reads the interim order.
The civil servants approached the court after the Treasury Department refused to stop garnishing their salaries although an earlier ruling passed by the High Court on October 21 last year had ordered Select Management Services to stop receiving loan repayments from another 58 civil servants.
That order also affected two other prominent money-lending firms, B-Blue Finance and Afrisure (EEZY Management Services).
The three companies have since appealed the High Court decision which said the contracts signed by the civil servants and the companies were null and void.
The Court of Appeal is expected to hear the case next month.
If the Court of Appeal upholds the High Court judgment, it means the three firms would not collect any of the balances they are still owed by the civil servants.