Essequibo rice miller wins $99M suit against GRDB over unpaid paddy order

The Guyana Rice Development Board (GRDB) has been ordered to pay Essequibo rice miller Arnold Sankar the more than $99 million it owes for paddy it asked him to supply.

The award, with accompanying interest and court costs, was made by High Court judges Jo-Ann Barlow and Simone Morris-Ramlall, who heard an appeal made by Sankar to the Full Court.

The thrust of the appeal surrounded the rice miller’s application to strike out a late defence which the GRDB sought to have filed before Justice Diana Insanally, by whom the matter was initially being heard. 

Justice Insanally had granted to the defendants several opportunities to file but they did not comply with the timelines set by the court. When they did file their defence, however, it had been out of time.

To the late defence the Rice Board was seeking to have filed, associate attorneys Manoj Narayan and Rajendra Jaigobin, who represented Sankar, applied to have it struck out, asking that judgment be entered for the plaintiff.

They were, however, denied.

It was this denial that saw them appealing to the Full Court.

Narayan had argued that the Attorney General’s Chambers, by which the Rice Board was being represented before Justice Insanally, needed to have filed for “relief from sanctions,” to the out-of-time filing but failed to do so.

It was in these circumstances that counsel argued judgment needed to be granted in his client’s favour.

Endorsing the plaintiff’s arguments, Justices Barlow and Morris-Ramlall ruled that Justice Insanally ought to have awarded judgment at that point as she would have become duty-bound to do.

The defendants did not complete their necessary filings within the 14 days for which the law orders nor did they have relief from sanction.

The Full Court noted that the sanction in the order operated automatically in default of the party against whom the order was made.

In its award, the Court granted to Sankar the full sum of $99,670,273, which he lost as a result of the Rice Board’s breach of the paddy-supply deal.

Additionally, the GRDB was ordered to pay interest at a rate of 6% per annum from November 7th, 2016, when the writ was filed, to the date of judgment, which was passed on Monday.

It also has to pay interest at a rate of 4% per annum from the date of judgment until the amount has been paid in full.

Sankar was also granted the $249,963 in High Court costs he was seeking. In addition, he secured $50,000 in costs from the Full Court.

Apart from Narayan and Jaigobin, Sankar was also represented by attorney Anil Nandlall.

The AG’s Chambers was represented by Judy Stuart-Adonis, while GRDB was represented by attorney Fay Barker before the Full Court.

In his statement of claim, Sankar, of the Arnold Sankar and Sons Rice Mill, of Airy Hall Essequibo Coast, said that during the first rice crop of 2015, the GRDB requested that his company purchase as much paddy as was available on the market, at a price of between $3,000 and $3,300 per bag.

He identified the parties to the agreement as then GRDB General Manager Jagnarine Singh, accountant Peter Ramcharran and the Deputy General Manager Madanlall Ramraj.

Sankar swore in his affidavit in support of his lawsuit that the GRDB gave an undertaking to purchase all of the paddy from Arnold Sankar and Sons, at a cost of US$490 per metric tonne.

As part performance of their agreement, Sankar said that the GRDB made an advance payment of $60 million to his company. After receiving the cash, Sankar noted that he paid by cheque, from the said $60 million, to some of his suppliers, under the agreement. He said that this payment was done in the presence of the GRDB’s Singh, Ramcharran and Ramraj.

He, however, said that the advance sum paid by the defendant was inadequate to pay for all the paddy purchased and that the named representatives of the GRDB knew this but still desired the delivery of all the paddy purchased.

Sankar deposed that the GRDB representatives requested that his company fully pay the remainder of the farmers and thereafter promised to repay Arnold Sankar and Sons Rice Mill from the proceeds to be received from the sale of the said paddy by the GRDB.

Relying on this promise made by the GRDB, Sankar said that his company then went ahead and purchased a total of 32,622 bags of paddy, equivalent to 2,121 metric tonnes, at a cost of $90,749,215.

Again relying on the said “warranty, guarantee, promise, undertaking and agreement,” the plaintiff stated in his affidavit that he applied for, and obtained overdraft facilities from the Guyana Bank for Trade and Industry, therefrom paying the unpaid farmers the balance of $30,749,215.

Sankar asserted that the GRDB then breached the agreement when on May 5th of 2015, it accepted delivery of only 813 metric tonnes of paddy, valued at $21,447,467, thereby leaving a balance of 1,308 metric tonnes of paddy.

The plaintiff said that his repeated requests to the GRDB to accept delivery of the remaining 1,308 metric tonnes of paddy were futile.

Sankar said that as a result he was forced to sell this remaining amount to C-Rice Inc., at the price of US$225 per metric tonne, which was a price far lower than the US$490 per metric tonne to which the GRDB had committed.

The plaintiff said he was forced to sell the paddy for US$225 per metric tonne because it was on the verge of spoiling. As a result, Sankar sued the Rice Board for $99,670,273, which he says Arnold Sankar and Sons Rice Mill suffered in loss and damage by the GRDB’s breach.

This figure comprises $131.3 million, the value of the remaining paddy had it been accepted by the GRDB, less the $58.5m received from C-Rice Inc, added to $25.1 million expended for the storage of the paddy plus $1.6 million in interest paid to GBTI for use of its overdraft facility.

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