Telkom will soon add R89m plus interest to its coffers after the state-affiliated telecom company won a high court case against a supplier in its network.
The ruling is a win for the fixed-line operator now implementing big cost cuts that could see about 1,800 employees lose their jobs at a time when Telkom lacks the ability to fully realise the value of its sprawling telecoms infrastructure, which includes SA’s largest fibre network.
Last week, Judge TP Mudau ordered Pathmanathan Madevarajan Pillay, owner of R&R Wholesalers, to pay Telkom R88,501,491.13, plus interest compounded monthly in arrears from April 2021 to the date of final payment.
The matter relates to a dealer agreement between Telkom and R&R Wholesalers in early 2017.
According to court papers, R&R Wholesalers had a deal with Telkom “to sell, market and procure customers for Telkom’s services and products including but not limited to data devices, mobile phones/headsets, data cards, connection packs, mobile accessories and value-added services”.
The court found that Pillay, the respondent, is liable as surety and co-principal debtor for the outstanding balance on the accounts in respect of telecommunications services rendered by Telkom to R&R Wholesalers.
The court found that Telkom, which brought the case to court, is entitled to the relief and to have the legal costs of the case paid by the defendant.
Background
Telkom appointed R&R Wholesalers to sell, market and procure customers for Telkom’s services and products. The agreement expired after three years, but services continued to be rendered on a month-to-month basis, in line with obligations set out in the original written agreement.
A clause in the original agreement provided that Telkom would provide a credit limit to R&R Wholesalers, according to its discretion, to be used for the purposes of the agreement after a successful risk assessment is performed. R&R Wholesalers had the option to request an increase of this credit limit by providing collateral or security to cover the additional risk exposure as may be required by Telkom.
The fixed-line operator reserved the right to request suretyship or any other form of security it deemed acceptable for payments of any amounts owed to it.
Suretyship is a contract between the creditor, the principal debtor and the person binding himself on behalf of the principal debtor, usually as surety and co-principal debtor. In their personal capacity, the surety undertakes to step into the shoes of the principal debtor and pay the creditor if the principal debtor cannot.
It had been agreed that R&R Wholesalers would make payment of all invoices within 30 days of a statement being issued, with interest payable on late payments compounded monthly, the longer it takes to settle such amounts. Interest was calculated based on a rate of 5% above the prime overdraft rate from Absa.
Defence and ruling
Pillay contends that the suretyship was for a completely separate service provided by Telkom, unrelated to the dealer agreement. He says he believed the suretyship he was signing was for Telkom to provide his business with telephone lines.
According to judge Mudau, Pillay failed to prove his case regarding the alleged separate agreement.
“It stands to reason that Mr Pillay’s contention in this regard is not only fanciful and disingenuous but far-fetched, as Telkom also submitted. Importantly, Mr Pillay fails to disclose the identity of the ‘Telkom personnel’ whom he dealt with, as counsel for Telkom also pointed out.
“Equally significant, Mr Pillay fails to produce the agreement for telephone services, signed in 2018 on his version, and on the basis of which he allegedly signed a suretyship.”
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