In then name of Republic of Tajikistan

DECISION

Dushanbe
29.08.2008
Case no.2-90/08
A-38/08

Supreme Economic Court of Republic of Tajikistan consisting of chairman Usupova Z.S., Secretary Radjabov S.A., interpreter – Ermamadova N.A., having considered the case in session of the court at the suit of Administration of Education of Dushanbe city to Department on state support of entrepreneurship, investments and management of state-owned property of Dushanbe, Mission Center “Grace Sonmin” on invalidation of contract of purchase dated 02.07.1997 of undeveloped site of secondary school situated in Bofanda quarter, Dushanbe; license for right of ownership dated 21.07.1998; official act for right of acquisition of state-owned property by installments by labor collective dated 25.07.1997 with participation of representatives:

Plaintiff – lawyer of Administration of Education of Dushanbe Abdurahmonov F., acting by attorney no.517 dated 25.08.2008; head of Administration of Education of Dushanbe Islomov Sh.;

Defendant - main specialist of Department on state support of entrepreneurship, investments and management of state-owned property of Dushanbe city Jamilov Z.H, acting by attorney no.19/7/11 dated 26.08.2008 –

Adjudged:

The plaintiff had appealed to the Court with above mentioned plaint note against defendant stating that privatization of undeveloped site of secondary school situated in Bofanda quarter, Dushanbe, dated 02.07.1997 is performed in contravention of Law of Republic of Tajikistan “On privatization of state property”.

For justification of action stated the following:

According to the decision of Executive Committee of Council of people's deputies of Dushanbe city no.562/b dated 03.11.1987 “on giving permission to Central administration of Dushanbe city to design and construct school in Bofanda quarter, Dushanbe”. Design Institute “Tajik Giprostroy” had prepared design for construction of 3 floors and 33 classrooms, as well as other facilities. During the period of 1989-1993 construction-assembly work were performed for total amount of 25.988.800 rubles, but this work was not completed. Meanwhile this undeveloped site was offered on auction and privatized in 1997 by Mission Center “Grace Sonmin” for 18.192.200 rubles. In result of privatization there was harm to field of education in Dushanbe because Bofanda quarter was deprived of building of comprehensive school. The plaintiff considers that during privatization applicable legislation was violated and thus contracts contravening legislation are not valid. The plaintiff asks the Court to invalidate contract of purchase of undeveloped building of secondary school, located in Bofanda district dated 2 July 1997 concluded between Committee on management of state-owned property of Dushanbe city and Mission center “Grace Sonmin”; the License for right of ownership dated 21 June 1998; official act for right of acquisition of state-owned property by installments by labor collective dated 25.07.1997.

On session of the Court representatives of the plaintiff retained their claim on foundation noted in the plaint note and explained to the Court that on initial court sessions when prosecutor of Dushanbe city made claim, representatives of Administration of Education of Dushanbe were not invited. Meanwhile representatives of the plaintiff had explained the Court that undeveloped school was registered as asset of Central administration of Dushanbe city and being municipal property of Dushanbe city should have been passed to Administration of Education of Dushanbe upon construction. However, this building was sold to Mission center “Grace Sonmin” without permission of Government of Dushanbe, whereas number of students in Dushanbe had grown significantly and now there is lack of 62 thousand places for students in Dushanbe. The defendant was obligated to construct the school and utilize it for intended use, but it uses the building for commercial purposes organizing there woodworking workshops, warehouses and etc. The plaintiff asks the Court to sustain the claim and bring the parties to initial position.

On session of the Court representative of the Defendant retained claim of the plaintiff and considers that privatization of disputable object was performed against applicable legislation for the moment of contract conclusion Law of Republic of Tajikistan “On privatization of state-owned property of Republic of Tajikistan” was already in force and was published in newspaper “Sadoi Mardum” dated 14.06.1997 where two forms of privatization are foreseen. Nevertheless for the moment of contract conclusion dated 02.07.1997 the parties governed by previous law “On denationalization and privatization of property of Tajik SSR”. Co-defendant Mission center “Grace Sonmin” had purchased the disputable object on behalf of labor collective which according to old law had privileges, but the site was undeveloped, was not commissioned and thus it is considered that labor collective was not established.

On session of the Court representative of the third party applying independent demand, had retained claim of the plaintiff and explained to the Court that disputable object, undeveloped site of school in Bofanda quarter, Dushanbe, is municipal property and was asset of Administration of Education, Dushanbe, which is operational unit of Executive body of state power of Dushanbe and construction of the school was commenced with the funds of Dushanbe city. According to the decision of Executive Committee of Council of people's deputies of Dushanbe city no.562/b dated 03.11.1987 “on giving permission to Central administration of Dushanbe city to design and construct school in Bofanda quarter, Dushanbe”, Design Institute “Tajik Giprostroy” had prepared design for construction of 3 floors and 33 classrooms, as well as other facilities. During the period of 1989-1993 construction-assembly work were performed for total amount of 25,988,800 rubles, but this work was not completed. Privatization of undeveloped site of disputable object was performed in contravention of applicable legislation, since for the moment of contract conclusion new Law of Republic of Tajikistan “On privatization of state property in Republic of Tajikistan” was in force but parties were governed by old law that became inoperative.

The contract contravenes the applicable legislation violating public and social interest and therefore is void, and the Court is requested to sustain the claim and bring the parties to initial position.

On session of the Court representatives of the Co-defendant had made oral petition to allow representatives of USA, OSCE as international observers and to summon representatives of Central administration of Dushanbe city to the court.

After listening to the opinions of parties’ representatives on made petition who considered that there is no need to sustain these request due to their inexpediency, the Court had ignored oral petition by representatives of the Co-defendant, Mission center “Grace Sonmin”.

Representatives of the Co-defendant having told to the Court that thus principle of publicity is violated had left court room and relevant act was concluded by participants of court session.

According to the article 155 of Economic procedural code of Republic of Tajikistan in case of not submitting revocation to claim, additional evidences as well as absence of persons participating in court, court may consider case in their absence.

The Court having considered case papers, listened to declaration of plaintiff’s representatives, defendant, third party applying independent demand, comes to conclusion to sustain the claim in full measure with the following foundation.

As it may be seen from declarations of the parties and case papers according to the decision of Executive Committee of Council of people's deputies of Dushanbe city no.562/b dated 03.11.1987 “on giving permission to Central administration of Dushanbe city to design and construct school in Bofanda quarter, Dushanbe”, Design Institute “Tajik Giprostroy” had prepared design for construction of 3 floors and 33 classrooms, as well as other facilities.

During the period of 1989-1993 construction-assembly work were performed for total amount of 25,988,800 rubles, but this work was not completed.

Meanwhile this undeveloped site according to contract of purchase dated 02.07.1997 concluded between Dushanbe state Committee and Mission Center “Grace Sonmin” was sold to the later for 18.192.200 rubles.

As it may be seen from case papers and declarations of the parties that for the moment of conclusion of mentioned contract new Law of Republic of Tajikistan “On privatization of state property” that came into force on 14.06.1997, and at the same time old law “On denationalization and privatization of property of Tajik SSR” became inoperative.

According to the article 11 of Law “On privatization of state property” privatization is done in two ways: sale on auction and with individual design of privatization based on competitive bidding. Definition of type of privatization and its terms and conditions, order of auction, as well as approval of individual design of privatization is realized by the Government of Republic of Tajikistan.

According to the article 11 of specified Law, the auction is preformed in form of auction proceeds or tender.

Meanwhile, as it may be seen from case papers and from contract of purchase dated 02.07.1997 particularly, for the moment of contract conclusion parties were governed by the Law of Republic of Tajikistan “On denationalization and privatization of property of Tajik SSR” that became inoperative from the moment of publishing of new Law of Republic of Tajikistan “On privatization of state property”.

According to the article 6 of Law “On denationalization and privatization of property of Tajik SSR” sale of enterprises, factories and other state property to labor collectives, other legal entity and persons is allowed, including sale in installments. According to the articles 5, 6, and 9 of the Law in general under same conditions employees of enterprise offered for privatization have priority right for property acquisition and redemption of enterprise. Decision about the type of denationalization and privatization is made by the majority of members of labor collective. Labor collective means all workers of certain enterprise, institution or agency.

Meanwhile for the moment of privatization of the site, decision was made not by joint meeting of labor collective but by meeting of congregation and believers in number of 10 persons whereas at that moment undeveloped site of secondary school did not have labor collective.

Additionally, according to paragraph 2 of mentioned contract of purchase and scope of protocol no.1 dated 02.09.1996 of joint meeting of believers of Tajik Mission Center “Sonmin”, the vendee was obliged to commission the object but did not fulfill its obligation till now.

According to cost estimation of undeveloped school situated in Bofanda quarter for 01.07.1996 value was 25.388.800 rubles. However, as it may be seen from official act for right of acquisition of state-owned property by installments by labor collective dated 25.07.1997, state property is subject to redemption for 18.192.200 rubles that is not conforming cost estimation of property dated 01.07.1996.

In may be seen from explanation of representatives of parties that undeveloped school was asset of asset of Central administration of Dushanbe city and being municipal property of Dushanbe city should have been passed to Administration of Education of Dushanbe upon construction since number of students in Dushanbe had grown significantly and currently there is lack of 62 thousand places for students.

According to the Protocol of joint meeting of President of Republic of Tajikistan with heads of state power bodies and workers of education field no.1/16.1 dated 22.12.206, action plan on studying and consideration of issue of restitution of building and facilities that were leased and sold to education system including buildings of kindergarten, schools and preparatory schools was approved.

According to the decree of the Chairman of Dushanbe no.372 dated 06.06.2007 undeveloped site of secondary school located in Bofanda quarter, Dushanbe, was excluded from the list of sites offered for sale.

The Court considers that privatization of disputable object is done in contravention of applicable legislation since for the moment of contract conclusion Law of Republic of Tajikistan “On privatization of state-owned property in Republic of Tajikistan” was already in force, whereas for the moment of contract conclusion the parties governed by old law “On denationalization and privatization of property of Tajik SSR”.

According to the article 46 of Civil Code of Republic of Tajikistan (as in force in 1963) which corresponds article 193 of Civil Code of Republic of Tajikistan (as in force in 2001), contract that is not according with applicable legislation is void if it is not prescribed by law that such contract is traversable and does not foresee other consequent violations of legislation. Under invalid transactions each party should return other party everything received upon transaction, and when possible to return received asset in kind – redeem its value in money, of other consequences of ineffectiveness of transaction is not prescribed by law.

Discussing the issue of period of limitation the Court considers that the plaintiff did not default term specified by law since according to paragraph 2 of article 224 of Civil Code of Republic of Tajikistan, period of limitation begins from the day when an entity found out or had to find out about violation of its rights. According to case papers and explanations of parties it may be seen that Administration of Education of Dushanbe had found out about violation of its rights in March, 2007.

Thus the Court comes to conclusion that claim is justified and should be sustained in full measure.

Following articles 165-168, 174-175, and 179 of Economic procedural code of Republic of Tajikistan, the Court had –

Decided:

Plaint note of Administration of Education of Dushanbe against Department on state support of entrepreneurship, investments and management of state-owned property of Dushanbe, Mission Center “Grace Sonmin” on invalidation of contract of purchase dated 02.07.1997 of undeveloped site of secondary school situated in Bofanda quarter, Dushanbe; license for right of ownership dated 21.07.1998; official act for right of acquisition of state-owned property by installments by labor collective dated 25.07.1997 – to be sustained.

Contract of purchase dated 02.07.1997 of undeveloped site of secondary school situated in Bofanda quarter, Dushanbe; license for right of ownership dated 21.07.1998; official act for right of acquisition of state-owned property by installments by labor collective dated 25.07.1997 – to be invalidated, and parties – are to be brought to initial position: to return undeveloped site of secondary school situated in Bofanda quarter, Dushanbe to Central administration of Dushanbe Government; to charge Department on state support of entrepreneurship, investments and management of state-owned property of Dushanbe 18.192.200 rubles in favor of Mission Center “Grace Sonmin”, Dushanbe.

To charge Department on state support of entrepreneurship, investments and management of state-owned property of Dushanbe in favor of Administration of Education of Dushanbe state duty to the extent of 120 somoni.

Decision can be appealed in appeals instance of Supreme Economic Court of Republic of Tajikistan.

Judge
of Supreme Economic Court
of Republic of Tajikistan
Yusupova Z.S.