DECISION
of appeals instance on monitoring of legality and sufficiency
of economic court's decision not acknowledged as legitimate

Dushanbe
16 October 2008
Case no.2-90/07
A-38/08

Board of appeals of Supreme Economic Court of Dushanbe consisting of chairman Shirinjonova M.M., judges Alieva M.H., Ashurov A.A. secretary Sattorov B. having considered on court session application of appeals of Mission Center “Grace Sonmin” against decision of Supreme Economic Court of Dushanbe dated 28.08.2008 with claim of Administration of Education of Dushanbe, third party having independent demand – Executive body of local state power of Dushanbe to Department on state support of entrepreneurship, investments and management of state-owned property of Dushanbe and Mission Center “Grace Sonmin” on invalidation of contract of purchase of undeveloped site dated 02.07.1997; license for right of ownership dated 21.07.1998; official act for right of acquisition of state-owned property by labor collective in specified period dated 25.07.1997, that was adopted by judge Yusupova Z.S., with participation of representatives of the plaintiff Abdulloev A.A. based on letter of trust no.7 dated 08.10.2008, representative of Administration of Education of Dushanbe Abdurahmonov F. based on letter of trust no.517/08 dated 25.08.2008, representative of Department on state support of entrepreneurship, investments and management of state-owned property of Dushanbe Jamilova Z. based on letter of trust no.22/7/11 dated 14.10.2008, listened to arguments of judge Shirinjonova M.M. -

Adjudged:

Administration of Education of Dushanbe appealed to Economic Court of Dushanbe with claim against Committee on management of state property of Dushanbe, codefendant - Mission Center “Grace Sonmin” on invalidation of contract of purchase of undeveloped site of secondary school dated 02.07.1997, license for right of ownership dated 21.07.1998 and official act for right of acquisition of state-owned property by labor collective in prescribed term dated 25.07.1997. It justified its claim with that privatization of undeveloped site of secondary school situated in Bofanda quarter, Dushanbe, dated 02.07.1997 was performed in contravention of applicable legislation and brought economic and social harm to interests of state and society.

According to the case papers based on 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 including: research work, geodesy and designing, excavation, wall construction, roofing were performed for total amount of 25.988.800 rubles, but this work was not completed. Despite of major part of works completed the value of the undeveloped site was evaluated and sold for 18.192.200 rubles.

Due to lack of possibility to continue construction work privatization of the site permitted based on letter of Department of general construction of Dushanbe dated 10 August 1996 no.8 and request of Mission Center “Grace Sonmin” dated 25 June 1997 no.17 regarding giving permission for privatization of undeveloped site. Based on the abovementioned documents decision of the Chairman of Dushanbe no.53 dated 24.03.1997 “On approval of list of sites offered for next sale” was made and list of objects offered for sale was approved.

Despite, the mentioned decision was made according with part 1.3 of Order of privatization of state-owned property in Republic of Tajikistan and law of Republic of Tajikistan “On denationalization and privatization of state-owned property in Republic of Tajikistan”, during making decision and in the process of privatization requirements of applicable legislation were not complied, and undeveloped site was privatized without proper basis.

In accordance with articles 47, 87 of Civil Code of Republic of Tajikistan (articles 191, 224, 229 of current Code), contract of purchase dated 2 July 1997 was concluded in contravention of state interests, based on article 57 of Civil Code of Republic of Tajikistan (article 192 of current Code) all succeeding contracts being considered inconsistent and cannot have legal effect and are held invalid from the moment of signing. According to article 92 of Civil Code of Republic of Tajikistan (article 247 of current Code) Mission center “Grace Sonmin” does not have right of ownership for specified site, the building cannot belong to it on legal basis.

In the plaint note there is an issue raised on invalidation of contract of purchase of undeveloped building of secondary school, located in Bofanda district, concluded on 2 July 1997 between Committee on management of state-owned property of Dushanbe city and Mission center “Grace Sonmin”, License for right of ownership dated 21 June 1998 batch no.11 HMD no.3501470, issued by Committee on management of state-owned property of Dushanbe city to Mission center “Grace Sonmin”, delivery-acceptance certificate for undeveloped site dated 13 April 2000 due to the fact that they contravene legislation, and parties are to be set into original position.

By the decision of Economic court of Dushanbe city dated 28.08.2008 the claim was sustained. However Mission center “Grace Sonmin” did not agree to it and appealed to appeals instance and with the following basis requested to abate the Court decision.

  1. During court session the judge had violated article 11 of Code of Republic of Tajikistan on publicity of economic court proceeding and did not allow representatives of embassy of USA in Tajikistan to participate in court session.
  2. While making decision of the Chairman of Dushanbe.53 dated 24.03.1997 the Law of Republic of Tajikistan “On privatization” dated 16.05.1997 was not yet adopted and Appendix to the Law was adopted only in December 1998.
  3. Based on Economic Court decision dated 27.05.2004 the dispute was resolved.

On the session of appeals instance representative of Mission center “Grace Sonmin” Abdulloev A. had supported application for appeal and based on its foundation requested to abate mentioned court decision and to discontinue proceedings.

Representative of Administration of Education of Dushanbe Abdurahmonov F. did not support the appeal application and requested to leave the court decision without change.

Representative of third party - Executive body of local state power of Dushanbe Sharipov S. did not support the appeal application and requested to leave the court decision without change.

Department on state support of entrepreneurship, investments and management of state-owned property of Dushanbe did not support the appeal application and requested to leave the court decision without change.

Body of appeals instance of Supreme Economic Court of Republic of Tajikistan having considered case papers, listened to evidences of parties came to conclusion to leave the decision of Economic court of Dushanbe city dated 28.08.2008 without change based on following foundation.

Body of appeals instance of Supreme Economic Court of Republic of Tajikistan defined that privatization of undeveloped site of secondary school situated in Bofanda quarter, Dushanbe, dated 02.07.1997 was performed in contravention of applicable legislation, and in the course of sale of the site in 1997 applicable legislation on privatization of sites was modified and on 16 May 1997 Law of Republic of Tajikistan “On privatization of state property” was adopted. The site was sold in contravention of the mentioned Law and order of the Government of Republic of Tajikistan dated 28 August 1997 no.388.

It is stipulated in paragraph 3 of article 48 of the Law of Republic of Tajikistan “On education” that it is prohibited to utilize material and technical base, buildings and property of educational institutions for purpose contravening their main use, educational process and activity that is not foreseen by Charter.

In addition during the privatization of the site by Privatization Commission of Dushanbe city, real value of the site is underestimated in contravention of paragraph 3.4 of Guideline dated 6 September 1991 “On estimation of value of state-owned property subject to lease, sale and privatization” and paragraph 6 of Guideline dated 4 May 1997 “On definition of estimated value of privatized objects”.

Besides, during denationalization of the object the Mission center “Grace Sonmin” has applied as labor collective but the Center could not act as labor collective. In this regard there was flagrant violation of then applicable Law “On labor collectives” and Law of Republic of Tajikistan “On denationalization and privatization of state-owned property in Republic of Tajikistan”, and unjustified method of sale to labor collective with prolongation of term was used.

The argument set forth in appeal application regarding that at the moment of purchase of the disputable site previous law was not in force, was ignored with the following basis.

Indeed at the moment of making decision of the Chairman of Dushanbe no.53 dated 24.03.1997 “On approval of list of sites offered for next sale” the disputable object was included into the List and at that moment Law of Republic of Tajikistan “On denationalization and privatization of state-owned property in Republic of Tajikistan” and the decision of the Chairman of Dushanbe was made based on this Law. But afterwards on 16 May 1997 the Law of Republic of Tajikistan “On privatization of state property” was adopted and according to article 9 of the Law privatization of educational objects is realized by the decision of the Government of Republic of Tajikistan, and according to the article 11 of the Law the sale is carried out in form of auction and competitive bidding so this condition was not observed as well.

Namely in introduction part of the contract of purchase it was stated that the contract is concluded on the basis of Law of Republic of Tajikistan “On denationalization and privatization of state-owned property in Republic of Tajikistan”, but at that moment mentioned Law was already in force.

The specified object was intended for education purposes and after completion of construction it should have passed into disposal of Education Administration of Dushanbe city. In its application dated 25 June 1996 no.17 about privatization of the object Mission center “Grace Sonmin” states that building will be used in academic purposes, but after 9 long years after acquisition of undeveloped site it did not lay any legal effort to fulfill this obligation. According to revisions of supervisory body of State Inspection on construction and architecture, prosecutor of Dushanbe city and conclusion on construction of the site testify that the Center uses the object for their interest and had begun its illegal reconstruction.

Till now Mission Center “Grace Sonmin” did not fulfill its contract obligations stipulated in paragraph 1 and 2 of contract of purchase between the Center and Committee on state-owned property of Dushanbe city dated 2 July 1997. According to this paragraph mandatory utilization of the object is foreseen, and according to construction design it should be commissioned yet in 1990. This undeveloped site according to construction design and key plan of the quarter is only meant for educational purposes and without permission of Executive body of state power of Dushanbe alteration of construction design and its utilization for purposes other than intended use is in contravention of concluded contract of purchase and appointment of the building. According to conclusion of experts modification of main design of the building without proper permission for reconstruction contravenes law on construction and architecture.

According to subparagraph 6 of paragraph 2 of contract of purchase between Committee on state-owned property of Dushanbe and Mission Center “Grace Sonmin”, compliance with legislation of Republic of Tajikistan and the Contract was stipulated by provision of purchase.

However, Mission Center “Grace Sonmin” from the moment of acquisition of undeveloped site till now violates requirements of article 232 of Civil Code of Republic of Tajikistan, article 29 of Law of Republic of Tajikistan “On architecture and urban planning”, as well as subitems 1 and 6 of paragraph 2 of concluded contract.

For instance, according to article 232 part 4 of Civil Code of Republic of Tajikistan while owner practices its rights he/she should not violate rights and interests of other legally protected citizens. But contrary to law the building was not used in social interests of people residing in the quarter for 9 years whose children according to the design should have attended this comprehensive school, thus it brought harm to people. Irrespective of purposes of privatization of the site which first of all includes early completion of construction and its commissioning, during 9 years construction work are not completed according to the design and the site is commissioned against its intended use. In result the site is still considered as undeveloped, and keeping it in this condition brings damage to urban planning and architecture policy of Executive body of state power of Dushanbe city.

According to paragraph 7 of the Contract between Committee on state-owned property of Dushanbe and Mission Center “Grace Sonmin” violation of provisions of the contract is one of the basis for its denouncement. In this case subitems 1 and 6 of paragraph 2 of the Contract were violated while using undeveloped building.

Yet, in this case management of Mission Center “Grace Sonmin” having violated legislation, had started to do minor construction work and partial reconstruction of undeveloped site of secondary school by putting additional doors, building walls and small classrooms against article 29 of the Law of republic of Tajikistan “On architecture and urban planning” i.e. without permission of Executive body of state power of Dushanbe city and Administration on architecture and urban planning of Dushanbe city.

Argument of appeal application that regarding this issue that there is already court decision, is ignored by the decision of Supreme Economic Court of Dushanbe dated 29.07.2008.

Body of appeals instance of Supreme Economic Court of Republic of Tajikistan considers conclusion of first instance court on that the plaintiff did not default period of limitation as correct since Administration of Education of Dushanbe had found out about violation of its rights only in March, 2007.

According to subparagraph 1 of article 248 of part 1 of Code of Republic of Tajikistan on economic court proceedings based on consideration of application of appeal, appeals instance has right to leave decision of first instance court without change and not to sustain application of appeal. Body of appeals instance of Supreme Economic Court of Republic of Tajikistan considers decision of first instance court as legitimate and justified and there is no basis for its cancellation.

Based on above foundation and article 248 of part 1 of Code of Republic of Tajikistan on economic court proceedings, appeals instance –

Decided:

Decision of Supreme Economic Court of Republic of Tajikistan dated 28.08.2008 with claim of Administration of Education of Dushanbe, third party having independent demand – Executive body of local state power of Dushanbe to Department on state support of entrepreneurship, investments and management of state-owned property of Dushanbe and codefendant Mission Center “Grace Sonmin” on invalidation of contract of purchase of undeveloped site dated 02.07.1997; license for right of ownership dated 21.07.1998; official act for right of acquisition of state-owned property by labor collective in specified period dated 25.07.1997, is to be left without changes. Regarding part of collection of 181.922.000 rubles from the Department on state support of entrepreneurship, investments and management of state-owned property of Dushanbe: taking into account indexation 181.922.000 rubles is set on the day of decision making.

The application for appeal is not to be sustained.

The decision enters into effect from the moment of adoption but can be appealed in cassational instance of Supreme Economic Court of Republic of Tajikistan.

Chairman: Shirinjonova M.M.
Judges: Alieva M.H.
Ashurov A.A.