The borrower was declared by the court to have nullified the credit contract
The People's Court of Region 7 - Ho Chi Minh City has tried a credit contract dispute between the plaintiff, Vietnam Prosperity Joint Stock Commercial Bank (VPBank) and the defendant, Mr. Tran Hong Son and his wife, 59 years old.
Novareal Joint Stock Company (Novareal JSC) was summoned by the court as a person with related rights and obligations but was absent.
The lawsuit documents show that on November 5, 2020, Mr. Son and his wife signed an agreement with Novareal Joint Stock Company to buy a villa with a land area of 150 m2, a total floor area of 175 m2 in the Dai Duong Valley Tourist Area Complex in Tien Thanh Commune, Phan Thiet City, Binh Thuan Province (also known as the NovaWorld Phan Thiet Project, now in Tien Thanh Ward, Lam Dong Province).
The couple signed a credit contract with VPBank to borrow 3.65 billion VND to pay the deposit for the purchase of the above-mentioned parallel villa. The contract is valid for 36 months, with an interest rate of 11.5%/year; the collateral is the property rights arising from the purchase agreement for this villa.
However, since the disbursement, Mr. Son and his wife have only paid 900 million VND in interest, have not paid the principal and have stopped paying since December 2022. As of September 30, outstanding loans had exceeded VND5.32 billion. Despite repeated reminders, Mr. Son and his wife did not repay the debt, forcing the bank to file a lawsuit, request payment or handle the collateral.
After studying the documents and the verdict, the Trial Panel (HDXX) rejected VPBank's lawsuit request, declaring the credit contract between the plaintiff and the defendant to be invalid. The court ordered Novareal Joint Stock Company to return VPBank VND 3.65 billion in principal (the amount the company received for disbursement from the bank); forced VPBank to return to Mr. Son and his wife more than VND 900 million.
One of the analysis bases of the Trial Council (HDXX) is that the results of the appraisal of the actual status of assets formed in the future show that the bank is not only allowed to locate the land for villa construction. During the verification process at the local level, the authorities also did not have information on project management.
The case file does not have documents proving that the real estate formed in the future is a parallel villa in the Thuong Lung Dai Duong project with the foundation completed (a prerequisite for putting it into business).
Delta Valley Binh Thuan Company (project investor) is also not allowed to authorize Novareal to sign a deposit contract related to housing. The panel of judges stated that because this property does not actually exist, Novareal's receipt of deposit from customers is determined to be a violation of the law.
At the same time, the panel of judges determined that the agreement signed on November 5, 2020 between Mr. Son and his wife with Novareal Company was invalid. Regarding the credit contract between the bank and Mr. Son and his wife, the court determined that after the parties signed the credit contract, the disbursed amount would be transferred directly by the bank to the Novareal Company's account opened at this bank.
The panel cited Clause 2, Article 8 of Circular No. 39/2016 of the State Bank stipulating that credit institutions "not allowed to lend to pay for expenses, meeting the financial needs of transactions and acts prohibited by law".
From there, the Board of Directors determined that the credit contract between VPBank and Mr. Son and his wife was invalid. The court had no basis to accept the bank's lawsuit request. Because the defendant did not have a counter-suit, the court focused on resolving the consequences of the invalid contract in another civil case.
What did Novareal say about the court's conclusion?
Immediately afterwards, Novareal Company issued a notice stating that the dispute between the plaintiff, VPBank, and the defendants was a borrower of VPBank. In which, Novareal Company is the party with related rights and obligations, currently only at the first instance stage and the People's Court of Region 7 - Ho Chi Minh City has not issued or issued any official decisions or judgments to the litigants.
During the dispute settlement process, the presiding judge violated the proceedings procedure, did not collect all the documents as requested by the representative of the Procuracy, and did not provide all the documents for the proceedings to the parties involved.
At the same time, this verdict has not yet come into legal effect and the findings in the verdict are not consistent with the trial practice and the nature of the transaction, especially in the context that there have been many legally valid judgments of Courts at all levels and commercial arbitration centers that have recognized the validity of consulting, brokerage and credit transactions between customers with Novareal Company and credit institutions.
Therefore, the Company will continue to complain about these violations in the process of appealing the content of the judgment against the un object and unfounded legal opinions of the Board of Directors related to Novareal Company.
