Dubai, United Arab Emirates
Siraj Finance PJSC, the issuer of Bank and Performance Guarantees to Samana Developers for two of developers’ residential projects in Dubai, is at default of millions of dirhams that belong to Samana Developers. Siraj Finance is not replying to any notice and refusing to pay back. The guarantees are unconditional in every aspect as per the content of the signed guarantee document but they seem not willing to pay back despite a dozen reminders in four months, which is a clear violation.
Siraj Finance PJSC is Abu Dhabi based company, regulated by the UAE Central Bank. It provides a multitude of financial products.
SAMANA HILLS PROJECT
Samana Developers obtained a Performance Guarantee for total amount of Dh6,516,956/- by paying 50% margin that equals to Dh3,258,478/-. On the request of Samana Developers, the RERA issued the NOC to Siraj Finance PJSC for the cancelation of the guarantee.
RERA instructed Siraj Finance through a notice dated March 12th 2020, which was received by Siraj Finance on same day, for the remittance of amount into the Escrow Account of Samana Hills project.
Despite RERA’s notice, repeated requests, emails and phone calls in almost four months, Siraj Finance PJSC has failed to remit the amount so far.
It is clear violation and falls under Article 463(1) of the Commercial Transaction Law No. 18 of 1993, which states the bank/financial institution must return the financial securities deposited with it upon demand of the depositor with due consideration to the time needed for preparation of the securities for such return.
Apart from fulfilling any claim under the “Guarantee”, Siraj Finance PJSC has totally failed to remit the deposited amount to the client (Samana Developers), which is a big question mark on the credibility of Siraj Finance.
SAMANA GREENS PROJECT
The contractor of the Samana Greens project – Conforce Arabia Contracting LLC – arranged a Performance Guarantee of Dh2.65 million approximately to fulfill the contractual obligations. The contractor failed to perform and the call for liquidation of the Performance Guarantee was made after certification of default from the project engineer was issued. As a result of this failure and under terms of the contract, an official notice from Ajman Bank (as Account Trustee of the project) was issued to Siraj Finance (the performance guarantee provider), and received by Siraj Finance on 12th March, 2020.
Imran Farooq, Chief Executive Officer of Samana Developers, says: ”We meticulously planned Samana Greens project to be delivered on time. But the contractor has failed to complete it within the stipulated period.”
He added: “Contractor’s failure to complete the residential project on time and Siraj Finance’s inability to honor the guarantee amount have adversely affected the on-time delivery of the project. But we managed it well and made alternative arrangement for completing project on-time, which will be shared with the media very soon.”
“Samana Developers’ several requests sent to Siraj Finance, for paying guaranteed amount of approximately Dh2.65 million, went unnoticed. Siraj Finance is playing a deaf ear to all requests, calls, emails, notices and official order which establishes default on the part of Siraj Finance PJSC and inability to honour the guarantee issued by them.”, Imran concluded.
Excerpt from Siraj Finance’s Performance Guarantee: Dated: March 21, 2018
“Siraj Finance PJSC, irrevocably and unconditionally undertake with you that whenever you give written notice to us stating that in your sole and absolute judgment the contractor has failed to observe or perform any of the terms, conditions or provisions of the Contract on its part to be observed or performed. We will, notwithstanding any objection which may be made by the contractor and without any right of set-off or counterclaim, immediately pay to you or as you may direct such an amount as you may in such notice require not exceeding the sum equivalent to 10% of the Contract Price Dh2,656,700.00 (Two Million Six Hundred Fifty Six Thousand Seven Hundred Only) (Guaranteed Sum).”
Further states: “Any payment by us in accordance with this Guarantee must be immediately available and freely transferable in UAE Dirhams free and clear of and without any deduction for or on account of any present or future taxes, levies, imposts, duties, charges, fees, set off, counterclaims, deductions or withholdings of any nature whatsoever and by whom ever imposed. Proceeds, under this guarantee, should be credited to Samana Green Escrow Account with Ajman Bank PJSC.”
The default in paying the “Guarantee Sum” undertaken by the financial institute through proper legal document is raising serious concerns in the market. Siraj Finance’s unprofessional and mysterious behavior can tantamount to fraud and can damage the strong reputation of Dubai’s highly regulated real estate market.
About Samana Developers:
Samana Developers, part of Samana Group of companies, has successfully completed numerous industrial and residential projects in the Middle East. Samana Developers has built its reputation through high performing standards and a wide range of services. Samana Developers focuses on developing state-of-the-art commercial and residential projects with distinctive features that make life a better place to live in.