Dorji Choden

The High Court has ruled in favour of the State Trading Corporation of Bhutan Limited (STCBL), ordering Bhutan Chamber of Commerce and Industry (BCCI) President Tandy Wangchuk to pay Nu 4.7 million, including a 12 percent penal interest, for the purchase of a Toyota Fortuner.

The decision overturns the Thimphu District Court’s earlier ruling, which rejected STCBL’s claim for penal interest on the unpaid balance.

The High Court deemed the penal interest valid, stating it was a form of compensation for damages stipulated in the sale agreement and not regulated under the Financial Services Act of 2011.

In October 2023, BCCI requested a tax waiver for the import of a Toyota Fortuner, a request initially approved by then Finance Minister Namgay Tshering, who “strongly recommended” a tax exemption for the vehicle.

Acting on this assurance, Tandy Wangchuk purchased the vehicle from STCBL for Nu. 6.2 million, paying an initial amount of Nu 2 million.

The Toyota Fortuner was purchased as a pool vehicle for the BCCI President. 

However, the Ministry of Finance later rejected the tax waiver recommendation.

After Tandy Wangchuk failed to pay the remaining amount of Nu 4.2 million, STCBL filed a case against Tandy Wangchuk to the Thimphu District court.

The Thimphu District Court upheld the validity of the sale contract stating that neither party had contested it within the required 10-day period. However, it rejected STCBL’s claim for penal interest, stating that the sale of a vehicle did not constitute financial services under the Financial Services Act of 2011 and that imposing interest was not permissible under the Act.

Section 11 of the Financial Services Act 2011 states that no person shall offer financial services as a business without obtaining the appropriate license under this Act or the regulations under it; nor shall any individual fulfil a function on behalf of a financial services business without the license or registration, if any, required by this Act or the regulations under it.

STCBL appealed to the High Court, which overturned the lower court’s decision.

The High Court clarified that the 12 percent penal interest was not a financial service but a contractual compensation for damages caused by delayed payment. The ruling emphasised that no specific law prohibits the inclusion of interest in compensation for damages.

The High Court ordered Tandy Wangchuk to clear the total amount, including the penal interest, within six months.

The High Court declined to address the issue of the tax waiver, citing that it is outside of jurisdiction over the matter.