The District Court further ruled that there was no reason to demand that Bank Mizrahi verify on its own initiative that the transaction BTB Mizrahi was "in favor" of Hefziba Investments, as a condition for granting his consent to the provision of the loan. In the meantime, the claim that this was a transaction of an unusual financial scope as far as Heftziba Investments was concerned, was rejected; It was determined that Bank Mizrahi was entitled to rely on the decision of the board of directors, and on the approval given by the company's counsel, according to which this decision was lawfully made and in accordance with the instructions Companies Law regarding the approval of interested party transactions.
- The judgment also ruled that it was not proven that the activities of the officers of Heftziba Investments (Mordechai Yona and Boaz Yona) were carried out with a preference for "personal interest" or a preference for Hefziba Shikun over the interest of Heftziba Investments. The court rejected the Special Manager's argument that Mordechai Yona's holding of Hefziba Shikun shares is in itself indicative of a "personal interest" that he and his son had in the transaction. BTB Mizrahi; It was held that the special manager had to prove an "excess connection" that substantially influenced the judgment of Mordechai Yona and Boaz Yona as directors of Heftziba Investments, to the extent that they were blind to the benefit of this company - However, this burden has not been lifted. And since no basis was found for the claim that the officers of Heftzibah Investments acted in favor of such a "personal interest", it was held that in any event, the claim that these actions were carried out in breach of a duty of loyalty to the company and in contravention should also be rejected To the section 254(a)(1) to the law. The District Court further noted, more than necessary, that it has not even been proven that we are dealing with an "unusual transaction" as it is Section 272 to the law. In this context, it was determined that the transaction BTB Mizrahi is essentially a loan transaction made with a bank with a guarantee for the repayment of the loan, and it cannot be said that "was not in the normal course of business of the company, which is not in market conditions, or that could have materially affected the profitability, property or liabilities of the company"; And even at this point, it was clarified that even if the amount of the loan is significant, it cannot be said that it is exceptional in view of the scope of Hefziba Investments' transactions as reflected in its financial statements.
Following these statements, the District Court ruled that it was even possible to suspend the claim that the BTB Mizrahi was not duly approved by Heftziba Investments, it was not proven that Mizrahi Bank knew or could have known about it as required In the section 281 30Companies Law - Therefore, in any event, the company's right to cancel this transaction did not arise. In this context, the judgment detailed a series of documents signed over the years by Mordechai Yona and Boaz Yona in connection with the BTB Mizrahi, and that within their framework, the company's representatives even confirmed in their signatures that all the decisions and approvals required by law have been made for the execution of the transaction, including the approval of transactions of interested parties. The District Court was of the opinion that Bank Mizrahi was entitled to rely on these approvals, and that it cannot be said that the bank should have known that there was any defect in the approval process.
- The District Court further ruled that even if there was a basis for ordering the cancellation of the transaction BTB Mizrahi by force Section 281 30Companies LawIn any case, there was no reason to order the return of the deposit funds to the liquidation fund of Hefziba Investments. In this context, it was clarified in the judgment that the cancellation of the transaction means the cancellation of the loan agreements as well - which requires the return of the loan money to the bank.
The Special Manager's Argument for the Cancellation of the Transaction BTB Mizrahi by force Section 30 30The Contracts Law It was also rejected, and in this context the District Court noted that "There is a long way to argue that this is an improper contract that contravenes public policy, even if it was a transaction without a "business reason" as claimed". The argument regarding the nullity of the transaction due to the failure to register a disguised pledge was also rejected, while it was clarified that "The law recognizes the bank's right to pledge deposits, even without registering a lien. The clauses granting lien, pledge, offset and guarantee rights in the terms of managing the account signed by Hefziba Investments are sufficient to grant the bank a pledge and lien even without the registration of the rightsIn addition, it was determined that Bank Mizrahi had a contractual right of offset by virtue of the deed of offset signed by Hefziba Investments - and this right is preferable to the rights of other creditors.