CIVIL APPEAL NO

IN THE COURT OF APPEAL OF TANZANIA AT PAR ES SALAAM ( CORAM: WAMBALI. 3.A.. MASHAKA. J.A. And MGONYA, J.A.^ CIVIL APPEAL NO. 286 OF 2021 ARTHUR MGONGO....... ............. ................................................ APPELLANT VERSUS KCB BANK TANZANIA LIMITED.................................................RESPONDENT (Appeal from the Judgment and Decree of the High Court of Tanzania, Labour Division at Dar es Salaam) ( Muruke, 3.) dated the 28th day of August, 2020 in Labour Revision No. 186 of 2019 JUDGMENT OF THE COURT 16thAugust & 6th December, 2024 MGONYA. J.A.: Arthur Mgongo, the appellant, lodged this appeal challenging the decision of the High Court Labour Division at Dar es Salaam which quashed the award of the Commission for Mediation and Arbitration (the CMA) in Labour dispute No. CMA/DSM/ILA/R. 146/2017 which was in his favour. Briefly, the background of the parties' dispute is that, the appellant was an employee of KCB Bank Tanzania Ltd (the respondent) from 2014 to the time of his termination on 23rd January, 2017 holding a position of Branch Manager at KCB Buguruni Branch. The appellant was terminated on alleged breach of employment rules and regulations which involved; falsifying customer information, breach of operations procedures and accountability on oversight of bank procedure/control which could expose the bank to a loss of TZS. 95,000,000.00. Believing that he was unfairly terminated, the appellant successfully challenged the termination at the CMA on the ground that, the procedure for termination of his employment was not followed. It is noteworthy that, at the CMA, the appellant prayed for compensation, severance payment, leave, one month salary in lieu of notice and certificate of service. Upon hearing the parties, the CMA found that the termination of the appellant was both substantively and procedurally unfair, hence, awarded the appellant compensation for unfair termination equal to twelve months remuneration to the tune of TZS. 60,000,000.00, and severance payment amounting to TZS. 4,038,461.00, making a total of TZS. 64,038,461.00. Dissatisfied with the decision of the CMA, the respondent lodged before the High Court Labour Revision No. 186 of 2019. Having heard the parties and considered the impugned decision, the High Court Judge allowed the application and quashed the CMA award, for the reason that, the termination was substantively fair as the appellant breached his duty of utmost good faith and violation of the laid down procedures. In the same vein, the High Court Judge found that the procedures for termination were followed as the appellant was given an opportunity to exercise all his rights which included asking questions and the evidence was produced before the Disciplinary Committee. Discontented, the appellant lodged the instant appeal predicated on six grounds namely: 1. The High Court Judge erred in iaw by deciaring termination o f the appeiiant fair as he breached his duty o f utmostgood faith; the offence which the appellant had never been charged with and which does not exist in Labour iaws and respondents internal rules; 2. The High CourtJudge erred in iaw for failure to note that the appellant was terminated on misconducts which were not proved as required under the law as no witness testified before the disciplinary hearing committee; 3. The High Court Judge erred in iaw for failure to note that failure to give the appellant investigation report before hearing was procedural irregularity which denied appellant ability to defend himseif against the charges; 4. The High Court Judge erred in iaw in failure to note that during disciplinary hearing the appellant was required to prove his innocence instead o f the employer to prove his guiltiness; 5. The High Court Judge erred in law when he failed to note that the appellant did all what he was required to do and no any law or employer's rules o fprocedures were violated by the appellant; and 6. The High Court Judge erred by failure to note that termination was not appropriate penalty in the circumstances o f this case even if found guilty. During the hearing of this appeal, the appellant appeared in person, unrepresented, while Mr, Anthony Arbogast Mseke, learned counsel appeared for the respondent. Both parties had earlier on filed written submissions in support and against the appeal which they adopted during the hearing to form part of their submissions. Before embarking into the merit of this appeal, we find it apposite to instigate with a point of law raised by the learned counsel for the respondent in his written submission that, some of the grounds of appeal raised by the appellant contravened section 57 of the Labour Institutions Act, Cap. 300 (the LIA), which provides: "Any party to the proceedings in the Labour Court may appeai against the decision o f that court to the Court o fAppeai o f Tanzania on a point o f law oniy. ” It was Mr. Mseke's argument that, in this appeal, grounds 1, 2 and 4 raises questions of facts instead of points of law as the same requires evidence. Therefore, in his view, those grounds offend section 57 of the LIA. To bolster his argument, he relied on our decision in Mary Mbelle v. Akiba Commercial Bank Ltd (Civil Appeal No. 302 of 2020) [2021] TZCA 591(20 October 2021; TanzLII). On his side, the appellant being a layman had nothing to reply on the respondent's counsel objection, rather he urged the Court to allow his appeal. As rightly argued by Mr. Mseke, the law under section 57 of the LIA restricts the appellate jurisdiction of this Court. It requires the Court to interfere with the decision arising from the High Court Labour Division, on matters which are pure point of law and not otherwise. For this stance, see for instance Remigious Muganga v. Barrick Bulyanhulu Gold Mine (Civil Appeal No. 47 of 2017) [2018] 7ZCA 219 (11 October 2018; TanzLII) and Paschal Bandiho v. Arusha Urban Water Supply & Sewerage Authority (AUWSA) (Civil Appeal No. 4 of 2020) [2022] T7CA 42 (21 February 2022; TanzLII). The Court in Atlas Copco Tanzania Limited v. Commissioner General Tanzania Revenue Authority (Civil Appeal No. 167 of 2019) [2020] TZCA 317 (17 June 2020; TanzLII) dealt with the definition of pure point of law in terms of section 25 (2) of the Tax Revenue Appeals Act, Cap. 408 R. E. 2006 and had this to say: "... we think, a question o f iaw means any o f the following: first, an issue on the interpretation o f a provision o f the Constitutiona statute, subsidiary legislation or any legal doctrine on tax revenue administration. Secondly, a question on the application by the Tribunal o f a provision o f the Constitutionf a statute/ subsidiary legislation or any iegai doctrine to the evidence on record. Finally, a question on a conclusion arrived at by the Tribunal where there is failure to evaluate the evidence or if there is no evidence to support it or that it is so perverse or so illegal that no reasonable tribunal would arrive at it." Although the above definition derives its root from the Tax Revenue Appeals Act, we also find the same interpretation applicable in this matter. Therefore/ having reminded ourselves on what is a pure point of law, we concur with the respondent's counsel submission on the 5th ground as the same contains factual matters hence, falls short of constituting a pure point of law. In the circumstance, we disregard it and proceed to determine the remaining grounds. In determining this appeal, we intend to address the 1st, 2nd and 4th grounds of appeal conjointly, while the 3rd and 6th grounds of appeal will be determined separately. Essentially, in the 1st, 2nd and 4th grounds of appeal, the appellant's complaint is centered on the fairness of his employment termination both procedurally and substantively. It was the appellant's submission that, the High Court Judge erred in declaring that the appellant breached the duty of utmost good faith and violation of the laid down procedures, the offence he was never charged with and also the alleged violated procedures were not shown, contrary to rule 12 (1) (a) and (b) (i) (ii) (iii) (iv) and (v) and 2 of the Employment and Labour Relations (Code of Good Practice) Rules, 2007. He further submitted that, no witnesses appeared to testify at the disciplinary hearing contrary to rule 13 (5) of the Employment and Labour Relations Act (Code of Good Practice) Rules G.N. No. 42 of 2007 (hereinafter the Code of Good Practice). According to the appellant, the Disciplinary Committee found him guilty while no evidence was presented by the respondent at the hearing. Therefore, it is the appellant's complaint that the termination was unfair as the Disciplinary Committee required him to prove his innocence. In reply, Mr. Mseke contended that, the appellant was charged and found guilty for the gross misconduct which involved; falsifying customer information, breach of operation procedure and accountability on oversight of bank procedure/control. It was Mr. Mseke's submission that, looking at the holding of the Judge together with the offence charged, it is not true that the findings of the Judge were contrary to the offence which the appellant was charged with as the act of the appellant to falsify customer's information, amounted to breach of his duty of utmost good faith. Further, it was Mr. Mseke's submission that, the appellant's misconduct was proved on preponderance of probability. That, the evidence adduced by the respondent reveals how the appellant was involved in processing the loan and the extent he had failed to exercise the duty entrusted to him. Countering the 4th ground, the learned counsel submitted that, the appellant breached the bank operation procedure. He argued that, being the Branch Manager, the appellant was familiar with all the procedures plus the Know Your Customer (KYC) rule, before granting loans. It was the learned counsel's further contention that, despite of being aware of the procedures, the appellant did not conduct due diligence to confirm legitimacy of customer's business and validating the authenticity of documents produced. Having heard the rival submissions from both parties, in the respective grounds of appeal, we find the main issue for our determination is whether the termination of the appellant's employment was fair. Employment contract like any other contracts, provide rights to both the employer and the employee to end the contract once there is a valid reason to do so. Essentially, the employer's right to terminate an employment contract is limited to valid reasons and fair termination procedures. Rule 8 (1) (c) and (d) of the Code of Good Practice provides: "An employer may terminate the employment o f an employee if he- (c) follows a fair procedure before terminating the contract; and (d) has a fair reason to do so as defined in section 37(2) o f the Act'. Meanwhile, section 37 (2) of the Employment and Labour Relations Act, Cap. 366 (the ELRA) stipulates that: ”37(2) A termination o f employment by an employer is unfair if the employer fails to prove- (a) that the reason for the termination is valid; (b) that the reason is a fair reason- (i) related to the employee's conduct, capacity compatibility; or (ii) based on the operational requirements o f the employer; and (c) that the employment was terminated in accordance with a fair procedure." The procedures to be followed before the termination of the employee's employment has been stipulated under rule 13 of the Code of Good Practice. According to rule 13 (1) of the Code of Good Practice, the fairness of the procedure before terminating the employee's employment contract, demands that there must be an investigation to ascertain whether there are grounds for hearing to be held. Thereafter, ruie 13 (2) of the Code of Good Practice provides that, if the outcome of the investigation report suggests that hearing is to be held, the employer must notify the employee the allegations using a form and language that the employee can understand. We find it useful to reproduce the said provision as hereunder: "13(2) Where a hearing is to be held, the empioyer shaii notify the employee o f the allegations using a form and language that the employee can reasonably understand," The wording of the above provision is unambiguous that, an employee has a right to be notified the allegations using a form and language that he understands. It connotes that there should be a formal charge or rather a proper notification of the allegations to be issued to an employee before the hearing. The aim being to allow an employee to know the allegations against him/her and make proper response to the charge. Moreso, a charge being a foundation of the disciplinary hearing, it must not only inform an employee about the nature of the disciplinary offence but also it must state the contravened provisions to enable an employee to prepare his defence before hearing. In Jimson Security Service v. Joseph Mdegela (Civil Appeal No. 152 of 2019) [2021] TZCA 176 (6 May 2021; TanzLII), we held that: "The failure to serve any formal charge on the respondent was an egregious violation o fRule 13 (2) 10 o f the Rules. Actually, it was clearly the watershed o f the alarming shortcomings that followed." See also; Peter Maghali v. Super Meals Ltd (Civil Appeal No. 279 of 2019) [2022] TZCA 217 (22 April; TanzLII) and Magreth Method Mapunda v. National Museums of Tanzania, Civil Appeal No. 251 of 2019 (unreported). As we have intimated above, the appellant's complaint that the High Court Judge erred in holding that he was guilty for breach of utmost good faith while there was no proper charge framed against him. The breach of his duty of utmost good faith as an offence does not exist in Labour Laws and the respondent's internal rules. On our part, having gone through the record of this appeal, we concur with the appellant that, he was terminated without there being any charge framed and served to him establishing that, he was in breach of his duty of utmost good faith. Meanwhile there were no rules or internal regulations which were said to have been contravened to warrant his termination. This Court in Pan African Energy Tanzania Limited v. John Msigala (Civil Appeal No. 163 of 2020) [2024] TZCA 5 (4 January 2024; TanzLII), held among other things that: "In terms o f rule 12(1) o f the Code o f Good Practice governing fairness o f the reason for termination, a li disciplinary offense must arise from a violation o f a rule or standard regulating an employee's conduct relating to his employment It means, therefore, that there must always be a link between a misconduct and the employment relationship regulated by the rule or standard alleged to have been contravened" From the above authority, it is clear that for a disciplinary offense to arise, there must be a violation of rules or standard regulating an employee's conduct. Therefore, as correctly argued by the appellant, for the Court to establish that he was guilty, there must be a formal charge stating the disciplinary offence and the rule or standard alleged to have been contravened. It is noted that, Janeth Rumanyika (DW3), Human Resource Officer of the respondent, told the CMA that, after completion of the investigation report they invited the appellant to attend the Disciplinary Hearing Committee vide a letter dated 2nd January, 2017 (exhibit KCB-13). It is from the said letter the appellant was informed that, he had to respond to the charges which involved the breach of employment rules and regulations which involves falsifying customer information, breach of operations procedures and accountability on oversight of bank procedure/control. For ease of reference, we quote the said letter as herein below: "Ref: KCBT/HR/02/17 Arthur Mgongo, TZA 50847 Dear Arthur, RE: APPEARANCE BEFORE DISCIPLINAR Y COMMITTEE Kindly be advised that you are required to appear before a disciplinary committee on Friday 0&h January, 2017 at the KCB Bank Tanzania Head Office at 03:00 p.m. You would be required to respond to the charges which are the breach o f employment rules and regulations: 1. Falsifying customer information: • On 15th November, 2016, you convinced the CQ approvers that the customer Ahmed General Supplies business history is good with attractive business while it was not the case thus you wrongly represented customer's business position contrary to Banks'procedures. • You did not exercise due diligence by doing a proper call/site visit to confirm legitimacy o f business prior to issuing any loan facility which is a key requirement as far as the Bankprocedures are concerned. • Consequently, you conspired with customer and lied about his nature o f business and further obtained a phony shop and impersonated customer to pretend its his. 2. Breach o f Operations Procedure: It has come to our attention that, you failed to confirm, and or validating authenticity o f bank statement produced and submitted to the Bank by the customer, Ahmed Genera! Supplies, contrary to our Standard Operating procedures. 3. Accountability on oversight o f bank procedure/controi: As a Branch Manager you were responsible to oversee adherence to ail control procedures. On the contrary, you negligently recommended for approval a credit quest that did not meet the requirements o f processing which could expose the bank to a loss o f TZS. 95,000,000/=. You have a right to choose a fellow employee to be present with you at the hearing o f an interpreter. In case you decide to do so, kindly inform the undersigned by Tuesday 0 Jd January, 2017. In the event that you fail to show up for the hearing, it shall be deemed that you have waived your right to be heard and hence the Bank shall proceed to take necessary disciplinary action without any further notice to you. Kindly note that the Bank shall not accept unnecessary delay in the hearing proceedings from you or your representative. AH disciplinary rules and regulations shall be read to you during the hearing to which, both you and your representative shall be required to comply. Should you wish to have a copy o f these rules and regulations, prior to the hearing, kindly inform the undersigned by 0 JdJanuary, 2017. You are required to sign and acknowledge receipt o f a copy o f this letter signifying that you have read and understood the contents herein. Yours faithfully, (signed) CUTHBERTMARO AG. HEAD OF HUMAN RESOURCE'. It was Mr. Mseke's argument that, the above letter informing the appellant about the hearing should be taken as a charge per rule 13 (2) of the Code of Good Practice, since there is no format of a charge. With due respect, we decline to accept the learned counsel's invitation that a letter to the appellant to attend the Disciplinary Committee as seen above, saves as a charge. The reason for our stance is; a letter to appear before the disciplinary hearing presupposes that the charge has been sent to the employee and has replied to it, thus convening the disciplinary hearing. Fair hearing requires that before hearing, there must be a formal charge forwarded to an employee informing him the offense, the rules or regulations which were contravened by him and avail him reasonable time to respond on it. In our considered view, informing an employee about the allegations in a letter to attend hearing which did not even indicate the violated rules or regulations, could not in any way be said that an employee was availed with a formal charge, hence accorded a fair hearing as the respondent's counsel wished to convince the Court. Therefore, the High Court Judge erred in holding that, the appellant was properly charged and found guilty of breach of utmost good faith, while there was no any formal charge containing the alleged offences and the rules which were contravened by the appellant to warrant his dismissal. In regard to the appellant's complaint that no witness testified before the disciplinary hearing, rule 13 (5) of the Code of Good Practice is very clear that, evidence in support of the allegations against the employee shall be presented at the hearing. The provision also provides that an employee shall be given a proper opportunity at the hearing to respond to all allegations, question any witness called by the employer and to call a witness if he/she wishes to do so. However, in the case at hand it is apparent in the record of appeal, particularly Disciplinary Hearing Statement (exhibit KCB- 15 14), reflected at page 106 -112 that, no employer's witnesses presented evidence before the Disciplinary Committee before the appellant was called upon to defend himself. Likewise, the record of appeal is silent whether the appellant was availed with an opportunity to cross examine the employer's witnesses. Exhibit KCB-14 portrays that, it was the appellant only who was required to respond to the charges after he was asked whether he admitted to the allegations and later cross examined by the Committee. Essentially, the purpose of rule 13(5) of the Code of Good Practice is to provide an employee a fair hearing of the allegations raised against him at the Disciplinary Committee. Therefore, if an employee is denied a right to know the substance of the employer's evidence and to examine the employer's witnesses or to go through documentary evidence intended to be tendered against him, that is a fatal irregularity which vitiates the proceedings towards the termination. See for instance Platinum Credit Limited v. Martin Joaqim (Civil Appeal No. 138 of 2022) [2023] TZCA 17740 (6 October 2023; TanzLII). We have noted another procedural flaw during the disciplinary hearing which contravened rule 13 (7) of the Code of Good Practice. It is a legal requirement that, where the hearing results in the employee being found guilty of the allegations, the employee shall be given an opportunity to put forward any mitigating factors before a decision is made. Nevertheless, the 16 record of appeal does not indicate whether the appellant was given a chance to mitigate before his termination. At page 114 of the record of appeal, there is a document showing the outcome of the hearing, where it is on record that the Committee recommended termination. Then, after the said recommendation the appellant was terminated vide a termination letter (exhibit KCB-15). This is a procedural flaw which vitiates the fairness of the termination. Moreover, going through the disciplinary hearing proceedings as reflected in exhibit KBC 14 at page 105 of the record of appeal, it came to our knowledge that, the Disciplinary Committee in respect of the appellant's hearing was composed of six persons among them, Mr. Uzairu Athumani, Acting Head Islamic Banking, who was a chairperson. Others are Colman Riwa, Acting Head of Finance; Donart Misano, Unit Head Corporate Liabilities; Avitus Kyaruzi Senior Manager Legal, Hans Kirumbi, Physical Security and Investigation Manager and Janeth Rumanyika, Human Resources Manager who was the secretary. Mr. Hans Kirumbi who testified as DW1 at the CMA, is the one who investigated the appellant's allegations. He interviewed the appellant on several occasions and interviewed other relevant staff before he prepared his Report and presented it to the Management. Due to his investigation report, the appellant was called before the Disciplinary Committee to answer the allegations advanced against him. According to the good practice in hearing at the Disciplinary Committee, it is prudent to draw line in pursuing some matters separately so as to avoid biasness and conflict of interests to ensure that the Committee is embraced with the neutral and sober persons who will not be compromised in any way during the proceedings and in reaching the ultimate decision. As we have noted, Mr. Kirumbi was the one who conducted the investigation as soon as the appellant's allegations arose. Under normal circumstances, he would be seen to have interest in the matter and allegiance was in favour of his employer against the appellant. We are thus of the considered view that, in the circumstances of this case, it was not appropriate for Mr. Kirumbi to be a member of the Disciplinary Committee. From the foregoing deliberation, we find merit on the 1st, 2nd, and 4th grounds of appeal and we allow them. On the 3rd ground of appeal, it is the appellant's complaint that, he was not availed with the investigation report before hearing, a procedural irregularity which denied him the ability to defend himself against the charges. When invited to amplify this complaint, he referred us to the High Court decisions in Ezekia Samwel Ndehaki v. Tanzanite One Mining Limited, Revision No. 59 of 2013; KCB (T) Ltd v. Dickson Mwinuka, Revision No. 45 of 2013 and Omary Kombo Kijangwa v. Mtibwa Sugar Estate Ltd, Revision No. 07 of 2020 (unreported), and stressed that failure to supply him with the investigation report, rendered the whole process of termination a nullity. In rebuff, Mr. Mseke contended that, there is no law which requires an employer to avail the investigation report to an employee. It was his assertion that, rule 13 (1) and (5) of the Code of Good Practice requires an employer to conduct investigation but the same does not extend to compel the employer to avail an employee with the copy of the investigation report. It was the learned counsel's stance that, the investigation report is an employer's tool which assists him to frame the charges against the employee and it is not mandatory for the same to be supplied to an employee. According to him, the appellant's complaint that he was denied the ability to defend himself against the charges, does not hold water, since the appellant was aware of the charges and that he was informed his rights. The main issue for our determination is whether this ground of complaint has merit. As stated above, it is the investigation report which initiates the disciplinary hearing. Equally, it is gathered from the evidence that, what prompted the disciplinary proceedings and ultimate termination 19 was the audit report (exhibit KCB 8). However, going through the record of appeal, our perusal on exhibit KCB-14 (Disciplinary Hearing Statement), we note that, there is a part written "summary of evidence" which included the explanation given by staff and an Audit Investigation Report. However, nothing shows that the said audit report was made known to the appellant during the disciplinary proceedings because as alluded to earlier, the proceedings started by calling upon the appellant to respond to the allegation while no evidence from the respondent had been tendered before the Committee. Rule 11(5) of the Code of Good Practice, provides for the mandatory requirement that the substance of the employer's evidence be presented at the hearing. We find there is merit in the appellant's 3rd ground of complaint. In the circumstances of the case at hand, since it was the Audit Report which prompted the disciplinary proceedings and ultimate termination, there was a necessity for the respondent to disclose it to the appellant. We thus find the circumstance in the case of Tanzania Cigarette Public Limited Company v. Msafiri Kibanga (Civil Appeal No. 257 of 2022) [2024] TZCA 800 (22 August 2024; TanzLII), where despite the procedure irregularities, the respondent confessed to the dishonesty of false sales, hence the failure of the appellant to supply him with the investigation report did not prejudice him is distinguishable with the case at hand. Therefore, the case of Severo Mutegeki & Another v. Mamlaka ya Maji Safi na Usafi wa Mazingira Mjini Dodoma (Civil Appeal No. 343 of 2019) [2020] TZCA 310 (19 June 2020; TanzLII) applies in the circumstances of the instant appeal. Having said so, we allow the 3rd ground of appeal. Turning to the 6th ground of appeal, it is the appellant's complaint that, termination penalty imposed to him was not appropriate under the circumstances of the alleged offence. Considering the deliberation and findings in other grounds above, we are not going to be detained much with the appropriateness of the penalty. It is settled that, the employee's right to a fair hearing whenever an employer is contemplating termination, is a sacrosanct right. Such right cannot be taken away even when the employer believes that the committed offence is more serious and cannot be tolerated by any means. Therefore, in establishing the lawfulness of termination of employment, it is not sufficient to show only that the employer had valid reason but she must demonstrate that the procedures set out under rule 13 of the Code of Good Practice were adhered to. Therefore, having found that there was non-adherence of the of the procedures before termination of the appellant, it is obvious that the termination was not an appropriate penalty. Hence, the 6th ground of appeal is equally meritorious, and we allow it. In the light of our discussion, we find that the termination of the appellant's employment was contrary to the right to fair hearing under rule 13 (2), (5) and (7) of the Code of Good Practice. 21 We thus allow the appeal. Consequently, we quash and set aside the Judgment and Decree of the High Court Labour Division in Labour Revision No. 186 of 2020 and restore the Award of the CMA. We make no order as to costs. DATED at DAR ES SALAAM this 18th day of November, 2024. F. L. K. WAMBALI JUSTICE OF APPEAL L. L. MASHAKA JUSTICE OF APPEAL L. E. MGONYA JUSTICE OF APPEAL Judgment delivered 06th day of December, 2024 in the presence of Mr. Elipidius Philemon, learned Counsel for the Respondent and in absence of the Appellant is hereby^certified as a true copy of the original.