bank of africa tanzania ltd vs nkumat tanzania ltd and 3 others 2021 tzhccomd 3427 26 november 2021

IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA (COMMERCIAL DIVISION) AT DAR-ES-SALAAM COMMERCIAL CASE NO.151 OF 2019 BANK OF AFRICA TANZANIA LTD................... PLAINTIFF VERSUS NAKUMAT TANZANIA LTD ...1st defendant Y*r.. • NAKUMAT HOLDING LTD .. ^DEFENDANT ATUL KUMAR SHAH ... 3 ^/DEFENDANT NEEL ATUL SHAH 7774™ DEFENDANT Last Order: 10/00/2021 Judgment: 26/11/2021 JUDGMENT NANGELA, J. This is/^^case concerning breach of a credit facility agreemenlfjA’credit facility agreement’ (also synonymously referred^© as^'loan agreement’’ or "facility letter") is an 4 v] agr^menyin which a bank or other financial institution (as a lender) sets out the terms and conditions on which it is all set to extend a loan facility to a borrower. Before I go to the details of this case, and for clarity's sake, let me briefly summarize its facts. It all started sometime, between 2011 and 2016, when the?!54 Defendant,, a limited liability company incorporated, registered and carries out business under the laws of the United Republic of Page 1 of 22 Tanzania, applied for several credit facilities, renewable from time to time. The last of such facilities was through a facility letter dated 18th July 2016, in which the Plaintiff renewed an Overdraft Facility of USD ($) 500,000 and an existing term Loan Facility of USD ($) 73,984.17. These particular loans were secured by various securities. In particular, the securities relied upon included a 'General Debenture' over the entire fixed and floating assets issued by the 1st Defendant, as well as corporat^guaraptee of the 2nd, Defendant, a limited liability to^j^^company incorporated and registered under thef laws\6f Kenya. The the 3rd and 4th Defendants offered^nebsonal guarantees respectively. It was also agreed that^the Overdraft facility would attract an effectiv^mtere^rate of 8% per annum while the term loan attractezd4n effective interest rate of 7.5 / / % per annum, ^^asej^the overdraft facility expires or exceeds the^anciaWimit authorized or the facility instalment^^lfinte^arrears, it was agreed that, the same wouliattract^penalty interest rate of 13.5% per annum. - A In terms of the duration of the facilities, the facility letteWxpressly provided that, the Overdraft Facility of USD ($) 500,000 would be for a term of 12 months, whilst the term loan of USD ($) 73,984.17 would expire on the 29th January, 2017. It is the Plaintiffs averment, however, that, the Defendants, failed and/or neglected to repay the outstanding loan facility as per the agreements. The failure is said to have led to accumulation of an outstanding credit Page 2 of 22 facilities plus interest to the tune of USD ($) 575,692.65 as of the 3rd day of December 2019. It is on the basis of the above facts, that the Plaintiff brought this suit against the Defendants, jointly and severally, praying for judgement and decree to the effect that: 1. the Defendants be ordered to pay the sum of US$ 575,692.65 as outstanding credit facilities plus interest as of the 3rd December 2019; 2. in the event of failure/^ Defendants to pay a^orderedr>the Plaintiff be allowed' to sale the 1st Defendant's securitiesjMdjarges and secured /by y4he^ Debenture instr^ent\^or^r to realize the o utstahdi ngamou nt; 3>tlne Defendant be ordered to jointly / y \ a eve rally, pay interest on the \amount due in para 1 above at a commercial rate of 13.5% per annum from the date of filing this suit to the date of judgement; 4. the Defendants be ordered, jointly and severally, to pay interest on the decretal sum at the court rate of 7% from the date of judgement to the date of payment in full; 5. the Defendants be ordered to, jointly and severally, pay costs of the suit; Page 3 of 22 facilities plus interest to the tune of USD ($) 575,692.65 as of the 3rd day of December 2019. It is on the basis of the above facts, that the Plaintiff brought this suit against the Defendants, jointly and severally, praying for judgement and decree to the effect that: 1. the Defendants be ordered to pay the sum of US$ 575,692.65 as outstanding credit facilities plus interest as of the 3rd December 2019; 2. in the event of failure^by the Defendants to pay aszorderedr^the Plaintiff be allowed'to sa|e the 1st Defendant's securitiesXgharges and secured /by ^Xjfie Debenture instr^enwn^order to realize the outstanding amount; a^Xfie Defendant be ordered to jointly a ndy severally, pay interest on the amount due in para 1 above at a commercial rate of 13.5% per annum from the date of filing this suit to the date of judgement; 4. the Defendants be ordered, jointly and severally, to pay interest on the decretal sum at the court rate of 7% from the date of judgement to the date of payment in full; 5. the Defendants be ordered to, jointly and severally, pay costs of the suit; Page 3 of 22 6. the Court be pleased to grant any other relief(s) as it deem just and fit to grant. On the 6th day of March 2020, the Defendants filed joint written statement of defence. In that joint defence, the 2nd Defendant raised a preliminary point of law in objection to the suit, but the same was overruled vide a ruling of this Court issued on 25th June 2021. Having determined that the pleadings were complete, and having carriedQoutIthe preliminary processes related to pre-trial hearing, thezmatter went through the mediation process, It was unfortunate that it could^notybe resolved by way of mediation. Consequently, ^\2yd\l^arch 2021, this court convened for a final pre-trial conference. In agreement with both parties, the court settledfer the following issues: 1. Whether^o^thexredit facility letter daSi^lS0} July 2016 the Plaintiff renewecT with the 1st Defendant, ^tfie^overdraft facility to the tune of )/USD($) 500,000/= and an existing term loan of USD ($) 73984.17 2. If the 1st issue is in the affirmative, whether the overdraft facility and the term loan issued to the 1st Defendant by the credit facility letter dated 18th July 2016 was secured by the general debenture dated 27th December 2011, issued by the 1st Defendant, corporate guarantee by the 2nd Defendant Page 4 of 22 and personal guarantee by the 3rd and 4th Defendants 3. If the 2nd issue is in the affirmative, to what extent are the Defendants liable to the Plaintiff. 4. To what reliefs are the parties entitled. On the 25th day of May 2021, the full hearing of this case commenced. On the material date, Ms Irene Swai, learned advocate, represented the Plaintiff wknje/ Mr. Jonathan Wangubo, learned advocate, r^pe^ented the Defendants. Both parties called olCyWitjiess each to establish'their respective cases. witnesses had earlier filed their respective witn^L statements which were admitted as their testimonies^ in^chief. As such, before I proceed to address theCissde^h will briefly give a summary of the respectivd^caseS^for both the Plaintiff and the Defendant. z Inzth^^fse of establishing the Plaintiff's case, the Plainiti^twitgess, Mr. Masoud Ali Manya (testified as Pw- hisfestimony in chief, Pw-1 told this Court that, he is the Head of Credit Recovery in the Plaintiff's bank. PW-1 told this Court that, sometimes in the year 2011, on diverse period of time, the Plaintiff advanced to the 1st Defendant various credit facilities, the last credit facilities being an Overdraft Facility worth USD ($) 500,000/= and term loan of USD ($) 73,984.17. He tendered in Court, as Exhibit P.l, the following facility letters: Page 5 of 22 - A credit facility letter Ref. No. PDO/CDT/knk/1193/11 dated 19th day of December, 2011. - A credit facility letter Ref. No. PDO/CDT/fj’m/686/11 dated 20th day of June, 2012. - A credit facility letter Ref. No. PDO/CDT/fjm/0609/13 dated 12th day of September, 2013. - A credit facility letter Ref. No. BCM/LO/jbb/0145/16 dated 18th day of July, 2016. In his testimony in chief, Pw-I^statedXthat, the first credit facility dated 19th Decemb^W^was secured by general debentures instrumepf^ver entire fixed and floating assets of the 1st Defend^nt^^cfi^vas admitted as Exh. P.3 while a certificate registeringjhe charge was also tendered in Court as Exh.P^Pw-Htirther told this Court that, the 2nd Defendant issued a ^corporate guarantee to secure the various fa^litie^exEended to the 1st Defendant, and that, the same^was^used to secure subsequent credit facilities, itself being^a^continuing security, as per Clause 3 of the said corporate guarantee. He tendered in Court, the said corporate guarantee issued by the 2nd Defendant, and the same was admitted as Exh.P.4. Besides, Pw-1 told this Court that, the 3rd and 4th Defendants had offered their personal guarantee and indemnity to secure the falicities extended to the 1st Defendant, through a facility latter Ref. PDO/CDT/ Page 6 of 22 knk/1193/11, dated 19th day of December, 2011 (Exh.P.l). The personal gurantee and indemnity issued by the Directors of the 1st Defendant (the 3rd and 4th Defendants) were admitted as Exh. P.5, as well as two letters of confirmation of the guarantee which were collectivey admitted as Exh.P.6 (a) and (b). Furtherstill, Pw-1 tendered in Court, the 1st Defendants board resolution which was admitted as Exh.P7. y In his testimony in chief, Pw-1 told this C(^KTh^,^e parties had agreed that all subsequent^credit facilities granted to the 1st Defendant, should conti n?ied to be N Z secured by the same existing sg^idties^fi.e. Exh.P2 to Exh.P5). As such, it was state^tnat^jthe Plainitiff allowed the 1st Defendant to uglize^^e overdraft facility by overdrawing its account foelckby the Plaintiff and, further It was Pw-l's testimony, therefore, that, in view of the the breach of thedisbursed Plainitff tnhiterm terms of the loan facility facility letter dated 18asth well. Pw-1 July 2016, tendered in Court the Plainitiff issuedcPbarik demandstatement notices which theadmitted to bothwas 1st and 2as nd Exh.P.ltj/ ^cprdinj^to Pw-1, the 1st Defendant did not observe the^term^f the facility letter dated 18th July 2016, did not depositing the amount which could have cleared the utilized amount, and, when the term loan expired on 29th January 2017, the 1st Defendant did not repay the same as agreed. Defendants informing them that, they were in default of payment of the outstanding amount of USD 509,170.03. Page 7 of 22 Pw-1 told this Court that, the 3rd and 4th Defendants were accordingly, put on notice that 1st Defendant was in breach of terms and conditions of the facility letter. As such, Pw-1 stated that, by virtue of their personal guarantee, the 3rd and 4th Respondents should have met the 1st Defendant's obligations to repay the loans having secured the loan defaulted. The two notices were admitted as Exh.P8 and Exh.P9 resectively. > Pw-1 stated, however, that, despite servirtg'me 1^/and 2nd Defendants with the demand letters foll^iAgng^he^aefault by the 1st Defendant, and, despite putting \he/3rd and 4th Defendants on notice as a personairguarantors of the 1st Defendant^ the Defendants fajledw\meet their obligations as per the Facility Letter datedW^July 2016 and the the 3rd and 4th Defendants' signed^pe^onal gurantees. Upon being/crossiexamined by Mr Wangubo, Pw-1 stated that, there wa^a/renewal of overdraft facility of USD ($) 500^0,0p/^nd/there existed term loan facility of USD ($) 73,934?lj7as per letter of facility dated 18th July 2016. Pw^told^his Court that, the existing term loan was from 201iya^continuing one and, that its balance which the client was still servicing by 2011, was USD ($) 73,984.17. Pw-1 referred this Court to transactions appearing in Exh. P.1O, page 2, dated 29/1/20'16, which shows that the client's A/c was debited with USD ($) 10,832.03 in respect of a continuing loan, which had initially started as a USD($) 500,000/- and the balance was USD ($) 73,984.17. Besides, while still being cross-examined, Pw-1 stated, that, Page 8 of 22 the overdraft given to the 1st Defendant, was not for disbursement but rather was a limit of an allowable amount which she could withdrew from her customer's account, even when it is at zero balance. He referred to Exh.P 10, which shows that, by 11th January 2016, the 1st Defendant has a negative balance of USD ($) 240,3777.00, but on that said date, the 1st Defendant was able to withdraw USD 30,000/from its account held in the Plaintiff's bar^c Pw-1 stated futher while being cross-ex^inpdj:hat, the loan advanced on 18th July 2016, could dnlyjpe exhibited by the repayments made and the ajjnount^o1 not be shown in the statement. He toldr’thK Court that the debenture issued was for anXinspecified amount anc securities were continuing securities^ During re-examinatipn^Pw-l emphasized that, the securities offered^eF^cofitinuing as the loans were continuing even^whe^the Facility letter date 18th July 2016 was signed, wpich/the 1st Defendant defaulted. He also stressgd^jthat^the debenture was signed to secure an unspecified) amount, beginning with the term loan issued in 201i^and the rest*that followed. He stated, therefore, that, even if the amount guaranteed was not shown, still Clause 3 of the guarantee is clear that the guarantee was to remain as one of the securities offered. The Plaintiff's case was later closed paving way for the defence case to open. As stated earlier, the Defendant called one witness to testify. The witness for the defence was Ms Wairange Loise Ruguru who testified online from Nairobi, Kenya. She Page 9 of 22 testified while under oath, as Dw-1. Having urged this Court to admit her witness statement as her testimony in chief, Dw-1 proceeded to cross-examination. Upon being cross-examined, Dw-1 admitted that, the last credit facility was of 18th July 2016, and that, as per the last paragraph of Exhibit P.l, the bank is shown to have agreed to renew the overdraft facility. Dw-1 further admitted that the overdraft was of USD ($) 500,000 as well as term loan amounting to USD ($) 73,984.17. zShe\funner admitted that, there was indeed a renewaltof-the overdraft and, that, the term loan issued in 20J4 wasVtilPexisting by 18th July 2016. During re-examination by Mr. Wangubo, Dw-1 agreed that, the claims in Commercial case No. 151 of 2019 are about default in payment of the loan. Also admitted that, the Debenture, which was admitted as Exhibit P-3, was for unspecified amount and limited to the amount specified in the facility letter. Dw-1 did confirm existence of several over draft facilities, which were dated, 19th December 2011, the Page 10 of 22 20th June 2012, the 12th September 2013 and the last Facility being the one dated 18th July 2016. Dw-1 stated that, the the ones relevant in this case were facilties extended to the 1st Defendant on the 19th day of December 2011 and, on the 18th day of July 2016, as these were in dispute, having there been an alleged default in payment. Dw-1 stated that, the 2nd Defendant is the holding company to the 1st Defendant and, hence, the 1st Defendant is subsidiary company. In her testimony, Dw-1 admitted that, ahy^financial decision with regard to the 1st Defendant has^to be reported to and approved by the 2nd D^ndarf^ Holding Company.The Defendant's case camertg-a. closure and the parties prayed to file final submissions., This Court granted their prayer and ordered the learh^counsels for the parties to file their submissions^one^rently on 30th August 2021. I am pleased that th£ parMes^have complied with that order. In my deliberatipns^herefore, I will take into account such Tb^begiftyvith, it is trite law that the Plaintiff bears the primary duty or burden of proving the allegations he/she has mad'e-a'gainst a Defendant. This is what in law is referred to as the burden of proof. The legal maxim to it is that, he who alleges must prove, and, that aphorism is well captured in our sections 110 to 112 of the Evidence Act, Cap.6 R.E 2019. Those specific provisions provide as follows: 'TlO.-(l) Whoever desires any court to give judgement as to any legal right or liability dependent on the Page 11 of 22 existence of facts which he asserts must prove that those facts exist. (2) When a person is bound to prove the existence of any fact, it is said that the burden of proof lies on that person. 111. The burden of proof in a suit proceeding lies on that person who would fail if no evidence at all were given on either side. 112. The burden of proof as to any particular fact lies on that persWf who wishes the court to /believe ii its existence, unless/it5iswrovideci by law that thewoof of^at ^act shall lie on any otherperson." It is also a setted principle that, in proving its case, a Plaintiff has to ^d^so^ihly^jn the scales of balance of probability. Seethe casezof Olasiti Investment Co.Ltd vs. Elias PejteklNyajtpmwanza t/ a Isagilo Express, HC. Civil Appeal N^27 of 2019 (unreported). \ All t^at having been said, let us revert to the issues whicFHWere agreed upon by the parties and seen if the parties have been able to discharge their respective burden of establishing or disproving the allegations or claims raised in this case. The first issue was: 'Whether by the credit facility letter dated 18th July 2016 the plaintiff renewed with the 1st defendant, the overdraft facility Page 12 of 22 to the tune of USD ($) 500,000/= and an existing term loan of USD ($) 73,984.17'. In his submissions filed in this Court, the Plaintiff's counsel pressed on this Court that, the first issue has been affirmatively established, that is to say, that, by way of the credit facility letter dated 18th July 2016, the Plaintiff renewed with the Defendant an overdraft facility to the tune of USD ($) 500,000/- and, and existing termdS^pf USD ($) 73,984.17. In my view, and havingdooked/at the available evidence'on record, the learned counsel for the Palintiffs submission is correct on tffat-ppjnt. z As testified by Pw-1, the^arties/relations started way back in 2011 where the. Plaintiffs advanced to the 1st Defendant the first ovprdraft^acility and a term loan. The letter dated 19th Dece^rribep2011 forming part of Exh.P.l is evident onjthat. According to it, the amount constituting the overdraft^fagility was for USD ($) 500,000, for a period of GOjnonths, meaning that, it extended to the vear^TOl^. The same carried an interest rate of 3.5% p.a belowdsJSD base [ending rate which was set by the Plaintiff at 11.5%, and, hence, the effective interest was 8% p.a. The same was based on Reducing Balance Method. This initial loan facility was secured by general debenture over the entire fixed and floating assets of the company, corporate guarantee of the 2nd Defendant and personal guarantee of one of the 1st Defendant's director, in Page 13 of 22 the name of Atuikumar Shah, executed for unlimited amount. The second loan facility was evidenced by a facility letter dated 20th June 2012 which also forms part of Exh.P-1. This overdraft facility was for USD ($) 500,000 and a term loam of USD ($) 500,000/. Its tenor was for 12 months. Both facilities carried an interest rate of 3.5% p.a below USD base lending rate which was s^at 11^%, and, hence, the effective interest was 8% p.a. ^dtWacilities attracted charges in case the overdraft expired or/exceed the .allowable financial limit or wherejihe agreed repayable instalments were not forthcoming^for any reasons whatsoever. letter, the securities involved were a retained general debenture over the entire fixed and floating^a^gts^of the company, corporate guarantee ofjhe 2\Defendant and personal guarantee of y one of the/15 Defendant's director, in the name of Atuikumar Shal^exg^ute^for unlimited amount. 4 Therthird loan facility was evidenced by a facility letter datedm.2 JSeptember 2013, which also forms part of Exh.P- 1. It involved an overdraft of USD($) 500,000/- and a term loan of USD($) 395,529.39. It attracted a 2% interest rate per annum below USD base lending rate which was set at 10% p.a, and, hence, the effective interest remained to be 8% p.a. Similarly, both facilities attracted charges in case the overdraft expired or exceeded the allowable financial limit or Page 14 of 22 where the agreed repayable instalments were not forthcoming for any reasons whatsoever. In terms of securities offered, the respective facilities, were secured by a general debenture over the entire fixed and floating assets of the company, corporate guarantee of the 2nd Defendant and personals guarantee of one of the 1st Defendant's director, in the: name of Atulkumar Shah, executed for unlimited amount. The fourth loan facility was evidenced zbyya facility letter dated 18th December 2016, which al^^oms^part of Exh.P-1. It involved an overdraft oWSD$)1500,000/- and a term Ioan of USD($) 73,9>84^^SThetenor for the overdtaft facility was 12 month's and^ie term loan was to expire on 29th January 20j^The^yerdraft facility attracted an interest rate of 3%^Iow^Bank's USD base lending rate which was set at^W^pTa^arid, hence, the effective interest remained to be^8% pia^z The^erm^ap^facility continued to attract an interest rate^^3>^%^^low the Bank's USD base lending rate, which was^set j^t 11% p.a, and, hence, the effective interest remiairfedto be 7.5% p.a. It was also stipulated that, if and so long as the overdraft facility expires or exceeds the allowable financial limits or the facility instalments are in arrears, then a penalty interest of 2.5 % above the Bank's USD base lending rate would be attracted and, hence, the effective interest would be 13.5% p.a. In terms of securities availed to cushion the lender against the risks of default, these were: a general Page 15 of 22 debenture over the entire fixed and floating assets of the 1st Defendant, corporate guarantee of the 2nd Defendant and personal guarantee of two of the 1st Defendant's directors, namely Mr Atulkumar Shah and Mr Neel Atul Shah, executed for unlimited amount. It was also a condition that, disbursements were not to be made available unless the 1st Defendant availed to the Plaintiff a board resolution and personal guarantee(s) duly executed by the'guarantors or confirmation of Guarantee obtained from the guarantors to guarantee the full amount borrowed or enhanced. z tv?/ In this case, apart from the evidence oFExh.P-1, Pw- z7\ F 1 did also submit to this Court gs^evidence Exh.P-6 (A) and Exh.P6 (B) which wer^^nfirn^tion of guarantee in respect of the facility granted to^je 1st Defendant, as well as Exh.P7, which was^T^ahd resolution regarding the a credit facility letter Ref.^ISSo. BCM/LO/jbb/0145/16, dated 18th day^of Jul^2016. There was as well submitted into evideng,^Exh'.P-4 which is a 2015 corporate guarantee bpthe 2nd Defendant and the same bears the 2ndpefeSant's official seal. M^1y’ziook at all the exhibits tendered, leaves no doubt that, by way of the credit facility letter dated 18th July 2016 the Plaintiff renewed, with the 1st defendant, the overdraft facility to the tune of USD($) 500,000/= and the existing term loan of USD ($) 73,984.17. I am further fortified by the what Exh.PIO shows at page 1, thereof. It is indicated, that, as of 11th January 2016, the 1st Defendant had a negative balance of USD ($) 240,3777.00, but on that Page 16 of 22 said date, the 1st Defendant was able to withdraw USD 30,000/from its account held in the Plaintiff's bank. Similarly, at page 2 of Exh.P.10 it is shown that, on 29/1/2016, the client's A/c was debited with USD ($) 10,832.03 in respect of a continuing loan, (REP LOAN REF.4392390 as on 29th Jan. 2016). It is also worth noting that, in her evidence, Dw-1 did not deny there being an overdraft facility and Ioan extended to the 1st Defendant.^ In particular, during re-examination, Dw^^^admit and did confirm existence of several overdraft facilities, which were dated, 19th December 20U( the^^^une 2012, the 12th September 2013 and, thatv-therHast Facility letter was the.one dated 18th July^^j^Dw^L admitted that, the Facilities in dispute weje^ thb^e/ extended to the 1st Defendant on the lO^Zday^o^December 2011 and, on the 18th day of July 2016. With^all such evidence, I am firmly Thatvbeing said, the next issue is: 'whether the overdraft facility and the term loan issued to the 1st defendant by the credit facility letter dated 18th July 2016 was secured by the general debenture dated 27th December 2011 issued by the 1st defendant, Corporate guarantee by the 2nd defendant Page 17 of 22 and personal guarantee by the 3rd and 4th defendants.' In order to respond to this issue, reference has to be made to what the Facility Letter it self provides. As I indicated hereabove, the letter dated 18th July 2016 (which is part of Exh.P-1) clearly shows that, the two facilities extenteded to the 1st Defendant were secured by debenture dated 27th December 2011 issued by the 1st Defendant, corporate guarantee by the 2nd Defendant ari^xpersohal guarantee by the 3rd and 4th Defendants. In my humble view, because the^termjOap^issued on 2011 was for 60 months, and, given tpatjicrother general debenture was registered, except^Se one issued on 2011, it follows that, the same continued^-be part of the agreed securities meant to secure the^credit facility letter Ref. No. BCM/LO/jbb/Ol^/J^da^d 18th day of July, 2016. It follows, therefore,^,at, by virtue of Exh.P-1, Exh. P2, Exh.P3, E^P^q^&^KP.5, the 2nd issue is also responded to in the affirmative. /me4 third issue- is about the extent of liability of the Defendants to the Plaintiff. It reads as hereunder, that: if the 2nd issue is in the affirmative, to what extent are the defendants liable to the plaintiff. In this case the Defendants have been sue jointly and severally by the Plaintiff. Their liability is, thus, joint and several since each had a duty to play in ensuring that the Plaintiff's monies advanced or ulitized by the 1st Defendant Page 18 of 22 by way of an overdraft facility, were fully repaid within the agreed period. In principle, and, as it might be noted herein, the 2nd, 3rd, and 4th Defendants are being sued as guarantors. Their liability, therefore, stems from their contractual relationship with the creditor (the Plaintiff). Such a relationship is evidenced under their respective contracts of guarantee in which they stand as sureties for the principal debtor. Tinese are in particular evidenced by Exh.P4 and P6 In our jurisdiction, the concept ©^guarantee is governed by the Law of Contract Act,Xap. We .2002]. Section 78 of this Act, defin||j-whab\the contract of guarantee is all about and the(partiesj:hereto. The section provides as follows: ’A "contract zof^guarantee" is a contract^^gerform the promise, or discharge ^the liability of a third person An the case of his default andzthe person who gives the /guarantee, is called the "surety"; the person in respect of whose default the guarantee is given is called the "principal debtor", and the person to whom the guarantee is given is called the "creditor"; and the guarantee may be oral or written.' Observably, the above provision confirms that, a contract of guarantee puts a surety under an obligation to honour the promise of the principal debtor by paying the Page 19 of 22 principal debtor's present or future debt, in case the principal debtor defaults. It is also trite law that, the liability of a guarantor is coextensive with the liability of the principal debtor. It can even be invoked without exhausting the remedies against the principal debtor, unless otherwise provided in the contract (of guarantee). Section 80 of the Law of Contract Act, Cap. 345 [R.E.2002] is very clear on that. See also the decision of the Court of Appeal in^E^im Bank (Tanzania) Ltd vs. DASCAR Limited 8cAnother, Civil Appeal No.92 of 2009. See furthei^Nati^apBank of Commerce Ltd vs. Universal—Electronics and Hardware Ltd & Another [^5]T>L^. 257 at 271. As I stated herein above, in^ie case at hand, there is no dispute that the 2nd,^3^/za^4th Defendants signed deeds of guarantee, onex^eingCoJjGdrporate and the other being of personal nature^ Tnese/were duly admitted into evidence. / v y Accordingxto^Exh?Ri5 (read together with Exh.P6A and B), the- 3^-and^^ Defendants as personal guarantors, did conyenantflthat, their guarantee was to be a continuing securit^for the debtor's obligation to the bank at any time and was to remain additional to any other security held by the Plaintiff. It is likewise, clear, under clause 2 of Exh.P-4, the 2nd Defendant did indicate that, as a guarantor, she undertook the responsibilities of repaying the the 1st Defendant's debt, if the 1st Defendant (as a debtor) defaults on the loan. In particular, that clause 2 of Exh.P-4 is to the effect that, the Page 20 of 22 2nd Defendant did unconditionally guarantee to discharge the obligations of the debtor (1st Defendant) to the Bank (Plaintiff) and shall promptly pay the full amount of principal and interest of the debt whenever the same will be due by reason of default. It is from such an analysis I hold and find that, the Defendants are jointly and severally liable to the Plaintiff to the extent of their respective contracts with .and their assurances to the Plaintiff in relation to the acts\pf thezlst Defendant. Since the 2nd, 3rd and V^^Derendants guarantorship was unlimited, they will^be fully liable to the Palintiff. z; The final issue is : tOj/^Tahr^iefs are the parties entitled. Basically, it is the^Plainf^who is entitled to relief since the scales of justiceZa^this case lean towards the Plaintiff's favour, Zavirf^bproved her case to the requisite standards. In^view^of^that, this Court proceeds to grant judgement^ndjfegpee in favour of the Plaintiff, and, against the Defen^ahtpointly and severally, as follows, that: 1 1. The Defendants are hereby ordered to pay the Plainitff a sum of US$ 575,692.65 as outstanding credit facilities plus interest as of the 3rd December 2019; 2. In the event of failure by the Defendants to pay as ordered, the Plaintiff is hereby authorised by this Court to sale the 1st Page 21 of 22 Defendant's securities, charges secured by the Debenture instrument in order to realize the outstanding amount; 3. The Defendants are ordered, jointly and severally, to pay interest on the amount due in para 1 above at a commercial rate of 13.5% per annum from the date of filing this suit to this date of judgement; 4. The Defendants are hereby ordered, jointly and severally, to pay interest on the decretal sum at the court rate of 7% from the date of judgement to the date of payment in full; 5. The Defendants are hereby ordered, jointly and severally, to pay costs of the suit. It is so ordered DATED AT DAR-ES-SALAAM ON THIS 26th DAY OF NOVEMBER 2021 DEO JOHN NANGELA JUDGE, Page 22 of 22