20190429 TZHC Dar es Salaam

IN THE HIGH COURT OF TANZANIA (DAR ES SALAAM DISTRICT REGISTRY) AT DAR ES SALAAM CIVIL APPEAL NO. 79 OF 2017 (Arising from the decision of the District Court of Kinondoni in Civil Case No. 50 of 2014 by Hon. Joyce Mushi, RM) BRUCE MASSAWE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ST APPELLANT BEST GROUP LIMITED ····················································· 2ND APPELLANT VERSUS MARY FREDRICK MPIRI ................................................... RESPONDENT JUDGMENT 10/4/2019 & 29/4/2019 NGWALA, J. The appellants, Bruce Massawe (1 st appellant) and Best Group Limited (2 nd Appellant) are dissatisfied with the decision of Kinondoni District Court in Civil Case No. 50 of 2014. The facts of the case are that the respo~dent Mary Fredrick Mpiri sued them for recovery of a residential permit kept as Security for the loan of Tshs. 8,000,000/= · she secured from the appellants. The said Residential permit kept as _ ~ Security belongs to PW2, one Fredrick Maliyo Kovaga, who appears to be her guarantor for the loa:n. After full trial the trial Magistrate ruled out that, the respondent, who was then the plaintiff had already ·, repaid the principal sum_ save for the 20% interest, which she was 1 ordered be repaid before the Residential permit is returned back to the plaintiff now respondent. The appellants Memorandum of Appeal contains five grounds. For easy of reference, the same are reproduced hereunder in verbatim. "1. That the trial Magistrate erred in law and fact to hold that the counsel for the appellants did not dispute that the respondent paid Tshs. 8,000,000/= to the Appellants. 2. That the trial Magistrate erred in law and fact for not including the appellant's reliefs in the judgment and decree as reflected in the counter-claim of the ' defendants Written Statement of Defence. 3. That the trial Magistrate erred in law and fact for Introducing a new issue which was not among three issues agreed. 4. That ,the trial Magistrate erred in Law and fact to hold to the effect that the suit property was pledged 2 'I for Security purpose only hence cannot be sold in view of Part X of the Land Act, 1999. 5. -That the trial Magistrate erred for not granting Costs to_the Appellants." In this appeal the appellants are represented by Mr. Aidan Mutagahywa Kitare, learned advocate. The respondent has never appeared since this appeal was preferred in this court. The court thus ordered the matter to proceed ex-parte on 21/03/2019. The court ordered the appellant's advocate to file his written submission. ·, Mr. Aidan, widely submitted on the grounds of appeal. For the reason to be stated hereunder, I shall not delve to resolve the grounds of appeal but rather try to see whether the proceedings before the trial court were proper or not. My careful perusal of the records, landed me to one crucial legal '- issue, on whether the 1st appellant is legally allowed to advance loans and charge interest. I made that observation because under Part II of the Banking and Financial Institutions Act, Cap. 342, the only institution from which people borrow money to be repaid with interest are Banks and Financial institutions. This must meet the 3 conditions stipulated under Section 7 of the Banking and Financial Institutions Act [Cap. 342 R.E. 2002]. Upon compliance\\ \ with. th~ Law, the institution is issued with a business licence to operate a financial business. The immediate question that crops in, is whether the first appellant complied with these conditions and thus legally allowed to operate as a financial institution so as to charge interest on loans. I have labored to peruse the records of the trial court. All what the 1 st appellant tendered in court is a business licence called "leseni ya biashara" with Number B. No. 00671732 which was received by the trial court as Exhibit 'KCA - 1 '. The license is issued under the Business Licensing Act, No. 25 of 1972. This was issued by Ilala Municipal Council. The license is written "Mikopo midogo midogo". Does that make the 1st appellant a Financial Institution within the meaning of Banking and Financial Institutions Act, No.5 of 2006? It is certainly not. The license issued by the Municipal Council serves as a general license to do business, ,but when it comes to special type of business there 4 are certain specific compliance issues that one must comply with in \ order to be recognized and be allowed to condu~t such a business\\. \ In order to bring home the point, I will pinpoint an example of those carrying out a Pharmacy business. They must comply with the law and be authorized by the Tanzania Food and Drugs Regulatory I Authority and the Relevant law in order to legally conduct the business. In the instant case apart from 'Leseni ya Biashara', that general business licence there is nothing else evidencing that the 1st appellant is a Financial Institution duty authorized to carry on such a money lending business and charge interest. As such the transactions carried out by the 1st appellant is in contravention of the law. It is illegal. In the case of DAVID CHARLES v. SENI MANUMBU (HC) Civil Appeal No. 31 of 2006, Mackanja, J. faced a similar case like this. His Lordship having noted that the appellant conducted money lending business without being officiated as a Financial Institution declared the transactions illegal and unenforceable at law, the view which I full subscribe to. 5 It follows therefore that, since the whole transaction is tainted with illegality, and since the loan agreement is unenforceable in law, even the submissions by the learned counsel bears no legal effect. More so since the trial magistrate found out in evidence that the respondent had repaid the principle sum advanced to her, and since at law, she is better placed to assess the evidence, I am not prepared to disturb those findings of facts. The rest of the claims which arise from the purported loan contract, named as 'Money bond' which is the interest charged from the agreement is ineffectual, illegal and unenforceable. · For the foregoing analysis, I dismiss the appeal in its entirety. The 1st appellant is hereby ordered to surrender the 'Residential Permit' kept as security for the loan to the respondent forthwith. In the circumstances there are no order as to costs. Order Accordin'gly. ~' A.F. NGWALA JUDGE 29/4/2019 6 29/4/2019 I, Coram: Hon. Dr. A. F. Ngwala, J. Appellant: Present For the Appellant: Mr. Kiobya (Advocate) Respondent:Absent For the Respondent: Absent C.Clerk: Masasi\ Mr. Kiobya: I hold the brief of Mr. Aidan Kitare advocate for Appellants. Court: Judgment delivered in the presence of the appellants and Mr. Kiobya Advocate for the appellants. Court: Right of Appeal to Court of Appeal of Tanzania explained. A.11:ALA JUDGE 29/04/2019 7