Bulamata Amcos vs Misigalo Company Ltd

IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA (SUMBAWANGA DISTRICT REGISTRY) AT SUMBAWANGA MISC. CIVIL APPLICATION NO. 24 OF 2022 (Arising from Civil Case No. 02 of 2022 pending at Mpanda District Court) BULAMATA AMCOS ...................... APPLICANT VERSUS MISIGALO COMPANY LIMITED ................. .....................RESPONDENT RULING MWENEMPAZI, J. The applicant made this application under section 95 of the Civil Procedure Code, [Cap 33 R.E 2019], arid section 2(3) of Judicature and Application of the Laws Act, [Cap 358 R.E 2019] and any other enabling provision of the laws. She is inviting this Court to invoke its inherent power to call and examine legality of' proceedings in Civil Case No. 02 of 2022, pending at Mpanda District Court between Misigalo Company Limited Versus Buiamata Amcos as it contravenes Regulation 83(1) - (10) of GN. 272/2015 and has a view that the decision entered by the Registrar of the Cooperative Society cannot be challenged in the District Court. The applicant also prays i for orders that the respondent be ordered to pay the cost of this application and any relief (s) which this court may deem fit and just to grant. The application is supported by an affidavit sworn by Peter Damino Maganga. He is the principle officer of the applicant. In the affidavit, he has stated that the applicant herein was first sued in the District Court of Mpanda in Civil Case No. 14 of 2021 for Tshs. 90,000,000/= as the value of contract for planting trees and Tshs. 100,000,000/= as general damages. That suit was before Hon. G.B. Luoga (RM) and was dismissed on 24th February 2022, based on the preliminary objection that parties to the dispute had a contract which had dispute mechanism other than the District Court and the parties were required to use the mechanism they agreed as per contract. As a result of the said decision the respondent referred the dispute to the Deputy Registrar of Cooperative Society for Katavi Region. Upon hearing, the Registrar found that the respondent had no any claim as against the applicant. The decision was arrived at after visiting the respondent's 2 project and he could not see any tree. The respondents were not entitled to be paid by the applicants. The applicant's principal officer has asserted that the respondent was dissatisfied by the decision of the Registrar. She therefore filed another suit, Civil Case No. 02 of 2022, which is currently pending in the Mpanda District Court of Mpanda District with the same claim as it was in Civil Case No. 14 of 2021 earlier on dismissed. The applicant, who is the defendant, raised a preliminary objection on the grounds that: - ? (i) The suit is incompetent before the "trial court" as it has been filed without a plaintiff's board of Director's resolution; which contravene the mandatory practice and proceedings of the companies Act, [Cap 212 R.E 2002], (ii) That the trial court has no jurisdiction to determine this court. (iii) That the suit is resjudicata. However, the preliminary objection was overruled and the matter was fixed to proceed on merit. In the 7th paragraph the applicant alleges that the proceedings in Civil Case No. 2/2022 have the following irregularities: - 3 (1) That while Mpanda District Court has fixed Civil Case No. 2 of 2022 for hearing; the Registrar of Cooperative societies for Katavi had entered his decision on 30th March, 2022 that the respondent has no legal claim against the applicant; and in case the Civil Case No. 2 of 2022 will be heard on merit, there will be two contradicting decision. (2) That Mpanda District Court illegally applied the Court of Appeal of Tanzania decision in Mount Meru Flowers Limited Versus Box Board Tanzania Limited; Civil Appeal No. 260 of 2018, to allow incompetent suit to be heard on merit in which such decision do not contain the words that: - "There is no preliminary objection if one needs to ascertain that the Board resolution is there or not. ' There is no any provision of the law which provides that before instituting a case, there must be a Board Resolution" Though if you go through the whole judgment nowhere such words which were quoted can be traced". 4 (3) That the District: Court of Mpanda decision being not the appellate court on decision of the Registrar for cooperative matters; proceeding on Civil Case No. 2 of 2022 still will have no effect as to the decision entered by the Deputy registrar on 30th March, 2022 as indicated in the plaintiff pleading. The applicant Invites this court to give guidance to the trial court. The proceedings on the basis of the irregularities pointed out in paragraph 7 of the affidavit. This application was scheduled for hearing on the 26th day of October, 2023 and parties by consensus prayed for hearing to be conducted by way of written submission. This court granted leave to the parties to file their written submission. For the applicant was Mr. Alex Enock Advocate and for respondent was Mr. Laurence John, learned advocate. The counsel for the applicant has submitted that they have filed this application to seek guidance of this court in regard to Civil Case No. 2/2022 the respondent's claim was determined by the Registrar Of Cooperative Societies stated in paragraph 3, 4 and 5 of the applicant's affidavit. 5 He has submitted that after the Registrar's decision, the respondent did not appeal to the Minister in terms of Rule 52(3) of GN. 280/2004 rather they preferred to file Civil Case No.? 2 of 2022. The said suit is still pending though the District Court has no jurisdiction. The aggrieved party was supposed to appeal to the Minister. The counsel for the applicant cited the case of Wadoki Saccos Ltd David Mseti and 20 Others; High Court Civil Appeal No. 58 of2020 at 9 to 15(Tanzlii)where this court had a similar situation in which this court ended by nullifying the proceedings of the District Court as the District Court had no jurisdiction. The counsel has also submitted that the suit at the District Court of Mpanda was filed by the respondent being a company without complying to the requirement of law. The same was filed without having resolution in the plaint a firm of the advocate representing them has been appointed in place by the company allowing the suit to be instituted also impleading that as provided for by section 147(1) (a) and (b) of the Companies Act, [cap 212 R.E 2002]. The counsel cited the cases Newlife Hardware and Another Vs. Shandong Locheng and 2 Others, Commercial Case No. 86 of 2022 and Misc, Commercial Application No. 135/2022, High Court of Tanzania (Commercial Division at Dar es Salaam (at page 10 - 16); Oxley 6 Limited Vs. Nyarugusu Mine Company Limited and Another, High Court of Tanzania at Dar es Salaam Commercial Case No. 14 OF 2022 (pages 5 - 7). In the two referred cases suits were struck out with costs as the result of same being filed without board resolution of the company authorizing the filing. The case of Ursino Palms Estate Limited Vs, Kyela Valley Foods Ltd, Civil Application No. 28 of 2014, Court of Appeal of Tanzania (unreported) at page 5 and also the case of Simba Papers Converters Ltd Vs. Packaging and Stationary Manufacturers Ltd and another, Civil Appeal No. 280 of 2017 at Dar es Salaam (reported at Tanzlii). In the latter case the court of appeal of Tanzania nullified proceedings, quashed the judgment and declared that the pleadings by the plaintiff were void for non-compliance to the law; lacking authorization of the filing of the suit by resolution and failure to plead the said authorization. T The counsel, therefore has prayed that this court revise the proceedings of Mpanda District Court and issue an appropriate order. In reply to the submission in chief the counsel for the respondent has raised concern that this application was filed as an application for revision 7 without attaching a copy of proceedings. That is in law fatal. He has cited the case of [Hyasitha Malisa Versus John Malisa], Civil Application No. 167/01) where at page 9 and 10 the court held: - "I will start with the first ground that the applicant was belatedly supplied with the copies of proceedings. As correctly submitted by Mr. Shayo, in application for revision initiated by a party, the party initiating revision proceedings has to supply the court, among others, with copies ofproceedings". He has submitted that similar position was also held in the case of Mohamed Rabu Vs. Hamida Ismail Honde & Others, Misc. Civil Application No.461 of 2017 [2018] TZCA74 (5 June 2018). The counsel for the respondent has also raised an opposing argument that the application is challenging an interlocutory order, which is not appealable, not subject to revision revisable as per prime Catch (Exports) Ltd and 5 Others Vs. Diamond Trust Bank Tanzania Ltd, Civil Application No. 296/16 of 2017, Court of Appeal of Tanzania at Dar es 8 Salaam (unreported). He has therefore submitted that this application is misconceived and is bound to fail. Submitting in reply on the issues that the case at the trial court was filed prematurely, the counsel has argued that this court should not dwell on the point for the reason that the point was decided by the trial court on 13/10/2023 and the same cannot be subjected to appeal or revision now for being interlocutory. He has also argued that the cited case of Wadoki Saccos Ltd Vs. David Mseti and 2 Others (supra) is distinguishable with the circumstances in the present situation. In the said case, the complainant was the member of the SACCOS as seen at page 9 of the judgment and their dispute arose from:the SACCOS as seen at page 9 of the judgment. Their dispute arose from SACCOS itself while in this case the respondent is not a member of the Applicant hence the relationship among the two was purely contractual. The counsel for the respondent has submitted and argued that the respondent rightly filed the case before Mpanda District Court for procuring the court order to compel the applicant to honor the contract. Hence the 9 complaint resorting to the Minister instead of resorting to the judiciary machinery is of no merit and the same should be dismissed. The counsel continued to submit on yet another complaint on the need to have a board resolution before: a company can file a suit in court. It is the respondents' argument that the correct position of the law is that presence of the board resolution is not mandatory for a company to institute a suit. He has complained that the applicant has misinterpreted the position emanated by the case of Simba Papers Converters Lts Vs. Packaging & Stationary Manufacturers Ltd and Another (Civil Appeal Case No. 280 of 2017) [2023]TZCA 17273 (23 May 2023). The correct position is that whenever there is collision within the company itself that is where the resolution is demanded; if there is no any fight among the company itself then there is no need of board resolution before instituting a suit. The position of the law is that the company's locus standi cannot be defeated by lack of board resolution simply because the company is a legal person in law and it acquired its right to sue and to be sued on the date of its incorporation Refer. ECOBANK TANZANIA LIMITED VS. EAST io AFRICAN FOSSILS CO. LTD AND 3 OTHERS, Commercial Case No. 38 of 2022 High Court of Tanzania at Dar es Salaam (unreported) where it was held: - "It is trite law that once a company is incorporated it becomes a legal person capable of inter alia suing and being sued in its own name. That is the principle on enunciated in Solomon Vs. Solomon & Co. Ltd [1897] AC.22. I am afraid the sentiment extended to requirement of board resolution does not sync with the legal personality of a company. lam of settled view that a company cannot be deprived of its locus standi to sue merely because there was no board resolution". The counsel also cited the case of Makoa Farm Ltd and 2 Others Vs. Uduru Makoa Agricultural and Marketing Society Limited (Uduru Makoa Amcos), (Civil Case No. 4 of 2022 [2023] TZHC 16882 (27 APRIL 2023) where it was held/observed that: - "Zf thus suffices to state that, I fully subscribe to the view that hold that, much as the importance of board resolution cannot be underrated, enclosure of the same to a plaint is not a mandatory legal requirement nor it is a pure point of law which can be resolved through preliminary objection....". The counsel for the respondent submitted further that suits by companies are governed by Order XXVIII Rule 1 of Civil Procedure Code, [Cap 33 R.E 2019]. The pleadings may be signed and verified on behalf by secretary, director or other principal officer of the company who is able to depose to the facts of the case. He therefore prayed for the application to be dismissed with costs. In rejoindet to the submissions made by the counsel for respondent, the counsel for the applicant has submitted that the counsel for respondent has not adopted the contents of the counter affidavit. In the applicant's submission, nowhere the counsel has stated that the present application is an application for revision. The counsel for the applicant has submitted that this application does not intends to challenge the ruling in the preliminary objection. The application was filed to seek guidance of this court in the matter pending in 12 the District Court. The counsel cited the case of Yara Tanzania Limited Vs. Ikuwo General Enterprises Limited, Civil Appeal No. 309 of 2019, Court of Appeal of Tanzania at Dar es Salaam for the argument that parties are bound by their own pleadings. The counsel has submitted further that since the submission by the counsel for the respondent is based on the statement from the bar, the same should be disregarded. The council also submitted urging this court not to rely on the High Court decisions which have been cited to hold that board resolution is not necessary for institution of the suit by the company. He prays this court to stick by the decision of the court of Appeal in Simba Papers Converters ltd Vs. Packaging and Stationary Manufactures Ltd and Another (supra). It has been submitted by the counsel for the applicants that this court through its inherent powers can interfere with proceedings at M pa nd a District Court as the said case is still pending in court which has no jurisdiction to determine the same. 13 The counsel for the applicant also is in opposition to the prayer to dismiss the application with costs for the reason that it breaches with the rule biding parties to their pleadings. He pray this court: to disregard the same. Instead of that he prays this application to be granted with costs. I have read the record, a chamber summons and an affidavit supporting the same; the applicant has moved this court by citing section 2(3) of Judicature and Application of the Laws Act; [Cap 358 R.E 2019] and section of the Civil Procedure Code. Section 95 of the Civil Procedure Code provides that: - "Nothing in this code shall be deemed to limit or otherwise affect the inherent powers of the court to . make such orders as may be necessary for the ends of justice or to prevent abuse of the process of the court". In the case of M/S Tanzania - China Friendship Vs. Our Lady of Usambara Sisters (Civil Appeal No. 84 of 2022) [2005] TZCA 104 (19 October 2005) it was observed that: - 14 "'...generally speaking, inherent powers of the court relate to matters of procedure for the ends ofjustice and to preventan abuse ofprocess of the court". However, it has been argued by the counsel for the applicant in his rejoinder that the application was intended to seek guidance of the court. In my reading I think, the applicant ought to have moved the trial court to refer the case for opinion of the High Court under section 77 of the Civil Procedure Code. I say so due to the following reasons: - One, it is true that the suit, Civil Case No. 2 of 2021 is still pending in the trial court. Due to the fact that a preliminary objection was dismissed the applicant decided to file this application for, allegedly, guidance of the High Court. The applicant has submitted that he was seeking guidance or opinion of this court on whether the District Court of Mpanda District has jurisdiction to entertain a suit by the plaintiff who is aggrieved by the decision of the Registrar of cooperative society. The applicant's counsel has an opinion that the District Court has no jurisdiction; as the aggrieved party by the decision of the Registrar of 15 societies' decision need to refer the dispute to the Minister. He cited the case of Wadoki Saccos Ltd Vs. David Mseti and two Others (supra). These arguments are opposed by the counsel for the respondent. He is of the view that the respondent rightly filed the case before Mpanda District Court for procuring the court order to compel the applicant to honour the contract. According to the record, the relationship of the parties herein is contractual and began by a contract dated 13/03/2021. In the said agreement by virtue of paragraph 9 they agreed to resolve their dispute amicably or referring the same to the Registrar of Societies. Under the circumstances by their choice parties decided to move away from the normal courts and go for mediation. They are thus estopped from denying what they bound themselves with by signing a contract; and in my opinion they are obliged to honor the terms of the contract. As to the need to have a board resolution in institution of the suit it is clear according to the cases cited by the parties. The cases cited namely Newlife Hardware and Another Vs. Shandong Lpcheng and 2 Others, Commercial Case No. 86 of 2022 and Misc. Commercial 16 Application No. 135/2022, High Court of Tanzania (Commercial Division at Dar es Salaam (at page 10 - 16); Oxley Limited Vs. Nyarugusu Mine Company Limited and Another, High Court of Tanzania at Dar es Salaam Commercial Case No. 14 OF 2022 (pages 5 - 7) are very relevant and I fully subscribe to the position pronounced in them. For avoidance of doubt, I will repeat that the board resolution is necessary and the essence is clearly shown in the two cases, which is emphasized in the latter case (Oxley Limited) namely: "... to ensure that the company's affairs are run and managed by board of directors to avoid unilateral decisions or acts of an individual person which might be detrimental to the company and other shareholders. As such, the requirement for board resolution before institution of the case is intended to safeguard the interests of shareholders who may be bound by the decision of the court of which they were not aware." Since this application was brought for an opinion, then I have no any mandate to order anything other than directing that the proceedings in Civil Case No. 2 of 2022 be finalized expeditiously and if any grievance 17 arises the correct procedure according to law should be followed to ensure the ends of justice are met. No order as to costs. The original be sent back to the trial court for compliance. It is ordered accordingly. Dated and signed at Sumbawanga this 21st August, 2024. T.M. MWENEMPAZI JUDGE Ruling delivered virtually this 21/08/2024 in the presence of Mr. Laurence John, Advocate for Respondent. T.M. MWENEMPAZI JUDGE 21/08/2024 18