TADB LEAVE for Tanzlii

IN THE HIGH COURT OF TANZANIA SUB-REGISTRY OF GEITA AT GEITA MISC CIVIL APPLICATION NO. 13700 OF 2024 (Arising from Civil Case No. 11305) CHATO AGRICULTURE MARKETING COOPERATIVE SOCIETY (1999) LTD ................................................................ APPLICANT VERSUS TANZANIA AGRICULTURE DEVELOPMENT BANK ............... 1ST RESPONDENT THE ATTORNEY GENERAL ..................................................2ND RESPONDENT RULING Date of last Order: 10/07/2024 Date of Ruling: 14/08/2024 K. D. MHINA, J. This is an application for leave to appear and defend a suit, namely, Civil Case No. 11305 of 2024, brought by way of chamber summons made under Order XXXV Rule 3(1)(c)(i) of the Civil Procedure Code Cap. 33 RE: 2019. [Summary procedure] In that Civil Suit, the respondents, the Tanzania Agriculture Development Bank and the Attorney General sued the applicant, Chato Agriculture Marketing Cooperative Society (1999) Ltd, for the recovery of TZS. 1,020, 193,181/51 being the outstanding balance of a loan the respondent advanced to the applicant accrued from the interest, working capital and term loan. Following that, the suit was instituted under summary procedure; before filing the defence, the applicant must first seek leave to appear and defend the suit, hence this application. The application is supported by the affidavit of Abeid Busumilo, the applicant’s board chairman, which expounded the grounds for the application. The respondents countered it by filing a joint counter-affidavit. At the hearing of the application, which proceeded orally, the applicant was represented by Mr. Abeid Busumilo, the board chairman, while the respondent by Mr. Allen Mbuya, learned state attorney. In his oral submission, Mr. Busumabu acknowledged that the 1st respondent Bank advanced the loan to the applicant. He explained that the reason for the failure to service the loan accordingly was because the cooking oil industry failed to produce cooking oil after failing to get raw materials. He promised that since the new leaders of the applicant were elected, they planned to repay the loan. When they asked the 1 st applicant to start paying TZS. 10,000,000/= after three months, they were served with the notice to appear in the suit. In reply, Mr. Mbuya submitted that the applicant was indebted to the outstanding principal loan amount and accrued interest arising from the working capital and term loan of TZS. 1, 020, 193,181. 51 as of November 2023. He explained that before November 2023, the 1 st respondent restructured the loan by reducing the interest rate from 10% to 4% and extending the repayment period from 4 to 10 years. Despite the restructuring, the applicant failed to pay according to scheduling payment. Therefore, on 17/7/2023, the bank served the applicant the 60-day default statutory notice, informing him regarding the non-repayment and that the amount at that time was TZS. 1, 001,961,420/18. He further submitted that as per Order 35 Rule 3 (1) (c)of the CPC, for an application of this nature to succeed, the applicant must indicate that, one, the loan or the portion of the loan is paid, and two, the loan was never granted to the applicant. Explaining further, he stated that the applicant filed this application under Order 35 Rule 3 (1)(c)(i) of the CPC, which caters for a situation where the loan is fully paid. However, paragraph 5 of the applicant’s affidavit indicated that he paid part of the loan. In addition, he submitted that the applicant’s prayer to settle the loan and arrangements for repayment with the 1 st respondent bank were not grounds for granting leave, and those were the statements from the bar as they were not averred in the affidavit. In rejoinder, the applicant insisted on sitting with the 1 st respondent for negotiations. Having considered the chamber summons and its supporting affidavit, the affidavit in reply, and the oral submission made by both parties, the issue that has to be resolved is whether the applicant has, by affidavit, show that there are bona fide triable issues to allow to defend the suit. Flowing from above, there is a plethora of authorities on how to scrutinise triable issues. The Court of Appeal in Prosper Paul Massawe and two others vs. Access Bank Tanzania Limited, Civil Appeal No. 39 of 2014, held that; “It is common ground that the underlying factor for grant of that leave is existence of triable issues, a matter of fact which has to be demonstrated by the applicant. The court's determination on whether or not there are triable issues has to be based on the affidavit, obviously because as of that stage, there is yet a statement of defence from the defendant. This is a settled position from our previous decisions, such as; Makungu Investment Company Ltd (supra). We also endorse the first holding of the High Court in Mohamed Enterprises (T) Ltd v. Biashara Consumer Services Ltd [2002] T.L.R 149, which the learned counsel for the appellants cited to us. The holding states: "(I) In deciding whether a defendant should be granted leave to appear and defend a summary suit, the role of the court is limited to looking at the affidavits filed by the defendant in order to decide whether there is any triable issue fit to go to trial." In the endorsed High Court case of Mohamed Enterprises (Supra), it was also held that; “In the application of this nature, the court is not required to involve its lengthy arguments but, rather, to look upon the affidavit filed in support of the application to see whether the deposed facts have demonstrated a triable issue fit to go for trial. The applicant is only required to show a fair and reasonable defence.” From the above, it is essential to look at what was raised by the applicant in the affidavit. Therefore, I will quote a few paragraphs of the supporting affidavit as follows; Paragraph 4 “The applicant is not indebted to the applicant the sum claimed in the suit.” Paragraph 5 “The Applicant has a good defence to the suit, as he has already made part payments to same. The Copies of the Bank statements on Cash deposit to Respondent’s Bank. Account has been annexed to form part of this Affidavit and marked annexure “CHATO AMCOS-1.” Therefore, from the above two paragraphs, the applicant does not deny that the 1st respondent advanced him the loan. What he is disputing is that the amount claimed in the suit is not proper and that he was servicing the loan by paying part of the payments. This Court has already faced a similar situation in Rafiki Engineering and Pump Services Ltd vs. Frankline Elias Kileo and another, Misc. Commercial Application No. 17 of 2020 (Tanzlii) by Nangela J, and in Ahaco Oil Limited and another vs. Apel Petroleum, Commercial Application No. 05 of 2015 (unreported) by Mansoor J. In both cases, by raising the issue of part payments, this Court was satisfied that the Applicants had demonstrated what was required of them under the law to entitle them to be granted leave to defend the summary suit. For instance, in Ahaco Oil (Supra), it was held that; "I have read the affidavit...The law requires that the Applicant has to satisfy the conditions given in the law. The Applicants have to either deny that they have not taken the loan or they have to show that they have paid either all or part of the loan. The Applicants in the present case admit to have taken the loan, and, also, have pleaded, in their affidavit that, they have paid a portion of the loan. The Applicants have demonstrated that they have an arguable defense entitling them to defend the summary suit...." Therefore, since the applicant in the instant application by way of affidavit disputes the amount claimed in the summary suit and that he had already paid part of the payment, those are triable issues fit to go for the trial. Therefore, the applicant is entitled to defend the summary suit. As a result, I do hereby grant the applicant leave to appear and defend the summary suit unconditionally. Costs will follow the cause in the main suit. It is so ordered. K. D. MHINA JUDGE 14/08/2024 Court The right to appeal is fully explained to the parties. K. D. MHINA JUDGE 14/08/2024