CIVIL APPEAL NO 362 OF 2021 CHIYANGA ENTEPRISES T KTD VS EXIM BANK TANZANIA LIMITED ANOTHER

IN THE COURT OF APPEAL OF TANZANIA AT PAR ES SALAAM rCORAM: MWANDAMBO. J.A.. MAIGE, J.A. And KHAMIS, J.A.1 CIVIL APPEAL NO. 362 OF 2021 CHIYANGA ENTERPRISES (T) L T D ........................ ...................... APPELLANT VERSUS EXIM BANK (TANZANIA) LIMITED (as the Successor of THE FIRST NATIONAL BANK TANZANIA LTD) ................. 1st RESPONDENT TRANQUIL BUREAU LIMITED BANK TANZANIA LTD ......2ND RESPONDENT (Appeal from the Judgment and Decree of the High Court of Tanzania Land Division at Dar es Salaam) f Luvanda, J.^ dated 25th day of February, 2021 in Land Case No. 46 of 2016 RULING OF THE COURT 5th & 13th August, 2024 MAIGE. J.A.: On 12th September, 2014, the appellant procured an overdraft facility of TZS 290, 000,000.00 from the first respondent (exhibit PI) for a term of 12 months from 12th September, 2014 and which was payable in equal monthly installments of TZS 9,000,000.00. It was to be secured, by among others, a residential property at Plot No. 10 Block A, Kigogo i area within the District of Kinondoni in the region of Dares Salaam which is in the name of Francis George Manyama ("the first security") and Commercial Property on plot No. KND/KGG/KAT4/96 Kigogo area within Kinondoni District in Dares Salaam Region which is in the name of George Manyama Mangaru,("the second security"). On 11th June, 2016, the appellant requested for a reschedule of the loan repayments from TZS 9,000,000.00 to TZS 5,000,000.00 per month. Subsequently, the second respondent, at the instance of the first respondent, issued a 14 days - notice of sale of the two securities in realization of the outstanding loan arising from the overdraft in question (exhibit P3, collectively). Being aggrieved, the appellant commenced a suit at the High Court of Tanzania, Land Division ("the trial court") for the following reliefs: One, declaration that the first appellant was in breach of the overdraft agreement; Two, a mandatory injunction compelling the first respondent to adhere to the terms and conditions of the overdraft agreement; Three, declaration that the notices issued by the second respondent to the appellant under the mandate of the first respondent are premature and therefore illegal; Four, a mandatory injunction compelling the first respondent to reschedule the overdraft facility and allow the appellant to remit to the first respondent the sum of TZS 5,000,000.00 per month; Five, an order suspending interest on principal sum from the date of institution of the suit to the date of judgment. The factual allegations constituting the appellant's cause of action were pleaded at paragraphs 9, 10,11 and 12 of the plaint as follows: "9. That instead o f receiving positive answer from the 1st Defendant as per clause 7 o f the overdraft facility agreem ent the P lain tiff was served with 14 days'notice from 2nd Defendant to se ll the Plaintiff's su it properties on 11th June 2016. The said notice was not preceded over by the notice o f default from the 1st Defendant and thus the 2nd Defendant's notice is therefore illegal. Furtherm ore the said notice does not specify the amount which is due under which the Plaintiff's properties should be sold. Attached herewith and marked as JLC-3 is a copy o f the said notice leave o f which is craved to form part o f this Plaint 10. That apart from change o f circum stances as explained above, the P lain tiff has, since the grant o f the overdraft facility, been repaying the overdraft money in accordance with the term s and manner as agreed without failure. 11. That the P lain tiff states further that the 1st Defendant's demand under the mandate from the 1st Defendant o f selling the Plaintiff's properties before the expiry o f contractual term is breach o f overdraft Agreem ent and a total disregard o f the Plaintiff's change o f circum stances which has not been the Plain tiff's fault but rather occasioned o f its main contractor. 12. That the P lain tiff states that the said notices are unlawful, illeg al and therefore inoperative." In its judgment, the trial court found that, the appellant did not adduce sufficient evidence to establish that the first respondent was in breach of the overdraft facility or that, the notices of default were issued against the law. It, therefore, dismissed the suit with costs. Aggrieved, the appellant has instituted this appeal criticizing the judgment of the trial court on the following grounds: 1. The Trial Court erred in law and fact by failure to take into consideration that without change o f mode o f paym ent from that o f an overdraft facility to that o f term loan facility, the Appellant could not be in a position to discharge its lia b ility freely as suggested by the Trial Court. 2. The Trial Court erred in law and fact by failure to take into account that the Appellant did not fa il to discharge the overdraft agreem ent rather it was the 1st Respondent who had failed to create conducive environm ent to the Appellant with a view o f enabling it to discharge its liability. 3. The Trial Court erred in law and fact by holding that the allegation o f default notice was an afterthought while it was not as it had featured in the appellant's and respondent's pleadings and evidence. 4. The Trial Court erred in law and fact by condemning the appellant for failure to pay the overdraft facility fo r the period o f six years without taking into account the 1st Respondent's failure to change the m odality o f paym ent 5. The tria l Judge erred in law and fact by failure to take into account the appellant's evidence which was stronger compared with the 1st respondent's evidence on failure to pay the overdraft money. At the hearing, Mr. Philemon Mutakyamirwa, learned advocate appeared for the appellant while Mr. Innocent Felix Mushi, also learned advocate, appeared for the respondents. Right from the outset, Mr. Mushi informed the Court that, the first respondent phased out of existence in July 2022 and its assets and liabilities acquired by Exim Bank Tanzania Limited (herein referred to as "the successor in title"). He prayed, which was not objected by Mr. Mutakyamirwa, for leave so that the appeal proceeds against the first respondent's successor in title. Pursuant to rule 4(2) (a) and (b) of the Tanzania Court of Appeal Rules, 2009, we granted the prayer as reflected herein above. As we were preparing ourselves for the hearing, we entertained doubt, in the first place, whether, to the extent that it sought to challenge the first respondent's realization of the two securities, the suit would stand without the mortgagors being joined. In the second place/ we entertained doubt that, to the extent that it sought to enforce an overdraft facility, the suit in question was a land dispute which, in the absence of the claim to challenge the enforcement of the securities, it would fall within the jurisdiction of the trial court. We, therefore; invited the learned advocates to address us on the issue. Mr. Mutakyamirwa conceded that, it was wrong to proceed with a suit on mortgage without the mortgagors being joined and, therefore, the judgment and the whole proceedings of the trial court were a nullity for non-joinder of the necessary parties. Conversely, while conceding that a mortgagor is a necessary party in a suit founded on mortgage, Mr. Mushi was of the contention that, the omission in the instant matter was not fatal, as the mortgagor in the second security was a director of the appellant and testified as PW1. On that basis, he urged us to proceed determining the merit of the appeal. When asked on whether the mortgagor in the second security was involved, he admitted that he was not. This issue cannot consume much of our time. As we demonstrated herein above, the appellant's claims at the trial court was, among others, a declaration that the notices of default in respect of the two securities 6 were illegal. In accordance with the overdraft facility and the notices of sale pleaded in the plaint, it is apparent that, while the first security belongs to Francis George Manyama, the second security belongs to George Manyama Mangaru. It is an elementary position of law and the parties are not in dispute that, in a suit on mortgage, the mortgagor is a necessary party. [See for instance, Order XXXII of the Civil Procedure Code]. In here, the suit was commenced by the appellant as the borrower without joining any of the mortgagors. Mr. Mushi contends that, the omission was not fatal as one of the mortgagors testified. With respect, we cannot agree with him because, as we understand the law, a person does not become a party to the proceedings just because he appeared as a witness. Assuming that was the law, the suit would remain incompetent as the mortgagor in the second security was not involved howsoever in the proceedings. Determination of a suit without joining a necessary party is a fatal irregularity which renders the decision and proceedings thereof a nullity. See for instance, Abdulatif Mohamed Hamis v. Mehboob Yusuf Othman & Another (Civil Revision No. 6 of 2017) [2018] TZCA 25 (1 August 2018; TANZLII) and Gapco Tanzania Limited & Another v. Ramzan D. Walji Company Ltd (Civil Appeal No. 381 of 2020) [2024] TZCA 558 (15 July 2024; TANZLII). Indeed, where, like here, the enforcement of the mortgage is challenged, the proper plaintiff should be the mortgagor. In view of the foregoing, we invoke our revisional powers under section 4(2) of the Appellate Jurisdiction Act, Cap. 141 R.E.2019 and set aside the judgment and decree of the trial court and nullify the proceedings thereof. We further strike out the suit for being incompetent. Since the issue was raised by the Court on its own motion and, considering Mr. Mutakyamirwa's stance, we make no order as to costs. DATED at DAR ES SALAAM this 9th day of August, 2024. L. J. S. MWANDAMBO JUSTICE OF APPEAL I. J. MAIGE JUSTICE OF APPEAL A. S. KHAMIS JUSTICE OF APPEAL The Ruling delivered this 13thday of August, 2024 in the presence of Mr. Philemon Mutakyamirwa, learned counsel for the Appellant and Mr. Godfrey Ngassa, learned counsel for the Respondents, is hereby certified as a true copy of the original. £t - KALEGEYA