Misc Commercial Application No 16773 of 2024 Consolata Rwegasira ruling

IN THE HIGH COURT OF TANZANIA (COMMERCIAL DIVISION)

AT DAR ES SALAAM EXECUTION NO. 16773 OF 2024 (Arising from Commercial Case No. 44 of 2020) CONSOLATA RWEGASIRA ..........................................................APPLICANT

VERSUS INTERNATIONAL COMMERCIAL BANK (TANZANIA) LIMITED.............................................................................1ST RESPONDENT C.E HOLDING LIMITED......................................................2ND RESPONDENT MAKAME S. SENGUO t/a MASS & ASSOCIATES CO LTD & COURT BROKER.............................................................................3RD RESPONDENT GEOFREY KIMBARI............................................................4TH RESPONDENT MOHAMED MNZAVA...........................................................5TH RESPONDENT APSAM COMPANY LIMITED................................................6TH RESPONDENT

RULING Date of last order:22/11/2024 Date of the ruling: 07/02/2025 AGATHO, J.: This ruling is on an application to set aside sale of a property situated on Plot No. 2 Bock “A” with Title Deed No. 186313/2, at Mikocheni Area, Kinondoni Municipal, Dar es salaam (the property) on the ground of material irregularity in conducting the auction. The application traces its roots from Commercial Case No. 44 of 2020 of this court in which the 1st 1 Respondent, was the plaintiff while the 2nd, 5th, 6th respondents and the applicant were defendants. The facts giving rise to this application are that on 20th January, 2015 the 2nd Respondent applied to the 1st Respondent for an overdraft facility of United States Dollar One Hundred Thousand only (USD 100,000.00). The sum was supposed to be repaid by 20th January, 2016. The overdraft facility was later varied into term loan. In furtherance to that, the 2nd Respondent applied and was granted another credit facility in form of short-term loan of USD 80,000.00. The credit facilities were later varied by a further extension of repayment period. On 30th January, 2015, the applicant mortgaged her landed property in favour of the 2nd Respondent in consideration of the 1st Respondent’s extension of the credit facility. The property is identified as C.T No. 186313/2, L.O No. 142154, Plot No. 2 Mikocheni Area, Kinondoni Municipality, Dar es salaam

City (“the property”), the subject of this Ruling. Repayment of such a credit facility by the 2nd Respondent turned out to be arduous. As a result, the credit facility stood at USD 183,897.72 as of 6th May 2020. This unbecoming payment trend by the 2nd respondent prompted the 1st Respondent to sue the applicant, the 1st respondent, 2 together with the 5th and 6th Respondents who were guarantors to the Loan in this court vide Commercial Case No. 44 of 2020. Fortunately, in the course of pendency of the case on 28th May, 2021, the parties entered into a settlement Agreement. In this agreement it was agreed that the Loan be discharged in instalments. The Deed of Settlement provided among other things that the 2nd Respondent was to continue making payments to the 1st Respondent. However, the 2nd Respondent’s efforts to settle the outstanding amount in satisfaction of the Deed of Settlement decree were abortive, an act which prompted the 1st Respondent on 15th December, 2023 to lodge an application for execution of consent Decree extracted from Commercial Case No. 44 of 2020 for payment of the outstanding balance of USD 136,717.98 by attachment and sale of the landed property located at Mikocheni Area, Kinondoni Municipality, Dar es salaam, Plot No. 2, Block “A” under Certificate of Title No. 186313/2, L.O No. 142154. This Court issued a notice for the applicant to appear on 25th

March, 2024 to show cause as to why execution should not be granted. When the matter came for mention on 16th April 2024, the Court issued a prohibitory order against the property and also ordered valuation to be conducted by a registered government valuer. 3 On 7th May, 2024 the Court issued a proclamation of sale of the mortgaged property. (See Annexure A-5). According to it, the sale of property was for payment of USD 136,717.98. The 3rd respondent, Mr. Makame S. Senguo t/a Mass & Associates Co. Ltd & Court Broker, was appointed to conduct a public auction on 14th June, 2024 at Mikocheni Area, Dar es salaam at 10.00 O’clock. The auction was executed on 14th June, 2024 and the 4th Respondent emerged as the highest bidder by offering the sum of TZS 281,000,000/=. According to annexture A-7 the 4th respondent deposited 25% of the sum on the same date that is TZS 70,250,000/=. Having learnt of the sale, the applicant herein has emerged with this application to set aside the sale on ground of material irregularity in conducting the said sale. She is also praying for costs of this matter to be provided for plus any other relief (s) this Honourable Court may deem fit and or just to grant. The affidavit accompanying this application was sworn by the Applicant Consolatha Rwegasira herself. Countering it, the 1st and 3rd respondents filed their respective counter affidavits. One

Bahati Makamba, Principal Officer of the 1st Respondent swore the counter affidavit on the bank’s behalf while Makame S. Senguo, Principal Officer of the 3rd Respondent swore a counter affidavit for the auction mart. The 4 6th respondent stated unwaveringly that he does not oppose the application. As for the remaining respondents, they did not file any counter affidavits. By implication this means that the 2nd, 4th and 5th respondents do not oppose matters of facts in the applicant’s affidavit. Representation of parties in this matter was through Mr. Shukran Elliot Mzikila, Esq for the first applicant and Jerome Joseph Msemwa, Advocate for the 1st Respondent. The third respondent used self representation. It was agreed that the hearing of the matter be by way of written submissions. After the applicant had filed her submissions, the court received reply submissions from the 1st and 3rd Respondents only. I prefer not to recite all (word to word) that has been submitted in the submissions, but I pledge to give due regard to them in reaching a conclusion. The major question tabled for determination by this court is whether the sale of the mortgaged property by auction was conducted lawfully in conformity with rules and procedures for sale of mortgaged property by public auction. The applicant’s submission in support of the application reflects the purported irregularities of the

sale sought to be set aside. I find it fitting to deliberate on this matter going by these points of complaint raised. 5 The applicant’s first point of grievance is that the sale of the property was not publicly advertised as required under Order XXI Rule 64 of the CPC. In their reply submissions both the 1st and 3rd Respondents denied this allegation stating that the auction was properly advertised in Mwananchi Newspaper and thus enabled the general public to take note of the details of the auction. In my own perusal of record of this case, I have come across an unlabeled annexure by the 1st respondent’s counter affidavit which shows it is a copy of a leaflet from Mwanahalisi Newspaper issue of Thursday May 23-29, 2024 page 6. Within this page is an advert for the auction subject of this Ruling. The applicant has also taken note of this advert in her own written submission by stating that her names were misspelt. That means she does not dispute of the existence of the advertisement. Under these circumstances, it is my take that the auction was advertised to the general public. The second limb of complaint was that the Sale by auction of the property was conducted without issuance of fourteen days’ public notice to the Applicant, at the principal town of the district and also at the place of the intended sale on Plot No. 2 Mikocheni, Dar es salaam. I find it necessary to link

this complaint with the third one in which the applicant states that no fourteen days’ notice was issued to her by the 3rd 6 Respondent as ordered by the Court as per letter dated 17th April, 2024 to enable her to willingly settle the decretal sum. I have crosschecked the 1st and 3rd respondents’ replies with regard to this complaint of notice not being served to the applicant and found that they both stick to a defence that the notice was served to a local government leader. This much is also substantiated by copy of a letter from the 3rd Respondent to the Deputy Registrar, dated 06/05/2024 which is annexed with the application and marked A-6. The question that follows is whether this letter suffices to confirm that the applicant was served with proper notice as required by the law. It is an established requirement of law under the Civil Procedure Code [Cap 33 R.E. 2019] that proper notice be availed to the judgment debtor. Order XXI Rule 65 of the CPC enacts that:- (1) Where any property is ordered to be sold by public auction in execution of a decree, the court shall cause a proclamation of the intended sale to be made in the language of such court. (2) The proclamation shall be drawn up after notice to the decree-holder and the judgment debtor and shall state the time and place of sale, and specify as fairly and accurately as 7 possible- (a) (c) (d) (e) the property to be

sold; the rent (if any) payable in respect of the property; any incumbrance to which the property is liable; the amount for the recovery of which the sale is ordered; every other thing which the court considers material for a purchaser to know in order to judge the nature and value of the property. In their respective counter affidavits, the 1st & 3rd respondents stresses that the applicant was properly served with notice of sale through the local government. Going through the record, apart from a letter notifying the court of the service of the notice to have been effected through “Serikali ya Mtaa” there is nothing else material to verify that the applicant herein who was the judgment debtor was served with notice. There is no such service seen, nor proof of its service by the Serikali ya Mtaa to the judgment debtor or anything. Worse enough, annexure A-6 does not even mention the person to whom the purported notice was left so that he/she serves it upon the judgment debtor but mentions the local government which is an office. Further there is no evidence brought such as an affidavit to show that the judgment debtor has been avoiding service. The wording used in annexure A-6 is 8 “Mheshimiwa tarehe 06/05/2024 tumefanikiwa kusainisha Serikali ya Mtaa notisi ya madai ya siku 14......”. which my English is that “Your honour, on 06/05/2024 we managed to serve 14 days’

notice through local government.” This assertion in itself is very wanting in a sense that it does not tell a person who exactly received the notice on behalf of the local government. With the discussion above, it is established without a flicker of doubt that the applicant was not served with notice before proclamation of sale. This in my view is a material irregularity tainting the whole execution process that followed. The Court of Appeal had the occasion to deliberate on Rule 88(1) of Order XXI of the CPC under which this application is brought, in the case of Ottu On Behalf of P.L. Asenga & Others vs Ami Tanzania Limited (Civil Application 44 of 2012) Reported in Tanzlii as [2013] TZCA 474. In this case, the court observed that a sale held in execution of a decree can be set aside under this rule only if there is a material irregularity or fraud and because of that, the applicant has sustained substantial injury. The applicant in this case has sustained a substantial injury by losing her property. It is for this 9 reason she beseeches this court to set the said sale aside on the ground of a material irregularity in conducting the said sale. Having established that the execution was illegally conducted by non-issuance of a notice to the judgment debtor, which act undermined her right to be heard. I find it nugatory to deliberate on the rest of the grievances jotted down by

the applicant. Luckily the sale has not become absolute as the records do not suggest that certificate of sale was issued. The application to set aside the sale of a property situated on Plot No. 2 Block “A” with Title Deed No. 186313/2, at Mikocheni Area, Kinondoni Municipal, Dar es salaam is hereby allowed. The sale of that property by way of an auction which was conducted on 14th June 2024 in execution of a decree emanating from Commercial Case No 44 of 2020 is hereby set aside. Given the nature of this application, each party will bear its costs. Order accordingly. DATED at DAR ES SALAAM this 7th Day of February 2025. U. J. AGATHO 10

JUDGE 07/02/2025 Court: Ruling delivered today, this 7th February 2025 in the presence of the parties. U. J. AGATHO

JUDGE 07/02/2025 11