DAMCO

IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA (COMMERCIAL DIVISION) AT PAR ES SALAAM MISC. COMMERCIAL CAUSE NO. 6605 OF 2024 WINDING UP PETITION (Pursuant to Section 281 of the Companies Act (Cap 212 R.E. 2002) IN THE MATTER OF COMPANIES ACT, (Cap 212 R.E. 2002) AND IN THE MATTER OF WINDING UP OF DAMCO TANZANIA LIMITED COMPANY NO. 43720 (hereinafter called the "the Company" or the Petitioner) AND IN THE MATTER OF A PETITIONER FOR WINDING UP PRESENTED BY MAERSK LOGISTICS AND SERVICES INTERNATIONAL A/S FORMELY KNOWN AS DAMCO INTERNATIONAL A/S RULING Date of last order: 10/06/2024 Date of ruling: 21/06/2024 AGATHO, J.: i This is a winding petition by a creditor MAERSK LOGISTICS AND SERVICES INTERNATIONAL, a company duly registered in Denmark and also registered in Tanzania against DAMCO Tanzania Limited. The Petitioner preferred the winding up petition following the respondent's failure to repay the loan extended to it under the loan agreement executed on 20th June 2019. The loan was to the tune of USD 1,300,000. In terms of legal representation, the parties enjoyed services of legal counsel. At the hearing the Petitioner was represented by Jeremiah Tarimo, Advocate whereas Augustine Rutakolezibwa and Francis Kajiru, Advocates appeared for the respondent DAMCO Tanzania Limited. During the hearing of the petition, Mr. Tarimo before going into the petition he made a prayer regarding the advertisement of the petition which had been effected in Mwananchi Newspaper of 24th April 2024. He submitted that the law under rule 99(1) of the Companies Insolvency Rules that the petition has to be advertised once in gazette and once in a daily newspaper widely circulated in Tanzania unless the court directs otherwise. Therefore, based on the position of the law and current state of affairs as explained Mr. Tarimo prayed that the court finds appropriate to find it sufficient the advertisement of the petition made in Mwananchi Newspaper. 2 He supported his submission with the following: (1) that since the advertisement of the petition in Mwananchi Newspaper we have not received any notice to challenge the petition aside from the notice from the respondent herself who supports the petition. (2) That all other provisions of the law have been complied with including the service of the petition itself and the filing of the certificate of compliance which indicates that all provisions of the law have been complied with. (3) Lastly, rule 99(2) of the Companies (insolvency) rules instruct the advertisement of the petition to appear either in the gazette or newspaper. According to him in this case the advertisement of the winding petition was made in pursuant to this rule which given an option the advertisement to appear in the gazette or newspaper. Pursuant to rule 99(2)(b) the advertisement was made within 7 days after the service of the petition to the respondent which took place on 19th of April 2024. He thus invited the court to rule that the advertisement was sufficient. The Court after hearing Mr. Tarimo it had an opportunity to read rule 99(1) of the Companies (Insolvency) Rules, which is a provision governing advertisement of the winding up petition. And it requires the advertisement of the petition to appear once in the gazette and once in the newspaper. 3 However, rule 99(2) of the Companies (Insolvency) rules creates a confusion as it gives an option to advertise a petition in the gazette or newspaper instead of its heading stating a procedure seen in its items (a) and (b) as to how advertisement should be done and time for the same. In the court's view the petitioner was not to be blamed for advertising the petition in Mwananchi newspaper. She opted for that based on what is stated in the heading of rule 99(2). For that reason, court found the advertisement to be lawful and in order. Besides, none has filed affidavit in opposition nor is there any notice of appearance from interested parties if any. The court thereafter directed the hearing of the petition to proceed as scheduled. On the petition, Mr. Tarimo submitted on the grounds for winding up indicated under paragraph 4 of the petition. He also adopted the affidavit verifying the winding up petition, sworn by Aurelia Migwe, principal officer of the petitioner to form part of his submission. It was his submission that the petition is filed having been presided by statutory notice of demand served upon the respondent in pursuant to the Companies Act, and the petitioner did not receive any objection to the debt up to the filing of the winding up petition. Therefore, Mr. Tarimo was 4 of the view that the debt is uncontested. He clarified that the debt as indicated in the petition is to tune of USD 1.3 million excluding interest. There is no claim of interest. The amount stated is only principal sum. According to the petitioner's counsel, paragraph 5 of the petition depicts the background and details of the loan. The said loan agreement was attached in the petition as annexture D-l. To support that the petitioner filed evidence of the transfer of such amount and the respondent acknowledged to have received the full amount as per annexture D-2. The last annexture to the petition is D-3 which is statutory notice of demand. Mr. Tarimo submitted that pursuant to Section 280 of the Companies Act, a company is deemed to unable to pay its debts if it has neglected to pay after it has been served with statutory notice of demand, and if it is proved to the satisfaction of the court that the company is unable to pay its debts. In the circumstance of the case at hand the annextures D-l, D-2 and D-3 substantiates the petitioner's claim. Annexture D-3 is statutory notice of demand that the respondent exhibited non-adherence to it. Along with that there a notice of appearance from the respondent (DAMCO) which supports the petition. It was the term 5 of the loan agreement that by December 2019 the loan amount was required to have been repaid. But to the petitioner's dismay and despite several reminders to the borrower/respondent the amount has not be paid to date. Lastly, Mr. Tarimo submitted that they have information which is uncontested by the respondent that currently she is not doing business or operating as per its objectives. And hence according to the petitioner the only suitable remedy for the petitioner to be reimbursed will be through liquidation. H The petitioner's counsel thus reiterate the prayers stated in the petition that the respondent be wound by an order of this court under provision of Section 279 of the Companies Act. Secondly, based on the finding of first prayer the court be pleased to appoint Gerald Shita Nangi, advocate to be a liquidator. Lastly, the court make any other orders it deems fit to grant in relation to the affairs of the respondent. I have given due consideration to the annexture D-l loan agreement, annexture D-2 the respondent's acknowledgment of receiving the full amount from the petitioner. And annexture D-3 to the petition is statutory notice of demand. The same has not been heeded to. That confirms that the respondent is incapable of paying its debts as per Section 280 of the 6 Companies Act. That in itself is a sufficient ground to grant an order for winding up of a company. That said and done, the petition is granted and the court proceeds to order as follows: 1. DAMCO is incapable of discharging its liabilities that is to repay the loan advanced to it by the petitioner. And hence it fair that it be wound up as per Section 281 of the Companies Act. 2. Mr. Gerald Shita Nangi, advocate is appointed liquidator. 3. The liquidator, upon realizing all the property of the company shall pay the petitioner's debt and file in court a report on his accounts for his discharge according to the provisions of Section 307 of the Companies Act. 4. No order as to costs is given. Order accordingly. DATED at DAR ES SALAAM this 21st Day of June 2024 7 Date: 21/06/2024 Coram: U.J. Agatho, J For the Petitioner: Zena Njovu, Advocate For the Respondent: Francis Kajiru, Advocate B/C: E. Mkwizu Court: Ruling delivered today 21/06/2024 at 10:00 A.M.in the presence of Zena Njovu, advocate for the petitioner, and Francis Kajiru, advocate for JUDGE 21/06/2024 8