LAND CASE NO 294 2023

IN THE HIGH COURT OF TANZANIA (LAND DIVISION) AT PAR ES SALAAM LAND CASE NO. 294 OF 2023 DOMINICK MILLING GROUP LIMITED............................................. 1st PLAINTIFF LEONARD DOMINICK RUBUYE....... ........... 2nd PLAINTIFF VERSUS TANZANIA AGRICULTURAL DEVELOPMENT BANK LIMITED.............................................................................. 1st DEFENDANT THE ATTORNEY GENERAL.............................................................. 2nd DEFENDANT JUDGMENT 16th to 25th September, 2024 E.B. LUVANDA, J In this suit, the Plaintiff named above claims against the First and Second Defendants above named jointly and severally for the following reliefs: One, declaration that the First Defendant is in breach of the contractual terms of the credit facility letter dated 29/12/2021; Two, an order of specific performance of the execution of the credit facility letter dated 29/12/2021 by releasing to the First Plaintiff in full the working capita contracted under the credit facility letter dated 29/12/2021; Three, an order nullifying the default notices issued to the Plaintiffs on 15/03/2023; Four, declaration that the First Defendant actions of not fulfilling its contractual responsibilities under the credit facility letter dated 29/12/2021 has damaged the Plaintiffs business beyond redress causing the i ■ V : Plaintiff loss and is entitled to damages thereof; Five, payment of general damages as to be assessed by the Court; Six, costs of the suit to be paid by the Defendants; Seven, any other relief that this Court may deem fit to grant. The relationship between the First Plaintiff and First Defendant is that of a borrower and lander, respectively. On 12/03/2019 the First Plaintiff borrowed from the First Defendant a sum of TZS 2,000,000,000/= as working capital to finance purchase of raw materials (maize and sorghum) for manufacturing of flour along packaging material and collection of sunflower seeds from farmers, as per credit facility-indicative terms sheet exhibit Pl. On 9/04/2019 the First Plaintiff borrowed a sum of TZS 4,05,427,327/= from the First Defendant a breakdown being TZS 1,700,000,000/= working capital loan and TZS 2,350,427,327/= term loan, as per the credit facility letter offer exhibit P2. On 29/12/2021 the First Plaintiff and First Defendant entered into a disputed credit facility agreement for a sum of TZS 1,000,000,000/= as a short revolving loan for stock financing, as per credit facility letter of offer dated 29/12/2021, exhibit P4 and credit facility agreement dated 11/01/2022, exhibit P10. Leonard Dominick Rubuye (PW1) complained that the First Defendant breached the said facility by disbursing a less sum of TZS 300,000,0000/= instead of TZS 1,000,000,000/= as agreed. Furaha Sichula (DW1) contended that the said sum 2 of TZS 1,000,000,000/= ought to be disbursed on tranches upon request and proof by the First Defendant of utilization of the initial disbursed amount. In view of the above, issues which were framed for determination are: One, whether the First Defendant breached the credit facility agreement as alleged; Two, whether the notices of default issued by the First Defendant are proper, un contractual and fraudulent; Three, whether the First Plaintiff has suffered damages as alleged; Four, what reliefs are parties entitled to. For issue number one. As per the preface above, the main complaint by PW1 is that the First Defendant is in breach of the terms of the credit facility agreement for failure to disburse the entire agreed amount of TZS 1,000,000,0000/=, instead the latter disburses a less amount of TZS 300,000,0000/= only. DW1 on the other hand, was of the view that disbursement ought to be on phases. On my part I am not seeing any express provision or clause to the effect that the entire amount could be disbursed in a lamp sum. Going by clause 3 in exhibit P4 provide that disbursement will be upon borrower's written instructions accompanied with relevant documents. The same is provided in exhibit P10 at clause 2.4, that the loan facility will be available to the borrower by means of disbursing into borrower's account upon instructions from the borrower. Therefore, to be construction of these clause do not connote single instalment, 3 rather suggest that it was upon the borrower to make request upon fulfilment of conditions attached therein. Again, reading clause 4 in exhibit P4 support the above theory, I quote and bold a pertinent portion, 'Each draw down in the stock financing facility shall be repaid within 90 days (booked as a separate loan), as such, client shall be able to utilize it again once repaid, however, the facility as a whole will run for 12 months' The above clause is more elaborate and give a clear picture on how the disbursement and repayment ought to be done. By stating that each draw down shall be booked as separate loan, by necessary implication it means that the disbursement was not subjected to a single instalment as contemplated by PW1. Rather suggest elements of disbursement by way of piece meal. Yieldstreet in Article Drawdown: Its Role in Banking & Trading dated 18th October, 2023, at https://www.yielstreet.com, accessed on 25/10/2024 at 08.56 hours, define drawdown to mean, 'In banking, drawdown refers to the gradual access of credit funds - part or all of a credit line' Therefore, the clause above quoted it behooved the First Plaintiff to only draw down funds as needed. 4 In that context, it can be said confidently that the release of the first tranche of the loan a sum of TZS 300,000,000/= was regarded as separate loan, for which the First Plaintiff ought to have serviced and repaid it within ninety days counting from the date of when it was disbursed. In the joint written statement of defence, the First and Second Defendant pleaded that a sum of TZS 300,000,000/= was advanced to the First Plaintiff on 8/04/2022 upon his request. The Plaintiffs did not file reply to counter this factual averment. Therefore, implying concession. In that regard, counting from 8/04/2022 when the first draw down was made for TZS 300,000,000/=, a grace period of ninety days within which the First Plaintiff ought to have repaid it ended on 08/07/2022. When PW1 was cross examined by Mr. Urso Luoga learned State Attorney for Defendants, asserted that no any repayment was done after disbursement of TZS 300,000,000/=. Therefore, to my respective view, when notices of default were issued and served to the Second Plaintiff on 15/03/2023 as per notice to pay or perform or observe covenant(s) in the mortgage, exhibit P6, the Plaintiffs were indeed in breach of the terms of the credit facility. Again, in clause 3 of exhibit P4 provide that the purpose of the facility is a short term revolving loan for stock financing. At https://www.investopedia.com 5 accessed on 31/08/2024 at 07.49 hours, defined revolving in the context of banking to mean, 'A revolving loan facility, also called a revolving credit facility or simply revolver, is a form of credit issued by a financial institution that provides the borrower with the ability to draw down or withdraw, repay, and withdraw again' Therefore all these cement my position that the credit facility exhibit P4 and PIO for a sum of TZS 1,000,000,000/= was not for a single disbursement, rather on several draw down upon request or demand by the First Plaintiff. And that the First Plaintiff having utilized and failed to pay a loan of TZS 300,000,000/= within ninety days, was in breach of the credit facility. When PW1 was cross examined by the learned State Attorney, concede a fact that he ought to have requested for disbursement of another amount. On further cross examination, PW1 stated that he crafted a letter requesting disbursement of TZS 700,000,000/=, but PW1 had no recollection if he tendered the alleged letter into evidence. To my view, the allegation by PW1 that he crafted a letter requesting for disbursement of TZS 700,000,000/= was a mere concocted fact. This is because that facts was not supported by his pleadings. Contextually, the Plaintiffs raised the argument of non-disbursement of a remained sum of TZS 700,000,000/= after being served with a default notice on 15/03/2023, as per exhibit P6. This can be evidenced by a statutory notice of intention to sue which 6 was issued by Mr. Tazan Mwaiteleke learned Counsel for Plaintiffs on 17/05/2023, exhibit P8. My undertaking is grounded on fact that exhibit P8 was issued after expiry of one year and one month counting from the date of first drawdown on 8/04/2022. Meaning that the entire claim is an afterthought regard being the First Plaintiff is the one who orchestrated the breach of the credit facility as above stated. Therefore, issue number one is resolved in the negative. Issue number two: whether the notices of default issued by the First Defendant are proper, un contractual and fraudulent. This is a consequential to issue number one. Having ruled issue number one in the negative, automatically the second issue follows suit. The First Plaintiff having been found to be in breach of the terms of the credit facility, the First Defendant was entitled in law to issue and serve the default notice. Therefore, exhibit P6 was legally founded, proper and in tandem to the terms and covenant of the credit facility. Issue number two, is answered in the negative. Issue number three, whether the First Plaintiff has suffered damages as alleged. The First Plaintiff being the author of the breach of the credit facility, in law she cannot be said to have suffered any loss. On similar footing, there is no relief which is available to the Plaintiffs under the circumstance. Therefore, issue number three and four are resolved on the negative. 7 I appreciate for lucid closing submissions from the learned Counsel for both parties. The suit is dismissed with costs. for First and Second Plaintiff, MrJcEmil Lukiko learned State Attorney for First and Second Defendant. 8