east african development bank vs nyakirangani construction limited 2022 tzhccomd 379 10 november 2022

IN THE HIGH COURT OF TANZANIA (COMMERCIAL DIVISION)

AT DAR ES SALAAM MISCELLANEOUS COMMERCIAL APPLICATION NO. 118 OF 2022 (Arising from Commercial Case No. 107 of 2019)

BETWEEN EAST AFRICAN DEVELOPMENT BANK •.•..••.••...•..••..••••••• APPLICANT Versus NYAKIRANG'ANI CONSTRUCTION LIMITED •••••••••••••••1st RESPONDENT CHRISTMAS MUMANGI. ••••••••••••••••••••••••••••••••••••••••••••• 2nd RESPONDENT X-MAS NZAGI MATOBERA •••...••...••.....••.•...••••••••.•••••• 3rd RESPONDENT STEVEN M. NYAKIRANG' ANI. ............•.... II ••••••••••••• II •••• 4th RESPONDENT NYANGULETA NYAKIRANG'ANI. ••••••••••• 11 •••••••• ,1111,, •••••• sth RESPONDENT SIMONI NZAGI ••...•.•.•.•••••••••••••••••••••••••••••••••••••••••••••• 6th RESPONDENT Date of last Order: 19th September 2022 Date of Ruling: 10th November 2022

RULING MKEHA, J: Through Mr. Mnyele learned advocate, the applicant is moving the court for an order of lifting veil of incorporation so that the 2nd to 6th respondents can be arrested and detained as civil prisoners until the decretal sum of USD 202,036.63 llPage is fully paid. The 2nd to 6th respondents are Directors and shareholders of the 1st respondent. The application is made under section 2(1) and (3) of the Judicature and Application of Laws Act, section 95 of the Civil Procedure Code as well as Article 108 (2) of the Constitution of the United Republic of Tanzania. The application is supported by an affidavit affirmed by Mr. Hashim Kihwelo, Principal Officer of the applicant. On the other hand, the application is contested through a counter affidavit sworn by Mr. Augustine Kusalika, the respondent's learned advocate. According to the submissions by Mr. Mnyele learned advocate for the applicant and in terms of paragraphs 7 and 8 of the applicant's affidavit the respondents have been promising to pay without actually fulfilling their promise. Because of the respondents' failure to fulfill their promise to pay, the learned advocate for the applicants thinks that, this is a fit case for lifting of corporate veil so that the 1st respondent's Directors and shareholders can be held responsible for payment of the decretal sum. Mr. Kusalika learned advocate submitted in reply

that the applicant had assigned no reasons for lifting of veil of incorporation. The learned advocate's submission is backed up by paragraphs 3 and 4 of the respondents' counter affidavit. ·····-·-· 21Page The only issue for determination is whether the applicant has sufficiently made a case for issuance of an orderfor lifting of veil of incorporation. Fortunately, the position regarding lifting of corporate veil is now settled. In terms of the decision in YUSUPH MANJI VS EDWARD MASANJA & ANOTHER (2006) TLR, 127 before the decree holder succeeds in having the veil of incorporation lifted for purposes of execution of a decree, he has to prove that, according to the circumstances prevailing at the time of making an application for execution of his decree, there is no real separation between the company and its owners. The decree holder has also to prove the company's actions which are wrong and fraudulent, say, concealing assets of the company or doing other acts calculated to obstruct execution of the decree against it and that, unless the veil of incorporation is lifted, the decree holder stands to suffer for not enjoying what the court decreed in his favour. See also THE GRAND ALLIANCE LIMITED VS MR WILFRED LUCAS TARIMO & 4 OTHERS, CIVIL APPLICATIONNO 187/16 OF 2019, CAT AT DSM. The applicant's affidavit points to no specific action of the respondents calculated at obstructing execution of the decree in its favour. Failure of the respondents to fulfil their promise to pay is no good reason for lifting veil of incorporation. For the foregoing reasons prayer for lifting veil of incorporation is refused. The application is struck out with no order as to costs. 3IPage C. P.

JUDGE 10/11/2022 Court: Ruling is delivered in the presence of Ms. Anna Kailole learned advocate for the applicant and Mr. Augustine Kusalika learned advocate for the respondent. C. P. MKEHA,

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