exim bank tanzania limited vs the m five b hotel and tours limited 2 others 2022 tzhccomd 257 10 june 2022

IN THE HIGH COURT OF TANZANIA (COMMERCIAL DIVISION)

AT PAR ES SALAAM COMMERCIAL CASE NO. 109 OF 2016 EXIM BANK (TANZANIA) LIMITED.......................... ....PLAINTIFF

VERSUS THE M & FIVE B HOTEL AND TOURS LIMITED................................. lstDEFENDANT BAKHITA MATHIAS MANGA, (Administratrix of the estate of the late Mathias Manga)....................... 2ndDEFENDANT BELINDA MATHIAS MANGA................................. 3rdDEFENDANT Date of Last order: 05/04/2022 Date ofJudgement: 10/6/2022

JUDGEMENT MAGOIGA, J. The plaintiff, EXIM BANK (TANZANIA) LIMITED by a plaint instituted the instant suit against the above-named defendants jointly and severally praying for judgement and decree in the following orders:- i. A declaration that, the 1st, 2nd and 3rd defendants, are in breach of loan facility agreement and contract of guarantee and indemnity respectively by their failure to discharge their duties and obligations in accordance with the agreement; ii. That defendants jointly and severally be ordered to immediately pay to the plaintiff the outstanding amount of USD.2,878,100/=^^ i (say United State Dollars Two Million Eight Hundred Seventy- Eight Thousand One Hundred Only); iii. That the defendant jointly and severally be ordered to pay to the plaintiff default rate interest of 14.5% charged from the date of breach of the terms and conditions of the term loan facility agreement to the date of full payment of the outstanding amount; iv. That the defendants jointly and severally be ordered to pay the plaintiff interest from the date due to the date of judgement thereof at the prevailing commercial rate; v. That the defendants jointly and severally be ordered to pay the plaintiff interest on decretal amount from the date of judgement to the date of full payment thereof at the prevailing court rate; vi. That the defendants be condemned to pay the plaintiff costs of any

incidental detriments to the suit; vii. Any other relief(s) the honourable court may deem fit and just to grant. Upon being served with the plaint, the defendants filed joint written statement of defence admitting the existence term loan facility and 2 disputing the claimed amount on the rider that the same was not settled because the whole arrangement was frustrated by plaintiff for failure among others, on-full disbursement USD.3,000,000.00, fraud, negligence in managing and the operations of 1st defendants accounts by allowing fraudulent withdrawals and drawn downs to be made without proper authorisation of the 1st defendant and eventually prayed that the instant suit be dismissed with costs. The facts pertaining to this suit are that, the 1st defendant on 2011 commenced a construction of a five-star hotel project through equity financing with other sources. However, later on given the pace and speed it was taking, apparently funds could not meet construction and therefore it was resolved that, the 1st defendant to seek bank financing by way of loan. Facts go that, the 1st defendant through the letter dated 2nd May, 2012 applied for a term loan to the tune of USD. 3,000,000/= from the plaintiff's bank. On 4th June, 2012, the 1st defendant accepted terms and condition contained in facility letter. However, before the term loan, the 1st defendant had an overdraft loan to the

tune of TZS.900,000,000/= in which on 11th July, 2012 was reviewed and the term loan facility of USD.3,000,000/= was extended to the 1st defendant in accordance with terms and conditions contained in offer letter dated 3 11th July, 2012. Further facts were that, it was agreed, among others, that said facility was to be repaid within 36 months after grace period of 12 months with interest rate of 10% per annum calculated on monthly basis and penal interest rate of 14.5% per annum on any defaulted interest and principal instalment. As security for the facility, several properties of the 1st defendant as listed in the plaint, personal guarantees and indemnity of directors in favour of the plaintiff were put as secuurity. Unfortunately, the 1st defendant defaulted in repayment of the principal sum plus interest, which act constituted an event of default under clause (16) of the Credit Facility letter and clause 7 (1) of the debenture. Efforts by the plaintiff through his lawyers to have the money repaid were in vain, hence, this suit claiming for payments of an outstanding of USD.2,878,100= as per 30th July,2016 and other consequential prayers as contained in the plaint. The plaintiff at all material has been enjoying the legal services of Mr.Makarios Tairo, learned advocate. On the other adversary part, the defendants at all material time were enjoying the legal service of Messrs. Mpaya Kamara and Edward Mwakingwe, learned advocates. 4 Before hearing started, the following issues were framed and agreed between parties for the determination of this suit, namely: 1. Whether either of the parties breached terms of the loan facility agreements and contract of guarantee and indemnity by failing to discharge their duties and obligations under those agreements.

2. If issue No 1 is answered in the affirmative, what is the outstanding amount of the plaintiff is entitled to claim, if any?

3. To what reliefs parties are entitled to? In proof of the suit, the plaintiff called 3 witnesses. The 1st witness was one, Mr. OSCAR ROBINTON NYIRENDA (to be referred herein in these proceedings as "PWI"). PW1 under oath and through his witness statement adopted in these proceedings as his testimony in chief told the court that, he is the Senior Credit Officer of the plaintiff, hence, conversant with the facts of Commercial Case No 109 of 2016. PWI went on telling the court that, on 27th May, 2012 plaintiff availed to the defendant an overdraft facility to the tune of TZS.900,000,000 (Say Tanzania Shillings Nine Hundred Million Only) which was reviewed on 11th July, 2012 and the 1st defendant was extended the term loan of USD.3,000,000/= (say United States Dollars Three Million Only) with conditions, among others, that it will attract an interest rate of 10% per annum calculated on monthly basis 5 and penal interest rate of 14.5% per annum on any defaulted interest and principal instalment as per clause 5(a) and (b) of the letter offer and the same to be repaid within 36 months after grace period of 12 months. PW1 went on testifying that, on 6th February, 2014, the 1st defendant wrote a letter to plaintiff requesting for 12 months extension of grace period in the loan account and on 7th May, 2014 the request was accepted as a such the 1st defendant was given moratorium period

of 12 months on the term loan facility of USD.3,000,000/= with an additional facility fee of 0.25% flat, other terms remained as stipulated in offer letter dated 11th July,2012. Testifying on the security of the loan, PW1 told the court that, the following securities were offered to secure the loan: - a. Legal mortgage over property situated at plot No 47 Block "EE" C.T No 10375 land registry Moshi, Ngarenaro Arusha Municipality in the name of the M & Five B Hotel Limited as listed under clause 7(a); b. Legal mortgage over property situated at plot No 123 Block "Y" C.T No 16374 land registry Moshi, Ngarenaro Arusha Municipality in the name of Mathias Erasto Manga; 6 c. Debenture over the entire assets of the company as listed under clause 7(b); d. personal guarantees of the 2nd and 3rddefendants as listed in clause 8; e. Credit facility agreement between the plaintiff and the defendant listed in clause 7(c); f. Demand promissory note of the 1st defendant as listed in clause 7(d). Further testimony of PW1 was that, the entire loan amount was disbursed in five instalments as indicated in the Bank statement as follows:- on 4th February 2013 plaintiff disbursed the amount of USD.550,760.65, on 26th February, 2013 USD. 1,045,979.72, on 21st August 2013 USD.644,094.00, on 6th March, 2014 USD. 255,266.00 and on 4th December, 2014 USD. 503,899.63 bringing a total amount disbursed to

USD.3,000,000/= According to PW1, all disbursements were made in accordance with the terms and conditions of the facility agreement as such on 30th January, 2013 to 31st January, 2014. PW1 told the court that, the 1st defendant expressed its appreciation for the loan disbursed for the construction of the hotel not only that but also the 1st defendant requested for further 7 support from the plaintiff office in terms of ensuring necessary facilitation of the project with remaining re-imbursement. According to PWI, the submission of the report and appreciation of the support in the project by the 1st defendant is a clear indication that it received the loan as agreed and utilised the same in accordance with the credit facility and that had it been true that the money did not reach the lstdefendant, it would not have been appreciated. PWI further added that, even the reasons assigned by the 1st defendant as the reasons which slowed the project, the term loan was not among the reason given neither the reasons given on the request for extension of grace period in the loan account of the M & Five B Hotel Limited none of the reasons touching term loan of USD.3,000,000.00. PWI insisted that this is a clear proof that the 1st defendant enjoyed the term loan and therefore, the 1st defendant was obliged to comply with the terms and conditions of the credit particularly discharging its

duties and obligation by ensuring the repayments of the debt. Further testimony of PWI was that, the 1st defendant failed to meet its obligations under the facility as a such on 15th June, 2015 plaintiff issued three demand letters informing the 1st defendant that it is in default while to 2nd and 3rd defendant as guarantor informing them that 1st 8 defendant has failed to discharge it obligations and therefore plaintiff demanded for payments of the outstanding amount of the loan which as per 31st May, 2015 stood at USD.3,Oil,845.51. PW1 went on telling the court that on 10th July, 2015 plaintiff issued statutory notice in relation to mortgages requiring the mortgagor to remedy the situation otherwise the plaintiff will exercise the remedies provided for under the Land Act, 1999. Despite all notices issued, the 1st defendant failed and/or neglected to pay the outstanding amount due which as of as 31st May, 2015 stood at USD.3,011,845.51. However, PW1 pointed out that instead of rectifying the default, the defendants came up with the allegations of not knowing how the loan was disbursed and used, leading the plaintiff and defendant to exchange several letters relating to the said allegations. PW1 went on testifying that, the 1st defendant on 26th August, 2015 wrote plaintiff letter requesting for an explanation on how disbursement of USD.3,000,000 loan was disbursed and used. On

28th August, 2015 plaintiff responded that, the loan of USD.3,000,000 was disbursed in five instalments according to authorisation made by the 1st defendant as follows;- i. On 4.2.2013 the amount of USD. 550,760.65, A. 9 ii. On 26.2.2013 USD. 1,045,979,72, iii. On 20.8.2013 USD 644,094.00, iv. On 6.3.2014 USD.255,266.00 v. On 4.12.2014 USD.503,899.63. PW1 went on telling the court that, again on 30th September, 2015, the 1st defendant requested for document which were still needed in connection of the term loan. The plaintiff via letter dated 23rd February,2016 EX/CM/078/2016 submitted the requested documents. Again on 29th February, 2015 the 1st defendant specifically requested for documents concerning suppliers not recognized by the 1st defendant and requested the plaintiff to investigate the genuineness of the transactions not recognized. PW1 testified that plaintiff responded vide letter dated 16th May, 2016 with Refence: No EX/LD/078/2016 informing the 1st defendant that investigation has been conducted and it has proved beyond reasonable doubt that there was no irregularity in alleged transactions on the part of the bank as all transactions were per company's instructions only and on the same letter plaintiff demanded for payments of full amount which stood at USD. 2,458,550.80 as on 30th April, 2016. io It was further testimony of PWI that, following the plaintiff

response on 14th July, 2016, the 1st defendant wrote a letter to the plaintiff informing the ongoing investigations on their side and urged the plaintiff to maintain their relationship so as to help them on the method of paying the accumulated amount and request for restructuring of the existing loan of IISD.3,000,000 and to be paid for a period of 7 years, reduction of interest to 7% and grace period of one year after topping up the loan waiver of all restructuring charges and interest accumulated. PWI went on telling the court that, the plaintiff responded vide letter dated 18th July,2016,EXCM/304/2016 informing the plaintiff that, the bank has agreed to appraisal request and the 1st defendant was required to indicate its acceptance of the indicative terms sheet by signing the same and return to the bank. However, 1st defendant did not sign the term sheet. According to PWI, the defendants are to be blamed for failure to repay the loan as agreed. The allegations of fraud and unrecognized transaction are unfounded and afterthought intending to defeat genuine claim by the bank and unfairly justification of failure to repay the loan basing on the fact that the amount alleged recognized transaction is USD.1,125.861.12 which does not tally with the amount claimed in the ii plaint. Not only that but that the 1st defendant was given 14 days from 5th June, 2016 but kept quiet without

complaining of any fraud or unrecognized transactions worse enough on 10th July, 2016 the 1st defendant was given statutory notice again but remained silence for 27 days. On the basis of the above testimony, PW1 prayed that this court be pleased to enter judgement and decree against all defendants as prayed in the plaint. In proof of the case the plaintiff tendered in evidence the following exhibits, namely; a. Offer letter dated 27 5.2011 as exhibit PI; b. Facility letter dated 11.7,2012 as exhibit P2; c. Debenture instrument dated 6.8.2012 as exhibit P3; d. Guarantee and indemnity dated 13.7.2011 as exhibit P4; e. Mortgage deed dated 6.8.2012 as exhibit P5; f. Credit facility agreement dated 12.7.2012, Demand promissory notice dated 15.6.2016 and statutory demand notice dated 10.7.2015 as exhibit P6a-c; g. 11 letters dated 16.5.2015, 29.2.2015, 28.6.2015, 30.9.2015, 28.8.2015, 26.8.2015 and 23.2.2016 as exhibit P7a-g; 12 h. Three letters dated 11.7.2016, 14.7.2016 and 18.7.2016 as exhibit P8a-c; i. Covering letter dated 30.1.2014 and 30.10,2014 as exhibit P9a- b; j. Letter for extension moratorium dated 2.5.2014 as exhibit PIO; k. Letter dated 6.2.2014 as exhibit Pll; I. Bank statement in respect of Acc. No 0792854006, Acc. No 00360026542 and loan Acc. No 0036027857 and affidavit as to authenticity as exhibit P12 a-d. Under cross examination by Mr. Kamara, PW1 told the court

that, his history with plaintiff started in November 2013 as a Loan Officer up to August 2018 when he became Senior Credit Officer in Dar es salaam headquarters. Pressed with questions, PW1 admitted to have mentioned the account of the 1st defendant as 0792854006 as a current account, account No. 0036026542 as loan account and the third account is 0036027857 in the name of the 1st defendant, but PW1 told the court that, he can't tell where those accounts were opened neither the officer who assisted the 1st defendant in opening the accounts. Under cross examination, PW1 told the court that, all loan accounts are opened at headquarters. 13 PWI when further questioned told the court that the payments in disputed periods were done by special units with different officers so it is very difficult to point out who did what and not but disbursement unit is the credit administration. However, PWI was quick to point out that, the said section has never been under him and therefore, he can't tell exactly who did it because he has never approved any disbursements nor witnessed any disbursement until when he saw them in the Bank statement. PWI when questioned on the disbursement on paragraph 8 of his witness statement told the court that, all disbursement was done by the bank and the documents for disbursements are letter for credit, form of transfer of money to the payee, invoice to the

payee, especially to loan money and after receiving the letter what follows is disbursement. PWI when shown exhibit P6b, he identified it and told the court that, in this document nowhere it was agreed that the disbursement will be due. According to PWI, in absence of such specification the only optional is to use bank best practice of using the following documents such as negotiable instrument which include cheques, promissory note and invoices. PWI when shown exhibit P7 identified it as a letter dated 30.9.2015 from the 1st defendant to the plaintiff requesting for cheque JK. 14 leaves and transfer form in which the 1st defendant was not availed with cheques because they were not available instead was availed with forms which he can't recall exactly who presented them to the 1st defendant. However, PW1 told the court the other cheques were presented in his presence by Mr. Larry Lagara an employee of 1st defendant. PW1 when further pressed with questions told the court that, all document which were presented during his tenure with the 1st defendant were not sent directly to him as a such even item 4 of March, 2014 were not presented to him.PWl when questioned on the authorised signatories of the 1st defendant told the court that, in the current account authorised signatory was Mathias Manga but he was quick to point out that, loan account are internal account which do

not require signatories and therefore Larry was not authorised signatory of the 1st defendant. PW1 when pressed with more questions told the court that, before he left Exim, he was Senior Manager and his duty was to ensure that all loan applications are processed and advice the management and when he was elevated as Senior Manager, he was among initiator of recovery process to defaulters with the bank. PW1 went on insisting that, he was not involved in disbursement and payments but it come to his knowledge through loaning documents in 15 respects of this client at bank level and the document he read was disbursement form, Bank statement and letter requesting for disbursement. PWI went on insisting that the disbursement unit is different from his department. The head of disbursement unit was Mama Nsia Charles and Gisela Swai. PWI when shown exhibit P7a identified it as a letter dated 23.2.2016 from the plaintiff to the 1st defendant explaining on how disbursement and payments were done to payees, the said letter was accompanied with 11 annexures in groups. However, those annexures were not attached to the letter because it is not necessarily to attach as it was only proof that the documents were sent to client and not payments. PWI when pressed with more questions on prove of payments, PWI told the court that, the bank statement proves that the money was disbursed into the

client account. However, he was quick to point out that the bank statement does not per see authorise payments. PWI when shown the letter dated 28.1.2013 recognized it and told the court that, he does not recall who presented it to the bank from client but the said letter was accompanied by TISS form and it is the one which enabled the bank to complete the transaction. Further questioned on disbursement told the court that, item 2 of the transaction dated 16 26.2.2013 were affected through TISS form and a letter dated 19.2.2013 asking for payments of USD. 1,450,970.72 to Group Six International Ltd, Shangai Mitsu, Arusha Aggregates, Manga Gems, Mica Computer Services, Tandaza Plumbing Contractors Ltd and Nagtech & General Supply. PW1 went on telling the court that, the said amount was based on signature verification and no call back to client for verification was done, but the paying officer compared signatures and upon satisfaction proceeded to pay. PW1 when asked on the third transaction told the court that, it was done by way of letter dated 12.8.2013 and USS form and when show the letter recognized it as the letter used to effect the payments of USD 644,094.00 to be paid to James Manga,Tandaza Plumbing Construction Ltd, Msemara Hardware Company Limited, Kapwani Alex and Universal Building Material Industrial Ltd. PW1 when shown another document from BRELA identified it as a

document reporting that, Universal Building Material Industrial Ltd its registration number is not with BRELA and another document showing Larry Bawage Lagara as auditor and partner of Msemera Hardware Supply Company Limited. PW1 also admitted that there was no call back before payments were done. PW1 when pressed with questions with payments in item 4 on the letter dated 5.2.2014 17 told the court that, Tandaza was paid USD.166,117.00 and Msemera was paid USD.95,827.00. PW1 when shown exhibit P7g identified it and told the court that, it was the letter requesting for payments of USD.255,266.00 and there was no call back to client. PW1 went on telling the court that, in item 4 the payee was Msemera Hardware Supply Ltd who was paid USD.536,921.00 and on item 5 payee was Tandaza Plumbing Contractors Ltd who was paid USD.67,312.00. PW1 admitted that the letter in item 5 at beginning was dated 13.10.2014 but later on it was amended to 25.10.2014 in which it was amended again and payment were effected on 17.11.2014. PW1 went on testifying that, the letter dated 25.10.2014 allowed some payments to Msemera Hardware Supply Ltd and the reasons for amendments was due to the fact that the requested amount was more than the balance. PW1 when asked to read exhibit 7f, read it and told the court that it is a letter from the 1st defendant requesting for an explanation on how the loan of

USD.3,000,000/= was disbursed and how it was used. PW1 when shown exhibit P7e identified that it was the letter from Exim bank to the 1st defendant as a reply to letter dated 28.8.2015. PW1 further shown exhibit P7d dated 30.9.2015 which was showing documentary 18 evidence supplied which was not supplied earlier as requested by the 1st defendant, however, later on he changed the story and told the court that, the 1st request was received on 26.8.2015 and the bank replies on 23.2.2016 more than six months and they took copies because some documents by then were in archives. PWI shown exhibit P7b identified it and told the court that, it was from the 1st defendant to the plaintiff which was referring transactions not recognized by the 1st defendant and requesting for investigation of the transactions which was fair and reasonable request for client. PWI when further shown exhibit 7a identified it and told the court that, it was a letter from the bank informing 1st defendant that, after investigations it has come to conclusion that all transaction was done by the company and were lawful, however, the letter was not accompanied with the investigation report. PWI when pressed with questions on the investigation told the court that, he does not know when it started but it was after plaintiff made the complaint and the investigation was conducted by forensic department which is under

risk and compliance. PWI told the court that he was not part of the investigation team as a such he does not know what was the terms of reference of the investigation, if the signatories of the company were interrogated and 19 he know nothing on what happened with the investigation team although the forensic report was done with his department together with police officers. PW1 when referred to the forensic report dated 15.6.2016, he admitted that they wrote to the 1st defendant that the investigation was concluded on 16.5.2016 while the report is dated 15.6.2016 means that this report came out while plaintiff has reported to 1st defendant that investigation has been conducted. PW1 when asked to read exhibit P7b told the court that they are the same and he don't know why the plaintiff filed notice of appeal to that court. PW1 admitted that they did not annex that ruling but there was nothing to hide. Under cross examination by Mwakingwe, PW1 told the court that, the investigation was done by the department of risk and compliance together with forensic of the police. Under re-examination by Mr. Tairo, PW1 told the court that disbursement is of two issues, one is the bank to credit the loan to the account and two is to allow debits to payees in the circumstance of this case. PW1 when show exhibit P6b read it and told the court that, these are general terms and conditions which

provides that there must be agreement on how the disbursement should be done. PW1 insisted that 20 these clauses are to be read together with facility letter of 2012 in respect of USD.3,000,000 (exhibit P2) which stipulate specific terms and clause 15 is very clear on the point. PW1 when shown exhibit P7d identified it and admitted that it is true the client requested for documentary documents in respect of the loan. PW1 when pressed with question told the court that payment of the loan was done through three documents letter for the client and amount transfer forms showing all details of payments and invoice from payees. PW1 insisted that cheques were not used because they were not there. PW1 when shown exhibit P 7b and P7g told the court that the plaintiff took six months to reply in writing, however, there were other communications by phones and oral communications. When pressed with more questions told the court that on 28.8.2015 they replied the letter in which it was accompanied with exhibits /annexures. PW1 went on telling the court that the bank started its investigation on 2016 and his testimony is on respect of this case only. PW1 when asked questions for clarification by the court told the court that, call back is a process where the bank needs extra evidence whether the transaction is genuine, and insisted that they did not call back because the activities done by

the account holder was enough. 21 When asked on disbursement of 26.2.2013 told the court that, it had 7 payees of USD. 1,045,979.72 on the letter dated 29.2.2016 however he recognized three payee and 4 payees were not recognized. The second witness was one E.9955 D/SGT/FAUSTINE EMMANUEL MASHAURI (to be referred in these proceedings as 'PW2'). PW2 under oath and through his witness statement adopted in these proceedings as his testimony in chief told the court that, he is police sergeant with an experience of 7 years in Forensic Bureau Criminal Investigation together with the knowledge of identifying handwritting.PW2 went on telling the court that, he do recall that on 11th May, 2016 at the Forensic Bureau Criminal Investigation department in Dar es salaam, he received the sealed parcel with ref No EB/CO/320/16 from one John Orauya who told PW2 that he was sent by the Exim Bank, in particular, by Head of Risk and Compliance, one, David Lusala. PW2 went on further testifying that, the said letter was attached with the following:- (a) Exhibit Al-A4=Telegraphic Transfer Application forms for Exim Bank (T) Limited Arusha Branch all dated 19.2.2013 with the amount figures USD. 95,827.00 and 169,226,12 respectively, 22 (b) Exhibit A5-A6=Telegraphic Transfer Application forms for Exim Bank (T) Limited Arusha Branch all dated 12.8.2013 with the amount figures USD. 95,827.00 and

169,226,12 respectively, (c) Exhibit A7 Telegraphic Transfer Application forms for Exim Bank (T) Limited Arusha Branch all dated 14.8.2013 with the amount figures USD. 100,000.00. (d) Exhibit A8-All=Telegraphic Transfer Application forms for Exim Bank (T) Limited Arusha Branch all dated 5.2.2014 with the amount figures USD. 18,518.00,53,692.00,67,312.00 and 37,000.00 respectively, (e) Exhibit A12 Telegraphic Transfer Application forms for Exim Bank (T) Limited Arusha Branch all dated 25.10.2014 with the amount figures USD. 18,609. (f) Specimen B1-B3 and B7-B15 Course of business Telegraphic Transfer Application forms for Exim Bank (T) Limited Arusha Branch all dated between 28.1.2013 and 25.10.2014 with the amount figures as USD. 67,733.00 and 266,151.00, 14,457.00 and 115,056.00 respectively, (g) Specimen B4-B6 and B18-B15 various application letters and documents written to the Bank by client in the normal course of business. * 23 Testifying on the how the documents were arranged, PW2 told the court that, documents were arranged in two groups as follows:- Group one (a) Documents from 1A-A 12 marked collectively as were "X" and group two (b) the documents from Bl and B16-B18 were marked collectively as "Y". Further testimony of PW2 was that, he was requested to find out whether signature appearing in documents marked collectively as "X" ( disputed signature) were similar to

specimen signatures in documents marked collectively "Y" which were written and signed by, one, Mathias Erasto Mwanga in his normal course of business and were not disputed. PW2 went on testifying further that, he examined and compared the disputed signature on document marked collectively as "X" together with specimen signatures on documents marked collectively "Y" through the use of modern Scientific equipment especially ( VSC 6000), and discovered similar characteristics of the letters and strokes formations between signature in documents marked collectively as X Al-A12( disputed signature) and in documents marked collectively "Y" were similar and were written by the same person, that is, Mathias Erasto Manga. PW1 went on testifying that, he prepared the report attached it with photographic enlargements showing similarities between the 24 disputed and specimen signatures for reference, clarification and records of the conclusion arrived at and eventually the report was forwarded to Exim Bank by ACP IE Mabayo (on behalf of commissioner for forensic Bureau) after the payments of TZS.50,000/= as fees for document examination. In proof of the case the PW2 tendered in evidence the following exhibits:- 1. Letter dated 15.6.2016, Forensic report and exchequer receipt as exhibit P 13 a-b; 2. Two TTS as exhibit P14a-b and the rest of 6 documents as IDli. 6 3. 12TT,1 Specimen

resolution &5 letters as ID2 i.8 Under cross examination by Mr.Kamara, PW2 told the court that, he is hand writing expert, sign expert, stamp logs expert, printing process and counterfeit bank noted.PW1 when pressed with questions told the court that, all exhibits he has tendered before this court were the one he used in his examination and prepared the report. PW2 when asked to show where he got an information told the court that, that he got information as an expert and his statement under paragraph 11 of his witness statement as to the effect that what he stated in his witness statement 25 was on his own knowledge .PWI when asked on his role, told the court that his role was to examine the handwriting of the disputed signatures by comparing the disputed and undisputed which were being made in course of business and not doing investigation. When pressed with questions PW2 told the court that he was examining the signature of Mathias Manga although he has never got specimen of Mr. Mathias Manga because he is not an investigator and his role as handwriting expert is to collect document and use his expertise to get the result. PW2 when further questioned admitted that what was stated in paragraph 1, 2 and 3 are true and he has no knowledge if Arusha Forensic Bureau did investigation because he was a witness in commercial case No 104 of 2017 in which he was not shown the

said report. PW2 put into further cross examination told the court that the report was brought to police from Exim Bank and when asked to read paragraph 8 of the witness statement read it and told the court that he was asked by Exim Bank. PW2 shown ID1 and asked to show mark 'X' 'Y', PW2 identified and was quick to point out that, mark 'X' in ID1-6 are in IDs and the columns show specimen for investigation and mark 4 is all documents. PW2 when pressed with more questions told the court that, it is true that the addressee was a commissioner but he received 26 the parcel from John Orauya because he introduced himself as from Exim and there was no letter from commissioner directing him but he did it because he was doing his daily routine. PW2 when asked on the purpose of forensic examination told the court that, the purpose was to examine the disputed signature and undisputed signature to establish the truth of the issue. PW2 when shown ID 13& 15 told the court that, those ID were undisputed document in Dar es salaam, however, in Arusha were examined as disputed but looking at Arusha report ID 13 & 15 the content is the same but printing source are doubtful. Under re-examination by the Mr. Tairo, PW2 told the court that, there are two ways in which examination can be done when investigator has to establish disputed and undisputed by taking the disputed and undisputed in the course

normal course of business. In this case categorization was done by the bank because they had doubt whether signed or not. PW2 went on testifying that in his duties it does not require signer because his duty is to examine annexures received from the client. PW1 when asked on the meaning of disputed and undisputed signature was quick to point out that, disputed signature was doubtful but undisputed are that one not in dispute. PW2 when pressed with more questions told the court that, they can receive from the 27 government and private institution and admitted that the letter was addressed to Commissioner but he received it because he does his duties on behalf of the Commissioner. PW2 when asked questions for clarifications by the court, clarified that the Forensic Bureau office of Arusha was established in 2015. PW2 when asked if the case had public interest told the court that it had no public interest for it to be brought at the Headquarter in Dar es Salaam. PW2 went on to clarify that the Arusha got machine in earlier 2016 while he did his report in June 2016 in which all documents examined revealed that were signed by one person but the finding in examination conducted in Arusha had different findings. The third witness was one Mr. DAVID JAKA LUSALA (to be referred herein in these proceedings as "PW 3"). PW3 under oath and through his witness statement adopted in these

proceedings as his testimony in chief told the court that, he is Head of Risk & Compliance of the plaintiff with roles of managing market risk, managing credit risk governance, managing operational risk including fraud risk, managing compliance risk and managing liquidity risk and he has been in this position for 4 years. PW3 went on telling the court that, sometimes in March, 2016, he received communication exchange between the plaintiff and the 1st 28

I II defendant which were forwarded to him by Mr. Sandeep Singh in respect of some transactions alleged not recognized by the 1st defendant. PW3 went on testifying that, on 11th May, 2016 he wrote letter with ref No EC/CO/320/16 to chief police Bureau, Tanzania Police force headquarters in Dar es salaam requesting for examination of disputed signature and expert opinion the said letter was attached with same documents PW2 received. It was a testimony of PW3 that, he arranged the above document into two groups as follows (a) Documents from 1A-A 12 marked collectively as were "X" ( b) the documents from Bl and B16-B18 were marked collectively as "Y". Further testimony of PW2 was that, in his request, twelve documents 1A-12A marked collectively as "X" were those that were disputed to be signed by Mathias Manga and those which were signed by Mathias Manga in the ordinary course of business and were not in dispute were marked collectively "Y" and 18 specimen B1-B18. PW2 went on testifying further that, sometimes in June, 2016 he received document examination report which were prepared by E 9955 Sgt Faustine Emmanuel Mashauri forwarded by one J.E Mabeyo -ACP . According to PW3, the disputed signatures on exhibits 1A-A 12 and marked "X" and 29 specimen signature on specimen Bl -B18 marked "Y" were similar and were written by Mathias Manga. PW3 went on telling the court that, on 16th

May, 2016 he wrote the 1st defendant letter with ref No EX/LD/078/2016 informing them that plaintiff has conducted the investigation on the transaction mentioned on their letter as per their instructions and there is no irregular on the part of the plaintiff as all transaction were disbursed according to the 1st defendant's instructions. On the basis of the above testimony, PW1 prayed that this court be pleased to enter judgement and decree against all defendants as prayed in the plaint. In proof of plaintiff case, PW3 tendered the following exhibits: - a. 6TT dated 19.2.103,19.2.2013,19.2.2013,19.2.2013,12.8.2013 and 14.8.2013 as exhibitP15 a-f; b. 12 TT forms, 5 letters and 1 special resolution as exhibit P16a-r; c. 4 TT forms dated 12.8.2013, 5.2.2014, 5.2.2014 and 25.10.2014 as exhibit P17 a-d. Under cross examination by Mr. Kamara, PW3 told the court that, he know the meaning of being in under oath and the consequences of telling lies .PW3 went on telling the court that he has never worked with Arusha Branch and that he was neither involved in opening bank A account of the 1st defendant and also he can't recall who authorized its opening. PW3 when asked on Exim mandate file on account No. 0792854006 told the court that, mandate file is a primary document which introduces client and his business which is signed by the client and the bank official during opening of the

account. Pressed with questions, PWI admitted that mandate file was signed by Mathias Manga at page 7, however, it was not among document which were submitted for investigation of handwriting. Pressed with more questions, told the court that, specimen signatures are taken by signing special document purposely for specifying the signature on specimen signature card and are taken during opening of the account. However, it was not among the documents they submitted for specimen examination because they did not have it before going to bureau. PW3 when shown exhibits P15, P16 and Pll identified them and told the court that the documents were received from Sandeep Singh and not from Mathias Manga and when exhibits P15, P16 and P17 presented for filing was not working in Arusha. PW3 went on to tell the court that, the categorisation of documents was done by credit department particularly Sandeep Singh and is the one who determined the signature. When shown exhibit 13b and P7a was quick to point out that, they received the report on 15.06.2016 whereby the reply to the 1st defendant was done on 31 16.5.2016 one month before the report. PW3 when asked on the outcome of the report told the court that, there were two conclusions in Arusha the finding were that, the documents were signed by different person while on the findings of Forensic Bureau at Dar es Salaam documents were signed by

one person. Under re-examination by Tairo, PW3 told the court that, the court ordered submission of the document to police Arusha through CID Headquarter Dar es salaam, the letter was written by Head of department of after verification that the signature was the same but for further investigation they went for forensic report. PW3 when asked questions for clarifications told the court that he does not recall reading the Arusha report. This marked the end of hearing of plaintiffs case and same was marked closed. In defence, the defendants were defended by 4 witnesses. The first witness was one Mr. SEBASTIAN GERMANUS SEBASTIAN (to be referred in these proceedings as 'DW1'). DW1 under oath and through his witness and supplementary statement adopted as his testimony in chief told the court that he is Group Financial Controller and Head of Finance of Manga Group of Companies. DW1 told the court that he has 32 personal knowledge of all facts relevant giving rise to plaintiff claim, hence conversant and competent to depose the evidence on behalf of defendants. DW1 went on testifying that, on 2nd day of May, 2012, the 1st defendant applied for a term loan of United States Dollars Three Million Only (USD.3,000,000/=) to plaintiff bank for the purposes of constructing of Five-Star tourist hotel in Arusha and on 11th July,2012 plaintiff approved the term loan amounting to USD.3,000,000/=

in terms and conditions as contained in article 1 of the general terms and condition. DW1 quoted Article 1 of the general terms and conditions and told the court there was no agreement as to how the loan will be disbursed. According to DW1, since there was no conditions on how the loan could be disbursed the general practice of the bank would have used. DW1 went on telling the court that, the disbursements were affected by letter written on behalf to Mr. Manga accompanied by supplier invoice, transfer form or any withdrawal provided by the plaintiff and other negotiable instrument signed by Mr. Manga as a sole signatory of the current account and loan account. According to DW1, the operations of the 1st defendants' account were irregularly operated. DW1 went on telling the court that sometimes on August, 2015 when the 1st defendant 33 made a request for disbursement, he was informed by plaintiff that the whole money of USD.3,000,000 has been utilized, which according to DW1, the 1st defendant has not utilized the entire amount. It was the testimony of DW1 that on 26th August, 2015, the 1st defendant wrote plaintiff letter requesting explanation on how disbursements were made, the manner in which each disbursement was request and affected, telegraphic transfer used to withdraw the requested amount, original cheque leaves signed by sole signatory and original invoice from payee

or any other document supporting the payment requested and it requested for original copies of letter requesting disbursement. DW1 went to tell the court that, vide letter dated 28th August 2018 plaintiff informed the 1st defendant that the money was disbursed on five instalments as follow:- I) USD. 550,760.65 made on 4.2.2013, II) USD. 1,04,979.72 made on 26.2.2013, III) USD. 644,094.00 made on 20.8.2013, IV) USD. 255,266.00, made on 6.3.2014, V) USD. 503,899.63. made on 4.12.2014. Testifying further DW1 told the court that, he was ordered by his Director one Mathias Manga to scrutinise the document received from^^ 34 plaintiff after going through the document he noted some anomalies and irregularities including unauthorized, unknown transactions and a number of irregular transactions in which payments were made to third parties. DW1 went on telling the court further that, after discovery on those anomalies, the 1st defendant on 30th September,2015 informed plaintiff on anomalies and requested for additional documents indicating how transaction were disbursed, authorized and how payments were affected. DW1 told the court that, on 23rd February, 2016 after five months of the request plaintiff availed 1st defendant some of documents but not all. DW1 pointed out that the additional document received were reviewed and he noted that some transactions which were not known at all by

the 1st defendant, never authorised, unauthorised payments made to third parties, unauthorised payments made to non- existing persons and unauthorised payments made to persons known to the 1st defendant but who he did not authorise payments. DW1 went on making clarification on how payment were made to non- existing persons and persons whose existence is unknown to BRELA he pointed that the amount USD 100,000,00 was paid to Universal Building Material Limited on 21st August,2013, USD. 170,010.00 paid to Maji Tech and General Supply on 27th February, 2013 and USD.95,837.00 paid to Msenera Hardware and Supply Company Limited. According to DW1, these 35 payees do not exist in the data base of BRELA and hence do not exist as legal persons. DW1 went on mentioning that, there are certain amounts paid to payees who are totally not known to the 1st defendant nor have contractual or business relation with the lstdefendant. These payments of USD. 121,480.00 paid to Mica Computer service on 27th February, 2013 payment USD. 18,528.00 paid to Energy Service limited on 7th March, 2014, payment of 169,236,12 paid to Tandaza Plumbering Contractors Limited on 27th February,2013, USD 166,127.00 paid to Tandaza Plumbering Contractors Limited on 21st August,2013 and USD. 67,322.00 paid to Tandaza Plumbering Contractors Limited paid on 7th March, 2014. According to DW1, these payments were made

without authorisation and without proper mandate to unknown persons who have no contractual relationship with the 1st defendant. More so, DW1 told the court further that there were some payments which were paid to payees known to 1st defendant but without authorisation and proper mandate of the 1st defendant these payments include USD. 108,000.00 paid on 26th February, 2013 and USD 37.000.00 paid on 8th March, 2014 to S.E.C (East Africa Company Limited) which after payments were transferred to CRDB, NIC, KCB Banks and number of Chinese Banks. DW1 told the 36 court that, S.E.C (East Africa Company Limited) was once subcontractor employed by the 1st defendant for supply and installation of lifts elevator and escalator and he was paid fully for the work done to the tune of USD. 170,000.00 by the 1st defendant on 4th, February, 2013. According to DW1, any payments made subsequently including the payments of USD. 145,000 were neither authorised nor mandated by the 1st defendant. However, though the agreement termed as parties' unequivocal compromise, S.E.C (East Africa company limited) agreed to refund the said money in two instalments but plaintiff frustrated the exercise for refusal to provide computation of interest, penalties and delay in reactivation of the lstdefendant current account and loan account where payments were to be made. Testifying further on what was revealed on

the investigation DW1 told the court that apart from payments to unknown, to non- existing and to those known but not authorized there was some payments which were not reflected in the Bank statement these are payments of USD. 96,000.00 to Gu Yu Aluminium Doors, USD. 25,000 paid to Guangdo Shiyi Furniture Company the sum of USD. 24,609 paid to Msemera Hardware Supply Company Limited and the sum of USD.215,056.00 paid to Six International Limited. According to DW1, these payments were 37 paid but do not reflect in the Bank statement. DW1 went on telling the court that, Mr. Manga instructed his accountants including DW1 and legal team to work with plaintiff and initiate investigation into the manner in which unauthorized and irregular transactions were made and effected. I It was testimony of DW1 that, all these payments which 1st defendant have complained were fraudulently withdrawn without plaintiff making usual confirmation inquiries with Mr. Manga the sole signatory of the current. According to DW1, the plaintiff's officials are privy to collusive scheme which resulted into fraudulent withdrawals caused by their failure to use the means and material in their disposal for the identification of authorized mandate signatories of the 1st defendant. Not only that but also pointed that the plaintiff acted negligently for allowing payments to third persons and withdraw of the money

without presentation of cheques and any negotiable instrument contrary to baking rules and procedures. According to DW1, the acts of the plaintiff constitute clear breach of banker's duties in customer relationship that exist between the parties. Further testimony of DW1 was that, the plaintiff failure to take reasonable skills, exercise due care, diligence and failure to apply proper polices, as such the 1st defendant suffered loss 38 and damages including, among others, loss of USD. 1,435,757.25 an amount which were fraudulently and negligently withdrawn without plaintiff instruction or mandate. Further testimony of DW1 was that, the transactions in which suit is based are tainted with fraud and negligence on the part of plaintiff. The loan account, DW1 went on telling the court that, the manner in which plaintiff's officials assisted fraudulent withdrawals against the 1st defendant money for failure of the plaintiff to make usual confirmation. DW1 told the court that following the said anomalies on the transactions, the 1st defendant through his director initiated investigations at the Region Crimes Office (RCO Arusha ARR/1R/6393/2016.) but plaintiff refused provide any support to RCO, the act which made 1st defendant to institute Criminal Application NO 16 of 2017 in the Resident Magistrate's Court at Arusha seeking, among others, compelling Branch Manager to surrender

certain original documents for forensic examination and by its ruling dated 2nd May,2017 the Branch Manager was ordered to produce listed document to RCO but up to the date of making this statement no document has been surrendered to RCO.DW1 testified that, plaintiff through his letter on 16th May, 2016 informed the 1st defendant that, they have conducted 39 investigation on transactions claimed by the 1st defendant that they have proved beyond reasonable doubt that there are irregularity alleged transactions attributed by the plaintiff. Following plaintiff report, the 1st defendant requested the meeting with plaintiff in the view exchanging information regarding the investigation carried by each party. However, plaintiff did not act upon the request to meet with the 1st defendant but rather he wrote 1st defendant letter dated 11th July, 2016 informing the 1st defendant that his account with the bank has been operating irregularly contrary to banks regulations and on that note asked the 1st defendant to submit proposal and plan on how to manage its exposure. Not only that, but also requested for joint meeting which was to be held on 13thJuly, 2016. DW1 went on telling the court that, Mr. Manga and his lawyer attended the meeting in which the issue of fraudulent transactions and criminal investigation were discussed and following the outcome of the meeting on 14th July,2016, the

1st defendant wrote to plaintiff requesting, among others, additional top up of facility of USD.3,000,000/= and in return the plaintiff by its letter dated 18th July, 2016 accepted some of the 1st defendant request, including restructuring of the repayments of the term loan but at the same time the plaintiff on 29th August,2016 40 instituted the instant suit relying on demand notice dated 15th June,2016 and statutory notices dated 10th July, 2015. According to DW1, these notices were overtaken by subsequent event including the agreement for restructuring. DW1 further told the court that it is true it was agreed that USD. 3,000,000/= to be sanctioned by plaintiff and extended to defendant as per offer letter but was quick to point out that same was not fully disbursed, drawn down and utilized by the 1st defendant. DW1 admitted and concluded that the amount which was disbursed and utilized was USD 1,125,861.12 as per institution of this case and non-payments of the said amount was curtailed by the plaintiff negligence and fraudulent actions and omission of allowing unauthorized draw downs and withdrawals to be made in the first defendant current account and loan. In the circumstances, DW1 asked this court to dismiss this suit. In his supplementary witness statement DW1 told the court that, he is making supplementary witness statement on behalf defendants jointly under his

capacity as a Finance Controller and Head of Finance of the 1st defendant company. DW1 went on to tell the court that, in addition to previously statement and in particular on the criminal investigation conducted by Regional Crimes Officer -Arusha in ARR/6393/2016 told the 41 court that forensic examination were conducted to some of the documents that initiated disputed report dated 9th October,2017 with reference No ARR/FB/LAB/33/2017.DW1 went further telling the court that, in the forensic report it was discovered that number of payments were made in forged TISS form some of which are;- 1. Payments through TISS form dated 5.2.2014 with amount of USD. 6712 to Tandaza Plumbering as payee on 7.3.2014.

2. Payments through TISS form dated 19.2.2013 with amount of USD. 121,470/= to Mica Computer as payee on 27.3.2014.

3. Payments through USS form dated 19.2.2013 with amount of USD.170,000/= to Maji Tech as payee on 27.3.2014.

4. Payments through TISS form dated 12.8.2013 with amount of USD.166117 to Tandaza Plumbering as payee on 7.3.2014.

5. Payments through TISS form dated 19.2.2013 with amount of USD.169,226.12 to Tandaza Plumbering as payee on 27.2.2013.

6. Payments through TISS form dated 19.2.2013 with amount of USD.108,000/= to SEC EA Ltd as payee on 26.2.2013.

7. Payments through TISS form dated 25.10.2014 with amount of USD. 18,609/= to Msemera Hardware as payee on 13.12.2014. 42 8. Payments through TISS form dated 14.8.2013 with amount of USD.100,000/= to universal Building as payee on 21.8.2013 9. Payments through TISS form dated 5.2.2014 with amount of USD.53,692/= to Msemera Hardware as payee on 7.3.2014.

10. Payments through TISS form dated 12.8.2013 with amount of USD.95,827/= to Msemera Hardware as payee on 21.8.2013 Further testimony of DW1 was that, according to forensic report the signature appearing all TISS forms dated 19th February,2013,12th August,2013 and 5th February,2014 and all documents used to withdraw and transfer the money from current and loan account of the 1st defendant did not bear the signature of Mr. Mathias Manga sole signatory of the accounts. However, those disputed signature indicated to have been signed by one Larry Pawegi Lagara.DW1 pointed that they noted that in those disputed transactions there was increase of 10% as bank charges and there some amount their documents were not taken for forensic examination like the payments of USD. 18,528 paid to Energy Service Limited and USD.37000 Paid to S.E.C ( East Africa ) Limited. According to DW1, if all disputed documents could have been taken to forensic examination the total amount fraudulently withdrawn would have shown larger amount than what they know now. J 43 DW1 went on testifying on investigation conducted by police in criminal investigation, legal and investigation team, that all payments were made without negotiable instruments, without proper mandate or authorisation on the basis of forged signature and forged mandate and that some payments were made to entities belonging to perpetrators

of fraud such as Tandaza Plumbering, which is company controlled by Hillary Pawegi Pagara who stand charged in criminal case No. 242 of 2016. DW1 testifying on the loses and damages caused by the plaintiff told the court that 1st defendant employed on David Tuhaye independent consultancy to conduct a study and issue a report in which on 23rd July 2018 found out, among others, that there is cost overrun by delay in completion of USD.2,859,530/= causing increase costs of construction of the hotel from USD. 10,405,266/= initially estimated to USD. 13,264,797.85, loss of profit estimated at USD.8,161,488/=, Loss of expected benefits derived from project estimated at USD. 39,915,078.00 by the year 2019. On that note, the defendants reiterated their prayer in their previously statement and further stated that plaintiff is not entitled to any prayer contained in the plaint and urged the court to dismiss the suit with costs. c 44 DW1 in disproof of the plaintiffs case DW1 tendered the following exhibits:- a. prayed that exhibit P2, exhibit P7, Exhibit P8 Exhibit P12a to form part of the defence case. b. Letter from M & Five Hotels to RCO -Arusha dated 11.7.2016 as exhibitDl c. Letter dated 12.7.2016 from RCO Arusha to M-5 Hotels & Tours Ltd as exhibit D2 d. Ruling of Resident Magistrate court dated 2.5,2017 as exhibit D3 e. Notice of appeal dated 5.5.2012 as exhibit D4 f. Three letters

dated 2.5.2012, 5.5.2012 and 29.5.2012 as exhibit D5 a-c g. Affidavit of Upendo and Search report from BRELA to Upendo as exhibit D6a-g Under cross examination by Mr. Tairo, DW1 told the court that, he is an employee of Manga Group of companies since 2014 as Financial Controller and Head of Finance and when the project started Larry Lagara and himself were dealing with the operation of M& 5 Hotels and tours Ltd. DW1 pressed with questions told the court that, the problem 45 started on 2015 and his boss Mr. Manga was the one who informed them on fraud and after summoning him to Arusha. DW1 when asked to read paragraph 5 of his witness statement read it and told the court that, he has person knowledge of the case, however, when shown exhibit D5a dated 25.5.2014, 5.5.2012 from the 1st defendant dated 5.5.2012 and 2.5.2012 told the court that, he got the information from his director and after reading it he came to know the contents of documents. DW1 when questioned on the amount missing told the court that, the missing money is USD. 1,125,684/= and they claimed for payment of USD. 1,435,757.25 for negligently allowing withdrawals in the current account of the 1st defendant by accepting forged document from Mr. Larry and it was possible because he was aided by plaintiff officers as in current account payments are done where there is cheque, invoice and transfer form. In this case

there was none and payments were done which is a bad bank practice. DW1 went on insisting that, the amount claimed is more than USD. 1,435,757.25 as per calculation of transfer forms. DW1 told the court that he worked with Equity Bank so he knew the bank procedure. DW1 shown exhibit P2 and P6 identified them and told the court that these are offer letter and credit facility between parties and the purpose 46 of letter and credit facility is to put terms and conditions of the loan and which offer letter is for specific loan with specific terms. And in repayments of loan in 36 months equal instalments after the expiry of moratorium of 12 months and during grace period borrower pays only interest alone but starts to pay principal sum after expiry of grace period. DW1 put into further cross examination told the court that, the 1st defendant has repaid the loaned money as the loan was paid through the 1st defendant's account No 0792854006 as follows:- On 22.2.2015 USD.45,000.00, On 5.3.2015 USD.26,690.00, On 18.10.2014 USD.40,000/=, on 3.12.2015 USD.70,000/=, on 29.12.2015 USD.150,000/=, on 5.10.2015 USD.230,000/= and on 3.11.2015 USD. 100,000/=. DW1 when shown exhibit P6d and exhibit P6d identified them and told the court that, are demand notices to Managing Director of the 1st defendant of USD.1,196,212.60 dated 15.6.2015 and demand notice to Mathias Erasto Manga of USD.

2,815,632.91. DW1 when pressed with questions told the court that, on 10th July, 2015 the schedule was showing the amount of 3,037,634.00. However, on exhibit P12a-c, the amount was decreased because the amount of USD.48,000/= was paid but the 1st defendant was not discharged. 47 DW1 when shown exhibit Pll identified them and told the court that, these are letters from the 1st defendant to plaintiff asking for extension of grace period of 12 months on the loan account between December, 2014 to June, 2015 inclusive. DW1 when asked on the report told the court that, he did not write the report it was prepared by consultancy and they relied on that report while the forensic report was done by police unit with intent to reveal the fraud committed by the bank. DW1 further cross examined told the court that, there is criminal case No. 242 of 2016 pending in Arusha against Lagara. Under cross examination by Dr Onesmo, DW1 told the court that, the loan was of USD.3 Million and the forged amount is 1,435,757.25. Pressed with questions DW1 told the court that, Larry Lagara was an employee of the 1st defendant as Financial Consultancy but not a signatory. DW1 pressed with more questions told the court that, the 1st defendant made a complaint of fraud to police and during investigation police got the documents from the bank. DW1 when asked on KYC told the court that 'know your

dient/customer' at the entry point. DW1 went on telling the court that, some payments were paid to CRDB, KBC and other banks. JU 48 Under cross examination by Mr. Michael, DW1 told the court that, one of the payees was SGC suppliers Ltd and the 1st defendant has no claim against them. Pressed with questions on the one who reported the matter, DW1 was quick to point that, the 1st defendant's report was made to police but he can't recall when it was made and he is not the one who reported the complaint to police. Pressed with more question DW1 told the court that, during their reconciliation it was discovered that there was genuine clam and fake claims. DW1 when asked where he got the information told the court that, his testimony is based on the records of the company. Under re-examination by Mr. Kamara, DW1 told the court that under paragraph 10 of his basic witness statement he said they wrote plaintiff requesting for meeting. DW1 when asked on the meaning of KYC told the court that it means 'know your customer' at entry point and subsequent transactions, authorisation and verification of the transaction. According to DW1, Exim Bank Limited did not to do KYC on behalf of the 1st defendant. Pressed with questions DW1 told the court that, they did not sue payees because they have the contract with Exim Bank Limited. DW1 insisted that his verification is clear because he

got 49 the information from the records as such his evidence is not hearsay evidence. Under re-examination by Mwakingwe, DW1 told the court that in forensic report they based on the document they have. DW1 told the court that in his witness statement he said the amount is more that USD. 1,453,757.25 and that figure in dispute was arrived after he made the calculations after getting the document and the real problem is lack of cooperation from Exim Bank Limited. DW1 when asked questions for clarifications by the court, he pointed out that, what is disputed is USD.1,453,757.25 but USD.1,125.861.12 is not in dispute when one adds it up it brings the total of USD.2,561,618.37 and the difference of USD. 438,381.65 was used to pay the loan which is problematic. The second witness was one D.7310 D/SGT/ MUSTAFA RASHID (to be referred in these proceedings as 'DW2'). DW2 under affirmation and through his witness statement adopted in these proceedings as his testimony in chief told the court that, he is police of with the rank of detective sergeant and has been working with police force since 1988 whereby on 1992 was elevated as detective to date with an experience and conversant with his duties as investigation officer. DW2 went on 50 telling the court that in his normal duties together with other detectives, among others, conducted investigations of file No AR/IR/6393/2016 relating

criminal investigation on criminal case No. 242 of 2016 instituted by Republic against Larry Pawegi Lagara and two others pending in the Resident Magistrates' Court of Arusha. DW2 went on telling the court that in conducting criminal investigation he collected various information, document and specimen signature and hand writings from various persons including Mr. Larry Pawegi Lagara, Mr. Mathias Erasto Manga for purpose of carrying out forensic examination of documents especially signature and handwriting that were disputed leading to criminal investigation and institution criminal case No. 242 of 2016. DW2 further testimony was that, the documents collected and submitted to forensic examination include disbursement letters, TISS application forms and invoices specified as A1-A19 which include six letters with ref: NO.M5/EXIM/8/2013 dated 19.2.2014, NO.M5/EXIM/3/2014 dated 21.2.2013, No. M5/EXIM/11/2014 dated 5.2.2014, No. M5/EXIM/12/2014 dated 25.10.2014, NO.M5/EXIM/2/2012 dated 5.6.2012, NO.M5/EXIM/9/2013 dated 12.8.2013, Ten TISS of cash transfer USD.67,312/= dated 5.2.2014, USD. 12,1470/= dated 19.2.2013, USD.170,000 dated 19.2.2013, USD.16,6117/= dated 12 .8.2013, USD. 16,9226.12 dated 19.2.2013, USD. 108,000 dated 51 19.2.2013, USD. 18,607/= dated 25.10.2014, USD. 100,000/= dated 14 .8.2013, USD.53,692/= dated 5.2.2014 USD.95,827/= dated 12.8.2013, one proforma invoice

with serial No VRN No 40-007794-W dated 13.2.2013, 121470 one Delivery note No. 0067 dated 28.2.2013 and one invoice No.0019 dated 28.2.2013 all bearing disputed signature and handwriting. Further testimony on forensic examination, DW2 told the court that, he obtained Exim Mandate file of Account No 0792854006-bearing signature and handwriting purported to have signed by Mr. Mathias Manga, further D/Cpl Abdallah Mwiko requested hand witting and signature of Mathias Manga which were made in their presence on thirty four sheets of paper also they went further collecting Mathias Manga signature in mining Agreement signed on 13th April 2012 prior to institution of criminal case. Also, DW2 collected not only that but D/Cpl Abdallah Mwiko requested writing specimen from Abdallah Hussein which were made in their presence and also collected One iron business proposal from Mr. Abdallah Hussein containing handwriting purported to have been written by him on 8th November,2011 prior to commencement of criminal investigation. More so, D/Cpl Abdallah Mwiko request witting specimen from Mr. Larry Pawegi Lagara including his 52 handwriting which were made in their presence on twenty-seven sheets of paper. Also they went further to collect from CRDB Bank mandate file of account No 0150300952000 and from NIC Bank Mandate file of account No 2000115641 both contained signatures purported to

have written by Mr. Lagara prior to initiation of the criminal investigation, Mathias Manga signature in mining Agreement signed on 13th April 2012 prior to institution of criminal case. DW2 went on telling court further that, D/Cpl Abdallah Mwiko requested writing specimen from Mr. Goodluck Pallangyo which include his signature which were made in their presence on four sheets of paper and also collected three Delivery Note with serial No 35353, 35140 and 34781 all contained signatures purported to have signed by Mr. Pallangyo prior to commencement of criminal investigation. DW2 testified further that after satisfaction of the information gathered the file was sent to RCO Arusha, the RCO office sealed the document with a covering letter dated 8.9.2017 addressed to Forensic Bureau of Tanzania Police Force-Arusha Region and F 3626D/CPL Abdallah Mwiko was instructed to present sealed packet to Forensic Bureau -Arusha Region for forensic examination on the document which were disputed in the 53 said criminal proceedings and which were subject of criminal investigations. Further testimony of DW2 was that, on 9th October, 2017 the Forensic Bureau issued its report contained in the letter bearing reference No ARR/FB/DOC/LAB/33/2017 titled examination report (the forensic Report). According to DW2, the examination and opinion contained in the forensic investigation Report was made on

the basis of the documents information and specimen signature and hand writing submitted to the forensic, and, therefore, the conclusion and opinion made in the forensic examination report are true and correct in all material respect and were indeed made out of the information, documents and specimen collected in course of normal duties as investigating officers. In disproof of plaintiff claims, DW2 tendered in evidence the following exhibits namely: - a. Documents bearing disputed signatures and handwriting as exhibit D7a-s b. Document bearing specimen signature and handwriting purported to be and signed by Mathias Manga on his course of normal business as exhibit D8a-jj; 54 c. 16 documents bearing specimen and handwriting purported to be written by Abdallah Hussein in his normal course of business as exhibit D9a-p; d. 29 documents bearing specimen handwriting purported to be written by Larry Pawegi Lagara in his normal course of business as exhibit D12a-cc; e. 7 documents bearing specimen handwriting purported to be written by Goodluck Pallagyo in his normal course of business as exhibit D13a-g; Under cross examination by Mr. Tairo, DW2 told the court that other documents are in Arusha in criminal case No. 242 of 2016, however, he used TISS forms. DW2 told the court that, the 1st accused is Larry Pawegi and other his co accused, Larry Pawegi was advisor of Mathias Manga,

Abdalla Hussein was the Manager of Mathias Manga and Palagyo was a store keeper. DW2 pressed with questions told the court that Larry Pawaga is the one who forged the signature of Mathias Manga. DW2 told the court that he started his investigation after being instructed to conduct investigation by RCO on the complaint of forgery and stealing of USD. 1,07,253.12. DW2 when asked on the procedure told the court that, after investigation file is opened, the RCO writes a 55 letter to the bank which is used to collect documents, the bank issues the requested document by letter and that is the same procedure they used to get the document to NIC Bank. DW2 when asked on the letter from RCO told the court that the letter is with RCO is not in this court because is not in dispute. Under cross examination by Dr. Onesmo, DW2 told the court that, when the complaint is received and got a reference numbers and RCO gives directions on the collection of disputed signature & handwriting samples of all people concerned with examination. And that his investigation is based on the directives of RCO. Pressed with questions, DW2 told the court that, the disputed are B1-B36. DW2 shown exhibit D8e, D8g identified them and told the court that these are TISS Forms of USD. 108,000 paid to East African Company, USD. 37000.00 East Africa Company are in sample of disputed. Under re-examination by Kamara, DW2

told the court that, disputed signature had more amount than what is written in the letter the total amount is USD. 1,07,253.25. Pressed with questions told the court that samples were written by Mathias Manga and they were written before DW2 in order to compare and examine disputed signatures after collection he submitted them to forensic. DW2 pressed with more 56 questions told the court that, he was an in charge of investigation of the case file so others were working under his orders. DW2 told the court that, all documents from the bank were received with a covering letter which is not before this court because is not disputed. The third witness was one G.1875 FIKIRI TEMAUNJI (to be referred in these proceedings as 'DW3'). DW3 under affirmation and through his witness statement adopted in these proceedings as his testimony in chief told the court that, he is Detective Constable of police currently working at Forensic Bureau of Tanzania Police Force in Arusha region. And that on 2011 he undertook the course in forensic document examination and was appointed as hand witting expert and document examiner and therefore he is qualified document examiner. DW1 went on telling the court that under section 205 (1) of the Criminal Procedure Act, [Cap.20 R.E.2019] he always do examination of various documents which were supplied to him by the office of RCO Arusha Region in his normal

duties. DW3 went on telling the court that, on 8th September, 2017 at Forensic Bureau of Arusha Region received a sealed Packet from F3626 D/CPL Abdallah Mwiko to have been sent from the office of RCO - Arusha Region with a covering letter reference No ARR/CID/B.1/7GEN/VOL.40/231 dated 5.9.2017 which purported to 57 have been signed by RCO -Arusha Region requesting for examination of disputed signature and the documents supplied to DW3 for forensic examination were clustered in five groups as follows:- A. Exhibits, A1-A19 contained six letters with ref No M5/EXIM/8/2013 dated 19.2.2013, No M5/EXIM/7/2013, dated 28.1.2013, No M5/EXIM/11/2014 dated 5.2.2014, No M5/EXIM/12/2014 dated 25.10.2014, No M5/EXIM/2/2012 dated 5.6.2012, No M5/EXIM/9/2013 dated 12.8.2013, Ten TISS of cash transfer USD.67,312/= dated 5.2.2014, USD.12,147/= dated 19.2.2013 USD.170,000/= dated 19.2.2013, USD.166,117/= dated 12 .8.2013, USD.169226.12 dated 19.2.2013 USD.108,000/= Dated 19.2.2013 USD.18607 dated 25.10.2014, USD. 100,000/= dated 14 .8.2013 USD.53,692/= dated 5.2. 2014 USD.95,827/= dated 12.8.2013, one pro-forma invoice with serial No VRN No 40- 007794-W dated 13.2.2013, 121470 one Delivery note No. 0067 dated 28.2.2013 and one invoice No 0019 dated 28.2.2013 all bearing disputed signature and handwriting. B. Exhibit, B1-B36 bearing thirty-four sheets of paper, Exim Bank Mandate file of Account

0792854006 and one Mining Agreement dated 13.4.2012 all bearing specimen signature and handwriting 58 purporting to be signed and written by Mathias Manga after being requested by police officer and his normal course of business. C. Exhibit C1-C16 comprising fifteen sheets of paper and one Iron Ore business proposal dated 8.11.2011 all bearing specimen handwriting purporting to be written by Mr. Abdallah Hussein after being requested by police officers and in his normal course of business. D. Exhibits Dl-29 Having twenty-seven sheets of paper, CRDB mandate file of account No 0150300952000, and one NIC Bank mandate file of account No 2000115641 all bearing specimen handwriting purporting to be written by Mr. Larry Pawegi Lagara after being requested by police officers and in his normal course of business. E. Exhibit E1-E7 comprising four sheets of paper and three delivery notes with serial No 35353, 35140 and 34781 all contained signatures purported to have signed by Mr. Pallangyo after being requested by police officers and in his normal course of business. Further testimony of DW3 was that upon satisfaction of his verification he entered details in the register according to instruction of RCO and in the course of examination of the document which was conducted 59 through the use of modern scientific equipment especially the video spectral comparator ( VSC 6000) he examined and

compared the disputed signature on exhibit 1-16 Marked "X" against specimen signature purporting to be Mathias Manga which appeared on exhibits B1-B4 and B36 also Marked "X" in the forensic report. DW3 went on with his testimony that, he examined and compared the disputed signature on exhibit A17-A19 Marked "Y" against specimen signature purporting to be Mr. Goodluck Pallangyo which appeared on exhibits El- 44 and E5-E7 also Marked "Z" in the forensic investigation report. Not only that but also, he examined and compared the disputed handwriting on exhibits A5-A14 against the specimen hand witting purported to be of Mr. Larry Pawegi Lagara appearing on exhibit D1-D29 of the forensic investigation report. More so, he examined and compared the disputed handwriting on exhibits A5-A14 against the specimen hand witting purported to be of Mr. Abdallah Hussein appearing on exhibit C1-C16 of the forensic investigation report. In addition to that DW2 examined and compared the disputed handwriting on exhibits A5-A14 together with specimen handwriting purported to be of Mr. Mathias Manga appearing on exhibit B5-B34 of the forensic investigation report. 60 According to DW2, the disputed signature appearing on exhibit Al- A16 marked "X" when compared to the specimen signature purported to be of Mr. Mathias Manga appearing in exhibit B1-B4 marked "X" in the forensic report discovered that

there are different characteristics in letter formation, stroke connection and pen pressure between the specimen signature and signature appearing in disputed documents based on his skills he formed an opinion that the disputed signature and specimen signatures purported to have been signed by Mathias Manga are different and were signed by different person. DW2 went on testifying that, the disputed signature appearing in exhibit A17-A19 Marked "Y" when compared specimen signature on E1-E4 and E5-E7 also Marked "Z" in the forensic investigation report he discovered different characteristics in strokes connection letter formation and pen pressure between the disputed and specimen signature based on his skills he formed an opinion that the disputed and specimen signatures are different and were signed by different persons. In addition to that DW2 told the court that disputed handwriting on exhibit A5-A14 when compared and tested specimen handwriting purported to be Mr. Larry Pawegi Lagara appearing on exhibit D1-D29 of the forensic report, he discovered similar characteristics in letter 61 formation, figure formation and ink reaction between the disputed and specimen handwriting based on writing skill, he formed an opinion that the disputed and specimen handwritings are similar and were written by one and same person. Not only that but also, DW2 told the court that disputed

handwriting on exhibit A5-A14 when compared to be of Mr. Abdalla Hussein appearing on Exhibit C1-C16 of the forensic report, he discovered different characteristics in letter formation, figure formation and ink reaction between the disputed and specimen handwriting based on writing skill he formed an opinion that the disputed and specimen handwritings are different and were written by different persons. Lastly DW2 told the court that disputed handwriting on exhibit A5-A14 when compared against specimen handwriting purported to be of Mr. Mathias Manga appearing on Exhibit B5-B34 and B36 of the forensic report, he discovered different characteristics in letter formation, figure formation and ink reaction between the disputed and specimen handwriting based on writing skill he formed an opinion that the disputed and specimen handwritings are different and were written by different persons. 62 According to DW2, the examination, conclusion and opinions contained in the forensic investigation Report are true and correct in all material respect and may be used and relied in any testimony herein. In disproof of plaintiff DW3 tendered in evidence the following exhibits namely; - a. Letter dated 5.9.2017 as exhibit DIO b. Document examination report as exhibit Dll c. Letter dated 9.10.2017 16 as exhibit D 12 Under cross examination by Mr. Tairo, DW3 told the court that, he is a police

constable. DW3 told the court that the rank of D/sgt is higher than D/CPL. DW3 admitted to know Sgt Mashauri that he is under forensic headquarter Dar es salaam, however, he denied to say anything on his report. Pressed with questions told the court that, the report was given on 9.10.2017 and thereafter they wrote a covering letter to RCO. DW3 when shown exhibit D10 identified them as letters received from RCO directing them to conduct examination in the documents and the amount in the letter was USD. 1,122,42.12. Pressed with questions told the court that, he examined signatures and handwriting which Manga disputed that they are not his signatures.DW3 when asked on the two different opinion he was quick to point that he has never meet two 63 different opinion which are different in the same issue, however, he stated that the procedure is to conduct inquiries so as to find out who followed the procedure.DW3 when asked on the covering letter told the court that every report must have a covering letter showing where it come from and he admitted that in his witness statement he did not state about covering letter but he came with it although it was not received because it was not paid for. Under re-examination by Mwakingwe DW3 told the court that, report may differ because of procedure involved and even samples however variations in examination may occur during signing or writing

but are minor and do not fetter the report because are caused by material printing, sickness and age. DW3 when asked on the covering letter told the court that, the importance of covering letter is to inform the office which requested investigation and its absence does not affect where the report is self-explanatory. DW3 when asked question for clarification to court clarified that, the documents involved can cause a report to be different. Once an issue is reported, police starts with inquiry, then examination and lastly is the report. 64 At the outset and before going into the testimony of the DW4, I would like to point out that, the adoption of witness statement of DW4 was done under the provisions of section 34C of the Tanzania Evidence Act, [Cap 6 R.E 2019] read together with Rule 56 (2) of the High Court (Commercial Division) Procedure Rules, 2012 as amended by G.N.107 of 2019 as in this suit exist an exceptional reason beyond the control of the 2nd defendant following the demise of Mathias Erasto Manga. That noted, his witness statement was tendered by the administratix of the estate of the late Mathia Manga one Bhakita Mathias Manga and the proceedings and testimony of DW4 in Commercial Case No 104 was admitted in evidence as exhibit D14. The last witness in defence was one BHAKITA MATHIAS MANGA (to be referred in these proceedings as 'DW4'). DW4 under oath and

through the witness statement and supplementary witness statement of her late husband were adopted as his testimony in chief. The late Manga told the court that he was shareholder and member of the Board of directors of the 1st defendant, hence conversant and competent to depose the evidence in behalf of the all defendants. DW1 went on to testify that, on 2nd day of May, 2012, the 1st defendant applied to a plaintiff a term loan of United States Dollars Three Million (USD.3,000,000/=) for the 65 purposes of constructing of Five-star tourist hotel in Arusha.DW3 went on telling the court that, on 11th July, 2012 plaintiff approved the term loan amounting to USD.3,000,000/= and agreed to review TZS. 900,000,000/= the overdraft earlier granted to the 1st defendant subject to terms and conditions in offer letter. In the witness statement the late Manga went on telling the court that, following plaintiff acceptance of the term of offer letter on 12th July, 2012 plaintiff presented to the 1st defendant the general terms and conditions and special provisions for discount transaction (general terms and conditions). DW4 quoted Article 1 of the general terms and conditions to justify that the plaintiff did not act according to general terms and condition as there was no correspondences between plaintiff and 1st defendant on which details in the manner in which credit facility may be taken

up. According to DW4, the disbursed money were affected through traditional banking manner by letter written by or on behalf the 1st defendant accompanied supporting documents such as supplier invoice, transfer form or any withdrawal provided by the plaintiff and other negotiable signed by late Manga as a solo signatory of the current account and loan account. 66 DW4 went on telling the court that sometimes on August, 2015, the 1st defendant made a request for disbursement of certain amount but he was informed by plaintiff that the whole money of USD.3,000,000/= extended has been utilized. Following that news, the late Manga acting on behalf of the 1st defendant on 26th August, 2015 wrote plaintiff letter requesting explanation on how the disbursements were made, the manner in which each disbursement requested was affected, telegraphic transfer used to withdraw the requested amount, original cheques, leaves signed by sole signatory, original invoices from payees or any other document supporting the payment requested and further requested to be availed with original copies of letter used to requesting disbursement. DW4 went on telling the court that, vide letter dated 28th August 2018 plaintiff informed the 1st defendant that the money was disbursed on five instalments as follow:- USD.550,760.65 made on 4.2.2013, USD.1,045,979.72 made on 26.2.2013, USD.644,094.00 made on

20.8.2013, USD.255,266.00 made on 6.3.2014, and USD. 503,899.63 made on 4.12.2014. Further testimony of DW4 was that, after scrutiny of the documents supplied by the plaintiff under the terms of plaintiff letter above, he noted a number of anomalies and irregularities which were not 67 authorised payment transactions made to person and entities which are unknown and to third persons unknown to DW4. In the circumstances, on 30th September, 2015, the 1st defendant notified plaintiff anomalies and irregularities found on the transactions and requested plaintiff to provide additional documents indicating how the transactions were initiated, authorized and subsequently showing how the payments were made and effected.. DW4 pointed out that the additional documents requested on 23rd February, 2016 were supplied after five month of the request. The additional documents at last were received with a number of anomalies were noted that these transactions which were not known at all by the 1st defendant. The transactions were never authorised were payments made to third parties, to non- existing persons and to persons known to the 1st defendant but who he did not authorise payments. DW4 pointed out that the amount of USD. 100,000/= was paid to Universal Building Material Limited on 21st August, 2013, USD. 170,010/= paid to Maji Tech and General Supply on 27th February, 2013 and

USD.95,837/= paid to Msenera Hardware and Supply Company. According to DW4, these payees do not exist in the data base of BRELA and hence does not exist as legal persons. DW1 mentioned further that, there are certain amount 68 paid to payees who are totally not known to the 1st defendant nor have any contractual or business relation with the 1st defendant; these are payment of USD. 121,480/= paid to Mica Computer Service on 27th February, 2013, payment of USD. 18,528.00 paid to Energy Service Limited on 7th March, 2014, payment of USD. 169,236.12 paid to Tandaza Plumbering Contractors Limited on 27th February,2013, USD 166,127/= paid to Tandaza Plumbering Contractors Limited on 21st August, 2013 and payment of USD.67,322/= paid to Tandaza Plumbering Contractors Limited paid on 7th March,2014. More so, DW4 told the court further that, there were some payments which were paid to payees known to the 1st defendant but without authorisation and proper mandate of the 1st defendant. These payments include; USD. 108,000.00 paid on 26th February, 2013 and USD. 37,000.00 paid on 8th March, 2014 to S.E.C (East Africa Company Limited) which after payments were later on sent to CRDB, NIC, KCB Banks and number of Chinese Banks. DW4 told the court that, S.E.C (East Africa Company Limited) was once subcontractor employed by the 1st defendant for supply and installation of lifts elevator and

escalator and she was paid fully for the work done to the tune of USD. 170,000.00 by the 1st defendant on 4th, February, 2013. According to DW4, any 69 payments made subsequently including the payments of USD. 145,000/= were neither authorised nor mandated by the 1st defendant. However, through the agreement termed as Parties Unequivocal Compromise of criminal during criminal investigation S.E.C (East Africa company Limited) agreed to refund the said money in two instalments but plaintiff frustrated the exercise by refusal to provide computation of interest penalties and delay in reactivation of the 1st defendant current account and loan account where payments were to be made. The rest of testimony in his witness statement and supplementary witness statement was more similar to that of DW1 on what took place after being informed that the whole money disbursed has been fully utilized. In further disproof of the plaintiff's case tendered the following as exhibits: 1. Proceedings in respect of testimony of Mathias Erasto Manga in Commercial Case No. 104 of 2017 as exhibit D14.

2. And prayed for adoption of witness statement of Mathias Erasto Manga in Commercial Case No. 104 of 2017 on the same issue. Mr. Tairo had nothing to cross examined DW4 given the admission of exhibit 14 and as such was not re -examined as well. The defence case was as well marked closed. 70 Parties' learned advocates prayed for leave to file final closing submissions under the provisions of Rule 66(1) of the High Court (Commercial Division) Rules, G.N.250 as amended by G.N. 107 of 2019. I granted the prayer. Truly, I commend them for their insightful input on the matter at hand. However, in the course of determining this suit, I will not be able to reproduce them herein but will be referring to them where necessary and it suffices to say are taken on board and considered in determining this suit. The noble task of this court now, is to determine the merits or otherwise of this suit. Before going into answering issues framed for the determination of this suit, after hearing both sides testimonies and exhibits tendered, I noted that there are facts which are not in dispute, and which will help this court in answering the issues framed. These are; one, it is not disputed that 1st defendant requested and was extended an overdraft facility to the tune of TZS.900,000,000/= on 27th May, 2011 which was reviewed and on 11.7.2012 long term loan to the tune of USD.3,000,000/= was

extended as per offer letter with the conditions, among others, to be repaid within 36 months after lapse of grace period of 12months. Two, there is no dispute that, Mathias Erasto Manga was a sole signatory of current account No 0792854006 and loan account No 0036026542. Three, there is no dispute that the said credit facilities were secured by 71 debenture on fixed floating charge by the 1st defendant, personal guarantee by the 2nd to 3rddefendants. Four, there is no dispute that, the 1st defendant was given additional moratorium period of 12 months from May, 2014. However, in the circumstances, what is in serious dispute between parties' is apparent blames to each other for breach of long-term loan agreement; defendants believes that plaintiff acted fraudulently and negligently in allowing some payments without proper authorisation of the withdrawals. On the other hand, plaintiff believes that defendants failed to perform its obligation according to the terms and conditions of the facility letter agreement and to what tune because the 1st Defendant out of LISD.3,000,000/= admits the disbursement of USD. 1,125,861.12 and disputes the rest. Before answering the first issue, and given what is not in dispute and what is disputed, I find it imperative to determine the role of each party in the transactions. I will start with the determination whether the plaintiff in management

and operation of the 1st defendant's accounts did so negligently and fraudulently as such allowed transactions without proper instruction and mandate of the 1st defendant? tn 72 I That being in my mind, I find it imperative first to understand what are negligence and fraudulent acts in law. I will start with the term negligence. According to Black's Law Dictionary 6th Edition, the word 'negligence' is defined to mean failure to use such care as reasonable prudent and careful person would use under similar circumstances or it is doing of some act which a person of ordinary prudence would not have done under similar circumstances or failure to do what a person of ordinary prudence would have done under similar circumstance. Therefore, from the definition above, a person is said to be negligent if he or she has recklessly departed from the conduct expected of a reasonable prudent person acting under similar circumstance. Up to this juncture, the issue for determination right now is whether plaintiff was negligent in management and operation of 1st defendant loan and current accounts which led disbursement of unauthorised payments? Having dispassionately considered the testimonies of the parties and exhibits tendered, with due respect to Mr. Tairo, learned advocate for the plaintiff, I agree with learned advocates for defendants that, all considered, I find and hold that the

plaintiff acted negligently in management and operation of the 1st defendant loan and current accounts. The reasons why I am taking this stance are not far -fetched. 73 One, the contents of exhibit D8, exhibit D9 exhibitDIO and exhibit Dll are loud and clear that, there were some payments made by the plaintiff without proper instruction and mandate of the 1st defendant because signatures appearing in the transaction documents were different and were signed by different person. It is not disputed that, Mathias Erato Manga was a sole signatory of the two accounts, so plaintiff was duty bound to take due diligence and reasonable skills before allowing any withdrawals or payments requested by making a verification of signature in mandate file of the 1st defendant file or by calling Mathias Manga by phone for confirmation of the payment which has been a good banking practices considering the amount involved. PWI categorically admitted that no call back for confirmation and verification was done. More so, PWI during cross examination admitted that, there was no agreement on how the loan was to be disbursed, and therefore, the confirmation of payments was mandatory but for reasons known to plaintiff there was no confirmation for any payment requested. On the above reason, I don't associate myself with Plaintiff's counsel arguments that all disbursement documents were signed by

Mathias Manga because after careful perusal of plaintiff's report on forensic examination, particularly exhibits P13a, exhibit P13b and exhibit P13c I have noted that the whole process to this report was marred 74 I with irregularities. The whole process didn't involve criminal investigations authorities. Section 59 of the Criminal Procedure Act [Cap 20 R. E 2019] provides for procedure to be engaged to have a valid forensic report. Section 59 of the CPA provides as follows: Section 59 (l)Any police officer in charge of the police station or any police officer investigating any offence may take or cause to be taken measurements, prints of the hand, fingers, feet or toes..... Or sample of handwriting of any person who is charged with the offence whether such person is in lawful custody (2) Any police officer in charge of the police station or any police officer investigating any offence may take or cause to be taken measurements, prints of the hand, fingers, feet or toes....... Or sample of handwriting of any person who is not charged with any crime were such measurements are reasonably believed to be necessary for facilitating the investigation of the crime. If I may borrow the wisdom of my learned brother Mwambegele, J (as he then was) in the case of URAFIKI TRADING AGENCIES LIMITED AND SAMRT RENTAL CAR LIMITED vs. ABBASSALI AUNALI KASSAM AND SAVINGS AND FINANCE COMMERCIAL

BANK LIMITED, COMMERCIAL CASE NO. 59 OF 2010 (HCCD) DSM (UNREPORTED) in which the 75 learned Judge faced with investigation done at the instance of plaintiff and an advocate as investigators had this to say: "... the whole process was initiated without involvement of the proper investigative authorities, particularly, the criminal investigators... this in my view was contrary to the required procedure in establishing the culprit of the offence of forgery and the crime of forgery itself... investigation ofcrime is not a primary role of lawyers ... the fact that specimen were procured by the plaintiff at the behest of their advocate denied the handwriting expert a basis for objective examination of the same and as such, his conclusion, regardless of the technology and experience employed in examination, is far from being fair, accurate and objective." With that in mind and back to this suit, and having gone through testimony of the DW2 and exhibits P13 tendered subject of proving that the signatures were of the same person, I am of considered view that, the forensic examination report conducted by DW2 (exhibit P13) is far from being fair, accurate and objective for being procured without involvement of the investigative machinery. The obvious in this report are that, DW2 did not take the handwriting or samples of Mr. Mathias 76 Manga as required under section 59(2) for

investigation of the offence. I am entitled to say so because DW2 under paragraph 4 of his witness statement told the court that on 11th May, 2016 at the forensic Bureau of criminal investigation department Dar es Salaam received a sealed parcel from John Orauyu whom was neither called to testify on that effect. To such serious allegations involving such a big amount one would expect, DW2 to have the specimen signatures of Mathias Manga and compare them with the disputed signature. This was not done, and in my considered opinion, rendered the whole report doubtful and of no legal effect in this suit. The Bank officers, DW3 and one, Sandeep Singh alleged to have taken and arranged the taking of samples of their own choice, but are not police officers so to speak to exercise the legal powers vested to police officers by the law. Equally important, it should be noted that, in my respective opinion the requirements under section 59 of the Criminal Procedure Act are to insure that, the investigation is initiated by a party who has interest in the intended criminal allegations or pending investigation so as to avoid biasness and have objective report. But in this suit, the plaintiff for reasons known better to themselves submitted the document of their choice and pointed out Detective Sergeant Faustine Mashauri of. 77 Headquarters Dar es salaam over all policemen in Arusha as a

such Exhibit P13 cannot be acted upon to prove that plaintiff was not negligent and Mathias Manga is the one who signed the documents. Two, the conduct of plaintiff in this matter demonstrates how plaintiff was negligence and she has the knowledge of what was going on in the management and operation of the 1st defendant accounts but recklessly decided not to take any action. The wording of exhibitP7d are loud that on 30th September, 2015 the 1st defendant requested to be furnished with documents indicating how the transactions were initiated authorised and how the payments were made and effected but plaintiff took good five month to respond to plaintiff request without giving any explanation to the said delay. Not only that but also the testimony of DW1 and DW4 are to the effect that when the court ordered surrender of documents for investigation purposes, plaintiff denied to surrender the document and filed a notice of appeal against the order of the court as per Exhibit D4. It is my considered view and findings that since Mathias Manga did not authorise the said withdrawals, the plaintiff bank was negligent to allow withdrawals without proper instruction and mandate of the 1st defendant's accounts. Failure to call back to verify 78 such a big amount involved it cannot be other than negligence on the part of the plaintiff. This takes me to the term fraudulent. According to

Black's law Dictionary 6th Edition, the word 'fraudulent' is defined to mean, a statement or claim or document if it was falsely made or caused to be made with the intent to deceive. In the circumstance of this suit, can it be said, the 1st defendant monies were fraudulently withdrawn. The learned counsel for the defendants submitted that plaintiff's employees and the 1st defendant's employees fraudulently colluded and withdrew the 1st defendant's money to the tune of USD. 1,435,757,25. On the other hand, learned counsel for plaintiff submitted that fraud was not pleaded and strictly proved as required by the law, and that, since defendant has pleaded negligence, then, plaintiff has completely been exonerated from the allegation of fraud. I agree with the learned counsel for plaintiff that, fraud must be specifically pleaded and that the particulars of the fraud alleged must be stated on the face of pleading. Nevertheless, with all due respect to the counsel for plaintiff, I don't agree with him that negligence and fraud cannot be committed at the same time. It will depend on the particular circumstances of each case. i 79 I have carefully gone through the pleadings, in particular, the joint written statement of defence and reply to written statement of defence, without much do, I find this was done by the defendants under paragraphs 4.3, 7, 9, 10.1, 10.1.2, 10.1.3, 10.1.4 and

10.1.5 of the defendants' joint written statement of defence. I am also aware that fraudulent conducts must be distinctly alleged and distinctly proved although the standard of proof may not be so heavy as required to prove beyond reasonable, something more than more balance of probability is required. See the cases of OMARI YUSUFU vs. RAHMA AHMED ABDULKADR [1987] TLR 169, RATILAL GORDHANBHAI PATEL vs. LAUI MAKANJI [1957] EA 314 AND URAFIKI TRADING AGENCIES LIMITED AND ANOTHER vs. ABBASALI AUNALI KASSAM, COMMERCIAL CASE NO. 59 OF 2010 (HCCD) DSM (UNREPORTED) The issue which arises is whether there were fraudulent withdrawals of the 1st defendant's money? Much as there is investigative report, exhibit D3, exhibitDIO, exhibit Dll which were tendered in court how forensic investigation was done to unveil fraud in my considered opinion, I find that fraud was committed by Larry Lagara with the aid of the plaintiff's employees as after examination of the forensic report­ exhibit Dll indicated that they were not signed by Mr. Manga and 80 following the fact that exhibit P13 is of no legal effect, then the evidence of defendants remained uncontroverted. More so, the sequence and chain of events which were taking place throughout indicates that there was syndicate collusion to defraud the 1st defendant. For instance, there was no incident reported to police by the plaintiff

for investigations but only DW2 received the sealed parcel from one, John Orauyu who was neither called to testify on that matter and no reasons or explanation was offered. It is trite law that where for undisclosed reasons a party fails to call a material witness on his side, the court is entitled to draw an inference that if the witness were called, they would have given evidence contrary to party interest. So, John Orauyu was not called for reasons known to the plaintiff. See the case of AZIZ ABDALLAH vs. REPUBLIC [1991] TLR 71. In this suit, no reasons were given why even Mr. Sandeep Singh and Mr. John Orauya or any employee of the plaintiff from Arusha branch where the transactions were done were not called because were the one who attended the whole transactions and eventually allowed the disputed withdrawals. In addition to that, exhibit P7a and paragraph c of exhibitP8c show that, plaintiff completed his forensic investigation on 16th May,2016 and 81 went on informing 1st defendant that, they have proved beyond reasonable doubt that there was no irregularities on the party of plaintiff and therefore there will be no further investigation but after careful perusal the contents of exhibit P13 a, exhibit P13b and exhibit P13 c I have noted that plaintiff had result of investigation before even the result of the forensic bureau because the documents were submitted on 11th

May,2016 and the forensic report come out on 15th June,2016 while plaintiff in his letter dated 16th May, 2016 informed 1st defendant that, they have proved beyond reasonable doubt that there has been no irregularity in alleged transactions on the part of the bank and that all transactions were made as per company instruction. As rightly argued by the learned counsel for the defendants and rightly so in my own opinion, I am entitled to hold and find that the plaintiff negligently and fraudulently allowed withdrawals of the 1st defendant monies and as such cannot deny that fact. This further proves that the plaintiff was not prepared for any objective investigations into the matter. Furthermore, Plaintiff when requested for production of mandate file or specimen signature card for inspection did not produce them neither to police for investigation, but went on appealing to the High Court so as to 82 precluded the court from knowing who had mandated signing of the disputed signatures. Indeed, this conduct is other than that the plaintiff did not want fraud and negligent to be investigated knowing that the truth will come out. That said and done, I find hold that the plaintiff acted negligently leading to the 1st defendant's money withdrawn fraudulently by Larry Pawegi Lagara with the aid of the plaintiff's employees. Now back to the the 1st issue which was couched"Whether either

of the parties breached terms of the loan facility agreement and contract of guarantee and indemnity by failing to discharge their duties and obligations under the agreements. While the defendants' counsel are of the strong submissions that, the loan amount disbursed to the 1st defendant was negligently and fraudulently withdrawn and paid to third parties, to non-existing persons and to persons the 1st defendant had never had with any business with, then, the act which constitute gross negligence on the part of plaintiff and failure to discharge their duties and obligation under the agreement hence breach of facility agreement and as such invited this court to find that the same made the whole loan facility void under sections 23 and 24 of the Law of Contract Act, [Cap 345 R.E.2019]. Jl 83 On the other hand, the plaintiff's counsel has disputed those allegations and to him since the defendants breached the term loan facility agreement and the contract of person guarantee and indemnity by their failure to repay the entire amount of the term loan facility as agreed per exhibit 11, exhibit 12, and exhibit p9 are loud and clear that plaintiff was not negligence and the allegation of fraud were suspicious unfounded and baseless for being an afterthought in attempting to justify failure to repay the loan. Relying on reasons I gave when dealing with the allegations of negligence and

fraud withdrawals herein above and having gone through testimony of the parties' and having read the exhibits tendered, I with respect to the learned advocate for the plaintiff, inclined to associate myself with the defendant's counsel that it is the plaintiff who breached the terms of the loan facility agreement and contract of guarantee and indemnity by failing to discharge her duties and obligations under the agreement. It is settled legal position that, a breach of contract occurs when one party in a binding agreement fails to perform according to the terms of the contract. Legally each party in a contract is expected to fulfill its obligation under that contract. The 84 provisions of section 37 of the Law of Contract Act, [Cap 345 R.E 2019] underscore the point. For ease of reference, I produce it hereunder:- Section 37(1) The parties to the contract must perform their respective promises, unless such performance is dispensed with or excused under the provision of this act or by any other law. (Emphasis mine) Guided by the above legal stance, the next question to be asked by this court is: was there any such failure on the party of the 1st defendant or plaintiff? In order to find out whether there was breach or failure to perform; one should take into consideration the terms of the contract and find out if at all, there was any failure to fulfill any of such terms without

any justifiable or lawful excuse. Back to our suit, carefully examination of the testimony of both parties, it is loud and clear that the plaintiff assumed risk for failure to call back the sole signatory given the amount of money involved and the payees. In the case of SILAYO vs. CRDB 919960 LIMITED [2002] 1 EALR 288 it was, among others, held that: "Moreover, a bank is expected to act prudently. Although it is to inquire into very cheque presented, it is an assumption of 85 risk not to inquire. What circumstances would justify an inquiry would depend strictly on the facts of each cheque. The amount of the cheque, the history of the account, the antecedents of the customer and the known relationship between the customer and drawer of the cheque are some of the factors which might justify inquiry." Much as this court has found and held that there was negligence and fraud and the defendants have proved to the required standard of both as demonstrated above, I find myself constraint to find and hold that by virtue of sections 23 and 24 of the Law of Contract Act, [Cap 345 R.E.2019] as correctly cited and argued by the learned advocates for the defendants and rightly so in my own view, I find the whole transactions became void and no successful claim can stand under the circumstances. I boldly and frankly remind banks that, they have high legal duty to inquire any payment unless

it is from the holder of the account himself or herself. A mere looking at the signature by the bank teller who possess no expertise is not enough. Therefore, the plaintiff's failure to perform its duties to the best banking practice for failure to call back to very payment assumed the risk at its own detriment. H 86 More so, the request for extension of grace period and the appreciation of fund cannot be a justification of breach of contract on the party of the 1st defendant because plaintiff does not dispute that party of the amount was disbursed and utilized by the 1st defendant. Not only that but appreciation cannot be a defense to deny the defendants to complain that its money entrusted with the plaintiff has been negligently and fraudulently withdrawn. The consequences of the conduct of the plaintiff to the 1st defendant's project are far reaching. Frankly speaking, I appreciate the arguments by the learned advocate for the plaintiff and the relevant law as cited and case law but the circumstances of this case do not convince to hold otherwise. On the part of the defendants no dispute that out of USD.3,000,000/= they acknowledge the lawful use of USD. 1,125,861.12 but which are claiming to have paid. Whether fully paid or not will be answered in the second issue. In totality of the above reasons, the first issue must be and is hereby answered in affirmative that, it is

plaintiff who breached the terms of the loan facility agreement and contract of guarantee and indemnity by failing to discharge their duties and obligations under the agreement. 87 This takes me to second issue which was couched thus "If issue No 1 is answered in the affirmative, what is the outstanding amount of the plaintiff is entitled to claim, if any" This issue will not detain this court much. Much as the first issue has been answered in the affirmative against the plaintiff and this court by declaring the whole transaction void, then, this issue became obsolete. The last issue was couched that to what relief parties are entitled to? However, given my findings above in issue number one, this suit is amenable to one order of being dismissed with costs to the two learned advocates for the defendants. It is so ordered. 88