red dot distribution limited vs hakam investment limited 2022 tzhccomd 67 25 march 2022

IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA (COMMERCIAL DIVISION) AT DAR-ES-SALAAM Misc. Commercial Cause No.28 of 2021 WINDING UP PETITION (Pursuant to Section 281(1) of the Companies Act, 2002 (Cap. 212 RE 2002) IN THE MATTER OF THE COMPANIE^ACT . IN THE MATTER OF HAKAM INVESTMENZLIMITED BETWEEN'^\^\ RED DOT DISTRIBUTION •ATE^T^^-P^inONER HAKAM INVESTyiENT>LIMITED RESPONDENT Last Order: 15™'Decemben2021 RULING: 25™-MARCH 2022\\/> RULING NANGELA>J.:V> This--fuling results from a preliminary objection raised by the Respondent against this Petition for a winding up order of the Court. The objection raised by the Respondent was to the effect that: "The Petitioner's counter affidavit filed on 1st July 2021 departs from the winding up petition and, Page 1 of 15 thus, violates the rules of pleading as it contains new allegation of fact and/or new ground of claim contrary to laws governing pleadings." On the 18th November 2021, the learned counsels for the parties appeared before me. The Petitioner enjoyed the services of learned advocates Mr Nicholas Kahoza and Ms Shakila Ally, while theJearh^d, advocate Mr Kamazima Iddi, appeared for the Respondent On that material date,Jt was agreedlhat the preliminary objection be dispbsed^^y^way of filing v\\ \\ written submissions. Axf!!Lng S^edule^was given and the parties duly filed their submission^ on time. I will give such submissions/a quick summary and finally analyse the merit or otherwise ofthe preliminary objection. SubmittjpgLirysupport of the objection, Mr KamafiSa^ubmitted that, the Winding-up Petition filed before this Court arises from a claim of an outstanding amount''-of-'z money, equal to US$ 92,745.28. He submitted that, on 21st June 2021, the Respondent filed an affidavit in opposition as per Rule 106 (1) of the Companies (Insolvency) Rules2005claiming to have paid a total of US$ 349,033.52 and not US$ 258,000.00 as alleged by the Petitioner and that, the Page 2 of 15 only outstanding amount is only US$ 9,033.52, which, subject to proof, will be paid. Mr Kamazima submitted that, the counter affidavit filed in response to the affidavit in opposition filed by the Respondent, failed to adhere to what was pleaded in the Winding up Petition and the verifying affidavit, because the Petitioner introduced new allegations of facts and /or new grounds of claim in paragraphs 4, 5, 7\8, 9, 10 and 11 of that counter affidavit. It was under those circumst^es^tFiat, the Respondent raised an objectjont^^^ndlng that, the Petitioner has adduced evidence\whicFi is inconsistent with the facts pleaded in the^winding up petition and prejudiced the ^^^spor^enf^d.ef^nce because the latter is deprived.of the\opportunity to challenge those new facts. /^uBmitting~orTthe status of a counter affidavit as part'of the pleadings, Mr Kamazima contended that, it is trite''avHhayparties are bound by their pleadings and no departure from them is permissible, except by way of amendments. He contended that, the pending proceedings in Court are insolvency proceedings governed by the Companies (Insolvency) Rules 2005, GN.43 of 2005. He observed that, under Rule 455 of the said GN 43 of 2005, it is provided that: Page 3 of 15 "The Civil Procedure Code applied to insolvency proceedings In the High Court and Resident Magistrate Court, in either case, with any necessary modifications." Mr Kamazima submitted that, since the Civil Procedure Code, Cap.33 R.E 2019 applies in such proceedings; Order VI Rule 7 prohibits a departure in the pleadings by providing that: "No pleading shall, excepriSy-vyay He submitted, irNy^/bf what he raised in the notice of objection^e,, the Petitioner's affidavit filed to countert^^^aviWrpopposition has raised new grounds and .or is inconsistent with the previous pleading (winding up p^ition^then this Court should struck out such affidavit*from its record. To support that position, he relied on the decision of the Court of Appeal in the case of James Funke Gwagilo vs. Attorney General [2004] TLR 161 and the decision of this Court (Land Division) in the case of Saleh Hamis Lufedha vs. TANESCO, Land Case No. 158 of 2017 (unreported). Page 4 of 15 Mr Kamazima submitted further that, the Petitioner's counter affidavit was a third pleading following the Petition for winding up, the Affidavit in opposition and, thus, the last pleading to be filed by the parties. He contended that, since the Respondent will not have an opportunity to controvert the said counter­ affidavit, that fact will occasion a miscarriage of justice as the Respondent will not be able to marsfcibevidence in defence of his case. Besides, Mr Kamazima submitted^tfi'afe' in all Z-. pleadings, parties are obi.iged^to^a^Ji^e> to what is contained in the pleadings^ffiis being a position reiterated by the Court of /Appeal ^in\?the ''case of Charles RichardKombezt/a\Building)vs. Evarani Mutungi & 2 Other^Civ^A^No>38^f 2012 (CTA) (unreported). He contended that, theevidence adduced in Court should notZbe^^\^F^fite with the pleadings as such inconsistency wilKhot be tolerated. ^Q^baplc up his position, he also relied on the decision of this Court (Mgonya, J) in African Banking Corporation vs. Sekela Brown Mwakasege, Civil Appeal No. 127 of 2017, (HC) (unreported). With all such submission, Mr Kamazima urged this Court to struck off or expunge the counter-affidavit from the record. Page 5 of 15 Responding to the submission from the learned counsel for the Respondent, the learned counsel for the Petitioner submitted that, the provision of Order VI rule 7 of the CPC does not apply to this petition. He submitted that, a counter-affidavit is not a pleading. He acknowledges, however, the Civil Procedure Code, Cap.33 R.E 2019 does apply to insolvency proceedings. He contended, however, that, accordmgsto Order VI rule 1, pleadings are defined to include^hose^unaepofder VIII Rule 3, i.e., set-off, counte^^im-^ncRreply to written statement of deferitt^He<argued that, the z< counter affidavit is not among tne^pleadings referred to I( under Order VI Rule 7/OTthesCPGX^ To support/his positibn, ye referred this Court to its own decisioruin thexcase of-M;A Kharafi & Sons Ltd vs. National/Construction Council and Others, Misc. Commr-Case\No.221 of 2016 (unreported) where this Court stated\that: "It follows then, a petition filed under Rule 5 and 6 of the Arbitration Rules in order to set aside or remit an arbitral award is not a suit but rather an application. Therefore, Order VI Rule 14 of the Act is not applicable to Petitions filed under the arbitration Act. I therefore find Page 6 of 15 this preliminary objection to have no merit and I proceed to dismiss it." Relying on the above, he contended that, the Petition for winding up of a Company is not a suit but rather an application, and this is supported by section 281 (1) of the Companies Act. He argued that, the Petition filed under the Act is not a suit but rather an application and^as suchxthat'fact ousts the applicability of the provisions of. OrdeKVI'Tule 7 of the Civil Procedure Code. He-further>relied on the case of Tanzania Cotton Marketing. Board* vs. Cogecot .-VW X\ Cotton Company S.A^2004]<FLR 14*3 and distinguished (( the cases cited by the Respondent for the reasons that, the current matteris aNPetition'and not a suit /civil case. He contended'that a petition is not a pleading. \\ ) L 17 The learned'counsel for the Petitioner has made reference terother; cases which I see no point in referring to themJiereyAt the end, he urged this Court to overrule the objection with costs. In a swift rejoinder submission, the Respondent submitted that, the Petitioner has not disputed the fact that there are inconsistencies between the Petition and the counter affidavit. Mr Kamazima contended that, the submission by the learned counsel for the Petitioner, that, a Petition is not a pleading, is a misconceived idea. He submitted that, Page 7 of 15 in practice, applications, like other civil proceedings, are instituted and defended by pleadings of various nature and form. He contended, and by analogy, referring to section 77 of the Law of Marriage Act, Cap.29 R.E 2019, that, proceedings under that law are instituted by way of Petitions and under the Law of Marriage (Matrimonial Proceedings) Rules, the terms "Pleadings" is defined to mean "a petition, an answer to petition or re^l/\ Besides, he reiterated his earlier^librnission^tnat, Rule 455 of the Insolvency Rules$^GN 43^of"2005 does allows the CPC to apply in insol^enc^prgceedings. He contended, therefore, that^OrderxVI Rule 1 of the Code \X will apply with necessary .modifications to include an I( affidavit as part/Ofxihe pleadings provided that, their purpose is tojje used for—institution of proceedings or putting up^defence a^per the law. He relied on the case of ^1beya-Ruk\^i~Auto Parts and Transport Ltd vs. Jes^ina Georae^Mwakyoma [2003] TLR, 251 at page \\ // 266 whgre-ttie Court of Appeal stated that: ".... Pleadings by affidavits are supposed to be complete with the Applicant's reply, if any, to the Respondent's counter-affidavit. There should normally be no reply to a reply for the applicant, being entitled to the last word, would Page 8 of 15 then have to reply to the reply to the reply.... In the light of the fore going, we make the following orders. First, the three affidavits just referred to are expunged from and cease to be part of the record." I have ^c^efully^wnsidered the above rival submissions, the cue Taking Jfhe from the above, Mr Kamazima issuefoPcidtermination urged is whether the prelimina^^bjectionras^any this merit Court to make a finding that, the it. in affidaviMiled by the Petitioner violated the laws governing^pleading^by /^In-the^fii^place, and from the look of things, it is departing from the cleaj\to meXas Petition observed thewinding'up'and^deserves byfor Respondent's counsel in to be expunged and cease to b^attogth^record of this his suomissions, that, the Petitioner's legal counsel does Court. He therefore urgejvthis^Cpurtfro uphold the not dispute that the affidavit filed in reply to the one objection with costs. constituting the answer to the Petition by the Respondent, contains facts which were not contemplated in the Petition and, for which the Respondent will have no other room to make any response meant to controvert such facts. Page 9 of 15 Secondly, it is also a fact that, the learned counsel for the Petitioner does admit, according to Rule 455 of the Companies (Insolvency) Rules 2005, GN.43 of 2005, that, the rule does provide for the applicability of the Civil Procedure Code (CPC) Cap.33 R.E 2019 to insolvency proceedings. That, indeed, is a palpable fact observed from the Rules themselves. That being the case, and taking intosaccount that the affidavit filed by the Petitioner,^l^quesHori/that follows is: whethersuch^affidavifi^is in \\ \< contravention of Order VI Rulei7 of the>CPC or not. Alongside that issue, isthe'qu^stfensregaraing: whether such affidavit and^fke^peti^ion in general, falls under what constitute "pleadings". the^CPC provisions would strictly apply and, as such, the affidavitTHed'by the Petitioner is not a "pleading" because Order VI rule 1 defines pleadings to mean a Plaint and a written statement of defence and all other subsequent pleadings filed under Order VIII Rule 13 which are "set­ off, counter-claim and reply to written statement of defence". Page 10 of 15 According to the Black's Law Dictionary, 7th Edition, at page 1173, the term pleading is defined as: "a formal document in which a party to a legal proceeding (especially a civil lawsuit) sets forth or responds to allegations, claims, denials or defences." The definition also includes a supplementary pleading which refers to: 'a pleading that either correctS'a defect or addressesxfacts'arising From these definitions, bdo novhave any doubt in holding that even amaffidav^ora counter affidavit, a petition or an afiswer tcba-getition, a plaint or a written statement^Fdefenc^a^counter claim or a reply to, will all fortTM/yiiaMhe-law7 regards as pleadings. Having held as such/th^next question is: whether the affidavit which^vvas/ filed by the Petitioner and which introduces new facts not contemplated earlier in the Petition is in contravention of Order VI Rule 7 of the CPC or not. In principle, parties are bound by their pleadings. There is a plethora of cases which have emphasized in that principle. See for instance the cases of Blay vs. Pollard & Morris [193O]1K.B.682; Nkulabo vs. Page 11 of 15 Kibirige [1973] EA, 112, Peter Ng'omango vs. AG, Civil. App. No.214 of 2011, Sean Tan Tours Ltd vs. The Catholic Diocese of Mbulu, Civil Appeal No.78 of 2012 (Unreported); James Funge Gwagilo vs. the AG [2004] TLR 161 and Yara Tanzania Ltd vs. Aloyce Msemwa and 2 Others, Commercial Case No.2 of 2013 (Unreported). In the case of James Funge Gwagik^vs. the AG (supra), the Court of Appeal of Tanza^a^/vas^ofsa^clear view that: to give notice ofu-je case^which has toxbe met^part^ must so stat^hls case\that/his opponent <z^vill nobb^t^er? by surprise. It is x also/to define with precision the ) [matteig/on which parties differ x^nd^points on which they agree, \thereby to identify with clarity the issues on which the Court will be called upon to decide." According to Order VI rule 7 of the Civil Procedure Code, Cap.33 R.E 2019, the law provides that, "No pleading shall, except by way of amendment, raise any new ground of claim or contain any allegation of fact inconsistent with the previous pleadings of Page 12 of 15 the party pleading the same." (Emphasis added). As we noted herein and, as undisputed by the learned counsel for the Petitioner, Rule 455 of the Companies (Insolvency) Rules 2005, GN.43 of 2005 does provide that the Civil Procedure Code (CPC) Cap.33 R.E 2019 will apply to insolvency proceedings. Since that is the position, and given that'Xthe affidavit filed by the Petitioner falls within the^d^fjQiti^K^^hat constitute pleadings generally, an^considerirtg^the fact that the said affidavit is inEonsisfcent with the facts /y X^X^^x \> disclosed in the Petition <and has\introduced new facts X x\ xx altogether, then, OrderA/I Rules^wjnscome into play. It is clear,/.ask stateJHfy. Mr Kamazima that, the \X 7/ Respondent has ntyotherroon1 to respond to those facts. The case<^Mbeya-Rulcwa Auto Parts and Transport Ltd^^StestimrGeorge Mwakyoma [2003] TLR, 251, cited by Mr\Kamazima is therefore quite relevant on that point And, if the Respondent does not have an opportunity to offer a response to those facts, continuing with a blind eye regarding what he Petitioner did will amount to perpetuating an injustice, a fact which this Court will not be ready to do. In view of the above observations, to some extent the preliminary objection has merit. I say to some extent Page 13 of 15 because one has to determine what will remain of the affidavit if the offending paragraphs which seem to be introducing new facts which are inconsistent with those in the Petition are expunged. The relevant paragraphs according to Mr Kamazima's submissions are paragraphs 4 to 11. If these are expunged as submitted, will the affidavit still remain intact? In my view, even if these paragraphsZto 11 of the counter affidavit are expunged frorhWie. affidavit as a proposed, and the affidavit is left with paragraphs 1, 2, 3 and 12 and 13, it is my xonsideretRfindjng that, the affidavit can still stand and sppporbtjie application as the rest of the remaining/^^grap^stancl intact. I’ This Court, therefore;} settles for the following orders ft)That, paragraphs 4 to 11 of the Z^affidS^it filed by the Petitioner in ^response to the affidavit filed in answer to the Petition are herby expunged from the said affidavit. 2. That, although the said paragraphs 4 to 11 are expunged, still the remaining paragraphs 1, 2, 3, 12 and 13, can still make the affidavit to be relied upon without having it expunged in its entirety as the Page 14 of 15 Respondent would wish that this Court should do. 3. In view of what is stated herein (in paragraphs 1 and 2) the preliminary objection is partially upheld. 4. Parties are to proceed with the hearing of the Petition. it is so ordered. DATED AT DAR-ES-SALAAM, this 25th DAY OF MARCH 2022 ............. DEO JOHN NANGELA Judge ourt of the United Republic of Tanzania (Commercial Division) Page 15 of 15