HOTEL CONTINENTAL VS LINDA SAMWEL MACHUNGU WINDING UP COMM CAUSE NO

IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA COMMERCIAL DIVISION AT PAR ES SALAAM WINDING UP COMMERCIAL CAUSE N0.38/2023 IN THE MATTER OF THE COMPANIES ACT NO.12 OF 2002 AND IN THE MATTER OF PETITION FOR WINDING UP OF HOTEL CONTINENTAL BETWEEN LINDA SAMWEL MACHANGU............................................... 1st PETITIONER JACQUELINE SIA MACHANGU............................. 2nd PETITIONER AND HOTEL CONTINENTAL LIMITED................................................... RESPONDENT RULING Date of Last Order: 07/06/2024 Date of Ruling: 21/06/2024 GONZI, J. The two petitioners filed the petition under Sections 275,279(1)(e), 282(1) and 295(1) of the Companies Act, Act No. 12 of 2002 praying for Orders that: a) The Company be wound up by the Court under the provisions of the Companies Act. b) That the Court grants interim and or preservatory orders safeguarding the Company and its shareholders who are also Petitioners herein. 1 c) Appointment of a provisional liquidator to take into custody and control of the Company's affairs, books, records and assets; freezing the Company's bank accounts styled as Hotel Continental Limited operated at CRDB Lumumba Branch with account number 0U1007567900. d) Appointment of a provisional liquidator to take into custody and control of the Company's assets styled as Hotel Continental building with registered title number 186013/58. e) Appointment of a provisional liquidator to take into custody and control of the Company's assets styled as follows: furniture, equipment, fridges, mattress, televisions, air conditioner and printer. f) Any other order(s) as it deems fit. g) That the official receiver be appointed by the Court. The reasons constituting "just and equitable" ground upon which the winding up order is sought, are stated under paragraph 6 of the petition. It is alleged that there is just and equitable cause that the Company should be wound up for there is a complete breakdown in relation among the directors and shareholders of the Company. In particular it was stated that: 2 a) The Company was under maximum supervision of the late Samwel Machangu who employed his prime time to run the activities of the Company as an experienced businessman when it comes to hotel Management businesses. b) Upon death of Samwel Machangu the business of the Company declined to the extent that the hotel was operating under loss for more than 10 years as a result the Company was subjected to voluntary members' winding up. c) That since the demise of the late Samwel Machangu the Company has never declared dividends to its shareholders. The petitioners have never made any profits from the Company. d) That the breakdown of relationship among the directors and shareholders has caused poor management of the Company which has resulted to poor operations of the same, resentment, cost overruns and loss of business. e) That the petitioners have no access to or control of the Company's books, office, assets and records and thus in absence of a winding up order, the petitioners will continue be held accountable for losses, actions and omissions by the Company's directors. 3 f) That it is for very long time now that neither directors nor shareholders annual general meeting or extraordinary meeting have been called to discuss affairs of the Company which is against the articles of our Company and the Companies act and its regulations. g) That the hotel is not renovated for a long time now due to financial constraints as a result the hotel has been in ruins. h) That some of the directors and shareholders are living outside Tanzania as a result the management of the Company is not in the required standards. i) Basing on the above misunderstanding, the Company on 17th November 2021 resolved by special resolution to wind up the Company voluntarily and went further to appoint Mr. Ayoub Mtafya of NexLaw Advocates to be liquidator for purposes of such voluntary winding up. Mr. Mtafya managed to file members' voluntary winding up declaration of solvency at BRELA Copies of notice of appointment (form 360a) and members' voluntary winding up declaration, special resolution dated 17th November 2021 are both collectively attached and marked as annexture Continental 5. j) Upon appointment, Mr. Mtafya managed to notify the public on resolution to winding up the Company voluntarily via Government Gazette dated 4th 4 February 2022 at page 15. A copy of the said Government Gazette is attached and marked annexture Continental 6. k) That in the middle of the ongoing process of winding up, out of dismay some directors and shareholders denied to recognize Mr.Ayoub Mtafya and the process itself that they didn't consent the said voluntary winding up. I) Upon the said ambiguous denial from some of directors and shareholders, despite the process of winding up being at advanced stages, where the liquidator was in final stage of collecting Company's assets, Mr. Ayoub Mtafya decided to resign as liquidator at a meeting held on 12th April 2023. Upon resignation, he notified the Registrar of Companies, the Business, Registration and Licencing Agency with a copy of the Company. Copies of the resignation dated 19th may 2023 with reference number NEX/BRELA/HCL/23/01 together with attached liquidator report are both collectively attached and marked as annexture Continental 7. m) Upon receipt of the notice of resignation of the liquidator, and resolution to cancel the voluntary winding up process, the Registrar of Companies officially cancelled the process of winding up. A copy of the letter dated 5 4th July 2023 notifying the cancellation of winding up is attached and marked as annexture Continental 8. Based on the foregoing reasons, the Petitioners prayed, under paragraph 7 of the Petition, that in the circumstances it is just and equitable that the Company should be wound up as the petitioners are justifiably and genuinely concerned that the absence of a winding up order from this Honourable Court, the Company's debts, liabilities, reputations shall be unbearable to directors and shareholders. Under paragraph 2 of the Petition, the Respondent Company sought to be wound up, is described as a limited liability Company duly incorporated on 19th December 1977 under the Companies Act No. 12 of 2002 and was issued with Certificate of Incorporation No.6032. The petitioners attached the incorporation certificate as annexture Continental 1 to their petition. The registered office of the Company is described as Hotel Continental, Nkrumah Street, Plot No. 1516/159 Floor II, Ilala, Dar es salaam, Tanzania. The Petitioners attached a copy of the Certificate of Title as annexture Continental 2. The share capital of the Respondent Company is described as Tshs.5,000,000/= divided into 5,000 shares of Tshs.1000 each and that the amount of capital paid up or credited to be paid up is Tshs.5,000,000. The 6 Petitioners attached a copy of memorandum and articles of association of the Respondent Company bearing the foregoing facts, as Annexture Continental 3. The memorandum and articles of association show further that when the Respondent Company was incorporated in 1977, it had three shareholders namely Samwel Machangu holding 60% of total shares, Pascal Matunda holding 30% of total shares and Mohamed Husein Sumar holding 10% of total shares. All shares are ordinary or equity shares. According to official search report dated 12th September 2023 issued by the Registrar of Companies (BRELA) to Richard Samwel Machangu, the Company has 5 directors namely: (i) Pascal Matunda, (ii) Betty Machangu, (iii) Richard Machangu, (iv) Jollyn Machangu Samuel, and (v) Jacqueline Sia Machangu Motcho. The current shareholders of the Company are shown to be nine (9) namely: i) Rex Hotels Limited (3250 shares), (ii) S.M Investments Limited (940 shares), 7 (iii) Pascal Matunda (500 shares) (iv) Betty E. Machangu (270 shares) (v) Sia Jacquelin Machangu (08 shares) (vi) Jollyn Samwel Machangu (8 shares) (vii) Linda Machangu (08 shares) (viii) Tamara Shedrack Machangu (08 shares) (ix) Olivia Samwel Machangu (08 shares). The search report from BRELA shows that the latest annual returns were filed in 2016 and that the following are the registered charges: 1. Debenture dated 25th May 1999 in favour of CRDB (1996) Bank to secure a sum of Tsh.20,000,000. 2. Debenture dated 21st November 2013 in favour of CRDB Bank PLC to secure the sum of Tshs.50,000,000/= 3. Mortgage dated 27th November 2013 in favour of CRDB Bank PLc to secure the sum of Tshs.50,000,000/= Upon the petition being filed, the Court directed the Petitioners to advertise the same and it was advertised in the Government Gazette of 1st 8 September 2023 at page 22 and Mwananchi Newspaper of 1st September 2023 at page 7. The Petitioners through their Advocate, Mr. Maunda Raphael, filed an affidavit in compliance on 13th September 2023 pursuant to Rule 105 (1), (2) and (3) of the Companies (Insolvency) Rules No.43 of 2005, providing proof of the advertisement of the petition in the Government Gazette and the Newspaper. The advertisement attracted responses from one opposer and 4 supporters as follows: The opposer was Mr. Richard Machangu also known as Richard Samwel Machangu of Moshi, Kilimanjaro, who described himself as a son of the late Samwel Machangu and a director and shareholder of the Respondent Company herein as well as a director and shareholder of S.M Investment Limited. He filed an affidavit in opposition under Rule 106 (1) of the Companies (Insolvency) Rules No.43 of 2005. Mr. Richard Machangu stated in his affidavit that whereas the 1st Petitioner is a shareholder in the Respondent Company, the 2nd Petitioner is not a shareholder. He attached the official search report from BRELA dated 12th September 2023 as annexture HCT1 to substantiate it. He stated that the late Samwel Machangu left behind two widows namely Betty E. Machangu and Magret Sandi (now deceased). He stated that his later father left behind a Will that was revealed 9 in the family meeting on 13th May, 2006. He attached a supporting affidavit of Prof. Robert Shedrack Machangu as the person in possession of the Will. Also, he attached Minutes of the family meeting, collectively as annexture HCT 2. He stated that the late Samwel Machangu left behind 12 issues namely: i) Emma Machangu, ii) Anna Machangu, iii) Linda Machangu, iv) David Machangu, v) Grace Machangu, vii) Richard Machangu, vii) Suzan Machangu, viii) Esther Machangu, ix) Jacqueline Machangu, x) Jolly Samwel Machangu, xi) Olivia Samwel Machangu and xii) Tamara Shedrack Machangu. 10 Mr. Richard Machangu testified further in his affidavit in opposition that the shares of the late Samwel Machangu in the respondent Company were not inherited by all his 12 heirs enumerated above, but that the shares were mischievously transferred to Betty Machangu and her 4 biological daughters only namely Sia Jacqueline Machangu, Jollyn Samwel Machangu, Tamara Shedrack Machangu and Olivia Samwel Machangu as well as to the first petitioner Linda Machangu. He stated that the rest of the heirs of the late Samwel Machangu were left out by Betty Machangu who took out letters of administration in Court mischievously. He attached annexture HOT 3 being copies of the share transfer forms. Mr. Richard Samwel Machangu testified further that during the life time of his late father, he was working close with him and other directors managing all affairs of the respondent Company and that the business was doing very well. He attached annexture HCT 4 being a copy of audited financial statement for the year ended 2005 wherein his name appears as one of the directors. He testified that even if the business is operating under loss, it is not a good and fair reason to wind up the Company. He stated that since the demise of the late Samwel Machangu, management of the Company fell in the hands of Betty E. Machangu, together with her biological 11 daughters namely Jollyn Machangu samwel, and Jacqueline Sia Machangu Motcho and that the other director Pascal Matunda and the opposer were not allowed to take part in the Company management and operations of the business. He said that Mr. Pascal Matunda and he accepted the set up so as to bring harmony and that there is no conflict as to the management of the business of the Company. He stated that non-issuance of dividends is not a good cause to wind up the Company as there is an alternative remedy to sustain business operations of the Company including employing new management and changing strategies. He stated that the hotel is centrally located in city center and it can flourish and benefit all the shareholders, but winding up the Company, will erase the legacy of its founders. He stated that the voluntary winding up process was initiated without good intentions by not involving other shareholders and directors of the Company. He stated that there is pending Revision Application No.30 of 2021 in the High Court of Tanzania atTemeke against Betty E. Machangu to revoke her appointment as an administratix of estate and to challenge the way she has administered the estate of the deceased person including the shares of Samwel Machangu in the respondent Company. He attached Chamber Summons and affidavit in Revision No.30/2021 as annexture HCT 5. He stated that the hotel building 12 has 32 rooms and is located in prime area and thus it is illogical to wind up the Company. The advertisement of the winding up petition on the other side, attracted 4 supporters who, on 21st September, 2023, filed a joint affidavit in support of the petition. These are Betty Machangu, Jollyn Samwel Machangu, Olivia Samwel Machangu and Tamara Shedrack Machangu. They stated that in addition to the grounds for winding up as disclosed in the petition, the shareholders have not benefited since the demise of the late Samwel Machangu who was the engine of the Respondent Company's business. They also cited poor relationship between directors and shareholders as the cause for poor performance of the Company and that they are afraid that the Company may continue to accumulate losses which may make them eventually accountable for the losses incurred. Although the petition was duly advertised pursuant to orders of the predecessor Judge, and hence it was brought to the attention of the general public, on 7th June 2024, I ordered the Petitioners to effect service of the petition to Tanzania Revenue Authority (TRA) specifically on the understanding that they may be interested in the outcome of the petition one way or the other. I granted TRA 7 days in case there was a need for 13 them to bring to the attention of the Court any relevant fact in connection with the present petition. Upon being served, on 14th day of June 2024, TRA filed in Court an application by Chamber summons and affidavit to be joined as a party to the winding up proceedings. Their interest to join the case was premised on the fact that the Respondent Company sought to be wound up by order of the Court owes TRA Tshs.152, 635,047.31 which comprises of corporate tax TZS 84,327,479.88; SDL TZS 49,366,268.00; PAYE TZS 2,793,341.00 and VAT TZS 16,147,958.43. The petitioners, upon being served with the application by TRA to join the petition as interested party, responded that whereas the alleged tax liability is neither admitted nor disputed, it can be dealt with in the course of winding up of the Company. The Petitioners stated that in case a liquidator is appointed, TRA will be one of the secured creditors to be paid first. The Petitioners resisted the said TRA to join in the petition arguing that their application had been overtaken by events as the Court had already heard the matter by way of written submissions and had scheduled a Ruling date on 21st June 2024. The Opposer and Respondent as well as supporters did not respond to TRA's request to join. 14 I was satisfied that the claims by TRA had been entered in Court record. I took notice of the fact that hearing of the case had already been done by way of written submissions and the fact that in the event of an order of winding up of the respondent Company being issued, the liquidator would be informed of the tax debt of the Respondent Company, which debt was not disputed by the Respondent Company nor the Petitioners in their counter affidavit, I proceeded with determination of the petition on merits after admitting TRA as an interested party supporting the petition subject to recognition of the respondent's tax liability. The hearing of the Petition proceeded by way of written submissions. The two Petitioners (Linda Samwel Machangu and Jacqueline Sia Machangu) were represented by Mr. Maunda Raphael, learned Advocate. The Respondent Company (Hotel Continental Limited) and the Opposer (Richard Samwel Machangu) were at different times represented by Mr. Gratian B. Mali, learned Advocate. The written submissions, however, expressly stated that they had been filed for the opposer Richard Machangu, hence I take it that they were not for the Respondent Company. The Supporters (Betty Machangu, Jollyn Samwel Machangu, Olivia Samwel Machangu and Tamara Shedrack Machangu) were represented by Ms. Mary Brown Francis, learned 15 Advocate. I thank all the learned counsel for their insightful arguments and authorities presented. Mr. Maunda Raphael, learned Advocate for Petitioners submitted that the petition was brought under Section 275, 279(l)(e), 282(1) and 295 (1) of the Companies Act, No. 12 of 2002. He submitted that the only opposition to the petition comes from Richard Samwel Machangu who is challenging the Petition on the basis of a Probate case related to the late Samwel Machangu, thus not a subject of the petition at hand. Mr. Raphael, learned Advocate, submitted that there are six reasons why the Petitioners are praying for winding up of the Respondent Company. The first ground is that the Company is operating under loss and has not declared dividends to its shareholders for a long time. He argued that upon the demise of its founder Samwel Machangu in 2006, the Respondent Company dealing with hotel management, was placed under new management team but still their efforts proved futile. He submitted that in 2010 the Company's business closed and was re-opened in 2015 only to close again in 2017. He submitted that in 2019, two directors Betty Machangu and Pascal Matunda decided to take a loan from CRDB Bank to revive the Company's hotel business but there was no business due to COVID -19 16 pandemic and hence the hotel business of the respondent Company continued to make losses. As a result of sustaining losses, he argued, the Respondent has failed to pay dividends, salaries as well as creditors' and Government bills. He submitted that while under section 180(1) and (2) of the Companies Act, Directors are obliged to declare dividends, the Respondent Company has not declared any dividends since 2006 upon the death of the late Samwel Machangu. The second ground presented by Mr. Raphael, learned Advocate was that the Company has not called up for any periodic meetings for a significant period of time. He submitted that under section 133(1) of the Companies Act, a Company should call for regular statutory meetings every year. He submitted that it has been more than 5 years now since the Respondent Company's Directors convened a general meeting to discuss affairs of the Company. He argued that the meeting of 17th November 2021 is the only meeting called and whose sole agenda was to pass a resolution for voluntary winding up of the Respondent Company. He referred to annexture Continental 5. Mr. Maunda Raphael learned Advocate, proceeded to submit that the Respondent Company has not been audited for a long time now or at least no such audited report has ever been shared with the shareholders. 17 He argued that this contravenes section 164(1) of the Companies Act and it is a sufficient ground for winding up. He referred to the case of In the matter of Petition for Winding up of Kilwa Ruins Limited between Amir Ramadhan Mpungwe and Michael John Lancaster and Others, Misc. Commercial Application No. 14 of 2021 decided by this Court, for the rule that where a Company is run contrary to the law by not holding statutory meetings and is characterized by disputes which make it impossible to conduct its business, that constitutes a good cause for winding up. The fourth ground advanced by Mr. Maunda Raphael, learned Advocate, was that there is a breakdown of relationship between the shareholders and directors which has made the Company cease its operations. He argued that since the demise of the co-founder Mr. Samwel Machangu, who was a business tycoon in hotel management, there is no peace and harmony between and among the shareholders and directors of the Company. He referred to paragraph 8 of the affidavit in opposition where the opposer Mr. Richard Samwel Machangu stated that he left the management position of the Respondent Company due to breakdown of relationship between and among the directors and shareholders. He submitted that some shareholders are living outside Tanzania namely Jollyn 18 Machangu Samuel, Olivia Samwel Machangu and Tamara Shedrack Machangu and they have lost interest in the affairs of the Respondent Company and that makes it difficult to convene meetings physically due to difficulty of obtaining the requisite quorum. Mr. Raphael submitted that the other founder co-shareholder Mr. Pascal Matunda, is not participating even in the winding up proceedings rather his son Pascal Matunda Jr is the one who has been participating and saying that his father is too old and ill such that he cannot handle Company affairs. Mr. Raphael submitted that Annexture 5 (special resolution) dated 17th November 2021 is a clear proof of the misunderstanding among the shareholders and directors of the Company whereby they had resolved to wind up the Company voluntarily and had proceeded to appoint Mr. Ayoub Mtafya as the official liquidator but there emerged misunderstandings among the shareholders and directors of the Company which forced the said official liquidator to cancel the voluntary winding up process by filing Form No.360 with the Registrar of Companies. The said official liquidator cited the misunderstandings among the shareholders and members as the cause that made his work impracticable. Mr. Maunda Raphael, learned Advocate, referred to paragraphs 2.4 and 2.5 of the petitions. Mr. Raphael submitted further that in the case of Ernest Andrew versus Francis Philip Temba, (1996) TLS LR 287 at page 291, 19 the Court held that: "it would be just if the Company is wound up because the former directors were not in talking terms so to speak, each director accusing the other director of one or the other." The Court proceeded to wind up the Company in terms of section 167(f) of the Companies Act and appointed the Registrar of Companies to act as official receiver. He submitted that a similar position was taken by the Court in the case of in the matter of winding up of Joelle Dahan versus Albero Italian restaurant & Hotel and another, Misc. Civil Cause No.3 of 2017. The case cited serious differences or misunderstandings between the shareholders/ directors, which hinder smooth and efficient running of the Company as a commercial concern, as a good cause for winding up of the Company. He buttressed his argument further by relying on the cases of in the matter of petition for winding up of Bazizane Company Limited, Civil Cause No.224 of 2020 decided by the High Court of Tanzania as well as the case of Chu versus Lau (British Virgin Island) UKP 24 decided by the Privy Council in 2020. He argued that in both cases, misunderstandings or management deadlock were cited as a good cause for winding up of a Company. The sixth reason advanced by Mr. Raphael learned Advocate was with respect to the petitioners not having access to books, office assets and 20 records of the Company. He relied on sectionl51 (1) of the Companies Act which requires every Company to keep books of account accessible to directors showing balance sheet of profits and losses. He submitted that the Company's premises are closed down, and shareholders and directors do not know the balance in the Company's bank account No.01J1007567900 CRDB Lumumba Branch. They do not known the status of their assets and there are no audited reports for years. He argued that these circumstances justify winding up of the Company. Based on the foregoing six reasons, Mr. Raphael, learned Advocate, prayed that this Honourable Court be pleased to find that it is just and equitable to wind up the respondent Company; grant interim and or preservatory orders to safeguard the Company and its shareholdesers. He prayed further that the Court be pleased to appoint a liquidator to take custody and control of the Company's affairs, books, records and assets, freezing the Company's bank account No.01J1007567900 in the name of Hotel Continental Limited maintained with CRDB Bank Lumumba Branch. He also prayed for the Court to order that the liquidator should take into custody and control the Company's assets styled as Hotel Continental building with 21 Title Number 186013/58 together with furniture, equipment, fridges, mattresses, televisions, air conditioner and printer. The supporters through their learned Advocate Ms. Mary Brown Francis, filed reply submissions fully supporting the petition for winding up of the Respondent Company. They cited the reasons mentioned under paragraph 6 (a) - (m) in the petition as having raised sufficient grounds for winding up of the Company by the Court on just and equitable grounds. In addition, the learned counsel submitted that since the death of the co­ founder, the late Samwel Machangu, the shareholders have not received any dividend as the Company has not made any profit from its business. She submitted that the survival of the Company depends upon its financial capabilities. She relied on the case of Winding Up Petition in the matter of Winding up of Benson Informatics Limited, Misc. Commercial Cause No.57/2020 as well as Shell Tanzania Limited versus Scandinavian Express Services Limited, Misc. Commercial Case No.36 of 2005. The supporters also cited reasons such as loss of mutual confidence among directors and shareholders, failure to keep books of account at the registered office of the Company, failure to hold annual general meetings, foreign residence of some of its shareholders as well as the termination of the 22 voluntary winding up process, as other "just and equitable" causes for winding up of the Company. Ms. Mary Brown Francis, learned Advocate, concluded that the Company be wound up as there are genuine concerns that in absence of the winding up order, the Company's debts, liabilities, reputation shall be unbearable to directors and shareholders. For the Opposer, Richard Samwel Machangu, reply submissions were filed by Mr. Gratian B. Mali, learned Advocate. He submitted that upon the death of the late Samwel Machangu, the management of the Company fell in the hands of Jacqueline Sia Machangu (Petitioner), Betty Machangu and Jollyn Machangu (supporters). He submitted that the said Jacqueline Sia Machangu and Jollyn Machangu are biological daughters of Betty Machangu. He submitted that after the new team of management took over, the opposer Richard Machangu, and the other director and co-founder Paschal Matunda, were not allowed to participate in the Management of the affairs of the Company. He argued that in order to keep harmony, the duo decided not to interfere with new management thereby leaving all duties and obligations of running the Company upon the new management team and that the two directors after stepping down have never complained. Mr. Gratian Mali, learned Advocate, submitted therefore that all the allegations made by the 23 petitioners and the supporters like not declaring dividends, having no access to Company's books of accounts and office, failure to call annual general meetings and others are all complaints by the petitioners and supporters against themselves as the directors of the Company. Mr. Mali, learned Advocate, submitted further that under the provisions relied upon to file the present petition, the Court can wind up the Company where, in the opinion of the Court, it is just and equitable that the Company should be wound up. The learned counsel for the Opposer submitted that the six reasons advanced by the petitioners do not constitute just and equitable ground for winding up of the Company because the Petitioners and Supporters constitute one team as managers and directors of the business of the Respondent Company. He submitted that all that has been submitted is just a mere narration not backed up by substantive evidence to assist the Court to see that it is indeed just and equitable that the Company be wound up. On break down of relationship among the shareholders and directors, Mr. Gratian Mali, learned Advocate, submitted that since the petition is brought by the petitioners and supported by supporters, who are the very persons in the management of the Company, they should have disclosed who 24 among them is responsible for the breakdown of the relationship that affects smooth management of the Company among them. He submitted that the other Directors Richard Samwel Machangu and Paschal Matunda ceased to have active role in the management of the Company after the demise of the late Samwel Machangu and, as such, they should not be associated with flimsy unfounded allegations of mismanagement as advanced by petitioners and supporters. Mr. Gratian Mali, learned Advocate, submitted that the petition is an abuse of Court process with an ill motive of disposing of the assets of the Company. He submitted that all the alleged problems, if they exist, are made up by the Petitioners and supporters themselves. He relied on the case of Ebrahim versus Westerbiurne Galleries Limited (1973) AC 360 where the Court of Appeal of England held that: "Petitioners should come with dean hands. That is, they should not themselves be guilty of unconscionable conducts. If the petitioners' conducts led to the reasons for winding up, the relief will be denied". Mr. Mali, learned Advocate, submitted further that in the case of Re- Yenidje Tobacco Co.Ltd (1916) 2 Ch.426, it was held that: "refusal to meet on matters of business is a good cause for winding up but such 25 impossibility should not have been caused by the person seeking to take advantage of it". Mr. Gratian Mali, learned Advocate, submitted that the ground for winding up, relied upon by the petitioners and the supporters, is "just and equitable". He argued that the words "just and equitable" were defined by Lord Wilberforce in Ebrahim versus Westerbourne Gallaries Limited (supra), in relation to winding up to mean: "Recognition of the fact that, a limited Company is more than a mere legal entity, with personality in law of its own; there is a room in Company law for recognition of the fact that behind it or amongst it, there are individuals, with rights, expectations and obligations interse, which are not submerged in the Company structure." Mr. Gratian Mali, learned Advocate, argued that winding up order is a death sentence on a Company, it is an order of the last resort. Unless there is evidence, that pursuit of the alternative remedy has failed, the petition should fail. He relied on the case of Re-A Company, Ex parte Estate Acquisition and Development (1991) BCLC 154 for the foregoing position. He also relied on section 282(2) of the Companies Act for the position that the Court will wind up a Company if, in the absence of any 26 other remedy, it would be just and equitable that the Company should be wound up. He concluded that in the case of Yusufali versus Bhardwaj (2008) 2 EA, which was referred to by the Court of Appeal of Tanzania in Hashim Hassan Mussa and 3 Others, Civil Appeal No.515 of 2021, the rule was established that unless there is evidence that the pursuit of alternative remedy has failed, the petition should fail. Mr. Gratian Mali, learned Advocate, submitted that the Respondent Company carries on a sound and viable business and owns a hotel building with 32 rooms in a prime area in City Center of Dar es Salaam with huge value and it is still operating. He argued that there are several alternative remedies including the petitioners and supporters selling their shares at a fair value whereupon the opposer can buy out the petitioners and that the opposer had once approached the petitioners for purchase of their shares but the parties could not agree on the fair price. Mr. Gratian Mali, learned Advocate, submitted that in the case of Yusufali versus Bhardwaj (supra) the Court held that where there is an alternative remedy and offer is made to purchase minority's shares, the Company ought not be wound up but a proper formular for valuation of such shares should be provided so that the dissent shareholders go out of the 27 Company leaving other shareholders to run. Also, he referred the Court to the case of Hashim Hassan Mussa versus Dr.Chrispin Semakula and 2 Others, Civil Appeal No.515 of 2021 wherein directors had reached a deadlock but the Court was still of the opinion that there existed alternative remedy which the parties were unreasonably not pursuing and hence declined to make winding up order. Mr. Gratian Mali, learned counsel, concluded his submissions by praying that the petition be dismissed with costs or alternatively that the Petitioners be ordered to agree on alternative remedy of their value of shares being established for proper disposal thereof. By way of rejoinder, the learned counsel for petitioners, Mr. Raphael Maunda, submitted that the submissions by the opposers' learned counsel are not supported by the affidavit in opposition. He submitted that the submissions by the opposers did not attach any of the unreported authorities relied upon, hence not credible. Mr. Maunda submitted that even before filing the petition in Court, the Company was not doing well and that the stepping down of Mr. Richard Samwel Machangu and Paschal Matunda from directorship of the Company, is a proof of the serious breakdown of relationship. He submitted that among the persons who can petition for winding up under section 281 (1) of the 28 Companies Act, Cap 212, the petitioners are inclusive. Mr. Raphael reiterated the position in the cases of Re-Yenidje Tobbacco Co.Limited (1916) (supra) and In the matter of petition for winding up of Joelle Dahan versus Albero Italian Restaurant (supra) that serious misunderstandings or breakdown of relationship between directors/shareholders, is a just and equitable cause for winding up of a Company by the Court. He refuted allegations of petitioners intending to benefit as there is nothing to benefit from but that the petitioners are looking for benefits of all shareholders. He concluded by submitting that the Opposer does not have serious intention to buy the shares of the other shareholders but is merely bluffing as he was given enough time by the Court to negotiate on that possibility but he failed and, therefore, he is now delaying the process maliciously for his own gains. Ms. Mary Brown Francis, learned Advocate for supporters, also filed rejoinder submissions. She argued that despite the stepping down of Richard Samwel Machangu and Paschal Matunda from directorship, the situation did not ease rather the hostility increased as the relationship between stakeholders (directors and shareholders) is poor and irreparable. She argued that the Company is now at the edge of a certain death with no meetings held, properties deteriorating in value, majority shareholders 29 residing outside Tanzania, and they do not speak to each other. She reiterated the position in the two cases of Chu versus Lau (supra) and In the matter of winding up of Joelle Dahan versus Albero Italian Restaurant (supra) that where misunderstandings hinder the smooth management of the Company as a commercial Company, winding up order should be issued by the Court. Ms. Mary Brown Francis, learned Advocate, concluded by arguing that the allegation of the opposer's intention to purchase the shares of the other shareholders is not genuine as he has failed to do so despite being given enough time. That marked the end of the submissions by the learned counsel for the petitioners, Supporters and the Opposer in this petition. The numerous related parties with common surnames tend to obscure the reality in this case somehow. Therefore, before considering the written submissions by all parties, I should underscore some critical observations emanating from the pleadings exchanged and filed relating to the parties herein and their connection with the Respondent Company. Essentially there are two major camps. The first one is that of the two petitioners assisted by four supporters. The second camp is that of the lone opposer. Petitioners for winding up are Linda Machangu who is a shareholder with 8 shares and 30 Jacqueline Sia Machangu who is a shareholder with 8 shares and also serving as a director in the respondent Company. The supporters of the petition for winding up are (i) Betty Machangu who is a shareholder with 270 shares and also a Director in the Respondent Company;(ii) Jollyn Samwel Machangu who is a shareholder with 8 shares who is also a Director in the Respondent Company;(iii) Olivia Samwel Machangu who is a shareholder with 8 shares and(iv)Tamara Shedrack Machangu who is a shareholder with 8 shares. Brought together, the petitioners and Supporters directly own 310 shares in the respondent Company and indirectly they own 3250 shares through their other Company called Rex Hotel Ltd. According to Annexture Continental 5 to the Petition, which is a special resolution for the abortive attempt for voluntary winding up of the respondent Company passed on 17th November 2021, the Directors who transact business for Rex Hotel Limited are Tamara Shedrack and Betty E.Machangu. This holding Company is the majority shareholder in the Respondent Company holding 3250 shares out of the total 5000 issued shares. Annexture Continental 5 also shows that the other holding Company is S.M Investment Limited which is holding 940 shares in the Respondent Company. The directors of S.M. Investment Limited are Tamara Shedrack and Betty E. Machangu whose names are shown in annexture Continental 5. The other director is Richard Machangu according 31 to his affidavit a fact which has not been disputed by the other parties. Annexture Continental 5 shows further that the shareholders of S.M Investment Limited are Sia Jacqueline Machangu, Jollyn Samwel Machangu, Linda Machangu, Tamara Shedrack Machangu, Olivia Samwel Machangu and Betty E. Machangu. According to the affidavit of Richard Machangu in opposition to the petition, he is also a shareholder in S.M Investment Limited. As the breakdown of shareholding in S. M. Investment Limited is not shown in annexture Continental 5, it is only safe to say that the Petitioners and supporters have the majority on the Board of Directors of that Company and they own substantial number of shares in it as well. Without taking into account the number of shares held by the petitioners and supporters in S.M Investment Limited, still it can be said with certainty that the Petitioners and Supporters own or have controlling shareholding of more than 71.2% of the total shares in the Respondent Company (Hotel Continental Limited). The Opposer Richard Samwel Machangu is a Director in the Respondent Company without directly holding any shares in it. Richard Samwel Machangu indirectly owns shares through his partial shareholding in another holding Company called S.M Investments Limited which is holding 32 940 shares in the Respondent Company. Not all 940 shares belong to him through. The following critical observations are made from all that: (i) Petitioners and Opposers directly and indirectly own or have a control of at least 3560 shares out of the total 5,000 shares in the respondent Company. They are the majority or controlling shareholders of not less than 71.2% in the Respondent Company. (ii) The Petitioners and Supporters have 3 out of 5 members in the Board of Directors of the Respondent Company. These are Jacqueline Sia Machangu (First Petitioner), Betty Machangu (supporter of the petition) and Jollyn Samwel Machangu (supporter of the Petition). (iii) It is not disputed that currently the three Directors who are the petitioners and the supporters of the petition are the only ones in control of the Company after the other two directors, Richard Machangu and Paschal Matunda, stepped down from active Management of the Respondent Company. (iv) The opposer Richard Machangu is not a shareholder in the Respondent Company. Through his partial shareholding in S.M Investment Limited, 33 he may only constitute the minorities side in the respondent Company. He is also a minority in the Board of Directors. (v) The Respondent Company is neither opposing nor supporting the present petition. In fact, during the Court proceedings, Mr. Gratian Mali, learned Advocate used to appear for the respondent Company but in drafting the affidavit in opposition as well as the written submissions, Mr. Gratian Mali, ended up representing Richard Machangu, the opposer. As Richard Machangu and Hotel Continental Company Limited are different persons in law, in effect, the Company did not file any pleading nor written submissions. (v) The Respondent Company was not represented at all by the persons who in law should have acted as its agents namely directors. One of its directors Jacqueline Sia Machangu is the Petitioner for winding up of the Company. The other two directors Betty Machangu and Jollyn Machangu support the petition for winding up of the Company hence acted against the Company too. The fourth director Mr. Paschal Matunda opted not to take any part in the petition. After it was advertised, he did not enter appearance to oppose or resist it personally or on behalf of the Company. The fifth director Mr.Richard Machangu challenged the petition, not on 34 behalf of the Company, but on behalf of himself personally as an alleged heir to the estate of his late father, Samwel Machangu. (vi) There is a breakdown of relationship between the Petitioners and the supporters on one hand and the Opposer on the other hand. The breakdown of relationship is so serious that Betty Machangu, one of the supporters believes that an armed robbery incident at her house in Shirimatunda, Moshi in which her sister was shot at, is connected with the disputes concerning this Company and the attack was intended at her. (vii) There is a raging inheritance dispute between children of the late Samwel Machangu born from the wombs of different women. On one hand, the Petitioners and supporters constitute the widow of the late Samwel Machangu and her biological daughters, while the Opposer is a biological son of the late Samwel Machangu, from another mother. (vii i) There is mismanagement of the Respondent Company. The incidents complained of include: not declaring dividends to its shareholders, not being able to make any profits, poor operations of the Company, resentment, cost overruns and loss of business. Others include directors and shareholders having no access to or control of the 35 Company's books, office, assets and records. Also, that neither directors' nor shareholders' annual general meetings or extraordinary general meetings have been called and that no audited accounts nor annual returns have been filed for a long time. Other mismanagement issues raised include the allegation that the hotel is not renovated for a long time now due to financial constraints as a result the hotel has been in ruins and that some of the directors and shareholders are living outside Tanzania as a result the management of the Company is not in the required standards. In short it is clear that the Articles of Association of the Respondent Company as well as the relevant legal provisions have been not complied with by Respondent's Directors and supporters. With the above picture and reality in mind, I proceed to determine the petition while considering the evidence in the affidavits, the arguments advanced by all the parties in their written submissions and the position of the law in this regard. In determining the present application, I will consider the meaning, scope and limitations of the ground upon which the application was brought namely "just and equitable". Then I will assess and test the material facts of 36 the present case in view of the prevailing position of the law so as to get the outcome justified by the law and that suits justice of the case at hand. In Winding-Up Cause No 12 Of 1977, In Re Garnets Mining Co Ltd, the High Court of Kenya at Nairobi, held that: The application is usually made by the creditors who want the Company to pay its debts, and it is uncommon for it to be made by the shareholders because the legislation for companies is designed to permit the members of a Company to manage its own affairs including winding it up. In Re Cuthbert Cooper & Sons Ltd [1937] Ch 392 the Court laid an emphasis that: "Each Company had its common law in the form of its memorandum and articles of association which should be sufficient for its disputes. So, applications under the "just and equitable"subsection tended to be confined to instances where the deadlock, oppression or exclusion could be shown to be due to the mala tides or lack of bona tides of the opponents:" The two cases above are to the effect that the memorandum and articles of association of a Company should be the first port of calling 37 whenever internal disputes occur in the Company. If there is no alternative remedy capable of being pursued practically in the Company's constitution or the relevant provisions of the Companies Act, then resort can be had to the Court under the ground of just and equitable cause seeking for an order of the Court to wind up the Company. Also, the authorities show that ordinarily a petition for winding up under just and equitable cause is expected to be presented in Court by creditors rather than shareholders because the shareholders have an alternative way, namely the internal mechanism of solving their disputes or making decisions through Company meetings. In the present case, the petition has been brought by not only shareholders, but the majority and controlling shareholders who are also the majority and the only active members of the Company's Board of Directors. This is unusual in Company law. I have looked at the Articles of Association of the Respondent Company with respect to its decision-making mechanism in both the member and directors' meetings. The Memorandum and Articles of Association were attached by the Petitioners as annexture Continental 1 to the petition. Correctness of the same has not been disputed by the Respondent, the Opposer or by the Supporters. 38 The decision-making power of the Members in their general meetings is covered in many provisions, in particular the following articles: Article 46 provides that: "An ordinary genera! meeting of the Company shall be held once in every calendar year at such time (not being more than fifteen months after the holding of the last preceding ordinary genera! meeting) and place as the Board shall appoint" Article 47 provides that: "all genera! meetings other than ordinary genera! meetings shall be called extraordinary general meetings." "52. No question shall be transacted at any general meeting unless a quorum of Members is present at the time when the meeting proceeds to business; save as herein otherwise provided two members present in person or by proxy shall be a quorum." Under the Articles of association of the Respondent Company, it is the Members Annual General Meeting which is vested with powers even to resolve to have the Company wound up under Article 130 that provides that "the Company may be wound up by a special resolution of the Company. "In 39 the case at hand, it appears that the Petitioners and the Supporters have neglected to exercise their powers and follow the procedures contained in their own Memorandum and Articles ofAssociation. " They requisite quorum of at least two members. The decision-making powers of the board of directors are stipulated under the following Articles: POWERS AND DUTIES OF DIRECTORS "51. The management of the business of the Company shall be vested in the Board which, in addition to the powers and do all such acts and things as may be exercised or done by the Company and are not hereby or by Ordinance expressly directed or required to be exercised or done by the Company in genera! meeting. 91. The quorum necessary for the transaction of the business of the Board may be fixed by the Board and unless so fixed shall be two. 90. The Board may meet together for the dispatch of business, adjourn and otherwise regulate its meetings as it thinks fit. Questions arising at any meeting shall be decided by a majority of votes. In 40 case ofequality of votes the Chairman shall not have a second or casting vote." In the present case, the petitioners and the supporters constitute the majority shareholders and the majority members of the board of directors. The articles of association show that in both the members general meetings and directors' meetings, majority of votes would determine the poll and decide the matters transacted. In both the members' general meetings and board of directors' meetings, the necessary quorum is 2 members or two directors only. The petitioners and the Supporters side in this case has 7 members namely Linda Machangu, a shareholder with 8 shares, Jacqueline Sia Machangu, a shareholder with 8 shares, Betty Machangu, a shareholder with 270 shares, Jollyn Samwel Machangu, a shareholder with 8 shares, Olivia Samwel Machangu, a shareholder with 8 shares, Tamara Shedrack Machangu, a shareholder with 8 shares and Rex Hotels Limited, a shareholder with 3250 shares. The Petitioners and supporters, without considering their shareholding in S.M Investment Limited, have at least 3560 shares out of 5000 shares which is 71.2%. They also have three out of five members of the board of directors namely Jacqueline Sia Machangu, Betty Machangu and Jollyn Samwel Machangu. With the quorum requirements set as low as two members and with the rule that decision making will be on the 41 number of shares held by the member, with the power of calling both members' annual general meetings and meetings of board of directors, vested upon the directors, I cannot see any impediment to the Petitioners and supporters to utilize the internal mechanism in their articles of association to resolve all their disputes and make important decisions for the continuance of the Company, through either the meetings of board of directors or the members annual general meetings. Actually, the opposer is not personally even a member or shareholder. If he comes through his partial shareholding in S. M. Investment Limited that holds only 940 shares out of the 5000 shares of the Respondent Company, the opposer will belong to the minority and cannot create any deadlock in decision making of the respondent Company. I find that the Petitioners and supporters have neglected to make use of their own agreed internal legal framework for governing the Company. They have completely abandoned the articles of association or perhaps they did not know the central role of the articles of association in Company management. In Company law when a person subscribes to become a member of the Company, he must be deemed to be aware from the outset of his position 42 under the articles because, as per Lord Selborne LC in Oakbank OH Co v Crum (1882) 8 App Cas 65, 70, 71), the position of the law is that: "Each party must be taken to have made himself acquainted with the terms of the written contract contained in the articles of association, and the Acts of Parliament, so far as they are important He must also in law be taken (though that is sometimes different from what the fact may be) to have understood the terms of the contract according to their proper meaning; and that being so he must take the conseguences, whatever they may be, of the contract which he has made, (emphasis supplied)" I asked myself whether with all the avenues in the Memorandum and Articles of Association through which the members and Directors could have sorted out their differences according to their own agreed rules for management of their Company, was it really justifiable for the Petitioners and supporters in this case to rush to Court seeking a winding up order under the ground of just and equitable cause? I find it not to be the case. The resort to the discretionary powers of the Court to order a compulsory winding up on "just and equitable" ground should be the avenue of last resort after having exhausted all practicable alternative remedies available to members 43 and directors of the Company. It is my ruling that the other available remedies ought to have been exhausted before resorting to the discretionary powers of the Court under "just and equitable" ground for winding up of the Company. I find backing for my foregoing position from statutory provisions and judicial precedents. Firstly, is the provision of section 282 (2) (b) of the Companies Act, Cap 212 which stipulates that: "282.-(l) On hearings winding-up petition the Court may dismiss it, or adjourn the hearing conditionally or unconditionally, or make any interim order, or, any other order that it thinks fit. (2) Where the petition is presented by members of the Company as contributories on the ground that it is just and equitable that the Company should be wound up, the Court, ifit is of opinion — (a) that the petitioners are entitled to relief either by winding up the Company or by some other means; and (b) that in the absence ofany other remedy it would be just and equitable that the Company should be wound up, shall make a winding-up order, unless it is also of the opinion both that some other remedy is available to the petitioners and that they are actino unreasonably in seeking to have the Company 44 wound up instead of pursuing that other remedy (emphasis supplied)." On judicial decisions, I rely on the case of In The Matter of Compulsory Winding Up of INETS Company Limited Between Ephraim Solomon Swila and INETS Company Limited, Misc. Commercial Cause No. 48 of 2022, where Hon. Mbagwa,!, observed at pages 10 and 11 that: "This Court has held, on different occasions, that winding up a Company is tantamount to killing or burying the Company hence there should be genuine reasons. See the cases of Dangote Cement Limited vs NSK OH and Gas Limited, Misc. Commercial Application No.8 of2020, HC (Commercial Division) Arusha and Tanzaiasa Limited vs Tractors Limited, Misc. Commercial Cause No. 11 of 2022, HC (Commercial Division) at Dar es Salaam. With the above position in mind, are there genuine reasons to kill the respondent Company which is trading at profit and manned by two directors? Again, my answer is absolutely no. Indeed, the petition is devoid of compelling reasons for the Court to wind up the Company" 45 In KiritbhaiR. Pate! v. Lavina Construction & Finance Ltd, [ 1999], the Gujarat High Court reached the conclusion that: When other remedies fail to adequately protect the Company's genera! interests, a Court may resort to relief based on the just and equitable ground, I find that the Respondent Company's Articles of Association contain alternative remedies which are adequate enough to protect the Company's interests and deal with the disclosed management crisis rather than for the Petitioners and supporters seeking a Court order for compulsory winding up of the Company on the "just and equitable" ground which is discretional. In the case at hand, it is the Directors and shareholders of the Company who have chosen not to implement the avenues available under the articles of association and rushed to Court seeking the intervention of the Court on a matter which the Articles of Association of the respondent Company and the Companies Act have given them all the necessary powers to handle. If the directors and shareholders will be allowed to easily abdicate their powers under the articles of association and the provisions of the Companies Act and instead rush to Court for each and every management dispute, then companies' business will stagnate since it would take more time for Courts of law to resolve those disputes than the well-tailored internal mechanisms 46 under the articles of association of the companies. The delayed disposal of companies' disputes in Court will eventually stifle national economic growth as companies are principally formed to do business. Also, if every dispute in the Company, for which the articles of association and the Companies Act adequately vest practicable powers to the members or directors of the Company to handle, is filed in Court, the Courts will be flooded with multitudes of disputes related to management of the companies than the Courts will be able to handle and dispose of timely. The very essence of the law to enable individuals organize themselves in a Company, was inter alia, to secure their collective self-regulation by way of constitutive technique. The law constitutes the several persons as members of the Company and then regulates them collectively as such in terms of the provisions of the Companies Act. On the other hand it enables them to regulate themselves internally by way of their articles of association. Under the Articles of association of the respondent Company, the petitioners and supporters who are the majority shareholders, and are the majority and the only sitting members of the Board of directors of the Company, had all the mechanisms they needed to control and manage their Company but none was utilized by them, instead, they rushed to Court seeking for a compulsory winding up order on the ground of just and equitable cause. All the complaints advanced 47 in the Petition as grounds for winding up of the Respondent Company which allegedly constitute the "just and equitable cause" could be solved by the members and the directors by resorting to the provisions of the articles of association of their Company. The alternative remedies under the Articles of Association of the Respondent Company have not been pursued. In addition to, and in tandem with, pursuing the remedies under the Articles of Association, there were other alternative remedies for rescuing the Company from the crisis under the Companies Act, Cap 212. One such alternative to seeking the winding up order, was seeking an administrative order under section 247 of the Act. I reproduce the relevant part: (2) An administration order is an order directing that, during the period for which the order is in force, the affairs, business and property of the Company shall be managed by a person ("the administrator") appointed for the purpose by the Court. (3) The purposes for whose achievement an administration order may be made are — (a) the survival of the Company, and the whole or any part of its undertaking, as a going concern.... Apart from the administration order, the petitioners and supporters had an alternative and practicable remedy of entering into a voluntary 48 arrangement under section 240 of the Act. This could be done through the Company meetings something which was in the mandate and capacity of the Petitioners and supporters as the majority shareholders and directors without recourse to the discretionary powers of the Court. I reproduce sections 240 and 243 of the Act on voluntary arrangement. "240.-(I) The directorsofa Company (other than one for which an administration order is in force, or which is being wound up) may make a proposal under this Chapter to the Company and to its creditors fora composition in satisfaction ofits debts or a scheme of arrangement of its affairs (from here on referred to, in either case, as a "voluntary arrangement"). (2) A proposal under this Chapter is one which provides for some person ("the nominee") to act in relation to the voluntary arrangement either as trustee or otherwise for the purpose of supervising its implementation; and the nominee must be a person who is qualified to act as an insolvency practitioner in relation to the Company. 243.-(I) The meetings summoned under section 242 shall decide whether to approve the proposed 49 voluntary arrangement (with or without modifications)." Another alternative statutory remedy was filing an application on the grounds of unfair prejudice or derivative action by the minorities members (the two petitioner) who are complaining of being sidelined in the management of affairs of the Company. This option is available under section 233 of the Companies Act. It provides: "233.-(I) Any member of a Company may make an application to the Court by petition for an order on the ground that the Company's affairs are being or have been conducted in a manner which is unfairly prejudicial to the interests of its members generally or of some part of its members (including at least himself) or that any actual or proposed act or omission of the Company (including an act or omission on its behalf) is or would be so prejudicial. If the Court is satisfied that the petition is well founded, it may make such interim or final order as it sees fit for giving relief in respect of the matters complained of." If the petition based on derivative action or unfair prejudice was successfully brought by a member, the Court could issue an array of relevant orders as prescribed under section 233(3) of the Act including an order to: 50 " {a) regulate the conduct of the Company's affairs in the future, (b) require the Company to refrain from doing or continuing an act complained ofby the petitioner or to do an act which the petitioner has complained it has omitted to do, (c) authorize civil proceedings to be brought in the name and on behalf of the Company by such person or persons and on such terms as the Court may direct, (d) provide for the purchase of the shares of any members of the Company by other members of the Company or by the Company and, in the case of a purchase by the Company, for the reduction accordingly of the Company's capital, or otherwise." Another alternative remedy to Court order for compulsory winding up on the just and equitable ground, which was available to the petitioners and supporters herein, was members' voluntary winding up under section 333 of the Companies Act. I reproduce it "333-(l) A Company may be wound up voluntarily- (a) when the period, if any, fixed for the duration of the Company in the articles expires, or the event, if any, occurs, on the occurrence of which the articles provide that the Company is to be dissolved, and the 51 Company in general meeting has passed a resolution requiring the Company to be wound up voluntarily; may be wound up voluntarily; (b) if the Company resolves by special resolution that the Company be wound up voluntarily; (c) if the Company resolves by special resolution to the effect that it cannot by reason of its liabilities continue its business, and that it is advisable to wind up." The resignation of Mr. Mtafya as a liquidator during the voluntary winding up was unfounded. He had support of majority members. The consequence of members' voluntary winding up would be no different from the ones sought herein, but its grounds would be different. Whereas there might be no grounds for compulsory winding up of a Company by order of the Court under the just and equitable cause, the same Company might be wound up by way of members' voluntary winding up process. The two are different in many respects. Before me is an application by way of petition to wind up the respondent Company by order of the Court on the ground of just and equitable cause. I find that as the Petitioners and supporters had alternative remedies, the Court cannot proceed to use its discretionary power under section 282 of the Companies Act. 52 All the alternative remedies I have explained herein above were readily and practicably available to the petitioners and supporters before they could resort to the discretionry remedy of compulsory winding up on the just and equitable ground. I take note that all the arrangements I have shown above, require participation by the members through their duly convened meetings. The opposer, personally, is not a member in the respondent Company. He could not, as such, have been directly a party to the decision-making process in pursuit of any of the remedies above enumerated which were available to the members of the Company. The opposer, in his affidavit in opposition, alleged that he is a biological son of the late Samwel Machangu and that he has a probate matter wherein he is claiming for inheritance of a portion of the shares in the Respondent Company by virtue of an alleged Will. Until that inheritance right is established, shares are transmitted and the opposer's name is entered into the register of members of the Company, the opposer is not a member of the Respondent Company. At any rate, if the opposer is representing another Company (S.M Investment Limited) which is holding 940 shares in the respondent Company, he was supposed to transact business, including attending meetings of the respondent Company in the name of S.M Investment Limited and not as Richard Samwel Machangu. Even the objection or opposition to the present petition by Richard Machangu 53 should have been brought in the name of S.M Investment Limited wherein he is a director (and shareholder) or in the name of the Respondent Company wherein he is among the Directors but without shares. The power of Mr. Richard Machangu in the meetings of the Respondent Company would depend on the amount of shares held by him in that other (holding Company) and on the instructions given to him as an agent/director of S.M Investment Limited. If he is a minority shareholder in S.M Investment Limited and the other shareholders are unfairly not taking into consideration his interests in S.M Investment Limited in relation to the 940 shares that S.M Investment Limited holds in the Respondent Company, Mr. Richard Machangu, as a member of S.M Investment Limited, should have taken a remedial action in respect of the said S.M Investment Limited. At the moment, in so far as Hotel Continental Company Limited is concerned, as it has been shown in this petition, neither of the holding companies (Rex Hotels Limited and S.M Investment Limited) holding 3250 shares and 940 shares respectively in the respondent Company, filed any objection or in resistance to the aborted members voluntary winding up process or the present petition for winding up by order of the Court. My reluctance to allow this petition therefore, does not tacitly endorse the opposer, in his personal capacity, as a member and or shareholder of the respondent Company. That is a contentious issue in 54 the pending probate matter and which is not the subject of this case at all. My reluctance to allow the petition is based on the fact that the petitioners and supporters are not entitled to the order of Court for compulsory winding up based on just and equitable cause. In the circumstances of the present case, even if the petition had not been opposed by Mr. Richard Machangu, I would still have declined to exercise my discretion to wind up the respondent Company because in my opinion it is not "just and equitable" to do so. Among the reasons which make it not just and equitable to issue the winding up order in the present petition is the fact that whereas the petitioners and supporters had alternative remedies handy at their disposal, they opted for this discretionary remedy of seeking Court order for winding up on just and equitable cause without legal basis to prefer their petition under it. The petitioners and supporters have argued that there is deadlock in decision making of the Company, but the circumstances of the case do not support that allegation. Decision making is not based on unanimity of all shareholders or all directors. According to the articles of association of the Respondent Company, decision making in the annual general meeting is on the basis of number of shares held. Decision making in the board of directors is on majority vote. The factual circumstances prevailing in both fora with 55 respect to the respondent Company, do not indicate possibility of there being a deadlock in passing resolutions by vote. The petitioners and supporters have the overwhelming majority. The Petitioners and supporters control over 71.2% votes, by virtue of their direct and indirect shareholding in the respondent Company. The petitioners and supporters have three votes in the Board of Directors made of 5 members. The opposer is not a member in the respondent Company. He is one of the 5 directors in its board. I don't see any deadlock there. Deadlock is among the acceptable circumstances where a Court may exercise its discretion to issue an order that it is just and equitable for the Company to be wound up. In cases of a deadlock, even if the Court were to leave the Company management to its own devices under the internal decision-making machinery in its articles, no progress could take place as no decisive voting could be possible. Deadlock as a relevant factor for winding up of a Company on just and equitable cause, was also judicially acknowledged in Ebrahimi v. Westbourne Galleries Ltd ( 1973 AC 360 : (1972) 2 WLR 1289), where it was held that there are three instances to grant winding-up order on just and equitable ground— CO When the main object of the Company has failed and it becomes impossible for the Company to achieve the object. 56 (ii) Due to the shareholders' dispute, a deadlock situation arises. (Hi) When there is complete loss of confidence amongst the shareholders. The first ground above is not applicable as the petitioners have failed to prove that it has become impossible for the Company to achieve its objective. The impossibility complained of is with respect to deadlock in decision making which actually does and cannot exist looking at the membership and shareholding structure of the Company. The third ground in the case above also doesn't apply since the loss of confidence is only alleged to relate between the petitioners and the supporters on one hand as against the opposer on the other hand. The opposer, however, is not a shareholder in the Respondent Company. Equally, in the present petition, therefore, deadlock does not arise. The only resistance in decision making is alleged to come from the opposer in his personal name while he is not a member of the Respondent Company. Even if the opposer succeeded to acquire shares by way of inheritance from his late father, through the pending probate Revision Application No.30 of 2021 in the High Court of Tanzania at Temeke, that shareholding would still be not enough to make him a member in the Respondent Company. I talked in length about this position of law in Misc. Commercial Cause No. 192 of 2023 Mary Deogratias Magubo (Formerly 57 Known as Mary Boniface Fungo and 3 Others Versus the Registrar of Companies, and I need not repeat it here. Suffice it to say that decision making in a private Company is in the domain of members of the Company and not shareholders. A member is a person whose name has been entered in the Company's share register or one who subscribed to the memorandum and articles of association. This point was well captured by the High Court of India in the case of Kedar Nath Agarwal v. Jay Engineering Works Limited (1963) 33 Com Case 102 Cal., where Gowans,J., observed that: *7/7 some situations and contingencies, the "member" may be different from a "holder". A member may be a holder ofshares but a holder may not be a member..."member" has a distinct connotation in the Companies Act. He is either a subscriber of a memorandum of a Company or a person who agrees to become a member of a Company and whose name is entered in the register of members." The only impediment to smooth and effective decision making in the management and the running of the affairs of the respondent Company is alleged to have come from Richard Samwel Machangu, who as it has been shown, is not a member of the respondent Company. Properly speaking, that 58 impediment should not have happened in the first place if the Directors and members of the respondent Company had abided by the laws regulating private companies. The other impediment to decision making pursuant to the articles of association of the respondent Company is alleged to have come from the other co-founder, Pascal Matunda, but the shareholding of Pascal Matunda is on the minority side of members of the Company such that he cannot create a deadlock in the decision making of the respondent Company. Members' votes in the Company's meetings are counted on the basis of their number of shares held and the class of shares. As shown above all the shares in the Respondent are ordinary shares and hence they rank in pari passu. Even the articles of association of the Company recognize that votes shall be weighted based on the number of shares held by the member .such that each one share shall constitute one vote. The Petitioners and supporters, directly, and indirectly through their two other companies holding shares in the respondent Company, are the majority shareholders and members. Also, they are the sitting majority directors in the board of directors of the respondent Company. All the above enumerated alternative remedies were therefore, legally and practically available to them and were 59 fully at their disposal. They forsake the alternative remedies and opted, instead, to pursue a discretionary order of the Court to wind up the Company on the ground of just and equitable cause, which ground is ordinarily not available to them as the majority and controlling members of the Company. They are not the minority members who might not practically be able to use the internal Company's management system as per the articles of association to decide and pursue the desirable course of action by the Company. The petition at hand is therefore objectionable as a matter of principle. When the legislature introduced the alternative remedies to rescue a Company which is in crisis, and made the winding up of the Company by order of the Court on just and equitable grounds, a discretionary and alternative remedy of the last resort, it had a policy objective behind. It would be going counter to the objectives of the Companies Act, if the Courts readily intervened in the administration of companies by performing the tasks which were entrusted by the law into members and directors of the Company. That would be contrary to the spirit of treating a Company as a separate autonomous business entity- a spirit that is statutorily prescribed and recognized in the agreement of members of the Company expressed in the form of the Memorandum of association. I fully subscribe to the holding 60 in Winding-Up Cause No 12 of 1977 in Re Garnets Mining Co Ltd, where the High Court of Kenya at Nairobi, held that; It is uncommon for [the application for Court order to wind a Company on just and equitable cause! to be made by the shareholders because the legislation for companies is designed to permit the members of a Company to manage its own affairs including winding it up. (emphasis supplied! I find that the scheme of the Companies Act of Tanzania, of 2002 was also, amongst others, tailored to further a similar objective of enabling members to take effective control of their Company and, indirectly through their elected directors, or directly through the members' general meetings, manage all its affairs pursuant to the Memorandum and Articles of Association and the provisions of the Companies Act. Members and directors should bonafidely attempt to use the internal mechanism of dispute avoidance, crisis management and resolution in the articles of association and the Act, before they could justifiably resort to the discretionary powers of the Court to seek an order for the Company to be compulsorily wound up on just and equitable cause which essentially is reserved as the remedy of the last resort. 61 I have also noted in the present petition that the Objector/ Opposer, Richard Samwel Machangu, who filed an affidavit in opposition in his personal name, ended up describing himself as the Respondent in the written submissions written by his learned counsel Mr. Gratian Mali. The current Petition was filed by the petitioners against the respondent Company as the sole Respondent and not against Richard Samwel Machangu, who entered appearance as an objector after the petition had been advertised. Out of the 5 directors of the respondent Company disclosed in the search report from the office of Registrar of Companies, three belong to the team of the petitioners and supporters of the winding up petition. The 4th director is Pascal Matunda who took no role in these proceedings despite the petition being advertised. The 4th director is the Objector/ opposer Richard Machangu. This being a case involving internal disputes in the management of the respondent Company, is the one where, in my view, a board resolution was mandatory for a director to represent the Company in signing pleadings for and on behalf of the respondent Company. In the case of Simba Paper Converters Limited versus Packaging and Stationery Manufacturers Limited and Dr.Steve K.Mworia, Civil Appeal No.280 of 2017, delivered by the Court of Appeal of Tanzania at Dar es salaam on 23rd May, 2023 at page 18 it was held that: 62 'We subscribe to the saidposition to the extent that it relates to the institution of a suit by one or more directors in the name of Company whereas in the present matter it resolves on the internal conflict within the Company. In any other case we will be hesitant to extend the rule any further mindful ofthe legal position relating to the power of the Company to be sued in its own name. I take the above holding as an authority that where one director wishes to institute a suit in the name of the Company and where there are internal conflicts within the Company, a board resolution is necessary. Richard Machangu was not sued, he entered appearance in the petition, in effect joining it, as an objector thereby advancing his claim against the Petitioners. If he were thereby representing the Respondent Company as the written submissions purported to show, or representing the holding Company S.M Investment Limited, he needed a Board resolution. However, as I have endeavored to show, he actually joined the petition as an objector in his own individual capacity as shown in his affidavit in opposition. I take it that the Opposer in this case, despite purporting to file reply submissions as if he were the Respondent Company, was actually proceeding on his own accord as an objector or opposer. 63 Under the circumstances of the present petition, I asked myself whether it is just and equitable for the Court to exercise its discretion and grant the winding up order on the ground of just and equitable cause? In S.P. Jain v. Kalinga Tubes Ltd ( AIR 1965 SC 1535.) the Supreme Court observed that: it is not enough for the petitioner to show that there is just and equitable cause for winding up of the Company although that must be shown as a preliminary to the application ofSection397. It must further be proved that the conduct of the majority shareholders was oppressive to the members and this requires that the events have to be considered not in isolation but as a part of consecutive story. The conduct must be burdensome, harsh and wrongful and mere lack of confidence between majority and minority shareholders is not enough for considering the application unless such lack of confidence springs from oppression of the minority by a majority. I find that it will neither just nor equitable, even in the literal meaning of the phrase to order the Winding Up of the Respondent Company. The petitioners and supporters of the petition are the majority shareholders and members who also constitute majority of the board of directors hence 64 wielding massive control of the respondent Company through their overwhelming voting power, hence not prone to oppression by the minority. In Lord Clyde, in Baird vLees 1924 SC 83, 92, said: "A shareholder puts his money into a Company on certain conditions. The first of them is that the business in which he invests shall be limited to certain definite objects. The second is that it shall be carried on by certain persons elected in a specified way. And the third is that the business shall be conducted in accordance with certain principles of commercial administration defined in the statute, which provide some guarantee of commercial profit and efficiency. If shareholders find these conditions or some of them are deliberately and consistently violated and set aside by the action ofa member and official of the Company who wields an overwhelming voting power, and if the result of that is that, for the extrication of their rights as shareholders, they are deprived of the ordinary facilities which compliance with the Companies Act would provide them with, then there does arise, in my opinion, a situation in which it may be just and equitable for the Court to wind up the Company." 65 The foregoing authorities form further basis for my decision to decline to grant the application at hand. It would not be "just" or "equitable" to do so. It would encourage members and directors of companies holding majority shares and having decision making power, to discard and ignore the internal scheme for resolution of disputes in the Company, and opt to rush to Courts over matters which were precisely intended to be put in their full control and for which there is no impediment to exercise their powers in respect of. There is another unpalatable taste to the scheme under the present petition for winding up of the Respondent Company. As it was argued correctly by Mr. Gratian Mali, learned Advocate, all the misconducts and violations of the law are conspicuously raised by the petitioners and supporters as shareholders and directors of the respondent Company, and the attack is directed towards the petitioners and supporters themselves as the majority members, shareholders and directors who should have acted to alleviate the worst situation the respondent Company has found itself in. Not calling statutory members meetings, not holding directors meetings, not filing annual returns, not conducting audits and providing audited reports, not disclosing the amount in the bank account of the Company, and not 66 keeping books of accounts of the Company, are all omissions by the Directors of the Company. These are among the duties of the Directors. Doing all that is what would have constituted "directing" the Company. The petition has alleged that upon assumption of management role by the new directors who belong to petitioners and supporters herein, the other two directors namely Richard Machangu and Pascal Matunda stepped down (although it seems their stepping down was done informally as the official records at BRELA still recognize them as directors). This fact has not been disputed by the petitioners and supporters. This means that for all this period, the active management of the respondent Company has always been in the exclusive control of the remaining three directors who incidentally belong to the camp of Petitioners and the Opposers seeking to wind up the Company due to mismanagement! They allege that they do not know the bank balance, if any, in the Company's bank account, that they have no access to books of accounts of the Company, that they are not able to convene statutory meetings, that they cannot preserve the assets of the Company from deteriorating, that they cannot access the head office of the Company and so many allegations signifying total failure to manage the Company. Incidentally, at the far end of the blame, one finds the same petitioners and supporters as the majority members and directors of the Company therefore 67 being the object of the blame and who should have remedied the litany of breaches complained of. One may wonder what were they managing as directors of the respondent Company? Using their powers as majority shareholders and directors, what have they done to remedy the problems complained of? Against whose actions and omissions are they complaining? The authors of Equity: Doctrines Remedies (1st Edn) (1975), Meagher, Gemmow and Lehane, observe that "Anyone whose conduct has been improper in any relevant way in some transaction who wants reliefin equity will be refused it." In The Matter of Compulsory Winding Up of INETS Company Limited Between Ephraim Solomon Swila and INETS Company Limited, Misc. Commercial Cause No. 48 OF 2022, Hon.Mbagwa,!, observed at page 9 that: "It is the settled position that the Court can issue a winding up order if it is satisfied that it is just and equitable to do so. In the case of Dr. Hashim Hassan Mussa vs Dr. Crispin Msemakuia and 2 Others, Civil Appeal No. 515 of2021, CAT at Dar es Salaam, the Court of Appeal held that winding up is both 68 statutory and equitable remedy as such, a petitioner should go to Court with dean hands. The question for consideration at this juncture is whether the petitioner, under the circumstances of the case, has dean hands to move this Court to grant a winding up order. My quick answer to this question is'no'..... In Ebrahimi v Westbourne Gallaries Ltd [1973] AC 376, 387, Lord Cross of Chelsea, said: "A petitioner who relies on the "just and equitable" clause must come to Court with dean hands, and if the breakdown in confidence between him and the other parties to the dispute appears to have been due to his misconduct he cannot insist on the Company being wound up if they wish it to continue." I am alive to the rule in Re Bleriot Manufacturing Air Craft Co (1916) 32 TLR 253, where it was stated at page 255 that: "The words just and equitable' are of the widest significance and do not limit the jurisdiction of the Court to any case... It is a question of fact and each case must depend on its circumstances." 69 I have considered whether or not it would be just and equitable to grant the orders sought? I am not persuaded. It would tantamount to the Court facilitating and blessing the wrong doer to benefit from his own wrong. The Companies Act provides under section 282 that: "282. -(1) On hearing a winding-up petition the Court may dismiss it, or adjourn the hearing conditionally or unconditionally, or make any interim order, or, any other order that it thinks fit." In the case at hand, after hearing the winding up petition, I am satisfied that it is not just and equitable to grant the orders sought. In the upshot the petition fails and I proceed to dismiss it in terms of section 282(1) of the Companies Act. Given the relationship of the parties to this petition, I make no order as to costs. It is so ordered. 21/06/2024 70 Ruling is delivered in Court this 21st day of June, 2024 in the presence of Mr. Maunda Raphael learned Advocate for the Petitioners, Ms. Nicolina Hondo learned Advocate for the supporters, and Mr. Gratian Mali learned Advocate for the Respondent. TRA as an interested party was represented by Ms. Consolata Andrew and Ms. Rose Sawaki, learned Advocates while the Opposer Mr. Richard Machangu was absent but was aware of the date of delivery of the Ruling. 21/06/2024 71