incar t ltd and others vs standard chatered bank t ltd 2020 tzhccomd 1989 12 august 2020

IN T H E H IG H C O U R T O F T A N Z A N IA (C O M M ER C IA L D IV ISIO N ) A T D A R-ES-SA LA A M MIS C .C O M M ER C IA L A P P L IC A T IO N NO.72 O F 2019 IN C A R T A N Z A N IA L IM IT E D .........................................I ST A P P L IC A N T SH IV A IM A G ES T A N Z A N IA L T D ..................................2nd A P P L IC A N T S T E F N A T E N G IN E E R IN G & T E C H .S E R V IC E S ........ 3rd A P P L IC A N T S H IV A C O M (T A N Z A N IA ) L IM IT E D ............................. 4™ A P P L IC A N T U L T IM A T E S E C U R IT Y T A N Z A N IA L T D .................. 5th A P P L IC A N T SH IV A C O M G R O U P O F C O M P A N IE S L T D .......... 6th A P P L IC A N T T A N IL S O M A IY A .................................................................7th A P P L IC A N T versus S T A N D A R D C H A R T E R E D B A N K (T) L T D .................R E S P O N D E N T R U LIN G Date of the Last order: 10/06/2020 Delivery of the Ruling: 12/08/2020 N A N G E L A , J.: This ruling is in respect of an application for leave to defend a suit filed by seven (7) Applicants herein by way of a Chamber Summons made under Order X X X V rules (2) (2) and 3 ( 1 ) (b), Section 68 (e) and 95 o f the Civil Procedure Code, Cap.33 [R.E. 2002] (as amended). The Chamber summons has been supported by two affidavits, one being that of the 7th Applicant, Tanil Somaiya, affirmed on 22nd May 2020 in Dar-Es-Salaam and filed in this Court on 28th May 2020; and the 2nd affidavit is that of Mr. Eliuta Mwanjawika, dated on the same day. Page 1 of 14 The nature of the prayers sought by the Applicants is as follows: 1. T H A T , leave be granted to the Applicant to appear and defend Commercial Case No.28 of 2020. 2. T H A T , the costs of the Application be provided for by the Respondent, and 3. Any other order(s) the Hon. Court may consider fit and proper to grant in the circumstance. On 10th June 2020, this matter was called on for necessary orders. On the material date, Mr. Edward Mwakingwe (Advocate) appeared for the Respondent and, was also holding the briefs of Mr. Michael J.T. Ngalo (Advocate) appearing for the Applicants. Addressing the Court, Mr. Mwakingwe sought leave to file a counter-affidavit to the application. He asked for 14 days and the Court granted the prayer. The said counter affidavit was filed on 24th June 2020 and a Reply thereto by the Applicants was filed on 2nd July 2020. On 10th June 2020, it was also agreed that the matter should proceed by way of filing written submissions. This Court, therefore, made the following orders, in respect of the filing of the written submissions: 1. T H A T , the Applicants' written submission be filed on or before 8thJuly 2020; 2. T H A T , the Respondent's written submission be filed on or before 15th July 2020; 3. T H A T , rejoinder submission (if any) be filed on or before 21st July 2020. 4. Ruling to be delivered on the 12th August 2020 at 9.am. Following the above scheduling order, on 8th July 2020, the Applicants, through the services of Mr. Michael Ngalo, learned counsel, filed their submission in chief in support of the application for leave to defend. On 16th July 2020, the Respondent Bank, through the services of Mr. Mwakingwe, learned counsel, filed its Reply submission in opposition to the application for leave to defend. On 22ndJuly, 2020 the Applicants filed a rejoinder submission. Page 2 of 14 I will now consider the written submissions in support and in opposition to the application. In their written submission, the Applicants submitted that the application was triggered by the summons and copies of plaint in respect of Com m ercial Case No.28 of 2020, filed by the Respondent as a "summary suit”. The Applicants submitted that, under rule 2 (2) and 3 (I) (b) of Order X X X V o f the Civil Procedure Code, Cap. 33 [H E. 2002] (hereinafter the CPC), the Applicants are permitted to apply for leave to defend within 21 days. The Applicants have, in the first place, noted that, the Respondent's counter affidavit, was sworn by an in-house lawyer, one Wallarick Nittu. The Applicants adopted the affidavit of Mr. Tanil Somaiya and its annexures as forming part of their written submission. They, as well, sought leave to adopt as part of their submission, Mr. Nitu's admission alleged to be made in his affidavit, and which admission is said to have been noted in Mr. Tanil Somaiya's affidavit in reply. The Applicants noted in their submission that, Mr. Nittu's affidavit is not accompanied with any annexure but that, Mr. Nittu seems to contain statements that part of the documents annexed in Mr. Somaiya's affidavit will be relied on by the Respondent. Citing the case of Bruno W enceslaus Nyalifa v The Perm anent Secretary Ministry of Home Affairs & Another, Civil Appeal No.82 of 2 0 17 (unreported), the Applicants argued that, although they do not dispute the Respondent's reliance on the documents annexed in Mr. Somaiya's affidavit, the Annexures are to be treated as evidence, subject of course to the Court's evaluation of the same to determine their evidential weight. In Bruno's case (supra) the Court of Appeal was of the view that:- "an affidavit is evidence and the annexure thereto is intended to substantiate the allegations made in the affidavit. Unless it is controverted, therefore, the document can be relied upon to establish a particular fact." Page 3 of 14 It was submitted that, the Applicants as customers of the Respondent Bank, had, at various dates on 30thJuly 2015, and 13th July 2 0 16 applied for loan and credit facilities from the Respondent. In particular, it was contended that, the I st Applicant, (Incar Tanzania Ltd) applied for credit facilities which constitute the basis of the suit against her on 30th July 2015. Likewise, it was averred that, Shiva Images Tanzania Ltd (the 2nd Applicant) is said to have applied for credit facility advanced to her vide a Facility Letter dated 30th July 2015. The 3rdApplicant, (Stefnat Engineering & Technology Services Ltd) obtained a credit facility vide a Facility Letter dated 13th July 2 0 16. In their submission, the Applicants argued that, most of the loan and credit facilities obtained from the Respondent were fully repaid and are neither being claimed nor do they form the subject of the summary suit and this application. For simplicity, the Applicants' learned counsel has referred to the said facilities collectively as "the banking facilities" and the three companies (the Ist, 2nd and 3rd Applicants) as "the borrower companies". I will adopt that nomenclature as well in this ruling. In their submission the Applicants set out the following as undisputed facts: 1. That, the said banking facilities were and are secured by three properties known as Plot Nos. 104-1 10 with C T.N o . 186078/2 Nyerere Road, Plot No. 100 with C T .N o .32467, Vingunguti Industrial Area and Plot No.26/3/2 with C T . No. 186081/36 Pugu Road, all situated in llala District, within Dar-Es-Salaam region, (collectively referred to as the Mortgaged Properties). 2. That, the borrower companies serviced the banking facilities, but failed to continue to do so since 2018. 3. That, in early 2018 the Respondent initiated measures against the borrower companies with a view to recover the outstanding balances due and owing on those banking facilities. It is also not disputed that, both the borrower companies, represented by Mr. Tanil Somaiya, for Page 4 of 14 and on behalf of Shivacom as its chairman, held negotiations and exchanged correspondences with the Respondent. 4. That, in June and July 2019, the Respondent issued to the Applicants, demand and statutory default notices recalling the entire outstanding principal sums and accrued interest on those banking facilities. And, that, it is undisputed that, upon receipt of those Notices, two of the borrower companies, (i.e., Incar and Shiva Images together with Shivacom Tanzania Ltd (the 4th Applicant) who are the registered owners of the mortgaged properties, hence mortgagors, instituted Commercial Case No. 105 of 2019 (the previous suit) seeking for various reliefs as outlined in the plaint attached to Mr.Tanil Somaiya's Affidavit as Annexture TAB-12. On the other hand, the Applicants have set out, in their submission, the following as disputed facts: 1. That, the Applicants asserts that there was a consensus and understanding reached between the borrower companies and the Respondent to the effect that, one, the borrower companies' offer to pay U SD FIV E M ILLIO N as full and final outstanding amount due and owing on the banking facilities and, secondly, that, a proposal that the mortgaged properties be sold to and purchased by Rai Group Limited, a Kenyan based company and which proposal was accepted by the Respondent. However, the Respondent, while admitting the two points above, argues that the acceptance was valid as up to I IthJune 2018. Further that, the sale proposal did not bar or interfere with its rights under the mortgaged deeds and debentures. As well, in dispute is in regard to the Respondent's communication, and engagement in negotiations with Rai Group regarding the transaction for the sale and purchase of the mortgaged properties. 2. The validity of the guarantees sued on and impleadment or joinder of the guarantors in a summary suit as done by the Respondent. It is contended that, the dispute is based on the fact that the guarantees sued on, are invalid because those were made in 2010 Page 5 of 14 for the facilities, advanced or taken prior to 2015 and 2016, which the Respondent argues that they were continuing and extended to the banking facilities sued on while the Applicants aver the contrary. The issues arising from this, therefore, are: (i) whether or not the guarantees sued on in the summary suit were continuous and extended to cover the banking facilities, hence valid and (ii) whether it is procedurally and legally proper to join guarantors in a summary suit as done by the Respondent herein against the 4th, 5th 6th and the 7th Applicants. As regards the grounds to be satisfied in the granting of an application for leave to defend as the instant one, the learned counsel for the Applicants submitted that, rule 3 of Order X X X V of the CPC (as amended in 2007 by the Mortgage Finance (Special Provisions) Act No. 17 states it all. In particular, two conditions are to be satisfied, i.e., that: (i) the loan was not taken at all; or (ii) the whole or part o f the loan has been discharged. A s regards whether the loan was taken or not, the learned counsel for the Applicants readily concede that, that is not a serious or disputable issue. What is in dispute is whether the banking facilities pleaded under paragraph 4 of the plaint filed in respect of Com m ercial No.28 of 2020 were all availed to and utilized by the borrower companies or not. The learned counsel for the Applicant referred to this Court the averments in paragraph 44 of Mr. Tanil Somaiya's affidavit filed in support of the Application. Paragraph 44 of the said Affidavit has questioned the alleged disbursement and or issuance to the borrower companies of the amount which stands to be U SD I 1,893,500 while there are no attached to the plaint documents demonstrating the making of all those facilities and their full realization by the borrower companies. It was argued that, in the absence of the banking statements for each borrowing company, the ascertainment of the correct and exact amounts outstanding on each facility are and remain uncertain. Page 6 of 14 To further advance their reasoning on that point, the Applicants have reproduced paragraph 32 of Mr. Nittu's affidavit in response to paragraphs 44 and 45 of Mr. Tanil's affidavit, where the Respondent has averred, in, as follows, that: "In relation to what is asserted by the Applicants in paragraphs 44 and 45 of Tanil's affidavit, I reiterate the contents of paragraph 4 of the plaint and the Respondent shall rely on the explicit terms of each facility letter attached therein. The fact that the facility was fully utilized has never been an issue between the Respondent and the Applicants as evidenced by most of the documents and correspondences attached to Tanil's affidavit." The learned counsel for the Applicants argued that, such a reply is faulty as it does not address the undisputed partial repayments made by the borrower companies to discharge those facilities in terms of how much and when. The Applicants learned counsel, contends, therefore, that, whether the facilities were indeed availed and fully utilized or not is a triable issue and, its determination will depend on whether it is raised in the pleadings or not, this being a good ground for granting leave to defend. As regards the second condition under the Mortgage Finance (Special Provisions) Act No. 17 of 2008, it was submitted that the borrower companies have partially discharged the banking facilities as deposed under paragraph II of Mr. Tanil's affidavit. That paragraph has been countered by Mr. Nittu in paragraph 6 of his affidavit. In particular, Mr. Nittu states that: "I strongly dispute the averments made by Tanil in paragraph I I of his affidavit. I state further that, it is the alleged few instances that led to the Ist to 3rd Applicant's failure to service the facilities that were granted to them." The Applicants' learned counsel submitted that, the Respondent's averment in paragraph 6 of Nittu's affidavit is sufficient proof that there is a triable issue that warrant the granting of the application for leave. They further Page 7 of 14 argued that, paragraphs 49 (e) and (f) of Mr. Tanil Somaiya's affidavit further raised triable issues warranting that the Applicants be granted leave to defend the suit. It was the Applicants prayer, therefore, that, this Court should make a finding that the Applicants have advanced an arguable case with prima facie triable issues of law and fact, and, hence, deserves to be granted leave to defend. In their lengthy submission, the Applicants have also raised an issue of the suit being subjudice. I think this is not an appropriate time to discuss such a matter since this is an application for leave to defend the summary suit. In my view, such an issue could be appropriately discussed if I was dealing with the suit or if the leave was to be granted. As such, the issue regarding whether the pending summary suit is a matter which stands to be subjudice or not cannot form the basis of discussion in this application. In its reply submission, the Respondent Bank adopted the contents of the counter affidavit sworn by Mr. Walarick Nittu and filed in this Court on 24th June 2020 to form part of its submission in reply. The Respondent submitted that the submission filed by the Applicant has infringed Rule 66 (2) of the High Court (Commercial Division) Procedure Rules 2012 as read together with Rule 19 of the same rules. The argument advanced is that the submission contains more than 10 pages and the affidavit of Tanil contains 12 pages. The Respondent has urged this Court to reject the pleadings filed by the Applicants, citing the case of K C B Bank Tanzania Ltd v Sunlon General Building Contractors Ltd and O thers, Com m ercial Case No.73 of 2013 (unreported) where Mwambegele, J., (as he then was) rejected a written submission which was found to be off-standards required by this Court. It was the Respondent's further submission that, the case of Bruno W enceslaus Nyalifa v The Perm anent Secretary, Ministry of Home Affairs & Another, (supra) cited by the Applicants is irrelevant and distinguishable. It has been further argued that some of the documents which Page 8 of 14 the Applicants intend to rely on, are privileged communications which cannot, in any way be called into evidence. In particular, it has been submitted that, the document that shows a removal of Ultimate Security from Shivacom Group in 2019 cannot be called into evidence and does not invalidate an executed guarantee that was executed on 30th of September 2015 by the 5th Applicant to cover the facilities extended to the Ist to 3rd Applicants. The Respondent argued, therefore, that, the Applicant cannot rely on those Annexures to the Affidavit. The Respondent Bank submitted further that, the grounds to be satisfied for this Honourable Court to grant the Applicants leave to defend are well enshrined under Order X X X V rule 3 ( I) (c) o f the CPC as amended. In short, the cited provision point out two conditions: (a) that, the loan or a portion of it has been discharged or (b) that, the loan was actually not taken. It was the Respondent's contention that, going through the Affidavit of Tanil Somaiya, nowhere has it been disputed or deponed and justified that the grant of the facility by the Respondent as having discharged the loan or a portion of it. Referring to the case of N ararisa Enterprises Com pany Limited v Diamond T ru st Bank Ltd, Misc. Com m ercial Cause No. 202 of 2015 (unreported), the Respondent Bank submitted that, as alternative grounds for what Order X X X V rule 3 ( I) (c) o f the CPC provided, the Applicants must satisfy the Court that, either they have a good defence to the claims on merit, there are good triable issues, or they disclose such facts as may be deemed sufficient to entitle them to defend. It was argued that, going through the affidavit of Mr. Somaiya, the same did not capture any of the grounds set out in the Nararisa's case (supra). It was argued, therefore, that, the Applicants have not demonstrated any triable issues, but what is claimed by them, is illusory, sham and practically moonshine acts, solely intended to delay the proceedings under the summary procedure. Page 9 of 14 As regards the decision of this Court in National Bank of Com m erce v Malt Hotels Ltd, Com m ercial Case No. 121 of 2012 (unreported), which was relied upon by the Applicants, the Respondent Bank submitted that, that decision has been wrongly interpreted. It was argued that the above case requires the Applicants to show that they are not intending to delay the process of the Court. The Respondent argued that, in the instant case, the Applicants want to delay the processes so that the Respondent cannot continue with the case as they centred their submission on technical issues which are irrelevant, such as the matter being subjudice. I think I have already ruled out any discussion regarding the suit being subjudice in this application. That is not an appropriate subject of discussion in an application like this one given that the clear grounds of granting it or denying it are well established in law. To conclude its submission, the Respondent Bank has prayed that this application be dismissed for failure to meet the conditions required for the Court to grant the application as the one at hand. Having summarized the contents of the rival submissions, the issue which I am called upon to address is whether the Applicants have met the conditions for which this Court should proceed upon and grant the application. Before I embark on the analysis of that issue, however, I find it appropriate to address the concerns raised by the Respondent Bank in its submission, particularly that, the submission filed by the Applicants exceeded the limit of allowable pages under Rule 66 (2) and 19 (I) of the High Court (Commercial Division) Procedure Rules 2012 fas amended). In its submission, the Respondent Bank has called upon me to expunge from the record the Applicants' written submission because the same is in excess of 10 pages allowed by the above cited rules. I think I need not be detained much by this issue. The case of K C B Bank Tanzania Ltd v Sunlon General Building Contractors Ltd and Others, (supra), which I am called Page 10 of 14 upon to rely on and expunge the Applicants' written submission from the record for being in excess of 10 pages, was decided in 2013. However, as it was stated in the case of SG S Societe Generale De Surveillance SA and Another, Civil Case No. 124, 2017 CAT (Unreported), not all procedural mistakes or errors affect a case filed in the Court. As noted above, the case cited by the Respondent was decided before the recent legal developments which call upon the Court to take into account the need to uphold substantive justice. As such, the case is therefore, easily distinguishable from the present application as it has been overtaken by events. I will not, therefore, consider that authority or be bound by it. I think the current application is not the appropriate case for which one should apply a strict approach to the rules as suggested by the Respondent. In view of that, let me now revert to the pertinent issue which I am called upon to determine in this Application: (i.e., whether the Applicants have met the conditions for which this Court should proceed upon and grant the application. Essentially, an application for leave to defend a summary suit, as the one at hand, needs not be complicated, provided that the respective Applicants meet the requisite conditions. Such conditions are set out in Order X X X V rule 3 (I) (c) of the CPC (as amended in 2007 by the Mortgage Finance (Special Provisions) Act No. 17 o f 2008. In particular, two conditions are to be satisfied, i.e., that: (i) the loan was not taken at all; or (ii) the whole or part o f the loan has been discharged. Besides, it is also clear from case law that, there are, as well, other conditions which may be looked at. The cases of N ararisa Enterprises Com pany Limited v Diamond T ru st Bank Ltd (supra) and National Bank of Com m erce v Malt Hotels Ltd (supra) are a few of such cases. In these cases, the right to defend can be granted if the Court believes that the Applicants' case has advanced some triable issues. Page 11 of 14 As regards the conditions set out under Order X X X V rule 3 (I) (c) of the CPC, the Applicants submit that they have fulfilled them. In particular, in their written submission and supporting affidavit of Mr. Tanil Somaiya, the Applicants contend that, most of the loan and credit facilities obtained from the Respondent were fully repaid and are neither being claimed nor do they form the subject of the summary suit and this application. However, what paragraph 44 of the said Affidavit seems to be questioning the alleged disbursement and or issuance of U SD I 1,893,500 to the borrower companies, since the Respondent has not attached to the plaint documents demonstrating the making of all those facilities and their full realization by the borrower companies. Consequently, it was argued that, in the absence of the banking statements for each borrowing company, the ascertainment of the correct and exact amounts outstanding on each facility are and remain uncertain. In my view, I think there is a triable issue here. While the Applicants contend that they have paid the facilities, the Respondent denies that fact. In such a situation, evidence will need to be established regarding who stands to be correct. Moreover, it is contended that what is claimed is not the correct amount and, as such, as pointed in paragraph 49 (e) and (f) of Mr. Tanil's Affidavit, whether all the banking facilities were indeed availed and utilized by the borrower companies is, in my view, a valid triable issue. Furthermore, as regards the second condition under the Mortgage Finance (Special Provisions) Act No. 17, 2008, while the Applicants submit that the borrower companies have partially discharged the banking facilities as deposed under paragraph I I of Mr. Tanil's affidavit, the Respondent has countered that averment in paragraph 6 of Mr. Nittu's affidavit. In my view, I think, as the Applicants' learned counsel submitted, the Respondent's averment in paragraph 6 of Nittu's affidavit is a sufficient proof that there is a triable issue that warrant the granting of the application for leave. The issue is whether the Applicants have partially discharged their Page 12 of 14 obligation under the facilities or not. This is a matter that will require further evidence to prove it and that can only take place if the Applicants are given right to defend. Looking at the submissions of the Applicants, I also find that the Applicants have raised two other pertinent issues. The issues are listed by the Applicants as triable issues are: (i) whether or not the guarantees sued on in the summary suit were continuous and extended to cover the banking facilities, hence valid, and (ii) whether it is procedurally and legally proper to join guarantors in a summary suit as done by the Respondent against the 4th, 5th 6th and the 7th Applicants. In my view, I find them to be triable in the main case. In the case of Nararisa Enterprises Com pany Lim ited and 3 O thers v Diamond Trust Bank Tanzania Limited (supra), the Court held that, before granting leave to defend a summary suit, the court should look upon the affidavit filed in support of the application, to see whether the deposed facts have demonstrated triable issues, fit to go to trial. The applicant is only required to show a fair and reasonable defence. Consequently, having looked at the affidavit of Mr. Tanil Somaiya, which was filed in support of the Applicants' application, together with what I have summarized from the submissions made by the parties, I am contented, that, the Applicants have disclosed triable issues fit to go to trial. In view of that, leave is hereby granted to the Applicants to defend the summary suit. Costs will follow the cause in the main suit. The Applicants should file their Written Statement og Defence within 21 days from the date of this ruling. It is so ordered. D E O JOHN N A N G E L A JU D G E, High C ou rt of Tanzania (Com m ercial Division) 12/08 12020 Page 13 of 14 Ruling delivered on this 12th day of August 2020, in the presence of the Mr Michael J.T. Ngalo, Advocate for the Applicants, and Mr.Sauli Santu, Advocate Page 14 of 14