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IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA (COMMERCIAL DIVISION) AT PAR ES SALAAM COMMERCIAL CASE NO.84 OF 2023 INFINITY FINANCE COMPANY LIMITED................... PLAINTIFF VERSUS COYESA COMPANY LIMITED.............................................. DEFENDANT JUDGMENT Date of last Order: 06/05/2024 Date of Judgment: 16/08/2024 GONZI, J. The Plaintiff sued the Defendant praying for Judgment and Decree that: a) That the Defendant be ordered to pay TZS 230,000,000/= being the outstanding amount b) The Defendant be ordered to pay penalty as agreed at a rate of 5.4% of the outstanding amount of TZS 230,000,000/= with effect from 01/08/2022 to the date of filing these proceedings at the tune of TZS.143, 100,000/- fina! payment. i c) A declaration that the act of the Defendant to remove the Plaintiff's principal Officer from being one of the signatories over Account NO.015056568600-CRDB Bank is a nullity. d) An order that the Plaintiff's Principal Officer who was appointed as a signatory be placed back to his original position as a signatory in respect to Account No. 015056568600-CRDB Bank. e) That the Defendant be ordered to pay interest as per (a) above at the Commercial rate of 12% per annum. f) That the Defendant be ordered to pay interest as per (a) above at Court rate of 7% per annum from the date of Judgment to the date of payment in full. g) Genera! damages as may be assessed by this Honourable Court. h) Costs of this Suit. i) Ant other reliefs this Honourable Court may deem just and equitable to grant. From the contents of the Plaint and the Witness Statement for the Plaintiff, the Plaintiff's claims breach of a Fair Agreement dated 8th February 2021 between the Plaintiff and the Defendant. It was the plaintiff's position 2 that, under that agreement, the Plaintiff agreed to finance construction projects procured by the Defendant on the understanding that the income therefrom would be shared between the two according to the terms agreed upon. It was alleged by the Plaintiff that the Plaintiff and the Defendant agreed to open and run a jointly managed Bank Account in the name of the Defendant at CRDB Bank, to which the Plaintiff's Principal Officer would be a co-signatory. The Plaintiff stated that after having financed the Defendant's projects, the Defendant breached the terms of the Fair Agreement by not fulfilling his duties. In particular, the Plaintiff complained of the Defendant's conduct with respect to two projects of Itigi District Council and Mkalama District Council awarded by TARLIRA vide tenders Nos. AE/092/2021/2022/SGD/W/49 and AE/092/092/2021/2022/SGD/W/26 respectively. The non-payment by the Defendant led to the Plaintiff and the Defendant holding a meeting on 23rd June 2022 with a view to ascertaining how best the Plaintiff could obtain his contractual entitlements out of the procured and financed projects. In that meeting, it was agreed that the amount due to the Plaintiff was TZS 318,000,000/= including penalty for delayed payment. The Plaintiff admitted to have been paid TZS 48,000,000/= leading to the outstanding balance of TZS 270,000,000/= 3 which was agreed to be repaid by the Defendant to the Plaintiff not later than 30/07/2022. It was further agreed that any delay from 30th July 2022 would fetch interest at the rate of 5.4% per month provided that the payment would be made by 30th August 2022. Despite this agreement, the Defendant failed to pay the Plaintiff the amounts due until 11th October 2022 when the Principal Officers of the Defendant made an undertaking on behalf of the Defendant. Under the written Commitment dated 11th October 2022, the Defendant undertook to pay the Plaintiff the outstanding amount of TZS 270,000,000/= not later than 30th October 2022. It was also the Defendant's Commitment that the outstanding penalty would be paid with effect from 1st August 2022. Instead of making good the undertaking, the Defendant continued to breach the terms of payment and went ahead to breach the contract further by removing the Principal Officer of the Plaintiff Company from being a Co-signatory to the Joint Bank Account at CRDB Bank. It was stated by the Plaintiff that out of the total balance of TZS 270,000,000/=, TZS 40 million had been paid by the Defendant in in two tranches being TZS 30,000,000/= on 1st November 2022 and TZS 10,000,000/= on 31st October 2022 respectively. After several demands for payment which yielded no results, the Plaintiff filed this suit against the Defendant. In the suit the 4 Plaintiff is claiming for the outstanding principal sum of TZS 230,000,000/= The Plaintiff also claimed for TZS 143,100,000/= being the accrued agreed interest as penalties. The Defendant through the Written Statement of Defence refuted the claims by the Plaintiff and stated that after the Accountant for the defendant did reconciliation, it was found that the Plaintiff had been repaid by way of Bank Transfers TZS 292,441,013/= as from 05th May 2021 to 1st November 2022. The Defendant stated that the Defendant failed in his duty under the fair agreement between them by not financing two projects/tenders worth TZS 472,476,502/=. On removal of the Plaintiff's principal officer from being a signatory to their Bank Account, the Defendant maintained that the Plaintiff's Principal Officer is still a signatory to the CRDB Bank Account of the Defendant Company as evidenced by the letter from CRDB dated 5th December 2022 wherein one Jacob Mseja, the Plaintiff's Director is shown as a co-signatory. In addition, the Defendant also raised a Counter Claim against the Plaintiff. The Defendant sued the Plaintiff for the Plaintiff's failure to finance Itigi and Mkalama projects secured by the Defendant for construction of Rural Roads under TARURA which were supposed to be completed in 180 5 days. The Itigi project was awarded on 25th November 2021 and was supposed to be completed by 31st May 2022 whereas the Mkalama project was awarded on 7th January 2022 and was supposed to be completed by 11th July 2022. It was the duty of the Plaintiff under the Fair Agreement to inject funds in the Defendant's Account No.0150556568600 at CRDB Bank PLC which is managed by Raphael Paschal Menda, Director of the Defendant Company and Mr. Joseph Mseja, Director of the Plaintiff Company. The Itigi project had a value of TZS 238,818,320/= VAT exclusive and the Mkalama project had a project value of TZS 233,658,182 VAT exclusive. The Defendant's counter claim was that the Plaintiff breached Clause 3 of the Fair Agreement between them by failing to finance the two projects fully whereby the Plaintiff by 25th March 2022 had financed the Itigi project at TZS 42,500,000/= only. For Mkalama project, by 14th January 2022, the Plaintiff had financed only TZS 33,128,200/=. Due to the breach by the Plaintiff, the Defendant had to find her own sources and secure funds to complete the two projects so as to avoid a Law suit from TARURA-the Client. It was alleged by the Defendant that the Defendant had financed from own sources TZS 166,198,000/= from 14th January 2022 to 28th March 2022 for 6 the Itigi project. For the Mkalama project, the Defendant had financed TZS 188,100,000/= from 28th January 2022 to 6th September 2022. The Defendant therefore prayed for specific and general damages from the Plaintiff and prayed the court to enter Judgment and Decree in its favour against the Plaintiff for orders that: a) The Plaintiff's case be dismissed with costs. b) A declaratory Order that the Plaintiffhas breached the Fair Agreement dated &h February 2021 entered between the parties. c) A declaratory Order ofspecific performance by the Plaintiff in respect of the Fair Agreement dated 8th February 2021 entered between the parties to fund the two projects worth TZS 472,476,502/= (Tanzanian Shillings Four Hundred Seventy two Million Four Hundred Seventy Six Thousand Five Hundred and Two. d) Payment of specific damages to the tune of Tanzanian Shillings Three Hundred Fifty Four Million Two Hundred Ninety Eight Thousand (TZS 354,298,000/=) being the amount the Defendant incurred to salvage the two projects. 7 e) Payment of Genera! Damages as may be assessed by this Honourable Court. f) Interest on (d) and (e) above at the commercial rate of from the date of filing the case to the date of the Judgment. g) Interest at Court rate from the date ofJudgment till full satisfaction of the decretal sum. h) Costs. i) Any other remedies as this Court may deem fit and just to grant. The Plaintiff filed a Written Statement of defence to the Counterclaim as well as Reply to the Written Statement of Defence by the Defendant. The Plaintiff refuted all the claims by the Defendant in the Counterclaim. The Plaintiff alleged that the defendant has misconceived the projects in dispute with their other projects not in dispute. The Plaintiff alleged that it had financed all the projects of the Defendant as per their agreement but that the Defendant had utilized the money intended for Itigi and Mkalama projects to rescue other Defendant's businesses and not the Itigi and Mkalama projects. The Plaintiff alleged that the Plaintiff's obligation to release money for the use of the Defendant under the Fair Agreement, was 8 on demand and not automatic. Also, that the money was to be released by installments reflecting the projects7 stages. The Plaintiff insisted that its principal Officer has been removed from operating the Joint Account and that the Defendant is now operating a new bank account to which the Plaintiff has no access. In Reply to the Written Statement of Defence to the Counterclaim, the Defendant stated that after accounts reconciliation, the Defendant discovered that there was no deviation of funds of the Plaintiff injected to finance the Itigi and Mkalama projects and that it was found that the amounts injected by the Plaintiff was only TZS 42,500,000/= and TZS 33,128,200/= for Itigi and Mkalama projects respectively. The Defendant further stated that the Plaintiff was bound to deposit the funds in the joint Bank Account No.0150556568600 at CRDB Bank but the Plaintiff channeled insufficient funds for the two projects. After pleadings were complete and the first Pretrial Conference was conducted, the parties unsuccessfully attempted a Court-Annexed Mediation. In the Final Pretrial Conference held on 14th December 2023, the Court framed the following issues to carter for both the main suit and the Counter Claim, after engaging the learned counsel for the Plaintiff and the Defendant: 9 1. Who between the Plaintiff and the Defendant breached the terms of the Agreement dated &h February2021? 2. To what reliefs are parties entitled? The Plaintiff filed two Witness statements in Court but ultimately called one witness and withdrew the second witness statement from record. Therefore, only one Witness Statement remained on record for the Plaintiff and the Plaintiff called only one witness namely Mr. Jacob Joseph Mseja who was cross examined on his witness statement. The Defendant brought one Witness for cross examination namely Mr. Raphael Paschal Menda who had earlier on filed his Witness statement. During the hearing, the witnesses adopted their Witness Statements which reflect the contents of their respective pleadings and whose key contents I have already summarized above. In addition, the Plaintiff's Witness tendered the following Exhibits in Court. Exhibit Pl was the Fair Agreement dated 8th February 2021 between the Plaintiff and the Defendant. Exhibit P2 was the Minutes of the Meeting of 23rd June 2022 between officers of the Plaintiff and of the Defendant concerning "Fedha za Miradi ya Itigi na Mkalama" (Project Funds for the Itigi and Mkalama Projects). Exhibit P3 was io the Commitment Bond issued by COYESA Ltd dated 11th October 2022. Exhibit P4 was the letter from TanAfrica Law to CRDB requesting the bank to freeze the Joint Bank Account operated by the Plaintiff and the Defendant. Exhibit P5 was the Board Resolution of Infinity Finance Limited of 4th July 2023. Exhibit P6 was the Demand Letter from Lexmicus Attorneys to the Managing Director of COYESA Limited dated 2nd August 2022. Exhibit P 7 was a letter dated 16th August 2023 from CRDB to Jacob Mseja regarding the jointly operated bank account. Exhibit P8 was the Bank Deposits from COYESA Limited showing TZS 30 million on 1st November 2022 and Exhibit P 9 was the deposit for TZS 10 million on 31st October 2022. Exhibit P 10 was the Email correspondences dated 6th April 2022 from Raphael P. Menda, the Director of the Defendant Company to Jacob Mseja, the Director of the Plaintiff Company concerning the Itigi and Mkalama projects funds. The Defendant's witness Mr. Raphael Paschal Menda, tendered 4 exhibits in court. These were Exhibit DI which was the Fair Agreement dated 8th February 2021 and which had also been admitted as Exhibit Pl. Exhibit D2 collectively was made up of the Tender Acceptance Letters for Itigi and Mkalama Projects whose dates of Acceptance were 25th November 2021 and 7th January 2022, respectively. Exhibit D3 collectively was made up of two li Agreements for the Itigi and Mkalama projects being Agreements Numbers 49 and 26 respectively. Exhibit D4 was the Bank Statement of the Defendant Company from 8th February 2021 to 6th December 2022. The two witnesses were cross examined and re-examined by the learned counsel. I will refer to their testimonies in cross examination and re-examination in appropriate places in my Judgment. Upon the closure of evidentiary hearing, both sides were granted time to present Final Written Submissions or closing speeches. For the Plaintiff, Dr. Sigsbert Ngemera, learned Advocate, duly filed the Final submissions. For the Defendant, Mr. Kika Ali Mzige, learned Advocate, duly filed the Final submissions. I thank both counsel for their useful submissions which were filed in court timely. Dr. Sigsbert Ngemera, learned Advocate for the Plaintiff, submitted that under section 110(1) of the Evidence Act, CAP 6 (R.E 2019) the rule is that he who alleges must prove. He argued that through Exhibits P-2 and P- 3, the Plaintiff has proved that he financed the Itigi and Mkalama projects. He submitted that the Defendant has acknowledged indebtedness towards the Plaintiff and has promised to make good the amounts owed. He argued that through E-mail correspondences as per Exhibit 10 paragraph 1, the 12 Defendant has admitted to have spent the amounts financed by the Plaintiff for the Itigi and Mkalama projects contrary to the intended and agreed purposes. He submitted that according to Exhibit P-5, the Plaintiff disbursed funds to the Defendant through one Linda Mario, who is one of the Directors of the Plaintiff Company as facilitation to obtain the projects. On the allegation of the Defendant having over-repaid the Plaintiff an amount of TZS 292,449,593, the learned counsel submitted that the allegation is an afterthought and that the Defendant did not call the said Accountant to testify on the allegations that upon reconciliation of accounts, it was discovered that the Plaintiff was overpaid by the Defendant. He prayed that an adverse inference be drawn against the Defendant for not calling such a material witness. He submitted that the account statement of the Defendant as per Exhibit D4 which allegedly shows that the Defendant has repaid some funds to the Plaintiff, shows that the alleged repayments were done in 2021. That was before the Itigi and Mkalama projects were even procured. He submitted that such repayment could not conceivably relate to the Itigi and Mkalama projects but to other similar projects carried out by the Defendant and the Plaintiff. Dr. Ngemera concluded that the Defendant never complained or issued any demand letter on delayed disbursement of funds 13 by the Plaintiff for the Itigi and Mkalama projects. He argued that this means that there was timely and adequate disbursement by the Plaintiff of the requested amounts. He prayed that issue number one be answered against the Defendant. He submitted that as per Exhibit P7 and the cross examination of DW 1, it is not disputed that the Defendant has removed the Plaintiff's principal officer from joint operations of the Bank Account in breach of the agreement between the parties herein. With respect to the remedies, Dr. Ngemera, Learned Advocate, submitted that vide Exhibits P2, P3, P8 and P9, the principal sum was TZS 270,000/= out of which the Defendant repaid TZS 40,000,000/= hence reducing the exposure to TZS 230,000,000/=. He submitted that parties had agreed to 5.4% per month as interest on delayed repayment. He therefore prayed that the reliefs prayed for be granted and the counter claim be dismissed, with costs. Mr. Kika Mzige, learned Advocate submitted that under the Fair Agreement Exhibit Pl and DI, the Plaintiff had a duty to finance the Defendant's projects but that the Plaintiff did not finance in full the Itigi and Mkalama projects. He argued that the Plaintiff had financed the Itigi and Mkalama projects only at 16% of the project costs. He submitted that as per 14 Exhibits P2 and P3, the Defendant had acknowledged indebtedness towards the Plaintiff for the Itigi and Mkalama projects before the Defendants accountant had made reconciliation of accounts where he discovered overpayment. He submitted that the Exhibit Pll was an email of 25th November 2021 hence the admission was made even before the Itigi and Mkalama projects had been procured. He urged the court not to take it into account. Mr. Mzige, learned Advocate, concluded by reiterating the rule on burden of proof that the Plaintiff has failed to prove his claims against the Defendant. He prayed for the prayers in the Plaint to be rejected and the suit be dismissed. He also prayed that the Defendant's prayers in the Counter Claim be granted. The issues in the present case as framed by the Court after hearing the propositions of both counsel in conformity with the disputed facts in the pleadings, are only two. The first issue is who between the Plaintiff and the Defendant has breached the terms of the contract dated 8th February 2021? The second issue is to what reliefs are the parties entitled? The two issues were framed for the simultaneous determination of both, the main suit and the counter claim. 15 I will start with the first issue as to who between the Plaintiff and the Defendant has breached the terms of the contract dated 8th February 2021. Inevitably, the determination of this issue requires a prior exposition of the terms of the said contract dated 8th February 2021 and an assessment of the parties' conformity or non-conformity thereto. As the Fair Agreement (Exhibit Pl and DI) between the parties herein dated 8th February 2021 is short, I reproduce verbatim hereunder the agreed terms in entirety: 1. That the contractor shall look for tender by either bidding or other ways and execute the work to standard accepted by the client. 2. That the contractor shall use her personnel to execute all works regarding the project and shall pay all labour work costs daily after the working hour. 3. That the Financier shall finance all financial related matters of the project under construction. 4. 0 Operation Mode 16 4. 1 Both parties agreed to open the common account number to CRDB Bank to operate the project. 4. 2. The account shall be opened as a contractor and shall be two to sign, one signatory (MR. RAPHAEL PASCHAL MENDA) from the Contractor and (MR. JACOB JOSEPH MSEJA) from Financier shall be involved in operating the account. 4. 4 That both parties agree to take 50% of the net profit of every project to be executed. 5. That the contractor shall implement all the projects in accordance with the contract and bills of quantities to form part of this agreement. 6. That any alteration or addition to this agreement shall be valid only if it is agreed to in writing between the parties. 7. That by signing this agreement, the contractor confirms to start implementation of finding new 17 projects and finance start to finance all projects awarded to the Contractor. 8. That this agreement shall be governed by the laws of Tanzania. The Agreement was duly signed and sealed by both parties through their Principal Officers. In both Exhibit Pl and DI, there is no Clause 4.3 and numbers jump from 4.2 to 4.4. It is apparent that the parties have many projects executed under the above agreement. However, the subject matter of the present case is with respect to Itigi and Mkalama projects only. Fortunately, parties have documented all the important financial details regarding the two projects. Exhibit PIO is an email dated 6th April 2022 from Raphael Paschal Menda of COYESA Co LTD to Jacob Mseja of Infinity Finance Co.Ltd. It reads: "We COYESA Company agree that money we received from IFL was used in our other projects instead of what it was intended for. The reason for that was the presence of heavy rains in Singida which made it difficult to work at the time. We also hoped we would be paid before the rains were over but very unfortunately it was not so that is why Itigi 18 project have no good progress. As agreed in the previous meetings that we are expecting to be credited 13 million Tshs from Kigoma and 45miHion Tshs from Mkalama One projects summing up to 58 million Tshs. This 32.2 million Tshs will be directed to Mariculture project and 16.8 million will be used to run Itigi Project. Hfe have also processed a bank loan which we expect to receive it by the end of this month if not earlier of the May 2022. We shall therefore be able to payback the money invested by IFL in Mkalama two and Itigi Projects which sums up to a total of 260,673,500.00. Also we have agreed that35,000,000 Tshs will be deducted in the coming consecutive certificates for Mariculture Project to recover the money invested by IFL." From the above e-mail correspondence, it is clear that the Defendant speaking through its Director was admitting unequivocally that the Plaintiff had invested TZS 260,673,500/= in the Itigi and Mkalama Projects and an undertaking was being made for the Defendant to pay the Plaintiff its due. In the same e-mail correspondence, the Defendant was admitting violation of the terms of the agreement for having spent the money financed by the Plaintiff for the Itigi and Mkalama projects by spending it in other projects because of heavy rainfall in Singida region where the Itigi and mkalama 19 projects are situated. The Plaintiff had therefore performed her duties by financing the two projects while the Defendant had breached her duties by diverting the funds to other projects and for not paying the Plaintiff her share. Exhibit PIO therefore answrs the first issue in favour of the Plaintiff against the Defendant. In the final submissions by Mr. Mzige, learned Counsel, it was argued that the email correspondence pretae the Itigi and Mkalama projects, hence it is not relevant. However, that is not the case. Exhibit PIO is an email dated 6th April 2022. The Itigi project was awarded on 25th November 2021 and was supposed to be completed by 31st May 2022 whereas the Mkalama project was awarded on 7th January 2022 and was supposed to be completed by 11th July 2022. At the time of the e-mail correspondence in Exhibit P10, both Mkalama and Itigi projects had been already procured and the work was in progress. I have also considered Exhibit P2 which is made up of Minutes of a Meeting between the Plaintiff and the Defendant held on 23rd June 2022. The meeting was attended by Raphael Menda (from COYESA Co.Ltd); Linda Mario (from IFC Limited); Eliud Mwambope (from COYESA Co.Ltd); Jacob Mseja (from IFC Limited) and Edson Peter (from COYESA Co.Ltd). All attendees signed it and both pages of the minutes of the meeting were 20 initialed and sealed with the Common Seals of the two companies. The Agenda Item was only one titled "Fedha ya Miradi ya Itigi and Mkalama" (to mean Itigi and Mkalama projects Funds). The Minutes show that Infinity Company Limited had invested a total of TZS 213,000,000/= in COYESA Co. Limited whereby COYESA Co. Ltd had repaid TZS 48,000,000/=. It was agreed that by 30th July 2022, COYESA Co.Ltd would be obliged to pay Infinity Finance Company Ltd a total of TZS 270,000,000/=. In the event of failure to pay in full the agreed amount by 30th July 2022, any outstanding sum, would fetch interest at 5.4% and the entire balance should be paid by 30th August 2022. The content of Exhibit P2 also answers the first issue in favour of the Plaintiff against the Defendant. The Defendant is on records admitting the investment done by the Plaintiff in the Defendant Company pursuant to their terms of contract. It also shows that the Defendant was struggling to repay the Plaintiff its amounts due. The Defendant was thereby committing to repaying the Plaintiff in the future with penalties for delayed payment. Another cogent piece of evidence that has direct implications to the first issue is Exhibit P3. It is a Written Commitment dated 11th October 2022 made by Raphael Paschal Menda, Director, COYESA Company Limited in the 21 presence of Linda Daniel Mario, Samwel Mbesele, and Edson Peter. The commitment is handwritten in Kiswahili language, signed by all persons named therein and sealed with the Seal of COYESA Co. Limited. It reads that: "COYESA COMPANY LTD inayodaiwa kiasi cha Shilingi miiioni mia mbiH na sabini (270,000,000/=) na Infinity Finance Company Ltd itaiipa hili deni kabia ya tarehe 30-10-2022. Pamoja na deni hili kuna riba ya 5.4% inayotakiwa kuiipwa na COYESA COMPANY LTD tarehe tajwa hapo juu. Riba itaanza 01-08-2022." The commitment can be translated into English that: "COYESA Company Limited which is indebted to Infinity Finance Company Limited at the tune of TZS 270,000,000/= (Tanzanian Shillings Two Hundred Seventy Million only) will repay the above stated debt before 30th October 2022. In addition to this debt there is also an interest which should also be paid by COYESA Co. Ltd on the above stated date. The interest shall be charged as from the 1st day of August 2022." The consistence in the theme of Exhibits P10, P2 and P3 is striking. It inevitably points towards acknowledgement by 22 the Defendant to have breached the terms of the Fair Agreement. The amount due to the Plaintiff is also clearly stipulated therein. I will next turn to Exhibit P7 which is a letter from CRDB Bank PLC to Jacob Joseph Mseja, dated 16th August 2023 on status of his being an account signatory in respect of Account No. 0150556568600 in the name of COYESA COMPANY LIMITED. The letter stated that his appointment as signatory of the account had been revoked by COYESA COMPANY LIMITED as per instructions received by the Bank on 23rd May 2023 and therefore, he was no longer a signatory. This letter is a clear proof that contrary to Clause 4.1 and 4.2 of the Fair Agreement between the parties. I reproduce the Clauses: "4.1 Both parties agreed to open the common account number to CRDB Bank to operate the project. 4.2. The account shall be opened as a contractor and shall be two to sign, one signatory (MR.RAPHAEL PASCHAL MENDA) from the Contractor and (MR.JACOB JOSEPH MSEJA) from Financier shall be involved in operating the account. 23 The letter from CRDB Bank PLC to Jacob Joseph Mseja, dated 16th August 2023 clearly shows that his appointment as signatory of the account had been revoked by COYESA COMPANY LIMITED, the Defendant herein. This action by the Defendant is a clear breach of the terms of the Fair Agreement between the parties. It also answers the first issue against the Defendant. Exhibit D4 is a Bank Statement for Account No.0150556568600 CRDB Bank PLC in the name of COYESA COMPANY LIMITED from 8th February 2021 to 7th December 2022. It has 39 pages. It shows that the account was debited indicating transfer of funds from COYESA CO Limited to Infinity Finance Company Limited on various dates. It was thus debited it on 5th may 2021 for TZS. 33,000,000/=; 5th may 2021 for TZS. 7,000,000/=; 2nd July 2021 for TZS. 23,870,000/=; 16th July 2021 for TZS. 52,941,050/=; 30th July 2021 for TZS. 9,100,000/=; 22nd December 2021 for TZS. 4,414,933.08, 31st January 2022 for TZS. 20,000,000/=, 27th March 2022 for TZS. 11,200,000/=; 12th May 2022 for TZS. 15,715,600/=; 18th May 2022 for TZS. 21,500,000/=; 20th May 2022 for TZS. 21,000,000/=;3rd June 2022 for TZS. 4,200,000/=; 20th June 2022 for TZS. 25,000,000/=. The Account Statement also shows the amounts credited by Infinity Finance Limited on diverse 24 dates. These are: 14th January 2022 TZS. 1,428,200/=; 18th January 2022 TZS. 1,500,000/=; 25th January 2022 TZS. 10,000,000/=; 22nd February 2022 TZS. 5,400,000/=; 25th February 2022 TZS. 2,050,000/=; 2nd March 2022 TZS. 8,500,000/= (mariculture project); 16th March 2022 TZS. 4,250,000/= and 25th March 2022 TZS. 42,500,000/=. The Account Statement shows the Total amount transacted in the given period as TZS. 1,481,711,234.24 on the debit side and TZS. 1,482,283,939.17 on the credit side. Exhibit D4 tendered by the Defendant proves that the parties herein had other projects and the same were also being transacted through the same bank account. It must be remembered that the Itigi project had a value of TZS. 238,818,320/= VAT exclusive and the Mkalama project had a project value of TZS. 233,658,182 VAT exclusive. It is obvious that the sums involving the parties in their account transactions surpass the total values of the Itigi and Mkalama projects by over TZS. one billion. Again, whereas the Itigi project was awarded on 25th November 2021 and was supposed to be completed by 31st May 2022 and the Mkalama project was awarded on 7th January 2022 and was supposed to be completed by 11th July 2022, Exhibit D4 shows that the Defendant was making payments to the Plaintiffs even 25 prior to 25th November 2021. That is to say the amounts paid by the Defendant to the Plaintiff in terms of Exhibit D4 could not all relate to the Itigi and Mkalama projects as the payments were being made even before those two projects had been secured by the Defendant. Now, the Defendant has used exhibit D4 as her proof that the Defendant has overpaid the Plaintiff in terms of the Itigi and Mkalama projects. It does not add up. The Accountant who allegedly made the reconciliation of the account was not called as a witness by the Defendant to explain how he/she reached that conclusion on the basis of exhibit D4. The Counter claim of the Defendant is wholly based on the alleged overpayment as per the reconciliation in the accounts. Yet the key witness in that aspect was not called by the Defendant. Where a party does not call a material witness, the court is justified to draw an adverse inference that if the witness had been called, he would have testified against the party who opted not to call him as a witness. I draw that inference in this case. There is another thing to be noted from the above account statement details as per exhibit D4 when the same is read in line with the Fair Agreement which was received as Exhibit Pl and DI. Clause 4.4 thereof stipulates that: 26 4.4 That both parties agree to take 50°/o of the net profit of every project to be executed. The above clause means that the amounts which the Defendant would pay the Plaintiff would be 50% of the net profit of every project. The Plaintiff would finance the projects costs but the Plaintiff would be entitled to 50% of net profit. Therefore, Exhibit D4 alone being the account statement cannot suffice to explain how much was paid to the Plaintiff by the Defendant, a detailed breakdown was expected showing how much was the project cost actually incurred for each of the two projects; how much did the Plaintiff finance; how much was spent as expenditure in carrying out the projects and other expenditures like taxes and penalties. The net profit should have been shown out of which the Plaintiff should have been paid 50% thereof by the Defendant. Exhibit D4 does not show that. The alleged accountant who did the reconciliation of accounts was not called as a witness. I find the Defendant to have utterly failed to prove the claims in the counter claim and to defendant the claims in the Plaint. The defendant has made verbal accounts that after reconciliation it was discovered that there was an overpayment. Why didn't the Defendant do the reconciliation before committing herself in writing repeatedly and consistently that it was indebted 27 for TZS. 270 million for the Itigi and Mkalama projects? On what basis was the Defendant admitting the liability in writing? The Defendant's Defence and counterclaims fail flat based on the available documentary evidence. The parole rule of evidence would not allow the defendant to give oral testimony which is incompatible with the written or documentary evidence given by the same party. The oral evidence would be excluded by the incompatible written evidence on the same subject. In this case the documentary evidence is overwhelmingly in favour of the Plaintiffs case and against the defendant's case. I therefore answer the first issue in favour of the Plaintiff. I find that the Defendant has breached the terms of the Fair Agreement dated 8th February 2021 between the Plaintiff and the Defendant, the Defendant's Director has never even alleged that his signatures were forged in the various documents wherein liability was admitted. The Defendant signed and sealed the commitment, minutes of meetings and agreements in which admission of liability towards the Plaintiff for the Itigi and Mkalama projects was made. To what reliefs are parties entitled? The Law of Contract Act, CAP 345 provides: 28 73.-(l) Where a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it. 74.-(l) Where a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated. (2) A stipulation for increased interest from the date of default may be a stipulation by way ofpenalty. In this case the outstanding sum that the Plaintiff is entitled to receive from the Defendant was persistently mentioned in numerous documents including the Minutes of the meeting, the Commitment and the Email correspondences. It is TZS. 230,000,000/=. The penalty for delayed 29 payment thereon was also agreed upon and stipulated as interest on the outstanding sum at the rate of 5.4% monthly from 01/08/2022 to the date of Judgment and Decree. The Plaintiff has proved the special damages as well as the contractual interest, strictly by documentary proof. The Plaintiff also deserves general damages for the inconveniences suffered. TZS. 10,000,000/= is reasonable considering the principal amount in dispute which is TZS. 230,000,000/=. The violation of Clause 4.1 and 4.2 by removing the Plaintiff's Principal Officer from being a co-signatory, calls for specific performance order. The Defendant is compelled to comply with the contractual provisions immediately. All in all Judgment and Decree is entered in favour of the Plaintiff against the Defendant and the following orders are entered: a) That the Defendant is ordered to pay TZS. 230,000,000/=to the Plaintiff being the outstanding amount due to the Plaintiff for the Itigi and Mkalama projects. b) The Defendant is ordered to pay the Plaintiff the agreed penalty for late payment at the rate of 5.4% per month on the outstanding amount of 30 TZS. 230,000,000/= with effect from 01/08/2022 to the date of this Judgment. c) The Court deciares that the act of the Defendant to remove the Plaintiff's principal Officer from being one of the signatories over Account No.015056568600-CRDB Bank is a nullity and the Defendant is ordered to place back the Plaintiff's Principal Officer one Mr. Jacob Mseja or any other Principal Officer designated by the Plaintiff Company, as a signatory, in respect to Account No. 015056568600-CRDB Bank. d) The Defendant shall the Plaintiffgeneral damages at TZS. 10,000,000/=. e) That the Defendant shallpay interest on (a) andf) at the Court rate of 7°/o per annum from the date of Judgment and Decree to the date of in full and final satisfaction thereof. g) Costs of this Suit shall be borne by the Defendant. h) The Counter claim is dismissed with costs. It is so ordered. 31 16/08/2024 Judgment is delivered in Court this 16th day of August, 2024 in the presence of Dr. Sigsbert Ngemera, Learned Advocate for the Plaintiff and Mr. Raphael Paschal Menda, Director of the Defendant Company. JUDGE 16/08/2024 32