INTERNATIONAL COMM BANK T LTD VS MCM INTERNATIONAL LTD COMM CASE NO

IN THE HIGH COURT OF TANZANIA COMMERCIAL DIVISION AT PA R ES SALAAM COMMERCIAL CASE NO. 111 OF 2016 BETWEEN INTERNATIONAL COMMERCIAL BANK TANZANIA L T D ---------------PLAINTIFF VERSUS MCM INTERNATIONAL LIMITED----------------------------------------------- 1s t DEFENDANT MICAH ELIFURAHA M RIN D O K O ------------------------------------------ —2n d DEFENDANT SHOMARI AYOUB K IM B A U ------ ---------------------------------------------- 3r d DEFENDANT JUDGMENT SONGORO, J International Commercial Bank (Tanzania) Limited the plaintiff claims that, on the basis Bank Guarantee Facility it was agreed that, a MCM International Limited, be supplied Petroluem products worth shs 200,000,000/= with Star Oil Petroleum Products and an amount was paid by the plaintiff bank, on the basis o f guarantee which was issued by Micah Elifuraha Mrindoko, and Shomari Ayoub Kimbau the 1st and 2 nd defendants respectively. The plaintiff further claim that, the 1st defendant as borrow and 2 nd and 3 rd defendants as guarantors they have both refused and neglected to pay the borrowed sum. Therefore the plaintiff bank is claiming for the following orders and reliefs;- 1) Payment o f Shs 122,778,016.00 being the principal amount and accrued interests thereon as payment as per paragraph 4 and 10 o f the plaint. 2) Payment o f shs 25,000,000/= as being expenses and charges incurred by the plaintiff in following up the payment o f the principal sum. 3) Payment o f interests on the principal sum in prayers (a) and (b) above at rate agreed under guarantee facility from the date o f filing the suit to the date o f judgment. 4) Interest on the aforementioned amount accruing at the plaintiff s default interests rate o f 21% per annum from the date o f institution o f the suit until judgment or sooner payment. Page 1 of 17 5) Payment of general damages to the tune o f shs 50,000,000/=. 6) Costs o f the suit. 7) Any other reliefs the Court may deem just and fit to grant. Responding the plaintiff suit and claims, all three defendants filed a joint written statement o f defence and opposed the plaintiff claims. The 1st defendant contested that, it was never granted any bank guarantee facility. Also, in its defence, the 1st defendant firmly stated that, it was not supplied with Petroluem products with Star Oil Tanzania Limited as the plaintiff claims. While the 2 nd and 3rd defendants opposed all plaintiff s claims. The court after perusing the plaint, written statement o f defence and upon consultation o f the parties frame the following as agreed issues for determination. 1) Whether there was a bank guarantee issued by the plaintiff to Star oil Limited (Supplier) in favour o f the 1st defendant. 2) What were the terms and conditions o f the said bank guarantee? 3) Whether the 1st defendant was supplied with fuel. 4) Whether the 1st defendant has breached the said terms and conditions of guarantee. 5) W hether the plaintiff suffered any damages. 6) To what reliefs are parties entitled So the plaintiff suit was heard and concluded on the basis o f the above mentioned points o f determination. At the hearing o f the suit, Mr. William Mang' era the Learned Advocate, appeared for the Plaintiff; whereas Mr.Michah Elifuraha Mrindoko who is the 2nd defendant appeared for defendants. It is worth remaking that, it on record that, the suit was originally before Hon Mruma J and on the 18/7/2017 was re -assigned to me for continuation o f hearing. Page 2 of 17 In pursuing the suit the plaintiff called Bernard Kilomo who testified as P W 1. Relying on his witness statement he told the court that, his duties at the plaintiff s bank is processing o f the loan and process recoveries o f credits and loan. PW1 then stated that, the 1st defendant is being sued as borrower to the guarantee credit facility while the 2nd and 3 rd defendants are being sued as guarantors The witness then stated in his witness statement that, on 9/9/2014 the plaintiff and 1st defendant company entered into guarantee facility where by the plaintiff agreed to provide financial assistance to the 1st defendant by away o f guarantee in favour o f the supplier (Super Oil Company) In view o f the financing assistance guarantee which was issued by the plaintiff the 1st defendant furnish to the plaintiff securities for recovery o f the said amount in the event o f default. As a guarantee for repayment Micah Elifuraha Mrindoko and Shomari Ayoub Kimabau both of them issued personal guarantee agreement to indemnify the plaintiff bank in the event the 1st defendant default to pay the bank. It was part o f his testimony that, the plaintiff was supplied with fuel by Super Oil Company and defaulted to pay for supplied fuel to Super Oil Company. As a result o f that, failure Super Oil Company issued demand notice to plaintiff s bank for payment o f shs 83,510,000/= millions for the fuel supplied. PW1 then explained in view o f demand notice the plaintiff bank on the 17/12/2014 complied with terms o f guarantee under the Bank Facility Agreement and duly paid a sum of shs 83,510,000/- for fuel which were supplied to the 1st defendant's company. . PW1 then insisted that, the plaintiff act o f paying Star oil Company Ltd for fuel supplied to the 1st defendant, all three defendant became indebted to the plaintiff bank. Their failure on the to repay the sum paid to Star Oil Company as per contract o f guarantee, the 2nd and 3nd defendants are equally liable as per their contract o f guarantee which they entered PW1 then stated in his paragraph 10 o f his witness statement that, since years has elapsed since the plaintiff demand notices to three defendants has elapsed the claimed sum plus interests is shs 122,778,016. Finally PW1 claimed that, defendants failure to pay for their contractual financial obligation as borrowers and gurantor that, has caused plaintiff s bank to suffer losses, embarrassment and inconveniencies. The witness then prayed that, the plaintiff claims be granted as prayed as per the plaint. Page 3 of 17 To support the plaintiff s claim that, defendants are all liable PW1 tendered a Bank Guarantee Facility AA No 2014/119 dated 9/9/2014 which was admitted as Exhibit P l, A Guarantee Joint and Severally signed by Micah Elifuraha Mrindoko and Shomari Ayoub Kambau which was admitted as Exhibit P2, A memorandum of acceptance to International Commercial Bank signed by Micah E. Mrindoko and Shomari Kambau which was admitted as Exhibit P3.A letter from Star Oil Tanzania Limited dated 14/11/2014 which was admitted as Exhibit P4 A MCM International Ledge Account which was admitted as Exhibit P5, Copies o f bounced cheques admitted as Exhibit P6 and Internet email letters which were admitted as Exhibit P7. Other Exhibits which were tendered by PW1 was a bank statement o f the 1st defendant admitted as Exhibit P8, a report header which shows the plaintiff s bank paid Star Oil (T) Ltd through interbank settlement amount and a sum o f shs 83,510,000 was paid was admitted as Exhibit P9, and a Mortgage Deed between Micah Elifuraha Mrindoko and International Commercial Bank Tanzania Ltd on property situated at Plot No 229, Block 1, Bunju Area in Kinondoni Municipality held under the Title No CT 111269 was admitted as Exhibit P10. Finally PW1 closed his testimony by insisting that, the 1st defendant is liable as a borrower and 2 nd and 3rd defendants are liable to pay the bank debt as guarantors. Next PW1 was duly cross examined by Micah Elifuraha Mrindoko and during cross examination he maintained that, the plaintiff bank under took to pay Star oil Company for the consignment o f supplied fuel in the event the 1st defendant company fails to pay, and the bank was issued with guarantee by the 2nd and 3rd defendants that, they will repay the loan in the event the 1st defendant fails to pay the plaintiff bank on the sum paid for fuel supplied by Star Oil Company to the l sl defendant within the agreed period. After PW1 closed his testimony, the plaintiff s bank closed its case and defendants open their defence by calling Micah Elifuraha Mrindoko who testified as DW 1. Relying on his witness statement DW1 told the court that, he actually applied for Bank Overdraft of shs 500,000,000 but he was issued with a Letter o f Offer o f Bank Guarantee Facility o f shs 200,000,000/= on the 9/9/2014. DW1 then stated in his witness statement that, after he was granted the said bank facility he was directed with the same plaintiff bank to go and do business Page 4 of 17 with the customer named as Star Oil Tanzania Limited. He also claims that, was not offered an opportunity to do business with any other supplier o f fuel who has the best prices. Then later DW1 told the court he went and contacted to Star Oil Tanzania as per the plaintiff bank direction and was requested by Star oil Tanzania Ltd to pledge to oil company 20 leafs of blank cheques which he did by depositing the empty cheques after signing each cheque. The witness then said the cheques leafs were supposed to act as security for his loading orders o f petroleum fuel. DW1 then submitted that, despite his orders and deposited cheques for supplier o f oil, but he was not supplied with fuel products by Star Oil Tanzania Ltd. The witness further claimed that, he even notified the plaintiff s bank that, Star Oil Tanzania were selling petroleum products by cash basis so his orders will not be honoured unless is paid cash to purchase fuel but his call was not given attention by the plaintiff bank. DW1 then claim he did not breach any term o f facility letter. To support his claim DW1 tendered a Bank Guarantee Facility which was admitted as Exhibit D I and was cross examined by Mr. William Mang'era. During the cross examination DW1 maintained that, it’s the plaintiff s bank which made a business arrangement with Star Oil and during their negotiation there did not agreed that, Star Oil Tanzania will be their supplier o f fuel. He also claim that, the cheques were only issued as a security and not for the supplied fuel. DW1 maintained while being cross examined that, the Star Oil Tanzania did not supply fuel to them and he then closed his testimony and the defence case was closed. Following the closure o f the defence case the plaintiff and defendant's counsel with the leave o f the Court were granted opportunity to file their closing submissions. On his part, Mr. Willaim M ang'ena addressed the 1st issue o f whether there was a bank guarantee issued by the plaintiff s bank to Star oil Limited by stating the testimony o f PW 1 established the plaintiff s bank it grant financial assistance in the form o f guarantee to allow the 1st defendant to purchase fuel from Star Oil Tanzania Ltd to the sum o f shs 200,000,000. The bank guarantee was in favour o f Star oil Tanzania. So it is the plaintiff bank which assured Star Oil Tanzania that, even if it supply fuel to the 1st defendant then in case o f any default in payment for the supplied fuel the bank will pay and in fact it paid after the 1st defendant defaulted for the fuel supplied to it. It was the plaintiff s counsel argument that, Exhibit P7 shows that, the plaintiff Page 5 of 17 guaranteed the 1st defendant then it is responsible to indemnify the plaintiff s bank. So the plaintiffs’ counsel submitted that, the evidence tendered proved that, the 1st defendant's company is liable to indemnify the plaintiff s bank. On moving to the second point o f what were the terms o f the bank guarantee Mr. William submitted that, the 1st defendant was issued with the bank guarantee in favour o f Star Oil Tanzania for supply to the tune o f shs 200,000,000/= and defendant failed to pay for the oil supplied to him which necessitated the plaintiff 's bank to pay for supplied fuel. In the light o f the above the plaintiff was under contractual right to call for the bank guarantee and recover the said amount from the 1st defendant Submitting on a point o f whether the 1st defendant breached the terms o f the Guarantee the plaintiff counsel submitted that, in 11/11/2014 the plaintiff was served with a demand letter by Star Oil Tanzania Ltd for payment o f shs 83.51 million being the value of unpaid fuel. The counsel then argued that, demand notice was served to the plaintiff bank after the 1st defendant posted cheques were dishonoured. So as per the bank guarantee the 1st plaintiff bank acting on the guarantee entered between the plaintiff and defendant made payments to indemnify Star Oil Tanzania Ltd. Commenting on a point whether the plaintiff bank has suffered any damages the counsel submitted that, the plaintiff s bank paid for the fuel which was supplied to the 1st defendant who has refused to repay the amount paid as guarantee for supplied goods. So it is obvious the 1st defendant bank has breached the terms o f guarantee agreement and that, has caused the plaintiff to suffer loss on monies which have not been repaid. The counsel insisted that, the plaintiff has been deprived the money which he would have invested in any business and realized the profits. The counsel claim the plaintiff is entitled to general damages as per Section 73 of the Law of Contract Act Cap 345 TR.E 20021, The counsel then argued since it is the 1st defendant breach the contract certainly the plaintiff s bank is entitled to remedies stipulated under Section 74 o f the Law o f Contract to be paid compensation including interest. In his submission to the point whether there was a contract between the 1st defendant and supplier of fuel Star Oil Tanzania, Mr. William submitted that, the said issue is irrelevant because the 1st defendant applied and secured from the plaintiff a bank guarantee in favour o f the supplier Page 6 of 17 o f Star Oil Company. Also the 2 nd and 3rd defendants guaranteed the 1st defendant. So contracts which are before the court for determinations are between the plaintiff and defendants which was on guarantee. He added that, the defendant's assertion that, he did not have a contract with Star Oil Tanzania is a mere afterthought because is even proved by existence o f bunch o f bounced cheque So the contract between the 1st defendant and star oil Tanzania was there. Submitting to the point o f whether the 1st defendant was supplied with fuel the counsel indicated that, there is evidence that, the 1st defendant was indebted to the sum of shs 83, 510,000 million and there are demand letter to prove that, plus cheques leaflets which tally with the same amount. So that, shows the 1st defendant was supplied with the fuel. If at all the cheques were forged or the Star Oil Tanzania was just being held unlawful then the defendants would have taken measures and report to the police and investigation be conducted. So the counsel prayed to the court to find there was a contract between the 1st defendant and Star Oil Tanzania. He further pray that, the court find plaintiff has proved his claims and is entitled to reliefs prayed in the plaint. On his part Mr Micah E. Mrindoko for 1st and 2 nd defendants he denied that, the plaintiff bank did not provide to them any bank guarantee. He then stated that, the plaintiff only provided a Letter o f offer for Bank Guarantee Facility -A A No 2014/119 dated 9/9/2014. Mr. Mrindoko then argued that, a letter is not a bank guarantee but a mere a Letter o f offer. He then argued that, the 1st and 2 nd defendants accepted it as a Letter o f Offer in it’s entirely. On the plaintiff claim that, has default o f re-payment the debt as per his guarantee, Mr Mrindoko submitted that, he was not served with any notice informing that, the 1st defendant or he has default and therefore there has been no default at all. Further the defendant claim that, there was no contract between the defendants and Star Oil Company for the supplier o f fuel and no contract agreement was tendered in court as Exhibit In respect o f a copy o f a Bank Guarantee No PBG140014 the defendant submitted that, there are not aware in the said document it is stated that, his company was supplied with fuel by Star Oil Co. On the bounced cheque the defendant pointed out to the court to disregard bounced cheques which were admitted in court because are copies and originals were not tendered in court. Mr. Mrindoko for and on behalf o f the 1st and 2 nd defendants prayed to the court to find and decide that, the plaintiff claim was not proved on the balance o f probability. Page 7 o f 17 The court considered the plaintiff claims and defendant defence and arguments contained in closing submissions and find the suit is based on allegations o f breach o f guarantee that, o f International Commercial Bank (Tanzania) Limited issued to MCM International Limited following its application. The second claim is on the breach o f guarantee issued by the 2nd and 3rd defendants to pay the debt o f MCM International Limited to the plaintiff bank. In the filed suit, it is the plaintiff s bank who claims that, the defendants have breached the repayment terms o f contracts o f guarantees. In view o f the above I find since is the plaintiff who alleges that, there has been a breach o f repayment term in contract o f guarantees thus under Section 110 (1) and (2) o f the Evidence Act Cap 8 fR.E 2002] the burden o f proving each and every allegations contained in the plaint is on the plaintiffs bank and level o f proof is that, of balance o f probability. Now turning to the 1st agreed issue whether or not the plaintiff s bank issued a bank guarantee to MCM International Limited I find for convenience purposes the above mentioned issue may also be determined in line with the issue o f whether the 2nd and 3 rd defendants also guaranteed debt liability o f the 1st defendant to the plaintiff s bank. In addressing the above mentioned issue I revisited the testimony Bernard Kilomo PW1 and a document which has a title o f Memorandum o f Acceptance Exhibit P3 which was signed by Micah E. Mrindoko and Shomari A Kimbau who are the 2 nd and 3rd defendants and find they stated that, they are directors o f MCM International. The Memorandum o f Acceptance Exhibit P2 was a reply to the offer o f Bank Guarantee Facility and schedule A which was admitted as Exhibit P l by the plaintiff and defendants also tendered the same letter o f offer as Exhibit D I . So the Memorandum o f Acceptance signed by the 2nd and 3rd defendants in their capacity as directors it preamble and opening statement reads as follows; We refer to your letter o f offer dated 9/9/2014 (o f which the above is a counterpart) in which you offered to place at the disposal o f M C M International Limited the credit facility detailed in Schedule A and we the directors o f M CM International Limited confirm having read and understood the terms and condition in the letter o f Page 8 of 17 offer, and we are pleased to accept such offer in such terms and conditions. So the words which reads “we are pleased to accept such offer” appearing in Memorandum of Acceptance signed by the 2nd and 3 rd defendants as directors o f MCM International clearly shows that, the two jointly consented to the granting o f bank guarantee facility o f shs 200,000,000/= in favour o f MCM International Ltd. Their acceptance note was in response to Letter o f Offer o f Bank Guarantee Facility -A A No. 2014/119 dated 9/9/2014 addressed to the Directors o f MCM International Limited in which the plaintiff bank in paragraph stated that; We are pleased to advise you that, the International Commercial Bank (Tanzania) Limited (the Bank) has approved, your request fo r a Bank Guarantee (BG) o fT Z S 200, 000,000 subject to the terms and conditions. So I have considered and weigh careful the testimony o f PW1, Letter o f offer from the plaintiff s bank Exhibit P l and Memorandum o f Acceptance Exhibit P3 which is the company seal defendants and easily find MCM International entered into contracts o f guarantee with the plaintiff bank. Next, I perused the Deed o f Guarantee Exhibit P2 signed by Micah E. Mrindoko and Shomari A Kimbau who are the 2 nd and 3rd defendants and find they issued a guarantee to the plaintiffs bank to secure any debts o f MCM International Limited. So going by the testimony o f PW1 details o f Exhibit P l P2 and P3 I find and decide that, evidence established that, the 1st defendant company applied and secured the Bank Credit Facility which was guaranteed and secured by 1st and 2nd defendants to the sum o f shs 200,000,000/= It is in view o f what is stated in the Memorandum o f Acceptance signed by the 2 nd and 3 rd defendant I find that, testimony o f PW1 on existence o f contract o f guarantee between the plaintiff s bank and three defendants to more credible and truthful. Page 9 of 17 Turning on the second agreed issue what were the terms and conditions o f the bank guarantee I find the Terms were provided for in Schedule a o f Exhibits Pl and D. But the key one was repayment o f period o f bank guarantee which was 12 months effective the date it was issued to the 1st defendant. Taking into account item 43 o f the 1st defendant bank statement Exhibit P8 which shows that, a credit facility of 83,510,000 was issued on the 17/11/2014 to the 1st defendant, it follows therefore by using simple mathematic a 12 months period expired was on or about 17/11/2015 and that, is the period which repayments was supposed to be made. Other terms to support Credit Facility Letter was that, the 2 nd and 3 rd defendant issued a Guarantee Deed to 1st defendant debts to the plaintiff s bank which is contained in Exhibit P2. Also it was agreed term by the 2 nd and 3 rd defendants in clause 2.1 to 2.2 o f the Deed o f Guarantee Exhibit P2 that, the 2 nd and 3rd defendants as guarantors have agreed to discharge the debtors bank obligation o f repaying the advanced sum, interests and expenses. Also as part o f security to the bank facility granted to the 1st defendant it was agreed in clause (vii) to the Schedule A o f the letter o f offer that, the following will be pledged as security- a) Mortgage property held on Certificate o f Title No 111269 of Plot No 229, Block 1, Bunju Area Kinondoni Municipality Dar es Salaam registered in the name Micah Elifuraha Mrindoko, Joint and Several Personal Guarantee of all shareholders Micah Elifuraha Mrindoko and Ayoub Shomari Kimbau. b) Letter o f Hypothecation overstocks to be executed. c) Indemnity bond from the company. In view o f the agreed terms, the 2 nd and 3 rd defendants signed a deed o f guarantee and deposited it with the bank. Likewise the 2nd defendant Micah E. Mrindoko pledged his landed property registered under a Certificate o f Title No 111269 of Plot No 229, Block 1, Bunju Area Kinondoni Municipality Dar es Salaam registered in the name Micah Elifuraha Mrindoko Page 10 of 17 The preamble o f Mortgaged Deed which appears at page 3 o f Exhibit PIO its intents reads as follows - TO SECURE A BANK GUARANTEE FACILITY (BG) OF UP TO TANZANIA SHILINGS TWO HUNDRED MILLION ONLYfTZS 200,000,000.00) AND INTEREST RATE TO BE CHARGED A T BASE LENDING RATE (BLR) OF TWENTY FOUR PERCENT PER ANNUM (24%PA) MINUS THREE PERCENT PER ANNUM (~3%P.A) TOGETHER WITH INTERETS AS PROVIDED IN THE FACILITY LETTER AND OTHER CHARGES THEREON EXTENDED BY INTERNATIONAL COMMERCIAL BANK TANZANIA ) LIMITED TO MCM INTERNATIONAL LIMITED (THE BORROWER) PURSUANT TO THE FACILITY LETTER DATED 09™ SEPTEMBER 2014 REFERENCED ICBTL /HO/BG/20I4/119 AND AS ACCEPTED BY THE BORROWER ON THE 10™ SEPTEMBER 2014 (Copy o f the said Letter is attached hereto as I st schedule andforms part o f this Mortgage Deed) Therefore to conclude on 2 nd agreed issue the court find and decide that, the credit facility agreement advanced to the 1st defendant had a repayment term and the repayment o f the advanced sum was secured by the 2 nd and 3 rd defendants. Turning to the 3 rd agreed issue o f whether the 1st defendant was supplied with fuel the court find as submitted by M r William the raised point is not relevant on the case at hand because the suit is on allegation o f breach o f credit facilities agreement and deed o f guarantees furnished to the plaintiff bank by the 1st 2 nd and 3 rd defendants. What is the key issue in filed suit is whether or not the plaintiff bank discharged its contractual obligation as per bank facility letter and is entitled for reimbursement. In addressing the above, I noted th a t,, the plaintiff s bank on l sl /10/2014 notified Star Oil Tanzania Limited through letter Exhibit P7 a letter serial No TZ 000382 that, they have was issued the I* defendant with Bank Guarantee Facility. In the said letter the Plaintiff bank expressly states that, “we are guarantors and responsible to you on behalf o f the purchaser up to a total o f shs 200,000,000/=, and we undertake to pay you, upon your first written demand”. ’ Also the plaintiff s bank tendered in court nine bounced cheques o f shs 83,510,000 were issued for payment to Star oil (T) Ltd by the 1st defendant and were deposited at CRDB Bank Azikiwe Page 11 of 17 Branch for collection but were dishonoured with a remark that, “Refer to Drawer”. The plaintiff s bank as guarantor o f the 1st defendant paid the sum stated in the bounced cheques was paid as per transaction No 43 o f 1st defendant bank account No.00005/01/000116/02 dated 17/11/2014 a sum of shs 83,510,000 was deposited into the 1st defendant company bank account and utilized to pay and liquidate the 1st defendant debt which accrued from Star oil Tanzania as per the claim contained in Exhibit P4 and P5. So both Exhibit P4 and P5 shows that, the 1st defendant's company was indebted to the sum o f shs 85, 510,000/= an amount which was paid by the bank. That, is the court may say about the 3 rd agreed issue, Turning to 4 th agreed issue o f whether or not there was a breach o f contract the court find normally a breach o f contract occurs when one o f the party to the contract refuse or neglect to perform one or all o f the agreed term o f performed it differently. Now going into the presented evidence I have stated earlier that, Schedule A o f Exhibits P l and Which are Letter o f Offer o f Credit Facility the repayment o f period o f granted sum was 12 months effective from 17/11/2014 and a period o f a 12 months period expired was on or about 17/11/2015 but the 1st defendant did not repay his debt even by today. The court find that, the 1st defendant as a borrower has breached the term o f credit facility letter which required him to pay his debt within 12 months. Likewise the 2nd and 3 rd defendants who were guarantors o f the 1st defendant under clause 2.1 to 2.2 o f the Deed o f Guarantee Exhibit P2 were under contractual obligation to indemnify the plaintiff s bank all the debts and interest which the 1st defendant has in the plaintiff bank which arises from the contract o f guarantee. But there is no evidence which shows that, the 2 nd and 3rd defendants discharged their contractual obligations pay the 1st defendant debts. Thus failure on the part o f the 2 nd and 3rd defendants to repay the debts o f the 1st defendant that, amount to breach to the term stipulated in item 2.1 to 2.2 o f the Deed o f guarantee Exhibit P2. Therefore to conclude on the 4 th agreed issue I find all the 1st 2 nd and 3 rd defendants have breached the terms o f the agreement which they entered with the plaintiff s bank as shown above. To discharge the debtors bank obligation o f repaying the advanced sum, interests and expenses. Page 12 of 17 Turning to the 5th agreed issue o f whether the plaintiff bank suffered any damages, I find from the testimony o f PW1, and a letter from Star Oil Company that, nine cheques o f shs 83, 510,000 which were paid by MCM International Ltd were paid and bounced Next the court noted that, the plaintiff bank on 17/11/2014 as guarantor paid a sum o f shs 83,510,000 on anticipation that, the defendants will reimburse the bank within a period o f 12 months that, being on 17/11/2015. However PW1 has informed a sum o f shs 83,510,000 has never been repaid by the 1st defendant nor by the 2nd and 3 rd defendants who are guarantors. Certainly pursuant to the contract o f guarantee that, the sum was to be repaid within 12 months from the date o f issuance it follows there the debt was supposed to be liquidated by 17/11/2015. But until today almost 32 months nothing has been paid to the plaintiff s bank. By refusing or neglecting to pay the guaranteed sum o f shs 83,510,000 to the p lain tiff's bank that, means the all defendants have denied the bank from using or investing the sum in another business venture which would have generated profit to the bank. So to conclude on the 5th agreed issue I find and decide that, the plaintiff s bank suffered loss and damages because was denied to utilize its earnings which are in the hands o f the defendant. Turning to agreed issue No 6 o f what reliefs are parties entitled too, honestly I find the 1st defendant who is the borrower promised to pay the plaintiff s bank any sum which would be granted under credit facility letter Exhibit P l . Likewise the court find the 2nd and 3 rd defendants promised in item 2.1 to 2.2 o f the Deed o f Guarantee Exhibit P2 to pay the plaintiff s bank any “ debts o f the 1st defendant which may arises pursuant to the Letter o f Credit Facility Letter and Deed o f Guarantee It was emphasized case o f Trust Bank Tanzania Limited Versus Le Marsh Enterprises Ltd and 2 others Commercial Case No 4 o f 2000, Hon. Nsekela J (as then was) the court where possible, must give the effect all the clauses in Exhibit P l (which was an Agreement o f Guarantee) and construe them in harmony with one another. Page 13 of 17 Therefore as pointed in the cited case above by signing Deed o f Guarantee Exhibit P2, and Memorandum o f Acceptance Exhibit P3 the 1st 2nd and 3rd defendants committed themselves to repay any outstanding loan or overdraft or expenses which are due. Their signatures in Exhibit P2 was their total acceptance to pay the 1st defendant bank liability. It follows therefore by signing deed o f guarantee with the plaintiff s bank , the 1st 2 nd and 3rd defendant expressly entered into contract o f guarantee envisaged under Section 78 o f the Law of Contract Act Cap 345 and the 2 nd and 3rd defendants also became principal debtors. Indeed Section 78 of the Law o f Contract Act Cap 345 states A "contract o f guarantee" is a contract to perform the promise, or discharge the liability, o f a third person in case o f his default and the person who gives the guarantee is called the "surety"; the person in respect o f whose default the guarantee is given is called the "principal debtor", and the person to whom the guarantee is given is called the "creditor"; and guarantee may be either oral or written. Further, Section 79 o f the Law o f Contract Act Cap 345 states that;- Anything done, or any promise made, for the benefit o f the principal debtor may be a sufficient consideration to the surety for giving the guarantee. Next Section 80 o f the Law o f Contract Act states that;- The liability o f the surety is co-extensive with that, o f the principal debtor, unless it is otherwise provided by the contract. So pursuant to Sections 79,78 and 80 o f the Law of Contract Cap 345 [R.E 2002] cited above the 1st 2 nd and 3rd defendants who entered into contract o f guarantee, expressly promised to pay any outstanding loan or interests or expenses to the plaintiff bank. Also, the 1st 2 nd and 3rd defendants have pledged their securities to the plaintiff's bank so that, it may use the said securities to realised its debts which are due and payable In line with the defendants promises to repay the loan in the said deed o f guarantee the court has also considered the testimony o f Elifuraha Micah Mrindoko DW1 that, he did not enter into agreement with the bank and Star oil Tanzania never supplied fuel to their company, but honestly the court find since there was a written agreements like Bank Guarantee Facility, Deed Guarantee, and Mortgage deed signed by both parties, his evidence and statements may not Page 14 of 17 contradict or vary the terms o f written and signed agreement. The sole duty o f the court when is faced with agreement or contract were stated in cases o f Osman v Mulangwa [1995-199812 EA 275 (SOLD and Jiwaji v Jiwaii [19681 EA 547 is just to give effect to the clear intentions o f the parties as stipulated in terms o f the agreements It is trite law stipulated in the case o f National Bank o f Kenya Ltd v Pipeplastic Samkolit (K) Ltd and another [200212 EA 503 (CAK) that, parties are bound by the terms o f their contract, unless coercion, fraud or undue influence are pleaded and proved. Also, it is trite law derived by Section 37 o f the Law o f Contract, Cap 345 that, parties to agreement must fulfil their promises including that, o f re-paying the outstanding debts. In deed Section 37 o f the Law o f Contract Cap 345 statutorily states and I quote;- The parties to a contract must perform their respective promises, unless such performance is dispensed with or excused under the provisions o f this Act or o f any other law. The same legal obligation o f honouring contractual promises was emphasized in the case o f Edwin Simon Mamuva Versus Adam Jona Mbala Edwin [19831 T.LR 410 at 414 whereas Lugakingira stated that;- ............. i f a man gives a promise or assurance which he intends to be binding on him and to be acted on by the persons to who it was given then once it is acted on he is bound by it. Also in the same case o f Edwin Simon Mamuya versus Jona Mbala, Lugakingira J stated that;- Once the parties bind themselves in contract fo r a lawful consideration they are obliged to perform their respective promise So guided by the wording o f Section 37 o f the Law o f Contract Act, Cap 345 cited above, and decision in the case o f Edwin Simon Mamuya versus Jona Mbala, on emphasis that, defendants who are parties to Credit Facility Agreement, Deed o f Guarantee and Mortgage Deed, must perform their respective promises o f paying to the plaintiff s bank the debt which is due. So the court find 1st defendant as the borrower and 2 nd and 3rd defendant as guarantors are contractual Page 15 of 17 liable to re-paying any outstanding loan o f the 1st defendant plus interest which the plaintiff claim is Shs 122,778,016.00. By issuing a guarantee and upon failure on the part o f the 1st defendant to the debt due the 2 nd and 3 rd defendants also their status as sureties is that o f principal debtor. And surety is discharged once he has performed what he agreed in the contract o f guarantee which is to pay debts due to the plaintiff s bank. It is in this regard I find the 2nd and 3 rd defendants are also liable. In respect o f mortgage o f landed property under a Certificate o f Title No 111269 o f Plot No 229, Block 1, Bunju Area Kinondoni Municipality Dar es Salaam registered in the name Micah Elifuraha Mrindoko which was pledged as security, it may only be released once the entire bank debt is fully discharged. Short o f that the plaintiff bank may subject to the terms o f mortgage deed use it and utilize to realize secured debts. On claim o f damages, I have already found and decided that, plaintiff suffered loss because a sum o f shs 83,510,000 which was due from 17/11/2015 is still in the hands o f the defendants even by now. It appears the 1st 2 nd and 3rd defendants has remained with the plaintiff s monies for almost 32 months. It is obvious that, the plaintiff s bank was denied to use its monies which would have been invested and yield profit if were promptly paid it followed that, the bank is entitled to damages. Court in several decisions including a decision in the case o f Stanbic Tanzania Limited Versus Abercrombie & Kent (T) Limited Civil Appeal No 21 o f 2001 unreported the Court o f Appeal quoting Lord Macnaghten in Bolag v Hutchson [1950] A.C. 515 have insisted and emphasized that, general damages are the ones which the law will presume to be the direct, natural or probable consequence o f the action complained off. Taking into account that, defendants defaulted to pay the debt for about 32 months, I hereby assesse and grant the plaintiff as sum o f shs 30,000,000 as general damages, due loss which they suffered. In the end result I find and decide that, the plaintiff s bank has proved his claim against all three defendants on the balance of probability. So defendants are jointly and severally liable to pay the plaintiff bank and are ordered as follows; Page 16 of 17 a) To pay the plaintiff a sum of Shs 122,778,016.00 being the principal amount and accrued interests thereon as payment as per paragraph 4 and 10 of the plaint. b) To pay the plaintiff a sum of shs 30,000,000 as damages for loss which the bank suffered c) Payment of interests of 9% per annum on item (a) above from the date of filing the suit to the date of Judgment d) Interest rate of 11 % per annum on the decretal sum from the date of judgment to the date the decretal sum will be paid in full e) Further the court orders that, the plaintiff s bank is at liberty to exercise its rights under the mortgage and recover its bank liability f) Defendants are also ordered to pay the plaintiff s costs of pursuing the suit. Finally, I find plaintiff suit succeeds as explained above. The right of appeal is fully explained to the parties. Signed and Dated at Dar es Salaam on this 7th day of August, 2018 (JUDGE) Page 17 of 17