iscon commoditiest ltd vs abdul ahmad lilah 2020 tzhc 4044 1 october 2020

THE UNITED REPUBLIC OF TANZANIA

JUDICIARY

IN THE HIGH COURT OF TANZANIA (DISTRICT REGISTRY OF MTWARA)

AT MTWARA CIVIL CASE NO. 08 OF 2018 ISCON COMMODITIES (T) LTD.......................... .....PLAINTIFF

VERSUS ABDUL AHMAD LILAH........................................DEFENDANT Final submission date on: 15/6/2020 Judgement date on: 01/10/2020

JUDGEMENT NGWEMBE, J: The Plaintiff Iscon Commodities (T) Limited is in loggerhead with the defendant Abdul Ahmad Lilah for the alleged breach of contract resulting into a loss of TZS 208,000,000/=. Thus, the plaintiff preferred this suit seeking legal protection against infringement of its contractual rights with the defendant. To recap its genesis of the dispute arose when the two disputants entered into a contract of purchasing cashew nuts for the season of 2013/2014. Their contract involved huge amount of money. Out of such money only TZS 208, 000,000/= were not realized by the plaintiff. After failure to settle the matter amicably among themselves, the plaintiff i preferred this suit on 5th December, 2018. In turn the Defendant resisted the claim by filing a written statement of defence. In the cause, both parties being represented by learned advocates, that is, the plaintiff is represented by learned advocates Mr. Hussein Mtembwa assisted by Ms. Eveta Lukanga, while the defendant is represented by learned advocates Alex Msalenge assisted by Rainery Songea. The advocates on behalf of their clients agreed on three issues namely:- 1. Whether there was a contract to supply cashew nuts between the parties; 2. If the 1st issue is answered in affirmative, then whether the defendant breached any term of the said contract; and 3. What reliefs are the parties entitled to. In

building the plaintiff's case, had one witness Mr. Mukhesh Patel, introduced as a director of Iscon Commodities (T) Limited. On the hearing PW1 testifies that in 2013/2014 cashew nuts seasons, the Plaintiff entered into an oral agreement with the Defendant whereby the Plaintiff issued advance money to the Defendant to buy cashew nuts on behalf of the Plaintiff. Above all the two agreed that the Defendant would be an Agent of the Plaintiff who would supply cashew nuts equal to the advanced money at a particular time, depending on the market price per kilogram. That the defendant complied with all what they agreed save on supply of cashew nuts worthy TZS. 208,000,000/= (say Tanzania shillings Two Hundred and Eight Milliom only). Also he failed to return such amount of money to the Plaintiff. He contended that when the Defendant failed to return such sum 2 of money, the two entered into an agreement on how to repay such balance of money. They signed two Promissory Notes which same were tendered in court admitted, collectively marked as exhibit P2. Despite signing those two Promissory Notes, yet the Defendant failed to heed to and refund the money to the Plaintiff. Thus, caused business stress to the Plaintiff, therefore, asked this court to order the Defendant to pay balance of TZS 208,000,000/= as agreed in the Promissory Notes. Also claimed for general damages to the tune of TZS

100,000,000/= (say Tanzanian Shillings One Hundred Million only). He referred this court to the case of Cooper Motor Corporation Ltd Vs. Moshi/Arusha Occupational Health Services [1990] TLR 96 where the Court held that general damages need not be specifically pleaded, they may be asked for by a mere statement or prayer of claim. On cross examination, PW1 disclosed that the transactions between the two parties had a total value of TZS 560,000,000/= (say Five Hundred and Sixty Million only) at a different time and they signed Promissory Note, but even after signing those Promissory Notes, yet the Defendant failed to refund the balance of TZS. 208,000,000/= (say Tanzania shillings Two Hundred and Eight Million only). Further, explained that the Plaintiff was the one issued money to the Defendant and the Defendant was responsible to purchase cashew nuts for the Plaintiff. On re-examined, PW1 testified that during the season of 2013/2014, there was no Warehouse Receipt of cashew nuts for Tunduru and Dar es Salaam, 3 but the system used was direct purchase form. The Companies were allowed to purchase cashew nuts (Direct Purchase) directly from AMCOS and thus, the Defendant was an Agent of the Plaintiff to purchase cashew nuts in Tunduru on behalf of the Plaintiff. In turn the Defendant Abdul Ahmad Lilah (DW1) on 25th February 2020, defended by testifying that in the season of

2013/2014, he met with PW1 in Tunduru, when he was there for the purpose of purchasing cashew nuts. Thus, PW1 asked him to direct them to the Villages where they can purchase Cashew nuts. Therefore, DW1 directed PW1 to the villages where cashew nuts were sold, then everyone continued to purchase cashew nuts under their Companies. DW1 continued to testify that, during that time, the system of purchasing cashew nuts was Direct Purchase, meaning the Companies purchased cashew nuts from AMCOS. On signing of Promissory Notes, DW1 testified that he agreed to sign two Promissory Note (Exhibits P2 collectively) with a promise to refund TZS. 208,000,000/= (say Tanzania shillings Two Hundred and Eight Milliom only), outstanding balance for unsupplied cashew nuts. But in the cause of his testimonies, the said balance was paid to the Plaintiff by TAMCU. On cross examination, DW1 testified that the outstanding balance was already paid by TAMCU, to the Plaintiff, thus invalidated the signed Promissory Notes. Added that any mis-delivery of purchased Cashew nuts TAMCU was responsible pay the Company and he knew about that, when he saw the 4 letter from TAMCU for payment of all Mis-delivery of cashew nuts. Moreover, authenticated that the Plaintiff was paid by TAMCU on August, 2014, but had no exhibit of payment of that amount of money. The manager of TAMCU at Tunduru (DW2) was called in court

by the Defendant who testified that, TAMCU is responsible to collect crops from farmers and look for markets. TAMCU is the apex of AMCOS in Tunduru District whose duty is to sale cashew nuts by way of Warehouse receipt (Stakabadhi ghalani). He conceded that in the season of 2013/2014 there was direct purchase, where the purchaser went direct to AMCOS to purchase cashewnuts, contrary to the current system, where the purchaser does not go to AMCOS, but to TAMCU. In that season, the purchaser were only companies licensed by the Cashew Nut Board. Further, testified that Iscon was among the companies which on that season purchased cashew nuts at Tunduru. All purchase was in the name of Iscon. The Defendant was responsible to lead the owners of Iscon to purchase cashew nuts at Tunduru. He explained that misdelivery means more money paid for cashew nuts, but less delivery of cashew nuts. In cross examination DW2 testified that, TAMCU did not pay any money to Iscon and that he was not aware if the two disputants are claiming any money. He denied to know anything related to Promissory Notes signed by the disputants and TAMCU likewise knows nothing on them. < 5 Upon closure of the parties' evidences, this court allowed the learned advocates to file their final written submissions. The learned advocates complied with the final order of this court and both filed their final

written arguments on 15th June, 2020. Briefly, the Plaintiff summarized the testimonies of both parties and argued that DW1 agreed to know the Plaintiff and that the two had business relationship. Further argued that the Defendant conceded to have signed the two Promissory Notes (Exhibits P2A and P2B). But the only denial was the fact that there was an agreement to supply cashew nuts. He argued that there is no evidence from the Defendant that TAMCU paid the Plaintiff, such amount of TZS. 208,000,000/= (say Tanzania shillings Two Hundred and Eight Million only), due to unsupplied cashew nuts. Even the key witness from TAMCU denied to have paid such amount of money on behalf of the Defendant. Thus concluded that the plaintiff's case was established and proved to the required standard on balance of probabilities. In turn the learned advocate for the Defendant, argued quite strongly, that the Plaintiff failed to prove its claim against the Defendant on balance of probabilities. That the nature of the transaction claimed to have been done by the Plaintiff to the Defendant is impossible to miss any documentary evidence, which can be verified and authenticate that, indeed the Plaintiff did transact such huge amount of money with the Defendant. Obviously, such amount of money could not have been given by cash, but by bank 6 transactions, but the Plaintiff has failed to produce any

documentary evidence to that effect, which fact create a serious doubt, he argued. Argued further that, assuming there was a contract as claimed by the Plaintiff, but a legal issue therein is whether such contract was valid in the eyes of law? He cited section 10 of the Law of Contract Act cap 345, R.E 2019 which put a mandatory requirement for agreement to be a contract entered by parties competent to contract, with free consent, for a lawful consideration and with a lawful object. Cited section 11 (1) of the Law of Contract Act, which defines a competent person to contract, to be a person of the age of majority and who is of sound mind, and is not disqualified by any law. He justified his line of argument by submitting that the cashew nut was purchased in Tanzania, which crop is governed by Cashew Nut Industry Act of 2009, Act No 18. Henceforth, the supply of cashew nut between the Plaintiff and the Defendant must comply with that governing law. Also he cited section 15 (1) of the the Cashew Nut Industry Act of 2009, Act No 18, which required any person who intended to purchase cashew nuts must be registered as a cashew nut buyer, seller, processor, exporter, importer, warehouse owner or operator to apply for a license. It is therefore, clear that for the Defendant to be able to supply cashew nut to the Plaintiff he must have applied for a license. Further, cited several

other sections of the Act before concluding that the Plaintiff failed to prove its claim against the Defendant, thus the suit be dismissed with costs, he rested. 7 Much as I agree with arguments advanced by both learned advocates on this suit, yet both have not pointed out on undisputable facts. I therefore, find important to point out some undisputed facts hereunder. First is the fact that Mukesh Patel (PW1) of Iscon Commodities (T) Ltd and Abdul Ahmad Lilah (DW1) are known to each other; Second on the season of cashew nut sale of 2013/2014 the two persons were in business of cashew nut at Tunduru; Third, the two knows that the Plaintiff in that season was supplied less cashew nuts compared to the amount paid; Forth, the two parties sometimes on 2014, signed two Promissory Notes involving payment of balance of TZS 208,000,000/=; and lastly, the Plaintiff is yet to be paid such balance of money neither by the Defendant nor by TAMCU nor by anyone else. To the best these are issues not in dispute. Upon clarifying on the undisputed facts, and since the whole dispute is centered on existence of contract, I find important to discuss an acceptable meaning of the term contract. Black's Law Dictionary, (8th edition) defines Contract to mean an agreement between two or more parties creating obligations that are enforceable or otherwise recognizable at law. In other words, a contract is

a promise, or a set of promises, for breach of which the law gives a remedy. This definition is similar to the definition provided for in section 2 of the Law of Contract Act Cap 345 R.E. 2019, where the law defined contract to mean a promise or set of promises forming the consideration for each other to mean an agreement and an agreement which enforceable by law is a contract. Therefore, a contract is an agreement enforceable by law. Now the issue for determination by this court is whether there was a contract to supply cashew nuts between the parties? 8 In answering this issue, both learned advocates led their witnesses on this point. While the Plaintiff stood firm that there was a contract between the two and the Defendant was given huge amount of money to purchase cashew nuts at Tunduru on the season of 2013/2014, but failed to supply all cashew nuts as agreed. The remaining balance of money was TZS 208,000,000/=. In the contrary, DW1 testified quite frankly, that he knows the plaintiff through his company Fine Nuts. On 2013/2014 season at Tunduru, there was a direct purchase from Primary Cooperatives (AMCOS). When the two met at Tunduru, he used six (6) days to assist Murkesh Patel of Iscon to show him where direct purchase of cashew nuts were found. He admitted that at the season of 2013/2014 there was a serious problem of mis-delivery of cashew nuts. But himself was not

involved in the alleged loss or mis-delivery. Also agreed to have signed two Promissory Notes prepared by the Plaintiff's lawyer whose contents were to the effect that the Defendant should pay such amount of TZS 208,000,000/= within two months. He justified his failure to comply with the contents of Promissory Notes by asserting that such amount was already paid by TAMCU on August 2014, though had no exhibit on that payment. The evidence of DW2 Iman Mohamed Kalembo, clarified the predicament of whether such money was paid to the plaintiff. In his testimony as manager of TAMCU admitted that Iscon was among the companies purchased cashew nuts during the season of 2013/2014. All purchases were in the name of Iscon. Further testified that DW1 led owners of Iscon to purchase cashew nuts at Tunduru on that season. But denied to. know 9 any complaint on misdelivery and on exhibit P2, and that TAMCU never paid any money to Iscon. That he was not aware if the Plaintiff was claiming any money to the Defendant. Such pieces of evidence, when considered deeply, leaves no doubt that on the said season, DW1 was involved in leading Iscon to purchase cashew nuts at Tunduru. Also it is obvious the claim of TAMCU paying any sum of money to the Plaintiff for misdelivery of cashew nuts is incorrect, otherwise such payment would be known to the manager of TAMCU (DW2) who denied to know anything

about the claims between disputants. According to the evidence of DW2, when compared with the evidences of DW1, obvious the alleged claims did not involve TAMCU and any misdelivery is only known to the disputants. Having clarified that pertinent fact in issue, yet the question remains, whether the two parties entered into a contract involving delivery of money and out of that money the claimed balance is yet to be paid to the Plaintiff. As defined above, a contract is an agreement enforceable by law. Understandably, section 10 of the Act is clear that a contract is a meeting point of two minds competent to contract, for a lawful consideration and with a lawful object. Likewise, section 11 of the Act is quite clear that every person is competent to contract who is of the age of majority according to the law to which he is subject, and who is of sound mind, and is not disqualified from contracting by any law to which he is subject. The term person includes natural person and legal person. Two matured natural persons may enter into a contract so long they qualify under the law to do so. Likewise, two legal persons and or a legal person and a natural person. 10 But always should be in mind that legal person operates through natural person employed therein. They can be Directors, Managers, or any other similar name, but must be employed or entrusted to operate on behalf of the

company. Notably, the disputants, that is Iscon Commodities (T) Ltd is a legal person, while Abdul Ahmad Lilah is a natural person. The question is whether the two had capacity to enter into a binding contract? I think the answer is found in section 11 of the Act as quoted above, so long the Plaintiff was legally registered and recognized by laws of Tanzania and that through its employees consented to enter into such contract with a natural person (DW1), who is also of the age of majority, obvious the two had capacity to contract. Secondly, whether the object, that is, purchase of cashew nuts was lawful object? I think, I need not to waste much time on this, because it is obvious on the season of 2013/2014 the purchase of cashew nuts at TUNDURU was, what is best known as direct purchase to Primary Cooperatives (AMCOS). The question of whether an individual natural person was allowed to purchase those cashew nuts, does not arise because the evidence of DW2 is so clear like a day sun rays, that DW1 was recognized by TAMCU as a leader of others who went to Tunduru to purchase cashew nuts on behalf of Iscon. In re-examination DW2 testified that DW1 was leading Iscon members on where to purchase cashew nuts and the purchaser was Iscon. 11 Rightly so, DW1 testified in his evidence that he was working with Fine Nuts but decided to assist Iscon on purchase of cashew nuts for some days.

The question is how could the Defendant do so, if there was no any form of agreement with PW1? How could DW2 recognize DW1 as a leader of PW1 in purchasing those cashew nuts if he neither had contract nor an employee of Iscon? Such predicament is clarified by the contents of exhibit P2 as fol lows:- "Promissory Note drawn on 12/4/2014. I, Abdul Ahmad Lilah............... hereby promise to pay on demand from this 12fh day of April, 2014 to Murkesh Patei the Director of Iscon Commodities (T) Ltd of ...the sum of TZS 208 000,000/= on the account of consideration specified beiow:- 1. The whole amount should be paid in one installment within a period of two months as from the date of this note that is before the 30th June, 2014.

2. If the drawee/payee fails to pay the said amount on the specified period, the debt will attract an interest of 20% on the principle sum per annum. Signature of Abdul Ahmad Utah and Murkesh Patei as Director of Iscon Commodities (T) Ltd. Signed before, Kimwangana Advocate and Notary Public and Commissioner for Oaths" This exhibit P2 has reminded me to the discussion made by Sarkar on Evidence, Fifteenth Edition at page 1269, he insisted on the need to respect the documentary evidence in the following words 12 "It is a cardinal rule of evidence, not one of technicality, but of substance, which it is dangerous to depart from, that where written documents exist, they shall be produced as being the best evidence of their own contents. Whenever written instruments are appointed, either by the requirement of law, or by the contract of the parties, to be the repositories and memorials of truth, any other evidence is excluded from being used, either as substitute for such instrument, or to contradict or alter them". In brief, the best evidence is the contents of a written instrument itself. In respect to this suit that document is the Promissory Note itself. Since the same was not disputed by the Defendant any contrary explanation may raise more questions than answers, for obvious reasons that the Promissory Note portrays serious commitment on the side of the Defendant to refund such

amount of money within two months, that is, May and June. Assuming his assertion is true that he never received any single money from the Plaintiff, the follow up question is how could he make such commitment to refund such huge amount of money if he was not in any way involved in any previous contract or arrangements? Secondly, why he failed to comply with such commitment enshrine in the Promissory Note? These are among many unanswered questions from the evidence of the Defendant. May be, I need to expound a bit more on various types of contracts recognized in our jurisdiction. There are several forms of contracts acceptable in our courts. The most common type of contract is a written contract, printed on paper, signed, attested, sealed and delivered. The second known form of contract is oral contract, whereby the contract is 13 concluded by word of mouth only. In the case of Buku Vs. Magori [1971] HCD 161 a farmer and transporter who owned a lorry entered into an oral Contract. The farmer wished to transport his vegetables to the market and orally agreed with the transporter to transport his vegetables to the market on an agreed date. The farmer prepared his vegetables ready for transportation on the agreed day; however, the transporter did not turn up. As a result, the vegetables went bad. The farmer sued the transporter, the first two subordinate courts decided against the

farmer, but when the court landed to the High Court, the Court accepted that the two were in an enforceable contract and the farmer was accordingly compensated for loss he incurred. The same position was decided in the case of Merali Hirji & Sons Ltd Vs. General Tyre [1983] TLR 175. Other forms of contract is partly oral and partly written. This form of contract is not common in our jurisdiction, but it is acceptable and is a known contract. This form of contract was so decided in the case of Walker Property Investments (Brighton) Ltd Vs. Walker [1947] LT 204. In this case the court of Appeal held that the oral agreement should be read with the written instrument so as to form one comprehensive contract. Other forms may be by statutory, that any contract must be in writing. The list of forms of contract is not exhaustive. Based on the facts and evidences adduced in this court, undoubtedly, the two disputants, entered into a partly oral contract and partly written contract. It is partly written in regard to the Promissory Note, while the original contract was an oral contract. In anyway, the disputants had a common meeting point of minds and agreed in a certain arrangement 14 which graduated into a binding contract on how to purchase those cashew nuts. I would therefore, conclude the first issue in affirmative. The second issue for determination is whether the defendant breached

the terms and conditions of the said contract? Breach of contract is defined by Black's Law Diction 8th Edition to mean violation of a contractual obligation by failing to perform one's own promise, by repudiating it, or by interfering with another party's performance. Breach may be one by non-performance, or by repudiation, or by both. In essence every breach gives rise to a claim for damages, and may give rise to other remedies. The High Court of Uganda in the case of Nakana Trading Co. Ltd Vs. Coffee Marketing Board, Civil Suit No. 137 of 1991 defined similar meaning of breach of contract to mean one or both parties fails to fulfill the obligations imposed by the terms of contract. Part VII of the Law of Contract provide guidance on consequences of breach of contract. From the facts of this case, the Defendant did not fulfill the undertaking of delivering the required amount of cashew nuts equivalent to the amount he received from the Plaintiff. Above all, even the Promissory Note which was signed before an advocate was not complied with, thus this suit. I would therefore, conclude this issue by confirming that the Defendant breached the terms and conditions agreed upon by the Plaintiff. The mode of payment of money from the Plaintiff to the defendant was not disclosed. Even in the Promissory Note, parties did not disclose the mode 15 of refund if, by cash or by bank

transaction or through an agent, this court is not informed. I therefore, need not to invent the wheel, rather this court is invited to determine and decide in accordance to the facts disclosed before it. Since the two issues have been answered in affirmative, I therefore, venture to determine on the last issue of which reliefs are the parties entitled to. The Plaintiff in its plaint claimed for recovery of its principle sum of TZS 208,000,000/= arising from unsupplied cashew nuts in the season of 2013/2014; Interest therein of 20% per annum from 30th June, 2014 to the date of full recovery; general damages; interest on commercial bank rate of 20% from the date of filing the suit to its full recovery and costs. I would not hesitate to grant the claimed principle sum of TZS 208,000,000/= with interest of 20% from 30th June, 2014 to the date of full recovery. The claim of general damages is always discretionary powers of this court. I therefore, grant a nominal general damages of TZS 20,000,000/= only. Finally, the plaintiff is also granted costs of this case. I accordingly Order. Dated at Mtwara in Chambers this day of 1st October, 2020 P.J. NGWEMBE

JUDGE 01/10/2020 16 Court: This Judgement is delivered at Mtwara in chambers on this 1st October, 2020, in the presence of Advocate Hussein Mtembwa for the Plaintiff and Ms. Tecla Kimati, Advocate for the Defendant. Right to appeal to the Court of Appeal explained. P.J. NGWEMBE

JUDGE 01/10/2020 17