ISSA MOHAMED HAMDANI VS CBA T LTD COMM APPL NO

IN THE HIGH COURT OF TANZANIA (COMMERCIAL DIVISION) AT PAR ES SALAAM COMMERCIAL APPLICATION NO 57 OF 2018 ISSA MOHAMED HAMDANI......................................1st APPLICANT SOUD MOHAMED SOUD........................................... 2nd APPLICANT VERSUS COMMERCIAL BANK OF AFRICA (TANZANIA) LIMITED................................... RESPONDENT RULING B.K. PHILLIP, X This ruling is in respect of an application for stay of proceedings of Commercial Case No 16 of 2017, pending continuation and/or discharge of the Administration of Mohamed trans Co. Limited by virtue of the court order dated 16th December 2016. The application is made under section 2(3) of the Judicature and Application of Laws Act, cap 358, R.E 2002, sections 68(e ) and 95 of the Civil procedure Code Cap 33 R.E 2002 ( hereinafter to be referred to as "CPC"), supported by the affidavit sworn by Soud Mohamed Soud. An Counter affidavit sworn by Frida B. Shirima was filed in opposition to the application. In the affidavit in support of the application the deponent states that , since the subject matter contained in the plaint is recovery of credit facilities extended to Mohamed Trans Limited (in administration) which the respondent is aware that it is under administration by the orders of this Court dated 16th December 2016, and the respondent is among the creditors listed in the proposal tabled by the appointed Administrator, then if commercial case is left to proceed to its finality the respondent herein i will be paid twice for the same subject matter, that is through the guarantors (applicants herein) and Mohamed Trans Limited. A brief back ground to this application is that, on 18" July 2018, the respondent herein lodged in this court Commercial case No. 16 of 2017 against the applicants praying for judgement and decree as follows (a) Payment of the sum of Tanzania Shillings three Billion Two hundred and Ninety, Three Hundred Sixty Eight Thousand, Four Hundred Seventy Six and Eighty two cents only (Tzs. 3,290,368,476.82) and united states Dollars One Hundred Sixty Seven Thousand five Hundred and Ninety six (USD 167,596.00) being the outstanding amount as of March 28, 2017; (b) Interest on the sum of Tzs. 3,290,368,476.82 at the rate of 19°/o per annum and on the sum of USD 167,596.00 at the rate of 3.01 % per annum from March 28, 2017 to the date of judgment plus penal interest at the contractual rate of 10°/o per annum; and (c) Interest on the decretal amount at the court's rate of 7°/o from the date of j udgment up to the date of payment; In the event of failure by the 1st defendant to pay the amount at (a) (b) and (c) above, (d) Appointment of Mr. Gaspar Nyika Advocate as receiver Manager with powers to sell the mortgaged property located on Plot No. 8, Block R, in Shinyanga Municipality vide C.T. No. 5395 owned by Issa Mohamed Hamdani; or (e) An order for sale of the property located on Plot No. 8, Block R, in Shinyanga Municipality vide C.T. No. 5395 owned by Issa Mohamed Hamdani. (f) Costs of t he suit. (g) Any other relief which this honourable court may deem just to grant i n favour of the plaintiff. Pleadings in the above mentioned civil case are complete and the case is due for hearing only awaiting for the determination of this application which will give its fate, that i s either hearing will proceed or be stayed. 2 At the hearing of this application, the learned advocate Michael Ngalo appeared for the applicant while the respondent was represented by the learned advocate Faisa Salah. In his submission the applicant's Advocate adopted the contents of the affidavit in support of the application and the reply to the counter affidavit. He submitted further that the basis of the said Commercial Case No. 16 of 2017 is a loan facility advanced to Mohamed Trans Limited (henceforth 'the Company') and the applicants are shareholders in the company, which is under administration since 2015. The administrator is still performing his duties and has done some works which the respondent i s aware as it i s among the creditors and has been involved in the administration process of the company. To cement his argument he referred to paragraph seven of the affidavit i n support of the application which shows the sequence of events in the administration of the company. The applicant's advocate contended that since Mohamed Trans Co. Limited is under administration it should not be frustrated by this case in anyway and referred this court to the case of Standard Chartered Bank Hong Kong Limited Vrs Mechmar Corporation (Malasyia) Berhad, Civil Revision No 1 of 2012 (unreported) in which the court of Appeal discussed the purpose of Administration of a company and made an observation that administration is designed to benefit an insolvent company by providing a 'breathing space' for the administrator to implement one or more of the statutory purposes set out in section 247(3) (a)-(c) of the Companies Act, Cap 212 R.E 2002. Finally, the learned Advocate submitted that i t i s prudent for the respondent to submit its claims to the administrator and prayed that this application should granted. Responding to the submission made by the applicant's advocate, the respondent's advocate adopted the counter affidavit i n opposition to the application in which is stated states that the fact that Mohamed Trans Co. Limited is under administration process constitutes an event of default which entitles the respondent, in terms of the mortgage Deed entered by the 1st applicant to recover the outstanding amount from the applicants 3 as they agreed under the guarantees executed to the effect that the respondent will be entitled to recover the remaining balance in the event Mohamed Trans Co. Limited Is wound up or reconstructed in insolvency proceedings. The respondent's advocate submitted further that the fact that the borrower (Mohamed Trans Co. Limited) is under administration is not a sufficient reason to stay the proceedings in Commercial case No. 116 of 2017. In his rejoinder the applicants advocate reiterated his submission in chief and insisted that he has adduced sufficient reasons to move this court to grant the relief sought in this application. The order sought in this application is among the discretional orders that can be issued by this court. I am alive of the fact that in granting any discretional order the court has to exercise its discretional powers judiciously. In making the determination of this application, it is my considered view that it is appropriate to start by looking at the reasons adduced by the applicant as a justification for the orders sought in the light of the facts in this application and the said Civil case no 116 of 2017 whose proceedings are sought to be stayed. The justification for this application is stated in paragraph 9 of the affidavit in support of the application together with the reasons submitted by the applicant's advocate during the hearing that is, it is proper for the respondent to lodge its claims to the appointed administrator of Mohamed Trans Co. Limited. For clarity I would like to reproduce Paragraph 9 of the affidavit hereunder; 9. That, if the suit is allowed to continue, the respondent herein will be paid twice for the same subject matter, l.e through the Guarantors ( Applicants herein ) and Mohamed Trans Limited, through the on going Administration' 4 It is my settled view that the contents paragraph 9 of the affidavit suggests that the plaintiff must win the case. What a prediction! The applicants are predicting that they will lose the case hence the respondent will be paid twice while they have filed their defence denying the plaintiff's claims. What I gather from the contents of paragraph 9 of the affidavit is that the injustices that the applicant's seeks to prevent is not real. It is only imaginary because there is no certainty that the respondent must win the case. And even if the respondent wins the case, it cannot be paid twice as contended by the applicants since records will show the payment made by the administrator to the respondent, bearing in mind that it is known to all parties that the respondent is under administration. I am not convinced that there will be such a gross negligence and inaction on the parties to the extent of effecting double payment to the respondent without the same being noticed. It is the finding of this court that the allegation on the possibility of the respondent being paid twice is imaginary and unrealistic. I have taken time to peruse the pleadings in Commercial Case No 116 of 2017 and noted that what is pleaded in this application is in essence the same to what is pleaded in the applicants' written statement of defence. The fact that the respondent is under administration and that the respondent has to claim from the administrator forms part of the applicants' defence. Let me reproduce paragraph 5 and 6 of the written statement of defence and paragraph 6 and 7 of the affidavit in support of this application to demonstrate the similarity I have stated herein above. Paragraph 5 & 6 of the written statement of defence. 5. That the contents of paragraph 11 of the plaint are disputed and the plaintiff is put to strict proof thereof. The Defendants reiterate that the company i.e Mohamed Trans Limited, is currently under Administration pursuant to an order of this Court through which the appointed administrator will repay all its creditors including the Plaintiff herein. 5 6. In further reply, the Defendants state that the Administration process is still ongoing and that the plaintiff being a Creditor, has been fully involved in the administration process as follows; 6.1 They were served with a copy of the order Administration; 6.2 They were served with the notice of the Creditors meeting on 18 March 2017, wherein there was annexed a copy of the Creditors proposat; 6.3 They sent a letter with their comments on the Administrators proposal on 21* March, 2017; 6.4 They attended the Creditors meeting on 28 March, 2017; 6.5 They submitted a list of assets charged to the Plaintiff on 11th April, 2017; and 6.6 They were on 18 July 2017 informed by the Administrators representative of the fact that a further meeting of the Creditors would be called in the near future following receipt of the list of charged assets from CDRB Bank PLC. Paragraph 6 & 7 of the affidavit 6. That the subject matter of the suit as contained in the plaint is recovery of credit facilities extended to Mohamed Trans Limited (in administration), which with the knowledge of the respondent is under Administration by orders of this Hon. Court dated 18 December, 2016 and to which the respondent is among the creditors listed in the proposal tabled by the appointed Administrator. Photostat copies of the orders of Administration dated 18 December, 2016 and the proposal are herewith annexed and 6 marked as "ISS-2" and the Applicant crave for leave of the court to refer to those as forming part of the affidavit 7. That through the ongoing Administration process which is vide to this court's order dated 18 December, 20I6 under Miscellaneous Commercial Cause No. I2I of 20IS, the administrator will pay all the creditors of the company including the Respondent herein who has been sufficiently involved in the administration process follows; 7.1 They were served with a copy of the Administration order; 7.2 They were served with the notice of the Creditors meeting on 18 March 20I~ wherein there was annexed a copy of the Creditor's proposal; 7.3 They sent a lattar with their comments on the Administrator's proposal on 21st March, 20I7; 7.4 They attended the Creditor's meeting on 28 March, 20I7; 7.5 They submitted a list of assets charged to the Plaintiff on IIth April, 20I7; and 7.6 They were on 18 July, 20I7 informed by the Administrator's representative of the fact that a further meeting of the creditors would be called in the near future following receipt of the list of charged assets from CDRB Bank PLC 7.7 Following the notification of 18" July, 20I7 the Respondent attended the Creditors meeting on 8 November 20I7 to which basically the Creditors approved the mode and timeline of disposing off the assets of the company save for modification in the revised proposal. 7.8 They have requested for a scheduled time table and list of assets to be auctioned to enable identification of the 7 Creditor responsible for the costs associated with the public auction vide email dated E March 2018. Photostat copies of the documents referred to under paragraphs 7.1; 7.2; 7.3; 7.4; 7.5; 7.6; 7.7 and 7.8 are annexed herein and marked as "ISS-2" and the Applicant crave for leave of the court to refer to them as forming part of the Affidavit. From the foregoing It is evident that the reasons adduced for the orders sought i n this application forms part of the applicants' defence, therefore the applicants will have opportunity to during the hearing of Commercial Case no 116 of 2017 to present all what i s said in this application and the court will make appropriate orders as it will deem fit. It i s my finding that no any injustice can be occasioned by determining the said commercial Case No 116 of 2017.AII parties will be heard and case will be decided on merits. In addition to the above it has to be noted that Mohamed Trans Co. Limited is not a party in Commercial case no 116 of 2017.The administration Process that i s going on in the Company vide the order of this court dated 16th December 2016 will not be interfered in any way. What I have noted is that it is the applicants whom have mentioned Mohamed Trans Co. Limited in their defence, whatever the case, the issues arising from the pleadings in commercial case no 116 of 2017 will be determined by the court during the hearing. It is my considered view that there is no justification for this court to invoke its powers under section 68(e) and 96 of the CPC. In fact granting the orders sought in this application will cause unnecessary delay in determination of Commercial case No 116 of 2017 for reasons which are based on imaginary and anticipatory suspicion of injustices. At this juncture I would like to associate myself with the finding of this court in the case of Symbion Power LLC Vrs Salom Construction, Misc 8 Commercial Cause No 26 of 2016, in which Mwambegele, J dismissing an application for stay of proceedings had this to say; 'Therefore, staying proceedings in Commercial case No 168 of 2014 will in my view, be a delay to justices on rather flimsy grounds, and an act of sabotage t the interests ofjustices' Likewise, in this application staying proceedings in Commercial Case No. 116 of 2017 will be a delay of Justice on unfounded grounds. It has to be noted that, justice delayed is justice denied. In the upshot, this application is dismissed with costs. Dated at Dar es Salaam this 1st day of November, 2018. 9