jaffery indi saini ltd vs st johns university of t another 2012 tzhccomd 40 30 october 2012

IN THE HIGH COURT OF TANZANIA COMMERCIAL DIVISION AT DAR ES SALAAM COMMERCIAL CASE 51 OF 2011 JAFFERY IND.SAINI LIMITED.......................................... PLAINTIFF VERSUS ST. JOHN'S UNIVERSITY OF TANZANIA ST. MARK'S COLLEGE TEACHING CENTER....................DEFENDANT Date of Hearing: 27th August 2012 Date of last Order: 27/08/2012 Date of Judgment: 30/10/2012 JUDGMENT MAKAR AM BA. J.: JAFFERY IND. SAINI LIMITED, the Plaintiff, is a limited liability company registered in Tanzania, which sells home and office furniture. The Defendant is a private institution, which provides education services in Tanzania. On the 21st October, 2009 and 16th November, 2009 respectively, the Defendant issued the Plaintiff with a Local Purchase Order No. 001/2009 for the supply of 1030 lecture theatre chairs and 326 plastic study chairs respectively. The Plaintiff delivered to the Defendant 366 sets of lecture theatre chairs worth TZS. 96,633,150/= and plastic study chairs worth TZS. 17,560,978/=. The Plaintiff claims that the Defendant has not honored payments of the goods supplied to them rather has acknowledged the debt and promised to pay it in installment of TZS. 2,000,000/= per month once the financial position of the Defendant has improved. The Plaintiff claims further that despite several demands, the Defendant has obstinately and persistently ignored the Plaintiff's demands. The Defendant does not deny the whole of the Plaintiff's claim. The Defendant has partly admitted the Plaintiff's claim. The Defendant avers that it is a newly registered private academic institution, which depends on students' tuition fees as source of income for all its operations. The Defendant has acknowledged the debt and has shown its willingness to settle it through monthly installments once their financial position improves. In this suit which the Plaintiff filed in this Court on the 14th day of June, 2011, is claiming against the Defendant for the following reliefs: (a) The Honourable Court to order the Defendant to pay the principal amount o f Tshs. 288,074,403.00. (b) General damages to the tune o f Tshs. 100,000,000.00. (c) Punitive damages to the tune o f Tshs. 80,000,000.00. (d) The Defendant be ordered to p ay interest a t the Court' rate o f not less than 12% p er annum o f the decretal amount from the date ofjudgm ent to the date o f final payment. Page 2 of 20 (e) The defendant be ordered to pay interest a t the commercial rates o f 25% per annum, o f the principal amount from the date o f the judgm ent to the date o f final paym ent (f) The Defendant be ordered to pay interest a t the commercial rates o f 25% per annum, o f the principal amount from the date o f the supply o f the goods to the date o f judgment. (g) Costs o f this suit be borne by the Defendant. (h) Any other order(s) and/or reiief(s) as the honorable court may deem fit and ju s t to grant. In this suit the Court is being asked to determine the following issues, namely: 1. Whether there was a contract between the parties; 2. I f the first issue is answered in affirmative, then, whether there was any breach by either o f the parties to the suit and to what extent; and 3. To what reliefs are the parties entitled. In this suit the Plaintiff is being represented by Mr. KESSY, learned Counsel. In support of its case, the Plaintiff summoned only one witness, Page 3 of 20 Mr. Balbir Singh Saini, the Managing Director of the Plaintiff's company, who testified as PW1. The Defendant is being represented by Mr. SHUMA KISENGE, learned Counsel. In support of its case, the Defendant also summoned only one witness Mr. James Yunge, an Accountant employed by the Defendant, who testified as DW1. At the close of the trial, both learned Counsel made their closing submissions orally. The first issue which falls for determination by this Court in this suit is whether there was a contract between parties. The following facts are not in dispute: that, there was a contract between the Plaintiff and Defendant for the supply of Lecture Theatre Chairs and Plastic Study Chairs. That the Plaintiff had issued an Invoice No. 003284 dated 8th September 2009 for the supply of 1017 lecture theatre chairs at a cost of TZS. 223,750/= plus 20% Value Added Tax (VAT), thus making a total price of TZS. 268,513,425/=. That the Plaintiff issued another Invoice No.003442 dated 6th November 2009 for the supply of 326 plastic study chairs at a cost of TZS.16,577,100/= plus 20% Value Added Tax (VAT) thus making a total price of TZS.19,560,978/=. The Invoices issued by the Plaintiff were admitted at the trial and marked as Exhibit P l collectively. Following the Invoices the Plaintiff issued, the Defendant proceeded to issue Local Purchase Orders (LPOs) dated 16 November, 2009 for the 326 plastic study chairs at a cost of TZS. 16,577,100/= plus 18% VAT making a total price of TZS. 19,560,978/=. The Defendant also issued another Local Purchase Order dated 21st October, 2009 for the 1030 lecture theatre chairs at a cost of TZS. 227,553,750/= plus VAT making it a total price of TZS. 268,513,425/=. The Local Purchase Page 4 of 20 Orders were tendered at the trial, admitted and marked as Exhibit P2 collectively. DW1 acknowledged that the Defendant received 326 plastic study chairs from the Plaintiff as per the Delivery Note No. 0003580 dated 17th November 2009; Delivery Note No.0003579 dated 14th November, 2009. DW1 also acknowledged the Defendant also received 366 lecture theatre chairs as per the Delivery Note No.003621 dated 15th December, 2009. The three copies of the Delivery Notes were admitted at the trial and marked as Exhibit P3 collectively. The above facts which have not been disputed establish the existence of a binding contract between the Plaintiff and the Defendant for the supply of chairs, comprising of lecture theatre chairs and plastic study chairs. The first issue whether there was a contract between parties is answered in the affirmative. The second issue which falls for determination by this Court is whether there was any breach o f the contract by either o f the parties to the suit and to what extent In his closing arguments, Mr. Shuma Kisenge, learned Counsel for the Defendant submitted that, the Plaintiff has not specified which terms of the contract the Defendant breached. The Defendant however, admits that they have not paid the contracted price in full due to financial hardships they have been facing. Of the whole consignment of chairs which the Plaintiff supplied to the Defendant, the Defendant has managed to pay only TZS 2,000,000/=. The Defendant complained also that, the Plaintiff did not supply to the Defendant the whole consignment as agreed, and as such of the 1030 chairs as indicated in the Local Purchase Order, the Plaintiff has supplied only 366 lecture Page 5 of 20 theatre chairs. In his testimony before this Court, PW1 responded that the Defendant themselves stopped the Plaintiff from supplying the remaining consignment of chairs for the reason that the classrooms were still under renovation. This allegation by PW1 that the Defendant stopped the Plaintiff from supplying the remaining consignment of lecture theatre chairs because the classrooms were still under construction is not supported by any evidence on record. They are therefore mere words from PW1. There being no written contract from which the terms and conditions of the transaction could be inferred to by this Court, such terms and conditions can only be construed from the Local Purchase Orders, the pleadings and other evidence on record. On the evidence on record, the only term of the contract which is agreed that the Defendant has not performed is delay in paying the total purchase price of the chairs the Plaintiff supplied to the Defendant as the Defendant had promised. In his closing arguments, Mr. Kessy, learned Counsel for the Plaintiff amplified on this fact by referring this Court to the provisions of section 37(1) of the Law of Contract Act, Cap.345 R.E 2002 which provides that: "The parties to a contract must perform their respective promises, unless such performance is dispensed with or excused under the provisions o f this A ct or o f any other law." Mr. Kessy also referred to the book by G.H. Treitel titled, The Law of Contract, 18th Ed, Sweet& Maxwell (1991) at page 731, that: Page 6 of 20 " Failure or refuse to perform the contractual promise when performance has fallen due is prima facie a breach" I have considered the reasons offered by the Defendant to explain why the Defendant defaulted in paying the contract sum due, that it was financial difficulties the Defendant has been facing, which arise from depending almost solely on student fees as source of funds. This reason in my view cannot constitute a good defence for exempting the Defendant from its liability to pay the outstanding contractual sum. In this regard the provisions of section 37(1) of the Law of Contract Act, Cap.345 R.E 2002 are relevant, that parties to a contract must perform their respective promises. This is the cornerstone of any contract, unless its performance is dispensed with or excused under the law of contract or of any other law. The evidence on record point to a failure and/or refusal by the Defendant to perform its promise to pay for the consignment of chairs ordered and delivered by the Plaintiff. This failure and/or refusal by the Defendant to perform its contractual promise when performance has fallen due, in absence of any good defence by the Defendant to explain away its failure and/or refusal to perform its promise, prima facie, amounts to a breach of the contract. It is for the above reasons that the second issue whether there was any breach o f the contract by either o f the parties to the suit and to what extent is answered in the affirmative. The last issue for determination by this Court is as to what reiief(s) the parties are entitled. This Court has already determined when dealing Page 7 of 20 with the second issue that the Defendant is in breach of the contract for the supply of chairs due to its failure to pay the full purchase price as promised. What relief(s) then is the Plaintiff entitled to. The Plaintiff has prayed for the payment of TZS 288,074,403.00 being the principal sum for the 1030 lectures theatre chairs, and the 326 plastic study chairs as ordered by the Defendant as per Exhibit P2. The evidence on record has established that the Plaintiff delivered ail of the 326 plastic study chairs as ordered. The evidence has also established that of the 1030 lecture theater chairs the Defendant ordered, the Plaintiff has managed to deliver only 366 lecture theater chairs. In that regard therefore the Plaintiff would not be entitled to the claim of TZS. 288,074,403.00. Rather, the Plaintiff would only be entitled to payment for the delivered chairs as per the Delivery Notes, Exhibit P3 collectively. According to Mr. Kessy, learned Counsel for the Plaintiff in his closing arguments, and the testimony of PW1 given at the trial, the total price for all of the delivered chairs is TZS. 114,194,128/=. Now, since the Defendant has managed to pay only TZS. 2,000,000/=, this amount is to be deducted from the TZS. 114,194,128/=, making it TZS. 112,194,128/=, being the amount the Defendant is to pay to the Plaintiff as the outstanding principal sum for the chairs ordered and delivered. As I intimated to earlier in this judgment, during the trial the Plaintiff never tendered any proof of the manufacturing of all the 1030 lecture theatre chairs which the Defendant had ordered. There is no any piece of evidence establishing the allegation by the Defendant that the Defendant neglected and/or refused to receive the whole consignment of the chairs Page 8 of 20 from the Plaintiff. It is for that reason that this Court finds that the Plaintiff is entitled to payment only for the delivered chairs, which as I have stated above it is only TZS. 112,194,128/= being the amount the Defendant is to pay to the Plaintiff as the outstanding principal sum for the chairs ordered and delivered. The Plaintiff has also prayed for payment of general damages to the tune of TZS. 100,000,000/=. This claim according to Mr. Kessy, learned Counsel for the Plaintiff, in his closing arguments, is the consequence of breach of contract as stipulated in section 73(1) of the Law of Contract Act, that: "When 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 o f things from such breach, o r which the parties knew, when they made the contract, to be likely to result from the breach o f it." I wish to point out here that it is a fairly settled legal principle as was succinctly captured by the Court of Appeal of Tanzania in its decision in the case of THE COOPER MOTOR CORPORATION LTD. VS. MOSHI/ARUSHA OCCUPATIONAL HEALTH SERVICES [1990] T.L.R. 96 (CA), that general damages need not be specifically pleaded, but may be asked for b y a mere statement or prayer o f claim, as the Plaintiff did in this case. The Plaintiff however, has failed to establish to the satisfaction of Page 9 of 20 this Court, its allegation on the existence of undelivered manufactured lecture theatre chairs, and on the rejection and/or refusal by the Plaintiff to receive those chairs. There is therefore no basis upon which Court may rely on to award general damages to the Plaintiff. Since the Plaintiff has failed to prove the extent of loss incurred as a result of the breach of the contract by the Defendant, which would have enabled this Court to assess the general damages to be awarded to the Plaintiff, this has made it difficult for this Court to assess the amount of general damages. In the absence of evidence of the kind of loss the Plaintiff has incurred as a result of the Defendant's breach of the contract, the exercise by this Court of its discretion to determine the amount of general damages to be awarded to the Plaintiff, would amount to acting from vacuum. I am, for those reasons, constrained in making an order for award of general damages. The Plaintiff has also prayed for punitive damages against the Defendant for the breach to the tune of TZS. 80,000,000/= . I must state here that the purpose of punitive damages as per the decision of the Court of Appeal in Civil Appeal No.37 o f 2009 betw een PETER JO SEPH KILIBIKA AN D CRDB BANK PUBLIC CO M PA N Y LTD V ER SU S PATRIC ALO YCE M LINGI (Unreported) [Munuo, Kimaro, and Mjasiri, JJ.A.], at page 22, is "...to punish the defendant fo r outrageous misconduct and to deter the Defendant and others from similar misbehavior in the future." Page 10 of 20 The purpose of punitive damages as captured by the Court of Appeal in the above cited case, finds expression in judicial pronouncements in a number of decisions, including in Commercial Case No.47 of 2006, between SCANIA TANZANIA LTD VERSUS KAGERA TRANS COMPANY LTD (unreported); DAVIES VS, MOHANLAL KARAMSHI SHAH [1957] E.A. 352; and ANGELA MPANDUJI VS ANCILLA KILINDA [1985] T.L.R. 16 (HC). The decisions in Davies case, (above) and Angela Mpanjuji case (above) have been cited with approval in another decision of this Court, Commercial Case No. 11 of 2010 between MASUMIN PRINTWAYS & STATIONERIES VERSUS LEAGUE OF TANZANIA (unreported) where it was stated as follows: "...there is nothing in m y view, in the Defendant's behavior suggesting bad faith or willfulness to p a y the debt as the default on the p a rt o f the Defendant to pay the debt was due to financial crisis and therefore cannot be condemned to punitive damages as the Plaintiff would wish this Court to do." The facts in Masumin Printways Case (above) are in all fours with the facts in the present suit. In the present case, the Defendant has alleged that it has failed to pay the whole contractual sum because of financial difficulties it was facing because as a University it depends largely on student tuition fees as a source of funds. I should emphasize here that the business of courts of law, as was it was observed by this Court in EMIRATES AIRLINE vs. HAMIDU MVUNGI. Commercial Case No. Page 11 of 20 26 of 2011 (unreported), is to determine the rights of the parties not to punish them. Much as the explanation offered by the Defendant for its failure to honour its promise that is it was due to financial difficulties, does not constitute a good defence, this Court cannot use it to condemn the Defendant to payment of punitive damages, which as I intimated to earlier on, may veer this Court from its legal course of determining the rights of the parties into punishing them. It is for these reasons that I shall decline from making an order against the Defendant for the payment of punitive damages. The Plaintiff also prayed for interest at the commercial rate of 25% per annum from the date of judgment to the date of final payment. It is trite law under Order XX Rule 21 of the Civil Procedure Code that, interest on judgment " shall be limited to minimum o f 7% and maximum o f 12% per annum.” As a matter of clarity the provisions of Order XX Rule 21 provides as follows: "77?e rate o f Interest on every judgm ent debt from the date o f delivery o f the judgm ent until satisfaction shall be seven p e r centum p e r annum or such other rate, n o t exceeding tw elve p e r centum p e r annum, as the parties m ay expressly agree In writing before or after the delivery o f the judgment or as may be adjudged by consent" (emphasis added). Page 12 of 20 In SAID KIBW ANA AND GENERAL TYRE VS. ROSE JUM BE [1993] T.L.R. 175, Mfalila, JA, as he then was, delivered the judgment of the Court and stated at pages 188-189 as follows: "The rate o f interest prescribed under powers conferred on the Chief Justice by s.29 vide G.N. No 410/64 are the same as those prescribed under Order 20 ruler 21 namely between the m inim um o f 7 % a n d the m axim um o f 1 2 % p e r annum from the date o f the delivery o f judgm ent until satisfaction. The ra te o f in terest to be aw arded fo r the period p rio r to the delivery o f judgm ent is s e t a t the discretion o f the Court. The ra te which it considers reasonable. There are thus two divisions o f interest under Tanzania Law as opposed to three under s.34 o f the Indian Civil Procedure Code which ceased to apply in Tanzania in 1966. These two divisions correspond to the period fo r which interest is awarded. The first period covers the whole o f th a t period up to the delivery o f ju d g m e n t The second period is the period from the delivery o f judgm ent to fin a l satisfaction. The rate to be awarded fo r the first period is entirely a t the discretion o f the Court, whereas the ra te to be aw arded fo r the second perio d is also a t the discretion o f the Court b u t w ithin s e t lim its i.e. betw een 7 % a n d 1 2 % p e r annum . Although fo r the purposes o f fixing interest rates there are only two periods, the first period can be subdivided in two: namely the period prior to the institution o f the suit and the Page 13 of 20 period between the filing o f the suit till ju d g m e n t./' (emphasis added). Emanating from the above rendering, the law that regulates payment of interest in civil litigation, the Civil Procedure Code, Cap.33 R.E. 2002, recognizes only two divisions of rates of interest, the one which covers the whole of that period up to the delivery of judgment, which is entirely at the discretion of the Court, and the one which covers the period from the delivery of judgment to final satisfaction, which is also at the discretion of the Court but within set limits, that is, between 7% and 12% per annum. However, much as for the purposes of fixing interest rates there are only two periods, the first period can be subdivided in two: namely, the period prior to the institution of the suit and the period between the filing of the suit till judgment. On the foregoing reasons, the prayer by the Plaintiff for award of interest at the commercial rate of 25% per annum from the date of judgment to the date of final payment does not have any legal basis. This Court exercising its discretion under the provisions of Order XX Rule 21 of the Civil Procedure Code and considering the nature and circumstances of this suit, awards the Plaintiff interest on the judgment at the rate of 7% p er annum from the date of the delivery of the judgment until the date the judgment debt shall be fully satisfied. The Plaintiff also prays for payment of interest a t the commercial rates o f 25% p er annum, on the principal amount from the date o f the Page 14 of 20 Z.I supply o f the goods to the date o f the judgment. In order for a claimant to be entitled to payment of interest at the commercial rate on the principal amount, there must be evidence. The commercial rate interest prior to the suit has to have constituted a contractual term. It is therefore a contractual interest rate, which commonly appear in all bank loan facilities. In exercising its discretion to award the commercial the court must give utmost respect and sanctity to the contract entered into between the parties. This means that if there is no express stipulation for the payment of interest at the commercial rate, the Plaintiff will not therefore be entitled to interest. This legal position find expression in the decision of this Court (Makaramba, J.) in Commercial Case No.5 of 2009 between KINONDONI TEACHERS SAVINGS & CREDIT COOPERATIVE SOCIETY COOPERATIVE UNION LIMITED (KITE SACCOS LTD! VERSUS KINONDONI MUNICIPAL COUNCIL funreDOrtedl where in an "order for directions" on the 5th April 2011,1 stated as follows: "The court has discretion to award o r not to award any interest and in awarding such interest to determine a t what rate it should be awarded. Interest prior to the su it m ay be stipulated in the contract a t a fixed rate or m ay not be so stipulated. The contractual Interest rate is mandatory and therefore the Court has no discretion on the matter as was held in the persuasive Indian authority in the S tate o f In d ia v. G upta (TEA) L t d A I R (1987) C a i 6 4 (DB). The rationale behind this is that the court m ust always give utmost respect and sanctity to the contract entered into between the parties. Page 15 of 20 I f there is no express stipulation for the payment o f interest, therefore the Plaintiff is not entitled to in terest" The issue therefore is whether there was an express provision in the contract between the Plaintiff and the Defendant for payment of interest at the commercial rate of 25%. I have examined the Proforma Invoices (E x h ib it P 3 collectively) and the Local Purchase Order (E xh ibit P4) and did not find any such term. It is a matter of legal principle that a claimant for payment of interest at a certain specified commercial rate, has to lead evidence in connection with that rate of interest which is being asked. In the present suit, the Plaintiff has not led any evidence on its claim for interest on the judgment-debt at the commercial interest rate of 25% per annum from the date of the supply of the goods to the date of the judgment. I am alive in this regard to the persuasive words of my learned brother Judge, Nsekela, J. as he then was, in Com m ercial Case No. 49 of 2001 between BP TA N ZA N IA LIM ITED V ER SU S NYANZA CO -O PERATIVE UNION (1984) LTD (unreported) at page 4, where he stated as follows: "The Plaintiff is claiming interest on the judgment-debt a t the commercial rate o f 30% per annum from November, 1999 up to the date o f Judgment The Plaintiff has not ied any evidence in connection with the 30% commercial rate interest! It is certainly not reflected in the invoices in Exh.Pl. Therefore in terms o f Order X X Rule 21 o f the Civil Procedure Code, the Plaintiff is entitled to 7% Page 16 of 20 interest p er annum on the judgm ent debt from November 1999 up to the date o f Judgm ent" However, in the event a claimant fails to lead evidence on the interest at the commercial rate, the Court may exercise its discretion and award any rate which it considers to be reasonable. The rationale behind such payment was explained in two decisions, that of EASTERN RADIO SERVICE VERSUS R J PATEL (1962) E.A 818 and that of Y-F GULAN HUSSEIN VERSUS FRENCH SOMALILAND SHIPPING CO- LTD [1959] E.A 25 which were quoted with approval by this Court in Commercial Case No. 11 of 2010 between MASUMIN & STATIONERIES VERSUS LEAGUE OF TANZANIA, where it was stated as follows: "...where a successful party was deprived o f the use o f goods or money b y reason o f wrongful act on the part o f the defendant, the party who has been so deprived o f the use o f goods or money to which he is entitled should be compensated for such deprivation by the award o f interest." In the present suit the Defendant has kept the Plaintiff's business money for a considerably long time. This is a ground good enough for this Court to exercise its discretion to award interest as compensation. I should insist here as I did in the decision of this Court in Civil Appeal No.79 of Page 17 of 20 2008 between DANIEL NGUDUNGI V ER SU S TH E REGISTERED TRU STEES OF PARASTATAL PENSION FU N D , that: "....the rate o f interest to be awarded for the period prior to the delivery o f judgm ent is set a t the discretion o f the Court. The court awards the rate which it considers reasonable." It is for the foregoing reasons that this Court deems it fit to award interest at the commercial rate of 18% per annum on the principal amount from the date of the supply of the goods to the date of the judgment. The evidence on record points more to the Defendant's intent to pay the outstanding debt for all the delivered chairs than anything else, which debt, the Defendant however, has failed to give good reasons for failing to pay thus forcing the Plaintiff to come to this Court for assistance. As it was clearly stated by the Court of Appeal of Tanzania in M OHAM ED ID D RISA M OHAM ED VERSU S HASHIM AYO UB JAKU (1993) T LR 281 cited by Mr. Kessy, in his submissions: "Where a party to the contract has no good reason not to fulfill an agreement, he m ust be forced to perform his part, for an agreement must be adhered to and fulfilled." The orders of this Court against the Defendant in this suit aim at making the Defendant perform its part of agreement as promised. Page 18 of 20 In the whole and for reasons I have explained above, the Plaintiff's suit succeed to the extent explained above. The Plaintiff shall be entitled to the following reliefs, namely: (a) The Defendant shall pa y the Plaintiff TZS. 112,194,128/= (Say Tanzanian Shillings One Hundred Twelve Million, One Hundred Ninety Four Thousand, One Hundred Twenty Eight only) being the principal outstanding amount. (b) The Defendant shall pa y interest on the above (a) a t the court rate o f 7% p e r annum from the date o f the ju dgm en t to the date the judgm ent-debt is fully satisfied. (c) The Defendant shall pay interest on the principal am ount on (a) above, a t the commercial rates o f 12% p e r annum, from the date o f the supply o f the goods to the date o f the judgment. (d ) The Defendant shall pa y the costs o f this suit. It is accordingly so ordered. R.V. MAKARAMBA JUDGE 30/10/2012 Page 19 of 20 Judgment delivered this 30th day of October, 2012 in the presence of Mr. Kessy learned Counsel for the Plaintiff and also holding brief for Mr. Shuma, Learned Counsel for the defendant. R.V. MAKARAMBA JUDGE 30/10/2012 Page 20 of 20