20071005 TZHC Dar es Salaam

• IN THE HIGH COURT OF TANZANIA ...... (DAR ES SALAAM DISTRICT REGISTRY) r AT DAR ES SALAAM CJVlL CASE NO. 129 OF 2005 1. METHOD KASHONDA (LIQUIDATOR OF TANZANIA FILM COMPANY LIMITEJ>) ............................................... lsT PLAINTIFF 2. WORKERS Dl\:VELOPMENT CORPORATION ........................................ 2Nn PLAINTIFF 3. RAMESH ,JANI ........................................3 Ro PLAINTIF'F VERSUS ) t. SISI ENTERPRISES LIM]TED ................... t&• DEFENDANT 2. NANI>IKISHORE CHITTARANJAN RULING KALEGEYA ..J: The Defendant.~ had raised five preliminary objections. However, in the course of proceedings including submissions thereon, they dropped tl\te~ _and maintained Jwo with an alternative prayer. The two preliminary objections are that ((i "the pt Plaintiff. Method Kashonda, is no/ a comperenl person Io institute and prosecute this proceeding as liquidator of Tanzania Film Company Limited ('11/C") as - alleged or at all as he has never been appointed liquidator of TFC and he has not other status up<m which he can or could institute and prosecute the proceedings, 2 {ii) the plaint is not verified properly or at all", and,. in the a/Jernative, "Lhat the defendants will pray the Honourable court to strike out paragraphs JO and 1.1 of the plaint for being ambiguous, e.mharra.ssing and prejudicial to the defendants 'proper defence. " The Defendants arc represented by Mkono & Co. Advocates while 'Maajar, Rwechungura, Nguluma and Makani represented the Plaintjffs. In their submissions, the Defendants' Counsel urge that Globe Accounta11cy Servjces 1 a firm in which d1e 1St PJainti:ff is a Partner, v.ras only contracted by LART to provide consultancy services .in respect of TFC but was never appointed its liquidator, and extended the argument by stating that under that Consultancy Agreement, Globe Accountancy Services had no mandate to appoint the l :-1 Plaintiff as TFC's liquidato.r; that in any case there is no instTument of such appointment save a -notification to the Registrar of Companies aJJeging that such a11 appointment has been made but whose . actual deed has not been availed. On ,;erification, the Defendants charge that the clause violates 0.Vl, Rule 15(2) of the CPC in that the "Plain.tiffs have deliberately misrepresented the source on their information contained in the paragraphs which they are verifying." They insist that though the I 51 :Plaintiff is •a shareholder of :1 st Defendant he was not involved in actual affairs and business that are pleaded to entitle him state that the plaint contains matters which are true to his best knowledge; that neither was 3r<1 PJai.ntiff invo.lved in the l 51 Defendant's affairs noh"-'ithstanding the grantee of the power of - ., l I I i ' l 3 attorney nor is the claim by a person signing that he is a principal officer of 2 nd Plaintiff sufficiently identified as he has not disclosed his actual status. They con.elude by insisting that the I St Plaintiff's claims should be dismissed as he has no .locus standi, and that in the event this prayer is dismissed, ao order sl1ould be made for proper verification. ln response, the Plaintiffs' Counsel argue, making reference to the :Black's Law D.ictionary, Seventh Editfo.n's definition of the term "competency" and urge that 1st PJaintiff is a fit and competent person in the circumstances; insist that 1rC was put under voluntary liquidation by LART which in turn by "Agreement" "appointed Globe Accountancy Services to provide consultancy services in respect to the liquidation of TFC' and that 1 the latter "appointed its partner, the 1';1 Plai.ntijf as liquidator of :TFC and such appointment was accordingly notified a1. the Registrar of . .. Con1pa111es ... .................... . They insist that the manner of appoiJ1tment of Liquidators by LART or PSRC should .not be confused wit11 the Uke under the Companies . , Ordinance (now "Act" - 2002 R.E.) ~ On verificatio:n, they urge that it is very properly made because the 1st and 3n1 Plaintiff's are shareho)ders of the l st Defer1dant hence ,conversant with its affairs and that the 3rd Plaintiff gave a grantee power of Attorney as he re-sides beyond the territorial jur,isdiction, and that as for the 2nd Plaintiff. - the capacjty of "principal officer" suffices to provide him with necessary knowledge on relevant affairs. 4 In rejoinder, the Defendants vehemently maintain that there is no evidence of l st Plaintiff having been appointed TFC liquidator; that it was only LART that was appointed Liquidator by its shareholder, the Treasury Registrar. On verification, they urge that the 2m1 Plaintiff should have reflected in the clause, words to the following effect: "lam so and so, holder ofsuch and such officer(?) in the corporate body that is the 2'111 PlaintifT', and that having so stated only then could be have gone on "to say that by virtue of that office, s/he is a principal officer of that body. "' I will start with the prayer fronted in the alternative - a quarrel on para.10 and 11 of the plaint. Though raised and not specificaHy withdra\v11 it was not submitted upon. In effoct therefore~ I take it that it was abandoned, I '"'ill say no more on this. Next, J should dispose the question regarding the verification dause before tur~ing to the crucial issue of appointment or otherwise of the liquidator. /,, This aspect should not take much of our time. W'ith greatest respect ,.to Defendants' Counsel, I find no fault in what is depicted in the plaint save for the technical lack of a specific verification clause for Yogesh holding power of Attorney. Otherwise it is not correct to say that the rest are incapable of being versed ,vith matters alleged therein. The 151 and 3rd Plaintift:5 are the J st Defendants' shareholders. A shareholder is supposed to be conversant .'# with affairs of his corporate body, That is the presumption. lt has not been 5 alleged nor suggested that the two were/are dummy shareho.lders. Unless otherwise proved, they are presumed therefore to have k:110'\vledge of affairs of their corporate body. And this js without prejudice to the other capacity claimed to be held by r. Plaintiff as "liquidator". As for Yogesh for "3 1 rd Plaintiff grantee ofpo·wer of.Attorney", jndeed he should have .re.fleeted that the information is as sourced from. Ramesh, the shareholder. As regards the 2 nd Plaintiff, the proposition that if a party verifying is a principal officer he should first preface the same with words suggested by Defendants' Counsel and quoted above is very nove.1. and out of practice. It suffices if a party simply shO\~.,s that he is a principal officer. O.XXVIII, Rule l CPC provide: ·•Jr1 suits by or against a corporation. any pleading may be signed und verified on behalf of the Coq,oration by the Secretary or by any director or other principal officer of the Co17,oration who is able to depose to the facts of the cc,se ''. The above quoted is very clear. It does not impose the obH.gation suggested by the Defendants' Counsel. The above said however, the plaint indeed suffers from non.- . ,' compliance with O.VI, Rule 15(2) CPC which provides: . "15(1) Save as otherwise provided by any law for the time being in force, everypleadlng shall be verified at the fool by the party or by one of the purlies pleading or by some other person proved w the saNsfacfion qf the coun to be acquainted ivilh (2) the/acts of the case. The person verifying J·hall specffy, by reference to the - numbered paragraphs of the pleading, what he verifies Qf his own knowledge and whar he 11erifies upon information received and believed to be true. '\ .C 6 (3) The verification shall be signed by the person making it and shall stale ihe date on which and th(t place at which it was signed.'' The relevant plaint has a verification c,lause yes~ but as Yogesh 1s .holding a power of Attorney he can only have been conversant with facts from Ramesh and not from his own knov. 11,edge. The Defendants' Counsers quarrel on this is fully justified. Let me pose here first and deal with the first objection., before turning to the consequences thereof. Now, for the most controversial issue in this matter - appointment or otherwise of the l st Plaintiff as the Liquidator of TFC. \¥hat is not disputed is that TFC was put under LART for liquidation and as per obtaining procedure, LART ,in turn cont1·acted Globe Accountancy Services. The Agreement between the two is entitled. "LlQVlDATION CONSULTANCY A GREEft1ENT BETWEEN TllE L,QANS AND ADVANCES REAL.TZATJON TRUST ,. AND GLOBE ACCOUNTANCY SE"RVJCES (CERTJFil!-"D PUBLIC ACCOUNTANTS) POR THE PROVJSJON OF CONSULTANCY SERVICES IN .RE:<;PECT - ., OF, AND FOR 1HE COORDINATION OF THE CONDUCT OF THE LJQVIDA1'JON OF TANZA.NJA FllM COMPANY LIMITED l I .., 7 and this best<rw's on Globe Accountancy Services a v,,,1ide range of powers ,including liquidation. Under S.1.01 sub-tit:led ''.Appointment of Globe Accountancy services", it :is provided: ''That LART has appointed GLOBE ACCOUNTANCY SERVICES as consultants to provide the services specified in detail in ::.Cclion 2.01 of Article II hereinafter .in respec.t f liquidation of the Company upon the principal terms and conditions set out in the said Article and other subsequent Articles of1his Agreement." Under Atticle 11, GJobe Accountancy Services is vested with tbe following: ''2.4 General Powers ofAttomey: LART hereby appoints the ConJultant c1s its AtMrney, for it and in its name and/or on its behalf to sign, sign. seal and deliver and ctberwise pe,fect any deed, assurance or-act wliich may be required or .may be deemed proper for any sale, lease, assignment 01· disposition by the Consul1an1 ofthe. properties and assets (>/the compan); or any part thereof under QJ1)' power ofsale. leasing or any other disposit.ion. 2.5 Liquidator's status as Agent: Nmwi.thstanding the general powers of atlorney vested upon the Consultant pursuant Jo sub-clause 2.4 above, the Consultant shall also discharge its dulie.s, resprmsibilit.ies and obligations as .liquidation age1!t of I.ART, subject to compliance with EART~s Seizure and Disposal of Assets Rules, 1993 (GN. No.164 of lt/93} and other applicable. ·• 2.6 Specific Powers oftlte Agent as Liquidator in relation to Assets Disposal: The powers of the agent as the Liqi.tidator shall include the following:,- (a) To enter upon and/or take possession of collect and get in all or any qf the properties or asse1s ofthe company; i. (b) To take cmd/or collect proceedin.gs in the m:rme <if LART or the company~ as the case may he, for !he pu1po.w1s set out in sub-paragraph (a) above; (c) To canyon business or manage !he assets oflhe company ftw as kmg as it· is necessary prior to disposing crl the said asseis: (d) To sell or let all or any of the properties or assets of the company; (e) n, do al such other acis and things os the ('onsu!Uml ma,v .:.:onsider to be incidental or condw::ive to any e![ rhe ma/fers and powers aforesaid and which may or can be c,m.•;ick.1red prudent and lmiful to do as agent of LART.. '' What we see next is a notice of appointment by the said GJobe Accountancy Services to the Registrar of Companies (Ann. MR!'-J""M/SlSI/A to the Plaint) and this notice is as follows: "NOTICE OF APPOINTMENT QFL/QUlDATOB NAME OF COMPANl': 1'ANZANIA FILM COMJ>ANl' LIMITED PRESEN1'ED BY: METHOD ANATOL! KA.SHONDA P. 0. BOX 7794, DAR ES SALAAM TO: THE REGISTRAR OF COMPANIES We GLORE ACCOUNTANCJ" SERV!CI::.:s t~f P.O. Bax 7794. Dar"'es Salaam do hereby appoint .METHOD AN:,ffOU KASHfJ:NDA Liquidatgr ofTANZANJA FllM COMPANY LIMJTEIJ Thisfolhrws our appaintmenr as liquidation! receivership Consul/ams ofTANZANJA FJLJ\;J COMPANY LIMITED by THE LOANS AND ADVANCES REALIZATION 1'RUST under the powrtrs conferred upon ii by the Treaswy Registrar Ordinance Gap ..JJ8. SIGNED FOR AND ON BEHALF OF GLOBE ACCOUNTANCY SERVICES - i By: W'JLLIA/\,1 J:'. .MUCiURUSl (Sgd) '! This 3r'd dCI)! of February 2000. 9 Adn,irtedly, this notice has a :flaw1 for example, it is \l\1a:nting to say that it ,was being presented by Kashonda while the body thereof reflects the finn's name. That said hov,,ever, the substance thereof needs no interpolation. The Registrar is befog notified that one Method Anatoli Kashonda has been appointed by Globe Accountancy Services as a Liquidator ofTFC Ltd on powers flowing from I..ART. Globe Accountancy Services was empov,•ered to appoint a 11iquidator and no parameters for the same \Vere provided. In my considered opinion therefore,, reading the Agreement between LART and Globe Accountancy Services, and, considering that the law pennitted LART to so contract and empower its Agent to appoint a Liquidator, the mere absence of a forma1, legalistic appointment deed is of no effect, in view of the notice quoted above. ..The said Method Anatoli Kashonda: in view of all this cannot be said to be an imposter. Under the obtaining procedure for assets plac.ed under LART and for which the latter contracted Agents to perfom1) among other duties, ,· . b Liquidation, and on facts established, I have no scintilla of doubt that • Kashonda is duly appointed Liquidator ofTFC Ltd. This disposes the issue. The preliminary objection on lack of locus standi by 1ft Plaintiff stands dismissed. I nm~' turn to the consequences of failure to include a proper - verificatiot1 clause. 10 Such a defect is curable by an order of the court, directing for amendment of the plaint by amending the verification clause as I hereby order. In conclusion, the preliminary objection on al1eged 1st Plaintifrs lack of locus standj stands dismissed while the one on lack of proper verification clause in respect of the 3rd Plaintiff is upheld with an order fo.r amendment. It is accordingly ordered that the Plaintiffs should amend the Costs in the JUDGE sJ,f-,q. ,. -