Mohamed Abood As the Attorney of Walid Abood Salehe vs DFS Lines Limited Misc

IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA DAR ES SALAAM SUB-REGISTRY AT PAR ES SALAAM MISC. CIVIL APPLICATION NO.7810 OF 2024 IN THE MATTER OF THE COMPANIES ACT (CAP. 212, R.E. 2002) AND IN THE MATTER OF THE APPLICATION FOR RESTORATION OF A COMPANY NAME UNDER SECTION 400(6) OF THE COMPANIES ACT (CAP. 212, R.E. 2002) AND IN THE MATTER OF THE APPLICATION TO RESTORE THE DISSOLVED COMPANY, DFS EXPRESS LINES LIMITED, BY MOHAMED ABOOD (AS THE ATTORNEY OF WALID ABOOD SALEHE) BETWEEN MOHAMED ABOOD (As the Attorney of Walid Abood Salehe) .............................................................................................. APPLICANT VERSUS DFS EXPRESS LINES LIMITED........................................... RESPONDENT RULING Date of last order: 19/06/2024 Date of ruling: 09/08/2024 A.A. MBAGWA, J. This is an application for restoration of a company under section 400(6) of the Companies Act. The application is made up by chamber summons and it i is supported by an affidavit affirmed by Mohamed Abood. The applicant prays for the following orders; i) That this Honourable Court may be pleased to issue an Order for restoration of the name of the Company called DFS Express Lines Limited with Certificate of Incorporation No. 78815 of 28h September 2010 into the Register of Companies. ii) Costs of the application be borne by the respondent; Hi) Any other reliefs deemed proper to be granted by this Hon. Court. According to the applicant's affidavit, in 2016, the applicant instituted a suit in this Court to wit, Land Case No. 81 of 2016 against the respondent company. However, the said suit ended in favour of the respondent. Aggrieved with the findings of this Court, the applicant appealed to the Court of Appeal via Civil Appeal No. 282 of 2019. Having heard the appeal, the Court of Appeal, on 23rd February 2023, overturned the High Court decision and decreed in favor of the applicant. To his dismay, when the applicant commenced execution proceedings, he learned that the respondent no longer existed as it had been wound up by its directors during the pendency of the determination of Civil Appeal No. 282 of 2019. As such, the applicant became unable to execute his decree. Following the above impediment, the applicant resorted to filing this application. 2 Upon service, the respondent contested the application through a counter affidavit affirmed by Salma Abdallah, the learned advocate for the respondent. In addition, the respondent filed a notice of preliminary objection challenging the competency of this application on the following grounds; (a) The applicant's application was made against non-existing company (DFS EXPRESS LINES LIMITED) (b) The applicant's application contravenes section 400 (6) of the Companies Act, 2002 (Act No 12 of2002) as amended. When the matter was called on for a hearing, the applicant had the services of Mr. Leonard Manyama, learned advocate whilst the respondent was ably represented by Ms. Regina Helman, learned advocate. Given the nature of the preliminary objection, I ordered both the preliminary objection and the application to be argued conjointly. Submitting in support of the preliminary objection, Ms. Regina Herman had it that the respondent was wound up on the 13th of October 2021 as per the search from BRELA hence it is not a legal entity. She explained that considering the status of the respondent, she has no legal capacity to be sued. The learned counsel expounded that a civil action can only be instituted against a natural or legal entity recognised by law but in the instant application, the suit was instituted against the non-existing person hence the proceedings are null and void. On this, the learned respondent's counsel referred to the case Rujuna Shubi Balonzi vs Registered Trustees of Chama Cha Mapinduzi [1996] TLR 203. She added that in the case of 3 Change Tanzania Limited vs Registrar Business Registration and Licensing Agency, Civil Appeal No. 03 of 2021, CAT at Dar es Salaam on page 13 the Court held that a non-existent person cannot sue. Furthermore, Ms. Regina Herman said that section 288 of the Companies Act bars from suing a wound-up company. She concluded that since the company has been wound up, there is no way the company can be sued for restoration. The respondent's counsel continued that section 400(6) of the Companies Act is not applicable because, according to her, it applies only when the company is struck off by the Registrar. She lamented that the company in dispute was not struck off by the Registrar. She opined that according to section 400, the application has to be brought against the Registrar. Regarding the 2nd preliminary objection, the respondent's counsel submitted that the application contravenes section 400(6) of the Companies Act as amended by Written Laws Miscellaneous Amendment Act No. 3 of 2019. She elaborated that where the company is voluntarily wound up, the section does not apply because the company was not struck off by the Registrar. She concluded that this Court is not enjoined to grant the requested prayers. She cited the case of Bonifasia Aidan Mapunda vs the Registrar of Companies, Misc. Commercial Cause No. 45 of 2022, HC, Commercial Division to support her contention. In fine, the respondent's counsel submitted that DFS is not a legal entity to be sued, and for that reason, she invited the Court to dismiss the application. X ? 4 In reply, Mr. Leonard Manyama, adv submitted that it is not in dispute that the company was wound up, and due to such voluntary winding up, the Registrar of Company struck off the company's name in the register of the company. He said that it is against this background the applicant applied to this Honourable Court to invoke its powers under section 400(6) of the Companies Act [Cap. 212]. He stressed that this application is properly filed. He also distinguished the case of Rujuna and Change Tanzania Limited (supra) cited by the respondent's counsel. Mr. Manyama continued that winding up is one of the factors for the Registrar to strike off the company. As such, it was his considered submission that the Court is enjoined to restore the company under section 400(6) of the Companies Act. Coming to the 2nd preliminary objection namely, that the application contravenes section 400(6) as amended by Written Laws Miscellaneous Amendment No. 3 of 2019, he submitted that the amendment did neither delete nor repeal section 400 of the Companies Act. He said that section 400 is still existing. He clarified that the said Miscellaneous Amendment Act just added section 400A which introduced additional reasons for striking off the company's name in the register. Mr. Manyama continued that the respondent alleged that the one to be sued is the Registrar of the Company but section 400(6) of the Companies Act does not have such a requirement. Rather, it provides that once a restoration has been issued, the Registrar has to be notified. 5 Moreover, Mr. Manyama dismissed the respondent's contention that DFS Company was not struck off by the Registrar. He elaborated that BRELA's official search reveals that the company was struck off by the Registrar. Mr. Manyama concluded that the application is properly before this Court hence the preliminary objections are baseless. In rejoinder, Ms. Regina Herman reiterated that section 400(6) does not confer the power to the court to restore the respondent. She also submitted that section 400(4) cited by the applicant's counsel is used by the Registrar where the company has been wound up due to the liquidator's failure to fulfill his obligations. She was insistent that the application is unmaintainable. Submitting on the merits of the application, Mr. Manyama adopted the applicant's affidavit and beseeched the Court to invoke its powers under section 400(6) of the Companies Act to issue a restoration order of the name of the company called DFS EXPRESS LINES LIMITED with a certificate of incorporation 78815 into the register of the company. In contrast, Ms. Regina Herman, learned counsel for the respondent, having adopted the counter affidavit of Salma Abdallah, opposed the application saying that it is void ab initio for the reason that the respondent in the chamber summons is a non-existent entity and the cited provision does not confer the court jurisdiction to entertain the matter. She added that section 288 of the Companies Act prohibits any action against a wound-up company except by the leave of the Court. Since this application was filed without leave of the court, the respondent's counsel submitted that this court is barred from granting the prayers in the chamber summons. To fathom her 6 submissions, she again cited the case of Change Tanzania Limited (supra) on page 13. She also challenged that the applicant has not advanced the reasons for the restoration of the company. As such, she prayed that the application be dismissed with costs. In a brief rejoinder, Mr. Manyama submitted that section 288 of the Companies Act applies only where the company was wound up by the Court Order. Having canvassed the rival submissions on both preliminary objections and the merits of the application and taking into account the parties' depositions, there are two issues for consideration in determining this matter namely, whether the application is properly before this court and whether the applicant's prayers are meritorious. To resolve the two questions, I deem it pertinent to reproduce the enabling provision. Section 400(6) of the Companies Act provides; (6) If a company or any member or creditor thereof feels aggrieved by the company having been struck off the register the Court on an application made by the company or member or creditor before the expiration of ten years from the publication in the Gazette of the notice above may, if satisfied that the company was at the time of the striking off carrying on business or in operation, or otherwise that it is just that the company be restored to 7 the register, order the name of the company to be restored to the register, and upon a certified copy of the order being delivered to the Registrar for registration, the company shall be deemed to have continued in existence as if its name had not been struck off, and the court may by the order give such directions and make such provisions as seem just for placing the company and all other persons in the same position as nearly as may be as if the name of the company had not been struck off. From the above excerpt, there is no gainsaying that the provision entitles any creditor to bring an application for restoration. The provision does not provide who should be joined in the application. However, by logic and common sense, it would appear that there was no other way to allow the respondents' directors to be heard except by joining the defunct company. Furthermore, the provision of section 400 (6) should be construed purposively to give meaning to its object. Looking at the provision, it is common cause that the thrust of the provision is to restore the company regardless of whether the company is a party to the proceedings or not. As such, this application is peculiar and different from other suits. Having considered all the above, it is my unfeigned view that both preliminary objections are without merits, and for that reason I overrule them. Coming to the merits of the case, it is undisputed that the respondent company was wound up pending hearing and determination of Civil Appeal No. 282 of 2019 in the Court of Appeal. This exhibits the directors' malicious intention to circumvent the court decision and this court cannot condone such blemished conduct. Given that the applicant is a decree holder against the respondent company, I am inclined to hold that it is in the interest of justice to restore the company. In the upshot, I find merits in this application and consequently allow it along with the following orders; i) It is hereby ordered that the company's name to wit, DFS Express Lines Limited with Certificate of Incorporation No. 78815 be restored into the register of companies. ii) The Registrar of Companies is hereby ordered to do the needful to give effect to the court order. iii) The respondent should bear the costs of this application. It is so ordered. The right to appeal is explained. it } A.A. Mbagwa JUDGE 09/08/2024 9 Court: This ruling has been delivered in the presence of Mr. Leonard Manyama, learned counsel for the applicant, and Ms. Regina Herman, learned counsel for the respondent on this 9th day of August 2024. bagwa JUDGE 09/08/2024 io