MS MIEMBE SABA OIL CO

IN THE HIGH COURT OF TANZANIA (COMMERCIAL DIVISION) AT PAR ES SALAAM MISC. COMMERCIAL APPLICATION NO. 108 OF 2015 (Original Commercial Case No. 52 of 2015) M/S MIEMBE SABA OIL COMPANY LIMITED................................. APPLICANT VERSUS NATIONAL BANK OF COMMERCE LIMITED.................................................1s t RESPONDENT IMMMA ADVOCATES.............................. 2nd RESPONDENT RULING Mansoor, J: Date of Ruling- 26th MAY 2015 The Applicant herein filed an application for temporary injunction restraining the respondents , their agents, workmen or assignees or any other persons working on behalf of the respondents from entering, advertising and/or auctioning the Applicant’s and or guarantors mortgaged properties situate at Plot no. 141, Industrial Area, Kibaha , CT No. 36019, Plot no. 136 Block K Mbezi Area, CT. No 44141, Plot No. 5, Kibaha Area (CT. No. 54453), Farm No. 1768, Kibaha Area (CT No. 54680) and Plots No. 8 and 76 Visiga Area, Kibaha (CT Nos. 59345 and 83285, pending the hearing of the main case, i.e. Commercial Case No. 52 of 2015. The Applicant entered into an agreement with the 1st Respondent for loan and as security for the loan, the Applicant mortgaged the above mentioned properties in favor of the 1st Respondent. The loan was therefore secured by Directors Guarantee of Mr. William Mbowe and a legal mortgage over Miembe Saba Petrol Station, CT No. 54453, Plot No. 5 located at Miembe Saba Kibaha in the name of Leonard William, a Directors Guarantee by Mr. Leonard William supported by a Legal Mortgage over Oryx Pwani Petrol Station, CT No. 36019 on Plot No. 141, Industrial Area Kibaha in the name of Leonard William, Residential Property located at Plot No. 136 Block K Mbezi Beach , Kindondoni Area (CT No. 44141) in the name of Leonard William, Legal Mortgage over plot no. 147 Misugusugu Kibaha under CT No. 59345 and Plots No. 76 Visiga Kibaha under CT No. 83285. 2 The plaintiff/Applicant sometime before the filing o f this suit filed a Commercial Case No. 72 of 2014 which was dismissed for want of prosecution, and this is the second case. The Applicant’s Counsel argues that the cause of action in the dismissed case was different from the present one. I ’m not going to rule on this matter of the dismissed case as that did not arise as an issue in this application. The Applicant mortgaged the suit properties mentioned above in favor o f the defendant/ 1st respondent bank and availed loan. The bank, took steps to bring the suit properties/ the mortgaged properties for sale and accordingly the sale by public auction was to be effected on 27.5.2015. Upon default, the bank officials gave a notice o f default on February 3, 2013, thereafter, the bank appointed Mr. Sadock Magai as Receiver and Manager to sale the mortgaged properties to recover the loan amount which remained unpaid. The Receiver and Manager published in the newspaper inviting bids for the sale of the suit property by public auction. Whereupon the suit was filed seeking the permanent injunctions as aforesaid. The respondents filed a counter affidavit opposing the application and stated that the averments as found set out in the affidavit of Shughudu Mvungi are false and frivolous and intended to delay the recovery measures of the outstanding loan 3 amount by the bank through the appointed Receiver and Manager. The Counsel for the respondents Mr. Nyika said, the applicants admits to have taken the loan and created a mortgage by deposit of title deeds by way of securing the prompt repayment of the said loan amount which as at 30 th April 2015, the amount remained outstanding was THz 5, 134,397,777.99 as at. He said, in as much as there was no discharge of the loan, under Section 127 o f the Land Act, 1999 , the bank took steps and the suit properties were placed under the Receiver and Manager and steps were taken to sell the suit properties, inviting sealed tenders from the public. In a bid to stall such proceedings, the plaintiff/Applicants filed the suit and an application for temporary injunctions stating that since there is a suit pending in Court, i.e. Commercial Case no. 52 o f 2015, the Court must restrain the respondents from effecting the public auction on 27 th May 2015, as in the case they have filed, they have raised serious triable issues as they challenge the legality o f the Notice to Sell the Mortgaged Properties by Public Auction. The Counsel for the Applicant Mr Salehe Njaa contended that the Applicants have met the principles set in the famous case, the case o f Atilio vs. Mbowe (1969) HCD 284. To buttress his arguments he also cited the case of Elizabeth Gikene vs. John Zacharia Gikene Matrimonial Cause No. 5 o f 2004, (unreported) where her 4 Ladyship Madam Judge Oriyo J, said, the condition set in the case o f Atilio vs. Mbowe that there must exist serious issue or irreparable injury, Madam Judge said that the law however does not need tangible proof, and that the object o f a temporary injunction is to maintain status quo pending determination of the issues in the main case. I totally agree with the findings of Madam Judge Uriyo, and am alive to the law that it is now trite that for the purposes of grant of a temporary injunction it is sufficient for the Applicants to prove that there are triable issues that merit judicial consideration. I agree that at this stage there is no requirement for the Applicants to establish a strong prima facie case with a high probability of success, however the Applicant is required to state those facts in the affidavit supporting the application for temporary injunction. I must also emphasize here that there are a number of cases including the cases cited by the Applicant, in which the courts have reiterated the principles upon which a temporary injunction should be granted. It is trite that the purpose o f a temporary injunction is to preserve matters in status quo until questions to be investigated in the suit can be finally disposed of. See A tillio vs. M b o w e (supra). Counsel for the Applicant correctly stated that the above cited cases have set three conditions for grant of an interlocutory injunction as was long been established by Spry VP in the 5 leading case of Geilla v Cassman Brown and. Co. Ltd [1973] EA 358 and the case of Atillio vs. Mbowe. Coming to the present application, having read the parties pleadings and carefully listening to parties submissions, I would say that, Firstly, there is no dispute that the applicant borrowed, and has willingly and without any force or undue influence gave the Legal Mortgage to its various properties as mentioned above, in favor of the Bank as security for the loan. It is not in dispute also that the Applicants was aware of the consequences of default, since it has carefully read the conditions set in the Mortgage Deed, and Guarantees, and voluntarily signed and executed the deeds and the guarantee. Secondly, the Affidavit of Shughudu Mvungi, in support of the Application did not give the particulars of the case which raises a serious triable issues, what is contained therein is an admission that the applicant has taken the loan, it is indeed in default, but the applicant wants this court to intervene and restrain the respondents from selling the mortgaged assets since it has already filed a case in this court. Thirdly, it is vividly clear that the Land Act empowers the bank to take some steps to recover the loan, including the appointment of Receiver and Manager, Section 127 (1) of the Land Act Provides, and I quote: 6 Section 127: Appointment, powers, remuneration and duties of receiver (1) It shall be an implied condition in every mortgage, other than a small mortgage, that the lender shall have the power to appoint a receiver of the income o f the mortgaged land. Under Sub Section 7 of Section 127 of the Land Act, the Receiver is given powers to recover by action all the income of which he was appointed the Receiver for: it provides: (7) The receiver shall have the power to demand and recover all the income o f which he is appointed receiver, by action or otherwise, in the name o f the borrower, and to give effectual receipts for the same. Under Section 131 of the Land Act, the Lender is given power to sell the mortgaged property, it provides: Section 131: Lender's power o f sale (1) Where a borrower is in default o f his obligations under a mortgage and remains in default at the expiry o f the time provided for the rectification of that default in the notice served on him under subsection (1) o f section 125, a lender may exercise his power to sell the mortgaged land. Therefore it deserves to be noted that the said provisions of the Land Act has been enacted with the object of speedy and effective recovery of the secured debt of banks and financial 7 institutions and for that purpose vast and stringent authority is vested with the banks and the financial institutions. However, at the same time, the same law ensures that that there are sufficient checks and balances, the legislature has conferred on the Courts, power and jurisdiction to examine as to whether the measures taken by the secured creditor for enforcement of security have been taken in accordance with the provision of the Land Act or not. After examining the facts and circumstances o f this case and by the affidavit deposed by the parties, I have come to the conclusion that the Applicant have failed to satisfy the conditions for granting of a temporary injunction as set out in the famous case o f Atilio vs. Mbowe (supra), as the affidavit of one Shughudu Mvungi filed in support of the application is silent on whether or not the case filed in this Case contains serious triable issues, and to what extent the applicant shall suffer an irreparable loss if the application for injunction shall not be granted. The affidavit or the submissions o f the applicant’s counsel, did not state or submit on whether or not the steps taken by the bank contravenes the sections o f the Land Act. On the other hand, the bank was able to establish that, in fact, any o f the measures taken by the secured creditor are in accordance with the provisions of the Land Act and the rules made thereunder, and sale of the secured assets by public 8 auction is a step authorized by the law to the secured creditor to recover the loan amount which remains un paid, and that the notice o f default was properly issued and served. The bank was also able to establish that its business would be jeopardized if they will not exercise their powers given under the Mortgage Deed and in the Land Act, as the loan amount outstanding is too big that if not recovered, it will affect its working capital, and their business would stand to suffer, as they will be contravening the Bank of Tanzania Regulations. Again, the Applicant failed to give the particulars o f irreparable damages that they will suffer if injunction order shall not be issued, and the particulars that in case they win the main case the damages that they may suffer from selling o f the mortgaged assests cannot be recovered in monetary terms, or that the damages suffered would not be able to be compensated by way o f damages. The Applicants application therefore lacks merits, the court intervention in this matter is not necessary, in the result, this application is refused and the orders prayed for are not granted. Costs shall be in the main cause. 9 Application for injunction is therefore dismissed with costs. DATED at DAR ES SALAAM this 26th day o f May, 2015 10