NBC LTD VS EDINA JOHN MGENI VS COMM CASE NO

IN THE HIGH COURT OF TANZANIA (COMMERCIAL DIVISION) AT DAR ES SALAAM COMMERCIAL CASE NO. 90 OF 2013 NATIONAL BANK OF COMMERCE LIMITED ......................... PLAINTIFF VERSUS EDINA JOHN MGENI alias JESCA DINAH JOHN ......... DEFENDANT AND COUNTER CLAIM JESCA DINAH JOHN .................... PLAINTIFF VERSUS NATIONAL BANK OF COMMERCE LIMITED ................ 1st DEFENDANT MBEYA CEMENT COMPANY LIMITED ................ 2nd DEFENDANT JUDGMENT Date of the Last Order: 19/07/2018 Date of the Judgment 23/07/2018 SEHEL, J. The Plaintiff advanced a loan facility of Tshs. 63,000,000 dated 15th October, 2009 to the defendant. The loan facility was to be 1 repaid within a period of 36 months. Further by way of an overdraft facility letter dated 14th January, 2010, the plaintiff granted the defendant an overdraft of Tshs. 150,000,000 for a period between 14th November, 2010 up to 31st October, 2011. It is alleged by the Plaintiff that an overdraft facility acknowledged an amount of Tshs. 52,352,026 being existing or remaining balance of the term loan facility from the loan agreement dated 15th October, 2009. The term loan facility was to be changed an interest of 24% per annum and interest was to be charged every month on the outstanding amount. A further penalty of 5% interest per annum was to be charged on the excess balance if the loan is in arrears or expired. Overdraft and Term Loan facility were secured by legal mortgage over landed properties in certificate of Title No. 78278, Plot No. 2027 Block Y Mbagala Maji-Matitu Area, Temeke Municipality, Dar es Salaam; chattel mortgage over a Motor Vehicle; and credit life insurance policy cover against the risk of death and permanent disability. 2 The Plaintiff claims that the defendant took and utilized the term loan and overdraft facilities which together with accrued interest were to be repaid in full by the defendant on or before 31st October, 2012. In breach of the term loan and overdraft facilities, the defendant defaulted in repaying the facilities as a result the sum of Tshs. 203,198,486.36 stood outstanding as at 19th October, 2012. Following such a default a 60 days Notice of default was sent to the defendant on 19th October, 2012 through a registered mail. The defendant failed to pay the outstanding balance, hence the present suit was filed, claiming for;- (1) Payment of Tshs. 203, 198,486.36 being the outstanding amount on account of the term loan and overdraft facilities as at 19th October, 2012; (2) Payment of Commercial interest on Tshs. 203,198,486.36 at a rate of 24% per annum from the date it was due to the date of judgment; and 3 (3) Payment of interest on the decretal sum at the court's rate from the date of judgment until the loan is paid in full; and/or (4) Declaration that the defendant is in breach of the loan agreement and bank overdraft facility as constituted under loan agreement/term loan facility and overdraft facility letter dated 15th October, 2009 and 4th November, 2010 respectively thus the plaintiff is entitled to realize the mortgage under landed properties in Certificate of Title No. 78278, Plot No. 2027 Block *Y’ Mbagala Maji-Matitu Area, temeke Municipality, Dar es Salaam; (5) Costs of the suit; and (6) Any other order (s) and relief(s) may this court deem it and just to grant. The defendant filed a written statement of defence and counter claimed against National Bank of Commerce Limited (1st Defendant to the counter claim) and Mbeya Cement Company Limited (2nd Defendant to the counter claim). The 4 defendant in her written statement of defence agreed to have taken the loan and the overdraft facilities aiming at getting funds to inject in her cement business with the 2nd defendant to the counter claim. In her counter claim she says she came to learn that goods that were released to her did not match the payments that were made by her through the 1st defendant to the counter claim to be transferred to the 2nd defendant to the counter claim. She alleges that she called upon the 2nd defendant to the counter claim to make conciliation of accounts and at all occasions the 2nd defendant's officials did not cooperate as such she had to request the 1st defendant to the counter claim to supply her with her bank statements. She said upon perusal of the bank statements she discovered that a total sum of Tshs. 451,794,027.35 were overpaid to the 2nd defendant and Tshs. 580,397,800 were deposited to the 2nd defendant’s bank but denied by the 2nd Defendant to have been received as such she claims for payment of Tshs. 1,081,977,884.72, interest on the principal sum; general 5 damages not in excess, of Tshs. 400,000,000; and costs of the suit. The 1st defendant to the counter claim denied to be a party in the transactions between the plaintiff and 2nd defendant to the counter claim and that any money transferred to the 2nd defendant was done under the instructions of the Plaintiff. The 2nd defendant to the counter claim in her defence disputed all the allegations and stated that the modality of doing business does not allow and/or give room for client to accumulate a colossal amount of monies neither does the audited accounts for the alleged period portrays such a balance. At the hearing of the suit the following issues were framed for the main suit;- (1) Whether the defendant is indebted to the plaintiff. 6 (2) If issue numbers one is answered affirmatively, what amount is outstanding. (3) What reliefs are the parties entitled to. For the counter claim the following five issues were framed:- (1) Whether the Plaintiff in the counter claim deposited money to the 1st defendant for on ward payment to the 2nd defendant. (2) If issue No. 1 is in affirmative, whether the 1st defendant in the counter claim failed to transfer the said amount to the 2nd defendant. (3) Whether the Plaintiff in the counter claim has any claim against the 2nd defendant. (4) Whether there was any overpayment made by the Plaintiff in the counter claim to the 2nd defendant in years 2006 and 2010. (5) What reliefs are parties entitled. 7 The trial for the main suit and counter claim were done separately as such I will start to determine the main suit then the counter claim. (1) Whether the defendant is indebted to the plaintiff if the answer is in affirmative, what amount is outstanding. It is not disputed that the plaintiff had advanced a loan dated 15th October, 2009 of an amount of Tshs. 63,000,000 and an overdraft facility dated 4th November, 2010 of an amount of Tshs. 150,000,000. It is not in dispute that as security of the facilities, the defendant created a legal mortgage over certificate of title number 78278, Plot No. 2027 Block Y Mbagala Maji - Matitu Area, Temeke Municipality, Dar es Salaam guaranteeing full payment of the term loan and overdraft facility and a further security was created over chattel mortgage on Motor Vehicle with Registration No. T 384 BBY Make Scania Model R113, Body Type Truck, Class Heavy Load Vehicle, year of manufacture 2006 with chasis No. 04359976. Allan Mara (PW1) testified that the defendant has not fully paid the loan advanced to it by the Plaintiff and that as of 19th October, 2012 an outstanding sum of Tshs. 203,198,146.36 remained unpaid and owing from the defendant to the Plaintiff. PW1 tendered a loan agreement dated 15th October, 2009 as Exhibit P2; a legal mortgage as Exhibit P3; a chattel mortgage as Exhibit P6; and a defendant’s bank statement in respect of account number 018101007357 as Exhibit P4. The defendant in her written statement of defence, witness statement, cross examination and final submission does not dispute that she is indebted to the Plaintiff. On the basis of the evidence available on record I find that the plaintiff has proved her case on the balance of probabilities that she advanced a loan of Tshs. 63,000,000 as evidenced by exhibit Pl; overdraft facility of Tshs. 150,000,000 as evidenced by exhibit P2. According to exhibit P4 the amount outstanding as at 19th October, 2012 is Tshs. 203,198,486.36 which amount is not disputed by the defendant. Consequently, I find that the defendant is indebted by the plaintiff to the tune of Tshs. 203,198,146.36 as at 19th October, 9 2012. Issues number 1 and 2 are therefore answered in the affirmative. What relief(s) are parties entitled to? The Plaintiff submitted that since there is an admission on the part of the defendant then the plaintiff is entitled to the prayers made in the plaint with costs and that the Plaintiff is entitled to enforce all securities executed by the defendant in repayment of the outstanding loan and overdraft facilities. The defendant on her part submitted that the amount owed and outstanding be offset from the counter claim where she itemized deposits she made by cheque in favour of the 2nd defendant to the counter claim which amount are alleged not to be received by the 2nd defendant to the counter claim. This issue then takes me to the counter claim. Whether the plaintiff in the counter claim deposited money to the 1st defendant to the counter claim for onward payment to the 2nd defendant to the counter claim. io . It is not disputed that the Plaintiff to the counter claim and 2nd defendant to the counter claim are customers of the 1st defendant to the counter claim. It is also not in dispute that the plaintiff to the counter claim is a customer of the 2nd defendant to the counter claim for over a period of six years and that she had all along been purchasing cement from the 2nd defendant to the counter claim for depots at Makambako; Dodoma; and Dar es Salaam. It is on record through the testimony of Edna John (DWC1) and Exhibit P8 to the main suit and exhibit PCI to the counter claim that payments of goods were being effected through cheques drawn by the plaintiff in favour of the 2nd defendant and 1st defendant make a transfer of funds from the plaintiff’s account to the 2nd defendants account No. 016103000050. From the above evidence, it is evident that the money which are held at the 1st defendant’s bank are released to the 2nd defendant’s account after a request is made by the plaintiff through cheques. ii It is a general contractual banking principle between the bank and her customer that whenever a customer authorises the bank to make payment, the bank has a duty to honour the duly authorized instructions with reasonable care and skills. In this matter, we are told and it is on record through Exhibits 1st DC1; and PCI and the testimonies of PWC1 and DWC1 that monies deposited by the Plaintiff in her account were transferred to the 2nd defendant’s account by the 1st defendant upon request made by the plaintiff through cheque. For instances, entries of 20th November, 2006 in exhibit DC 1 shows that an amount of Tshs. 11,880,000/= was paid to the 2nd defendant by the plaintiff through cheque number 562. The first issue is therefore answered in the affirmative in that monies deposited by the plaintiff in her account were being transferred to the 2nd defendant by the 1st defendant after authorization is given by the plaintiff. The second issue, that is, whether the 1st defendant to the counter claim failed to transfer the amount to the 2nd defendant is also answered in the affirmative because throughout the testimony 12 of PWC1, it is established that monies were deposited to the 2nd defendant’s account. This fact is further proved by Exhibits DC1; PCI ; and PC3 which show that there are entries made in favour of the 2nd defendant. I now turn to issues number three and four because they are entertwined. The plaintiff through the testimony of PWC1 and exhibits PCI; DC1; and PC3 proved that payments were made in favour of the 2nd defendant but 2nd defendant denied to have received the monies. PWC1 itemized the entries with cheques made in favour of the 2nd defendant. These are: Date Cheque NBC/Code Amount Payee No. 7f6WM> 409 33 11,000,000/= Mbeya cement Co. Ltd 8/6/2006 453 33 1,350,000/= Mbeya cement Co. Ltd 9/8/2006 458 33 5,400,000/= Mbeya Cement 13 Co. Ltd 13/6/2006 559 33 4,800,000 Mbeya Cement Co. Ltd 13/6/2006 499 33 14,400,000 Mbeya Cement Co. Ltd 17/8/2006 765 Stan 8,500,000 Mbeya Cement Charted Co. Ltd 1/9/2006 457 33 5,160,000 Mbeya Cement Co. Ltd 6/9/2006 468 33 8,140,000 Mbeya Cement Co. Ltd 5/10/2006 526 18 2,700,000 Mbeya Cement Co. Ltd 7/11/2006 554 33 5,940,000 Mbeya Cement Co. Ltd 13/11/2006 560 33 7,740,000 Mbeya Cement Co. Ltd 20/11/2006 562 33 11,880,000 Mbeya Cement 14 Co. Ltd 27/11/2006 572 33 30,080,00 Mbeya Cement Co. Ltd 28/11/2006 779 33 18,004,800 Mbeya Cement Co. Ltd 9/12/2006 773 33 24,064,000 Mbeya Cement Co. Ltd 4/3/2007 668 33 92,590,000 Mbeya Cement Co. Ltd 30/3/2007 669 33 12,608,000 Mbeya Cement Co. Ltd 4/6/2007 722 Stan 10,500,000 Mbeya Cement Charted Co. Ltd 21/8/2007 764 Stan 6,500,000 Mbeya Cement Charted Co. Ltd 9/6/2007 725 33 60,000,000 Mbeya Cement Co. Ltd 3/9/2007 788 Stan 10,500,000 Mbeya Cement 15 Charted Co. Ltd 24/9/2007 783 Stan 30,500,000 Mbeya Cement charted Co. Ltd 31/9/2007 770 Stan 10,200,000 Mbeya Cement charted Co. Ltd 16/5/2008 1007 54 5,246,000 Mbeya Cement Co. Ltd 28/3/2008 864 33 40,960,000 Mbeya Cement Co. Ltd 13/12/2008 979 33 65,000,000 Mbeya Cement Co. Ltd 4/12/2009 1171 54 2,000,000 Mbeya Cement Co. Ltd 6/12/2009 977 33 50,000,000 Mbeya Cement Co. Ltd 3/12/2009 1167 54 2,080,000 Mbeya Cement Co. Ltd 28/3/2010 1273 54 3,300,000 Mbeya Cement 15 Co. Ltd 6/11/2010 Cash Stanbic 6,385,000 Mbeya Cement Bank Co. Ltd 3/7/2010 1262 54 5,830,000 Mbeya Cement Co. Ltd 7/8/2010 1280 54 7,040,000 Mbeya Cement Co. Ltd TOTAL 580,397,800 PWC1 further tendered Exhibit PC4 prepared by herself which shows overpayments were made to the 2nd defendant. The 2nd defendant failed to cause its witness to attend for cross examination as it did not know the whereabouts of its witness after the witness left the offices of the 2nd defendant. In that regard pursuant to Rule 56(2) of the High Court (Commercial Division) Procedure Rules GN 250 of 2012 (hereinafter referred to as "the Rules"), the witness statement of Davis Tery was admitted on 15th December, 2017 to form part of DWC2’s testimony in chief but with 17 lesser weight to be attached as provided under Rule 56(3) of the Rules. It was stated by DWC2 that the Plaintiff has been their customer since year 2006 and she has been purchasing cement either on cash or credit line basis. It is further stated that payments were done either in cash or by cheque in favour of the 2nd defendant. DWC2 denied to have been over paid any amount and he said the reconciliation done 19th March, 2010 revealed that the plaintiff owed the 2nd defendant the total sum of Tshs. 33,040,000/= out of which Tshs. 24,080,000/= was not disputed and Tshs. 8,960,000/= was disputed. It is a principle of law that “He who alleges must prove" enshrined in Section 110(1) and (2) of the Evidence Act, Cap. 6. In the case of Rock Beach Hotel Limited Vs Tanzania Revenue Authority, Civil Application No. 52 of 2008 (unreported-CAT) it was stated:- " We are mindful of the provisions of Section 110 of Evidence Act, Cap. 6 RE 2002 which places the burden of 18 of proof on him who alleged by stating inter alia:-110(1) whoever desires any Court to give judgment as to any legal right or liability depend on the existence of facts which he asserts must prove that those fact exist; (2) When a person is bound to prove the existence of any fact, it is said that the burden of proof lies on that person.” In the matter at hand I have held that amounts of monies as per Exhibits PCI; DC1 and PC3 were deposited to the 2nd defendant. It is on evidence that the monies paid to the 2nd defendant is for purchase of cement. This is clearly stated by PWC1 and collaborated by DWC2. It is alleged by the Plaintiff that there was overpayments of Tshs. 451,794,027.35 and in trying to prove this allegation of overpayment the plaintiff through PWC1 tendered exhibit PC4 which is a reconciliation statement made by PWC1. Unfortunately, the reconciliation statement is not attached with any invoice, delivery note and payment voucher for the court to be able to ascertain as 19 to what was supplied and what was not supplied to the plaintiff such that there could have been overpayment. Further the plaintiff failed to prove by way of documentary evidence that the 2nd defendant failed to supply cement in respect of monies deposited in the 2nd defendant’s account. Therefore Exhibit PC4 is not conclusive evidence for this court to hold that either there was overpayments made to the 2nd defendant or the 2nd defendant failed to supply the cement ordered by the Plaintiff. Consequently, issues number three and four are answered in the negative. Lastly is the issue of reliefs that parties are entitled to. I have shown herein that for the counter claim, the 1st defendant effected payments to the 2nd defendant upon obtaining instructions from the Plaintiff as such the payments made to the 2nd defendant had nothing to do with the relationship that existed between the plaintiff and 2nd defendant. The relationship between the Plaintiff and 1st defendant was a banking fiduciary relationship where the bank has obligation to make payments to any person upon receipt of duly instructions from the customer. Therefore the Plaintiff has no claim whatsoever against the 1st defendant. For the main suit, it is proved and admitted the defendant is indebted to the plaintiff. As regards, to the 2nd defendant, I have shown herein that the plaintiff failed to prove her case against the 2nd defendant. Therefore the only relief available is for the counter claim to be dismissed with costs. In the end, judgment and decree is hereby entered in the main suit against the defendant, Edina John Mgeni alias Jesca D. John in favour of the National Bank of Commerce, the plaintiff as follows:- (1) Defendant to pay the plaintiff Tshs. 203,198,486.36 being outstanding amount on the loan and overdraft facility as at 19th October, 2012; (2) Defendant to pay the Plaintiff interest on Tshs. 203,198,486.36 at the contractual rate of 24% per annum from 19th October, 2012 to the date of judgment; 21 (3) Defendant to pay the Plaintiff interest on decretal amount at a court’s rate of 7% per annum from the date of judgment till full satisfaction; and (4) Defendant to pay plaintiff costs of the suit which shall be taxed. The counter claim is dismissed with costs. It is so ordered. Dated at Dar es Salaam this 23rd day of July, 2018. B.M.A Sehel JUDGE 23rd day of July, 2018 22