NATIONAL CHICKS CORPORATION LTD VS NBC MISC

IN THE HIGH COURT OF TANZANIA (COMMERCIAL DIVISION) AT PAR ES SALAAM MISCELLANEOUS COMMERCIAL CAUSE NO. 115 OF 2015 (Arising from Miscellaneous Commercial Cause No. 36 of 2015 & Commercial Case No. 11 of 2014) A NATIONAL CHICKS CORPORATION LIMITED ISSACK BUGALI MWAMASIKA HAROLD ISSACK MWAMASIKA I ..... APPLICANTS ATUGANILE ISSACK MWAMASIKA INNOCENT ISSACK MWAMASIKA VERSUS NATIONAL BANK OF COMMERCE........................... RESPONDENT 20th & 25th May, 2015 RULING MWAMBEGELE, J.: In the course of arguing preliminary points of objection (henceforth "the PO") in Miscellaneous Commercial Cause No. 36 of 2015 in which the five applicants; National Chicks Corporation Limited, Issack Bugali Mwamasika, Harold Issack Mwamasika, Atuganile Issack Mwamasika and Innocent Issack Mwamasika are seeking injunctive orders against the National Bank of commerce, the respondent therein, Mr. Marando, counsel for the applicants, prayed for maintenance of status quo pending final determination of that application. This court advised the learned counsel to file a formal application in that respect. Heeding to the advice, this application was filed. It has been filed under certificate of urgency. As can be gleaned from the chamber summons, the application seeks for the following orders: 1) That the honourable court may be pleased to order that the advocates for the respondents acting by and through their partner SADOCK DOTTO MAGAI, be restrained from selling in any manner whatsoever, the following properties; i. Plot No. 1028, Block "G" Boko Area, Kinondoni Municipality under Certificate of Title No. 79631; and ii. Farm No. 777 Mbeya and Ndaga Villages, Rungwe District, Certificate of Title No. 7484. Until the final determination of the application filed on 27.02.2015 and that an advertisement be taken out cancelling the present advertisement; and 2) Costs be in the cause. The application is supported by a five paragraph affidavit sworn by Issack B. Mwamasika; the second applicant. It is made under the provisions of section 68 (e) and Order XXXVII rules 1 (a) and 2 (1) of 2 the Civil Procedure Code, Cap. 33 of the Revised Edition, 2002 (henceforth "the CPC"). The application was argued before me on 20.05.2015 during which the applicants, like in Miscellaneous Commercial Cause No. 36 of 2015, were represented by three seasoned lawyers - Mr. Mabere Marando, Mr. Martin Matunda and Mr. Burton Mwakisu; learned advocates. The respondent had the noble services of Ms. Linda Bosco, learned Advocate. This application was argued without the court having an advantage of reading the skeleton written arguments the counsel for the parties ought to have been filed. The reasons are obvious, for the skeleton arguments were not filed due to the nature of this application - it was, as already alluded to above, filed under certificate of urgency it being alleged that the respondent was in the process of alienating the landed properties which are, allegedly, the subject of this application and Miscellaneous Commercial Cause No. 36 of 2015 as well as Commercial Case No. 11 of 2014. Satisfied that the course would not leave justice crying, the court allowed the application to be argued without skeleton written arguments being filed before the oral hearing as required by rule 64 of the High Court (Commercial Division) Procedure Rules, 2012 - GN No. 250 of 2012. 3 It was Mr. Marando, learned counsel, who lead the team of advocates representing the applicants. The learned counsel adopted the contents of the affidavit supporting the application and submitted in support of the application that the application was filed because of an advertisement in several Newspapers, one of them being the Mtanzania tabloid of 30.04.2015 which intends to sell by way of auction landed property; the subject matter of Miscellaneous Commercial Cause No. 36 of 2015 which is still pending in this court. The learned counsel submitted that if the advertisement is put into effect, Miscellaneous Commercial Cause No. 36 of 2015, which is seeking for restraint order against the respondent exercising the remedies under the mortgage, will be rendered nugatory as the substratum of the said application will be destroyed. This is so because in that advert, definite dates for sale of the landed properties are set. Landed property in item xi is set for sale on 27.05.015 while the one in item xii is set for sale on 06.06.2015 which will be before finalization of Miscellaneous Commercial Cause No. 36 of 2015. The learned counsel submitted further that both the present application and Miscellaneous Commercial Cause No. 36 of 2015 stem from Commercial Case No. 11 of 2014 which was struck out. That suit contained a counterclaim and the issue as to whether the said counterclaim was or was not wiped out by the striking out of the main suit to which it was pegged has not been resolved by this court. He clarified that while the defendants (the applicants herein) contend that 4 the counterclaim is still pending in court, the plaintiff (the respondents herein) are holding a contrary position; that the counterclaim ceased to exist when the main suit was struck out. The learned counsel contended further that the respondent, in the counter affidavit opposing this application, is not disputing existence and pendency in this court of Miscellaneous Commercial Cause No. 36 of 2015. What is disputed, he charged, is the pendency of Commercial Case No. 11 of 2014 under the pretext that an appeal has been preferred to the Court of Appeal as a Notice of Appeal has been filed by the respondents herein. He contended further that an appeal is instituted by filing a Notice of Appeal. He also underlined that the subject is landed property which, if auctioned as envisaged by the advert, cannot be atoned by any monetary award as, it being landed property, will be lost forever. He thus prayed that the application be allowed as prayed in the chamber summons. Ms. Bosco, learned counsel for the respondent strenuously opposed the application. She started by stating that the provisions of section 68 (e) and Order XXXVII rule 2 (1) of the CPC under which the application was pegged, do not allow the prayers prayed for by the applicants in that the respondent is not intending to make any sale as it has been provided under those provisions. What the respondent intends to do, 5 she submitted, is exercising its rights under the Mortgage. She clarified that the respondent is not relying on any decree in the intended process. Thus granting an injunction under Order XXXVII rule 1 (a) will be inappropriate, she stated. The learned counsel went on to underline the essence of Order XXXVII rule 1 (a) that it is for preservation of properties that are in danger of being alienated. There is not any suit before this court the subject of which this court is charged to preserve and therefore there are no property to warrant this court to make any restraining orders against. As for the prayer by the applicants to the effect that the advertisement in respect of the properties should be taken out cancelling the same, she charged that this would not be a restraining act but rather a nullifying act which will not be an injunctive order prayed. The respondent being the mortgagee is exercising its right under the mortgage and a notice of default was duly issued by the mortgagee to the applicants according them sixty days within which to pay the outstanding amount and having defaulted to heed to the notice, the respondent made the advertisement to sale the mortgaged properties. She cited National Bank o f Commerce Vs Dar es Salaam Education and Office Stationary [1995] TLR 22 to buttress the proposition that the court cannot interfere when the mortgagee is exercising its rights under the mortgage unless there is fraud, corruption or collusion. 6 On the pendency in this court of the counterclaim, the learned counsel submitted that the main suit - Commercial Case No 11 of 2014 - having been struck out, the defendants' counterclaim was never saved; and that there was no order by the court to that effect. In the premises, she stated, the pendency of Miscellaneous Commercial Cause No. 36 of 2015 in this court has nothing to do with the process they are pursuing. On the question of the Notice of Appeal filed in respect of Commercial Case No. 11 of 2014, the learned counsel submitted that that act did not bar them from exercising their rights under the Mortgage Deed. She added that once their rights are exercised, the Notice of Appeal will be overtaken by events. She added that if this application is refused, Miscellaneous Commercial Cause No 36 of 2015 cannot be rendered nugatory as submitted by the counsel for the applicants because the properties intended to be auctioned are not the subject of the application. Neither will the applicants suffer. If anything, she submitted, it is the respondent who will suffer because it will not be able to recoup the outstanding loan money and thus the ability to lend moneys to other prospective borrowers will be impeded. She therefore prayed for dismissal of this application. Perhaps noting the missiles unleashed by Ms. Bosco, learned counsel for the respondents, Mr. Marando and Mr. Matunda, learned counsel for the applicants, joined forces to rejoin. It was Mr. Marando who rejoined first. He submitted that Order XXXVII rule 1 (a) is very clear that it 7 does apply only when seeking a restraint order to restrain a process of execution. There are several instances that are covered by the rule and the present instance is covered by the phrase "alienated by any party to a su it" in that rule, he stressed. As to whether the counterclaim was saved or not saved when Commercial Case No. 11 of 2014 was struck out is the subject of Miscellaneous Commercial Cause No. 36 of 2015 which is still pending in this court. On the sale of the mortgaged landed property having to do with the present application, the learned counsel reiterated that a party has a right to exercise the rights under the mortgage without coming to court; that is as the tenor and import of sections 126 and 127 of the Land Act Cap. 113, of the Revised Edition, 2002. However, once the mortgagee decides to seek recourse in a court of law over the mortgage, he is precluded from exercising the rights under the mortgage while that process is still pending in court. He added that the fact that the respondent filed the Notice of Appeal and has gone back to exercise their remedies under the mortgage under the pretext that the said notice will be overtaken by events once that process is done, is an abuse of process, unfair and creates anarchy. Joining forces, Mr. Matunda rejoined that the properties sought to be protected by the injunctive orders are the subject matter of the counterclaim in Commercial Case No. 11 of 2014. He reiterated that the respondent has no right to exercise its rights under the mortgage at this stage. On whether the advert can be cancelled, the learned counsel submitted that the provisions of section 68 (e) of the CPC under which 8 the application was, inter alia, made allows that course. He thus prayed that the advert be taken out of the public domain by publishing another advert to cancel it. With regard to the National Bank of Commence case relied upon by the learned counsel for the respondent, he stated that fraud is alleged in the counterclaim in Commercial Case No. 11 of 2014 and thus this court can intercede. On the question of whether there is a pending appeal in respect of Commercial Case No. 11 of 2014, Mr. Matunda relied on Aero Helicopter (T) Ltd Vs Jansen [1990] TLR 142 to reinforce the proposition that a Notice of Appeal institutes an appeal. The learned counsel added that the applicant will suffer a great loss if the injunctive orders are not given and that the respondent will benefit if the project envisaged by the loan money is completed. In the premises, he prayed that the application should be granted so that the respondent is secured now and in the future. I have subjected the rival arguments of the learned counsel for the parties to this application. In deciding the present application, I will try, as much as I can, to avoid deciding on Miscellaneous Commercial Cause No. 36 of 2015 and Commercial Case No. 11 of 2014 as some of the arguments in the present application seem to overlap with or cross over to those matters. It is no wonder, therefore, the counsel for the parties have, most of the times, been arguing as if they are arguing Miscellaneous Commercial Cause No. 36 of 2015. As already alluded to 9 at the beginning of this ruling, the present application was triggered by Mr. Marando's to the effect that there should be maintenance of status quo and he showed the court the contents of the advert which is the subject of complaint in the present application. The court advised that a formal application to that effect; that is, for maintenance of status quo be filed hence the present application. In this application, as can be deciphered from the chamber summons, I am called upon by the applicants to restrain the advocates for the respondent, acting through their Partner, one Sadock Dotto Magai, from selling in any manner whatsoever landed property designated as Plot No. 1028 Block "G" Boko Area within the Kinondoni Municipality in Dar es Salaam under CT No. 79631 and Farm No. 777 Mbeye and Ndaga Villages in Rungwe District under CT No. 7484 as advertised in, inter alia, the Mtanzania Newspaper of 30.04.2015 until final determination of Miscellaneous Commercial Cause No. 36 of 2015. In effect, the prayers in the present application and the ones in Miscellaneous Commercial Cause No. 36 of 2015 are somewhat seeking for the same reliefs except that the reliefs in the present application are sought pending final determination of Miscellaneous Commercial Cause No. 36 of 2015 while the reliefs in Miscellaneous Commercial Cause No. 36 of 2015 are sought pending the final determination of Commercial Case No. 11 of 2014. io Most of the arguments raised in the present application are the subject of discussion and decision in Miscellaneous Commercial Cause No. 36 of 2015. In the premises, I will refrain from addressing some of the arguments raised by the learned advocates in this application, for, taking that course may preempt the decision on Miscellaneous Commercial Cause No. 36 of 2015. I will not delve into arguments like: the counterclaim was or was not saved when Commercial Case No. 11 of 2014 was struck out, the respondent has a right to exercise its rights under the mortgage and hence should not be interfered in that process, that there is or there is not any appeal pending after the filing of the Notice of Appeal by the respondent, that there is not property that this court can protect, et cetera, for the simple reason that these issues are the subject of Miscellaneous Commercial Cause No. 36 of 2015 and some of them will be answered on 28.05.2015, the date on which a ruling on the PO raised by the respondent herein is slated to be delivered. I will direct myself to the gist of the present application which essentially is to protect the properties mentioned in the advert complained of. Thus the basic question which this ruling should answer is whether if this application is not granted, Miscellaneous Commercial Cause No. 36 of 2015 will be rendered nugatory. I narrow down this ruling to answer this question only. The crux of the matter in Miscellaneous Commercial Cause No. 36 of 2015, as can be gleaned in the chamber summons in that application, is a prayer to restrain the respondents herein from exercising their rights ii under the mortgage particularly alienating and or putting under receivership the mortgaged properties the subject of Commercial Case No. 11 of 2014. For easy reference, let the prayers in that chamber summons paint the picture. The two prayers are couched thus: "(a) That the National Bank of Commerce, the Respondent, its servants, workmen or agents in whatever capacity may be temporarily restrained from exercising any of its right under the mortgages of properties known as Plot No. 1028 Block "G" Boko Area, Kinondoni C.T No. 79631, L.O. No. 281869 and Farm No. 777 Mbeya Ndaga Village, Rungwe, C.T No. 7484 - MBYLR L.O No. 178933, until the final determination of Commercial Case No 11 of 2014. (b) That the National Bank of Commerce, the Respondent, its servants, workmen or agents in whatever description be temporarily restrained from effecting receivership and taking possession of and exercising all or any powers conferred upon receivers in respect of the mortgaged properties hereinabove mentioned, until the final determination of Commercial Case No 11 of 2014. 12 (c) N/A" And the prayers in this application quoted at the beginning of this ruling but find it apposite to repeat at this stage are: "1. That the honourable court may be pleased to order that the advocates for the respondents acting by and through their partner SADOCK DOTTO MAGAI, be restrained from selling in any manner whatsoever, the following properties; i. Plot No. 1028, Block "G" Boko Area, Kinondoni Municipality under Certificate of Title No. 79631; and ii. Farm No. 777 Mbeya and Ndaga Villages, Rungwe District, Certificate of Title No. 7484. Until the final determination of the application filed on 27.02.2015 and that an advertisement be taken out cancelling the present advertisement; and 2. N/A" And the advertisement complained of by the applicants, which was appended with the affidavit supporting the present application, is an 13 advert by Sadock Dotto Magai of IMMMA Advocates titled "PUBLIC AUCTION OF MORTGAGED PROPERTIES". In that advert a total of 23 mortgaged properties intended to be sold by the public auction have been listed and in items xi and xii the mortgaged properties are: "xi) PLOT NO. 1028, BLOCK "G " BOKO AREA, KINONDONI MUNICIPALITY, Certificate of Title No. 79631 ... [and] xii) FARM NO. 777 MBEYE AND NDAGA VILLAGES, RUNGWE DISTRICT, Certificate of Title No. 7484 MBYLR ..." Juxtaposing the three quotations above; that is, the prayers in the two applications as well as the advertisement complained of, it is not difficult to realize that their hallmark is the landed properties described as Plot No. 1028 Block "G" Boko Area, Kinondoni Municipality under Certificate of Title No. 79631 and Farm No. 777 Mbeye and Ndaga Villages, Rungwe District under Certificate of Title No. 7484. Thus if this application is not granted and the auction of the properties under reference proceeds as scheduled, Miscellaneous Commercial Cause No. 36 of 2015 will, as rightly submitted by Mr. Marando, be rendered nugatory. There is a preliminary objection raised in the application - Miscellaneous Commercial Cause No. 36 of 2015 - to the effect that despite the fact that the suit - Commercial Case No. 11 of 14 2014 - was struck out, the application had no legs on which to stand in this court. The ruling in respect of that PO is slated for pronouncement on 28.05.2015; just three days ahead. Depending on the outcome of that ruling, the application will either terminate on that date (if the PO is sustained) or disposed in few days thereafter (if the PO is overruled). There is no need to hurry, lest justice buried in that process. Now supposing I decide to refuse this application today and the mortgaged properties under items xi and xii of the advertisement are auctioned, what will be the value of that application? In my view, hat application will be worthless; if anything, its value will be worth the paper on which it is written. As rightly pointed out by Mr. Marando, learned counsel for the applicants, once alienated, the mortgaged properties under discussion may not be able to revert to the applicants. It is my well considered view that the applicants have made out a case warranting this court to exercise its discretion in their favour. In all fairness, I think justice will triumph if the process of auctioning the mortgaged property is temporarily stayed pending the determination of the application which seeks to preserve them. I find no cogent reasons why that endeavour by the applicants should be frustrated by rendering it nugatory in case of success. I find myself ready to buy the learned advocates for the applicants' argument to the effect that if this application is not granted, 15 Miscellaneous Commercial Cause No. 36 of 2015 will be but nugatory. For this reason, I would grant this application. In the upshot, I order that the advocates for the respondents acting by and through their partner Sadock Dotto Magai, are restrained from selling in any manner whatsoever, the properties on Plot No. 1028, Block "G" Boko Area, Kinondoni Municipality under Certificate of Title No. 79631; and Farm No. 777 Mbeye and Ndaga Villages, Rungwe District, Certificate of Title No. 7484 until the final determination of the Miscellaneous Commercial Cause No. 36 of 2015 and, of course, subject to the prevailing laws on temporary injunctions. This application is therefore allowed to that extent. Costs will be in the cause. Order accordingly. DATED at DAR ES SALAAM this 25th day of May, 2015. J. C. M. MWAMBEGELE JUDGE 16