national insurance corporation tanzania ltd vs mjb builders hard ware 2008 tzhc 73 6 october 2008

1 IN THE HIGH COURT OF TANZANIA AT PAR ES SALAAM CIVIL APPEAL NO. 84 OF 2006 (Originating from Civii Case No. 114 o f2001 at Kisutu RM's Court before Hon. P.B. Khaday, PRM) NATIONAL INSURANCE CORPORATION (TANZANIA) LIMITED . . . APPELLANT VERSUS MJB BUILDERS & HARD W ARE.......... RESPONDENT Date o f last order - 26/9/2008 ■ Date o fJudgment - 6/10/2008 JUDGMENT Shangwa, J. This is an appeal against the decision of the Court of the Resident Magistrate at Kisutu in Civil Case No. 114 of 2001 delivered on 2nd December, 2005. In its judgment, the said court considered four issues which were framed at the commencement of the trial and gave judgment in favour of the plaintiff now Respondent - M.J.B. Builders & Hardware. The amount which was claimed by the plaintiff is Tshs.9,500,000/=. The four issues which were framed for determination by the trial court are as follows:- 1. Whether the p la in tiff had a valid insurance policy at the time o f the alleged burglary. 2. Whether there was any loss. 3. Whether the p la in tiff com plied with the insurance terms and conditions. 4. What reliefs are the parties entitled to. The above listed issues were all determined in favour of the plaintiff now Respondent. The Appellant National Insurance Corporation (Tanzania) Limited who was the defendant was ordered by the trial court to pay the Respondent half of the amount claimed together with 3 interests. The Appellant was not satisfied with the entire decision of the trial court. Hence this appeal. There are six grounds of appeal that have been raised by the Appellant corporation in its Memorandum of Appeal. They are as follows:- 1. That, the trial court erred in law and in fact in entertaining the su it while it had no valid/prerequisite jurisdiction. 2. That, the trial court erred in law and in fact in holding that the respondent is entitled to h a lf o f the principal amount claimed. 3. That, the trial court erred in law and in fact in holding that the respondent is entitled to indem nification for the purported loss while in fact the 4 respondent failed com pletely to substantiate the loss and the existence in stock o f the goods/item s purported to have been stolen. 4. That, the trial court erred in law and in fact in holding that the respondent is entitled to interest on the indem nification awarded. 5. That, the trial court erred in law and in fact for entertaining the m atter despite the non joinder o f the necessary party to the suit. 6. That, the trial court erred in law and in fact in giving judgm ent in favour o f the respondent as prayed. These grounds were argued by way of written submissions in the following manner:- Grounds 1 & 5 were argued together. Grounds 2, 3 & 4 were also argued together. Ground 6 was argued separately. On grounds 1 & 5, learned counsel for the Appellant C & M Advocates contended that the trial court had no jurisdiction to entertain the suit for two reasons: First, that the Appellant was a Specified Public Authority which was put under the receivership of the Presidential Sector Reform Commission with effect from 12/6/1998 by G.N. NO.330A of 1998. Second, that upon receivership of the Appellant corporation, the Respondent's claims were put under the Bankruptcy Act [Cap. 25 R.E. 2002] and that by virtue of S.97 of the said Act, the court which has jurisdiction in bankruptcy proceedings is the High Court. Furthermore, C & M Advocates contended that as the Appellant was put under receivership of the Presidential 6 Sector Reform Commission, the Respondent had to join the said Commission as a necessary party to the suit after obtaining leave of the High Court to join it. In support of their contention above, they cited High Court Civil Appeal No. 31 of 1999 General Manager National Milling Corporation Vs. K.A.A. Mwaisanila and 26 others (unreported). They finally submitted on this point that as the trial court had no jurisdiction to entertain the suit between the parties, its proceedings are a nullity. They prayed the court to quash them. On the other side, learned counsel for the Respondent Mr. Marando submitted that the first and fifth grounds of appeal raised by the Appellant constituted an abuse of the process of this court. The reason he gave for his submission is that the issue as to whether or not the trial court had jurisdiction to entertain the suit and whether or not the Presidential Sector Reform Commission was supposed to be 7 joined by the Respondent as a necessary party after obtaining leave of the High Court, were not raised before the trial court for consideration and that therefore such issues cannot be raised now on appeal against the judgment of the trial court which was based on evidence. He argued that, the whole submission on the first and fifth grounds of appeal should be dismissed because the issues on which the submission was made by the Appellant were never part of the judgment of the trial court. In support of his argument, he cited Court of Appeal Civil Appeal No. 82 of 2002 Hotel Travertine Ltd and 2 others Vs. National Bank of Commerce Ltd (unreported). In addition to that, Mr. Marando for the Respondent submitted that the suit between the parties did not involve bankruptcy proceedings, and that therefore S.97 of the Bankruptcy Act, Cap. 25 R.E. 2002 which makes provisions for jurisdiction on bankruptcy proceedings is not applicable. 8 Mr. Marando further submitted that S.9 of the Bankruptcy Act which requires leave of the High Court before instituting a suit against a specified public authority and to join the Presidential Sector Reform Commission applies in cases where the debt is provable in Bankruptcy. He referred the court to Commercial Case No. 105 of 2002, Sanyou Service Station Ltd V. BP Tanzania Ltd in which the applicability of S.9 of the Bankruptcy Act was discussed by Kalegeya, J as he then was by holding inter-alia that under S.9 of the Bankruptcy Act, the debts which are envisaged are those in existence at the time the receiving order is made by the court or when the specifying order is made. In elaborating that the suit between the parties did not involve Bankruptcy proceedings, Mr. Marando stated that the debt was a result of the burglary which occurred on 26/11/1998 and that the Appellant was specified on 12/6/1998 when the debt was not in existence. He argued 9 that as the debt was not in existence on the date the Appellant was specified, it is not a debt which is provable in bankruptcy. In rejoinder, learned counsel for the Appellant MS C & M Advocates argued that the issue of jurisdiction can be raised at any stage of the case even at the stage of appeal. In support of their argument, they cited Civil Appeal No. 40 of 2001 Mathias Eusebi Soka and the NICT & 20 Others at page 4 - 5 (unreported). They further argued that the case of Travertine Hotel cited by learned counsel for the Respondent is distinguishable from this case. They said that the issue before this court is the issue of jurisdiction and that in the case of Travertine no issue of jurisdiction arose. Let me remark at this juncture that the first and fifth grounds of appeal argued by counsel for the parties are sufficient to dispose of this appeal. I will therefore not deal 10 with the second, third, fourth and sixth grounds of appeal which have also well been argued by counsel for the parties. The first ground of appeal raises an issue as to whether or not the trial court, namely, the court of the Resident Magistrate at Kisutu had valid jurisdiction to entertain the suit between the parties and the fifth ground of appeal raises an issue as to whether the Respondent was or is supposed to obtain leave of this court to sue the Appellant and whether the Respondent was or is supposed to join the Presidential Sector Reform Commission in its law suit against the Appellant. Before considering the above mentioned issues, I wish to consider first a certain point of law which has been contested by learned counsel for the parties. That is whether the question of jurisdiction can be raised on appeal and whether or not an issue which was not pleaded and was never part of the judgment of the trial court can be 11 entertained on appeal. As to whether the question of jurisdiction can be raised on appeal, the authority in point is Civil Appeal No. 40 of 2001 Mathias Eusebi Soka and the NIC (T) and 20 others (unreported) in which that question was considered by the Court of Appeal. After considering that question, their Lordships, the Justices of Appeal Ramadhani, J.A, Nsekela, J.A. and Kaji, J.A. settled it by holding at page 5 of their typed judgment that the question of jurisdiction can be raised at any stage of proceedings. Therefore, although this question was not raised by the Appellant at the stage of trial, there is nothing wrong in raising it now on appeal. As to whether any matter that was not pleaded before the trial court and does not form the judgment of the trial court can be entertained on appeal, the answer is that if such matter does not concern the jurisdiction of the court, it cannot be entertained on appeal. This question was settled 12 by the Court of Appeal of Tanzania in Civil Appeal No. 82 of 2002 Hotel Travertine Ltd & two others Vs. National Bank of Commerce Ltd (unreported) at page 14 of its typed judgment where it was held that as a matter of general Principle an appellate court cannot allow matters not taken or pleaded in the court below to be raised on appeal. The matter which is now due for consideration is whether the trial court had jurisdiction to try the suit. In order to resolve this matter, one has to look at the nature of the suit between the parties. Before the trial court, the Respondent sued the Appellant to be indemnified for loss of its Industrial cables and other properties which were stolen by burglars from its insured premises at Plot No 381 Mikocheni Medium Density, old Bagamoyo Road, Dar es Salaam which were burgled on 26/11/1998. By then, the Respondent was holding a burglary Insurance Policy No. BN 0053. As already stated, the total amount which was 13 claimed by the Respondent against the Appellant is Tshs.9,500,000/=. The said amount consists of the burglary insurance claim of Tshs.4,880,000/= and general damages of Tshs.4,620,000/= for loss of business. Now, assuming that the Appellant is indebted to the Respondent for the loss of goods alleged to have been suffered by the Respondent through burglary, does the dispute between the parties involve bankruptcy proceedings? It is not in dispute that the Appellant was declared a Specified Public Corporation on 12/6/1998 vide GN No. 330A of 1998 and it was put under the official receivership of the Presidential Sector Reform Commission (PSRC). It is also not in dispute that the reason for putting the Appellant under the official receivership of the said Commission is that it could no longer run its affairs including discharging of its debts because of going bankrupt. 14 In my opinion, as the Appellant corporation was specified on 12/6/1998 and the cause of action arose on 26/11/1998, its debt is a debt provable in bankruptcy. I say so because the debt in issue arose at the time when the Appellant was already bankrupt and under the receivership of the Presidential Sector Reform Commission. I hold therefore that the dispute between the parties involves bankruptcy proceedings. According to law, the major court which has jurisdiction to deal with matters of bankruptcy is the High Court. Therefore, counsel for the Appellant was quite right in their submission by stating that the court which has jurisdiction in bankruptcy matters is the High Court. It was so remarked by E.M. Mushi, J. in Misc. Civil Cause No. 286 of 2002 Rose Mapunda and Another Vs. The National Insurance Corporation Ltd & the Parastatal Sector Reform Commission. 15 The legal provision which confers jurisdiction on the High Court in such matters is S.97 of the Bankruptcy Act. It provides as follows:- "S.97 - The court having jurisdiction in bankruptcy shall be the High Court; save that the Chief Justice may by order delegate a ll or any part o f the jurisdiction of the High Court in bankruptcy to any subordinate court, either generally or for the purpose o f any particular case or class o f cases." In this case, there is no order of the Chief Justice to show that he had delegated the jurisdiction of the High Court in bankruptcy to the Court of the Resident Magistrate at Kisutu which tried the suit between the parties. I hold therefore that the said court did not have jurisdiction to entertain the suit between the parties. 16 The issue which follows for determination now is whether the Respondent was or is supposed to obtain leave of this court to sue the Appellant. The relevant provision is S. 9 (1) of the Bankruptcy Act [Cap. 25 R.E. 2002] which was cited by learned counsel for the Appellant C&M, Advocates. It provides as follows: "S. 9 (1) - on the making o f a receiving order the official receiver shall be thereby constituted receiver o f the property o f the debtor, and thereafter, except as directed by this Act, no creditor to whom the debtor is indebted in respect o f any debt provable in bankruptcy shall have any remedy against the property or person o f the debtor in respect o f the debtor or shall commence any action or other legal proceedings, unless with the leave o f 17 the court and on such terms as the court may im pose." In my view, the words "any debt provable in bankruptcy" which appear in the above quoted provision have a wide denotation. That is to say that the debts that are envisaged in S.9 of the Bankruptcy Act are not only those which are in existence at the time the specifying or receiving order is made just as it was held by Kalegeya, J. as he then was in Commercial Case No. 105 of 2002 Sanyou Service Station Ltd Vs. BP Tanzania Ltd cited by counsel for the Respondent, but they include those debts which a specified Company or Corporation falls into after the receiving order is made as it happens to be the case here. Another point is whether or not the Respondent was or is supposed to join the Presidential Sector Reform Commission in the suit against the Appellant. Generally speaking, after obtaining leave of the court to institute legal 18 proceedings against a Company or Corporation for a debt which is provable in bankruptcy, whomsoever is the official receiver of such Company or Corporation has to be joined in the suit. The authority in point is HC Civil Appeal No. 31 of 1999 General Manager, National Milling Corporation Vs. K.A.A. Mwaisanila and 26 Others in which Mackanja, J held inter-alia that in proceedings against a specified Corporation, the official receiver of such Corporation becomes a necessary party whose joinder the suit will be finally and effectually determined. For the reasons I have given in this judgment, I hereby invalidate the proceedings and judgment of the trial court and allow this appeal. However, under the circumstances of this case, I order that each party should bear its own costs. A. Shangwa JUDGE 6/ 10/2008 19 Delivered in court this 6th day of October, 2008 in the presence of Mr. Marando for the Respondent and in the absence of counsel for the Appellant. * A. Shangwa JUDGE 6/10/2008