Chef v NTS winding up

1 IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA COMMERCIAL DIVISION AT DAR ES SALAAM MISC. COMMERCIAL CAUSE NO. 20 OF 2023 THE CHEF LIMITED.……………………………………………………… PETITIONER VERSUS NTS-MART TANZANIA LIMITED………………................................ RESPONDENT RULING June 10th, 2024 & July 26th, 2024 Morris, J Life of a corporate person is born through incorporation and normally ends by winding up. This application is preferred by The Chef Limited for the latter process. She moves this Court to order winding up of NTS-Mart Tanzania Limited; appoint a liquidator for such exercise; and grant any other discretionary reliefs. The affidavit of Salim Mahsein Al-Amry supports the verifies and supports the petition. The deponent is the Director of the Petitioner. Other credentials attached to the petition include copies of the respondent’s certificate of incorporation; Memorandum and articles of Association (MEMARTS); business licences; audited financial statements; 2 and board resolution. However, no document in opposition of the application was filed. Briefly, the petitioner is one of the deuce contributors to and shareholders in NTS-Mart Tanzania Limited (elsewhere, NTS). The other shareholder is Guangzhou Nantian Sources Company Limited (Guangzhou). NTS was incorporated on December 17th, 2014 under certificate of incorporation No. 113864. Amongst her principal objects was dealing in importation and selling of both hospitality and household supplies. Among the grounds advanced for winding up of NTS are that the company closed and ceased to do business effective mid-2022; it retains no viable financial means to honour obligations as may arise from time to time; and that the petitioner’s co-shareholder in NTS is unwilling to further carry on the objective for which the subject company was established. After the filing of the petition, the Court ordered the petitioner to serve the petition to the respondent and advertise it in terms of Rule 99(1) of the Companies (Insolvency Rules), 2004; GN No. 43/2005 [the Rules] and comply with statutory requisites under Rule 102 of the Rules. The petitioner complied accordingly. For the hearing of this matter, the petitioner had 3 Advocate Tazan Keneth Mwaiteleke. As intimated above, the respondent did not appear or file any document in opposition. Consequently, I granted leave to Mr. Mwaiteleke to present written submissions in lieu of oral hearing. The petitioner prayed to adopt contents of the petition and stated further that this matter was filed under sections 275, 279(1), (e) and 294 of the Companies Act, Cap 212 R.E. 2002 (the Act); together with Rules 95(1), 99 and 100(1) of the Rules. He reiterated that the petitioner was allotted and paid for 1430 shares in NTS (annexure NTS-3) which allotment accords her the necessary locus standi in this application. Mr. Mwaiteleke also argued that after complying with the provision of the Act and the Rules; and advancing sound grounds for winding up, the petitioner could legally pray for the reliefs sought herein. Reference was further made to Pamela Essau Shayo v Unity School Ltd and 9 Others, Civil Case No. 20 of 2017; Alizara Mohamed Rawji v CSS Solution, Misc. Civil Cause No. 353 of 2021; and Shell Tanzania Limited v Scandinavian Express Services Limited, Misc. Commercial Case No. 36 of 2005 (all unreported). In addition, it was averred that the co-shareholder in NTS registered her disinterest in the affairs of NTS any more. Such position has too been 4 demonstrated by her irresponsiveness to the court summons after due service to her. The Court is thus, satisfied that the petitioner has exhibited the inability of NTS to continue with her existence in this country. I also took liberty to go through the annexures attached to the petition in order to establish the nexus between the grounds in the petition and the presented evidence. The said documents are the MEMARTS (annexure NTS- 2); Financial Statements/Audited Accounts for 2020, 2021 and 2022 (annexure NTS-5); and NTS Letter to TRA (annexure NTS-7). It is evident therefrom that NTS not only ceased to operate business for a considerable time but also, she is at the verge of creating financial and allied liabilities which are incapable of being remedied in the future. According to section 279 of the Act, the Court may wind up a company after satisfying itself through evidence inter alia that, such company suspends its business for at least one (1) year; or it is unable to pay its debts; or circumstances dictate that the company should be wound up in the interest of justice and equity. It is also trite law that un-opposed petition for winding up warrants the Court to allow it. 5 In line with the foregoing, see for instance, Re Bazizane Company Limited, Misc. Civ. Cause No. 224 of 2020; Re Sibatanza Limited, Misc. Comm. Cause No.42/2022; Re Alfa Match Industries Limited, Misc. Civ. Cause No. 292 of 2023; and Re Marlink Tanzania Limited, Misc. Civ. Appl. No. 208 of 2023 (all unreported). The above analysis having been made-and-done; the present application is found to meet the principal statutory conditions for this Court to exercise its powers in favour of the petitioner in so far as winding up order is concern. However, the winding up order does not take effect in isolation. The law requires that there must be appointed a person to liquidate the company being wound up. In the present application, the petitioner has also prayed for the Court to appoint such person under section 294 of the Act. Reading such provision, it is clear that the Court is mandated to appoint a liquidator to perform the duties of winding up the company. The foregoing powers notwithstanding, such person should be proposed to the Court by the petitioner and/or parties to the winding up proceedings. In my view, such approach is to give parties an opportunity of 6 vetting the proposed person and to allow the court to be objective by appointing a person not of its own; where circumstances of the case do not warrant otherwise. That position is also in line with the Act; Peter C. Pereira and Gerald P. Pereira v Isle of Germs, Misc. Civil Cause No. 16 of 2019 (unreported); and Re Alfa Match Industries Limited(supra). The philosophy behind the above system is not far to fetch. Among the effects of the winding up order, is that the company’s officers to retain no power to anymore carry on the business of the company afterwards. The liquidator takes over control of the company forthwith. In the absence of such person, the liquidation process will not commence. That is, to order winding up of the company without appointing the liquidator is identical to the Court granting the probate or letters of administration without a corresponding executor or administrator of the deceased estate. In the matter at hand, the petition does not specifically propose the liquidator to be appointed by the Court. Nonetheless, paragraph 5(X) thereof refers to the petitioner’s Board Resolution (annexure NTS-8) in which she appoints Advocate Seni Songwe Malimi with limited powers 7 thereof. I prefer to quote the relevant excerpt of NTS-8 for precision of this conclusion. It provides that; “RE SOLVED FURTHER THAT Advocate Seni Songwe Malimi who is the advocate of the High Court of Tanzania at Dra es salaam(sic) be appointed as Advocate to prepare, lodge and prosecute a petition for winding up of the Company in the High Court of Tanzania (Commercial Division) at Dra es salaam(sic).” From the quotation above, the named counsel’s mandate is limited to pursuit of this petition, not less not more. Henceforth, the application is without a proposed liquidator. Such limitation leads the Court to partly allow this petition, in order to prevent multiplication of cases in Court. For avoidance of doubt, I grant the prayer for winding up order in respect of NTS-Mart Tanzania Limited (113864) which will take effect upon appointment of the liquidator thereof. I order no costs. 8 It is so ordered. C.K.K. Morris Judge July 26th, 2024 Order: The petitioner is ordered to present the proposed liquidator(s) within 14 days of this ruling. C.K.K. Morris Judge July 26th, 2024