MISC NO 10620 OF 2024 OMARY SALUM JUMA VRS UPAMI GROUP CO

IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA LABOUR DIVISION AT DAR-ES-SALAAM MISC. LABOUR APPLICATION NO. 10620 OF 2024 CASE REFERENCE NO. 202405101000010620 BETWEEN OMARY SALUM JUMA & 20 OTHERS .................................................APPLICANT VERSUS UPAMI GROUP CO. L T D .............. 1st RESPONDENT VITUS JOHN LIPAGILA.............. 2nd RESPONDENT JOHNSON VITASJOHN LIPAGILA 3rd RESPONDENT EX-PARTE RULING Date of last Order: 12/ 07/2024 Date of Ruling: 20/ 08/2024 MLYAMBINA, J. The Applicants moved the Court to grant the following Orders: One, to lift Corporate Veil of Incorporation of the Judgment Debtor/lst Respondent so that the Directors of the 1st Respondent can pay the decretal sum. 7m?, to issue Order for 2nd Respondent and 3rd Respondent to show cause as to why they should not be Committed to prison as Civil prisoners for failure to pay the decretal sum. Following the Respondent's failure to enter appearance and reply to this application, this Court proceeds to enter ex-parte decision. Arguing in support of the application, Mr. Emmanuel Dominic Kusekwa, the Applicants' Counsel submitted that; on 25th of August 2022, the Respondent was ordered by the Court through Revision Case No. 445 o f 2021, to pay the Applicants three (3) months and other statutory benefit to the tune of TZS 19,740,000.00. However, up todate the Court's order has not been satisfied by the Respondent despite the fact that the Applicant filed an application for execution and no reasons have been adduced by the Respondent as to why such an order has not been satisfied. It was Mr. Kusekwa's submission that the Applicants filed Execution Case No. 67 o f 2023 and prayed for Garnishee Order on the Respondent's Bank Account No. 015043556400 CRDB Ubungo Branch, where it was discovered that the said Bank Account has no enough funds to settle payment. That, on September 2023, the parties (Applicant and Respondent) made a written agreement signed to settle all payment by the Respondent. However, the Respondent refused to honour his obligation, despite of seducing the Applicants to withdraw the Execution Application with the leave of the Court to file another Application. Mr. Kusekwa went on to submit that the Applicant filed another Application No. 326 o f2023 which was application to attach the Respondent debt. In that application, it was observed that the Respondent was not aware of the Applicants debt. Hence, the application was withdrawn with leave to refile. Then the Applicants filed Application No. 671 o f 2024 before Hon. Mganga J. It was further argued by Mr. Kusekwa that; since a company has Corporate personality which is distinct from its members, and therefore, members cannot be held personally liable for debts owed by the Company unless the Court pierces the company's corporate veil and impose personal liability on the members, directors or shareholders, the Court has established principle through the case of Musa Shaibu Msangi v. Sumry High Class Ltd and Another [2016] TLR 430 where it was held that: The principle of corporate personality is not absolute and can be lifted in exceptional circumstances. Mr. Emmanuel Dominic Kusekwa, therefore, urged the Court to grant this application. In the case of Jackson Sifael Mtares & 3 Others v. The Director of Public Prosecutions, Civil Appeal No. 180 of 2019, Court of Appeal of Tanzania it was held that: However, lifting the incorporation veil entails looking behind the person control of the company not to take 3 shelter behind legal personality where fraudulent and dishonest use is made of the legal entity. The underlying reasons are to ensure that the legal entity should not be used to defeat public convenience, justify wrong or defend crime. Thus, the law will consider the company as an association of persons whereby the Courts can draw aside the veil to see what lies behind. Again, in the case of Saguda Magawa Salum & 3 Others v. Nam Company Limited & Another, Misc. Civil Application No. 34 of 2021, High Court of Tanzania at Dodoma, it was held: One can ask the question that; can the corporate veil of the company be lifted and make shareholders or directors liable? The answer is that there are circumstances where the corporate veil of the company can be lifted under the doctrine of lifting the veil of corporation. The doctrine of lifting the corporate veil plays an important role in identifying the offenders who do these crimes and hide behind the curtains of the company. The doctrine of a separate legal entity plays the same role as that of the lifting of the corporate veil but in a much broader sense. The concept of a separate legal entity itself is the cause of action or reason behind the members of any given company or an organization to commit crimes and hide behind the curtains of the company. This notion of hiding behind the walls of the company was removed by the Courts and the law and the true meaning of a separate legal entity can be seen in many landmark cases, which led to the establishment of laws. In this matter, before resorting to this application, the Applicants unsuccessfully made a lot of efforts to make sure that the Award is satisfied by the Respondents. As submitted herein and evidenced by annextures, they filed execution application and attached the 1st Respondent's bank account but the account had no sufficient fund to satisfy the Award. The Applicants further agreed to settle amicably by accepting settlement agreement and proceeded to withdraw the execution application. Under such circumstances, it is my view that the Respondents have been deploying delaying tactics to defeat execution of the Award. From the records, it is proved that the 2nd and 3rd Respondents are directors of the 1st Respondent's company. As indicated above, they are acting fraudulently to defeat justice to the Applicants. Since the veil can be lifted when there is a fraudulent and dishonesty conduct, it is my view that the Applicants have adduced sufficient reason for the grant of the application sought. In the result, the corporate veil of Incorporation is hereby lifted to the Directors of the 1st Respondent to pay the decretal sum of the Judgement debtor. The Court also proceeds to order the arrest and detention of the 2nd and 3rd Respondents in accordance with Section 44 o f the Civil Procedure Code [Cap 33 Revised Edition 2019]. It is so ordered. Y. J. MLYAMBINA JUDGE 20/08/2024 Ex-parte Ruling delivered and dated 20th August, 2024 at 14:42 hours in the presence of Counsel Emmanuel Kusekwa for the Applicants and in the absence of the Respondents.