20151009 TZHC Arusha

IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA AT ARUSHA MISC.LAND APPLICATION NO. 159 OF 2015 ' (C/F CIVIL CASE NO 28 OF 2015) PULSES AND AGRO COMMODITIES (TANZANIA) LIMITED ....... 15TAPPLICANT ESSIMINGOR ESTATES LIMITED ........................................ 2ND APPLICANT I I VERSUS AFRICAN BANKING CORPORATION (TANZANIA) LIMITED ....... RESPONDENT j RULING MAGHIMBI, J This application •is made under the provisions of Order XXXVII Rule 1 (a) ..-t and section 68 (e) of the Civil Procedure Act, Cap 33 R.E 2002 and any other enabling provisions of the Law. The applicants herein are praying that this court be pleased to grant an order of temporary injunction restraining the respondent, their agents, workmen, and anyone acting on their instructions from interfering and or meddling in any way whatsoever with the property namely Farm No. 7/2, Essimingor, Maasai District with Land office No. 19096, Title No.13669 in Arusha Region hence the maintenance of status quo as at .28th July 2015. The application sought is for the period prescribed by the law or for any period to be determined by the court pending determination of the main suitCivil Case No. 28 of 1 2015.The applicants further prayed that this court order any other relief as it may deem just to grant. The application was supported by the affidavit of applicants' principles officer one Mr. Rakesh Yoginder Vohora dated 29th day of July, 2015. In this application, Mr. Omar I. Omar represented the applicants and Mr. Boniface Joseph represented the respondent. In his submissions in support of the application, Mr. Omar prayed that in order to avoid repetition of the facts pleaded in the application; the court adopts the contents of the applicants'affidavit in its entirety. Mr. Omar then based his submissions on the specific conditions in which this court can grant an order of temporary injunction as laid down in the celebrated case of Atilio vs. Mbowe (1968) HC Digest at page 284 that; 1. There must be a serious question to be tried on the facts alleged and the probability that the plaintiff or rather the applicant will be entitled to the relief claimed. 2. The court interference is necessary to protect the plaintiff from the kind of injury which may be irreparable before his legal rights are established. 3. on the balance of convenience/ there are greater hardship and mischiefs suffered by the plaintiff from withholding of the injunction than will be suffered by the defendants by the granting of it Mr. Omar submitted that from the affidavit in support of this application as previously adopted, and from the bedding main suit which is pending before this court, there is -no doubt that indeed there is existence of a serious issues to be determined by this Court particularly on para 12(a)(b) (c)(d) &(e) of the affidavit in support of the application as to whether the 2 unlimited corporate guarantee dated 14/09/2012 issued by the 2nd applicant was obtained fraudulently and or by false pretense and thereby illegal and void abinitio. He submitted further that the second issue is whether the mortgage over the land and property on farm No. 7/2 Esimingor Maasai District Monduli in Arusha region registered under CT No. 13669 with Land Office No 19096 which belongs to the second applicant herein was obtained fraudulently and or by false misrepresentation and thereby illegal, null and void ab initio. That the third issue is whether a notice of default issued on 08/05/2014 to the 2nd applicant herein by the respondent and subsequent guarantee call up dated 27/05/2014 was unreasonable, malicious, illegal, null and void and that an attempt by the respondent and or its agents to take over the 2nd applicant mortgaged property would amount to tress pass and tortuous interference with the second applicant property. He submitted further that the 4th issue is whether the purported notice dated 13/07/2015 giving the first applicant herein a 14 days notice for the recovery of an amount equivalent to $ 2,112,679.27 issued by the respondent to the 1st applicant and the purported notice of claim dated 29/04/2014 are both illegal, null and void ab initio. Mr. Omar argued that there are serious issues for this honourable court to adjudicate upon and if the said orders are not granted, it would basically mean the pre-emption of the main suit as it will interfere with the main suit which is before this court and it would mean a perpetuation of the alleged illegality and misrepresentation of the respondent alleged unlawful act. 3 Mr. Omar submitted further that it is quite imminent from the. affidavit in support of this application that the respondent is determined to interfere and possibly disposed off the mortgaged property which is the subject matter before this honourable Court hence this Court's interference is necessary to protect the applicants from the kind of irreparable injury that they would suffer in the event that this injunction is not granted. He argued that the balance of convenience relies heavily on the applicants in favour of this application as it is quite clear that it was the applicants who first brought this matter before this Honourable Court asking for its intervention so that parties rights in this matter can be rightfully adjudicated by this Court before the disposition of the mortgaged property. To support his arguments Mr. Omar referred this court to the case of Sleyum Mbarak Salim Vs Managing Director People's Bank Of Zanzibar & 2 Others, Civil case No. 21/2013 High court of Zanzibar, whereby at Page 7 to this Ruling Mwampashi J held that: "The main purpose of temporary injunction orders or relief is to preserve the status quo of the matter or property in dispute while right over the matter or such property are being litigated and until the dispute is finally settled or determined. The process or power of courts in deciding whether to grant the temporary injunction orders or not is discretionary which should however be exercised on sound judicial principle'' Mr. Omar concluded that from the facts submitted, this is the fit matter for an injunction to be granted as it fits all the parameters or the principles guiding the issuance of a temporary injunction. 4 In his reply, Mr. Boniface the learned counsel for the respondent also prayed that this court adopts the counter affidavit of Heri Kayinga being the principle officer of respondent. He then submitted that this is not a fit case for invoking the jurisdiction of this court to grant an order of temporary injunction as per the principles laid down in the case of Atilio Vs Mbowe. He argued that on issue whether there are triable issues to be taken for trial, the facts available both in the affidavit and the plaint read together, do not established a triable issues to be adjudicated in the main case as the existing relationship between the parties is a banker and customer relationship which is not denied at all, the applicants are not denying that they are indebted to the respondent for a loan which they have accrued to an outstanding sum of 2.1 million. He further argued that it is not disputed that the said loan had been granted to the applicant and was secured by way of a debenture and a legal mortgage executed by both parties as the pre-conditions for the grant of the said loan. Further that para 2, 3 5 & 6 of the applicants' affidavit is clear that the applicant took loan while not contemplating any further arrangement or the respondent taking over a credit facility which was pending at Bank of Baroda and that the respondent was not even a party to the said agreement between the applicants and Bank of Baroda. Mr. Boniface argued further that the 1st applicant concealed information about the security for the credit facility granted by Bank of Baroda and that the first and second applicant without any undue influence or otherwise executed such documentation through a proper process and these matters cannot be raised at this particular point 5 as such. He argued that Mr. Omar is just giving an overview as to whether there are triable issues to be taken for trial. Mr. Boniface denied the existence of annexure 1 to the affidavit as a valid instrument as it is not signed or dated hence it cannot be part or facts to be considered in the process of considering whether to grant or refuse an order of temporary injunction. Mr. Boniface argued that the respondent, being a mortgagee, upon a default issued a statutory notice under Section 127(2) of the Land Act, Cap 113 in May 2014 and upon lapse of 60 days the entire amount of the claim of approximately 2.1 USD became due and payable to the respondent and in that circumstances the mortgagee may exercise the right to sell the mortgage land. To support his arguments, Mr. Boniface cited the case of General Tyre EA Ltd Vs HSBC Bank PLC 2006 TLR 60 particularly para 2 of page 68 where the Court held that: "To my mind the right to appoint a receiver is overdue as this right accrued to the respondent as debenture holder immediately upon default being made by the applicant in the payment of the principle and interest To say otherwise will be to defeat the ve,y purpose to which a debenture is issued as a security. " Applying the same principle to this case Mr. Boniface argued that it is quite clear the right to sell the mortgaged property is overdue immediately upon the applicant'failure to pay the principle and interest since Sept 2013. On the second principle whether there is irreparable loss to be suffered by the applicant, Mr. Boniface submitted that it is the respondent who has disbursed such a substantial amount who will stand to suffer and that the 6 applicants have failed to show how they will suffer in the event that the property is sold or if they cannot be adequately compensated by the respondent. Mr. Boniface argued that the instant case is a straight case of banker, debenture holder, borrower, mortgagor relationship and in the event that there is any breach of the agreement parties will have a way to seek redress by way of damages for breach of contract, the second respondent is a financial institution, it will generally be in a financial position to pay any damages that will be awarded to the applicant in case the applicants succeed in the main case. He further cited the same General Tyre case at page 69whe:re it Was held that: ''Lastly, the respondent is a bank doing banking business. The applicant wants the court to restrain the respondent from realizing and enforce its security. The object of the security the debenture is to provide a source of satisfaction of the debt secure. As stated by Nsekela -l in the Agency Cargo International Cas~ in order for the respondent to continue being in a banking business, it must have funds to lend in which must be paid by its borrower debtors. If a Bank does not recover loans, it will surely be an obvious candidate for bankruptcy. '' Further that eventually it was concluded that: '!4 grant of a restraining order in this case will be contrary to generally established banking principles and security laws'~ Mr. Boniface further cited the cases of Abdi Ally Salehe Vs. ASAC Care Unit Limited & Others Land Case No. 71/2011 at Dar-es-salaam (Unreported) the case of lane Paul Mwikwabe vs. Paul Mwikwabe & 7 5 others, High Court Dare salaam in Land Case No 82/2011 (unreported) were the same principles were applied. Mr. Boniface, concluded that the applicants have miserably failed to establish conjunctively existence all the pre-conditions for the grant of temporary injunction and he prayed that this court dismiss the application as it lacks merits. In his rejoinder, Mr. Omar submitted that there was never existed a debenture between the parties herein particularly the 1st applicant and the respondent. He argued that the respondent raised the issue of debenture to pave way for the court to rely on the authorities pleaded by the respondent and in particular the General Tyrescase as in Ali Salehe's case and Mwikabe's case, they both adbpted the position of the General Tyre's case where in that case a debenture was an issue. Mr. Omar hence distinguished the authorities from the current case. He further differentiated that while the debenture instruments is usually created by the loan and their particular instance, in the current case the issue is a credit facility. Mr. Omar submitted further that carefully going through the submissions of Mr. Boniface, one will see that there are some of the key issues to be adjudicated upon since the parties herein are not one on those issues. He submitted further that there is an issue to be determined by this court as to whether there is a proper notice to both of the applicants herein asthe applicants are challenging the purported respondent's notice and that it will be absurd and to the detriment of the applicant to allow the recovery 8 process basing on the assumption that the respondent has a deeper pocket to pay the damaged to the applicant particularly the 2nd applicant this being a 3rd party security. He argued that looking into the nature of security put by the second applicant and the issue on the legality, misrepresentation among others on the mortgage and the credit facility, they are very pertinent to be resolved first since there is no danger that the mortgaged property, the guarantees given are in danger of being wasted or alienated in anyway whatsoever. That the securities are safe in the hands of the respondent meaning that the mortgage is registered and that after a determination of the matters before this Hon Court, then the enforcement measures would still be in place without harm to the respondent, but if the securities are allowed to be disposed it will be highly inconvenient and costful with unnecessary botheration to all of the parties involved.Mr. Omar further prayed for the discretion of this Hon Court to be in favour of the applicants bearing the technicality of the matter, its peculiarity and thus protect the applicants from unnecessary injury that wiU be beyond repair in the event the respondent is not estopped from proceeding with his mission. I have thoroughly gone through the application and the supporting documents thereto, I have also considered the parties arguments and the authorities cited to support their application. It my consideration that there are some and not all of the pleaded issues, which require the attention and determination of this Court. The first issue is whether the 2nd applicant; on the basis of an agreement and assurance that respondents are taking over the credit facilities in Bank of Baroda; agreed to guarantee 1st applicant 9 and executed a mortgage deed in the form of the third party legal mortgage over the land and property on farm No 7/2 Essimingor Maasai District Monduli in Arusha region registered under CT NO.13669 with land office No 19096 which belongs to the second applicant, is an issue which calls for the attention of this Court. Secondly whether the Demand note; issued on 13th July 2015, to the 2nd applicant; is illegal owing to the fact that the court decla_ration under civil case No 24 of 2014 declared the whole receivership illegal also calls for the attention of this Court. It is hence the opinion of this Court that the applicants have established the first condition of existence of serious issues and arguable questions requiring the determination of this court.However, it is premature to say as to whether there are chances that the matter will be decided in favour of the applicant. As to the question of balance of convenience and irreparable loss, I have observed from the pleadings and the parties submissions that there is no contemplation that the mortgaged property is in danger of being wasted or alienated in any way whatsoever as they are in the safe hands of the respondent as the mortgagee. Hence in the interest of maintenance of status quo as pleaded by the applicant, it the finding of this court thatin the event the court does not grant temporary injunction, it will be the applicants who will suffer irreparable loss not foreseeable to be adequately compensated by an award of damages as compared to the respondents in the event that the application is granted. The applicant has not denied liability to repay the loan but has pleaded, to the satisfaction of this Court 10 that, of the fact there are some events which have interfered in the process. For the aforesaid reasons and in line with the provisions of Order XXXVII Rule 1 of the Civil Procedure Code (supra) this Court deems it just that this application is granted and hence hereby so grants this application. The respondent, their agents, workmen, and any other person acting on their instruction are hereby restrained from interfering and or meddling in any way with the property namely Farm No 7/2, Essimingor, Maasai District, Monduli Arusha region with Land office No 19096 and Title No 13669 until the main suit which ·is before this court is determined or until this order is otherwise bar_red by the operation of the law. Application allowed th Dated at Arusha this 09 day of October, 2015 SGD S.M MAGHIMBI JUDGE I hereby certify this to be a true copy of the original. eputy Registrar High Court Arusha i1/r2-1 ,(-- 11