rajani industries ltd vs parastatal sector reform commission another 2006 tzhc 297 5 may 2006

IN THE HIGH COURT OF TANZANIA

AT DAR ES SALAAM CIVIL CASE No. 372 OF 2002 RAJANI INDUSTRIES LTD........................................PLAINTIFF VE RSI'S 1. THE PARASTATAL SECTOR REFORM COMMISSION > DEFENDANTS 2. TANZANIA LIQUID STORAGE CO. LTD

RULING ORIYO, J . W hat is before me is a list of six preliminary points of objection on points of law by the second defendant, Tanzania Liquid Storage Co. Ltd. The points of objection run as follows: 1. The suit is barred by the Law of limitation 2. The plaint does not disclose a cause of action against the second defendant 3. The suit is bad for misjoinder of causes of action 4. The institution of the suit does not comply with the law on cases of this nature 5. The amended plaint is bad in law for attempting to circumvent the law of limitation through the device of bringing a fresh claim by amendment of pleadings in a pending action 6. The cause of action founded on failure to perform statutory duty has been brought to Court contrary to law The same was prosecuted by Law Associates Advocates for the second defendant while it was strongly resisted by Odhiambo Kobas, (Advocate) of the plaintiffs Legal Department . The claim by Rajani Industries Ltd was filed in Court on 25/10/2002. The claim was for compensation and damages for breach of contract due to second defendant's failure to provide storage facilities to the plaintiff. By an agreem ent dated 8/12/89 between the plaintiff and the second defendant the storage facilities were to be available to the plaintiff for use by January 1994; but that did not happen. Despite the litany of points of objection set out above,

the centre of contention was whether the claim by the plaintiff was time barred or not. M/s Law Associates Advocates argued that the claim was time barred because the alleged breach of contract occurred in January 1994 when the second defendant failed to make the storage tanks available to the plaintiff. Further argument was that since breach of contract occurred on 1st January 1994 and in terms of the Law of Limitation Act 1971 the suit ought to be filed within 6 years; the lodging o f suit on 25/10/2002 was beyond the statutory time limit. The second limb o f the second defendant's argum ent was that the claim against the first defendant was based on breach o f statutory duty. It was argued that in terms of the Law of Limitation Act 1971, the claim ought to have been lodged within a year, that was by 25/10/1997 as the alleged breach was committed on 26/10/1996. On the other hand, Mr Odhiambo vehem ently challenged the second respondents arguments. While advocating for the plaintiff, learned counsel, conceded to the facts as presented by the second defendant but maintained that the suit was legally in court having been filed within time. On the first limb of the second defendant's argument that since the breach of contract took place in January 1994 when defendant failed to make the storage, facilities available to the plaintiff, the suit should have been filed within 6 years,

that is by December 1999; Mr. Odhiambo contended that the breach was continuous. In support of his argument, he relied on payment Schedules contained in Annexture "D" to the plaint; which showed that instalment payments were staggered, January - December 1994; January - December 1995; January - December 1996 and January -June 1997. Therefore he concluded that cause of action accrued on the last due date of payment, that was June 1997. The provisions of SECTION 7 of the Law of Limitation Act were cited in aid. The plaintiff did not end there. He attacked the objection from another angle; this time he relied on the exclusion provision of SECTION 21 (1) of the Law of Limitation Act. The plaintiff argued that he filed Civil Suit No. 306 of 1997 on 31/10/1997 but the same was held incom petent because leave to sue a specified corporation had not yet been obtained. He argued that the time spent in prosecuting the earlier suit i.e. 31/10/1997 to December, 2000 should be excluded. He concluded that if the said exclusion is done the suit would not be time barred. On the second limb of argum ent on claim of breach of statutory duty being tim e barred; the plaintiff resorted to the provisions of SECTION 26 o f the Law of Limitation Act. The plaintiff argued that the cause o f action on failure by the first defendant to perform a statutory duty accrued when the plaintiff discovered the

same. It was contended that due to manner and nature of the first defendants operations, the plaintiff was not aware that the former had discharged its receivership of 2nd defendant by sale o f shares on 2/8/2001 and without calling a creditors meeting. It was contended that the plaintiff became aware on 28/2/2002; and that should be the effective date. Therefore, it was argued, that the suit was filed within one year; on 25/10/2002. In rejoinder, the second defendant was not moved. It was contended that the plaintiff wrongly sought refuge in SECTIONS 7 and 26 of the Law of Limitation Act because there were no averments in the plaint on continuous breach, fraud or mistake. Further argum ent was that the jurisdiction referred to under Section 21 (1) of the Law of Limitation Act was reference to substantive jurisdiction and not procedural jurisdiction; (See Msumi JK as he then was in the case of PHENIX BUREAU DE CHANGE LTD VS BANK OF TANZANIA, Civil Case No. 189 of 1998, unreported). Now let me turn to the m erits of the objections. There is no dispute that the fundamental breach of contract occured on January 1994 when the second defendant failed to make the tanks available to the plaintiff for oil storage as per agreement. This is evidenced by the averm ents in paragraphs 10, 11 and 12 of the amended plaint. Further evidence is found in paragraphs 13,20 and prayers (b) (c) and

(d) o f the amended plaint that the operative date of plaintiff's claims was and has been 1st January 1994. So the plaintiffs argument that there was a continuous breach of contract from January 1994 to June 1997 is contrary to the clear language of the averments and prayers in the of the amended plaint. The plaintiff's alternative argument was that the period 31/10/97 to December, 2000 should be excluded in the computation of time under SECTION 21 (1) of the Law of Limitation Act 1971, which states as follows:- "In computing the period of limitation preserved for any suit, the time during which the plaintiff has been prosecuting with due diligence, another civil proceeding, whether in a court of first instance or in a court of appeal, against the defendant, shall be excluded, where the proceeding is founded upon the same cause of action and is prosecuted in good faith in court which, from defect of jurisdiction or other cause of a like nature, is incom petent to try it." (em phasis added) Faced with a sim ilar situation in the case of PHENIX BUREAU DE CHANGE LIMITED VS BANK OF TANZANIA, Civil Case No. 189 of 1998, this Court (Msumi JK) placed the following interpretation on SECTION 21 (1) of the Law of Limitation Act, at page 4 thereof:- "W ith respect, I am of the view that the lack of jurisdiction referred in Section 21 (1) is of substantive nature and not procedural.

In other words the court should be unable to adjudicate upon the type of the case subsequently filed and not in the manner the said suit is presented to the Court. For exam ple a suit dismissed for being presented in a form of plaint rather than by way of a cham ber summons as required by law does not mean that the court has done so for lack of jurisdiction." On my part I have no reason to depart from the above interpretation. So the jurisdiction referred to in SECTION 21 (1) above is substantive rather than procedural jurisdiction. As correctly argued by the second defendant, this court has alw ays had jurisdiction over the subject matter but the plaintiff failed to invoke it properly in the earlier suit in CC 306/97. Under these circum stances the plaintiff cannot invoke the provisions of SECTION 21 (1) above to his aid. The plaintiffs claim against the first defendant arose from the latter's alleged breach of statutory duty. Part I of the First Schedule of the Law of Limitations Act, item 1 states:- "For compensation for doing or for omitting to do an act alleged to be in pursuance of any written law." The period of limitation provided is One Year. The plaintiff does not deny that the second defendant became specified on 26/10/1996 and was autom atically placed under the receivership of the first defendant, as averred in paragraphs 14, 15 and 16 of the amended plaint. The

statutory duty of the first defendant to convene a statutory meeting of 2nd defendant's creditors arose on the specification date by virtue of SECTION 14 of the Bankruptcy Act, Cap 25; which provides:- "As soon as may be after the making of a receiving order against a debtor ageneral meeting of his c re d ito rs .................... shall be held for the purpose o f .........................and generally as to the mode o f dealing with the debtors property." However, the plaintiff departed from his own pleadings by making allegations of confidentiality, fraud and mistake against the first defendants mode of operations thus affording himself the protection of SECTION 26 of the Law of Limitation Act. The argum ents by the plaintiff that he discovered that the first defendant had breached its statutory duty on 28/2/2002 and that cause of action accrued on 28/2/2002 and not 26/10/1996 were not supported by the amended plaint. For ease of reference SECTION 26 of the Law of Limitation which provides for the effect of Fraud or Mistake states as hereunder:- "W here in the case of any proceeding for which a period of limitation is prescribed (a) the proceeding is based on the fraud of the party against whom the proceeding is prosecuted or of his agent, or of any person through whom such party or agent claims; or (b) the right of action is concealed by the fraud of any such person as

aforesaid; or (c) the proceeding is for relief from the consequences of a mistake, the period of limitation shall not begin to run until the plaintiff has discovered the fraud or the mistake, or could with reasonable diligence, have discovered it." With due respect to counsel for the plaintiff, the protection of SECTION 26 above is not available to the plaintiff as there are neither explicit or implicit averments of fraud or mistake in the amended plaint. In the circumstances it remains undisputed that plaintiff's cause of action against first defendant accrued on 26/10/96 the specification date and the suit ought to have been filed by 25/10/97. On the foregoing analysis and for the reasons stated, I am satisfied that the plaintiff's claims against the defendants is time barred. The defendants first and sixth points of preliminary objection are sustained. Accordingly the suit is struck out with costs. The decision on the two preliminary objections has sufficiently disposed of the matter and consideration of the other remaining objections may not serve any useful purpose. It is ordered. K. K. ORIYO

JUDGE 5/5/2006