sai energy logistics services limited vs exim bank tanzania limited 2023 tzhccomd 158 12 june 2023

IN THE HIGH COURT OF UNITED REPUBLIC OF TANZANIA (COMMERCIAL DIVISION) AT DAR ES SALAAM MISC.COMMERCIAL APPLICATION NO.177 OF 2023 SAI ENERGY & LOGISTICS SERVICES LIMITED.…APPLICANT VERSUS EXIM BANK (TANZANIA) LIMITED…………………RESPONDENT Date of Last Order: 08/05/2023 Date of Ruling: 12/06/2023 RULING NANGELA, J The Applicant herein filed this application by way of a chamber summons supported by an affidavit of Rajan Marwaha. The application was brought under Order XXXIX Rule 5 (3) (c) of the Civil Procedure Code, Cap.33 R.E 2019 seeking for the following orders: 1. That, this Honourable Court be pleased to order the Applicant to furnish security for the due performance of the decree as per this Court’s order dated 15th of July 2022. 2. That, Costs of this application be provided for and, Page 1 of 12 3. any other order(s) this Honorable Court may deem just and equitable to grant. When the application was called for necessary orders of this Court on the 08th of May 2023, Mr. Musa Mhagama, learned counsel, represented the Applicant while Jovinson Kagirwa, learned counsel, appeared for the Respondent. This Court directed the parties to dispose of this application by way of written submission and the respective learned counsel for the parties herein duly complied with such directives issued by the Court and, hence, this ruling. In his submission, Mr. Mhagama contended, as a matter of fact, that, the Applicant herein was awarded a decree by the Iringa Resident Magistrate Court and initiated a process to have it executed in the same Court, but the Respondent moved a step further and lodged an appeal (i.e., Commercial Appeal No.2 of 2022) in this Court. Mr. Mhagama submitted that, on the 15th of July 2022, this Court granted a stay of execution order with condition that the Respondent furnish security in due performance of the decree, hence, this application. He contended that, when the application for stay of execution Page 2 of 12 was being determined, the Respondent did state in paragraph 12 of her affidavit that she was ready to furnish security for the due performance of the decree. It was his contention, however, that, ever since the granting of the application which stayed the execution process, the Respondent has never fulfilled the requirements of the Orders granted by this Court. He submitted that, what the Respondent did was to file a mere letter believing that it was the security for due performance of the decree, a fact which Mr. Mhagama contends arguing that the mere letter filed in Court is not enforceable and cannot be regarded as security in due performance of the decree. According to Mr. Mhagama, the term security was defined in the case of Ms. Farhia Abdullah Nur vs. Advatech Office Supplies Limited and Another, Civil Appl. No. 182/16 of 2021, (CAT), Dar-es-Salaam, where the Court of Appeal had the following to say: We have carefully considered the rival arguments by the counsel for the parties. It is common knowledge that security is provided so as to Page 3 of 12 protect the Respondent from facing difficulties or impossibility of realizing the decree in case the intended appeal fails. To further cement the above, Mr. Mhagama referred to this Court the provision of Order XXXIX Rule 5 (c) of the CPC which states: “that security has been given by the Applicant for the due performance of such decree or order as may be binding upon him.” He contended, therefore, that, the letter availed to the Court by the Respondent cannot be regarded as security as it does not fall squarely under the definition of what constitutes security. Mr. Mhagama contended further that; the letter is neither a bank guarantee nor any other enforceable document to be realized by the Applicant. In his view, the Respondent’s averment in the Counter Affidavit which is to the effect that this Court did not order or mandate the Respondent to furnish security in due performance of the decree in the form of deposit security is unfounded. He argued that, the law is clear that, one condition of stay order is where a party furnishes security to the Court, which security can either be a bank guarantee, cash deposit or a Page 4 of 12 certificate of occupancy. He contended that, once that order is given, it must be fulfilled. To back up his position, reliance was placed on the case of Africhick Hatchers Ltd vs. CRDB Bank Plc, Civil Appl. No.98 of 2016 (unreported). In that case, the Court was of the opinion made it clear that as one of the conditions for stay: ‘ the applicant …must give security for the due performance of the decree against him. To meet this condition, the law does not strictly demand that the said security must be given prior to the grant of the stay order. To us, a firm undertaking by the applicant to provide security might prove sufficient to move the Court, provided the Court sets reasonable time limit within which the Applicant should give security.” Mr. Mhagama contended further that, if the mere letter filed in Court will be taken to be sufficient to stand as security for due performance of the decree, it will cause injustice to the Applicant because the letter is written by the Page 5 of 12 Respondent herself to guarantee on the performance of the decree which is against herself. To support that submission, he pointed to the Court, a decision by the Court of Appeal in the case of CRBD Bank PLC vs. Issack B. Mwamasika, Civil Appl. No.103/01 of 2017 (unreported) where the Court of Appeal of Tanzania rejected the offer of a guarantee by the Bank and ordered that, such must be from another reputable bank. Responding to the above submission, Mr. Kagirwa, the learned counsel for the Respondent took off by stating that, the Applicant’s counsel failed to address the ruling of this Court dated 17th day of July 2022. He submitted that the ruling was clear that the Respondent was to avail to the Court an undertaking to furnish security for due performance of the Decree. Mr. Kagirwa posed that; the question should be whether the Respondent complied with such orders of the Court. Referring to paragraph 6 of the Applicant’s affidavit, he contended that, the Applicant does confirm receipt of Page 6 of 12 such undertaking from the Respondent to furnish security for due performance of the decree. Mr. Kagirwa submitted that; the rest is contrary to the orders of the Court since what is being contended is that the undertaking is insufficient. He relied on the case of Tanzania Petroleum Development Corporation vs. Mussa Yusufu Namwao & 37 Others, Civil Appl. No. 603/07 of 2018, (CAT) (unreported), where the Court noted that, the term “firm undertaking" is not defined in any law. In that case, however, the Court stated that, from the way it is used: ‘it implies a profound and/or solid promise by the party seeking an order for stay to fulfill the decree as and when it may become binding upon the applicant in case, he/she loses the appeal….an undertaking is given to ease or smoothen the path of transactions … It means …an unequivocal declaration of intention addressed to someone who reasonably places reliance on it….’ Page 7 of 12 Mr. Kagirwa referred to this Court as well to another Kenyan case of Diamond Star General Trading LLC vs. Ambrose D.O Ritcher t/a Ritcher & Amollo Advocates, Misc. Civil Appl. No.451 of 2015 which was as well referred to by our Court of Appeal in the case of TPCD (supra). He noted that, in that case, the Court noted that, the term undertaking is defined as: ‘a promise, engagement, or stipulation” ….it is frequently used in special sense of a promise given in the course of legal proceedings by a party or his counsel, generally as a condition to obtain some concession from the Court or opposing party…..In legal context, it typically refers to a party agreeing to surety arrangement, under which they will pay a debt or perform a duty if the other person who is bound to pay the debt or perform the duty fails to do so.’ From the above context, Mr. Kagirwa urged this Court to make a finding that, what is required to constitute Page 8 of 12 undertaking is declaration and commitment, and the Respondent did exactly that, committing herself to satisfy the Decree should her appeal to the Court gets dismissed. He contended that; the cases relied upon by the Applicant are utterly distinguishable as they do not provide a definition of what an undertaking is all about. He finally urged this Court to dismiss the application but stated, in the alternative, that, should this Court make a finding that what was offered did not meet the requirements, then, the Respondent be allowed to furnish a Bank Guarantee. Mr. Mhagama did not file rejoinder despite being granted time to do so. As I carefully scan through the rival submissions filed by the learned counsel for the parties, the key question to address is whether this Court should grant the prayers sought by Mr. Mhagama. Mr. Mhagama’s contention, if I understood him correctly and if one may summarize it is that much as the Respondent filed a document purporting to be an undertaking to furnish security, no security was furnished. He contended that, the letter filed by the Respondent does not qualify and is not enforceable security Page 9 of 12 which the Applicant can readily realize or fall back on. Mr. Kagirwa sees it differently and is contented by it on the ground that, it is laden with a promise. In my view, the ruling of this Court had been issued with a view that, the Respondent was to file in Court an undertaking that a security guaranteed due performance of the decree should the Respondent’s appeal fails is furnished to the Court. As correctly submitted by Mr. Mhagama, and as it may be any other persons’ expectation, apart from the undertaking, a security guaranteeing due performance of the decree should have now been furnished in Court. The undertaking only sufficed to the extent of moving the Court to grant stay orders, but it was issued in expectation that the Respondent would later furnish to the Court security for due performance of the decree. As such, by now as the parties continue with the pending matter, the Respondent should have already furnished security as he committed herself to do so. In his submission, Mr. Kagirwa said that, if this Court is to make a finding that there must be a sufficient security for due Page 10 of 12 performance in place, then the Respondent should be allowed to furnish a bank guarantee for that purpose. One thing which needs to be considered is that, should the Respondent so furnish a guarantee, then what was stated in the case CRBD Bank PLC vs. Issack B. Mwamasika, (supra) must be strictly observed, i.e., the guarantee must be of another reputable bank other than the Respondent herself. In view of that, this Court finds merit in the application and allows it while taking on board the alternative proposed by the Respondent’s counsel settling for the following orders: 1. That, the Respondent furnish in Court a bank guarantee from a reputable bank as a security for due performance of the Decree. 2. That, the same be furnished to the Court not latter than the 27th of June 2023. 3. Costs of this application be provided for. It is so ordered. DATED AT DAR-ES-SALAAM ON THIS 12H DAY OF JUNE 2023 Page 11 of 12 ................................... DEO JOHN NANGELA JUDGE Page 12 of 12