STAMIGOLD CO

IN THE HIGH COURT OF TANZANIA (COMERCIAL DIVISION)

AT PAR ES SALAAM MISCELLANEOUS COMMERCIAL APPLICATION NO. 31 OF 2017 STAMIGOLD COMPANY LIMITED....................................................APPLICANT

VERSUS MANTRAC TANZANIA LIMITED.......................................................................... 1stRESPONDENT JUNIOR CONSTRUCTION TANZANIA LIMITED.............................................. 2ndRESPONDENT SULEIMAN MASOUD SULEIMAN...................................................................... 3rdRESPONDENT NCHAMBI'S TRANSPORTERS LIMITED........................................................... 4thRESPONDENT 24/09&23/10/2018

RULING MWANDAMBO, J The Applicant has preferred the instant application under Order XXXV rule 3 (1) (a) (b) and (2) of the Civil Procedure Code, Cap 33 [R.E 2002] hence forth to be referred to as the CPC. The application is for an order granting leave to appear and defend in Commercial Case No. 10 of 2017 instituted by the 1st Respondent against the Applicant jointly and severally with the 2nd, 3rd and 4th Respondents under summary procedure. The first Respondent resists the application through a counter-affidavit deponed to by Martin Munga, Principal Officer. The background to the application is largely not in controversy but to appreciate the same, I propose to highlight the relevant facts to appreciate the issues involved in this application. The Applicant operates a gold mining in Biharamulo District. Sometime in May 2015, the Applicant entered to an agreement with the 2nd Respondent for provision of Hiring Mine Equipment and Operations to its Biharamulo Mine. According to the plaint, the equipment the 2nd Respondent 1 hired to the Applicant under the agreement was obtained on credit from the 1st Respondent who was to pay the purchase price on agreed installments. As a commitment for the payment of the purchase price, the 2nd Respondent issued postdated cheques which were to be presented to the 1st Respondent's bank for payment on the dates shown therein. Contrary to the

1st Respondent's expectations, none of the cheques was honoured which prompted the 1st Respondent demanding for payment. Subsequently, the Applicant who had hired the mining equipment/machinery from the 2nd Respondent signed a letter of an undertaking committing herself to deduct certain sums of money from the 2nd Respondent's monthly payments payable by the Applicant to be paid to the 1st Respondent to reduce the former's liability from the month of June 2016.However, that arrangement materializedfor only a few months resulting into the first Applicant instituting a suit against the Applicant and the 2nd 3"* and 4th Respondents under summary procedure based on the dishonoured cheques issued by the 2nd Respondent. It may not be completely irrelevant to state at this juncture that the 2nd t0 4th Respondents took out a separate application for the same orders I am asked to grant i n this application. It is the Applicant's contention in the affidavit that it never issued any cheques in favour of the Applicant which were subsequently dishonored by the bank upon presentation and so the 1st Respondent cannot sue her under summary procedure or at all. According to the Applicant, she has disclosed facts to support the grant of leave to appear and defend. The 1st Respondent for her part maintains that the Applicant has not disclosed sufficient facts to be granted leave to appear and

defend in the main suit primarily because the Applicant guaranteed payment due from the equipment hired from the 2nd Respondent and so it cannot deny that it guaranteed the payment of the postdated cheques. On the basis of the foregoing the 1st Respondent i nvites the Court to dismiss the application. 2 Hearing of the application was by way of written submissions through a filing schedule made by Songoro, J on 27th November 2017 but by reason of an application in Commercial Review No. 10 of 2017 and ultimately an application for revision (Civil Application No.552 of 2016) before the Court of Appeal having a bearing on this application ruling could not be delivered on the date originally set. I am delivering it now taking over from my predecessor. The submissions by the Applicant made by Mr. Stephen Malosha learned Advocate representing the Applicant i s double edged. In the first place the learned Advocate submits that the 1st Respondent has no cause of action against the Applicant for the amount claimed as it was not privy to the credit arrangement between her and the 2IK! Respondent. Secondly, it i s contended that the letter of undertaking it signed was partly for payment of USD 460,000 for release of additional equipment and for the equipment supplied earlier but the instructions were to be complied with until advised otherwise. The learned Advocate contends that based on

instructions otherwise it received subsequently, the Applicant acted on such instructions paying the monthly dues to the 2nd Respondent i nto a different bank account. If I understood him correctly, the learned Advocate seems to be saying that the mere fact that the Applicant acted on subsequent i nstructions from the 2na Respondent did not constitute any cause of action in favour of the F Applicant and so leave to appear and defend should be granted as prayed. Mr. Roman Masumbuko learned Advocate for the 1st Respondent strongly resists the Applicant's submissions. To the extent i t i s material and relevant to the determination of this application, the learned Advocate argues that:(1) the Applicant has not disclosed facts to disprove consideration in relation to the dishonoured cheques within the meaning of Order XXXV rule 3 (1) (a) of the Civil Procedure Code, (2) the dishonoured cheques were guaranteed by a letter of undertaking from the Applicant against the equipment supplied by the 1st Respondent and (3) the 3 Applicant has not disputed consideration in the form of the equipment supplied by the 1st Respondent now used by the Applicant at its Biharamulo Mine. Having examined the submissions for and against the application, there is no dispute that the suit on the basis of which leave is now sought is founded on no other that dishonoured cheques issued by the 2nd Respondent

to secure payment of the purchase price of the machines supplied by the 1st Respondent on credit pursuant to a Credit Sale Agreement dated 12th May, 2015. According to annexure TCTL 2 to the plaint, the postdated cheques were delivered to the 1st Respondent on 1st July 2015. It is equally not disputed that the cheques were dishonoured by the drawer bank and hence the resort to the summary suit under Order XXXV rule 1 (a), 2 (1) of the Civil Procedure Code. In terms of Order XXXV rule 3 (1) (a) (b) of the Civil Procedure Code, the Court is enjoined to grant leave to appear and defend a suit under summary procedure upon affidavit disclosing facts incumbent upon the holder of a bill of exchange (in this case the cheques) to prove consideration or such facts as the Court may deem sufficient to support the application. It is instructive to note at this juncture that the 2nd Respondent who drew the said cheques obtained leave to appear and defend in the same suit in Miscellaneous Commercial Application No. 26 of 2017. My learned brother Songoro J found the Applicants in that application having raised triable issues to support the application relying on Kundanlal Restaurant vs. Deshid Company Limited (1952) 19 EACA 77 followed by the Court of Appeal for Eastern Africa in Souza Fiqueredo & Company vs. Moorings Hotel [1959] EA 425. In CRDB Bank Limited vs. John Kagimbo Lwambagaza,

Commercial Case No. 10 of 2000 (unreported) this Court speaking through Nsekela, J (as he then was) applied the same case Songoro, J referred to and granted the application before him. The learned Judge had this to say: "In the instant application paragraphs 4, 6 and 8 of the supporting affidavit do set up possible defences to the suit. It is true that in paragraph 6, Shs.37 Million appear to have been admitted, but this does not mean that the applicant has no defence for its recovery. It may not be a positively good defence, but I cannot confidently state that the defence is a sham and at the moment I am unwilling to deprive the applicantof his defence. The applicant has in my view raised triable issues fit to go for trial(at page). The relevant passage from Kundanlal Restaurant's case (supra) which both Nsekela, J and Songoro J found to be settled law runs as follows:- "The principle on which the Court acts is that where the defendant can show by affidavit that there is a bona fide triable issue, he is to be allowed to defend as tothat issue without condition. A condition of payment into court ought not to be imposed where a reasonable ground of defence is set up. The condition of payment, or giving security, is seldom imposed, and only in cases where the defendant consents or there is good ground in the evidence for believing that the defence set up is a sham defence and the

master is prepare vety nearly to give judgment for the Plaintiff in which case only the discretionary power given by this rule may be exercised. It should not be applied where there is a fair probability of a defence nor where the practical result of applying it would be unjustly to deprive the Defendant of his defence." It is plain in this application that the Respondent is not a holder of any dishonoured cheques issued by the Applicant and so, as submitted by Mr. Malosha, the Applicant must be held to have surmounted the hurdle under Order XXXV rule 3 (1) (a) of the Civil Procedure Code. Unlike Mr.Masumbuko, learned Advocate, the consideration which the holder of a dishonoured bill of exchange has to prove must relate to the issue of the bill of exchange itself which is not the case in this 5 application assuming the Applicant had issued the said dishonoured cheques. With respect, the argument premised on the letter of undertaking sounds attractive but legally and factually untenable. Firstly, a cause of action in an action under summary suit is founded not on any letter of undertaking and guarantee and I read nothing under Order XXXV permitting the institution of a suit as the 1st Respondent did against the Applicant neither did the learned Advocate refer the Court to any authority through decided cases permitting that course of action. Secondly, at any rate, contrary to the

submissions by the learned Advocate for the 1st Respondent, the letter of undertaking signed on 9th June 2016 could not have guaranteed payment of the postdated cheques submitted by the 2nd Respondent to the 1st Respondent on 1st July 2015 a year plus after that date. Thirdly, as indicated at page 2 of the letter of undertaking, the same was made partly for the release of an excavator which was still in the 1st Respondent's possession and partly to commit itself to deduct specified sums of money from the 2nd Respondent's monthly payments until advised otherwise. The foregoing taken in totality disclose bonafide or reasonable defence and so like Nsekela, J did in CRDB Bank Limited Vs. John Kagimbo Lwambagaza (supra) I am unwilling to deprive the Applicant of its defence as I do not consider it to be a sham one. In the event and for the foregoing reasons, I grant unconditional leave to the Applicant to defend in Commercial Case No. 10 of 2017. Having so held I order the Applicant to file its defence within 14 days from the date of this order. Costs shall be in the cause. Order Order accordingly. 6