standard chartered bank hong kong ltd another vs independent power tanzania limited another 2015 tzhc 2109 18 december 2015

IN THE HIGH COURT OF TANZANIA (DAR ES SALAAM DISTRICT REGISTRY) AT PAR ES SALAAM MISC. CIVIL APPLICATION NO. 5270F 2015 (Arising from Civil Case No. 60 of 2014) STANDARD CHARTERED BANK (HONG KONG) LTD......... 1st a p p l i c a n t MARTHA KAVENI RENJU 2nd APPLICANT Versus INDEPENDENT POWER TANZANIA LIM ITED .....1st RESPOND PAN AFRICA POWER SOLUTIONS LIM ITED ...... 2nd RESPOND Date o f subm issions: 23/10/2015 Date o f Ruling: 18/12/2015 RULING F. Twaib, J: This ruling is in respect of an application filed by Mr. Gasper Nyika, learned advocate of IMMMA' Advocates, on behalf of the applicants, primarily for an order of stay of proceedings in Civil Case No. 60 of 2014 (hereinafter "Case No. 60 of 2014" or "the main case") until Civil Case No. 229 of 2013 (hereinafter "Case No. 229 of 2013") is finally determined. The affidavit of Martha KaveniRenju, the Z"u applicant, accompanies the application. The respondents have resisted the application. They have filed two counter affidavits, affirmed by one .ParthbanChandrasakaran, director of the 1st respondent company, and one Manraj Singh Bharya, director of the 2nd respondent company. While the applicants have enjoyed the services of Mr. Nyika and at some earlier stages by Mr. Charles Morrison, the respondents have been represented by Mr. Joseph Makandege, Mr. MelchisedeckLutema and Mr. Sungwa, learned advocates. Apart from contesting the merits of the application, the respondents have also raised five points of preliminary objection. However, at the hearing of the application, their counsel abandoned one of the points and only argued the remaining four points. For convenience, I will discuss them in the following order: 1. The application is bad in law for want of locus standi on the part of the 2nd applicant to execute, file and depone an affidavit of the 1st applicant. 2. The application contravenes the mandatory provisions of paragraph 21 of Part III of the Schedule to the Law of Limitation Act. It is thus time-barred. 3. The application is legally untenable for offending the mandatory provisions of 8 section of the CPC. 4. The application is incompetent for non-joinder of the 3rd respondent in Civil Case No. 60 of 2014. Arguing the first point that challenges MsRenju's/oa/s standi, Mr. Makendegesubmitted that it was wrong for her to swear the affidavit in support of the application and the reply affidavit on behalf of the l stapplicant and as Administrative Receiver of IPTL. Counsel's reasons are that MsRenju's status as an Administrative Receiver of IPTL is contested in this case, and there is an order of the Court restraining her from interfering with the management of IPTL pending the determination of this case. Hence,her statement that she is such Administrative Receiver is contemptuous of the court order, counsel argued, and allowing her to do that would be to condonean abuse of the court and legal process. For this contention,Mr. Makandegerelied upon the case of The Village Chairman K.C.U. Mateka v Anthony Hyer^ 1988] TLR 188. I have read this case and, with due respect to learned counsel, it is no authority for theproposition he is putting forward. Indeed, that issue formed no part at all of the court's decision in the case. Mr. Nyika's answerto the issue of locus standw asthat Ms. Renju's status as Administrative Receiver of IPTL and whether or not she is in contempt of court do not qualify as preliminary points of law. I accept this contention as correct. These are contested issues in the main case, which will certainly require evidence: See Mukisa Biscuit M anufacturing Co. Ltd. v. West End D istributors Ltd. [1969] EA 696, which is further discussed below. For that reason, I would dismiss the third point of objection for want of merit. I will now move to determine the point on limitation. Mr. Lutema argued it on behalf of the respondents, and expressed the view that thisapplication is time-barred. The application was filed on 3rd September 2015, while the case was filed one year and four months before. The applicants became aware of the institution of the case on 15th July 2014 at the latest, contended Mr. Lutema. Hence, being an application, it falls within the provisions of paragraph 21 of Part III of the Schedule to the Law of Limitation Act, which puts the limitation period at sixty days. Mr. Nyika's response is that section 8 imposes a duty on the court not to exercise its jurisdiction whenever it is satisfied that the case pending before it was filed later than the other case, and that it falls within the rule as to res sub ju dice. That duty has no limit, he argued, and thus cannot be taken away by lapse of time. If I got him correctly, counsel seems to argue that where an application is made to the court, it also serves as a reminder to the court that it has a duty to stay proceedings due to the pendency of the other case. Furthermore, Mr. Nyika opines that the effect of section 8 is to suspend the court's jurisdiction pending determination of the case earlier filed. Hecited Bagamoyo D istrict Council v A S . Noremco Construction & Anor, Civil Appeal No. 106 of 2008 (unreported), where it was held that where there is a point of law touching upon the court's jurisdiction, it can be raised at any time, and cannot be affected by limitation of time. He concluded, therefore, that section 3 and paragraph 21 of Part III of the Law of Limitation Act does not apply in circumstances of this case. In rejoinder, Mr. Lutema agreed that where the issue is a point of law touching on the court's jurisdiction, rules of limitation do not- apply. However, he reasoned,res sub ju dice is not a point of law that can be raised at any stage of the proceedings.- It is, in his view, a point of fact that the law has permitted to be raised by way of an application, while points of law are raised by way of preliminary objections, not applications. He further submitted that the Law of Limitation Act provides for a sixty- day limit for all applications not elsewhere provided for, and has no categories of applications. The applicants should have applied for extension of time under section 14 of the Law of Limitation Act before filing their application, he concluded. Mr. Makandegelent support to Mr. Lutema's submissions, saying that even if res sub judice were a matter of law, it cannot be invoked to defeat the Law of Limitation Act. The right afforded by section 8 of the CPC, where applicable, has to be pursued within the law, including the law of limitation. He added that what is before the court is not a suit, by which counsel probably wants to remind the court that this is an application, in which case the law of limitation would apply. Is res judicata an issue of law? Is it the court's duty to observe the rule in section 8, or does the section only create a right that can be exercised by a party to a case who would apply to the court to have the proceedings stayed? I find with Mr. Nyika's argument, which would answer the first question in the affirmative, quite attractive. However,it does not appear to enjoy the express support of Mulla(supra), despite the obvious restriction that section 8 imposes upon the Court not to try such a case, which might be taken to mean, as Mr. Nyika says, that the court's jurisdiction is suspended whenever the situation arises. Mulla has, in my view, been accorded perhaps the greatest respect that any author of civil procedure has enjoyed in this country. And, in a sense, I am inclined to agree with his opinion that tends to show that the section does not come into play automatically by suspending a subsequent suit once it is found that there is a previously instituted suit before a court of competent jurisdiction falling within section 8. I have reached this position upon considering three principles that Mulla’ asserts in regard to section 10 of the Indian Code of Civil Procedure, a statute in parim ateria with our section 8 of the CPC. In the 18th edition of his treatise (2011), the learned autfpor writes: 1. (At p. 161)-.[section 10] enacts a rule o f procedure and a decree passed in contravention o f it is not a nullity and cannot be disregarded in execution proceedings [citing Sheopat Ravi i/ Warak Chand (1919) A.L-294]. It can be waived, although the section is so worded as not to leave any discretion in the court where its conditions are satisfied [citing Shanti Swaroop v Abdul Rehman, 1965A.M.P. 55, 59. 2. (At p. 164): Though the heading o f this section is "stay o f suit", it does not operate as a bar to the institution o f the subsequent su it that is not to be proceeded with [citing Maharastra State Corp. Mktg. Federation Ltd. v Indian Bank AIR 1997 Bom 189]. 3. (At pp. 165 and 172): [Section 10] enacts m erely a rule o f procedure and a decree therefore passed in contravention o f it is not a nullity [ citing Sheopat Ravi, supra I However, Mulla, again, provides a conclusion on what a court should do where the circumstances for the section's application are in place. He says: (At p. 161): Since however the provisions o f the section are m andatory the court, before which the subsequent su it is pending ought to stay it where a il the conditions la id down in the section exist [M ulla contrasts this position with the case o f Seaueria v P. Francisco 1976 A Goa 48] Given the obligatory character of this statement, Mullawould, I think, plai:e a duty on the court to stay proceedings of the subsequent suit in such situations—which would then offer credence to Mr. Nyika's view. However, with all due respect to the highly authoritative author Mulla, his statement last quoted appears rather contradictory when viewed in light of the case law positions he has himself identified. Unfortunately, my efforts to find an answer to the specific problem posed by this issue (i.e., whether the law of limitation applies to an application under section 8 so as to render the present application time-barred) have been fruitless. Mullaapparently does not discuss it.Neither case law nor any of the other learned writings that I have been able to lay my hands on,’have been of help in resolving this particular question, i Moneover, it seems to me that there is no difference of language between section 8 and section 9 of the CPC (on res sub ju dice and res judicata). I think that the common negative phrase "No Court shall" is significant. It contains an obvious prohibition. Hence, it would appear that the letter and spirit of the two doctrines is similar, if not identical. Both doctrines are prohibitive. Furthermore, I am inspired by the. decision of the Supreme Court of India \wAspi Ja l &Anrv. KhushrooRustomDadyburjor, S.C. Civil Appeal No. 2908 . of 2013, where it was held that: The use o f negative expression in Section 10, i.e. "no court shall proceed with the tria l o f any su it" w akes the provision m andatory and the Court in which the subsequent su it has been filed is prohibited from proceeding with the tria l o f that su it if the conditions la id down in Section 10 o f the Code are satisfied. I would thus hold that res sub judice is a mandatory rule and that a plea by a party for its invocation is not subject to the law of limitation, even though, as we have seen; a suit tried and determined without taking cognizance of a previously instituted suit pending in a court of competent jurisdiction may not necessarily be null and void. Hence, I hold the settled view, based on what I consider the proper interpretation of section 8 of the CPC, that once the court is satisfied that there is a pending suit in a court of competent jurisdiction in Tanzania where the matters in issue are directly and substantially in issue in both suits, between the same parties, or between parties under whom they claim litigating under the same title, the court handling the subsequently instituted suit has the duty of staying the same pending determination of the earlier instituted suit. With this finding, I would dismiss the second point of preliminary objection. The third point of preliminary objection has also brought up an argument as to whether it is a point of preliminary objection or simply one of fact. While Mr. Makandege believes that this is a point of preliminary significance and does not need any consideration of evidence except undisputed evidence from the pleadings, Mr. Nyikathinks the issue is one of evidence which, on the authority of Mukisa Biscuit Manufacturing Co. Ltd. (supra), cannot be decided purely on point of law. The rule in Mukisa Biscuitswas stated by Law, J.A. and Sir Charles Newbold, P. (at page 700). Law J.A. states: "So far as I am aware, a prelim inary objection consists o f a point o f law which has been pleaded, or which arises by dear im plication out o f pleadings, and which if argued as a prelim inary point may dispose o f the suit. " Sir Newbold put it this way (at p. 701): "A prelim inary objection is in the nature o f what used to be demurrer. It raises a pure point o f law which is argued on the assumption that a ll the facts pleaded by the other side are correct. It cannot be raised if any fact has to be ascertained or if what is sought is the exercise o f ju d icia l discretion." My understanding of the above statements is that the principle in Mukisa Biscuits$\d not rule out a consideration onthe facts. Indeed, in my respectful view, a preliminary objection must be based facts, but facts that are not disputed by the party against whom the objection is raised. This is what Newbold, P. meant when he said a preliminary objection "...raises a pure p o in t o f law which is argued on the assum ption that a ll the facts pleaded by the other side are correct” Mr. Nyika did not say what matters argued by Mr. Makandege touched on evidence in the sense of disputed facts. Fortunately, however, in their submissions, learned counsel on both sides argued not only the preliminary points, but also the merits of the application. It is thus not necessary, in determining this issue, for this point to be determined as a preliminary point. Indeed, as is clear from the submissions of counsel, whjle arguing the preliminary point, they have gone further and argued i the merits of the application. I would thus not attempt to answer the question as to whether this is a preliminary point. I will deal with it as an issue of merit since, either way, if the answer is that the parties are not the same or litigating under the same title, the application cannot succeed. The parties are at one on the four conditions that must exist before the court can properly invoke section 8 of the CPC and obtain an order of stay. The court must be satisfied that: i 1. There are two pending cases , one filed earlier than the other in point of time; 2. The two cases must involve the same parties or parties litigating under the same title; 3. The matter in issue must be directly and substantially in issue in both cases; 4. The two cases must be pending in courts of competent jurisdiction. It is common ground that the first and fourth conditions are fulfilled in the present case: There are two cases pending, one filed earlier than the other, and that they are both in this court, which court is of competent jurisdiction. Hence, only two main issues need to be decided: 1. Whether the two cases involve the same parties or parties litigating under the same title; and 2. Whether the matter directly and substantially in issue in Case No. 229 of 2013 is also directly and substantially in issue in Case No. 60 ; of 2014. The bottom line of Mr. Makandege's submission on this point is that the parties in the two cases are not the same, and neither do they litigate under the same title. Arguing the point before me, Mr. Makandege submitted that the application referred to section 8 of the Civil Procedure Code C'the CPC"), as the respondents maintain. The application itself has been brought under that section, which provides: No court sh all proceed with the trial o f any su it in which the m atter in issue is a iso directly and substantially in issue in a previously instituted su it between the same parties, or between parties under whom they or any o f them claim litigating under the same title where such su it is pending in the sam e or any other court in Tanzania having jurisdiction to grant the re lie f claimed. Further submitting,Mr.Makandegecontended that the plaint in Civil Case No. 229 of 2013 (annexure "GN1" to the affidavit of MsRenju) shows that the parties to the case are VIP Engineering & Marketing Co. Ltd. (as plaintiffs) and Standard Chartered Bank PLC, Standard Chartered Bank (Hong Kong) Ltd., Standard Chartered Bank (Tanzania) Ltd., the Joint Liquidators of Mechmar Corporation (Malaysia) Ltd.,. and Watsila Netherlands BV and Watsila (Tanzania) Ltd. (as defendants). In Civil Case No. 60 of 2014, the parties are: IPTL and PAP (as plaintiffs) and Standard Chartered (Hong Kong) Ltd., Martha Renju and Tanzania Electric Supply Co. Ltd. (as defendants). On the face of it, therefore, the parties in the two cases are not the same. But the applicants aver, through MsRenju's affidavit, that in Civil Case No. 229 of 2013, VIP Engineering is litigating under IPTL's title because it is suing on the strength of its Agreement for Sale and Purchase of Shares in IPTL entered into with PAP on 19th August 2013 ("the Share Transfer Agreement"), and a Power of Attorney, signed pursuant to sub-article 16 of article 1 of the Share Transfer Agreement. Mr. Makandege disputes this conclusion. He narrowed down the relevant provisions of the Share Transfer Agreement to article 1 (16) thereof, which provides for VIP's "residual interests" in IPTL. It is upon these residual interests, and only to their extent, argues counsel, that VIP's right to sue on behalf of IPTL in Civil Case No. 229 of 2013 arose. Sub­ article (16) describes the residual interest as: The rights and interests that VIP claim s against Mechm ar as o f the date o f this agreem ent and VIP's c/aims against Standard Chartered Bank o f not less than US Dollars 485 M illion as o f the date o f this agreem ent These residual interests, explained Mr. Makandege, were reserved by VIP at the time it sold its shares in IPTL to PAP. In order to enable VIP Engineering to exercise its right over the residual interests, it executed the Power of Attorney which is annexed to MsRenju's reply affidavit. The Power of Attorney, argues Mr. Makandege, is notindefinite. Rather, it is a ---------------- specific Power of Attorney for a specific purpose. It is limited, as is stated in article 1 (16^ quoted abovef to. claims "as of the date of this agreement". Mr. Makandege further contended that in Civil Case No. 229 of 2013, VIP acts for its own benefit. To quote him: The pow er is known in law as a pow er o f attorney with interest terminate, empowering the donee to act not fo r the benefit o f the donor, but for the donee's own interest, which would be defined in the pow er o f attorney and on the basis o f which such pow er is given. Those interests were not factored into the pricing of the shares, counsel contends, which is why the respondents maintain that in suing the applicants in Civil Case No. 229 of 2013, VIP Engineering is not acting for IPTL but for herself. That may well be the case, but I think this statement is too general. In any case, as Mr. Nyika submitted, what is important is that in the previous suit, VIP is suing on behalf of IPTL. How they share the spoils is up to them and the applicants have nothing to do with it.I agree with his view that it would be the same cause of action and indeed, as far as the claims the subject matter of the residual interests are concerned, whatever is decided in Civil Case No. 229 of 2013 would be res judicata for any claim that IPLT may wish to bring against the applicants, which is covered by the power of attorney. Having so found, the only remaining question in regard to this issue is the one raised by Mr. Makandege's contention that VIP's authority to claim on behalf of IPTL under article 1 sub-article 16 is limited in terms of time to the period before the date of the Agreement for Sale and Purchase of Shares, which is 19th August 2013. In other words, whether the outcome in Civil Case No. 229 of 2013 can operate as res judicata in respect of claims after 19th August 2013 against the 1st applicant. This finding has to be tested against the principle stated by Mulla in his The Code o f C ivil Procedure(pX£& to me by Mr. Makandege), when discussing section 10 of the Indian Civil Procedure Code. Hence, before concluding on the point, it is pertinent to move to the third condition for the application of section 8 of the CPC, namely, that the matter in issue must be directly and substantially in issue in both suits. In the 18th edition of his authoritative book, Mulla states that the phrase "directly and substantially in issue" means that the whole subject matter in both proceedings must be substantially the same. The cause of action in both suits must be the same. On page 163, Mulla writes: The fundam ental test to attract section 10 is whether on final decision being reached in the previous suit; such decision would operate as res judicata in the subsequent suit. That has operated as a rule in common law jurisdictions. In Mr. Makandege's view, the list of proposed issues in Civil Case No. 229 of 2013, once decided, cannot operate as res judicata in Civil Case No, 60 of 2014 because "the issues are different and so are the causes of action".Mr. Nyika, on the other hand, has further submitted that it is not necessary that the issues be identical. It is enough that they are substantially the same. It is not the identity of all the issues in the case, but the identity of the main issue, th a t main issue, in both cases, is whether the 1st applicant is a creditor of IPTL. All the other issues depend on this "fundamental issue". He thus concludes that, in this case, for the court to find in favour of IPTL, it must make a finding that the 1st applicant is not a creditor of IPTL. Mr. Nyika argues, however, that since they are merely proposed issues, they are not yet on record as issues to be decided by the court and in any case, what he sees as the "fundamental" issue in both case is whether the 1st applicant, Standard Chartered Bank (Hong Kong) Ltd. is a creditor of IPTL. I think Mr. Nyika is partly rightly in this regard. He is right in the sense that as proposed issues, the list relied upon by Mr. Makandege cannot on its own, be taken to represent the issues that the court will have to determine. He is also right in that looking at the pleadings in Civil Case No. 229 of 2013 the fundamental issue is whether IPTL is indebted to the 1st applicant. Again, however, it seems to me that, considering the limited scope of the documents that give VIP Engineering the right to claim and on behalf of IPTL, namely the Agreement for Sale and Purchase of Shares and Power of Attorney, the court's decision on the issue will still be limited to the date of the Agreement and not beyond that date. It seems clear to me, therefore, that the right to sue beyond that date (which is the cut-off point in this case) cannot be exercised by VIP Engineering in Civil Case No. 229 of 2013. Tested against Mulla's principle, which I accept, as the distinguished author has himself said, as the rule in common law jurisdictions and would apply in our jurisdiction as well, such decision cannot operate as res judicata in Civil Case No. 60 of 2013. In discussing this point, Mulla asserts (at p. 169): Section 10 contem plates substantial identity o f m atter in issue in the two suits. It is not the identity o f main or a ll issues but the identity o f m atter in issue which is the determ ining te st The decision in one su it m ust un-suit the other. This m ust be the phraseology o f answer, to win the question whether the m atter in issue in the two suits is directly and substantially the same [citing ArjiesAium inium Udyog v SudirBhatra, AIR 1990 D ei 139] In addition, one of the strongest points which mitigates against the application of res judicata in this matter is, I think, the one relating to the issue as to whether IPLT is indebted to the 1st applicant Standard Chartered Bank Hong Kong. The applicants maintain, correctly in my view, that that issue would arise in both suits. However, I would respectfully beg to differ with their conclusion that that question is also the fundamental matter at issue in both cases. As it has been argued on behalf of the respondents, it is not. While the issue is a fundamental one with regard to Civil Case No. 229 of 2013, it is not so in Civil Case No. 60 of 2014. The fundamental issue in the latter suit concerns the validity of the decision of the International Centre for the Settlement of Investment Disputes (ICSID) between the l stapplicant and the second respondent titled "Decision on Jurisdiction and Liability" issued in ICSID Case No. ARB/10/20 and dispatched to the parties on 12th February 2014. That issue cannot be resolved in Civil Case No. 229 of 2013. It thus cannot be correct to say that a decision in Civil Case No. 229 of 2013 would necessarily operate as res judicata in respect of Civil Case No. 60 of 2014. Hence, in concluding on this point, it is my settled view that the issue that is directly and substantially in issue in Civil Case No, 60 of 2014 is not directly and substantially in issue in Civil Case No. 229 of 2013. For that reason, therefore, the applicants cannot invoke section 8 of the CPC to ground an application for stay of proceedings that they are seeking from this court in the application before me. Having so held in respect of the third point of preliminary objection, the fourthand last pointis rendered purely hypothetical. It puts forward the argument that the application is incompetent for non-joinder of the 3rddefendant in Civil Case No. 60 of 2014. While this is a point of law which can be raised at this stage, its effect,given the finding just entered would be inconsequential. And, even if it was sustained, it would still be curable by amendment, as Mr. Nyika has rightly stated, under Order I rule 9 of the CPC. I thus see no need of wasting any more time or energy on it. In the final result, therefore, I would dismiss the application for stay of proceedings in Civil Case No. 60 of 2014 for want of merit, with costs. DATED at Dar es Salaam this 18thday of December, 2015. F.A. Twaib Judge