20071114 TZHC Arusha

IN THE HIGH COURT OF TANZANIA ATARUSHA CML APPEAL NO. 1 OF 2002 TANZANIA ELECTRIC SUPPLY COMPANY LIMITED .................. ~ ... ~;········· ..........APPELLANT VERSUS 1. ARUSHA INTERNATIONAL CONFERENCE CENTRE 2. L.S. BURETA .................... RESPONDENTS 3. V. NATHWANI JUDGME;NT Mussa, J; This appeal originates from Civil case No.46 of 1998 instituted in the District Court of Arusha. The respondents who were plaintiffs I there sought declaratory orders against the appellant to the effect that the latter is not entitled in law to impose a condition for new tenants to first pay arrears of electricity bills, unpaid by outgoing tenants, before being supplied with power; that monies paid by the respondents to the appellant out of n~essity be either refunded or posted as credit into their accounts and; that the appellant be temporarily restrained from denying supply of power to incoming tenants until the final determination of the suit or further orders of the court. 1 It is commonplace that the first respondent is a public corporation established by an executive order carrying on the business of letting premises while the second and third respondents are businessmen and, ostensibly, tenants of the first respondent. Also common ground, is the fact that the appellant is a public corporation established under the companies Ordinance with an exclusive licence to supply electricity in the locality and other parts of the country. The appellant had denied the claim in a written statement of defence that also enjoined a counter-claim. As is also quite apparent from the record below, the appellant also filed a notice of preliminary objection seeking to impugn the competency of the suit itself on account that the matter was· not properly before the trial court in the wake of non-compliance with the provisions of section I 43(1) of the Public Corporation Act as amended by Act No. 16 of 1993 read together with section 9(1) of the Bankruptcy Ordinance, chapter 25 of the laws. During the trial, the respondents were represented by Mr. Mughwai while the appellant initially had the services of Mr. Musiba but later Mr. Johnson was drafted in. At some stage in the proceedings below, counsel for both sides informed the court that there were agreed that their dispute 2 was centered on the interpretation of ,,,section 64 of the Electricity Ordinance and that theirs is a legal di~p~te to which they desired determined· upon written submissions. To this plea the trial court obliged and so the case was conteste.p wholly on the strength of ' counsel submissions. In the aftermath, Mr. Mughwai for the plaintiffs below submitted this:- When the case was called for hearing on the 2-t" April 2001 Counsel for the parties informed the ,1 Honourable Court that they were agreed on certain facts of the case. fhi~ agreement took 'i advantage ofsection 60 of the Evidence Act which provide that facts admitted:by the parties, or 1. their agents in civil proceedings need not be proved. r , The provision has the further advantage of ·, expediting the proceeding by trying contested issues . " only. The facts which were hot in dispute are:- i, 1. That the second and third 1 Plaintiffs ' were , I incoming tenants of the first plaintiff. 2. That when the said second ' and third 3 . Plaintiffs were first let the premises by the first plaintiff there were outstanding arrears of electricity bills left unpaid by the previous tenants. 3. That when the second and third plaintiffs ' look occupation of their leased premises the Defendant had already disconnected electric 1 energy from the concerned premises on ' I I account of the non payment of the bills. The legal issue which remains · to be considered and determined, and for which Counsel were given leave to file written submissions in lieu of oral submissions ( is whether.. the second and third Plaintiffs as incoming tenants were supposed in law to pay the outstanding electricity bills left unpaid by the former tenants, as a condition to being supplied with electric energy by the Defendant. Counsel then made a recital, apparently, from paragraphs 5, 6, 7 and 8 of the plaint as well as paragraph 5 of the written 4 statement. of defence from which he gathered that the facts therein were undisputed and that the sole issue for determination was on interpretation, as already indicated, of section 64 of the Ordinance. To this formulation, counsel for the defendant there submitted in part:- I agree with the issues as submitted by my learned brother Mr. Makange; Advocate for the plaintiffs, however, I disagree with his conclusion and interpretation ofsection 64 of the Electricity Ordinance Cap. 131 {hereinafter the ordinance.) Mr. Johnson had, quite obviously, inadvertently referred to Mr. Mughwai as Mr. Makange to which his brother rectified on a rejoinder. That was, perhaps, beside the point but; petinent to these proceedings is the glaring possibility that there was more to the agreement between the parties than is reflected in the ' proceedings below. Be that as may have happened but; on strength of the submissions before it, the trial court construed the provisions of section 64 of the Electricity Ordinance in favour of the respondents and determined the matter as such. The appellant is aggrieved and seeks to impugn the decision of the trial court upon four grounds of 5 appeal couched thus:- 1. The trial court acted without jurisdiction in adjudicating upon this case confrary to mandatory provision of law as the appella~t is a specified ! public corporation even before institution of the I Civil Case No.46/1998 between the same parties. 2. That the trial Court erred in law in disposing of the preliminary objections on matte~ of law without i making a finding on them on merits to satisfy itself as to their correctness. 3. That the whole trial was vested with material j, ' ', illegality as no issues were framed and no any I , I I witness testified in support of,the allegations ' in the plaint and the counter cfaim according to ,! ,, I the principles guiding proof of claims or a/legations in civil litigation. 4. That the Learned trial Magistrate erred in finding , I that the respondents qualify to be incoming ' ' IJ 1, tenants under section 64 of the flectricity Ordinance, Cap. 313. 6 At the hearing, the same Mr. Joh~son and Mr. Mughwai appeared, respectively, for the appellant and the respondent. I Learned counsel were agreed and allow~ to argue the appeal in I writing and; it is to learned rival arguments that I now turn to. ' " ' On the first ground of appeal, Mr.· Johnson submits in effect, that the appellant is a specified pu_blic corporation by virtue I of GNs Nos. 543 of 1997 and 424 of 1999, and thus in terms of section 43(1) of the Public Corporation Act; 1992 as amended by 1 Act No. 16 of 1993, once a corporation: has been specified, then the Presidential Parastatal Sector Reform Commission (PSRC) ,I . becomes the official receiver and that, the provisions of section I 9(1) of the Bankruptcy Ordinance apply. It is pertinent to reproduce the provisions of section 9(1)'Jin full:- ,I On the making ofa receiving ,, ' order the official receiver shall be thereby constituted ,,1 receiver of the property pf the debtor, .i and thereafter, except as directed by this Ordinance no creditor to whom the debtor I _li is indebted in respect o~an,y debt provable I in bankruptcy shall have any remedy against the property or ~e'rson of the debtor .7 I in respect of the debt, or shall commence I any action or other legal proceedings, unless with the leave of the court and on such terms as the court may impose. Counsel for the appellant elaborates further that by the operation of section 2 and 97 of this Ordinance, the express ··"the court" referred to in this subsection is, actually, the High Court and, . as such, the proceedings below required leave of the High Court first ,, thing. Mr. Johnson referred to the court of appeal decision of Mathias Euseki Soka v. The registered trustees of Mama Clementina foundation and two other$ Civil Appeal No. 40 of 2001. In this regard, Mr. Mughwai for the respondents does not quite dispute the fact that the appellant is, indeed, a specified public corporation but counters, first, that not all the provisions of the B~nkruptcy Ordinance are made applicable by virtue of section 43(1) I' of the Public Corporations Act; second, that section 9(1) of the Ordinance would not be applicable in as much as the appellant was not a debtor and what was in controversy was he construction of a provision of the law and; third, that to the extent that theirs was not a proceeding in bankruptcy, they were not enjoined to apply for leave I before instituting the proceeding below. 8 Expounding on the first point of contention, learned counsel I for the respondents urges that the only provisions of the Bankruptcy Ordinance that are engaged by section 43(1) of the Public Corporation Act are those dealing with powers· and rights of the official receiver which counsel conceives are sections 75, 76 and 77. Beyond these specific provisions, it was submitted, the Bankruptcy Ordinance would not be engaged, the more so, in as much as Parliament did not quite plainly express. As regards the second point counsel elaborated that, in the proceedings below, the appellant was no debtor against whom the I respondents sought remedy in respect of a debt; rather, the proceeding giving rise to this appeal merely sought a declaratory judgment having nothing to do with a debt provable in bankruptcy. The third argument is an extension of the second, that is, if I understood counsel well much as he seeks to impress that the making of a receiving order cannot affect debts or liabilities which are not provable in bankruptcy. To be frank, I cannot hide my being impressed by the quite refreshing submissions by both counsel on this point to which- I am anxious to dispose of ahead of the other grounds of appeal. In this regard, I deem it opportune to extract in fu:11 the provisions of section 9 43(1) of the Public Corporation Act:- Notwithstanding any other law to the contrary, with effect from the date ofpublication ofan order declaring a public corporation to be a specified public corporation, the commission shall- ( a} without further assurance on appointment have the power to act as the official receiver of the specified public corporation; and (b} have the power anda/1 the rights of a receiver appointed in accordance with or pursuant to the Bankruptcy Ordinance. To me, the rights of the official ~eceiver are inclusive those mentioned in the provisions of section 9(1) of the Bankruptcy Ordinance as held by the superior court in Mathias, the authority referred to me by learned counsel for the appellant. That being the position, I will,. respectively, dislodge ' Mr. Mughwai's blanket contention that section 9( 1) does not avail an official receiver of a , specified public corporation. 10 But, I should suppose, Mathias was decided and derived of a debtor - creditor situation to which factual setting it must be confined. I say so because I take the position that for the provisions of section 9(1) to come into play, it must involve an official receiver - creditor- debtor arrangement. Thus, in terms of the provision, once an official receiver is constituted, two consequences necessarily follow there from. First, no creditor to whom the debtor is indebted in respect of any debt provable in bankruptcy, shall have any remedy against the property or person of the debtor in respect of the debt and; second, again, no such creditor shall commence any action or other legal proceedings, unless with the leave of the court. To me and, in agreement with learned counsel for the respondents, it does not necessarily follow that any action is barred by the provisions of section 9(1) of the Ordinance merely because it is sought to be instituted against a specified Public Corporation. In order that the provision comes into play, it seems to me, the common denominator is rather whether or not the intending claimant is a creditor to whom the debtor is indebted in respect of any debt provable in bankruptcy. The knotty issue is, here, whether or not the respondents can be brought to the terms of the provision, the resolve of which was not, at all, an easy exercise. 11 Although counsel for the respondents sought to generally rely _upon the contention that theirs was simply a suit for a declaratory judgment but; in one of the prayers the second and third respondents sought to be refunded monies allegedly paid out of necessity which prayer was actually granted by the trial court. That being so, I am satisfied that the second and third respondent held themselves up ,in the position of creditors to whom the appellant was sought to be indebted. The commission, having acquired the ' powers and all the rights of a receiver appointed in accordance with the Bankruptcy Ordinance; it follows that a specified Public Corporation is deemed by the law to be· in a position as if it were a debtor who had committed an act of bankruptcy just as a claim, other than one for bankruptcy, instituted by a debtor must be deemed to be provable in bankruptcy so long as the plaintiffs qualifies to the conditions on which a creditor may petition in a bankruptcy suit. In the matter presently, before me, I take the position that the second and third respondents qualified as such. That said, I am satisfied that the second and third respondent held themselves up in the position of creditors to whom the appellant was sought to be liable in respect of a debt provable in bankruptcy. They were, as such, caught up by the provisions of section 9(1) in I that they were barred to commence any action or legal proceedings 12 against the appellant without leave of this court. The first respondent was, so to speak, drafted in as a necessary party and, thus, without the second and third respondent, the action against the I· appellant does not make good sense at all. In the end result, I uphold the first ground of appeal and quash the entire proceedings which were illegal. I need not give my concluded view on the other points that were just as lucidly presented by cou.hsel. As to whether or not I should award costs is a matter to which ' I exercised my mind tremendously. In a way this matter had to I shuttle all the way to this court partly because the parties adopted a '' certain procedure during the trial in terms of which learned counsel ' for the appellant was privy and implicitly forgo h.is objection as to the K.M .Ji 14/11/2007 13