20080605 TZCA Dar es Salaam

~ I \.__) IN THE COURT OF APPEAL OF TANZANIA 1) ' AT DAR ES SALAAM t : 1 1: , {CORAM: LUBUVA, J.A., MROSO, l.A., And MUNUO, J.A.) CIVIL APPEAL NO. 61 OF ~O~~ I I TANZANIA MOTOR SERVICES LTD . ..................:.................... APPELLANT VERSUS 11 TANTRACK AGENCIES LTD. . ..........................; ............... RESPONDENT (Appeal from the decision of the High Court of Tanzania at Dar es Salaam) (Kimaro, J.) dated the 17th day of February, 2004 · in : Civil Appeal -No. 58 of 2004 ! RULING OF THE COURT JI jl 6 May & 19 June 2008 11 ,1 i! LUBUVA, J.A.: I ,,I ' I This matter originates from Application: No. 257 of 1995 in the ,1 ,I Regional Housing Tribunal Dar es Salaam. the appellant, Tanzania -I -! Motor Services Co., had applied for·extensio~ of time to file notice of ·, 11 appeal. The Regional Housing Tribuna1 1: upheld a preliminary objection raised by the respondent that tlie Tribunal had no jurisdiction to extend the .time in which to appeal. 2 ·, '\j The appellant was dissatisfied and so, unsuccessfully appealed in the Housing Appeals Tribunal. Th~ appeal was summarily rejected under section 24 (1) of the Rent Restriction Act, 1984. Undaunted, the appellant further appealed to the High Court, (Kimaro, J. as she then was) where the appeal was also dismissed. In dismissing the · appeal, the learned judge took the view that the _Housing Appeals Tribunal correctly rejected the appeal summarily. Still unsatisfied, the appellant has further appealed to this Court. Before us in this appeal the appellant was represented by Mr. Fungamtama, learned counsel, and Mr.. Ntonge, learned counsel, advocated for the respondent. Mr. Ntonge had also appeared in the High Court for the respondent. When the appeal was called on for hearing, Mr. Ntonge raised a preliminary objection notice of which had been given in terms of the provisions of rule 100 of the Court Rules, 1979. In the preliminary objection, three grounds have been raised out of which, we think, ground one is crucial for ·the determination of the preliminary 3 'I \._.,' objection. This ground we shall shortly deal with after disposing of grounds two and three. We have no difficulty in disRosing of ground two. The complaint in this ground is that the :appeal has been instituted by Tanzania Motors Services Ltd., the appellant, which has ceased to have legal capacity. According to Mr. Ntonge once, the appellant "l company was declared a specified authority, it ceased to exist legally in which case it had no legal capacity to pursue the appeal. In response, Mr. Fungamtama briefly made the following I ,, submission. That although the appellant company had been declared I ' a specified public corporation, still it cqntinued to exist in law. In that ' capacity, it is capable of suing or being sued. Therefore this ground has no merit, Mr. Fungamtama stressed. It is common ground that once ~ public corporation is declared I , . a specified public corporation, in th:e first place, the Presidential Parastatal Sector Reform Commission, (hereinafter the PSRC) is ,,'1 :1 I I ,, 4 l,___ ·· vested with the power to act as the officia'I receiver of the specified public corporation. Second, the PS~C i~ also vested with the power and the rights of a receiver in terms of the provisions of section 9 (1) ' of the Bankruptcy Ordinance, CAP 25 R.E. 2002. Section 9 (1) of the Bankruptcy Act, provides:- 9(1) On the making of a receiving order the official receiver shall be thereby constituted receiver of the property of the debtor, and thereafter, except as directed by this Act, 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, or shall commence any action or other legal proceedings, unless with the leave of the court and on such terms as the court may impose. In our view, it is loudly clear from this provision that apart from . vesting the PSRC ·with powers of the official receiver to the appellant company as a specified public corporation, the legal existence of the 5 ' ', \.__ appellant company remains intact. In :Kampuni ya Uchukuzi I, ,,,1 Tabora Ltd. Versus Praxeder Paulo And T.M.K. Mrema, Civil 1 Application No. 43 of 1999 (unreported), the Court had occasion to ·,, ,I deal with a· similar situation. In that ca~e the applicant company, i :1 ' Kampuni ya Uchukuzi Tabora Ltd., hag been declared a specified 'I • IJ public corporation. In the course of hearing application for stay of 'I execution, it was submitted that the appljcant company upon being ,1 placed under receivership it ceased to'. exist as a legal entity. Rejecting this submission, a single Judge of this Court (Kisanga, J.A.) ii inter alia stated:- I 11 .. ... I think that the applicant corporation continues to exist in law, continues to be the owner of its property and thati with the leave of the court, a creditor of a debt provable in t 1; I bankruptcy can proceed against its property. For similar reasons, in this· case, we are iQcreasingly of the view that I I Mr. Ntonge's submission that the legal :;existence of the appellant I company had ceased to exist upon being declared a specified <I I I I: I . - 6. "- authority, is untenable. We agree with Mr. Fungamtama that this ground has no merit. It is accordingly dismissed. Ground three of the preliminary objection need not detain us either. It reads:- 3. That the appeal is pre-mature in that the appellant's official receiver PSRC has filed, the High Court, Civil Revision/Review No. 102 of 2002 concerning substantially the same issues as in this appeal. In the premise, Civil Rev .. 102 of 2002 ought to be allowed to proceed to its conclusion before this appeal is heard. In the first place, it is to be observed that we have not had the advantage of ascertaining whether in fact, there is Application No. 102 of2002 by the PSRC seeking review in the High Court as alleged in this ground. However, even if it is accepted that there is such an application by the PSRC pending in the High Court, we do not think that this in itself would render the appeal incompetent. Admittedly, it 7 may well be undesirable for the same iss,ue to be raised at the same time by simultaneously pursuing Civil Review No. 102 of 2002 in the High Court and the appeal in this Court. Irregular though .it is, as a matter of law, we think, such does not render the appeal incompetent as alleged. We find no merit in this ground. We shall· next deal with ground one which, as observed earlier, we think raises a matter of substance. 'In 'this ground, it is claimed that the appeal is incompetent for failure to join· the PSRC as a necessary party in the appeal in this Court. In his submission on this point, Mr. Ntonge observed that the appellant company is a specified public corporation by virtue of Government Nqtice No. 400 which was published on 28th July, 1995. Following this publication, counsel further submitted, the PSRC was vested with the· powers of a receiver in which case it was necessary to join the PSRC as a necessary party in this appeal. As the PSRC was not joined as a party in this appeal, the appeal is rendered incompetent, it should be struck out, Mr. Ntonge urged. In 8 1' "- support of this submission, the Court was referred to its decision in National Insurance Corporation Versus J. Mbuna, Civil Appeal No. 67 of 1999 (unreported). Mr. Fungamtama, learned counsel for the appellant, responded. It was however, apparent to us that he vacillated in his submission when at one stage he seemed to concede to the preliminary objection. On the other hand, he took the view that non-joinder of the PSRC should not be entertained at this stage. According to him, this is so because he had raised the same issue in Civil Application No. 91 of 2007 in this Court. Appar,e.ntly, upon realization that it was necessary to join the PSRC as a party in the appeal, he sought leave of the Court to join the PSRC as a party in the appeal. However, the application was dismissed by a single Judge of this Court in Civil Application No. 91 of 2007. In this light, Mr. Fungamtama was firmly of the view that the respondent should not be allowed at this stage on appeal to raise the objection that the PSRC was not joined as a necessary party. ·- ' 9 \ On the other hand, Mr. Fungamtama prayed that in the event the Court is inclined to uphold the preliminary objection, the appeal should not be struck out as urged by Mr. Ntonge. Instead, he sought the Court's indulgence to give the appellant time to rectify the irregularity. \Counsel further submitted that if the Court sustained the ' preliminary objection, it would not be enough for the Court to strike out the appeal. The reason, he said was that by striking out only the ' appeal it would leave the rest of the proceedings in the court below intact.. Such proceedings should not be left intact because they are similarly affected by the irregularity. :, For this reason, Mr. Fungamtama invited the Court to invoke its revisional jurisdiction ' ' under section 4 (2) of the Appellate .Jurisdiction Act, 1979 as amended by Act No. 17 of 1993 to revise the proceedings in the High Court. We think the starting point in. this ground is the consideration of the issue whether as a matter of law, the PSRC was a necessary • party in this appeal, the proceedings in the High Court or the Tribunals. As we have observed earlier, it is trite law that once a public corporation is declared a specified public corporation as was - the case with the appellant company in this case, the PSRC is vested with powers of an official receiver of the appellant company. Furthermore, the official receiver is also vested with the power and all the rights of a receiver appointed in terms of section 9 (1) of the Bankruptcy Act extracted above. From this provision, it is clear that upon declaration of a public corporation as a specified public corporation, no creditor to whom the debtor is indebted shall, among other things commence any action or other legal proceedings, unless with the leave of the court and "On such terms as the court may impose. We think Mr. Fungamtama's submission that the respondent should not be entertained in raising the argument at this stage that the PSRC was not joined in the appeal as a necessary party is without merit. .' 11 • The fact that unsuccessfully effort w~s made in Civil Application No. 91 of 2007 in this Court to have the PSRC joined as a party in the appeal cannot be taken ·as justification for non-compliance with the requirement of the law. After all, it is to be observed that the Court I . 'I . in Civil Application No. 91 of 2007 dismissed the application on the ground that there is no need for an order .of the court for joining the PSRC as a party in the pending appeal. It is our view that subject to applicable rules, it is for the party concerned to take appropriate •I ,, •I , measures at the right stage for correcting the record and not by way of a court order. We are therefore satisfied that Mr. Fungamtama's resort to Civil Application No. 91 of 2007 to explain his failure to join ·I the PSRC in the appeal is of no avail. , I .,1 ,we have underlined the words in section 9 {l) extracted earlier deliberately in order to underscore the fact1 that upon . specification of jl ' I a public corporation, no action or any other legal proceedings shall be commenced · against the specified corporation without joining the PSRC as receiver with leave of the court. It is common knowledge ' I that at that. stage the property of the specified public corporation is 1 12 - \ \ . placed under the hands of the official receiver. For this reason, the rationale for invoking the provisions of section 9 ( 1) of the Bankruptcy Act requiring the official receiver to be joined as a party ,, in legal proceedings against the ·specified I public corporation is glaringly apparent. In the case before this Court it is not disputed that the PSRC ii I! ' was not a party in the proceedings b~fore the Dar es Salaam Regional Housing Tribunal, the Housing Appeals Tribunal and the High Court. It will also be recalled ttlat, initially, the appellant ,I company, now a specified public corporation, filed Application No. 157 of 1995 seeking to be declared a statutory tenant. Judgment was given in favour of the respondent. As already shown, the '- appellant company unsuccessfully appeal~d to the Housing Appeals Tribunal and the High Court. In •this Court the appellant company is the appellant in the pending appeal. In the circumstances, the issue arising is whether the law as extracted above under section 9 (1) of the ,, Bankruptcy Act, requires ' I: 13 • the appellant company, as a specified public corporation to seek and. obtain leave of the court before instituting the proceedings in the Tribunals and the appeal in the High Court? Likewise, would the same legal requirement apply in this Court regarding the pending appeal by the appellant company? With:great respect to Mr. Ntonge, we do not think so. First, the situation in the instant case. is such that it can hardly be said that either remedy in respect of the property of the appellant . company as a specified public corporation is sought or that legal ,, proceedings against the appellant compa~y have been instituted. On the contrary, it is the appellant company which has instituted proceedings in the Tribunals, the appeal in the High Court and in this '- Court against another party, the respondent. Here, the protection of the property of the specified public corporation is not in issue. Second, in the instant case, as it i~ not disputed that the · ·appellant company is a specified public corporation we are unable to find any legal requirement for joining the PSRC cis a party in the ·• ' . 14 proceedings against another party. In this case, as already indicated, the PSRC was not a party in the proceedings before the Dar es Salaam Regional Housing Tribunal, the Housing Appeals Tribunal, the High Court and the pending appeal in this Court.. It is also to be noted that from the start, it was the appellant company which · initiated legal proceedings against the respondent. It is also common knowledge that in the appeal pending in this Court, the appellant company, is pursuing the appeal against the respondent. In that situation, we cannot accept Mr.Fungamtama's submission that it was necessary to join the PSRC as a party either in the Tribunals, the High Court or in this Court. In our view, this is so because as already stated, it does not follow that once a public corporation is specified as a public corporation, it ceases to exist as a legal entity. In this capacity, the specified public corporation is capable of suing or being sued on its own or jointly with other parties. This view was also restated by this Court in Kampuni ya Uchukuzi Tabora Ltd. (supra). In. that case, the Court among other things, considered the effect of placing a specified corporation . ' 15 ,1 i under the receivership of the PSRC as provided under section 39 (1) of the Public Corporations Act, CAP 257 R.E. 2002. Inter alia, the learned single Judge stated:- I · can see nothing in this provision which I suggests that upon being ,1 placed under ,1 receivership a public corporation ceases to ,, exist as a legal person or ceases to own property. What the provision says .... which I continues to be a living legal person .... ' (underscoring provided). In similar vein, in the instant case, the appellant, a specified public corporation as a legal entity, could, in our: view, properly proceed in action against another person without joinirg the PSRC. After all, the 'i appellant having been placed under receivership, it would be in the I interest of any other person who, after obta'lning leave of the court desires to sue the specified public corpor~tion to join the PSRC as a i _ I party. The idea behind this is that the, property of the specified . ,' i I public corporation placed under the hands of the receiver may well be affected by the proceedings instituted against the specified public ,1 . I .... 16 corporation. In the instant case, the j;position is different, the II ' ' property of the specified corporation, the gpp'ellant, is not proceeded against by way of a remedy. On the c9ntrary, it is the specified I corporation, the appellant, which is institu~;ing the proceeding against :1 the respondent. 11; '1 ' 11 11 • The case of Mathias Eusebi S~ka V The Registered Trustees of Mama Clementina Foundation If , and Two Others, ,, Civil Appeal No. 40 of 2001 (unreported) Vihich was cited in support 11 of the preliminary objection is distingui;shc;ible. In that . case, a preliminary objection was raised that the ,PSRC had not been joined ii ,1 as a party was sustained. There, unlike the instant case, the i :,i .I . appellant had sued a specified public corRoration without joining the '· l PSRC in terms of section 9 (1) of the Ban~ruptcy Act. In the instant case, the appellant, a ·specified public I) corporation, initially took proceedings against the respondent. In 'the appeal .pending in this d \ ~ ri Court, the specified public corporation :,s the appellant. In that ' situation, it would follow that there is no legal requirement that a 11 ' . III ,! . specified public corporation shall join the F?SRC in proceedings against I i, I !i I ~- . ~ ~ 17 . ,, • \ ! i I another party. We think failure to doI so does not render the i~ I: 11 ' proceedings or appeal as is the . case in this I matter incompetent. The ,1 I' . ' specified public corporation is a legal entity ~apable of suing or being II ,I . ,1' " sued. In construing section 9 (1) of the ~ankruptcy Act and arriving . 11 11 I, at this decision, we are not oblivious Of the decision in Mbuna '~ i\ I (supra). f ,I ,I 1: ' In the event, and for the foregoing reasons, we are satisfied II : that there is no merit in the preliminah, :objection raised. 1 It is 11 · i1 accordingly overruled. Costs in the cause}: , I ' 'I ,I .· th DATED at DAR ES SAlAAM this 5 ,day of June, 2008. D.Z. Lubuva I; 11 JUSTICE OF APPEAL ,I J.A. Mroso 'i . : JUSTICE OF APPEAL ::1 I: E.N. Munuo i,I JUSTICE OF APPEAL ,, I . I I certify that this is a true copy of the original. •I I -L. ~ - Ii: ~----. F.L.K. Wambali ,1 11 REGIST.RAR II f l 'I 11 :I i