thomas musiba manda vs nmb bank plc and three others 2022 tzhc 13976 17 october 2022

IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA

MOSHI DISTRICT REGISTRY

AT MOSHI LAND APPEAL NO. 01 OF 2022 (Originating from Application No. 209 of2017 of the District Land and Housing Tribunal for Moshi at Moshi). THOMAS MUSIBA MANDA.......................................APPELLANT

VERSUS NMB BANK PLC............................................... ^RESPONDENT

NUTMEG AUCTIONEERS AND PROPERTY MASTERS LTD................................2nd RESPONDENT MAULID IBRAHIM SWAI..................................3rdRESPONDENT

JUDGMENT 8/9/2022 & 17/10/2022 SIMFUKWE, 3 This appeal emanates from the decision of the District Land and Housing Tribunal of Moshi (trial Tribunal) in Land Application No 209 of 2017. In a nutshell the appellant herein instituted a land dispute in the trial tribunal against the respondents herein. From the record, it is undisputed fact that the appellant borrowed money from the 1st respondent at the tune of Tsh 45,000,000/- and mortgaged his house as collateral. It has been alleged that the appellant defaulted to pay the CSinc-—^ Page 1 of 23 loan and so the 1st respondent through the 2nd respondent sold by auction the said collateral. The 3rd respondent was a successful bidder and he bought the mortgaged property at the price ofTsh 50,000,000/- The appellant was not satisfied, he filed the said application before the trial tribunal, he claimedamong other things that the sale was illegal. The trial tribunal decided the dispute against him hence, this appeal. In his amended petition of appeal, the appellant advanced the following grounds: 1. That the Trial Chairman erred both in fact and in law when declared that the Auction conducted by the 2nd respondent in respect o f the su it prem ise was legal.

2. That the Trial Chairman erred both in law and in fact when held that the Appellant defaulted to pay the loan advanced to him by the 1st respondent.

3. That the Trial Chairman erred both in law and in fact when failed to ascertain that the sale was done contrary to the "Valuation Report" o f the su it prem ise.

4. That the Trial Chairman erred in fact when failed to ascertain as to which among the "Sham ba"'or "Nyumba" was kept as collateral to secure the said loan from the 1st respondent (certainty o f the Mortgaged property).

5. That the Trial Chairman erred both in law and in fact when failed to discover that the Auction o f the su it prem ise was conducted within the period o f the Loan Agreem ent 6. That the Trial Chairman erred in fact and in law when failed to properly assess and evaluate the evidence as a whole brought before him and ended ruled (sic) in favour o f the 3rd Respondent 7. That the Trial Tribunal erred both in fact and in law when failed to know that there was no sufficient notice o f Auction effected p rior the date o f Auction contrary to the law. Duringthe hearing of the appeal, the appellant was represented by Mr. Gideon Mushi, learned counsel whereas the 1st respondent was represented by Ms Upendo Mulazi, learned counselwhile the 2nd and 3rd respondents were unrepresented. The matter proceeded through written submissions. Supporting the appeal, on the 1st ground, Mr. Gideon faulted the Trial Chairman for declaring that the Auction conducted by the 2nd Respondent in respect of the suit premises was legal. It was argued that there was no sufficient Notice of Auction effected to the Appellant prior the date of auction contrary to the law. That, the auction was conducted without issuing the Appellant with 14 days' Notice. He was of the view that the alleged 14 days' Notice which was issued by the 2nd Respondent, was to inform the Appellant that failure to pay the outstanding

loan amount, the Mortgaged Property would be sold in Public Auction. Mr. Gideon also faulted the notice which was advertised on Daily Newspaper on 18/11/2017 by stating that the same indicated that the suit premise was to be sold on 3/12/2017.However, the auction was conducted on 4/12/2017 without any further Notice that the date of auction was changed. The learned advocate termed this instance as procedural irregularity Page 3 of 23 in respect of the said auction because of insufficient notice of auction to sell the suit premise on 4/12/2017. He referred to section 12 (2) of the Auctioneers Act, Cap. 227 R.E. 2002,which provides that: "No sale by auction o f any land sh all take place u n til after a t least 14 days public notice thereof being a t principal town o f the d istrict in which land is situated and also a t the place o f the intended auction. To substantiate the existence of the alleged irregularity, the learned advocate for the appellant referred atpage40 of the Trial Tribunal's typed proceedings where DW2, Seif AlfaniM ziraytestified that: "Tarehe 4/12/2017 tuiiwekamatangazo. TuiitangazamashartiyamnadakamaHivyooneshakwenyegazetinabaa dayahapotulifanyam nada." Mr. Gideon also cited the case of Elias Barnabas Macha vs Equity Bank (T) Ltd and 2 Others, Land Case No. 268/2017, High Court of Tanzania, Dar es Salaam (Unreported), which held that: " Where a sale is to

proceed by public auction, it sh all be the duty o f the Mortgagee to ensure that\ the sale is publicly advertised in such a m anner and form as to bring it to the attention o f persons likely to be interested in bidding for the m ortgaged land and the provisions o f Section 52 relating to auctions tenders for the right o f occupancy are as near as may be follow ed in respect o f that sale /' He argued thatduring the auction of the suit premises, the appellant and his wife were not around as they were not aware of the auction conducted on 4/12/2017. It was the opinion of the learned advocate that the appellant and his wife being the persons who were likely to be more interested with the said Mortgaged Property, they were not aware of the said date of the auction for the purpose of being prioritized on the said auction. It was submitted further that even the 14 days' Notice which was issued on 16/10/2017 was issued to the appellant's wife who was not party to the said Loan Agreement contrary to the law. Mr. Gideon formed an opinion that the said Notice was served to a wrong person. He cemented his point by referring to the case of Joseph Kahungwa vs Agricultural Inputs Trust Fund and 20thers. Civil Appeal No. 373/2019, Court of Appeal of Tanzania at Mwanza (Unreported) where at pages 11 and 12 it was held that: "The law doesn'tonly require the mortgagee to notify the m ortgagor

o f the default but also requires the mortgagee to adequately inform the m ortgagor a num ber o f issues as spelt out in Section 127 (2) o f the Land A ct Cap. 113 R.E. 2019." Reference was also made to Section 127 (1) and (2) of the Land Act Cap. 113 R.E. 2019 which is to the effect that: "S. 127 (1) Where there is a default in the paym ent o f any interest or any other paym ent or any part thereof or in the fulfilm ent o f any condition secured by any mortgage or in theperformance or observation o f any covenant, express or im plied in any mortgage, the mortgagee sh all serve on the m ortgagor a Notice in writing o f such default. (2) The Notice required by sub (1) sh all adequately inform the recipient o f the follow ing m atters; a. The nature and extent o f the default. b. That the mortgagee m ay proceed to exercise his rem edies against the m ortgaged land. c. Actions that m ust be taken by the debtor to cure the default and d. That after expiry o f 60 days follow ing receipt o f the notice by the mortgagor, the entire am ount o f the claim w ill become due and payable and the mortgagee may exercise the righ t to se ll the m ortgaged land." Moreover, Mr. Gideon referred the court to the decision of this court in the case ofJudith Athuman Shani vs NMB Bank PLC and 2 Others. Land Appeal No. 5/2021which at page 8 and 9 stated that: "It is a set principle o f law that, com

plying with the provisions o f the Land A ct and Auction A ct regarding statutory notice is m andatory and failure to do that■is fatal defect” Reference was also made to the decision of the Court of Appeal in the case of GodberthaRukanga vs CRDB Bank PLC and 3 others, Civil Appeal No. 25/217which held that: "The provision o f Section 12 o f the Auctioneers A ct is couched in m andatory term s and therefore, in our considered view, failure to give 14 dayg Notice before auctioning the m ortgaged property is procedural irregularity." On top of the above authorities, the learned counsel for the appellant made reference to the case ofThe Registered Trustees of Africa Inland Church of Tanzania vs CRDB Bank PLC, Commercial Case No. 7/2017(HC). In concluding the 1st ground of appeal, it was stated since the 2ndRespondent did not comply with both substantive and procedural laws governing public auctions, the whole exercise isa nullity and the remedy is to declare the entire process of auctioning the suit premise a nullity for failure to obey the laws and procedures regarding public auctions. On the 2nd ground of appeal, the appellant's advocate faulted the trial Chairman findings that the appellant defaulted to pay the outstanding loan amount advanced to him by the 1st Respondent. It was submitted to the effect that the trial Chairman failed to discover that the auction of the suit

premise was conducted on 4/12/2017 within the period of the Loan Agreement while the agreementwas expected to lapse on 22/2/2018 hence,breach of contract and contravention of mandatory provision of Section 37 (1) of the Law of Contract Act Cap. 345 R.E. 2019 which provides that: "The parties to a contract m ust perform their respective prom ises, unless such perform ance is dispensed with or excused under the provisions o f this A ct or any other law . " In respect of the 3rd ground of appeal, it was argued that the trial Chairman failed to discover that, the auction of the suit premise was done contrary to the Valuation Report of the suit premise. That, Page 7 of 23 pursuant to the Valuation Report, the Market Price of the suit premise wasTshs. 155,000,000/= and incase of default, the suit premise shall not be sold below the Forced Sale price which wasTshs. 124,000,000/=. On that basis the learned counsel blamed the 2nd Respondent for undervaluing the suit premise by auctioning it at the tune of Tshs. 50,000,000/= without any lawful justification contrary to Valuation Report (Exhibit PI). In support of this ground the learned advocate quoted section 3 of the Valuation and Value's Registration Act No. 7/2016which defines a Market Value to mean: "The estim ated am ount for which asset should exchange on the date o f valuation between a w illing buyer and a w illing seller

after proper m arketing wherein the parties had each acted knowledgeably, prudently and com pulsorily Furthermore, Mr. Gideonmade reference to the case of Hamis S. Ubalange vs Finca Microfinance Bank and 2 Others. Land Appeal No. 24/2020 (HC) (Unreported) in which at page 18 and 19 it was stated that: "The m ortgagee is legally bound when exercising the right to se ll a m ortgaged house, to se ll it at the best p rice " Mr. Gideon backed up his argument by reproducing section 133 (1) and (2) of the Land Act (supra)which emphasizes consideration of the best price and commented that since the sale of the suit premise was undervalued, the only remedy is to declare the entire Auction conducted by the 2nd Respondent void. On the 4th ground of appeal, the appellant's counsel challenged the Page 8 of 23 certainty of the Mortgaged property. That, thetrial Chairman failed to ascertain as to which among the farm and the house was offered as collateral to secure the said loan facility. That, failure to distinguish between the House and the Farm according to the term "MkatabawaKuuziana Sham babetween Nemes Richard and the Appellant concluded at Usseri Primary Court on 1/3/2014, the farm situated at MbomaiChini, Tarakea Village. However, the 2nd Respondent sold non­ existing property. It was stated that since the collateral offered to secure the said loan facility was a farm situated at

MbomaiChini, Tarakea, thus the 2nd Respondent should have sold the said farm and not any other property. Mr. Gideon implored the court to refer to Exhibit D5 to ascertain as to whether the mortgaged property was certainly capable of being disposed to the 3rd Respondent. On the 5th ground of appeal the learned counsel faulted the trial Chairman for failure to properly assess, evaluate and analyze evidencebefore him and decided in favour of the 3rd Respondent. It was stated that the noted violations of the mandatory provisions of the laws above, the whole Auction, execution processes leading to the selling of the Appellant's House were marred by material irregularities and illegalities hence null and void ab initio. He suggested that the only remedy is to nullify theauction. Mr. Gideon prayed the court to allow the appeal with costs and the whole proceedings, judgment and all orders made thereto be quashed and set aside for being nullity ab initio. In reply to the 1st ground of appeal,the learned counsel for the 1st respondent argued that the trial Tribunal correctly made a finding that the auction conducted was legal. He stated that the legal requirements of conducting an Auction are provided for under section 127 of the Land Act(supra)and section 12(2)(3) of the Auctioneers Act(supra). It was stated thatsection 127 of the Land Act, requires the mortgagee before exercised the

right to sale the property as conferred under sectionl26 (d) of the Land Act, to issue the mortgagor who has failed to honor a covenant in a mortgage with a default notice which will last for 60 days giving an ample time for the mortgagor to rectify the default. That, this requirement was fulfilled since at page 37 of the proceedings of trial Tribunal, DW1 one Hussein Abdi Mrutu, testified that on 26/09/2017 the Appellant was issued with a default notice which was received by his wife one Angela Musiba. That the said Default Notice was admitted without objection as exhibit D3. Further,it was stated that the auction took place on 4/12/2017, 70 days from when the Mortgagor had received the default notice under section 127 of the Land Act. Due to those facts, it was contended that by virtue of section 132(1) of the Land Actwhich is to the effect that upon expiry of 60 days from the date a Notice was issued, the Respondent had a right to sell the property. Regarding the requirement of section 12(2) of the Auctioneers Act, which requires issuance of a 14 days' Notice by the auctioneer before an auction is conducted, Ms. Upendo was of the view that the requirement was also met. That at Paragraph 6(a) (x) of the Appellants' Application, he admitted to had received notice from the auctioneer. It is also supported by the testimony of DW2 at page 39 of the Proceedings, who testified that

before the auction a 14 days' notice was issued. It was received by the Appellant's wife after the efforts to hand it in person had proved futile. That, Exhibit DW4 was a 14 days' Notice which was never objected by either the Appellant or his Advocate. Also, DW2 advertised Page 10 of 23 the auction in a newspaper (Daily news) which was admitted as an ID as per page 40 of the proceedings and a day before, the auction was advertised by a car around the entire Tarakea, in order to comply to the requirements of Section 12(3) of Auctioneers Act (supra). It was further stated that the auction was done publicly as supported by the testimony of DW3 at page 44 of the proceedings, who testified to the effect that, on 3/12/2017 which was the day before the auction he heard the news via motor vehicle advertisement that an auction of the suit premises was to be conducted which prompted him to attend on the day of auction. In support of the first ground of appeal, Ms. Upendo referred to the case of JUMA JAFFER JUMA v. MANAGER OF THE PEOPLE'S BANK OF ZANZIBAR & 2 OTHERS [2004] TLR 332 at page 334 and the caseof DottoKilekaNg'wanduvsExim Bank (T) Limited & 2 Others Land Case No. 32/2016,Hight Court (Mwanza) at page 11 inwhichwhile referring to the case of Jum a Jaffer Jumasupra made a finding that: "In the instant case, sale o f the m ortgaged property was as a result o f the p lain tiffs com

m ission o f events o f default and upon issuance o f a Notice o f D efault (Exhibit DE2) that notified and warned the p la in tiff against the undesirable leg al proceedings which were loom ing if the default was not addressed in 60 days. It is m y conviction that the defendant's actions were in line with the provisions o f section 125 (3) o f Cap. 113 which state as hereunder: "125 (3) Where the borrower does not com ply within two months o f the date o f service, with the notice served on him under subsection (1), the lender may- (a) N/A; (b) (iv) se ll the m ortgaged land . " In line of above authorities, Ms. Upendo urged the court to find that the first ground of appeal has no merit. Responding to the second ground of appeal Ms. Upendo supported the findings of the trial tribunal that the appellant had indeed defaulted to repay the loan. She said that under Paragraphs 6(a) v, vi, vii and viii of the Appellant's Application, the appellant admitted that he had an obligation to repay the loan in a monthly instalment of a sum of 4,211,747.08 T7S every month for a period of 12 months. That, the appellant pleaded that he managed to remit six instalments thereafter, he defaulted due to unforeseen event which was expiry of his timber mining license. Also, the appellant in his oral testimony at page 29 of the proceedings, he acknowledged to had remitted a sum of 32, 832,711

TZS only. During cross examination at page 32 the appellant admittedthat he was issued with a default notice as he was late in repaying the loan and that he defaulted to repay the loan as agreed in the loan agreement and he informed the bank that he was late in paying the instalments. Also, Ms. Upendo stated that the said evidence was supported by the testimony of the Loan Officer (DWl)who tendered the Loan Agreement (Exhibit Dl). It was admitted without objection. The Loan repayment history which was admitted as Exhibit D2 to prove the default and Default Notice (exhibit D3) were admitted without any objection. In that respect, the learned advocate referred to the case ofNATIONAL BANK OF COM M ERCE LIM ITED V. STEPHEN KYANDO T /A ASKY INTERTRADE, Civil Appeal N o.l62/2019,(CA ) in which the Court of Appeal at page 4 stated that: Page 12 of 23 "That it is a common ground that upon failure to observe schedule o f repaym ent the property m ust be sold." Ms. Upendo supported her argument with the case ofDotoKileka(supra) On the strength of the above authorities, Ms. Upendo averred that following failure of the appellant to remit his monthly instalment as required in the loan repayment schedule attached to the offer letterwas contrary to Clause 4.1 of the Offer Letter. Ms. Upendo opined that it was right for the trial Tribunal to make a finding that the appellant had defaulted to

repay the loan despite of the fact that the 12months tenure had not lapsed. Ms. Upendo also disputed the 3rd ground of appeal. She argued that it is awell-known principle that parties are bound by their pleadings. That, in the Appellant's amended application, nowhere the Appellant pleaded that the suit property was sold below the legally accepted value. That, even on the issues which were framed before the trial tribunal the issue on whether the suit property was sold below value was never in question. Thus, the allegation that the suit property was sold below the market value came during the hearing, when the Appellant formulated a new case through his testimony and decided to abandon his own pleading by tendering a valuation report which was admitted at exhibit PI. She said that the same was an afterthought and it violated the provision of Order XIV Rule 1(5) of the Civil Procedure Code, CAP 33 R. E 2019which sets the relevance of framing issues to ascertain matters upon which parties agree or disagree. Stressing the point further, Ms. Upendo referred to the case of Juma Jaffer Juma(supra).She argued that the rationale of prohibiting dealing with new factswhich were never pleaded has been explained in V Page 13 of 23 of Jam es Funke G w agilo v. AG [2004] TLR. The effects of the same is for the court to disregard the new factsas stated in the case ofYARA TANZANIA LIM ITED VS.

CHARLES ALOYCE M SEMW A & 2 OTHERS, CO M M ERCIAL CASE NO. 5 /2 0 1 3 ,at page 6. On the strength of the above authorities, Ms. Upendo submitted that the trial tribunal was right to disregard the valuation report which was tendered by the Appellant since it was not backed up with his own pleadings before the trial Tribunal. As far as the 4th ground of appeal is concerned, Ms. Upendo also submitted that the same is new issue whose origin is nowhere to be found in any part of the proceedings before the trial Tribunal. She was of the view that bringing itat the stage of appeal not only makes it legally hopeless but also it depicts the picture of how this appeal is nothing than a dying horse. She pleaded the court to refer to the cases of YARA TANZANIA LIMITED(supra),JUMA JAFFER (supra)and the case of JAM ES FUNKE GWAGILO(supra) to dismiss this ground. On the fifth ground of appeal, the learned counsel for the 1st respondent reiterated what had been submitted while replying the 1st and 2nd grounds of appeal. She argued that the auction was rightly done and it followed the proper procedure. The learned counsel stated further that Clause number 4 of the offer letter vested the bank with power to demand full payment upon default of the agreed payment schedule. Thus, the bank had no obligation to await until when the loan tenure expires so as to initiate the recovery process. Further

to that, the learned counsel citedSection 127which empowers mortgagee to exercise right of sale after it has complied with the Notice F requirement. Basing on that argument, Ms. Upendo prayed the court to rely on the case of Juma Jaffer and DotoKilekaand NBCvs Joseph Kyando[supra] and dismiss this ground. Responding to the sixth ground of appeal in respect of evaluation of evidence, it was submitted that all the evidence on record was regarded by the trial tribunal.At page 4 and 5 of the judgment, the trial tribunal indicated how the testimony of the 3rd Respondent was corroborated with the evidence on record. Thus, the tribunal had nothing than to rule out that the 3rd Respondent had bonafide purchased the suit property since he was the highest bidder as testified by him at page 44 and 45 of the proceedings which was corroborated by the testimony of DW1 and DW2 respectively. Ms. Upendo invited the court to make reference to the case of DottoKilasaNgwandu[supra]in which the court cited the case ofJuma Jaffer Jumaand argued that the bonafide purchaser such as the 3rd Respondent are insulated from mishaps which may arise as the result of defects in the sale process. She was of the view that evidence on record proved the case of the 3rd Respondent on balance of probabilities. Responding to the 7th groundof appeal,Ms. Upendo contended that the two Notices which were issued to the

Mortgagor (the Appellant) andreceived by his wife (as the appellant evaded service) were sufficient. That, the defaultNotice from the Bank met the requirement of section 127 of the Land Actsince it was after the lapse of seventy days from the date when it was received by the Appellant that is 26/09/2022 to 04/12/2022 when the suit premises were auctioned through public auction by the 2nd Respondent. Concerning the 14 days' notice which was issued by the 2ndrespondent it was argued that the same met the requirements of section 12(2) (3) of the Auctioneers Act(supra). That, the 2nd respondent published the same through a widely circulating newspaper (Daily News)which was admitted as seen at page 40 of the proceedings. Also,one day before the auction, the notice was advertised through a moving van at Tarakea Town where the Appellant and his family were residing. Thus, the appellant cannot deny the fact that the auction notice wassufficient. Moreover, Ms. Upendo pointed out that the right of the mortgagee toinitiate recovery after breach of the covenant under section 132 accrues immediately after the lapse of 60 days from the date when a default Notice was issued. She added that, the law is silent as to when the Mortgagee can seek the service of the auctioneer or whether the Auctioneer should wait for the lapse of 60 days to issue the 14 days' notice. The learned advocate opined

that since the law is silent,the objective of the fourteen days' notice is to remind the mortgagor of his obligation to honor what has been demanded from him by the mortgagee before the lapse of the 60 days. Thus, the 1st and 2nd Respondent notified the Appellant and left him with ample time to remedy the breach by remitting the outstanding balance of his loan so as to redeem his property before being auctioned. Therefore, in line of the case of JUMA JAFFER JUMA [Supra] the learned advocate urged the court to make a finding that the notice was sufficient, hence dismiss this ground. Ms. Upendo prayed the court to uphold the decision of the trial Tribunal and dismiss this appeal in its entirely with costs. In rejoinder, the learned counsel for the appellant insisted his submissionin chief. As far as 60 days' Notice is concerned, it was stated that the same was not issued and that Exhibit D1 wasnota 60 days'default Notice as alleged. He prayed the court to refer to the alleged Notice (Exhibit D l) to see whether it met the requirements of section 127 of the Land Act. Mr. Gideon emphasized that the default Notice should have been directed and properly served to the Appellant (the Mortgagor) and not anyone else. Regarding the assertion that the Notice was advertised inthe Daily News Newspaper;it was stated that the said newspaper should have been produced before the Trial Tribunal.

That, what was produced, was a photocopy of a piece of paper and the Trial Chairman did not ask for the Original Copy of the said newspaper since photocopies are not admissible before the court unless legal procedures to use secondary evidence are complied with. Also, the date of auction was shown to be 3/12/2017 while the auction was conducted on 4/12/2017 without issuance of any other Notice of Auction. It was insisted that the auction was conducted on 4/12/2017 even before the expiry of the said Loan Agreement. Mr. Gideon added that the purpose of scheduling oneyear period implies that, the said Tshs. 45,000,000/= plus interest should have been paid within a year. That, instead of waiting for the lapse of the year, the 1st Respondent decided to sell the mortgaged property within the period of the Agreement contrary to the terms and conditions. He argued that even Ms. Upendo admitted at page 9 of her Reply Submission that, the bank had to wait until when the loan tenure which is one year expires so as to initiate the recovery process. ___ [ Moreover, the learned advocate for the appellant maintained that,the respondents did not observe the Forced Sale and undervalued the Mortgaged Property. Responding to the allegations that the Valuation Report was not pleaded, it was stated that failure by the 1st and 2nd Respondents to adhere to the Forced Sale also renders the Auction

a nullity. Moreover, the issue of Valuation Report and that of the Certainty o f the Mortgaged Property^as reflected in the final submissions by the appellant filed before the trial Tribunal on 5/8/2021. Mr. Gideon reiterated further that the trial Chairman failed to properly assess, analyze and evaluate the evidence brought before him which led to erroneous decision. He was of the opinion that, the remedy is for this Court to allow this Appeal with costs, to quash and set aside the Trial Tribunal's decision, proceedings and all orders made thereto. I have very well considered the grounds of appeal, the rival submissions of the learned counsels of both parties as well as the Trial Tribunal's records.I have noted that the issue which cut across all the grounds of appeal is on the legality of the auction, that is whether the said auction adhered to legal requirements. On the first ground of appeal, the appellant challenged the auction in respect of Notice; that, there was no sufficient Notice issued to the appellant and that the auction was conducted within the period of the loan agreement.On the other hand, Ms. Upendo submitted that there was sufficient Notice since it was received by the appellant's wife and the auction was advertised in the Newspaper (Daily News). The law is very clear on the requirement to issue prior notice.Section 127 of the Land Act, provides that: "S. 127

(1) Where there is a default in the paym ent o f any interest or any other paym ent o r any p a rt thereof o r in the fulfilm ent o f any condition secured by any m ortgage or in the perform ance or observation o f any covenant, express o r im plied in any m ortgage, the m ortgagee sh a ll serve on the m ortgagor a Notice in w riting o f such default. (2) The N otice required by sub (1) sh a ll adequately inform the recipient o f the follow ing m atters; a N/A bN /A c N/A d. That after expiry o f 60 days follow ing receipt o f the notice by the m ortgagor, the entire am ount o f the claim w ill becom e due and payable and the m ortgagee m ay exercise the rig h t to se ll the m ortgaged la n d ." Also, section 12 (2) of the Auctioneers Act, Cap. 227 R.E. 2002, provides that: "No sale by auction o f any land sh a ll take place u n til after a t least 14 days p u b lic notice thereof being a t p rin cip al town o f the d istrict in which land is situated and also a t the place o f the intended auction ." Under the above provisions, it is the requirement of the law that prior to sale by auction, the mortgagee ought to issue 14 days' Notice. After expiry of 60 days, the mortgagee may exercise his right to sale the mortgaged property. In the instant matter, through Exhibit D3 which was admitted without objection, the default Notice was issued to the appellant's wife and thereafter

the auction was conducted 70 days later after the said default notice was issued. In addition, the auction was published in the Daily News andadvertised byusing a car on 3/12/2017 a day before the auction. Thus, there was compliance with above cited provisions of the law. On the 2nd ground, the learned counsel faulted the auction for being conducted within the period of contract(mortgage). That, the one- year loan agreement was to elapse on 22/2/2018.However, the auction was conducted on 4/12/2017. Ms. Upendo for the ^respondent submitted that the 1st respondent exercised its rights as provided for under Clause 4 of the Offer letter. In deciding this issue, I had to examine the letter of offer to see what the parties agreed in case of default to pay.Clause 4 of the Offer letter, provides that: "W ithout prejudice to the continuous rig h t o f the Bank to dem and repaym ent o f a ii am ounts due under the F a cility [upon an occurrence o f an event o f default in accordance with the term s hereof and/or o f the Conditions], the outstanding F a cility and any in terest accrued thereon from tim e to tim e, sh a ll be repaid as follow s: i) Any term loan in m onthly instalm ents o f TZS 4,211,747.08 which the firs t o f such instalm ents sh a ll be made after l(o n e ) m onth from the booking date. What is gathered from the above provision is that the Bank can demand repayment of

all amount due in the occurrence of default. Therefore, since there was default to pay the monthly instalments then, it was proper under clause 4 for the Bank to exercise its rights Page 20 of 23 of recovery of the debt. On the third ground of appeal, it has been alleged that the trial Chairman failed to note that the sale was done contrary to the valuation report. That, as per valuation report, the market price was Tsh 155,000,000/- and the forced sale wasTsh 124,000,000/-.Ms. Upendo was of the view that this issue was not transacted during the trial. Thus, it was not proper for the same to be raised at appellate stage. With due respect to Ms. Upendo, during trial, amongthe issues which were raised was "W h e th er th e a u ctio n co n d u cte d b y th e 2nd re sp o n d e n t w as la w fu l" From the above issue, I am of considered view that the value of the mortgaged price falls within the above raised issue. Considering the fact that at page 30 of typed proceedings, the appellant gave evidence to support such claim, then the trial Chairman should have considered the same otherwise there was no need for him to receive the valuation report (Exhibit 1). I am of considered opinion that since the issue of valuation report touches the point of law and this being the first appellate court, it is prudent to consider the issue by re-evaluating the evidence before the trial

Tribunal. As per the valuation report of the mortgaged property, the market price wasTsh 155,000,000/- and the forced price wasTsh 124,000,000/-. Section 133(1) of the Land Act(supra) provides for Page 21 of 23 duty of mortgagee who wish to exercise power of sale. As a matter of reference, it provides that: 133.-(1) A m ortgagee who exercises a pow er to se ll the m ortgaged land, including the exercise o f the pow er to se ll in pursuance o f an order o f a Court, owes a duty o f care to the m ortgagor, any guarantor o f the whole or any p art o f the sum s advanced to the m ortgagor, any lender under a subsequent mortgage including a custom ary m ortgage or under a Hen to obtain the best price reasonably obtainable a t the tim e o f sa le ." In the case of GodberthaRukanga vs CRDB Bank Ltd and 3 Others, Civil appeal No 25/17 of 2017, the Court of Appeal at page 24 quoted the case of Luckmere Brick Co. Ltd vs Mutual Finance Ltd (1971) Ch.949 which held that: "A m ortgagee selling a mortgage in his possession m ust take reasonable care to obtain true value o f the property a t the moment, he chooses to se ll it and obtain the best price fo r the property reasonably obtainable on the open m arket. " I fully subscribe to theabove positions of the law. In the instant matter considering the fact that the Market price of mortgaged property wasTsh 155,000,000/- and the forced value

was Tsh 124,000,000/- as seen in thevaluation report, it goes without saying that the mortgagee did not exercised duty of care by selling the mortgaged property at the price of Tsh 50,000,000/-.This court is of considered view that failure to exercise the duty of obtaining best price is fatal which vitiates the whole process of auction. I am aware that the 3rd respondent is a bonafide purchaser who should be protected. However, the law has provided the remedy for the bonafide purchaser in case there was improper sale. Section 135(4) of the Land Act (supra) provides that: "A person prejudiced by an unauthorizedim proper or irregular exercise o f the power o f sale sh all have a rem edy in damages against the person exercising that power." Therefore, the 3rd respondent should seek remedy from the 1st respondent. From the above findings, I am of considered opinion that the noted irregularity in respect of the auction affected the appellant. This alone suffice to dispose of this appeal hence, no need of discussing the rest of the grounds. Having said that and done, I allow this appeal and set aside the decision of the trial tribunal with costs. Consequently, I hereby nullify the auction which was conducted by the 2nd respondent and order the same to be conducted afresh in compliance to the law. It is so ordered. Dated and delivered at Moshi this 17th day of October, 2022. S. \

JUDGE