tanzania development bank ltd another vs hanspaul industries ltd 2 others 2023 tzhccomd 37 24 february 2023

IN THE HIGH COURT OF TANZANIA (COMMERCIAL DIVISION) AT ARUSHA MISCELLANEOUS COMMERCIAL APPLICATION NO. 19 OF 2022 (Arising from Commercial Case No. 1 of 2021) TIB DEVELOPMENT BANK LIMITED.............................1STAPPLICANT ATTORNEY GENERAL................................................... 2NDAPPLICANT VERSUS HANSPAUL INDUSTRIES LIMITED.......................... 1STRESPONDENT MOUNT MERU FLOWERS LIMITED.......................... 2ndRESPONDENT ALLAN REUBEN MOLLEL (FIRST WORLD INVESTMENT COURT BROKERS, AUCTIONEERS, DEBT COLLECTOR........................ 3rdRESPONDENT RULING Date of last Order: 21st February, 2023 Date of Ruling: 24th February, 2023 MKEHA, J. The applicants are moving the court so that it may be pleased to investigate > and find that the landed property known as 20 units of Green Houses Located at Farm No. 105/1 Nduruma Area Arumeru District with 16.184 Hectors together with Generators and Motor vehicle Reg No. T 219 CTL Make Land 1 | Page Cruiser is not liable to attachment and sale in execution by the l51 respondent in satisfaction of the decree of the High Court, Commercial Division at Arusha in Commercial Case No. 01/2021. The applicants are asking the court to release the aforesaid property from attachment and sale. The application is made under Order XXI Rules 57 (1), 58 and 59 as well as section 68 (e) of the Civil Procedure Code. The chamber summons is supported with an affidavit sworn by Mr. Menson Ngahatilwa, Principal Officer of the l^ Applicant. On the other hand, the application is resisted through courter affidavits sworn by Mr. Mohan Krishna Mandadi, Principal Officer of the lst Respondent and that of Mr. Allan Reuben Mollel, the 3rd Respondent. Notwithstanding the fact that the second Respondent was served with the application, she filed no counter affidavit. ■ f During hearing of the application, Ms. Jaquiline Kinyasi and Ms. Greener Mwakyoma learned State Attorneys represented the applicants. Mr. Richard Massawe learned advocate represented the l51 Respondent. Mr. Gwakisa Sambo learned advocate represented the 3rd Respondent. 2 | Page In the affidavit supporting the application and the submissions by Ms. Kinyasi learned State Attorney it was stated that, on diverse dates the Government advanced in favour of the 2nd Respondent and Tanzania Flowers Limited credit facilities to support their horticulture business. That, the l54 applicant was an agent of the Government for management and recovery of the government's credit facilities. That, the l51 Applicant also advanced various banking facilities in favour of the 2nd Respondent and Tanzania Flowers Limited. Copies of Credit Facility Agreement, Mortgage Deed and Debenture deed was attached to the Applicants' affidavit as Annexture TIB 1 to be part for the affidavit. In terms of paragraph 6 of the affidavit, as of 26/07/2022, the outstanding debt of the 2nd Respondent and Tanzania Flowers to both the Government and the l51 Applicant stood at TZS 33,229,604,506/= According to Ms. Kinyasi learned advocate, before the l51 Respondent obtained the decree against the 2nd Respondent, the latter had created mortgage over the farms and also issued debenture to secure the liabilities. According to the learned advocate, after default of the 2nd Respondent and Tanzania Flowers Limited to repay their respective loans as per relevant loan agreements, the Applicant for itself and 6n behalf of the Goyernment appointed a Receiver Manager over the assets of the two companies with instructions to recover 3 | Pa ge the secured debts. The properties subject of an attachment order in Commercial Case No. 1 of 2021 form part of the assets of the 2nd Respondent put under receivership in terms of section 126 9a) of the Land Act on or about 5th August, 2021. The Deed of Appointment of Receiver Manager of the 2nd Respondent, which is part of paragraph 10 of the Applicants' Affidavit (Annexture TIB 2) indicates that, up to when the receiver manager got appointed on 05/08/2021, the l51 Applicant was the registered holder of the Debenture dated 2nd July, 2009 (inclusive of all variations) and the Mortgage dated 2nd July 2009 (CTS Nos. 15434 & 19569 registered on 3rd August 2009 under File Document No. 25488) over Farms Nos. 105/1/1 and 105/2/1 respectively all created by MOUNT MERU FLOWERS LIMITED in favour of TIB DEVELOPMENT BANK LIMITED. In view of the learned State Attorney, the applicants had sufficient interest in the attached property warranting lifting of the attachment order. Mr. Massawe, learned Advocate for the l^ Respondent commenced his reply submissions by adopting the contents of the l51 Respondent's affidavit to be part of his submissions. The learned Advocate submitted that whereas the basis of the application was creation of a mortgage and debenture which are 4 | Page charges required to be registered, the same had not been registered rendering them void. In terms of paragraph 5 (b) of the Respondent's affidavit BRELA Search Report dated 05/08/2022 indicates that regarding registered charges, the status was as here under:- " The companyhas fiied various documents to make changes in the company, but the same are not registered due to anomaiies such as some annuai returns were not reported on annuai returns" According to Mr. Massawe, learned Advocate, the Applicants had no interest in the attached property because of invalidity of the debentures and mortgages which were not registered. Regarding the contents of paragraph 10 of the Applicants' affidavit the l51 Respondent attacked the Applicants as to why would they appoint a Receiver Manager on the properties owned by Tanzania Flowers Limited while the contract was between the l51 Applicant and 2nd Respondent. Mr. Sambo, learned Advocate for the 3rd Respondent adopted the skeleton arguments of the 3rd Respondent, the submissions by Mr. Massawe learned 5 | Page Advocate and the affidavit of the 3rd Respondent to be part of his reply submissions on behalf of the 3rd Respondent. The learned Advocate went on to submit that, the Applicants' affidavit had nothing indicating interest of the property. In view of applicants in the attached the attached the learned Advocate, in the absence of registration, the Applicants could not enjoy rights of a secured creditor. Regarding the contents of paragraph 10 of the Applicants' affidavit, the 3rd Respondent insisted that the attached properties namely, green houses were not part of the securities. The only issue for determination is whether the Applicants have proved that at the date of attachment, they had some interest in or were possessed of the property attached. In terms of the search report from BRELA dated 05/08/2022, which forms part of the first applicant's affidavit, the charges alleged by the applicants had not been registered. The position of the law is clear that a charge created over a security becomes void if it is not registered under the relevant laws. And when a change is not registered no right of priority of payment can be successfully claimed by the creditor. Therefore, it is my holding that the applicants did not successfully prove the alleged interest within the meaning of the law. The matter does not end there. 6 | Page Under Rule 58 of Order XXI of the Civil Procedure Code, the objector has to prove having interest in or being possessed of the property attached at the time of attachment. See: SOSTHENESS BRUNO & ANOTHER VS. FLORA SHAURI, CIVIL APPEAL NO. 249 OF 2020, CAT, AT DAR ES SALAAM. Whereas the attachment order was issued by this court on 13/10/2022, it is not disputed that the property has been under receivership of Mr. Daniel B. Welwel since the 5th August, 2021. Under paragraph 11 of the Applicants' affidavit facts regarding taking possession of the attached property are made certain. Whether the appointment of the said receiver manager complied with the law not is not the subject of the present application. Therefore, for a reason that the applicants were in possession of the attached property when the attachment order was issued, I hold the application to be Meritorious. I proceed to make an order that the prohibitory order and attachment orders in respect of the 2nd Respondent's properties dated 13th October, 2022 be lifted. I make no order as to costs. Dated at ARUSHA this 24th day of February, 2023. 7 | Page JUDGE 24/02/2023 Court: Ruling is delivered in the presence of the parties' advocates. JUDGE 24/02/2023 8 | Page