ZOFA T VS NBC LTD MISC

IN THE HIGH COURT OF TANZANIA (COMMERCIAL DIVISION) AT PAR ES SALAAM MISC. COMMERCIAL APPLICATION NO. 157 OF 2014 (Original Commercial Case No. 157 of 2014) ZOFA TANZANIA LIMITED............................ 1STAPPLICANT HAMISI MOHAMED ZOWANGE....................2nd APPLICANT ASHA MUSA KITWANGA..............................3rd APPLICANT ZUHURA KOMBO ABDALLAH......................4th APPLICANT VERSUS NATIONAL BANK OF COMMERCE LIMITED.................................................... RESPONDENT RULING Mansoor, J: Date of Ruling- 26th MAY 2015 The Plaintiff filed a suit under Order XXXV of the Civil Procedure Code, Summary Procedure for recovery o f THz 1,296,173,422/= being outstanding amount of the term loan facility of THz 350,000,000 granted to the 1st Applicant on 19 August 2011. The Term Loan was to be repaid within 36 months in equal instalments after the grace period o f six months from the drawdown date. The Facility carried the interest o f 20% per annum and penal charges of 5% per annum on the excess balance if the loan amount is found to be in arrears or has expired. The Plaintiff also prayed as an alternative for appointment of a Receiver Manager with powers to sell the mortgaged property over CT No. 34745 on Plot No. 20, Block 20 located at Kariakoo Area, Dar es Salaam City. The 2nd Applicant executed a mortgage deed over the security and a guarantee in favour of the respondent, the 3rd and 3 rd Applicants beings the wives o f the 2 nd Applicant to the mortgage. The 1st Applicant was given two more loans in addition to the first loan o f THz 350,000,000 on 13 March 2012, and o f THz 250,000,000 on 23 August 2012. The two last loans were to be paid for a period of 60 months o f monthly equal instalments after the six months grace period. The security for the last two loans remained the same as the first loan. To the above claim of the plaintiff, the defendant, having been served, filed appearance and thereafter filed an application 2 under Order 35 Rule 3 (1) (b) o f the CPC seeking unconditional leave to defend the suit. The 2 nd ,3rd and 4 th Applicants while conceding that they have mortgaged their above mentioned property for securing the first loan, they deny to have ever executed a mortgage or guarantee for securing or guarantying the 2 nd and third loan. The 1st Applicant concedes to have taken all the three loans but he says he is entitled to leave to defend the suit since he has already discharged part of the loan. Learned counsel appearing for the defendants/Applicants Mr. Mmanda argued that the defendants has made out an arguable case which would entitle the defendants for grant of unconditional leave. Counsel for the respondent, Ms. Linda Bosco, had argued that the law in summary suit is to the effect that the defendant has no automatic right to defend the suit unless leave is sought and obtained. She said under Order XXXV Rule 3 (c ) as amended by s 25 (b) o f the Mortgage Financing (Special Provisions) Act, 2008 in order to obtain leave to defend, the Applicant’s affidavit must demonstrate that the loan or portion o f the loan claimed was indeed discharged, or the loan was actually not taken. The 1st Applicant in its affidavit admits that it has taken the loan, and she argues that although the 1st Applicant claims that it 3 has paid part o f the loan but the payments was not in accordance with the terms and conditions of the Facility Letters, hence it should be taken that the Loan amount is not paid at all. To support her arguments, the Counsel for the respondent referred me to the case of Amoni Augustino Mchomvu & Margret Amoni Mchomvu vs. National Bank of Commerce Misc. Commercial Case No. 121 of 2013, (unreported), in which the judge dismissed the application for leave to defend on the grounds that the application did not satisfy the grounds stated in the law. Coming to the facts of the present case, I would say that the defense taken by the defendants/Applicants in leave to defend the suit bears the bonafide defense, and it is not a moonshine and the Applicants qualifies to be given leave to defend the suit. The law requires that the Applicant has to satisfy the conditions given in the law. The Applicants have not denied to have taken the loan, but they have demonstrated that they have been paying the periodical payments, thus, part of the loan has been paid. The Applicants in the present case have demonstrated that they have actually paid at least the initial periodical instalments o f the loan amount. There is also a prima facie case shown by the 2n d , 3 rd and 4 th Applicants regarding the validity of the mortgage with regards to the 2nd and 3rd loan advanced 4 to the 1st Applicant. This raises the triable issues, which qualifies the Applicants leave to defend the suit. The Applicants were able to give facts in their affidavits making out a prima facie case raising some doubt about the outstanding amount of loan remained unpaid as at the date the plaint was filed in Court as well as the validity o f the mortgage to cover the 2nd and 3rd loan. It is settled rule of law that wherever the defense put forth by the applicant/defendant is bonafine, raises triable issues and is not a moonshine, the applicant/defendant would be entitled to leave to defend conditional or unconditional depending upon the facts and circumstances o f each case. In this case the defendants/applicants have managed to show that their defense is bonafide, raises triable issues or not a moonshine. Evaluating the facts deponed in the Applicant’s affidavit, if these facts are duly proved, will afford a good answer to the plaintiffs claim. Since the Applicants were able to satisfy the conditions set in Order XXXV Rule 3 of the CPC as amended by the Mortgage Financing (Special Provisions) Act, 2008, leave is hereby granted to the Applicants to defend the summary suit. Thus, the Applicants/Defendants should filed their respective written statement of defense within twenty one days from the date of this Ruling. dh- 5 It is so ordered. DATED at DAR ES SALAAM this 26th day of May, 2015 6