2 September 2013

Tanzania: Firm Loses Appeal On Sh700 Million Debt

THE Court of Appeal has dismissed the appeal lodged by Dar es Salaam Region CCM Chairman, Ramadhani Madabida and four others contesting payments of over 699m/- debt to Stanbic Bank Tanzania Limited.

"We firmly agree with the findings of the trial judge and come to the considered conclusion that this appeal is devoid of merits. It is dismissed in its entirety," Justices Steven Bwana, Semistocles Kaijage and Kipenka Mussa, ruled.

Other appellants in the appeal argued by advocate Dennis Msafiri on their behalf were Salum Shamte, Pharmaceutical Investment Limited, Mpewani Trading Company Limited and Global Trading Company Limited.

The bank was represented by advocate Dilip Kesaria. The counsel for the appellants had submitted that Judge Frederick Werema of the High Court's Commercial erred in his judgment dated May 22, 2009, ruling in favour of the bank, by holding that a document titled 'Debt Settlement Agreement' was not an acknowledgment of debt.

The advocate further faulted the decision by Judge Werema, currently the Attorney General, to admit the document and another one titled 'Debt Restructuring Agreement' in evidence during hearing of the case.

Giving an example on the Debt Settlement Agreement, Mr Msafiri submitted that an objection was raised to its admissibility on grounds that it was unstamped and subjected to stamping during the trial as such a course was not allowed under Section 47 (1) of the Stamp Duty Act.

The counsel further told the justices that the trial court erred in law in holding that the suit was not barred by the time limitation and wrongly held that the suit was proved notwithstanding absence of and production of primary agreement or agreements proving loan transactions.

However, advocate Kesaria, for the Bank, had submitted that the suit was filed within the time limit because where there was continuing breach of contract, as was the case in the matter, a fresh period of limitation accrues every moment of time during which the breach arises.

Pursuant to Section 27 (3) of the Law of Limitation Act, he said, there was a fresh accrual of a right of action on the date of the acknowledgment of debt in the year 2007, being the same year in which the suit in the lower court was commenced by the Bank.

Regarding the 'Debt Settlement Agreement,' the advocate submitted that it was plainly and obviously an agreement relating to the rescheduling of Pharmaceutical Investment Limited's repayment obligation in settlement of its debt and provided for a new repayment schedule.

Such document, he said, was a debt Settlement Agreement and not Acknowledgement of Debt as correctly held by trial judge and having held so, the judge followed established legal principles of permitting the Bank to pay requisite Stamp Duty before allowing its admission in evidence.

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