Tanzania: Court Dismisses Company Appeal in 145m/ - Case

THE Court of Appeal has dismissed the appeal by Construction Company Sunlon General Building Contractors Limited, and its two directors, challenging repayment of about 145m/- part of a loan to KCB Bank Tanzania Limited for purchasing a truck and its trailer.

Justices Augustine Mwarija, Mwanaisha Kwariko and Lugano Mwandambo ruled against the Company, Gimonge Nyaimaga and Enock Waitara, who were appellants, after holding that the appeal lodged was devoid of merits.

"In the event, the appeal is hereby dismissed in its entirety with costs," they declared.

In their judgment delivered recently, the justices of the appeals court noted that the parties were not at issue as regards to payment of trailer's purchase price, as they agreed that the payment was fully made and at the material time of institution of the suit, the trailer was awaiting collection from the supplier.

However, they said, as could be gleaned from the submissions of counsel for the parties, the dispute on the payment of the purchase price of the truck centred on sufficiency or otherwise of the amount paid to Scania Tanzania for that purpose.

The justices found that the appellant company obtained the loan of 128m/-from the bank, the respondent, vide a Banking Facility Letter of February 17, 2011 and such loan was to be utilised to purchase vehicles, the prices of which were shown in the proforma invoices obtained from the suppliers.

"It is therefore, imperative that by requesting and accepting the amount of 128m/-as 80 per cent of the purchase prices of the vehicles based on the profoma invoices, the respondent cannot, by virtue of the loan agreement, be held liable for having failed to discharge its obligation," they said.

In that respect, the justices agreed with the trial Judge that the contention by the appellants that the respondent bank made erroneous calculations in converting the purchase prices of the vehicles from foreign exchange into Tanzanian Shillings is not supported by evidence.

According to them, the appellants should have adduced evidence to substantiate their allegation that the respondent Bank represented by seasoned Advocate Elisa Msuya in the appeal acted on wrong exchange rates thus arriving at a wrong amount of 80 percent of the purchase prices of the vehicles.

That apart, the justices said, the appellants, who were represented by Advocate Adronicus Byamungu accepted the loan on the terms and conditions stipulated in agreement and were, thus deemed to have been aware that the conversion was properly made at the time of signing the loan agreement.

"In case there was an error which affected the amount of loan such that it would have necessitated its variation and consequently variation the terms of the agreement, the appellants were supposed to have communicated such requirement to the respondent. The appellants did not however, do so," they said.

The Company and the respondent had entered into an agreement whereby the latter was to advance to the former an amount of money to enable it purchase a truck from Scania Tanzania Limited and a trailer from Superdoll Trailers Manufacturing Company (T) Limited.

According to the agreement and the invoices submitted to the respondent by the appellant, the truck was to cost an amount of GBP 33,759.80 while the trailer's price was USD 56,640.00.

Thus on February 17, 2011, the respondent advanced to the company an amount of 128m/- as loan.

The loan, which was secured by a deed of debenture, chattel mortgage and personal guarantees and indemnity of the Company's directors, was to be repaid within 24 months of the date of advance on monthly installments of 6,703,788/-with interest.

Such truck and trailer were to be registered in joint names of the respondent and the company.

From the loan which was deposited in the Company's bank account maintained at the respondent's bank, the latter paid to Superdoll USD 45,312.00 being 80 per cent of purchase price of the trailer.

The bank also paid 50,312,350/-to Scania Tanzania as 80 per cent of the purchase price of the truck which was GBP 33,759.80. There was no dispute that the purchase price of the trailer was fully -paid.

However, the appellants contended that it was not the case as regards the truck.

This gave rise to the dispute between the appellant company and the respondent as to whom between them had defaulted to discharge his obligation as regards the payment of purchase price of the truck.

In the meantime, the appellant company failed to abide by the schedule of repayment of the loan.

As a result, the respondent instituted the suit claiming for the certain reliefs, including payment of 147,258,941/89 being outstanding debt in the account of the appellant company and which were secured by the two directors as at March 30, 2013.

Having considered the evidence of the witnesses and documentary exhibits relied upon by the parties in support of their respective claims, the trial court found that the respondent discharged its obligation under the loan agreement and, therefore, granted the reliefs sought.

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