Dar es Salaam — The Commercial Division of the High Court has ordered two logistics companies to pay Bank of Africa Tanzania Limited and the I & M Bank (T) Limited $642,000 and Sh684.5 million respectively for defaulting on loan which they blamed on frustration of business.
Justice Elinaza Luvanda ordered A.A. Trans Limited, Asgher Versi and Akber Versi to pay Bank of Africa $642,000 for failing to repay the loan that the bank granted to the A.A. Trans between 2013 and 2014 for purchasing trucks and trailers.
The bank brought a lawsuit against the logistic company and two others in 2018 after spirited attempts to recover the $538,418 in outstanding loan balance failed.
The loan remained unsettled even after the bank sold ten new fuel tankers and 18 trucks and trailers that were security for the loan.
The firm had secured a loan of $360,000, $150,000, $300,000 in 2013 and later in 2014 got $500,000, $600,000 and $500,000 in loan deal with the bank.
To prove its case, the bank had tendered in court statements of the loan account which showed the company was still owed $642,000 as of December 12, 2017 despite the sale of trucks and trailers that were used to secure the loan.
Business not running well
Mr Ismael Nazir Suleiman of A.A. Trans conceded that they stopped furnishing the debt because their business was not running well.
"Our trucks and lorries were attached without notice and sold at a token price," Mr Suleiman complained at the hearing of the case.
However, the judge turned down the defence, saying the excuse had nothing to do with the case at hand.
"The defendants admitted to have defaulted to repay the loan, which suggests that the defendants had failed to discharge their obligation. This amounts to breach of the terms and condition of the loan agreement," said justice Luvanda.
He said the company cannot escape liability to pay the bank the remaining balance of $642,000. The amount will attract an interest of 7 percent from the date of judgment to the date of full repayment.
At the same court, ZEDS Logistics Limited was ordered to pay I & M Bank (T) Limited Sh684.5 million over breach of loan agreement.
Lady Justice Bitamo Phillip said in her recent decision that I & M Bank has produced sufficient evidence to prove that ZEDS Logistics and two other defendant--- Zulfikar Hussein Dewji and Abbas Zulfikar Dewji--have failed to honour the loan contract.
The bank had in June 2014 granted the defendants a Sh811 million loan for the purchase of ten trucks and trailers from Assets Well Limited of UK. The loan was supposed to be repaid within 36 months.
The bank resorted to court action after several attempts to recover Sh705 million in unpaid loan amount failed.
In their defence, the defendants disputed as incorrect the amount that the bank claimed. They claimed that the first defendant (ZEDS Logistics) has been servicing the loan up to July 2016 when its business was frustrated.
The company alleged that the bank was well informed of the frustration of its business and requested the bank to re-schedule the loan repayment plan.
"The request was accepted, but before the implementation of the re-scheduled repayment plan, the bank confiscated the trucks that were the 1st defendant's source of income for repayment of the loan," said the company.
But the bank strongly disputed the claim, saying the re-scheduled loan repayment plan could not be completed because ZEDS Logistics failed to submit audited financial statement.