SBC Tanzania Limited vs Abdallah Kondo Chuma (Civil Appeal No. 1041 of 2024) [2026] TZCA 590 (19 May 2026)

IN THE COURT OF APPEAL OF TANZANIA AT DODOMA ( CORAM: WAMBALI. J.A., MAIGE. J.A. And MDEMU. J.A.^ t CIVIL APPEAL NO 1041 OF 2024 SBC TANZANIA LIMITED ....................................................... APPELLANT VERSUS ABDALLAH KONDO CHUMA ...................... ......................... RESPONDENT (Appeal from the Judgment and Decree of the High Court of Tanzania, Moshi sub - Registry at Moshi) (Monaella, J.1 ) dated the 13th day of September, 2024 in Labour Revision No. 546 of 2023 JUDGMENT OF THE COURT 28th April & 19th May, 2026 MAIGE, J.A.: The respondent was, in May, 2004, employed by the appellant as a customer representative and was eventually promoted to a position of Area Sales Manager. Following the discovery of TZS 4,176,000 deficit in the respondent's sales account, the appellant issued a formal demand (exhibit D5) on May 31, 2023. This notice required the respondent to remit the outstanding funds by June 3, 2023, failure of which, disciplinary proceedings would be initiated. In his reply dated June 5, 2023 (exhibit D6), the respondent explained that the shortage resulted from credit supplies made to a sales agent one Yusuph Msabaha (the sales agent) in pursuit of sales targets. He l further committed to settling the balance by the end of the month with the assistance of said agent and his relatives. The appellant subsequently responded on June 10, 2023 as per the letter in exhibit D7, stating: "Your request has been taken into consideration and hereby be inform ed that, the management decided to give you a tim eline for ensuring you offset your outstanding o f Tshs. 4,086,631.12 in three week instalm ents. Failure to do so, the disciplinary procedure w ill be applied against you including but not lim ited to proceeding with other legal proceedings thereof " When the respondent allegedly failed to settle the outstanding balance, the appellant issued a notice on June 24, 2023 (exhibit D8), summoning him to a disciplinary hearing scheduled for June 30, 2023. Notwithstanding the respondent's absence, the disciplinary proceedings concerning the alleged misappropriation of funds continued. The respondent was eventually found guilty of the misconduct (exhibit D9), leading to the formal termination of his services on July 10, 2023 as per exhibit D 11. Aggrieved by this decision, the respondent filed a complaint with the Commission for Mediation and Arbitration ( the CMA), alleging that his termination was both substantively and procedurally unfair. Upon hearing, the CMA found that there was a valid reason for termination because the respondent admitted to the shortage and agreed to repay it but failed to prove that the loss was actually caused by the sales agent. Furthermore, the committee held that the procedure was fair, noting that a prior investigation was unnecessary since the respondent had expressly admitted to misappropriating the appellant's funds. Accordingly, the CMA dismissed the complaint. The respondent was displeased with the decision and, therefore, applied for revision before the High Court. Having critically reappraised the record, the High Court found that the appellant did not, at the CMA, establish in the required standard that the termination of the respondent's service was fair both in substance and procedure. Although it had no issue with the disciplinary proceedings being conducted in the respondents absence, the High Court found that the appellant failed to provide concrete evidence to establish existence of the alleged misconduct. More particularly, the High Court observed that, in the absence a formal inquiry, the unsubstantiated oral testimony by DW1 and DW2 as to the discovery of the shortage coupled with the letter from the sales agent in exhibit D13 could not ipso facto establish that the respondent acted dishonestly. 3 Likewise, the Court observed that while the respondent was charged with breaching staff regulations, those specific regulations were never tendered into evidence, leaving the proper procedure for handling sales account shortages undefined. Ultimately, the High Court Judge held that the respondent's admission of the shortage and his subsequent partial payments were immaterial because he maintained a denial of any dishonesty. Consequently, the High Court concluded that the disciplinary proceedings were commenced prematurely and failed to meet the necessary standards of proof. The High Court, having found that physical reinstatement would create a difficult working environment between the parties, it ordered the payment of 12 months7salary in lieu of reinstatement along with other terminal benefits. This time around, the appellant has been aggrieved by the decision. In the memorandum of appeal, the appellant had raised four grounds. For obvious reasons, the last two grounds were dropped during hearings and the appellant, through his counsel, argued the first two grounds which fault the High Court for: reaching an erroneous decision that there was no substantive reason for termination while there was a clear admission of loss occasioned by the respondent resulting into misappropriation of the appellant's cash worth TZS 4.086,631.12; and reaching an erroneous decision that the procedure for termination were not adhered to and that, the disciplinary proceedings were initiated prematurely. At the hearing, the appellant was represented by Mr. Kapimpiti Mgalula, learned advocate while the respondent enjoyed the services of two learned counsel namely; Mr. Majura Magafu and Mr. Mathew Bernard Kabunga. It is noted that while the appellant had filed written submissions through her counsel prior to the hearing, the respondent had not. Upon an informal request, however, we granted leave to Mr. Magafu to present oral arguments in opposition to the appeal in pursuance of rule 106 (10) (b) of the Tanzania Court of Appeal Rules, 2009. We subsequently heard from Mr. Mgalula, who adopted his written submissions in their entirety and offered brief clarifications, followed by Mr. Magafu, who provided a detailed rebuttal submissions. With humility, we express our sincere appreciation for the assistance provided by both counsel, as their submissions were instrumental in the composition of this judgment. Based on the submissions, there is a consensus between counsel as to what amount to a fair termination. This is a pure question of law which, as correctly observed by the High Court judge, is dearly and unambiguously stipulated under section 37 (2) (a) of 5 the Employment and Labour Relations Act (ELRA). Essentially, a termination is fair only if it is based on both a valid reason and a fair procedure. This is in line with article 4 of the ILO Convention. Item (b) of subsection (2) of section 37 of the ELRA sets out acts or and omissions which amount to unfair reasons as to include misconduct, incapacity, incompatibility and operational requirement. Subsection (4) thereof, requires the CMA or the High Court when determining whether the termination is fair, to take into account the codes of conduct in existence. In this respect, the Employment and Labour Relations (Code of Good Practice), G.N. No. 42 of 2007, henceforward, "the Code of Good Practice", provide in details for those standards of fair procedure. We shall refer to specific provisions as they become relevant during our deliberations. Finally, it is a settled principle of law that where fairness of a dismissal is challenged, the burden of proof rests squarely on the employer to establish that the termination was both substantively and procedurally justified. This is in terms of section 39 of the ELRA. The central issue for our determination is whether the appellant established, on a balance of probabilities, that the respondent's termination was both substantively and procedurally fair. We shall first address the question of whether a fair reason for dismissal existed. 6 According to the findings of the disciplinary committee (exhibit D9) and the subsequent termination letter (exhibit D ll) , the sole ground for the respondent's dismissal was the alleged misappropriation of company funds. It is trite that such a wrong, if proven, constitutes gross misconduct which, under regulation 12(3) (d) of the Code of Good Practice would legally justify summary dismissal. The crux of the matter, therefore, is whether the evidence supports this specific charge. Submitting in this respect, Mr. Mgalula contended that sufficient evidence exists to establish that the respondent committed the misconduct. The respondent, Mr. Mgalula submitted, expressly admitted, vide exhibit D6 to have misappropriated the appellant's funds. He clarified that upon being requested through exhibit D5 to address the anomaly, the respondent admitted through exhibit D6 and undertook to repay the same. It having been expressly admitted, it was submitted, investigation was no longer a requirement as the purpose behind it is to establish existence or non-existence of the disputed misconduct. In his contention, therefore, the termination of the respondent's service was fair both in substance and procedure and the appeal should be allowed. 7 In a detailed rebuttal, Mr. Magafu vehemently denied that any evidence of misappropriation or an admission thereof exists on the record. He argued that the contents of the referenced exhibits do not support a finding of misconduct. In the alternative, he contended, even if such an admission existed, which he denied, the appellant had agreed via exhibit D7 to allow the respondent three weeks from June 10, 2023, to liquidate the balance. The commencement of disciplinary action through exhibit D3 was, therefore, not only premature but more importantly, a signification of bad faith, Mr. Magafu added. Further indicators of bad faith were cited in exhibit D5, which was served on June 3, 2023, yet perversely required the respondent to offset the balance by that same date. Mr. Magafu emphasized that the burden of proving the fairness of the termination rested solely on the appellant as the employer, a burden he argued was not met. Aligning with the High Court's reasoning, counsel insisted that without a mandatory prior investigation, the alleged misconduct remained unproven. Mr. Magafu further contended that although the alleged misconduct concerned a sum of TZS 4,086,000.00, the record of appeal confirms that this amount had been liquidated in full prior to 8 the respondent's termination. Paradoxically, he submitted, this full settlement was omitted from the termination letter and remained unacknowledged in the appellant's submissions before the High Court. The counsel further highlighted the material inconsistencies regarding the actual quantum of the alleged toss. He clarified that, the appellant's insistence on a cash lump-sum payment, despite having already initiated recovery through monthly salary deductions, was a clear manifestation of bad faith intended to accelerate a dismissal rather than to recover the debt. Having accurately evaluated the rival submissions and subjected the record to critical scrutiny, we find no reason to depart from the High Court's conclusion. We agree with the learned High Court judge that the appellant failed to establish, on a balance of probabilities that, the respondent committed the alleged misconduct. We shall account for this conclusion gradually as we go along. For a start, the record of the disciplinary hearing (exhibit D9) is conspicuously silent on the charge of misappropriation. The committee's deliberations were anchored solely on the statement of the complainant, Bilal Yussuf, whose testimony was confined to criticizing the respondent's failure to settle the outstanding balance. As a result, it ended up by concluding that the respondent was 'irresponsible' insofar as he did not repay the outstanding balance within the allotted time. In our view, such an omission, even if proven, does not, as a matter of law, constitute the misconduct of misappropriation. At the CMA, the appellant's case rested on two witnesses whose testimonies were insufficient to prove misappropriation. DW1, the appellant's accountant, testified to a shortage of goods worth TZS 5,795,200, which was later revised to TZS 4,086,000. Importantly, DW1 admitted that this deficit was eventually cleared, as evidenced by the bank-in slips in exhibit Dl. His testimony established a temporary inventory shortage, but offered no evidence of dishonest intent or unauthorized diversion of assets. Indeed, DW1 conceded during cross-examination that this shortage related to merchandise rather than liquid currency. Similarly, the testimony of DW2, the Human Resource Manager, was founded upon an incorrect interpretation of exhibits D3 and D6. The appellant wrongly treated these records as a formal admission of misappropriation by the respondent. Upon our evaluation of the record of appeal, we concur with Mr. Magafu that these documents do not constitute an admission of misappropriation. It is evident that while the respondent acknowledged an account shortfall, he explicitly 10 attributed it to the transfer of materials to the sales agent to meet sales targets. This explanation points toward a professional or administrative discrepancy rather than the dishonest intent required to establish the charge of misappropriation. In our understanding, a financial deficit and misappropriation are neither synonymous nor identical. Misappropriation is a criminal act characterized by the unauthorized, intentional, and dishonest conversion of another's property for personal use. Conversely, a deficit is a neutral financial state representing a shortfall that may arise from negligence, administrative error or legitimate business risks. As correctly observed by the High Court, the record is entirely devoid of any evidence connecting the respondent to the specific charge of misappropriation. Since it has not been shown that the High Court misdirected itself on the law or misapprehended the facts, its findings must remain undisturbed. We, therefore, hold that the alleged misconduct was not proved. We now turn to the second ground of appeal, which concerns the procedural fairness of the termination. Similar to the focus of the High Court, our analysis begins with the appellant's failure to conduct a preliminary investigation, a requirement that is vitall to this case. 11 Under rule 13(1) of the Code of Good Practice, such an investigation is a mandatory prerequisite. The relevant provision stipulates as follows: " 13(1) The employer shall conduct an investigation to ascertain whether there a ground for a hearing to be held." As we held in Enza Zaden Africa Limited v. Edwin Kasena (Civil Appeal No. 427 of 2021) [2023] TZCA 17733 (5 October 2023), TANZLII, a disciplinary proceeding must be preceded by a formal investigation. This process is essential to confirm the basis for the allegations and to safeguard the employee's right to a fair hearing by allowing them to respond to specific investigative findings. In the matter at hand, it is undeniable that such a requirement was not met. Mr. Mgalula contends that the respondent's alleged admission of misconduct rendered a formal investigation unnecessary. With respect, we find this argument untenable for a number of reasons. First, as previously determined, the respondent made no such admission as the letter in exhibit D6 does not amount to admission of the misconduct under discussion. Second, even if an admission had occurred, it would not justify bypassing the mandatory requirement for a prior investigation. On top of that, the record of appeal reveals that the disciplinary proceedings were conducted in absentia and, 12 therefore, it was logically impossible for the respondent to have admitted to the allegations during a hearing he did not attend. Even if a prior investigation were deemed unnecessary, the respondent's termination remains tainted by procedural unfairness. The appellant acted in haste by initiating disciplinary measures on 24th June 2023 and thereby depriving the respondent of the full 21 day timeline originally set for the reconciliation of his account as per exhibit D7. Such premature action by the appellant overlooked the material fact that the respondent was, at all material times, in the process of reconciling the account. Most strikingly, the respondent had entirely cleared the debt by the date of his official termination as per exhibit Dlbut yet the appellant ignored this recovery in its final decision. We entertain no doubt that such conduct rendered the dismissal both procedurally and substantively unjust. Furthermore, we affirm the High Court's finding that the appellant's failure to produce the specific staff regulations allegedly breached, constituted a significant procedural irregularity. As noted by the learned High Court Judge, a view which we also endorse, the absence of these regulations before it, deprived the CMA of the necessary framework to determine the standard procedure for handling account shortages. 13 More to the point, while the termination letter cited section 10 of the staff handbook as the basis for the respondent's dismissal, this provision was never mentioned in the charge sheet. So that he could make a meaningful defence, the respondent was entitled to know exactly which rule he was accused of violating. Since the regulation in question was neither cited in the charges nor produced as evidence, the allegation of misconduct remains nothing else other than a mere conjecture. Before we conclude our judgment, we find it inevitable to address the failure on the part of the appellant to tender the record of the internal appeal. While the termination letter claims that an appeal was heard and dismissed, that remains as a mere assertion without evidence. To prove that the respondent's right to a fair hearing was respected, It was incumbent upon the appellant to produce, which she did not, the actual appeal proceedings. In the absence of such records, this Court cannot presume that a fair appellate process occurred. In light of the above, we find no reason to disturb the High Court's finding that the respondent's termination was procedurally unfair. 14 In view of the foregoing, therefore, we find the appeal at end devoid of any merit and we dismiss it. This being a labour dispute, we make no order as to costs. DATED at DODOMA this 15th day of May, 2026. F. L. K. WAMBALI JUSTICE OF APPEAL I. J. MAIGE JUSTICE OF APPEAL G. J. MDEMU JUSTICE OF APPEAL Judgment delivered virtually, this 19th day of May, 2026 in the presence of Mr. Kapimpiti Mgalula, learned counsel for the Appellant and Mr. Mathew Kabunga, learned counsel for the Respondent and Ms. Hilda Mcharo Court Clerk; is hereby certified as a true copy of the