ECO Bank Tanzania Limited & Others vs Eric Talemwa Lugeleka (Civil Appeal No. 573 of 2024) [2025] TZCA 1285 (15 December 2025)

IN THE COURT OF APPEAL OF TANZANIA AT PAR ES SALAAM fCORAM: KEREFU. 3.A.. KHAMIS, J.A. And NANGELA, 3.A.) CIVIL APPEAL NO. 573 OF 2024 ECO BANK TANZANIA LIMITED................................. . ........ 1 st APPELLANT STEAM GENERATION RECOVERIES ...................... ..............2 nd APPELLANT NOELAH DAMAS LUGONGO................................................ 3 rd APPELLANT VERSUS ERIC TALEMWA LUGELEKA.......... . .................................... . RESPONDENT (Appeal from the Decision of the High Court of Tanzania, Land Division at Dar es Salaam) (Luvanda. 3 / 1 Dated the 19th day of December, 2023 in Land Case No. 1 of 2023 JUDGMENT OF THE COURT 03rd & 15th December, 2025 NANGELA, 3.A.: The appeal before us arises from the decision of the High Court of Tanzania, Land Division (herein after referred to as the trial court). It relates to Land Case No. 1 of 2023, a suit filed by Mr. Eric Talemwa Lugeleka, the respondent herein. In that suit, the respondent prayed for judgment and decree against the appellants, jointly, as follows: i 1. A declaration that the first and second appellants herein breached the implied agreement entered into with the respondent herein. 2. A declaratory order that the sale by auction o f the suit property, described as Plot No. 2058 Block "H" with CT No.110584, Mbezi Beach ; Kinondoni Municipality, Dar es Salaam City, to the third appellant herein, done by the first and second appellants herein, jointly, was illegal and ineffectual. 3. An order for the first appellant herein to pay the respondent herein the sum o f TZS 150,000,000.00 being the total accumulated arrears from interest in regard to the loan balance owed by UNICREDIT. 4. An order for payment o f TZS 100,000,000.00 for breach of contract and loss o f income. 5. Payment o f TZS 50,000,000.00 punitive damages or as may be assessed by the court; and 6. Payment o f TZS 500,000,000.00 as generaI damages. For clarity/ setting out the factual context as may be ascertained from the record of appeal, is imperative. The respondent had friendly relations with two directors of a micro-finance institution branded as UNICREDIT MICROFINANCE LIMITED (hereinafter referred to as "UNICREDIT). The two of its directors were Messrs. Paul Edward Shayo and Lusekelo Mbwele. Based on their friendship, the respondent used to help them secure loans from 2 different institutions by way of mortgaging his property, described as Plot No. 2058 Block "H" with CT No. 110584, Mbezi Beach, Kinondoni Municipality, Dar es Salaam City, (the suit property). On 23/01/2019, UNICREDIT, through its directors, Messrs. Edward Shayo and Lusekelo Mbwele, applied for a credit facility in the tune of TZS 250,000,000.00 from the first appellant. On 22/02/2019, a facility agreement (exhibit Dl) was executed between the two directors of UNICREDIT (borrower) and the first appellant (lender). According to exhibit Dl, the loan was for purposes of enabling UNICREDIT to fund its activities, the tenor was for the period of thirty-six (36) months and, the drawdown of funds was subject to the fulfillment of conditions precedent. In terms of securities, the facility was secured by a collateral of a first ranking legal mortgage charged over a landed property which turned out to be the suit property earlier described hereabove. According to exhibit Dl that suit property was mortgaged by the two directors of UNICREDIT who also executed the mortgage deed (exhibit D3) dated 22/02/2029 and surrendered to the first appellant a certificate of the right of occupancy (CRO) in respect of the suit property (exhibit D2). Essentially, exhibit D2 showed that it was transferred from the respondent to Messrs. Paul Edward Shayo and Lusekelo Mbwele, the two directors of UNICREDIT. In that regard, it was the property of UNICREDIT or else a jointly held property of the said two directors of UNICREDIT. Upon filing the suit, the respondent neither sued nor impleaded the UNICREDIT or its directors (Messrs. Paul Edward Shayo and Lusekelo Mbwele). This fact was well observed by the trial court at page 370 of the record of appeal. As may be gathered from the respondent's pleading filed before the trial court, appearing at pages 2 to 15 of the record of appeal, the respondent claimed to be unaware of and not privy to exhibit Dl, D2 or annexure ECO-1, the Mortgage Deed in respect of the suit property. Further, according to paragraph 7 of his plaint (appearing at page 3 of the record of appeal), the respondent averred that the two directors of UNICREDIT fraudulently transferred the title of the suit property to their names without his knowledge. It appears that, UNICREDIT (as the borrower of the funds) defaulted in repaying the loan that the first appellant advanced to her. As such, in compliance with the law, the first appellant issued a 60 days' notice of default and moved for a recovery process through the auctioneering services of the second appellant. 4 However, before the property could be auctioned, the respondent, allegedly, engaged with the first appellant in an effort to rescue his property. According to the respondent's pleadings, after a long-drawn discussion, both the respondent and the first appellant agreed orally that the respondent would disburse and clear the accumulated arrears and accrued interests arising from the loan advanced to UNICREDIT and which, by the time, had accumulated to the tune of TZS 110,000,000.00 and, that, a further re payment of TZS 10,000,000.00 would be directly paid to the second appellant to cover the auctioneer's costs. It was a further respondent's averment on page 3 of the record of appeal that, subsequent negotiations between him and the first appellant ensued whereby it was agreed that, he was to assist in repaying the UNICREDIT's outstanding loan balance and, that, once the repayment of the outstanding loan on behalf of UNICREDIT was accomplished, the first appellant was to enter into a sale agreement, sign all the necessary documents on transfer of the property, and transfer the suit property to the respondent's name. According to the respondent, based on the discussions and orally agreed positions, he paid TZS 10,000,000.00 as the auctioneer's costs, on 30/06/2021; (TZS 3,000,000.00 and TZS 7,000,000.00) and later effected different payments to the first appellant in the sum of TZS 150,000,000.00. Despite all that which took place, the respondent averred, on page 4 of the record of appeal that, the first appellant went ahead and instructed the second appellant to auction the suit property without any public notice or informing the respondent and in total disregard of their agreements. It was on the basis of those facts; therefore, the respondent filed the earlier suit, namely, Land Case No.l of 2023, alleging among other things, that he was not given any notice to vacate or terminate their oral agreements considering that he had already deposited TZS 150,000,000.00 into the bank account number 0020135406 in the name of UNICREDIT held by the first appellant. He, thus, sought for the prayers earlier indicated hereabove. In contesting the suit, the appellants filed a joint statement of defense found at pages 16 to 20 of the record of appeal. There at, they denied the respondent's claims, stating that, by virtue of a mortgage deed dated 22/02/2019, the first appellant had advanced an overdraft facility amounting to TZS 312,500,000.00 to UNICREDIT and, that such disbursement of funds was based on the terms and conditions as stipulated on the facility agreement (exhibit Dl). 6 It was their further averment in defense; that, the term loan facility was granted after the borrower (UNICREDIT) had mortgaged its right of occupancy by executing a mortgage (exhibit D3) over the suit property as a continuing security, and handed in the Certificate of Title (exhibit D2) which was in the names of UNICREDIT's Directors, Messrs. Edward and Lusekelo. Besides, the first appellant further denied having had any relationship with the respondent concerning the loan default by UNICREDIT and, that, neither were there any agreement that the respondent was to deposit money into the UNICREDIT account to clear the outstanding amounts. In their written statement of defense, at page 18 of the record of appeal, the appellants averred further that, a 14 days' public auction notice was issued and published via Mzalendo Newspaper dated 11/12/2022 (exhibit D5). In short, they demanded that the respondent be put to strict proof of his claims which they denied. Following a final pre-trial session, the trial court settled for three issues, to wit: 1. whether there was a breach o f contract between the respondent herein and the first appefiant herein; 2. whether the saie o f the suit property to the third appellant herein and i 3. the reliefs to which the parties are entitied. Consequently, the trial court thereafter, heard the parties. In advancing their respective cases, both the respondent (as plaintiff) and the appellants (as defendants) each summoned one witness. For the respondent's case, the respondent himself testified as PW1. In his testimony, appearing at pages 181 to 185 of the record of appeal, he narrated how he used to relate with UNICREDIT and its directors; how he discovered that they had borrowed money from the first appellant using his property as collateral without his knowledge; how the property had been fraudulently transferred into their names; how UNICREDIT defaulted on the loan; and what steps he took to rescue his property. These steps included entering into an agreement with the first appellant and paying TZS 10,000,000.00 on 30/06/2021 (TZS 3,000,000.00 and TZS 7,000,000.00) on 08/07/2021, which amount was paid directly to the second appellant, as well as paying TZS 150,000,000.00 as part of commencing repayment of the outstanding loan following UNICREDIT's default. Moreover, PW1 testified that despite the arrangement he made with the first appellant, the latter later turned back and auctioned the suit property, prompting him to file the suit and seek the prayers contained in the plaint. 8 For their part, the appellants (as defendants) called one Davis Sichela, who testified as DW1. According to DW1, UNICREDIT was advanced a loan in the sum of TZS 250,000,000.00, as evidenced by exhibit Dl. As the borrower, UNICREDIT secured the facility by executing a mortgage over a right of occupancy (exhibit D3) and handing over to the first appellant the certificate of title (exhibit D2). DW1 further testified that UNICREDIT defaulted, and after the issuance of 60-day statutory notices of default (exhibit D4) on 17/02/2020 and 19/02/2021, the first appellant instructed the second appellant to publish a 14-day Auction Notice (exhibit D5), which appeared in the Mzalendo Newspaper dated 11/12/2022 (exhibit D6). This process ultimately culminated in the sate of the suit property on 24/12/2022. Additionally, at page 357 of the record of appeal, DW1 is recorded as denying the existence of any agreement between the respondent and the first appellant. He admitted, however, that the respondent once submitted a proposal, which was rejected on the ground that the respondent was not privy to the facility arrangement between UNICREDIT and the first appellant. After hearing the parties, the trial court decided partly in favour of the respondent, directing the first appellant to refund the TZS 150,000,000.00 that the respondent had deposited in the borrower's account. The refunded amount was to attract interest at the rate of 20% per annum from the date 9 of filing the suit to the date of judgment, and a further 7% interest at the court's rate from the date of judgment until full satisfaction. In reaching that decision, the trial court relied on its finding recorded on page 373 of the record of appeal when addressing the first issue. On that page, the trial court found and held as follows: "...undeniably, there was an implied agreement and undertaking between the plaintiff and the first defendant, for the former to rescue and redeem his house used as a collateral to the loan.... This can be evidenced by the fact that an email annexure ECO-3 being a commitment by the plaintiff to discharge a loan ; was pleaded into the joint written statement of defense ." Aggrieved by the trial court's decision, the appellants have now come to this Court by way of an appeal, the same being predicated on three grounds of appeal, namely: 1. That, the trial court erred in law and fact by finding that there was an agreement between the first appellant and the respondent by merely relying on a document which did not form part of the exhibits nor did it establish dear terms of agreement alleged to be entered. 10 2. That, the trial court erred in law and in fact in granting reliefs which were neither pleaded nor prayed for by the respondent and, without any justification to substantiate the relief granted. 3. That, the trial court erred in law and fact in awarding the sum o f TZS, 150,000,000.00 to the respondent as a refund without justification and material evidence to support the award. On the scheduled date of hearing of this appeal, Mr. Reginald Martin, learned advocate, appeared for the appellants. Conversely, Mr. Nehemiah Nkoko, learned advocate, appeared for the respondent. At the outset, Mr. Martin moved the Court, under Rule 111, to amend the memorandum and notice of appeal so that they would reflect that the appeal was preferred jointly by all three appellants and not solely by the first appellant. As there was no objection from Mr. Nkoko, we readily granted the prayer, and the hearing proceeded on that basis. Before the parties could address the respective grounds of appeal, however, the Court raised suo motu an issue as to whether, upon examining the record of appeal, there existed a question of non-joinder of parties. We invited the learned advocates for the parties to address this issue first, as they proceeded to argue the grounds of appeal raised by the appellants. When Mr. Martin took the floor, he adopted his written submissions and responded to the issue raised by the Court, noting that, there was no non-joinder of parties. According to him, that question had already been raised before the trial court, but the respondent's basis for suing the appellants was not rooted in the facility agreement, since the borrower was UNICREDIT and the mortgaged properties were registered in the names of other persons. He argued that, the respondent, not being the borrower, sued only because he claimed to be the owner of the suit property involved in the mortgage transaction. Regarding the grounds of appeal, Mr. Martin clarified that there was no clear evidence that the respondent had any agreement with the first appellant requiring him to service the outstanding loan facility, as he was not privy to the loan and was not the owner of the suit property that secured it. He further explained that the respondent did not even sue those who were shown to be the owners of the suit property; instead, he simply claimed to have entered into an agreement with the first appellant—an agreement which, according to Mr. Martin, never existed. He contended that, despite the absence of evidence, the trial court relied on a document (Annexure ECO-3, found at page 124 of the record of appeal), even though it had never been tendered and admitted in court as 12 an exhibit. Moreover, the document was an email that had no proof of any reply and was dated 2022. According to him, any payments made by the respondent into the accounts of UNICREDIT (the borrower) were not based on any agreement between the respondent and the first appellant. As for the second ground, he clarified that the payment of interest had not been pleaded and that the award of TZS 150,000,000.00 as a refund was erroneous and unjustified, as these were deposits made into the borrower's account which the first appellant was entitled to deduct. Moreover, the amount was not TZS 150,000,000.00 but TZS 130.000.000.00, as reflected in exhibit PI. He submitted that since the debt had remained outstanding since 2019, it had ballooned to TZS 312.000.000.00 due to the continued accrual of interest. He therefore urged us to allow the appeal with costs. For his part, Mr. Nkoko was very brief. He contended that on the issue of non-joinder of parties, the trial court took note of the allegations of fraud said to have been committed by the two directors of UNICREDIT, though, it did not pursue that line of argument further. Regarding the issue of the existence of an implied contract, he argued that the trial court rightly found that such a contract existed between the respondent and the first appellant. He drew our attention to paragraph 6 of the appellants' joint written 13 statement of defense, at page 17 of the record of appeal, where the appellants averred that "no further negotiations were made," insisting that this admission implied that negotiations had indeed taken place between the first appellant and the respondent, as the respondent had argued. He also referred us to page 134 of the record of appeal, which shows that the respondent deposited money for loan clearance and that there was an agreement to that effect between the respondent and the first appellant. To bolster his submission, he invited the Court to rely on its decision in Tanzania Ports Authority and Another v. JV Tangerm Construction Co. Ltd and Technocombine Construction Ltd (A Joint Venture) (Civil Appeal No. 34 of 2024) [2025] TZCA 425 (19 May 2025, TanzLII), contending that the first appellant cannot be left to enrich itself unjustifiably having auctioned the suit property. Mr. Nkoko relied as well on the decision of the Court in Grace Lumelezi v. The Board of Trustees of the National Social Security Fund (Civil Appeal No. 663 of 2024) [2025] TZCA 1057 (10 October 2025, TanzLII) for the proposition that the moment the respondent deposited the money into the account the burden was upon the first appellant to prove that the deposit was not based on the alleged agreement between the two. 14 Regarding the second and third grounds of appeal, Mr. Nkoko contended that the reliefs sought were all pleaded and clearly shown at page 5 of the record of appeal. He contended that, the decision of the Court in Said Abdallah Doga v. Rose Fridoline Mwapinga and Another (Civil Revision No. 1 of 2020) [2023] TZCA 18059 (28 November 2023, TanzLII) relied upon by the appellants in written submission, was distinguishable. He thus urged us to dismiss the appeal with costs. Mr. Martin offered a brief rejoinder. In addition to reiterating the arguments made in his written submissions and elaborated orally, he maintained that the TZS 150,000,000.00 constituted funds deposited into the borrower's account and, as such, belonged to the borrower and were applied toward servicing the outstanding loan and not otherwise. On that basis, he rejected the claims of unjust enrichment, noting that, the loan continued to accrue both interest and penalties. For these reasons, he concluded that the authorities relied upon by Mr. Nkoko were distinguishable when considered in the context of the present appeal. Having heard the rival submissions of learned counsel for the parties, the main issue for determination is whether this appeal has merit. Before turning to that issue, however, it is pertinent to address the point we raised suo mow concerning whether the suit before the trial court was 15 unmaintainable due to the non-joinder of parties. In their submissions, learned counsel for the parties advanced opposing arguments and reached different conclusions on that issue, though both were ad idem that the trial court had identified the problem in its decision but did not go beyond merely noting that certain necessary parties had not been impleaded. This latter point, on which learned counsel were ad idem, is indeed apparent at page 375 of the record of appeal, where the trial judge stated as follows: "PW1 is a totai stranger to the loan agreement (exhibit D l) and the mortgage o f right o f occupancy (exhibit D3). The borrower and mortgagor were not sued or impleaded herein , let alone to be joined, which creates a reasonable shadow o f doubt. Therefore , this court is debarred from dwelling into details, determining the legality or procedural aspects regarding the auction and sale o f the suit property to DW2 where necessary parties were not joined to the litigation." Based on the observations made by the trial court, and upon a close examination of the pleadings filed therein, which form part of the record of this appeal, we find that the issue of non-joinder of parties was a valid issue, 16 and that the suit was therefore defective for non-joinder. We hold this view for the following reasons. First, in approximately one-fifth of the plaint and the written statement of defense, the respondent and the appellants made reference to the borrower, UNICREDIT. This is evident in paragraphs 5, 6, 7, 9, and 18 of the respondent's plaint, as well as in paragraphs 3, 4, 5, 8, and 14 of the joint written statement of defense filed by the appellants. Second, as the trial court noted, the respondent was a complete stranger to the credit transaction between the borrower and the first appellant, yet his property was used as collateral. The respondent contended that he was unaware of this fact and never sanctioned the use of his title deed or the suit property to secure a credit facility of TZS 250,000,000.00 advanced to UNICREDIT. Paragraph 5 of the plaint (page 2 of the record of appeal) indicates that the respondent sought relief from the appellants based on the loan balance owed by UNICREDIT, a party not joined in the suit. Moreover, the same paragraph shows that, the amount claimed (TZS 150,000,000.00) consisted of "accumulated arrears from interest in regard to the loan balance owed by UNICREDIT." Paragraph 18 (page 5 of the record of appeal) further indicates that the funds were paid into the 17 borrower's account, not the respondent's, and were withdrawn by the first appellant from that account rather than the respondent's personal account. Third, paragraph 7 of the plaint (page 3 of the record of appeal) alleges that the respondent's title to the suit property was fraudulently transferred by the two directors of UNICREDIT, Messrs. Paul Edward Shayo and Mr. Lusekelo Mbwele, neither of whom were joined as parties to the suit. Page 17 of the record further references the suit property being in the names of these directors. In our view, considering the circumstances surrounding the suit that gave rise to this appeal, and given that the respondent raised allegations of fraud against the two directors in his plaint, he was entitled to seek relief not only against them but also against their company, which allegedly used his property as collateral without his consent. However, such relief could not have been effectively granted, nor could a conclusive decree have been pronounced by the trial court, unless both the borrower and its directors had been made parties to the suit. In Abdulatif Mohamed Hamis v. Mehboob Yusuf Othman & Another (Civil Revision No. 6 of 2017) [2018] TZCA 25 (1 August 2018, TanzLII), the Court had the opportunity to consider the question qualifies a 18 party as a necessary party. The Court, relying on the Indian case of Benares Bank Ltd. v. Bhagwandas, A.I.R. (1947) All 18, stated as follows: "First, there has to be a right o f relief against such a party in respect of the matters invoived in the suit and; second \ the court must not be in a position to pass an effective decree in the absence o f such a party. The foregoing benchmarks were described as true tests by Supreme Court o f India in the case of Deputy comr., Hardoi v. Rama Krishna , A.t.R. (1953) 5. C. 521. We, in turn, fufiy adopt the two tests and, thus, on a parity o f reasoning, a necessary party is one whose presence is indispensabie to the constitution o f a suit and in whose absence no effective decree or order can be passed. Thus, the determination as to who is a necessary party to a suit would vary from a case to case depending upon the facts and circumstances o f each particular case. Among the relevant factors for such determination include the particulars o f the non-joined party, the nature o f relief claimed as well as whether or not, in the absence o f the party, an executable decree may be passed As noted above, in his plaint, the respondent raised the issue of a fraudulent transfer of his title deed to secure a borrowing made in favour of UNICREDIT, allegedly orchestrated by its two directors without the 19 respondent's knowledge. In our view, this was sufficient to warrant the joinder of those parties to the case, enabling the court to adjudicate effectively and render a proper decree. In light of the foregoing, we are firmly of the view that the borrower, UNICREDIT, and its two directors were necessary parties to the suit and ought to have been joined. Accordingly, the trial court could have exercised its powers under Order 1, Rule 10 (2) of the Civil Procedure Code, Cap. 33 [R.E. 2023] (hereafter referred to as the CPC) to amend the plaint and join the necessary parties. That provision of Order 1, Rule 10 (2) of the CPC provides that: " The court may, at any stage o f the proceedings, either upon or without the application of either party and on such terms as may appear to the court to be just, order that.... the name of any person who ought to have been jo in e d whether as plaintiff or defendant, or whose presence before the court may be necessary in order to enable the court effectually and completely to adjudicate upon and settle all the questions involved in the suit, be added ” (Emphasis added). Since, as noted above, there was a non-joinder of necessary parties, and no further opportunity exists to amend the plaint at this stage, the only 20 course open to us is to nullify the entire proceedings, quash and set aside the judgment of the trial court, which we hereby do. That has the effect of reverting the parties to their original position before the institution of Land Case No. 1 of 2023. Any interested party may institute a fresh suit, ensuring that all necessary parties are properly impleaded. Each party shall bear its own costs of this appeal. DATED at DODOMA this 12th day of December, 2025. R. J. KEREFU JUSTICE OF APPEAL A. S. KHAMIS JUSTICE OF APPEAL D. 1 NANGELA JUSTICE OF APPEAL Judgment delivered this 15th day of December, 2025 via Virtual Court in the presence of Mr. Reginald Martin, learned counsel for the Appellants also holding brief for Mr. Nehemia Nkoko, learned counsel for the Respondent and Musa Amry, Court Clerk is hereby certified as a true copy of the original. 21