National Investment Company Limited vs Republic Services Social Security Fund (as successor of PSPF, PPF, LAPF & GEPF) (Civil Application No. 198/17 of 2023) [2024] TZCA 1039 (5 November 2024)

IN THE COURT OF APPEAL OF TANZANIA AT PAR ES SALAAM CIVIL APPLICATION NO. 198/17 OF 2023 NATIONAL INVESTMENT COMPANY LIMITED ................ . ..... . ....... APPLICANT VERSUS THE PUBLIC SERVICE SOCIAL SECURITY FUND (as successor of PSPF, PPF, LAPF & GEPF)................................................... 1 st RESPONDENT THE CAPITAL MARKETS AND SECURITIES AUTHORITY.................................................. . 2 nd RESPONDENT THE ATTORNEY GENERAL ........................ . ............................ 3 rd RESPONDENT KINONI ADAM WAMUNZA (as interim Manager of National Investment Company Limited) ................................ 4 th RESPONDENT (Application for extension of time within which the applicant can apply for restoration) (Mrangu, DR.) dated 31st day of August, 2019 in Civil Appeal No. 24 of 2016 RULING 24th October & 5th November, 2024 MGEYEKWA. 3.A.: The applicant herein, National Investment Company Limited (NICOL), has lodged this application by way of a notice of motion under rule 10 of the Tanzania Court of Appeal Rules, 2009 (the Rules) and section 85 of the Public Service Social Security Fund Act, 2018, for extension of time within which

the respondent can apply for restoration of Civil Appeal No. 24 of 2016. The application is supported by the affidavit deponed by Felix Gamaliel Mosha, the founder of the applicant company and it is resisted by all respondents. When, eventually, the matter was placed before me for hearing, the applicant had the services of Prof. Edward Hosea, learned counsel whereas the first, second and third respondents were represented by Mr. Kitila Toroke, Eric Hale, learned Senior State Attorneys and Ms. Luciana Kikala, learned State Attorney. The fourth respondent was represented by Mr. Benjamin Mwakagamba, learned advocate. The application was confronted with a preliminary objection challenging its competence on the ground that, counsel for the applicant on record, Mr. Dominic Daniel and Prof. Edward Hosea have no locus standi\ mandate and or instructions to initiate the instant application in absence of the applicant's Board Resolution as per rule 30 (3) of the Rules and section 182 of the Companies Act, Cap. 212. As is the practice, I had to determine first the preliminary objection before proceeding to determine the substantive application. In amplifying the grounds of the preliminary objection, Mr. Benjamin Mwakagamba, for the fourth respondent, argued that, the counsel for the

applicant; Dominic Daniel and Prof. Edward Hosea have no mandate to initiate this application as per rule 30 (3) of the Rules. Expounding, he argued that NICOL who appeared as the applicant herein did not instruct any advocate or the deponent of the affidavit, Mr. Felix Gamaliel Mosha to institute the instant application. He contended that Mr. Mosha was suspended by CMSA and was removed from his position as Chairman of the Board of NICOL in the shareholders meeting held on 14th April, 2012. Reinforcing his submission he referred the Court to annexure BM-3 and argued that the shareholders of NICOL confirmed the appointment of the fourth respondent and appointed the Interim Board of Directors and the permanent Management is in place. He continued to argue that Mr. Mosha was never instructed to institute the instant application, therefore, they have no mandate to institute this matter. To buttress his submission, he referred me to rule 30 of the Rules which demand the cooperate NICOL be represented by advocate and Directors or manager or Secretary appointed by Resolution of the Company. It was his argument that due to performance failure of the former Chairman; the Board and Chief Executive Officer (CEO) of the applicant were suspended. He argued that on 14th April, 2012, the shareholders removed

the applicant and CEO and the shareholders appointed a temporary Board of Directors and the decision was not opposed, thus, it is final and binding. The respondent cited the case of National Investment Company Ltd NICO, v. The Registered Trustees of Public Service Pension Fund (PSPF)and 5 Others, Misc. Commercial Application No. 288 of 2014 to bolster his argument that the applicant was barred to initiate the action in the name of the company. He went on to submit that it is undisputable fact that, the dispute is an internal dispute within the company. Reinforcing his submission, he cited the case of Simba Papers Converters Limited v. Packaging & Stationery Manufacturers Limited & Another, Civil Appeal Case 280 of 2017) [2023] TZCA 17273, the Court cited the case of Bugerere Coffee Growers Limited v. Sebaduka and Another X [1970] EA 147. It was the fourth respondent's contention that the importance of having resolution is to avoid a company being run by an individual without the Company consent. The respondent referred me to the case of Bugerere (supra) to bolster his argument that the resolution binds members in lifting the veil. He concluded by stating that since the application was lodged without a Board resolution, the same be dismissed with costs.

On the other hand, Prof. Hosea opposed the preliminary objection and sought the indulgence of the Court to dismiss it. On this, he contended that there is a dispute over proper and lawful management of the company. Expounding, he submitted that there are two existing Boards; a founding Board and a purported elected Board. He forcefully argued that the applicant and his counsel have locus standi to lodge the instant application and there was no need to obtain the Board resolution since Mr. Mosha was restored back as the Chairman of NICOL. To buttress his submission, he referred the Court to the decision of Hon. Fauz, J. Ultimately, Prof. Hosea urged the Court to find the preliminary objection misconceived and proceed to strike it out. In a brief rejoinder, Mr. Mwakagamba argued that, Mr. Mosha has never been restored and referred the Court to page 21 of the decision of Hon. Fauz, J (as he then was). He stressed in that decision the High Court recognized the removal of Mr. Mosha and there is no appeal to challenge the said decision. He thus, reiterated his earlier submission that, the deponent to the affidavit purported to be the Director of the applicant has no locus stand!to initiate the instant application for want of the Board resolution. Having heard the contending submissions, in disposing of the preliminary objection, the issue for our determination is the propriety of the

present application. The contentious issues on which parties locked horns is whether Mr. Mosha required a Board Resolution to initiate the instant application. Before delving into the merit of the preliminary objection I need to state clearly that I am on the same page with Prof. Hosea that, the suit cannot become incompetent on the reason that an advocate appearing on behalf of the company had no instruction or board resolution under rule 30 (3) of the Rules. My take is based on what this Court observed in Mohan’s Osterbay Drinks Limited v. British American Tobacco Kenya Limited, Civil Application No. 70/01 of 2022) [2024] T7CA 159, that: "..Neither do we subscribe to the argument that appearance by a company through an advocate requires a board resolution. By parity o f reasoning in as much as no authorization is required when an advocate appears before the Court representing a natural person in terms o f ruie 30 (1) o f the Rules, none is required when such an advocate appears representing a company under rule 30 (3 )." In light of the above observation of the Court, the matter at hand cannot be said to be incompetent for the reason of the advocates

representing the Applicant to have no instructions. By the way, the question whether or not the advocate before the court has been instructed, is the matter of fact and that for proper determination, evidence must be given. The requirement of evidence makes the point raised to cease to be a point of law as was pointed out in the celebrated decision in Mukisa Biscuit Manufacturing Co. Ltd v. West End Distributors Ltd [1969J1EA 69. However, in the present application, the fourth respondent appears as KINONI ADAM WAMUNZA (as interim Manager o f National Investment Company Limited) and the deponent who alleges that he is the founder of the applicant initiated this application on behalf of the company. It thus goes without saying that, the instant application emanates from the internal conflict of the Company, that is, between the deponent and the fourth respondent. The circumstance of this case requires a legal document that confirms the actions of the applicant including commencement of legal action. Consequently, it is my firm view that, since there is unresolved internal conflict within the same company, the applicant needed a Board resolution prior to initiating the matter within the meaning of Rule 30 (3) of the Rules

and as explained by the decision of this Court in Simba Papers Converters (supra), where the Court held that: "A resolution would be necessary where the suit involves a dispute between a company and one o f its shareholders or directors ." In view of the above authority, a person who institutes a matter for the company, must prove authority o f such the company ; This was also stated by the Court in the case of Bugerere Coffee Growers (supra). In that case, an advocate instituted a suit in the name of the company without the Board resolution to that effect. The Court found that there was no evidence adduced to prove authority of the company to institute the suit, it held the suit defective. In particular, it states: "When companies authorize the commencement o f legal proceedings a resolution have to be passed either at a company Board o f Directors1 meeting and recorded in the minutes; no such resolution had been passed authorizing these proceedings." In view of what I have endeavoured to discuss, it cannot be safely vouched that Felix Mosha neither his counsel had locus standi to lodge the instant application without obtaining a board resolution. I, therefore, agree

with the fourth respondent's counsel and hold that, the preliminary objection is meritorious. I therefore proceed to strike out the application with costs to the fourth respondent. DATED at DAR ES SALAAM this 5th day of November, 2024. The Ruling delivered this 5th day of November, 2024 in the presence of Dr. Dominic Damian and Caroline Hosea, learned counsels for the Applicant and Mr. Michael Fyumagwa, learned State Attorney for the 1s t, 2n d and 3rd Respondents and Benjamin Mwakagamba, learned counsel for the 4th Respondent is hereby certified as a true copy of the original. A. Z. MGEYEKWA JUSTICE OF APPEAL