Equity Bank Tanzania Limited and Another vs Nas Hauliers Limited and 10 Others (Civil Appeal No. 382 of 2023) [2024] TZCA 959 (2 October 2024)

AT PAR ES SALAAM (CORAM: MKUYE, J.A., MWAMPASHI. 3.A. And MURUKE. J.A.^ CIVIL APPEAL NO. 382 OF 2023 EQUITY BANK TANZANIA LIMITED ............................................. 1 st APPELLANT EQUITY BANK KENYA LIMITED................................................... 2 n d APPELLANT VERSUS NAS HAULIERS LIMITED..............................................................I st RESPONDENT EVEREST FREIGHT LIMITED........................................................2 nd RESPONDENT TANGA PETROLEUM COMPANY LIMITED...................................... 3R D RESPONDENT ALLY AHMED SAID......................................................................4™RESPONDENT AHMED HEMED SAID................................................................... 5™RESPONDENT BAHMAN SALIM HEMED............................................................... 6T H RESPONDENT IDRISA SAID ABRAHAM...............................................................7™RESPONDENT ISSA MOHAMED SAID................................................................. 8™ RESPONDENT SULEIMAN NASSOR MOHAMED.................................................... 9T H RESPONDENT SAMIHA ALLY HEMED SAID....................................................... 10 th RESPONDENT ALEXANDRIA ESTATE LIMITED.................................................. 11™RESP0NDENT (Appeal from the Judgment of the High Court of Tanzania, Commercial Division at Dar es Salaam) (Nanqela. 3.) dated 19th daly of April, 2023 in Commercial Case No. 105 of 2021 The appellants, Equity Bank Tanzania Limited (the EBTL) and Equity Bank Kenya Limited, (the EBKL) are appealing from the judgment and decree of the High Court dated 19/4/2023, (Hon. Nangela, J), in Commercial Case No. 105 of 2021. The facts leading to this appeal are as JUDGMENT OF THE COURT 3ffhApril & 2n dOctober, 2024 MKUYE. 3.A.: follows:

The 1st appellant, on diverse dates commencing from 30th June, 2014 extended to the 2n d respondent, Everist Freight Limited, both term loan and overdraft facilities which amounted to the tune of USD 3,444,199.00. The term loan was secured by both movable and immovable property of the 1st, 2n d and 3rd respondents (Nas Hauliers Limited, Evarist Freight Limited and Tanga Petroleum Company Limited), (the three respondents) as well as personal guarantees of its directors (the 4th to 10th respondents). It would appear that the three respondents were in further need of capital financing and due to single borrowing restrictions, they could not obtain such additional loan from the 1s t appellant. Then, the 1st appellant advised them to approach the 2n d appellant who eventually introduced them to a financial advisor, NISK Capital Limited (NISK), an entity registered in the Republic of Kenya. NISK managed to secure funding in the form of a loan from Lamar Commodity Trading, a company registered in the United Arab Emirates (U.A.E) (LAMAR). Upon execution of a loan agreement (Exh. P7) between the 1s t respondent and LAMAR, the latter offered to advance to the respondents a sum of US 16, 275,000.00. The facility so extended was meant to enable the three respondents pay up their outstanding debts with the 1s t appellant and other two financial institutions, UBL Bank and Amana Bank.

In order to advance the said loan, LAMAR vide Exh. P7 required the 2n d appellant to issue a standby letter of credit (SBLC)/Letter of credit (LC), with the respondents in order to secure the loan. The loan was disbursed to the three respondents and utilized for the intended purpose in which the securities for the cleared debts were discharged and held by 1st appellant as an agent for the EBKL (2n d appellant). It would appear that the respondents failed in their obligations to repay the loan to LAMAR as per the agreement. Upon being required to repay the loan by the appellants, the 1st, 2n d and 3rd respondents were adamant that they are no longer indebted to anyone. Then, the 2n d appellant under the SBLC/LC on being recalled by the lender paid out an outstanding amount of USD 16,275,000.00 owed by the respondents to NUMORA who was an assignee of LAMAR. This culminated to the withholding of the respondents' securities by the 1st appellant as an agent of the 2n d appellant. On the other hand, the 1st, 2n d and 3rd respondents, confident that they are no longer indebted to anyone, saw that the continued withholding of their securities by the 1s t appellant was illegal. As a result, they instituted in the High Court, a civil suit Commercial Case No. 105 of 2021 claiming among other things, a declaration that the appellants were in breach of the earlier facility prior to LAMAR loan and that the SBLC/LC had

not taken effect. More importantly, they claimed for a declaration that the withholding of its properties given as securities was illegal. It is noteworthy at this juncture that, the 4th to 11th respondents were dragged into the suit through the counterclaim raised by the 2n d appellant. It is upon the amendment of the 2n d respondent's Written Statement of Defence pursuant to an order of the trial court dated 11/4/2021, that the said 4th to 11th respondents came into play as personal guarantors to the loan. In the counterclaim, the 2n d appellant sought for the amounts owing to them to the tune of USD 19,769,680.00. Before the trial commenced and after mediation had failed, six issues were framed and agreed upon by the parties for determination of the controversy between the parties as hereunder:

1. Whether the 2n d defendant (2n d appellant) availed to the plaintiffs (the three respondents) a banking facility for standby letter o f credit/Letter o f Credit (SBLC/LC) o f USD 16,275,000.00 to secure the loan facility from Lamar Commodity Trading DMCC.
2. Whether the 2n d defendant issued the Standby Letter o f Credit/Letter o f Credit in favour o f Numora Trading PTE Limited, being the assignee o f Lamar Commodity Trading DMCC.
3. Whether the plaintiffs are in breach o f the SBLC/LC facility dated 22n d May, 2019, executed by the parties for issuance o f SBLC/LC to secure the loan facility form Lamar Commodity Trading DMCC.

4)Whether the 1st defendant was/is legally authorized to become the security agent for the 2n d defendant 5) Whether the plaintiffs (defendants in the counterclaim) owe the defendants (plaintiffs in the counterclaim) a sum o f USD 19,769,680.00 as claimed in the counterclaim. 6) To what reliefs are the parties entitled. In relation to the 1st issue, the High Court observed that, one, the foreign loan agreement (Exh. P7) did not involve the 2n d and 3r d respondents, rather, it was for the 1s t appellant alone. Two, that the lending by LAMAR was to be secured by an SBLC/LC (Exh. P3) between the appellants and respondents. Three, the 2n d defendant (2n d appellant) had failed to issue a Letter of Credit to secure the foreign loan from LAMAR. Four, the loan facility was not issued to the 1st, 2n d and 3rd respondents. Hence, the said issue was answered in the negative. With regard to the 2n d issue the High Court found that the 2n d appellant could not have issued an SBLC/LC for a facility not disbursed to the 1st, 2n d and 3rd respondents. As regards the 3rd issue, it was observed that since under the 2n d issue, no SBLC/LC had been issued, it follows, therefore, that the respondents cannot be held to have breached a non-existing agreement (Exh. P3). Hence, the issue was answered in the negative. With regard to

the 4th issue, it was found in the affirmative on the basis of the context under which the parties were operating. As to the 5th issue, relating to the counterclaim by the appellants, it was found that any claim under that counterclaim ought to have been progressed/raised by LAMAR; and on the sixth issue relating to the reliefs, the respondents were found to deserve general damages which were awarded to the tune of TZS. 300,000.000.00 basing on the ground that they were subjected to unfounded claims. Eventually, the judgment was entered in favour of the respondents whereby the mortgage deeds were discharged. Aggrieved with the decision of the trial court, the appellants have appealed to this Court fronting eleven (11) grounds of appeal which can be paraphrased as hereunder:

1. The High Court erred in holding that the intended event for which the SBLC/LC Banking facility marked Exh. P-3 was executed, did not materialize as no loan facility from Lamar Trading DMCC was issued to the 1s t, 2n dand J d respondents who signed Exh. P3.

2. The High Court erred in holding that the Letter o f Credit envisaged by clause 5 o f the Lamar Loan Agreement marked Exh. P.7 was supposed to be issued by Equity Bank Tanzania Limited and not Equity Bank Kenya Limited.

3. The High Court erred in holding that there is no nexus between the Lamar Loan Agreement marked Exh. P7 and the SBLC/LC Banking Facility marked Exh. P3 to warrant reliance on Clause 5 o f Exh. P.7 when dealing with matters touching on Exh. P.3.

4. The High Court erred in holding that Equity Bank Kenya Limited did not issue the SBLC/LC in favour o f Nomura Trading PTE, the assignee o f Lamar Trading DMCC and that the Letter o f Credit marked Exh. D- 10 which was issued by Equity Bank Kenya Limited was not the same as the Letter o f Credit contemplated under the SBLC/LC Banking Facility marked Exh. P-3.

5. The High Court erred in fact in holding that the SBLC/LC Banking Facility marked Exh. P-3 was executed in anticipation that there would be a loan agreement executed between the 1s t, 2n d and 3 d respondents as borrowers and Lamar Trading DMCC as the lender and there would be a loan from Lamar Trading DMCC to the 1s t, 2n d and 3 d respondents.

6. The High Court erred in holding that the purpose for which the Letter o f Credit marked Exh. D-10 was issued was not the same purpose disclosed under the banking facility marked Exh. P-3.

7. The High Court erred in holding that the 1s t , 2nd and 3 d respondents are not in breach o f the SBLC/LC Banking Facility marked Exh. P-3 and in holding that it is the appellants who are in breach o f Exh. P-3 for failure to issue the Letter o f Credit to secure the respondents borrowing from Lamar.

8. The High Court erred in iaw in holding that the respondents owe nothing to the Appellants and in dismissing the appellants' counterclaim with costs.

9. The High Court erred in holding that the monies disbursed by Lamar Trading DMCC to the 1s t , 2n d and J d respondents cannot be a subject o f scrutiny in the suit between the latter and the appellants but a matter to be dealt with in a suit between Lamar Trading DMCC and the 1st respondent as that is where it can be demonstrated whether the disbursed loan was secured or not.

10. The High Court misconstrued the provisions o f section 120 (3) o f the Land Act [Cap 113 R.E. 2019] hence erroneously held that the mortgagor's failure to submit to the Commissioner for Lands the information regarding the manner in which the money obtained from the mortgagee was invested to develop the mortgaged land, vitiates the mortgage leading to the discharge o f the collaterals.

11. The High Court erred in awarding the 1s t , 2n d and J d respondents general damages amounting to TZS300,000,000. When the appeal was called on for hearing, Messrs. Mpaya Kamara and Timon Vitalis, learned advocates appeared representing the appellants whereas the respondents were represented by Mr. Frank Mwaiongo, also learned advocate. Counsel for both parties sought to adopt their written submission they had filed earlier on to form part of their submission. At the inception of the hearing of the appeal, we, at the outset invited the advocates for the parties to address us on the propriety or competence of the appeal in view of the fact that the names of the 4th to

11th respondents as cited in the notice of appeal and memorandum of appeal, were not reflected or cited in the title of the trial court's (High Court) judgment and decree. Both counsel for the parties were at one that the inclusion of the said eight respondents in the notice of appeal and memorandum of appeal was in order and not fatal because though the said eight respondents were not parties in the suit instituted by the three first respondents, they were made parties to the counter-claim which was raised by the appellants. It was argued further that the counter-claim which was dismissed was determined alongside the suit which was allowed. The advocates for the parties urged us to invoke the overriding objective principle and find the irregularity not fatal mainly because the same has not prejudiced any party. On our part, having considered the circumstances of this case and for reasons given by the advocates for the parties, we agree with them that since no party has been prejudiced by the inclusion of the said eight respondents to the notice of appeal and memorandum of appeal, then the irregularity is not fatal. The appeal is not vitiated by the irregularity. In the written submissions the appellants opted to argue grounds nos 1, 4, 5, 6, 7 and 8 together and grounds nos 2, 3, 9, 10 and 11 separately, the arrangement which was also adopted by Mr. Mwalongo, learned counsel for the respondents.

In further elaboration of the said grounds of appeal, the learned counsel for the appellant opted to cluster grounds nos. 1, 4, 5, 6, 7 and 8 which, generally relate to misapprehension of evidence, into four issues as hereunder: (i) Whether SBLC/LC Agreement marked Exh P3 was executed in anticipation o f a loan agreement between the borrowers and Lamar Trading DMCC (LAMAR), that is to say, before signing the LAMAR Loan marked Exh P7; (ii) Whether the 2Pd appellant, Equity Bank Kenya, issued a tetter o f credit in favour o f LAMAR/NUMORA to secure the 1s t , 2n d and J d respondents borrowing from LAMAR; (Hi) Whether the LC marked Exh D 10 was the LC anticipated under Exh. P3; and (iv) Whether the borrowers defaulted their obligations under the SBLC/LC Facility marked Exh P3. In the first place, the appellants prefaced their submission by arguing, and rightly so, in our view, that this being the first appeal, the Court is entitled to re-evaluate the entire evidence and come up with its own conclusion. [See: Registered Trustees of Holy Spirit Sisters T.V. January Kamily, Civil Appeal No. 193 of 2016 [2018] TZCA 32 (21s t August, 2018 TANZLII]. In dealing with this matter, we shall be guided by this authority.

Before we embark on the merit of the appeal, we wish to make it clear that there are matters which are not in dispute as between the parties in this case, among them being: One, the 1s t respondent and Lamar executed a loan facility agreement (Exh. P7). Two, the appellants and the 1st, 2n d and 3rd respondent entered into an SBLC/LC banking facility agreement to enable the issuance of SBLC/LC by the 2n d appellant for the loan to be advanced by LAMAR to the respondents. Three, Ally Hemed Said (4th respondent) (PW1) was a director and majority shareholder to the 1st, 2n d and 3rd respondents; a signatory of two respondent's accounts; and knew all transactions relating to 1st, 2n d and 3r d respondents. Four, the loan to the tune of USD 16,275,000.00 from LAMAR was disbursed through NUMORA, an assignee of LAMAR, and deposited into the 1st respondent's escrow account held with the 2n d appellant. Five, the loan was to be disbursed after the SBLC/LC had been issued. Submitting on the first issue on whether SBLC/LC Agreement marked Exh P3 was executed in anticipation of a loan agreement between the borrowers and Lamar Trading DMCC (LAMAR), that is to say, before signing the LAMAR Loan marked Exh P7, the appellants' started by arguing that, Exh. P7 was executed on 25th March, 2019 as approved by a Notice of Assignment of Letter of credit dated 27th May, 2019; and that PW1

admitted to have signed it. It was argued that, according to Clause 5:1 of the said Exh. P7, there was a condition that the loan would not be disbursed until an SBLC/LC is issued by Equity Bank Kenya Limited (2n d appellant) satisfactory to LAMAR in form and substance. The appellants argued further that in compliance with that clause in Exh. P7, the respondents approached the appellants for the issuance of SBLC/LC then the Banking facility offer was signed on 22/5/2019, which was after Exh. P7 was signed on 25/3/2019, in order to obtain the LC to secure the foreign loan facility from LAMAR. It was stressed by the appellants that, Exh. P3 did not have a clause that it was signed in anticipation of an agreement between the three respondents and LAMAR. In this regard, it was argued that, it was wrong for the High Court to hold that Exh. P3 was signed prior to Exh. P7 as it was against common sense and logic. The respondents are of a different view. They argued that, basically the main issue in this matter is the performance of Exh. P3 and issuance of SBLC/LC. In the first place, the respondents conceded that Exh. P7 was signed prior to Exh. P3 and that this was confirmed by PW1 in cross examination (page 3507 of record of appeal). Nevertheless, the respondents are of strong view that, despite the signing of Exh. P3 and P7

the loan facility did not materialize or rather was still in the pipeline from LAMAR to 1st, 2n d and 3rd respondents as the loan was never executed. To the respondents' understanding, there was a loan which was negotiated between 1st respondent and LAMAR, which loan was availed to her alone. For that matter, it was stated that, Exh. P7 which was on foreign loan facility was between 1s t respondent and LAMAR and not the other respondents. They added that, although Exh. P3 was executed between LAMAR and the three respondents it was never performed. Apart from that, the 2n d appellant did not issue SBLC/LC of USD 16,275,000.00 to secure the loan to 1st, 2n d and 3rd respondents as there was no such loan agreement between them and LAMAR. Having heard the submission from both parties, we are now in a position to address the matter at hand. We commence our determination with the 1st issue. There is no dispute that the USD 16,275,000.00 facility agreement (Exh. P7) was executed between the 1st respondent and LAMAR on 25/3/2019, prior to Exh. P3. This fact was conceded to by both appellants and respondents, and in fact, PW1 who represented the 1st 2n d and 3r d respondents admitted to have signed it. Also, it is not disputed, as alluded to earlier on, that in Clause 5:1 of Exh. P7 there was a condition that, LAMAR would not disburse the loan unless Equity Bank Kenya issues an

SBLC/LC in form and substance satisfactory to LAMAR as beneficiary covering on demand all amounts payable under the facility, to secure such loan which was for purpose of settling of the three respondents' debts. It was not meant to be satisfactory to the respondents. It is also common ground that in compliance with the requirements under Exh. P7, the three respondents approached the appellants where upon Exh. P3 was executed on 22/5/2019 in order to obtain the LC which would secure foreign loan facility from LAMAR. Common features in Exh. P3 are, among others, the appellants offer of the banking facility to the 1st, 2n d and 3rd respondents; commitment to issue SBLC/LC for USD 16,275,000.00; the purpose of the loan; tenure of the loan of up to 5 years renewable and the security and mode of repayment of the loan in case of default. Looking at the terms and conditions of Exh. P3, we observe that there is no provision indicating that the same was executed in anticipation that there would be a loan agreement between the three respondents (borrowers) and LAMAR or rather such loan was still in the pipeline. Unfortunately, no evidence was led by the respondents to prove that the said loan agreement was in the pipeline. Besides that, we note that after the execution of Exh. P3, there were other transactions which took place which, incidentally, take us to the 2n d

issue of whether the 2n d appellant issued the SBLC/LC in favour of LAMAR/NUMORA to secure the 1st, 2n d and 3rd respondents borrowing from LAMAR. But before embarking on the 2n d issue above, we think, in order to have a smooth sequence of our decision, we should begin with determining as to who between the 1st and 2n d appellant was to issue the said SBLC/LC which is basically raised in ground no 2 in which the appellants are challenging the High Court in holding that the letter of credit envisaged under Exh. P7 ought to have been issued by Equity Bank Tanzania Limited and not Equity Bank Kenya Limited. It is the appellants' argument that under Clause 5:1 of Exh. P7, the loan would not have been disbursed unless SBLC/LC was issued by Equity Bank in form and substance to the satisfaction of LAMAR. However, the Equity Bank was not defined though the High Court found that "Equity Bank" meant Equity Bank Tanzania Limited and not Equity Bank Kenya Limited which issued LC (Exh. DIO). At any rate, it was their argument that based on logic and common-sense Equity Bank Tanzania Limited could not have done so since she rejected to lend money to the respondents as they exceeded the borrowing limit/ceiling. On the other hand, the respondents are of the view that SBLC/LC ought to have been issued by Equity Bank Tanzania and not Equity Bank

Kenya as it is not referred to in Exh. P7. It was argued that in Exh. P7 the Equity Bank is referred to as Equity Bank Tanzania. They also acknowledge that Exh. P3 specifically requires Equity Bank Kenya to issue the said SBLC/LC in favour of LAMAR for the facility advanced to the three respondents. Indeed, in its' finding the trial court found that the reference to "Equity Bank" under the Exh.P7, was meant to be "Equity Bank Tanzania Limited" (the 1st appellant) appellant and not "Equity Bank Kenya Limited" (the 2n d appellant). It is notable that the issue of Equity Bank was introduced by Clause 3 of Exh. P7 without stating which between Equity Bank Tanzania or Equity Bank Kenya was to issue LC. However, it defines "Equity Bank" as "Equity Bank Tanzania", as was rightly submitted by the respondent's counsel. Also, it is common ground that Exh. P7 did not involve the 2n d and 3r d respondents as it was between the 1st respondent and Lamar. However, on 22/5/2019, Exh. P3 was executed with a specific obligation for issuance of SBLC/LC by the 2n d appellant to secure the loan from LAMAR to the three respondents. In Exh. P3, "Bank" is defined to mean Equity Bank Tanzania Limited; and "Financier" or "Lender" is defined to mean Equity Bank Kenya Limited. We think, the two entities were so defined in accordance with the

context each carried under Exh. P3. Therefore, it was not Exh. P7 which imposed an obligation to the 2n d appellant but was through Exh. P3. Now, looking at the circumstances of this matter, the contention by the respondents that Equity Bank Tanzania Limited ought to issue the said SBLC/LC is defeated by what was intended under Exh.P3. But again, we think, such proposition would be against common sense and logic as was submitted by the appellant's counsel, more so when taking into account that the same Equity Bank Tanzania Limited had declined to lend more money to the respondents as they exceeded the borrowing limit. As such, in our view, Equity Bank Kenya Limited was better placed and responsible to issue the SBLC/LC. Coming now to the issue whether the 2n d appellant, Equity Bank Kenya, issued a letter of credit in favour of LAMAR/NUMORA to secure the 1st, 2n d and 3rd respondents borrowing from LAMAR, the appellants prefaced by arguing that, the 2n d appellant's obligation to issue SBLC/LC came under Exh. P3 and not Exh. P7. It was pointed out that, the respondents, after execution of Exh. P3, filled an LC Application Form for issuance of SBLC/LC (Exh. D9). They argued that, Equity Bank Kenya, acting on Exh. D9 which indicated the purpose of the loan to be for securing heavy equipment unlike in Exh. P3 where the purpose is to liquidate existing group exposures to Equity Bank Tanzania and other

banks, to provide additional working capital and to serve transaction costs, issued the said LC (Exh.DIO) which was relied upon in disbursing the loan. It was argued further that, although the purposes of the loan may appear to be different in Exhs. P7 and P3, under international practice, even if it showed the purpose to be for heavy equipment, it is irrelevant. In response, the respondents acknowledged that in order for the loan to be advanced by LAMAR, it was to be secured by SBLC/LC. They contended that the SBLC/LC to secure the loan from LAMAR was not issued by the 2n d appellant. It was argued that, even the 2n d appellant failed to prove if she had issued such SBLC/LC and, therefore, it meant that the 2n d appellant did not perform her duty. The respondent's argued further that, although the 2n d appellant claimed to have been issued SBLC/LC vide Exh. DIO as was testified by DW1, DW3, DW4 and DW5, the same is not compatible with Exh. P3 in the sense that; one, the purpose of the loan shown in Exh. P3 is different from the one in Exh. DIO as in Exh. P3 it was intended to liquidate existing group exposures at the bank whereas in Exh DIO the purpose is to secure business of heavy equipment such as trucks, excavators etc. Two, while in Exh. P3, the SBLC/LC is for securing the borrowing by 1st, 2n d and 3rd respondents, in Exh. DIO, it secures business for the 1s t respondent alone and there is no power of attorney indicating the 1s t

respondent also represented 2n d and 3rd respondents. Three, DW6, the Director of LAMAR, denied receiving SBLC/LC from Equity Bank Kenya Limited securing borrowing from LAMAR to liquidate existing group exposures but received the LC issued for securing heavy equipment. Four, although it was testified that (DW3) LAMAR had assigned the transaction to NUMORA, there were no clear assignment papers to that; and that, it did not involve the three respondents contrary to section 62 the Law of Contract Act. In this regard, it was argued that after signing Exh. P3, the 2n d appellant failed to perform her obligation of issuing SBLC/LC in accordance with section 37(1) of the Law of Contract Act, which requires the parties to perform their duties and obligation in the agreement which eventually caused the other party not to perform their obligation. The case of Abwai Ally Aziz v. Bhatia Brothers Co [2000] TLR 288 was cited in support. Mr. Mwaiongo insisted that the loan facility did not materialize since the SBLC/LC was not issued by the 2n d appellant as per Exh. P3 and that according to Exh. P7, the foreign Loan Facility was between LAMAR and 1s t respondent alone and did not involve the 2n d and 3rd respondents. The respondents went on to challenge the appellant's reliance on Exh. DIO arguing that it did not arise from Exh. P3 because; Exh. DIO mentions NUMORA as beneficiary instead of LAMAR who is mentioned in

Exh. P3; the parties in Exh. P3 are appellants and the 1st, 2n d and 3r d respondents; and the purpose of the loan facility is different as in Exh. P3 is to set off existing group exposures while in Exh. DIO is to secure heavy equipments. Now, as to whether or not the said SBLC/LC was issued by the 2n d appellant, we note that following the execution of Exh. P3 on 22/5/2019 which was signed by Equity Bank Tanzania Limited and Equity Bank Kenya Limited and the three respondents, the 1st respondent filed a Documentary Credit Application (an application form (Exh. D9) to Equity Bank Kenya Limited applying for the SBLC/LC, the beneficiary being NUMORA Trading PTE Ltd of 10 Anson Road to 11, International Plaza, Singapore. One feature of importance is that, although Exh. P7 and P3 indicated the purpose of the loan was to liquidate the existing group exposures, provision of additional working capital and to serve transactional costs, Exh. D9 lodged by the 1s t respondent to 2n d appellant on 29/5/2019 showed the amount of the loan involved being USD 16,275,000.00 and the purpose of the loan which was to secure Heavy Equipment such as Truck, Crane, crawler, type dozer and excavator. The record further shows that on the same date, 29/5/2019, the 2n d appellant, acting on Exh. D9 issued the SBLC/LC (Exh. D10) with Ref. No. OLCF 00001231904 in favour of NUMORA being the beneficiary for securing the loan of USD

16,275,000.00. It should be noted at this juncture that, through a Notice of Assignment of Letter of Credit (Exh. D21) from LAMAR dated 27/5/2019, she sold, assigned and transferred all her rights, title and interest as an assignor under the said Facility Agreement including the proceeds of any demand to NUMORA. Also, DW6 admitted receiving LC to the satisfaction in form and substance of Credit Letter dated 12/6/2019. This, eventually triggered NUMORA, an assignee of LAMAR to disburse the loan which was received by the respondents and which would not have been disbursed had the SBLC/LC not issued as per Exh. P7 and P3. Apart from that, the 2n d respondent through a letter (Exh. D2) applied for the utilization of the loan from LAMAR, which is an indication that he was involved in the whole transaction. Of course, we are aware that the respondents are of the view that the SBLC/LC did not relate to the facility agreement at issue due to variance on the purpose of the loan and the parties involved in Exh P7 and Exh P3 who are different. Admittedly, there is a discrepancy as to the purpose of the loan between the one shown in Exh. P3 and D.10. It is notable that while in Exh. P3 the purpose of the loan is to repay the loan or existing exposures, to provide additional working capital and servicing transaction costs, in Exh. D10, the purpose of the loan is for securing heavy equipment.

However, the evidence on record as per PWl's testimony, bears out that the disbursed loan was used to repay the debts to Equity Bank Tanzania Limited, UBL Bank and Amana Bank and we find that this purpose is plausible, since immediately thereafter there was a transfer of securities documents (Exh. D4 collectively) from UBL Bank and Amana Bank to Equity Bank Tanzania limited as trustee for Kenya Bank Kenya Limited. This fact was also admitted by PW1 in cross examination. We are of a settled opinion that going by the dictates of Exh. P7 and P3, the loan would not have been disbursed had the LC not been issued by the 2n d appellant. With this revelation, we answer the 2n d issue in the affirmative and hold that the SBLC/LC was, indeed, issued by the 2n d appellant to secure the loan from LAMAR/NUMORA. The issue that follows is whether the LC marked Exh. DIO was the LC anticipated under Exh. P3. We think, the question here is whether there was nexus between Exh. DIO on one hand, and Exhs. P7 and P3 on the other hand which is also the gist of ground no 3. With regard to this issue, it was the appellants' argument that there was such nexus. In elaboration, it was argued that after having executed Exh. P3 which was after Exh. P7 had been signed, the three respondents approached the appellants for issuance of SBLC/LC to secure foreign loan

through an application form (Exh. D9). This led to issuance of SBLC/LC (Exh. DIO) and upon the satisfaction by LAMAR/NUMORA in its form and substance the loan was disbursed on 7/6/2019. NUMORA disbursed the loan through the 1st respondent's Escrow account held at Equity Bank Kenya as proved by the Escrow Account statement (Exh. P18) and MT 103 Payee Advice (D19). Through a letter (Exh P2), the 2n d respondent applied to utilize the loan from LAMAR and the same was effected to the respective creditors leading to the transfer of securities documents (Exh. D4 collectively) from AMANA Bank and UBL Bank to Equity Bank Tanzania signifying that they were repaid their money. The appellants argued further that, PW1 also admitted during cross examination that the loan of USD 16,275,000.00 was disbursed to the 1s t respondent's Escrow account but the same was not secured. She also admitted that the LAMAR loan was utilized by all 3 respondents to extinguish their debts obligation to UBL Bank and Amana Bank where upon they discharged the security documents and remitted to Equity Bank Tanzania as a trustee for 2n d appellants. On top of that the 1st respondent applied for a foreign loan registration to the Bank of Tanzania but it was declined (see Exh D8 collectively. (See: page 4275-4279). On their part, the respondents argued that, one, much as Exh. P3 was executed, but it was never performed as the foreign loan facility

between LAMAR and 1st, 2n d and 3rd respondents never happened. Two, Exh. P7 was for a foreign loan facility between 1st respondent and LAMAR and it did not cover 2n d and 3rd respondents. Three, the 2n d appellant never issued SBLC/LC for USD 16,275,000.00 to secure 1st, 2n d and 3rd respondents' loan as there was no such loan agreement with LAMAR. Four, the purpose of loan facility as per Exh. P3 was to secure borrowing from LAMAR to liquidate/extinguish existing group exposures unlike the purpose shown in Exh. P10 that it secures the business of heavy equipment. Five, though SBLC/LC (Exh. D10) was issued by 2n d appellant to satisfy obligation under Exh. P3 as testified by DW1, DW3, DW4 and DW5, it was not compatible with Exh. P3. Six, although Exh. P3 refers to SBLC/LC for 1st, 2n d and 3rd respondents, Exh. D10 secures business for 1s t respondent alone without any power of attorney for 1st to represent 2n d and 3rd respondents. In the first place, there is no dispute as to execution of Exh. P7, P3 and D10. We note that the High Court found that there was no link (no nexus) between Exh. P7 and P3 as Exh. P7 was between the 1s t respondent and LAMAR while Exh. P3 was between the appellants and the 1st, 2n d and 3rd respondents; and that there was no loan agreement that was signed between LAMAR and the three respondents. The High Court further found that, (See pg 4620) Exh. P3 was executed by the appellants

and the three respondents in anticipation that they would sign a loan agreement. Further to that, it found that Exh. P3 and Exh. DIO could not relate due to the purpose of the loan indicated which were at variance (Pg 4652). They are different because the parties involved in both Exh. P3 and P7 are different and the purposes under SBLC/LC and the two documents are also different. The High Court further found that, according to the evidence of PW1, Exh. P3 was executed in anticipation that the three respondents would obtain a loan from LAMAR but no loan agreement between LAMAR and the three respondents was executed. On our part, having considered the rival submissions from either side, we agree with Mr. Vitalis argument that there is a nexus between Exh. P7 (the foreign loan agreement), the SBLC/LC banking facility (Exh. P.3), the LC application form (Exh. D9) and the LC (Exh. DIO) based on the following grounds; one, all the exhibits be it tendered by appellants or respondents, are premised on the same loan facility of US 16, 275,000.00 to be granted to the respondents by LAMAR/NUMORA. Two, the contents of all the Exhibits are not disputed. Three, the three respondents sent to Equity Bank Kenya Ltd application form (Exh. D9) which was relied upon in issuance of the LC (Exh. D10). Four, NUMORA (assignee) disbursed and deposited the loan through the 1st respondent's Escrow account held with

the 2n d appellant to the tune of USD 16,275,000.00 as agreed in Exh P3, which was eventually used to discharge the three respondents' existing exposures to Equity Bank Tanzania Ltd, UBL Bank and Amana Bank and adding up the working capital and costs of the bank. This was confirmed by Exh P8 showing PW1 being a director of all the three respondents and Exh P9 which is a security agreement involving all the respondents. Five, the 2n d respondent made an application to NUMORA to utilize the loan through a letter (Exh. D 2) which acknowledged their signing of the credit facility offer letter for the sum of USD 16,275,000.00. We do not, therefore, agree with Mr. Mwalongo that the LC (Exh. D10) was not in respect of SBLC/LC banking facility of USD 16,245,000.00 or rather the said loan was not secured on account that the purpose of the loan indicated in Exh. P7, P3 was different from the one shown in Exh. D.10. We say so because, the fact that Exh. D9 was sent to the 2n d appellant by the respondents, implies that the respondents accepted the purpose of the banking facility for the SBLC/LC as shown in Exh. D9 and Exh. D10. We wonder how the three respondents are now challenging the content of Exh. D10 which emanated from Exh. D9, they presented to the 2n d appellant after having received and utilized the money obtained through that document. In such a situation, we think the 2n d appellant was obliged to issue LC in accordance with the contents indicated in the

template (Exh. D9) lodged to her by the respondents. She could not have, in any way, issued such LC in accordance to her wishes. This brings us to an assumption that, even if there was a mistake in filling in the contents of the LC, then, the respondents should not benefit out of their fault as it supplied the format template of the same to the 2n d appellant (See: M/s Maximsure Tanzania Limited v. M/s Yukos Enterprises (E.A) Limited and Others, Civil Appeal No 424 of 2022 TZCA 24 (9 February 2024) TANZLII). We think, the three respondents are estopped from raising such an issue because even the fact that the application to utilize the loan (Exh. D2) was lodged by the 2n d respondent is an indication that they were fully involved in the whole transaction as it acknowledges their signing of the credit facility offer letter for the sum of USD 16,275,000. Pursuing further on the above issue, the learned counsel for the appellants argued that the respondents, (borrowers) accepted the loan structure and the LC content not only by filling Exh. D9 (description of heavy-duty equipment) but also by endorsing the Trade Loan Letter of Credit (LC) complying with documents eg. Commercial Invoice and delivery notes (Exh. D14). It was argued that, the contention by the respondents that it related to the 1s t respondent alone, was within the respondents' domain to decide and this did not affect the appellants because, the 1s t respondent had an Escrow account with 2n d appellant even before this

transaction. At any rate, the learned counsel argued, according to Exh. D18 the content of the LC is to be determined by the borrower and not the issuer. Apart from that, it was argued, Exh. P7 was attached to the application for SBLC/LC; and Exh. P3 was signed by the 1st respondent, NAS Hauliers, who also filled application for LC. The appellants argued further that, the respondents had all through been engaged with the appellants for SBLC/LC through their financial advisor NISK in the name of 1s t respondent (NAS) and PW1 being a signatory to both Exh. P7 and P3 having being a majority shareholder of all three respondents, director of two respondents and signatory of two banks accounts and knew the affairs of all the three respondents. On their side, the respondents insisted that there was no linkage as the purpose of the said loan as per Exh. P7 and Exh. P3 and Exh. DIO are at variance and for that matter no SBLC/LC was issued to secure the loan facility from LAMAR for the three respondents. We note that the High Court's finding that there was no SBLC/LC issued to secure the loan from LAMAR based on among other reasons, that Exh. DIO had a different purpose from Exh. P7 and P3. According to Exh. P3 the purpose was to extinguish existing debts and in Exh. DIO was for securing heavy equipment.

As to the existence of Exh. P7, P3 and DIO it is not disputed. Also not in dispute is the fact that the purpose of the foreign loan facility as between the said exhibits is different. While Exh. P3 reckons the purpose as being for debt refinancing, offering additional working capital and setting transactional costs; Exh. DIO reckons the purpose as being for financing heavy equipment. However, we do not agree with Mr. Mwalongo's contention that the Exh. DIO cannot be taken to comply with Exh. P3 or rather that the disbursed loan was unsecured because Equity Bank Kenya Limited did not issue SBLC/LC as was agreed in Exh. P3. We think his argument might have been misconceived. This is because, PW1 in his evidence admitted that LAMAR disbursed the loan at the tune indicated in Exh. P7, P3 and DIO issued by Equity Bank Kenya Limited in compliance with Exh. P3 which was received by the respondents and utilized as per the purpose indicated in Exh. P3. This fact was proved by Exh. D14 showing how the same was utilized as was also testified by PW1 and DW1, DW2, DW3, DW4 and DW5. As if that is not enough, the paying of the debts to Equity Bank Tanzania, UBC Bank and Amana Bank culminated into discharging the mortgaged properties by the said banks. Surprisingly enough, the respondents did not avail in court evidence as to how they were able to obtain the unsecured loan from LAMAR of USD 16,275,000.00 which was

required to be secured by SBLC/LC as per Exh. P7 and P3 without the SBLC/LC being issued by Equity Bank Kenya Limited as was required by Exhs P7 and P3. In other words, we do not find the respondents to have brought evidence to tilt the appellants evidence that the LC was issued which triggered the disbursement of the foreign loan facility to the 1s t respondent through NUMORA which had been by then assigned all the rights and obligations by LAMAR (Exh. 21). Unfortunately, the respondents failed to discharge the burden of proof on that aspect. Apart from that we had an opportunity to look at the manner the said Exh. P7, P3 and DIO as well as Exh. D9 to which Exh. DIO emanated, were tendered in court and we have noted that, in fact all of them, were not objected to when they were tendered in evidence as exhibits. This is, in our view, an indication that their contents were not objected by the respondents. But again, our further examination of Exh. D9 has revealed that the same was a template of LC crafted by the respondents themselves and sent to Equity Bank Kenya Limited which was responsible to issue the LC. Exh. D9 shows it is an application form by the 1st respondent of the LC in favour of NUMORA to the tune of USD 16,275,000.00, the amount which is reflected in Exh. P3, P7, D9 and D10. This document was accompanied by a proforma invoice and other documents but signed by the respondents

and it mentions the properties constituting the heavy duty sought to be secured. We do not have any hesitation to agree with Mr. Vitalis that Exh. DIO being a separate agreement between the 1st respondent and the appellants was within their domain to determine the matters agreed upon. After all, we think, that was not the concern of the banks. We now move to issue no 4 as to whether the borrowers defaulted their obligations under the SBLC/LC Facility marked Exh P3. It is the argument of the appellants' that, although the respondents received and utilized the loan, they did not repay it or renew it until 360 days stipulated in Exh. P3 upon which the loan was to be repaid expired. Due to that, the respondents became indebted under the SBLC/LC which led the LC to be to recalled (Exh. D15 and D17) by LAMAR as was testified by DW6. It was pointed out that, the 2n d appellant being the guarantor of the said loan by virtue of the SBLC/LC paid their obligations to NUMORA (assignee) the outstanding amount as proved by Exh. D20, the fact which was also confirmed by PW1 under cross examination that, indeed, the loan from LAMAR was not repaid (Vol. 6 pg 34). As to the involvement of other borrowers (2n d and 3rd respondents), it was argued that the 1st respondent failed to prove that the disbursed loan was for the 1st respondent alone who negotiated it.

On the other hand, the instructions to disburse the loan came from all respondents through their financial advisor NISK vide Exh. D22 which, incidentally, DW6 who tendered it was not cross examined on that aspect. The disbursed loan was deposited in the 1st appellant's Escrow Account as per the terms and conditions set out in Clause 2 of Exh. P3. On their side, the respondents are of the view that, there would not have been such default since the loan did not materialize. It was argued by the respondents that, under section 37(1) of the Law of Contract Act, Cap 345 R.E 2019, the parties were required to perform their duties and obligations under the agreement. However, in this case, after the parties had signed Exh. P3, the 2n d appellant did not perform her duty as no SBLC/LC was issued which would have triggered Exh. P3 to be performed. It was argued further that, since the 2n d appellant failed to issue the SBLC/LC to secure the loan from LAMAR, it prevented the other obligations to be performed. Hence, the obligations under Exh. P3 could not arise to the 1st, 2n d and 3rd respondents as the performance of the contract was dependent upon the other party's performance of express or implied obligation. In their view, they could only be held responsible if the SBLC/LC to secure the loan from LAMAR was issued but the same was not issued. Starting with the parties' pleadings, it is not disputed that on 22/5/2019 the appellants and the three respondents executed a banking

facility for a standby letter of credit / letter of credit (SBLC/LC) of USD 16,275,000,00 (Exh, P3) as shown in paragraphs 7 of the plaint and 8 of each, the 1s t and 2n d appellants' written statements of defence. The agreement was upon the terms and conditions of the said banking facility with a tenor of twelve months (renewable up to 5 years - see pages 75- 76). This fact, incidentally was not in issue as the parties from both sides are agreeing on this as they have testified to that effect. As we have stated earlier on, in Exh. P3 the three respondents were designated as borrowers while the 1s t appellant was designated as the "bank" and the 2n d appellant as the "lender" or "financier". Under clause 2.0 of the said agreement there was shown a purpose to secure by way of SBLC/LC the borrowing from LAMAR (for all the three respondents) to liquidate the existing group exposures at the bank (Equity Bank Tanzania Limited), to offer additional working capital and to settle transactions bills. The parties are in disagreement as to whether or not the said SBLC/LC in compliance with Exh P7 was issued. While the appellants argue that it was issued the respondents maintain that it was not issued. There is no doubt that according to the evidence, NISK negotiated the loan from LAMAR for the three respondents with a tenor of 12 months on condition that the SBLC/LC would be obtained and hence, parties signed Exh. P3 whereupon the 2n d appellant agreed to issue the said SBLC/LC to

secure the loan to be issued to the respondents. Though the respondents hold a view that the anticipated foreign loan facility from LAMAR was not issued to the three respondents but only to the 1st the respondent, and that it was not secured as the SBLC/LC was not issued, the appellants are of the view that the said loan was issued and was secured by the letter of credit (LC) issued by the 2n d appellant. In our view, we are inclined to agree with the appellants that, the said loan was issued and was secured by the LC issued by the 2n d appellant. This is because, much as the 2n d and 3rd respondents did not sign or rather were not parties to Exh P7, we find linkage between it (Exh 7) and Exh P3 and Exh DIO for the following reasons: One, according to DW5's testimony, Exh P7, was negotiated by NISK for the three respondents who engaged her vide the Business Consultancy Agreement between the both appellants and the three respondents on one hand and NISK Capital Limited on the other hand (Exh P2). This means that the three respondents knew very well what was going on in relation to the loan at issue. Two, Exhs P7 and P3 refer to a similar amount of money, that is USD 16,275,000.00 as was assigned by LAMAR to NUMORA as per Exh D21. Three, the Notice of Assignment of Letter of Credit from LAMAR to NUMORA (Exh D21) made reference to Exh P3; and Clause 5.1 of Exh P7 relating to the requirement of issuance of the SBLC/LC in favour of LAMAR.

Four, LAMAR called upon NISK to require the 1s t respondent (the borrower) to apply for LC with NUMORA as the beneficiary being an assignee as per Exh. P7 which was to remain unchanged. Five, Exh D21 makes reference and reliance on Exh. P3 and clause 5.1 of Exh P7 and Exh DIO. Besides that, the evidence that the loan was not issued came from the sole respondents' witness (PW1) who also made a U-turn during cross examination that it was issued only that it was for the 1st respondent. Even if assuming that PW1 said the foreign loan was not issued, while mindful of the rule that it is not the number of witnesses required to prove a fact in issue under section 143 of the Evidence Act, Cap 6, we think, his evidence considering that he has an interest to serve, could not override the testimonies of DW1, DW2, DW3, DW4, DW5 and DW6 to the effect that the loan was, indeed, disbursed by NUMORA to the 1st respondent's escrow account held with Equity Bank Kenya. Apart from that, the said loan was secured that is why NUMORA was able to disburse it, short of that it could not have been disbursed as was strictly provided in Exh P7. Much as the respondents maintain that it was not secured, they have not availed the court with evidence as to how NUMORA could disburse such a colossal amount of money without being secured.

If we may move a step ahead, it is also on record as per the evidence of DW1, DW2, DW3, DW4, DW5 and DW6 that following the default by the respondents to repay the loan, NUMORA had to recall the LC whereupon the 2n d appellant had to repay the loan amount under the terms in Exh DIO. We ask ourselves, how could NUMORA recall the LC if the loan neither materialized nor secured? In our view, the contention by the respondents that the loan did not materialize does not hold water as the banking facility between the 1s t respondent (Nas Hauliers) and others and the appellants was performed on 3/6/2019. The fact that NUMORA had to recall the LC translates that the respondents breached the terms and conditions under Exhs. P7 and P3 thus forcing Equity Bank Kenya Limited to repay the loan as guarantor. It is worth insisting that Banks/Lenders and their customers/ borrowers must fulfill and enforce their respective contractual obligations under various lending/security agreements entered into by parties and not to turn the courts in to the Bush for the to hide. In this regard, we answer this issue in the affirmative. We now move to ground No. 9 in which the appellants' complaint is on whether the issue that the LAMAR Loan facility was disbursed to 1st, 2n d and 3rd respondents could be subject to scrutiny in this case or whether it had to be dealt with in a suit between LAMAR and 1s t respondent as that is

where it could be determined whether the disbursed loan was secured or not. It is the appellant's argument that this issue contradicts the trial court's own finding that LAMAR loan did not materialize as there was no loan disbursed by LAMAR to the three respondents in view of the fact that it was proved by appellants that the LC was issued and that the loan was disbursed after the lender received the LC. At any rate, it is the appellants' argument that it was inevitable to prove or disprove the default in repaying the LAMAR loan that subsequently triggered the recalling of LC by the lender, NUMORA, the assignee of LAMAR. In response the respondents argued that going by the Plaint, written statements of defence, reply to the defence, counter claim and written statement of defence to the counter claim there was no issue on whether LAMAR disbursed monies to the 1st, 2n d and 3rd respondents because in their view, LAMAR was not a party to this matter based on the issue whether or not SBLC/LC was issued. There is no dispute that Exh. P7 (Facility agreement) was executed between the 1st respondent and LAMAR (See pg 3853) in which Clause 5.1 required Equity Bank to issue SBLC/LC to the satisfaction of LAMAR in form and substance (see pg 3858). Also, all the three respondents executed the Banking facility Exh. P3 with Equity Bank Tanzania Limited and Equity Bank

Kenya Limited on 22n d May, 2019 in which the latter committed itself to reimburse the lender on behalf of borrower (see: Exh P4 3610 Vol. 7) should the borrower default in repaying the loan pursuant to the SBLC/LC issued on behalf of the borrower under the facility (Exh. P3). Thereafter, on 27th May, 2019 the 1st respondent filed an application (Documentary Credit Application) Exh. D9 to EBKL for irrevocable letter of credit (LC) in favour of NUMORA Trading P/E LTD 10 ANSON ROAD: 10-11 INTERNATIONAL PLAZA, Singapore to the tune of USD 16,275,000 payable for 360 days with description of goods to be shipped as Truck, Crane, Crawler, Type Dozer, excavator, Melinank. Acting on Exh. D9, the EBKL issued IRREVOCABLE Documentary Credit Number OLCF000012319 dated 29th May, 2019 the beneficiary being NUMORA (Exh. D10). Since the security offered was not enough, on 30th May, 2019, PW1 mortgaged the Certificate of Title No. 8240 Plot 783 Msasani Beach Area, Kinondoni Municipality, Dar es Salaam City to secure credity facility extended to the 1st, 2n d and 3rd respondents as shown at page 3675 of the record of appeal (See pg. 3672, (Exh. P5) and on the same date issued a debenture to secure the loan facility (Exh. P6 - page 3762) advanced to the three respondents. In our view, although in Exh. D9 the applicant seems to be the 1s t respondent alone, the loan deposited in her escrow account was utilized by

all respondents. We say so because all respondents mortgaged their properties as per Exh. P5 and also issued debentures for the security of the loan facility from LAMAR as per Exh P6. Also, PW1 categorically testified to have acted on behalf of all respondents. Moreover, Exh D21 clearly indicates that the deal had been transacted by all of them. More importantly, there is evidence that the said loan facility which was issued by NUMORA as an assignee was utilized to repay the loan/liquidate the three respondents' credit exposures as per the invoices and bank statement shown in Exh. D14 which makes reference to Exh. DIO. Besides that, though most of the transactions/ processes may seem to have been executed by the 1st respondent alone, the fact that appears to be the basis of the respondents' claim that the 2n d and 3rd respondents were not involved, is answered by PW1 who confirmed to have processed it on behalf of all the three respondents, he being the majority shareholder in all the companies, director of two companies and a signatory of 2 respondents accounts (Exh D8) and knew all what was going on in all the three respondents companies. Moreover, there is evidence that after repayment of the debts to UBL Bank and Amana Bank through the loan advanced by LAMAR to respondent, the securities documents (Exh. D4) were discharged and transferred to Equity Bank Tanzania as an agent for Equity Bank Kenya.

In this regard, we can confidently answer this ground in the negative that the LAMAR loan was disbursed to the 1st, 2n d and 3rd respondents and not to the 1st respondent alone as the respondents seem to suggest and that it was proper for the High Court to have dealt with this issue during trial and not in a separate suit. So, we find merit on this ground. The appellants complaint in ground No. 10 is that the High Court misconstrued section 120A (3) of the Land Act, Cap 113 R.E 2019 which led to the holding that the mortgagor's failure to submit to the Commissioner for Land an information regarding the manner the money obtained from the mortgage was invested to develop the mortgaged land vitiates the mortgage leading to the discharge of collaterals. It was submitted that the issue that was framed was whether it was proper/legal for the 1s t appellant to act as a security agent for the 2n d appellant and not on failure to comply with section 120A (3) of the Land Act. As the High Court decided on section 120A (3) Land Act without the parties being accorded an opportunity to be heard such finding was irregular and should be quashed. Apart from that, it was argued further that, even if section 120A (3) a Land Act was applicable, it imposes the obligation to submit to the Commissioner within six months information on how the money has been spent to the mortgagor and not the mortgagee; and that in any case, the

law does not provide that failure to account for the use of money from the mortgagee vitiates the collaterals deposited with the mortgage. On the respondents' side, it is argued that, the High Court properly decided to disregard the mortgage deeds for having been by-passed the mandatory provisions of the law requiring the mortgagor within six months to submit to the Commissioner for Lands information as to the manner in which the money obtained from the mortgage is invested to develop the mortgaged land or investment for that matter under section 120A (3) of the Land Act. Having gone through the record of appeal, we share the view with the appellants' counsel that there was no issue framed in relation to the failure to observe the provisions of section 120A (3) of the Land Act and its effect of vitiating the mortgage. Admittedly, section 120A (3) of the Land Act, Cap 113 provides for a mandatorily requirement for the mortgagor, within six months to submit to the Commissioner of Lands, information as to the manner in which the money obtained from the mortgage is invested to develop the mortgaged land or investments for that matter. As it is, as was rightly argued by the appellants, the said provision, does not provide that failure to account for the manner the money obtained as loan has been invested to develop the mortgaged land would

vitiate the collateral deposited by the mortgagor to the mortgagee as the respondents try to suggest and as was held by the trial court. In this regard we find that the trial court's finding in this aspect was irregular. Even if such provision was applicable, we think, as was argued by Mr Vitalis, it imposes such duty on the mortgagor and not to the mortgagee. Hence, this ground is merited and we allow. On ground no. 11, the appellants' complaint is on the High Court awarding the 1st, 2n d and 3rd respondents general damages of TZS 300,000,000.00. Their argument is that, the dispute being contractual for breach of contract, general damages cannot be awarded because they are normally quantifiable and not at large See- Dharmshi v. Karan [1974] EA 41. A part from that, it is submitted that, the same could not have been awarded as there were no material facts supporting it See: Alfred Fundi v. Giled Mango and 2 Others, Civil Appeal No. 49 of 2017 [2019] TZCA 50 (5 April 2019) TANZLII. It is contended that the High Court awarded TZS 300,000,000.00 as general damages for being subjected to the unfounded claims though the respondents themselves did not plead its basis nor did they adduce evidence to support their claim. So, the High Court was wrong to award it. In response to this ground of appeal the respondents argued that the assessment of damages is within the courts power to do so. And, in this

case the general damages were awarded because the respondents were subjected to unfounded claims and that the appellant's contention that the same were awarded without considering the guiding principles is not correct. It is added, while relying on the case of FINCA Microfinance Bank Ltd v. Mohamed Omary Magayu, Civil Appeal No. 26 of 2020 [2021] TZHC 5802 (27 August 2021) TANZLII that, in a claim for general damages, particulars will not be needed of the quantum of damages claimed. Also, in the case of Anthony Ngoo and Another v. Kitinda Kimaro, Civil Appeal No. 25 of 2014 [2015] TZCA (25th February, 2015) TANZLII, it was emphasised that: "The law is settled that general damages are awarded by the trial judge after consideration on the evidence on record able to justify the award. The judge has discretion in the award o f general damages". Having gone though the record of appeal, we share the view of the appellants' counsel that; one, there was no evidence adduced by the respondent to show how they suffered much as the basis for such an award was for being subjected to unfounded claims though we wonder how were the respondent subjected to such unfounded claims while they were the complainants (Plaintiffs). Two, no cogent reason was assigned for such award of TZS 300,000,000.00.

Be it as it may, in this matter, in view of our finding that the respondents failed to prove their claim, we find that the award was not justified. That said and done, we find that the appellants were able to prove their counter-claim. Hence, we allow the appeal, quash the judgment and set aside the decree of the High Court. Consequently, we grant all the prayers as sought by the appellants in their counter-claim with costs. DATED at DAR ES SALAAM this 27th of September, 2024. The Judgment delivered this 2n d day of October, 2024 in the presence of Mr. Timon Vitalis who also took brief for Mr. Mpaya Kamara, both learned counsel for the appellants and Mr. Frank Mwalongo, learned counsel for the respondents, is hereby certified as a true copy of the R. K. MKUYE JUSTICE OF APPEAL A. M. MWAMPASHI JUSTICE OF APPEAL Z. G. MURUKE JUSTICE OF APPEAL original. A. L. KALEGEYA DEPUTY REGISTRAR COURT OF APPEAL