Devendra B. Patel vs Muntazir Mohamed Raza Dhirani (Civil Case No. 11 of 2000; Civil Case No. 11 of 2000) [2025] TZHC 8514 (19 December 2025)

IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA SUB REGISTRY OF ARUSHA AT ARUSHA CIVIL CASE NO. 11 OF 2000 MR. DEVENDRA B. PATEL ........................ PLAINTIFF VERSUS MR. MUNTAZIR MOHAMED RAZA DHIRANI... DEFENDANT JUDGMENT 8th & 19th December, 2025 KAINDA, J.: This is a suit of longstanding vintage. It originated in the year 2000, proceeded ex parte, and an earlier judgment of this Court was rendered in favour of the plaintiff. The Court of Appeal subsequently nullified the entire proceedings and the judgment, and directed that the matter be heard de novo. The suit has therefore come before this Court afresh on the amended pleadings, on the testimonies taken in the present hearing, and on the applicable law as it stands, bearing in mind that a de novo hearing restores the parties to the position of litigating their rights afresh on the merits, subject only to what is properly admitted, proved, and legally enforceable. From the amended plaint, the plaintiff's case, stated in essence, is that in or about late November 1998 he advanced to the defendant a loan of USD 70,000, repayable within six calendar months, with interest, and that the loan was secured by the defendant's title deed in respect of a house erected on Plot No. 55, Block 3, Sekei Area, Arusha Municipality, held under Title Deed No. 2689, Land Office No. 44298. The plaintiff pleads that an express covenant was contained in the agreement to the effect that upon default after the six months, the said property would "automatically" be transferred to him. He further pleads that default occurred, demands were made, the defendant refused to execute transfer documents, and therefore the plaintiff seeks, primarily, a declaration of ownership and consequential transfer orders; alternatively compensation in money, together with interest and costs. The defendant's position, as emerging from the defence stance and his testimony at the de novo hearing, is that although he did borrow money from the plaintiff, the arrangement was oral, the plaintiff was permitted to collect rent from the house to set off the loan, there was no agreed strict time limit for repayment, and the plaintiff's asserted written agreement, exhibit P.l was not signed by him. He also raises, as an important legal point, that the plaintiff is a foreigner and the Court must consider whether any relief purporting to vest Tanzanian land in a non investor foreigner is lawful or enforceable under Tanzanian law as it now stands, particularly because the operative pleadings were amended in 2025 and the Court is called upon to determine rights and remedies at the present time. At the final pre-trial conference, by agreement of parties, the following issues were framed for determination: (i) whether there was a loan agreement between the parties and if it was written or oral; (ii) if the first issue is answered in the affirmative, what were the terms; (iii) whether there was a breach of the loan agreement; and (iv) what reliefs the parties are entitled to. At the hearing, the plaintiff was represented by Mr. Abdallah Ally, assisted by Mr. Thomas Kessy, both learned advocates; whereas, the defendant had the services of Mr. Henry Simon Katunzi, also learned advocate. The plaintiff testified as PW1. He described himself as a businessman and stated that the defendant was his fellow businessman. He testified that the loan transaction occurred in 1998, that the loan was USD 70,000, that a written agreement was executed, and that he could identify it by his signature and the defendant's signature. He tendered the agreement, which was admitted as exhibit P.l after objection was overruled on the basis that the issues raised went to weight rather than admissibility. PW1 testified that the agreement provided that in case of default within six months, the house would be transferred to him. He testified that default occurred, he instructed his advocate to issue a demand, and thereafter filed the original suit in 2000, obtained an ex parte judgment in his favour, and transferred the title into his name. He tendered the certificate of title showing transfer into his name, which was admitted as Exhibit P.2 without objection. PW1 further testified that he remained in possession for about twenty-five years, but was forcefully evicted on 19 September 2025 and later discovered by official search that the title had been transferred back to the defendant's name in September 2025. He therefore prayed that the house be restored to his name, or in the alternative he be compensated at current market value. Under cross-examination he admitted he did not file a valuation report in Court though he estimated the market value at about TZS 700,000,000/=; he admitted the agreement did not provide for "compensation" as such; he admitted he is a Kenyan national; and he testified that the money was paid in cash in two instalments and that there were documents acknowledging receipt in two instalments, though those documents were not tendered in this de novo hearing. He stated the agreement was drafted by Rakesh Patel. PW2, Rakesh Patel, testified that he prepared the written agreement on the plaintiff's instructions; that the loan was USD 70,000; that interest was agreed at 15% per annum; and that the agreement provided that in default the house would be transferred to the plaintiff. He identified exhibit P.l as the agreement he prepared, containing his handwriting. He stated the defendant was present at execution and he observed him receiving the money in two instalments, though he could not recall the dates. Under re-examination he reiterated that he drafted exhibit P.l upon the plaintiff's instructions. The defendant testified as DW1 (connected virtually from New York, USA). He stated that he has known the plaintiff for many years as a business associate, that the plaintiff lent him money in two instalments but the arrangement was oral and he could not recall the exact amount. He testified that before travelling to the United States he left his house under an arrangement that the plaintiff would collect rent from the house at USD 800 per month; that he stayed longer than expected; and that the rent would offset the loan until his return. He testified that while he was abroad the plaintiff obtained an ex parte judgment and transferred the title into his name, and that the Court of Appeal later overturned the ex parte judgment and ordered a de novo hearing. He stated that he never signed Exhibit P.l, never met Rakesh, and that it would not have been possible for him to sign an agreement transferring his house to a Kenyan national. Under cross-examination he admitted he did not tender documentary evidence in this de novo trial; he admitted he obtained a loan from the plaintiff and he has never repaid it in full; he stated the title is currently in his name because the plaintiff never signed any transfer form; and he maintained that the Court of Appeal ordered status quo. Having carefully considered the pleadings as settled after the expunging order in respect of the offending sentences in paragraph 9 of the amended plaint, the oral evidence, the exhibits, and the submissions as reflected in the record, I now proceed to determine the framed issues. On the first issue, whether there was a loan agreement and whether it was written or oral, the starting point is that the existence of a loan relationship is common ground. Even on DWl's own testimony, he admitted that the plaintiff lent him money, although he attempted to dilute the certainty of the amount. However, the plaintiff pleaded USD 70,000 and testified to USD 70,000; PW2 confirmed USD 70,000; The defendant did not produce any contrary figure and admitted he did not repay in full. On the balance of probabilities, I am satisfied that the loan advanced is the pleaded sum of USD 70,000. The principal controversy under issue one is whether the agreement was written or purely oral. The plaintiff tendered exhibit P.l and called PW2, the alleged drafter, who identified it as in his handwriting and testified to execution in the defendant's presence. The defendant denied signing exhibit P.l. In civil cases, a party who challenges authenticity of a document, especially a document whose probative value will substantially affect the outcome, is expected to do more than a bare denial; where handwriting is in issue, one expects a party to lay a credible basis for denial, including seeking handwriting comparison, summoning the alleged attesting/participating persons, or producing circumstantial evidence showing impossibility. In this case, DWl's denial remained unsupported by any expert evidence, any documentary trail, or any consistent alternative account that explains why the plaintiff would carry a written instrument and call its alleged drafter to testify falsely in a matter of this gravity. Further, the defendant admitted borrowing and not repaying in full; this makes the existence of a written instrument more probable, because commercial dealings of this magnitude often attract documentation, and PW2's evidence, though not corroborated by the petty cash vouchers in this de novo trial, still supports the probability of a reduced-to-writing agreement. I therefore find, on a balance of probabilities, that the loan agreement existed and it was reduced into writing, and exhibit P.l represents that agreement. Accordingly, the first issue is answered in the affirmative: there was a loan agreement and it was written. On the second issue, what were the terms of that agreement, exhibit P.l, as read in Court, provides for: a loan of USD 70,000; a period of six months; interest at 15% per annum; security by reference to the title deed of the suit premises; and a clause to the effect that if the borrower does not pay the amount with interest in six months, "the house will automatically be transferred" to the lender for the same value. PW1 also testified that the loan was paid in two instalments, though that detail is not expressly stated in exhibit P.l; PW2 similarly testified that the instalment manner was not stated in the agreement though acknowledged by petty cash documentation not tendered here. The instalment manner is not decisive to the main obligations; what matters is the principal sum and the repayment covenant. I therefore find that the core terms were: USD 70,000, repayable within six months from late November 1998, with interest at 15% per annum, and the title was held out as security, with an additional term purporting to provide for automatic transfer of the house upon default. On the third issue, whether there was breach; the six-month repayment period, computed from 26 November 1998, would expire around late May 1999. The plaintiff pleaded default upon expiry of the six months and testified that the defendant failed to repay within the stipulated period. The defendant did not prove repayment within the stipulated time; indeed, his position is not that he repaid within six months, but that there were no strict time frame and rent would set off. However, that "rent set off" arrangement is not contained in exhibit P.l, and the defendant produced no document evidencing such a set-off agreement. On the evidence, I find that the defendant did not repay the loan within the six months as stipulated in the written agreement. That constitutes breach of the repayment covenant. Therefore, breach is proved. That brings me to the fourth issue: reliefs. It is here that the case becomes significantly shaped by equity and by the modern statutory framework governing land, mortgages, foreign interests, and the core equitable principle that the law does not permit unjust enrichment. I begin by stating what is not in doubt. It is not in doubt that the plaintiff advanced money; it is not in doubt that the defendant received money; it is not in doubt that the defendant did not repay in full; and it is not in doubt that for a very long period the plaintiff was in possession of the property, initially by reason of an ex parte judgment that was later nullified, and later the title position changed again in September 2025. The question for this Court is to fashion reliefs that are; one, consistent with the proved contractual relationship; two, consistent with the statutory regime governing land disposition and mortgages; three, consistent with equity's protection of the borrower's right of redemption and equity's hostility to clogs on redemption; four, consistent with the prohibition against enforcing illegality, including illegality in foreign ownership or acquisition of interests in land; and five, consistent with the equitable imperative against unjust enrichment, both ways. Equity regards substance rather than form. A transaction that is in truth security for money is treated in equity as a mortgage-like arrangement, notwithstanding the labels used by the parties. One of the oldest and most enduring equitable doctrines is that "once a mortgage, always a mortgage," meaning that a mortgage is a security for a debt and cannot be transformed into an outright conveyance merely by contractual cleverness. The corresponding principle is that the mortgagor's equity of redemption is jealously protected: the borrower must always have a meaningful right to redeem the property upon payment of the debt, and any term that, in substance, prevents redemption, or makes the security irredeemable, is treated as a clog on the equity of redemption. In modern mortgage jurisprudence, courts are also alert to terms that confer on the lender a windfall unrelated to the legitimate purpose of security, particularly where the security is of a value far exceeding the debt. Those terms are treated with suspicion, because a mortgage is not a device for forfeiture; it is a device for securing repayment. This equitable approach is reflected and strengthened in Tanzania by the statutory design of the Land Act regime on mortgages. The Land Act contemplates mortgages and provides structured remedies: statutory notices, power of sale, duty of care in sale, accounting, and the continuing covenant to pay where applicable. The statute does not, in general, countenance foreclosure as a means of converting the security into the lender's permanent ownership to the exclusion of redemption; rather, the mortgagee's remedies are framed to realize the debt, not to punish the mortgagor. The mortgage provisions include the mortgagee's power of sale after notices, and they impose duties of care in realization. For instance, the power of sale is exercisable after the expiry of the prescribed period following statutory notice. In the contemporary jurisprudence on mortgages, two strands are important for present purposes. The first is that mortgage litigation must respect necessary parties and the integrity of the mortgage relationship; where enforcement of securities is challenged, mortgagors are necessary parties and proceedings without them can be a nullity. While Chiyanga Enterprises (T) Ltd v Exim Bank (Tanzania) Ltd ( as the successor First National Bank (T) & Another, Civil Appeal No. 361 of 2021, was in the context of challenging notices and realization of securities, it demonstrates the Court of Appeal's insistence that mortgage disputes be resolved within the proper legal structure, not through short-cuts that would defeat substantive rights of those whose property interests are directly affected. The second strand is the repeated emphasis that a mortgage exists to secure repayment, and that courts should avoid approaches that confer unjust windfalls or impose unjust forfeitures. This Court recognize that, in absence of negligence or bad faith, a mortgagee who realizes the security but does not recover the full loan may still have recourse on the covenant to pay; the security is not treated as the sole and exclusive remedy unless the parties and the law so provide. That strand, though usually invoked to protect lenders against under-recovery, also contains the inverse logic; the mortgagee is not to be allowed to recover more than what is legitimately due, and if the mortgagee has already received value, equity requires accounting so that one party is not unjustly enriched at the expense of the other. Unjust enrichment is not a free-floating slogan; it is a rational organizing principle used by courts of equity to prevent a person from retaining a benefit where it would be unjust to do so. In disputes of this kind, the risk of unjust enrichment can occur in two directions. If the borrower received money and did not repay, and yet retains the property and its value without settling the debt, the borrower is enriched unjustly. Conversely, if the lender advanced money but then retained the property and its fruits for decades, collecting rent or enjoying possession far beyond the value of the debt, and still insists on taking title absolutely, the lender too may become unjustly enriched. Equity therefore insists on fair accounting. Applying these principles to the case at hand, I must examine the relief the plaintiff primarily seeks: a declaration that he is the lawful owner of the property and orders that the title be transferred to him. That relief, in practical effect, would convert the security into ownership and extinguish the defendant's equity of redemption permanently. The plaintiff's pleaded foundation for that drastic result is the clause in exhibit P.l stating that upon default the house w ill automatically be transferred to him. Such a term is, in substance, a classic clog or forfeiture clause, because it purports to make the security irredeemable upon default and gives the lender the property itself, rather than giving a structured mechanism to realize the debt and return any surplus value to the borrower. If the security is worth much more than the debt (and in this case even the plaintiff's own estimate of the current value is very high), then to allow an automatic transfer clause to operate as a forfeiture is to permit a windfall to the lender not justified by the purpose of security. Moreover, the legality of transferring Tanzanian land to the plaintiff is itself a decisive constraint. The Court posed questions on whether a foreigner who is not an investor may lawfully own land in Tanzania, and whether an agreement purporting to transfer land to a foreigner is enforceable in Tanzanian law. Under the Land Act regime, the general rule is that land in Tanzania is vested in the President as trustee and is governed by statutory restrictions. Section 20 of the Land Act, [Cap 113 R.E.2023], restricts the allocation or grant of land to non-citizens save for specified circumstances (notably investment under the Tanzania Investment Act arrangements and derivative rights). It provides; 20. (1) ''For avoidance o fdoubt, a non-citizen shallnot be allocated or granted land unless it is for investment purposes under the Tanzania InvestmentAct.". It is my finding that the statutory prohibition is substantive and that courts do not enforce or validate interests acquired in contravention of the land regime, because the illegality is not a mere technicality but goes to the capacity to hold rights in land. The plaintiff argued in submissions that in 1998 the position was different and foreigners could own land; and the defendant responded that the amended plaint filed in 2025 invokes the current legal position and that an amendment renders previous pleadings inoperative, relying on the effect of amendment of pleadings. It is correct that once pleadings are amended, the amended pleading supersedes the former and becomes the operative basis for adjudication. In this case, the relief of vesting title in a non-citizen is not a simple enforcement of a pre-existing debt right; this court cannot make orders whose effect is to sanction an ongoing contravention of a statutory prohibition. Put plainly, a court cannot, in the name of enforcing a security, issue an order that results in a non-citizen acquiring ownership of Tanzanian land contrary to the statutory scheme, unless the statutory conditions for lawful holding by a non-citizen are shown to be satisfied. No evidence was led that the plaintiff holds derivative rights as an investor or that the suit property falls within a statutory exception permitting direct ownership by him as a non-citizen. In that posture, a decree transferring the certificate of occupancy to the plaintiff would collide directly with the Land Act restriction. Therefore, the plaintiff's primary relief of ownership and transfer cannot be granted as framed, both because; one, the "automatic transfer" clause is, in equity, a clog/forfeiture term inconsistent with the equitable right of redemption in a security transaction; and two, the relief would in the circumstances offend the statutory restrictions on foreign interests in land, in the absence of proof that the plajntiff qualifies under the exceptions. That does not mean the plaintiff is without remedy. The law will not allow the defendant to retain the benefit of USD 70,000 without repaying merely because the security clause is unenforceable as a transfer. Nor will the law allow the defendant to deploy illegality as a sword to unjustly enrich himself where the plaintiff's claim is fundamentally restitutionary and contractual for money had and received, unless the plaintiff's own conduct is so tainted that the court must leave the parties where it finds them. Here, the debt itself is not illegal: lending money is lawful. The illegality problem attaches to the mode of enforcing security by vesting Tanzanian land in a non-citizen, not to the underlying loan. Equity therefore directs the court to sever the unenforceable part and enforce the lawful obligation: repayment of the loan with appropriate interest, subject to equitable accounting so that neither party is unjustly enriched. This brings me to the defendant's "rent set-off" narrative. The defendant testified that rent was USD 800 per month and that the plaintiff collected it for years. The plaintiff denied any agreement that he would occupy or collect rent to set off the debt, and exhibit P.l does not contain such a term. The defendant produced no rent receipts, no tenancy agreements, no bank transfers, no correspondence, and no independent witness to prove the alleged arrangement. On the other hand, the record shows that the plaintiff's possession was materially connected to the ex parte judgment of 2000 and subsequent transfers done under that process, before that judgment was nullified. The parties' long history means that possession and benefit cannot be simplistically treated as a voluntary rent set-off contract. However, equity looks at the reality: if, as a fact, the plaintiff derived substantial benefit from the property (whether by occupation, rent, or otherwise) for a long time, and that benefit is directly connected to the security and the loan dispute, then equity requires an account, even if the defendant failed to plead a fully quantified counterclaim, because the Court is fashioning an equitable remedy for repayment and must avoid unjust enrichment. At the same time, equity also requires proof. Courts do not make large set-offs on speculation. A party asserting that rent fully extinguished a USD 70,000 debt must lay credible evidential foundation. In this case, the defendant's evidence on rent remained bare, unsupported, and internally broad (he could not even recall the loan amount, yet he was certain of rent at USD 800 monthly since 1998). The defendant did not file evidence of historical rent or current occupational value. Therefore, the Court must enforce repayment of the debt with interest, because that is proved, and refuse forfeiture/transfer of the land. In mortgage and security disputes, such an account is consistent with the statutory philosophy that realization is for recovery, not for windfall, and consistent with equity's insistence that neither mortgagor nor mortgagee should be unjustly enriched and that mortgage disputes must be resolved by structured remedies and proper accounting, not by shortcuts that extinguish rights without due process. In this respect, issues of rent being payable to the plaintiff is considered not proved. Accordingly, and for avoidance of doubt, I hold as follows on the issues; the Court finds that the plaintiff has proved his case on the balance of probabilities. Judgment is therefore entered in favour of the plaintiff as follows; it is declared that the defendant breached the written loan agreement dated November 1998; the defendant is ordered to pay to the plaintiff the sum of USD 70,000, together with interest at the agreed rate of 15% per annum from the date of default until payment in full; in default of payment, the plaintiff shall be at liberty to pursue lawful enforcement mechanisms. The plaintiff is awarded costs of the suit. It is so ordered. S. JUDGE . KAINDA 19.12.2025 The judgement delivered under my hand and seal of the court In the presence of Mr. Thomas Kessy, learned counsel for the plaintiff and Mr. Simon Katunzi, learned counsel for the defendant. The plaintiff was also present in person. S. J. KAINDA — JUDGE 19.12.2025