CRDB Bank Limited vs Dantan Electronics Ltd and Another (Commercial Case No. 12 OF 2000) [2000] TZHC 313 (10 May 2000)

'I IN THE HIGH COURT OF TANZANIA (COMMERCIAL DIVISION) AT DAR ES SALAAM. COMMERCIAL CASE NO.12 OF 2000 CRDB BANK LIMITED ............. PLAINTIFF VERSUS DANTAN ELECTRONICS LTD }DEFENDANTS JAMILA RASMUSSEN ............ R U L I N G NSEKELA, J. This suit was instituted under the provision of Order XXXV of the Civil Procedure Code (CPC) 1966. The plaintiff'respondent filed a plaint seeking, inter alia, the following orders, namely - (a) payment of Tshs 19,485,014187perpara 4 supra, or, (b) sale of the mortgaged property described in annex CRDB 2;" The 2nd applicant, in her chamber application, has asked for leave to appear and defend the suit under Order XXXV rule 3 of the CPC. When the suit came up for hearing on the 20.4.2000, Dr. Wambali, learned advocate, represented the applicants and Mr. Mwandambo, learned advocated represented the respondent. Since the question as to whether or not to grant leave to appear and defend the suit depends mainly on the applicant's affidavits, I take the liberty to reproduce paragraphs 4, 5, 6 and 7 of the affidavit in support affirmed by Jamila Rasmussen, Managing Director of the 1t applicant. It reads as follows: - 4. That having regard to the plaint filed by the plaintff, it is obvious that the defendants can put up a genuine defence that raises triable issues which will enable us to resist the suit successfully if permitted to defend as to the whole claim of the plaintfffor the facts set out hereinafter. 5. That a scrutiny and perusal of the bank statement issued to the defendant company by the plaintff show that by 31.01.2000 there was no outstanding interest on the overdraft which testifies to the

fact that the conduct of the defendant company cannot be labelled as unsatisfactory. Shown to me are copies of bank statements collectively marked as "Annexture JR]." 6 That on the balance of Tshs, 19,485,045187 being part of the principal amount, efforts have been put forth to continue to repay the outstanding balance without uncalled for recourse to the court of law by the creditor, the plaintff Shown to me is a copy of one of several contracts for services executed by the defendant Company and Medical Stores Department and marked as "Annexture JR2." 7. That it is further averred that when the plaintiff's officers namely J. Sirikwa and A.Tabaro visited the defendant's office on April l3" 2000, it was agreed that the defendant pay at least an instalment of Tshs. 100, 000/= twice a week and on the strength of it the defendant continues to pay as so agreed. Shown to me is a copy of a duly signed record setting out inter alia prescribed instalment, marked as "Annexture JR3." It was Dr.Wambali's contention that the supporting affidavit of the 2 applicant Jamila Rasmussen disclosed facts which complied with Order XXXV rule 3(b) of the CPC. He submitted further that annexture JR1 to the affidavit showed that the 1St applicant was paying interest on the overdraft consistently and that according to annexture JR2, the 1st applicant is able to discharge its financial obligations under the overdraft agreement. Lastly, the parties, as evidenced by annexture JR3 had in fact made a variation to the overdraft agreement by agreeing to a revised repayment schedule. Cumulatively, he concluded, all these were triable issues entitling the applicants to unconditional leave to appear and defend the suit. On his part, Mr. Mwandambo submitted that the applicants have in fact admitted that they are indebted in the sum of Shs.19, 485,045/87 and therefore they have no reasonable defence to the suit. On the question of interest, he contended that there was an outstanding interest of Shs 332,021/01 as at 31.1.2000. He concluded by stating that the overdraft facility was expected to have been cleared off by 30.7.98 and that there was no moratorium given to the applicants. Having stated the respective positions that have been canvassed by the learned advocates for the parties, I move on to consider Order XXXV rule 3 of the CPC. It provides as follows: - 2

I' "3(1). The court shall, upon application by the defendant, give leave to appear and defend the suit, upon affidavits which - ... .... (n. a.) disclose such facts as the court may deem sufficient to support the application. (2)Leave to defend may be given unconditionally or subject to such terms as to payment into court, giving security, framing and recording issues or otherwise as the court thinks fit." The first thing to note under Rule 3(1) (b) above is that a decision whether or not to grant leave to appear and defend the suit is based on the defendants affidavits which discloses such facts as are sufficient to support the application. In the instant application, there is only one affidavit in support. The question is what facts does the deponent disclose? In paragraph 4 of the affidavit it is stated - the defendants can put up a genuine defence that raises triable issues...." But what are these triable issues? Essentially this means that there must be an issue or question in dispute which ought to be tried. It has been said that an applicant who seeks to resist summary judgment should state clearly and concisely what his defence is and what facts are relied upon as supporting it. (See: Paclantic Financing Co.Inc. and Others v Moscow Nardony Bank Ltd (1983) 1 WLR 1063) One triable issue that crops up in paragraph 5 is the question of outstanding interest on the overdraft facility. According to the affidavit - "by 31.01.2000 there was no outstanding interest on the overdraft .... " Mr. Mwandambo however thinks otherwise. This, on the facts as disclosed in the affidavit is a triable issue. I should perhaps hasten to add at this juncture that I am not in anyway attesting to the veracity of such facts or that the defence so raised is meritorious. Another issue raised is one on the outstanding loan. The applicants do in fact admit that there is indeed an outstanding loan to be repaid but do point out that they have contracts at hand which will enable them to generate funds to repay the overdraft in question. My understanding of this is that the applicants are currently experiencing a transient liquidity 3

wkw problem. That may well be so! It should be remembered however that order XXXV of the CPC — was designed to enable a plaintiff to obtain a quick and summary judgment on a claim for a liquidated sum where on the face of it the defendant has clearly no good defence without being unnecessarily kept from what is due to him by the delaying tactics of the defendant." (See: Thssen - Stahiunion Export GMBH v Kibo Wire Industries Ltd [1973] LRTn 54). It is stated in paragraph 7 of the affidavit that on the 13.1.2000 two officers of the respondent, namely J. Sirikwa and A.Tabaro visited the applicants' premises and as a result of that visit, a new agreement, annexture JR3 came into existence and purportedly varied the terms and conditions of the overdraft agreement as alleged in paragraphs 5 and 7 of the plaint. It will be recalled that according to annexture JR3 of the affidavit, the applicants had allegedly agreed to pay Shs 200,000/= weekly in reducing the loan. There are two interrelated issues here. The first one is the admission of the loan. Is this a triable issue? Considered alone, it may not be one, but when considered with the second issue, namely the variation of terms of payment of the overdraft agreement, it also becomes an issue. (See: Souza Figuerido & Co. Ltd v Moorings Hotel Co. Ltd f19591 EA 425. In the case of David Sassoon & Co. Ltd v Navichandra Patee and Others [19721 HCD 148 the late Mwakasendo, Ag. J (as he then was) had this to say - "My role in these proceedings is fairly limited It is simply to decide upon the affidavits filed by the applicant, whether there is disclosed any issue fit to go for trial and no more...." I am in entire agreement with these observations, but before I conclude, I would like to adopt the following guidelines which were quoted with approval in the Indian case of MIS Mechalec Engineers & Manufactures v MIS Basic Equipment Corporation AIR 1977 SC 577. In this case the Indian Court was construing Order 37 of the Civil Procedure Code (1908) which is in pari materia with our Order XXXV of the CPC and therefore of persuasive value. These principles are - "(a) If the defendant satisfies the Court that he has a good defence to the claim on its merits the plaintiff is not entitled to leave to sign judgment and the defendant is entitled to unconditional leave to defend

~ I If the defendant raises a triable issue indicating that he has a fair or a bonafide or reasonable defence although not a positively good defence the plaintiff is not entitled to sign judgment and the defendant is entitled to unconditional leave to defend. If the defendant discloses such facts as may be deemed sufficient to entitle him to defend, that is to say, although the affidavit does not positively and immediately make it clear that he had a defence, yet shows such a state of affairs as leads to the inference that at the trial of the action he may be able to establish a defence to the plaintff's claim the plaintiff is not entitled to judgment and the defendant is entitled to leave to defend but in such a case the court may in its discretion impose conditions as to time or mode of trial but not as to payment into court or furnishing security. If the defendant has no defence or the defence set up is illusory or sham or practically moonshine then ordinarily the plaintff is entitled to leave to sign judgment and the defendant is not entitled to leave to defend. If the defendant has no defence or the defence is illusory or sham or practically moonshine then although ordinarily the plaintiff is entitled to sign judgment, the court may protect the plaintff by only allowing the defence to proceed of the amount claimed is paid into court or otherwise secured and give leave to the defendant on such condition and thereby show mercy to the defendant by enabling him to try to prove a defence." With the benefit of these authorities, I am satisfied that the applicants have disclosed that there are triable issues sufficient to entitle them to defend the suit. I think the suit falls under category (b) above. In the result, I do hereby grant leave to the applicants to appear and defend the suit unconditionally. The written statement of defence should be filed on or before 24.5.2000; reply, if any, on or before 3 1.5.2000 and the suit is set down for hearing on 8.6.2000. Costs to be in the cause. It is accordingly ordered. 5

I H.R. Nsekela, Judge 10.5.2000: Ruling delivered in Chambers in the presence of Mr.Mwandambo learned advocate for the respondent also holding brief for Dr. Wambali learned advocate for the applicants. H.R. Nsekela, Judge 10.5.2000 '