Tanfarms Limited vs The Bank of Tanzania (Civil Case No. 157 of 1997) [1999] TZHC 146 (23 July 1999)

,., IN TI-DI; HIGH COURT OF TANZANIA (DAR ES SALAAM DISTRICT REGISTRY) NJ' DA "R ES SALAAM 'l'ltNFAHMS LIMITED o::iooaoooooocot'ooooo PLI,INTITF Versus THT~ BJ\NK OF TANZANIA OCC)OOOOOoooooo DEFENDANT RlILJNG In this ca£;e, the plaintiffs TANFAmr:s LH~ITED, have filed a suit against the defend:J.nt, Ba.nk of Tanzania, clr:,.iming special and general de,mar:;es. 'rhe defendant raised preliminary o'-:jections. This is a rulin1:; on those i)reliminary objections. The first 9reliminary objectim is th2.t t'.1e plaintiffs have no r '- cause of action against the defendant in that the defendant onl.v ~ c ) • l ' . facili ted the work of a Corm1itte:e established by the Government of Tanzania and further delivered ,3ubst2,11tial arn':unts of the requ::i site funds to the plaintiffs, and that theTe are funds due to the plaintiffs subject to satisfying access preconditions as required by the Government of Tanzania. The second preliminary objection is that the plaintiffs have no cause of action against the defendant as the plaintiffs cannot at law be indemnified by the defend2J1t for an alleged rnisu,se or mismanagement of the plaintiffs i funds through the ad.mi tted machim,tions of the plaintiffs I own directors o.nd shareholder so ·.- r .

2 The third objection is that even if there be a cause of act:i on, the -r1aint is ba.d at lcJ.w for ,non-joinder of ne_cess,.rry :iarties. 'I'he fourth :JreJ.:i.rninary o1'jection is th.st the .suit is bad at law as it amounts to sueculab_ ve li b;:·tion and for mul tiferious11e1cs and multi·::,licity of suits. The nla.int is also objected_ to for allee;ed failure to :oa..rt:Lct;.larize the alleged fra.ud arid f.or :impro 0 :ier ver:i fic.6.tj_on~ With the permission o:f the r::ourt the J.eerned advocate:;::: of the 1:,arties filed written submis,sionso I havr:: carefully perus0d and considered the· -::,arties I pleadings· and ·written submissions. From th-3 -oleaclin 1 :;;s 1 I e-;ather the following facts~ in 1990 the Government of Tanzania establ:i_shed a Pror:;ramme knovm aG a Debt Conversion Prog:ramme. The ma.in air-1s -o+: thi,s Proga.rmr,e were to cncoure.ge investment in selected sectors a.nd. to reduce the country's cx:ternal obligationso In order to ,1'!an2,ge and monitor this Proeramme, the Government. of Tanzania set up a. Ccimmi ttee c&lled Intermi.ni.sterial Debt Cc-.nver,sicm Committee (hereinafter ca::i.led the Co··1mittee). Th,,,t Committee· was comnosed of the Bank of Tanza.nia as chairman a.nd Secretariat. Others were the f":inister of Fj_ne.nce, Planning:- C'.')rin1,ission, D.G. Investment. P-.comotion Centre, AoG. 1 s Chambers, Sectoral i-i::i.i.stry and National Bank of Commerce. Between· July, 1992 and January, 19r:; 1 the d2:fendant 9 H j,s alleged converted for the ;,laintiff debts amounting to ToShso 148,482, 1 +13000, ancl. during that period the defendant er.edited to the plainbffs 1 bank account with the National Bank of Cor,1merce, Ta.nga. Branch T.Shs.109, 807, 622/80? leaving a bah.nee of T.Shs. ?,;7 9 772,055.10. A Director ; ond · shareholder of the p],aintiffs, one V.G. Chavda, unlawfully and wjth intent to. defraud t f d -" th t 1 - t - ff . , ,account' i ,h- d +. t t 1 f r2-.1'1s· err~, irom a p a1n~L ~-;anct pa1a :o ,,, 1r ryar,,1es a o a_ o: T. Shs. 101,616 ~ 886/:,, o So the plaintiffs are claiming, the ur.rpaid balance of T.Shso 37,772,055/10,the· money misused or mismarn::ged by the _sa.id V. G. Chavda, arid generc?-1 damases.

3 The que.stion nm-1 arises; whom should the ::->laintiffs sue? Is it the Bank. of Tanzania? or the Gr)Vernment of Tanzania, or the Cammi ttee or V.Go Chavda" In my view~ the Bn.n 1<: of 'I'anzan.ia wa1::~ juEt a member of the Cammi t tee. It was chA-irma.n and SE.cretar:iat o:f tbe Crn11mittee. As ,such it facilito.ted payments a;,Jproved by the Committee a.vicl, at the end of the day• by the Government· of Tanzania. The Bank of Tanzania we.s, in other words, a facilitator of the Committee 1 which Corr.lili_ttec was itself an agent of its principal, namely, the Government of Tcm zania. On this scol:-e, therefore, I hold t.hat tl1e pa.intiffs hnve no cau'.se of action ae:riinst the ckfendr.mt which we5 only a facilifa.tor of a- Commi ttee whose lega1. personality is doubtful. If anything, the plaintiffs should sue the principal, thc,t is, the Government of Tanzania. As to losB of monies of the plaintiff through mj_smanag:ent, misuse 9 or fraud on the art of one of the plaintiffs' direct-ors, I cannot see ho1-1 the defende.nt can be held to be Ua,)le fo• m:i sdeeds of the nlaintiffs 1 directors in the ?..bsence of any allegation of fraud on the part of the defendant,: In view of the foregoing~ I hold that the plaintiffs have no cause 'of acti::m ,:,p:ainst the defendant" In the r;remiees~ I find :i.t superfluous to deal ~,ith the re;=;t of the r)reliminary objections. For these reasons, this snit is t:e:reby dismissed with -costs. ,JUDGE Ruling delivered in Chambers this 23rd day of July, 1999 in the presence of Prof. Fimb,o for tbe plain+:if:f.s and Mr. Chl!a for the defendant. B. D. Cl-fIPE'I'A JUDGE

Prof. Fimbo: --""•-- My Lord 9 we apply for leave to appeal to t}1.e Court of A-r,meal. Order: As the defende-nt has no obje•ction? and a1;3 the matter involves an importcmt quest.ion of law, whj_ch is whether, in the circum- stances of this case, an agent ca.n be held liable, as such agent, for acts committed on beh,J.lf of his princi nal ~ the a·r,nlication for lea.ve to appeal to th<~ Court o:f A-oTJeal is hereby eranted. Co.sts shall be ir,_ the cam,,~. B.; D. CHIP}BTA tTUDG1!; 23/7/1999