Tanzania Portland Cement Company Limited vs Continental Builders Limited (Civil Case No. 262 of 1995) [1998] TZHC 2166 (3 November 1998)

.. :_1;:-· ;,. •· · , - • ---1t-:--:-·. -~ IN Ttli HIGH COUHT OF Tfa.NdIINIA (DAR ES SALAAM i)IST.fUCT RZGIS'r.RY) A'r DAR 1£.S. SALM.M ___ .. _ __. TANZANIA PORTLA.1"\JD CZl•ENT CONPANY LIMITED O O O O O O O O' Versus CONTINENTAL BUILDERS LIMI'I 1 ED •0•00000000000000000 R U L I N G PLAINTIFF RSSPONDENT This is an application for leave to defend the suit uncondi- tionally. It is made under Order 35, Rule 2 of the Civil Procedure Code. It is supported by an affidavit of the applicant's Managing Director. ' The record reveals that the pla1ntiff/respondent, Tanzania Portland Cement Company Limited; filed a suit against the defendant/ applicant under Summary Procedure on 3rd November, 1995. The record further shows that a cheque drawn by the upplicat in favour of the respondent for Shs. 1 1 349,898/= was dishonoured by the Bank with an endorsement- •·Refer to Drawer". By then, the amount due to the respondent from the applicant totalled ·.shs. 13,945,278/60. The applicant made subsequent payments leaving a balance of Shs. 10,327,516/=, which the respondent now claims from the applicant. In the affidavit in support of the application, it is statd that for several years the parties had been transacting business on cash basis. But from 1993, the respondent started suppling cement to the applicant on credit without the knowledge of the Managing Director of the applicant. It was not until in June, 1994 !

f'1-"'i ..,.~ ....... 1 -~ 4144S41W~~"'4'"--, .... +:,.,...i•·."'-- ' .I. • 2 that the applicrmt I s t:iam,gint3 Director· came to knew of th-;t fact through the respondent's debt-collecting agent. By then the debt stood at Shs. 15t 945, 278/=• The applica.i.1t and the said agent then worked out a programme for the settlement of the debt. But before the response of the respondent to that programme, the applicMt and the said agent agreed that the applicant should pay cash to cover the amount in the dishonoured cheque, and s0 the applicant paid cash Shs. 1, ~-85, 000/= in place of the dishonoured cheque. 1 rhereafter, the affidavit avers,! the parties agreed on a rep.:zyment programme by which the applicant was to pay Shs.400,000/= on the first working day of each montn in addition to paying Shs.160/= for every cement bag purchased by the applicant, and that the applicant was to be sold cement as and 1t1hen available. In conformity with that programme, the applica.t1t paid a total of Shs. 1 i 000, 000/=. But the respondent did not honour its obligations under that progra.mme in that the respondent allocated no cement to the applicant for about three weeks. On the ba.SJs of those facts, Mr. F. Mbuya., learned counsel for the applicant, submitted that the a_:)plicant be granted unconditional leave to defend tha suit. In the alternative, he submitted that as the amount in the cheque was paid for in ca.sh, the suit should have been filed as an ordinary suit as the amount in the cheque had been cleared by ca.sh. In the further alternative, Mr. Mbuya. submitted that only the amount in the cheque should have been claimed under Summary Procedure and the baL':'llce should have been claimed' by way of an ordinary sui to In a counter affidavit, the respondent 1 s Sales Accountant stated that the applicant started buying cment on 14 - day credit basis in June, 1992 and that the a.pplic 3.!1 t I s Managing Director was fully aware of that arrangement in that he signed some of the orders himself and also signed correspondence admitting a debt of Shso 6,882,056/90 as at 31st December, 19920 The allegation that the Cdsh payment of Shso 1,485,000/= was for redemption of .the dishonoured cheques is also denied, and the deponent states that that payment was for old invoices. It was .:.i.lso stated that the applicant was allocated cement but failed to pay for it or lift it. It was further averred that the applicant issued. two bad cheques which totalled Shs_o 2,712,678/=, and so Shs. 1,485,000/= could not have been a replacement of the cheques. , .

.. , r•. \ . ,,~ 3 The applicant was then told to replace the two dishonour2d cheques with cash or a banker's cheque before 31st ,,tugust, 1993, but the applicant took no action. On the basis of those facts, Iv'J.r. Rutakyamirwa, lea.rued counsel for the plaintiff/respondent, subn:itted that as the applicant/defendant had failed to prove facts making it incumbcpt upon the plaintiff/responr:l.ent to prove consideration, and as consideration had been proved by the plaintiff/respondent, and furthe:r·, as it is necessary to support -he objective of Order 35 of the Civil Procedure Code, which was, he said, to promote the credibility of Tanzanians in their commercial dealings among themselves and thG outside world, this application be dismissed with costs. As I understand the law, leave to defend in summary suits will be granted where the defendant/applicant raises a triable issue of fact or law. (See Kundanlal Restaurat v. Deushi, 19 E.A.C.A. 77 .. ). Leave will also be granted.where the applicant alleges that he received no conside- ration for ~he promisory note in question. But where consideration is . Land the facts do not disclose not d-enied ·. & substantial defence which, if proved, could be an answer to the claim, then leave to defend will not be e;r2nted. I respectfully agree with learned counsel for the plaintiff/ respondent that the object of summary procedure is the expeditious disposal of commercial causeso The courts, therefore, will talrn that object into c1.ccount while at the s:,1me time ensuring that real and bona fide triable issues are not suppressed by severe orders in such applications. In the present case I the defend.ant/applicant does not allege la.ck of consideration. In fact, most material allegations of fact have been admitted. The points r!lised by the applicant are: (3.) that the applicant's Managing Director did not initially have kn 1 d .,. t th t. transacting b . . O\v e ge l,na · e p::il' 1es were . u.s1ness on credit basis; (b) that when a repayment programme was agreed upon, the plaintiff/ respondent did not honour its part of the agreement; and (c) that the cash payment of Shs. 1,485,000/= was a replacement of the dishonoured cheque or cheques. ..... • j i • · 1

4 With regard to knowledge of the applic.mt's Hanaging Director, I find it inconceivable that a managing director of a company with such large commercial transactions would have been ignorant of the credit terms of the transactions between the parties. In the instant case, fortunately, there is credible evidence, which I accept, that the applicant 1 s Managing Director knew, .as long ago as June, 1992, that the applicant was being supplied cement by the respondent on credit. 'rhis is evident from the fact that the applicant's Nanaging Director signed some of the orders himself. In any case, in the absence of an allegation of any fraud ,.practised on the Managing Director by the Compmiy, then such ignorance c;i.mts for nothing. Equally_. unhdpful is the applicai."1.t is allegation that the respond(:nt did not honour its .Jart of t.he agreement. In any case, I do not believe th<1t allegation in view of the evidence of the respondent, which I accept, that cement was available but the applicant failed to pay for it or lift it. On the y_ue:=-tion of payment of cash bf Shs.1,485,000/-= 9 I am satisfied that it was not a replacement of the dishonoured cheque or cheques. I sa:y so beca.use, first, the arounts do not tally .snd 9 secondly, if that had been the case, the applicant v10uld have withdrawn the bad cheque or cheques. The suit, therefore, was properly filed under Summary Procedure. It has been submitted th:.tt in that c,,.se 9 the summary suit should have been confined to the amount in the chque or cheques, and the balance should have been claimed by way of a normal or ordinary suit. With respect 1

• -I take the view that the dishonoured cheque WM part of the entire debt of the applicant. In drawing th1:: dishonoured cheque or cheques, the applicant had drawn himself into the sphere of summary producere; and as the applicant raised no substantial triable issue, I can see no logic in splitting claims. That would only encourage an unnecess.'.ll'y multiplicity of suits.

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• 5 For the foregoing reasons, I am satisfied thnt no case has been made out for granting this .:.i.pplication for lea.veto d0fend the suit. This application is accordingly hereby dismissed with costso Judgment is accordingly hereby entered for the plaintiff as prayed in the plainto 3/11,l.98: ,, Coram; Mshote, DR Mr Galikano/ B. D. CHIPZTA JU.OGE .•';,; . · Mbuya For the Plaintiff Absent/ Served For the Defendant CC: Msuba Ruling delivered i:i Chambers this 2nd day of November, 1998, in the presence of Mr. Galikano for Mr. Mbuya for the plaintiff/respondent in the absence of Mro Rweyamnmu for the applicant/defendant. (sgd):. F. S. MBHOTE DISTRICT REGISTRAR UtJL1_9J.§.