Rajani Industries Ltd vs NBC Holding Corporation (Civil Case No. 364 of 1996) [1998] TZHC 2196 (6 October 1998)

... / KAT,,RGF.YA. ,T. TN 'T'HF. HTGH r:omn OF 'l'AN7.ANTA A'l' DAR RS_SALAAM r.TVTL CASF. NO. '.Hi4 OF 1qgfi RA,lANT nmllS'l'RTF.S T.'T'D .......... PLATN'l'TFF VF.RSIJS NRr. HOT.DTN(.; r.ORPORA'T'TON ... . .. DF.FF.NDA N'T' R U f. T N G ·----- 'l'h j s n1 li. ng i.s in nspect of r.1n app 1. i cr.1 ti.on for l.e11ve t.o r.1ppAr1l t.o thA r.oul'.'t. of AppP.rll against a r.ul.ing mane by t.h:is r.om:t. dismissing two preliminary objections, namely, that the pl;:iintiff's hr1vP. nn c;:itJSP. of r1ction ;:ig;:iinst dAfencl;:int, ;:ind ;:ilso t.hr1t. P.VP.n if it exist.An t.hA Rui.t. is timP. br1rred. Tn a nut.shP.11: the r.lr1ims by the plr1int.iff.- ;:is r.;:m he disr.erned from the pl;:iint ;:ind itR ;:innex11rAR, ;:ire t.h;:it. bet.ween 1q7q ;:ind 1gA, thA plr1int.iff contr.r1cted w:it.h Messrs Servntech F.ngineers Pi-·iv;:it.e r.ta of Tndin (in this dispute known ;:is 'snppl ·i fff' ~ vi rle three di ff Arent cont.r;:icts 11noer whi r:h 1·.he :=rnppliP.r hnd to supply to t.hA pl;:iint.iff mar.hjnery r1no ot.her sP.rvi cAs for r.onst.ruction of n project. structure. Under. thesA e., r.nnt.rrir.ts "the suppl[" provi.nen a 1 ong term supplier 1 s crecl.i t (whir.hallowed the plr1intiff tn pay part of the contract val.11e hy inst.nlrnents) on connj_tinn that the plaint.i.ff's hankers ( OP.fenrl;=ints) i ssuerl a "RRp.::iymFrnt guarant.ee". At the r.equRst of t.he Plni.ntiff, the DefRnoant r1greed to and di.d issue r1t the Plr1int.iff 1 s costs: lRtt.Rrs of ~1ar.anteR in the following words.- "Now, i.n r.ons iderat. ion of · your having ente:r.ed into t.he r3forRsr1 i.d r.ontrnr.t. nnr'l ;:it. the rP.quest. of thA r.ust.omer .- we 'l'HF. NA'l'TONAL BANK OF' r-oMMF.RCF..- hArP.by unconoit.ionally ;:incl i rrevor.r1hl y g11nrnnt.ee you.- not only as surety hut as primr1ry ohligntor the punctu;:il p;:iyment td you by the snid i n::;t_;:i 1 ment.s t.ogAt.her wi t.h .i nt.et"est. st.nt.ed ;;ibove 11 • l

ThA plaint goAs on to allege, that flowing t.herP.frnm, thP. Pl.r.d.nt.iff paid t.o the Defendant. a tot.al of Tndian Rupr-=Hs 15,229,000 equivalent to TSHS. 25R,RQ3,000/= for repatriation to s11ppJ ii wh i.r.h was not repat. r i a ten as rigrP.erl upon r.ompe J 1 i ng thP. i=.uppliP.r t.n suspP.nd shipmP.nts of the mar.hinP.ry, ini=;ta1la1·.ion and commissi,oning of the mr:ir.hi mry l.envi.ng the pr.ojAr.t vr1l 11ed at TSHS. 6.2 billion as nf November, 1QQ3 inr.ompleted. ThP. plaintiff r.hnllP.ngP.s that thP. oefend;:rnts r1r.1:i.on c::a11se<l Joss And dr1mr.1gP.s for. whir.h he r.lai.ms, among others, as follows - TSHS. 25R,RQ3,000/= pAid t.o T)P.fenaant. for rP.pRt-.ria1·.ion 1·.o s11ppl iAs; nimh11rsP.mP.ni". of interest., AR at 30\11\qfi, totalling to shs. 88,337,270, paid to nef1=rnnant.; int.er.est on t-.he nhnve st.at.ad sums at 18!i!i pP.r annum totaling to shs. 347,230,270; TSHR. 10,333,S00,000/= as r.ompernrntion for h11ildi.ngs, i.nfrastr.ucture and utilities so fnr erer.t.ed on the project; shs. 930,480,000/= as r.ompensati.on for costs inr.urred on staff, workers and other suppliers that pl a·i nt.i ff ha<'! t.o employ, tr.;=d n _. dP.velop and susta.i n for the smoot.h opRration of the project; compensation for Joss of exper.t.ed inr.ome for 10 YAnrs plus i.nterest assP.sseo at. 'T'RHS. ?..-34q,648,.7?.~/=. Tt is AgAinst the Aforest.ated cl.njm that the two preliminary nhj er.t. ions were ra i sA<'I. R11bP.i=;h :i .T. a i smisseo hot.h prP. l i m:i nary ohject ions. 'T'he court. di.d not suhscrihe to the general p:r.inr.iple of t·.he 1 .=iw ai=; presented hy Mr. tJ7,;:indr.1 that 1 n a contr.=ir.t. of g11.=ir;rnt.eA nnl y t.hA per::;on t.o whom t.hA guAr.antAe :is gi.vP.n, in this r.;:isA t.hA s11ppl.i.er., cnn hri ng ;rn act.ion on the guarantee and not prinr.ipal crP.ditor, by striking .=i di::;tinction that in this case the plaintiff paid money t.o defAn<lant. for repatriation to supplier which obl.igati on it faiJ ed to honour and therefore can hP. suP.d hy pl a.int.if f for this breAr::h. As rega:r.ds the per .i.od of 1 imi.t.at.ion, the court. <'!in not buy the content.ion t.hat the period of limit.at.ion startP.d to run on 14\12\89 and 16\10\90 for r.ont.racts T and TJ rAsper.ti.vely when defendant failed to r.em:i.t 1st. inst.;:il.m1=rnt.s hut. in 1996 when any further negotit.:i.ons were 2

( oer.lr.1reo impossihle hy <lefAndr.1nts. Tt is this der.ision whir.h Mr. 1J;;,;r.1nor.1 seeks to r.1ss-,i l hy proc11ri ng l er.1ve to ;::ipper.11 1·0 the r.nort of Apper.11. T should clarify from the outset. t.hr.1t. nrg11ment.s on this application for ler.1ve to appeal to the CAT were presented hy way of written submissions as ordered by Buheshi, J., on i9\6\98. However, being the author of the ruling bei.ng challenged, it was found just ,rnd proper to have the decision on the current .::ipplir.At.ion composed hy A rl:i f fenmt. ju<'lge hAnr.e re-r.1ssj gnment of the matter to me. Mr. (J;;,;r.1ndr.1, r.1dvocate r.1pper.1red for the defendant while Mr. Romr.1ni apper.1red for the p]Ai.nt.iff. Tn hiR Ruhm.issions, Mr. IJ;;:r1ndr1, mi'3intained that the r.ourt ~Rtiheshi .- ,T) rlin not. invest.ig;:ite ;rnd det.ennine the two preJimin;:iry points raised. While he hr.10, in the submissions on preliminr.1ry points, r.onr.entrr.1ted on an arg11ment th;:it. r.1 principal creditor (pl.r.1intiff in this r.r.1se) r.r.1nnot in l.Aw bring r.1n Act.inn on the gur.1nrnt.or (Defendr.1nt.)., i.n his submissions in this Application he seems to h;:ive changed tactj_c and argued that there was no obligation on defendr.1nt. to remit Any f11nds to suppliAr. As regards l_jmitation, he reiterated that periods of limitation are ;:ihso]ut.e_. and casts into wind equity considerations by citing LQX..9 Chan_c::.JJ9r Granwor.t_h bv K. .J. Rustomi .i. .i.n his text book "Th .. T,;:iw _ of_ r..i mi.tat.ion nd Adverse Possession" at page 1.fi, where jt. i.s st.Rt.Ad, "Stat.11t.es of Li.mi t.r1tion r.1re to he construed and applied Ar.cording to the exar.t. and specific lr.1nguage of their enar.trni:rnt.s, anrl not upon any supposea general and ahst-.r;:ir:t. principles of equity ....... . All periods of li.mit.at.ion are more or less arbitrary, r.1nd mrJy frequent.l y nsult in hardship. But in construina such provi si_on:=;, equi t.ahl e consi.derr.1t.ions are out. of place". 3 :.'-.

Citing Sango Bay EstatRs f,td and others v Dresdner Bank A.G. ( 1 q71) EA 17, Mr. lJ7.;:inflr1 cnncl uded thr1t leave shouJ f) always be gr;:int.ed where there i.s An ;:irgu;:ihle case Ji ke t.he pnsent. matter. Ap;:irt. from t.he o1hnve Mr. U?.a nda r1 l so nhservecl t.h;:it Mr. Boman i. 's suhmi ss i.on sho111 d not. be ;:icted upon ;is it w;:is filed out.side t.he <late set for the ::;ame (inst.end of filing the Si3.ffiP. on 14\8\98 he filed it on 1.8\8\qR) and no leave w;:is ohtainP.d for extension of time. Starting wi.th this l.ast submission T can only observe and associ;:ite myself with the correctness of Mr. Uzanda's submission. Parties before the Court have to abide by schedules Agreed upon ,;:ind ordered by t.h8 court, and if by any m.i.sbap a cert;:iin step is not taken in time an application must be made to the very court and lenve granted if such step has to he taken outside the time set. This hr1ving not been the case here Mr. Bomani's suhmi.ssion is disreg;:irded and treated as if it is not on record but so also 1 s Mr. IJ;;,;.::;3nda 's reply thereto. My decisi.on will thus be based on Mr. U;;,;anrla':=; :=;uhm.i.ssion only. T w"il l st.Art. with t·.he qwst i.on of whet.her or not then~ is a e;AllRe of ;:ie;t.i on. 'T'he court. r.1ppreci;:it.ed that. generally a pri.ncipal r.re<iit.or r.annot. sue ;:i guar;:intor but distinguished that generality with the specificity before 11s. Defendants concede that they received monj_es indi.cated from plaintiff for the purposes of nmi.tt.Anr.e t.o supplier and that they didn't. remit it. as required and a:=; a rest1lt the suppJ.ier refused to perform the obligations under the contract for which the plaintiff sustained mat.EHi.al sufferings: money wjse and material waste and non-performance of the project. On those material facts the general principal of the law between a guarantor and principal creditor as propounded by Mr. tJ;;,;;rnoa cannot. apply, f0r, generally, a guarantor simply sec:urP.s t.he posi.tion of a principal creditor, but in here the g11.;:ir;:intor received monies from the principal r.reditor for onward 4 ------------------ --,--- - - ·- ,-· -

t. nrnsm i ss ion to the supp 1 i <'ff wh i r.h dut.y he di on' t per f onn henr.e thP. fr1il1ire of suppliP.r to perfonn his nthP.r oblignt.inn oft.he r.ontnir.t. criusing the prim-:ipril cn~nit.or to suffer n;:im;:igP.s. Tt woulcl he r1hsurn to say t.hr:1t in t.hr1t. sit.urition the gunr.:rnt.or cannot j_n anyway be held li.r:1hle. Now wi.t.h the above, and r.onsjdering the legal princi.ple thnt "'T'he quest.ion whet.her n plr1int d.iscloses r1 cr111se of ;:ir.t.inn must he deter.mined upon perusal of the pJ.ajnt. Alone .. together with anything att;:iched so AS to form p;ut. of it an<l upon the assumption that any express or implied allegations of f;:i_ct i.n it ;:ire true" / JERAJ RHARTFF & SONS VS CHOTAT FANCY STORRS (1960) RA ;:it prige 37~~ ' I ., the r.ourt. r.r1nnot. he fr1ul t.ec'l for di smi ssi ng Mr. tJ;;,;;:.ind;i 's content.inn thrit. there is no cause of nr.tion. We now turn 1".o th A , ss11A of 1 im.i tnt. ion of per ion. 'T'he ;:ihove f;:ir.t.s in<'lir.r1tA that. NRC <'lef;:rn]ted externalising the funds in May. 1990. Mr. U?.r1ndr:1's ;:ir.gumAnt .is that t.hR present suit. was fi.Jed well heyond t.he peri.od provided under thR law of Limitation Act - n years for a contnict.. Tnneed si.x yerirs count.ad from May l990 P.nos M;:iy 1996 while this suit was filed on 4\1?.\96. Tn <lismissing t.hR preliminary ohjRr.tion t.hA r.our.t. held. "Mr. Uzanda has count.er.en ...... that negotiations for. sAttlement. do not check limitr.1tion ..... 'I'he ob&ervr:1ti.on is well. founded. However I am of the firm view that each case has to be decided on its own merits. In this connection, the c:ontents of the memorandum of underst,rndi.ng referred to ann. R - 13, para 17 of the plaint when closely examined would tend to revenl. that, F.lt that particular moment and timA,. thR issue of filing a suit in court was not to be Axper.t.ed. Agr1in this is a complex matter involving claims r1 nd r.ount.Rr-r. l ;:ii ms whare parties had in my view.. seriously ~ttempt.ed to settle thei.r differences thro11gh negotiation and reconcilir1tion. tt. mr:1y not he in the nature of cordial r:11st.omAr\Rank r.e l;::it.i on ship for. the dP.f ennant to come to r.ourt. ;:it. this st.Age ;:ind p.len<i limitation". 5

. ' Ann. B - 13 referr.ed t.o j s ;i memor;indum nf underst.;:in,1 i.ng which seems to have been dr;:ift:ed hy plr,3·int.iff b\lt. :rejer::t.ed hy defendants and which shows among others th;it i_t primarily concerned negotiati.ons over other dehts hy pl;iint.iff d11e to the somehow refers to plaj_nti.ff's clai.ms for compens;iti.on for the fnistr.;:it.ed contracts. Fr.om the r.lbove it ·is cl.ear. that t.her.e is an arg11ahle issue here - whet.her cert;ijn t.ypesof negotiations c;in check limit.atjon f per.ind, ;ind if sb, whet.her the negotj;:it.inns At hand are of the type i nv·i s;iged. Tndeed, when:i t.hAre is An ;:irgu;ihle issue leave to appe;:iJ should he gr.anted. For reason discussed leave to appeal to the Court of Appeal. reg;irding the issue of l.imit.ation of period 1s granted. neliver.ed today .. (L. B. Kalegeya} ,JUDGE -~ /. t~., q_g ..