Said Mnimbo and Others vs State Travel Services Ltd and Others (Civil Case No. 296 of 1997) [1998] TZHC 2209 (30 July 1998)

IN THE HIGH COURT OF TANZANIA (DAR ES SALAAM DISTRICT PEGTSTRY) AT DAR ES SALAAM CIVIL CASE NO. 2915 OF·;_ 9q7 SAID MNIMBO & OTHERS ............... PLAINTIFFS\DECREE HOLDER VERSUS STATE TRAVEL SERVICE LTD ......... DEFENDANT\JUDGEMENT DEBTOR AND

1. TOURISM SERVICES TANZANIA)
2. PRESIDENTIAL PARASTATAL ) .. .. OBJECTORS\APPLICANTS SECTOR REFORM COMMISSION) R U L I l'{. _ __Q KALEGEYA, J. This ruling is in respec~ of an application by Tourism Services Tanzania and Presidential Parastatal Sector eform Commission(PSRC) as 1st and 2nd Applicants\Objectors respectively praying for the lifting of a garnishee Order issued against 4 Bank(Accounts at Stanbic Bank Arusha branch; 4 ·Bank Accounts at Stanbic Bank Dar es Salaam Branch; 2 Accounts with NBC (1997) Ltd, Samora Avenue Branch, Dar es Slaam, and one Account with NBC 1997 Foreign Branch, Dar es Salaam in response to a decree entered by this Court against STATE TRAVEL SERVICES, LTD, Defendant ( as judgement-debtor) in f ;:wour of Said Mnimb.o, John Nyange, Silvano Kagya and 74 othrs'~s plaintiffs\decree holders. For clarity let us detailedly go thr0ugh the facts leading, relating and sorrounding this matter which Rre as follows:- Said Mnimbo, John Nyange and Silvans Kagya filed a representative suit on behalf of them~~JvQR n 74 others gain, the STATE TRAVEL SERVICES Ltd for terminal benefits following their retrenchment. Upon the plaintiffs' ~dvocate's submission 1

before a brother judge that the defendants hnd refused service they (plaintiffs) were allowed to prove their case exparte which they did by affidavit and judgement was accoringly entered in their favour. A decree to a tune of shs. 185,697,985/= was drawn up and this led to the garnishee order whirh i.s being challenged. In order to have full appreciation of this matter I should pose here and touch another set of relevant fctors leading to the filing of the suit. Vide Act No. 16 of 1993 (the Public Corporations (Amendment), Act, 1993) the Public Corporations Act, No. 2 of 1992 was amended. Under this amendment, ~ Special creature called the Presidential Parastatal Sector Reform Commission (PSRC) was created [S.21] and given very wide powers (S.22). For clarity and in view of what will subsequently be discussed,evenat the danger of making this ruling unnecessarily long, I will qu~te relevant sections of the said Act, extenso:- "S. 21 ( 1) · There -·is hereby es·tablished a Commission to be known as the Presidential Parastatal Sector Reform Commission which shall be an utonomous organ of the Government. (2) The Commission shall be a body corporate with perpetual succession and common seal and shall be capable in its corporate name of- (a) suing,and being sued; (b) taking, purchasing or otherwise acquiring, holding, charging and diposing of both movable and immovable prorerty; (c) borrowing and lendi.ng mnnPy; (d) entering into contracts; (e) doing.or performing all such other things or acts necessary for the proper performance of its functions under this Act which may lawfully be done by a body corporate". "S.22 (1) The principal functions of the Commission shall be- .-;.,, (a) to prepare and maintain an up to date list of all public corporations and make recommendations . to the Minister on which pith.lie corporation should be declared to be pcified public corporations; 2 I,

(b) to formulate and PYArUtP detailed plans for the restructuring of all spified public corporations; (c) to supervise, monitor nd enforce the restructuring procdurPs Rnd Rgreem~nts in relation to specified puhJ.ic corporations; (d) to liaise as necessary with responsible ministries and other organs of the Government with a view to ensuring that the objectives of the Commission are achieved; (e} to make such other recommendations as it considers necessary to ~nable the Commission to achieve its objecriv under this Act. (2) Without prejudice to subs~~tion (1), during the .period of its existence as specified under section 21 of this Act, the Commission shall- (a} be responsible to th~ President for ensuring the implementation of Government policies on the reform of the pnhli.c corporations sector; (b) implment the policies and programs of the Government with respect to the reform of the public corporation sector; (c) develop operting policies, procedures and guidelines for the implementation of'the public corporation re-structuring reforms decided by the Government; (d} review and make recomin<=>nd-:1tions on specific policies and legisltlan pertaining to th public corporations SP~tor; (e) liaise as necessary ith responsible ministries in monit0ing the performance of public corporations and in participating in the development and supervision of statements of. corporate strategy;" Again, under Sr.- 4A of Act 16\93 "Every public corporation '· existing on the coming into operation of this Act shall be deemed to be established pursuant to this Act ....... ". Under S. 38 (1) "The Minister may upon the recommendation of thie Commission (PSRC) by Order published in the Gazette declare a public corporation to be a specified public corporation to which the provisions of this Act shall apply". 3

The Commission's powers are further strengthened bys. 39(1) hich provides, among other things:- "Where a public corporation has been di:>cJ.ared a specified public corporation, the commission sh;;ill frnin t:he effective date be responsible for the restructuring of that specifid public Corporation. "(2) Without limiting the generality of subsection (1) the Commission may, in respect of any specified public corporation- (a) cause a detailed financial and operational '• analysis of the specified public corporation to be carried out; (b) determine the means by whlcl1 the restructuring of the specified public orporation may be :f implemented;· (c) cause a valuation of assets of the specified public corporation to be carried out; (d) invite expressions of interest from potential t purchasers cir lessors of the specified public corporation or of the asst nf such corporation; (e) publish guidelines for bidding and valuation procedures and criteria f0r the selection of purchasers or lessors; (f). determine the price at which the shares in or the assets of the specified public corporation may be purchased or leased; (g) hold discussions with the members of the Board and officers and employees 0r thPi.r representatives of the specified public corporation with a view to achieving a fair, reasonnle and harmonious restructuring of that spcified public _ .: ~ corpo.ration; (h) determine, in consultati0n with responsible ministries fair and reasonable severance, pension and other payment arrangements that may be appropriate following~ rstructuring of the specified public corpor0rion; (i) negotiate and cause to hQ executed such agreements as may be ncQssary with any party for the purchase, lease, man~gemi:>nt or control of shares in or assets of rhQ specified public corporation; 4

(j) negotiate and cause to h~ PPcuted such agreements as may be necessary with any party or the purchase, settlement or discharge of the liabilities or any othe indebtedness of the specified public crporation; (k) cause proceedings for the ecovery of any debt owned to or by a specified public corporation or .for the wind i.ng 11p .. l i.qu idation or dissolution of the spp,·• if i e<l public corporr1 t l('n to be initiated; An (1) do all such other cts as may be required to effect the restructuring nf any specified public corporation". The wide powers of·PSRC do not end thPre. Under S. 43 the Commission is given a wider perspective as it is provided, again among others, that, ''(1} Notithstanding any other law to the contary, with ,,?effect from the date of p11hl i_c;it.ion of an Order declaring a public corporation to be a specified public corporation the Commission shall- ( a) without· further assurance rm i'lppointment have the power to act as the official receiver of the specified public corporation; and (b) have the power and all the right~ of a receiver appointed in accordance with or pursuant to the Bankrupt Ordinance. (2) Without prejudice to subsection (1) of this section the -Commission, shall- ·· (a}.· in relation to a public corporation whic_h is . ·--insolvent- .- _;t't;·.:: (i) have power to determine whether the public corporation should be liquidated, .(ii) have power to determine an alternative restructuring option. Provided that in the event 0 f ~~termining an alternative restructuring option the Commission shall prior to proceeding with such option, inform all the interested parties in writing of the reasons for preferring tha alternative option; 5 \ ."·· (~ . .,. .... { !' :

(b) in relation to the debts of private creditors, but after negotiating wi.t.h ::;1rr-J, pr- i v:11 P cnni tors ;inrl with the consent of the Tresury have the power- (i) to write off any deb½; {ii) to reschedule the payment of any debt or . // interest on such debt; and (ii) to suspend the accumulRtion of interest on any ·· debt for a specified period". Under (c) and {d) the Commission (PSRC) can exercise powers under (b) above in relation to government debts where the Corporation is wholly owned by government, and wher the govt. owns just shares, with consent of the Treasury ana nthPr hareholders. Treading on the powers granted under thjR law (S.38(1)), the Minister for Finance, vide GN 324 of 25\10\96 declared various public Corporations to be "Specified publii:- C0rporati6ns 11 and in ::1.1:. the list included is "State Travel SArvirs Lt<l'' (present defendant\judgement debtor). PSRC·informed the general public of the existence of this GN and other GNs on similar subject in a public Notice contained in Daily News paper dated 27th May, 1997, displaying over: 30 specified public corportions and, which, again for clarity, the relevant part need t0 be quoted at length, "Accordingly, the PSRC is now fully cesponsible for the devising and implementing divestitute of these companies. No action would be executed on the assets of the companies without the·knoledge or\and prior approval of the PSRC. The PSRCwill.ensure orderly privatisation of those companies.and secure the interests of all the creditors and a11 otherparties concerned in accordance with the law. Notwithstanding,the specification order the management of the companies is'still vested in th respective Board of Directors which.are obliged to ensure continuation of business operations. The Boards arP obliged to consult and get approval of PSRC before making nny decisions in relation to disposal, acquisitions 0f the assets and signing of any loan\credit or lease agreement. All creditors are informed to register thej_r debts with PSRC through P.O. BOX 9252 Dar es Salam wi.thin twenty five dRy from the date of this notice i.e. 24th May 1997". 6

On 16\9\97, the Government of the United Republic of Tanzania represented by PSRC and referrP.<i to as the vendor (on first part); Tourism Services International Ltd referred to as purchaser (on'_2nd part) and State Travel Services Ltd (on third part) and referred to as the companv, entered into a sale agreement by which the purchaser bought 75% of the shares of the Company which had earlier on been owne~ JOO% by the government, leaving the latter with just 25% shares. Meanwhile negotiations had been going on between PSRC and the employees-of the State Travel Services (and regard being had to the facts available I will take it that they include the plaintiffs\decree-holders) possibly unp s. 39(2)(g) of Act 16 of 1993, which negotiations resulted in retrenchment of decree- , holders ip: July, 1997. In accordance with the plaint whose contents have;not been disputed by the Defendants (as it decided ' :, . ..,~ not to appearilet alone filing i written statement of defence, • . . . ;.·1.., . · •. ··•· coupled with the fact that in the course of arguments in this matter Mr. Mujulizi .for objectors was open enough to state that --} PSRC is arranging to:pay the claims signifying that the clais are not disputed) i~:-seems, during the retrenchment negotiations it was agreed betwen-the plaintiffs na PSRC, that, among others, the plaintifs\decree holders w0ulcl be paid "a golden handshake of two months' salary for each year of service for the first ten years of service plus one month's salary for each year of service fo years eleven to twenty years'' which decision was approved by the government. However not nnly were the ''golden handshake" be~efits ·not paid but also the severence allowance did not comply with the legal requirement of 5% of the annual salary times the number of years of service. Embittered by the non-payment of the above-enumerated benefits, on 21\10\97, exactly 36 days after 75% of the shares of the State Travel Services Ltd had been sold to Tourism Services 7

International Ltd, the plaintiffs\decree-h0lders\Respondents filed an action against State Travel Services Ltd, claiming among others, . "Tshs. 103 __ , 991,471 being the total golden handshake payment~ or the 77 plaintiffs swell as for a sum of Tshs 8243,033/= being the unpaid balance of total severance· allowance for the 77 Plaintiffs.," interests and costs which after the pssinu of the judgement have totalled. up.;,to a decretal sum of shs. 185,097, 9R5/=, the subject ' . -· . . of the disputed garnishee order. Again. ·it would seem the State Travel Services Ltd business is also being traded under th Tourism Services. ' The Applicants' attack is geared at 11nhl0cking the 11 Bank Accounts referrd to above. In support·of the application to lift the garnishee Order . ·-:- 1 . Mr. Mujulizi's(for the applicanti) lengthy arguments (including the acompanying'.::affidavit) can be summarised as follows - that from the date the State Travel Services ws declared a specified Public Corporation it came under PSRC as a Receiver hence the provisions of the Bankruptcy Ordinance, Cap. 25, became operational necessitating that all debts and claims including the suit leading to the decree, the subject of this controversy, against that Corporation, had to proceed against PSRC as a ,, Receiver to protect investors from prolification of suits which would render the objectives of the Act futile; that the garnishee Order itself, on its face value is confusing, vague and capable of causing grievous and irreparable harm to the 1st objector . .'. (Tourism Services) as it was issued againt all accounts operated by 1st Objector~ a trade name adopted after the 75% shares had been sold to Tourism Services Internation;:il Ltd; that the accounts which have been affected are Trust: Ac-counts - that due to operations of air services and 'l'our:=; whi<"'.h involve the selling 8 : ·•, ,,,,.,,, .... , ......... .

of tickets on behalf of various Airlines s0me of these Accounts contain monies from other parties, and that the garnishee order would paralyse the 1st Objector's Operations, adding that if the said garnishee order is to be upheld let it be varied to hold only the monies of the State Travel Service~ Ltd. Mr. Lutema's equally lengthy and forreful submission in response can conveniently be summarise~ fn the following words - that although under Act 16\96 (under whirh it was created) PSRC was given a wide range of powers as provide~ under various sections which include S.22, 37 and 43 it was not made an automatic official Receiver to all spified public Corporations as S. 43 may pμrport to indicate, urging the Court to note that in construing one section of an Act reg?r~ should be had to the other provisions of the same Act to avoid mking the other suh provisions superflous (cited New Insurance Coy Ltd vs Lilian Evelyn Crqss and another 1966 EA 90), and that in interpreting statutes the court should recapitulate to what was the intention of the legisl~tu byunderstanding the objectives and history of ;,,· . Act; that the-.purpose of the Public Corporations Act (Act 2\92} as Amended by Act 16\93 was not limited to simply dissolving the various corporationsand putting them undr Receivership but ·was to make better provisions for their establishment, management streamlining and related incidental mattPrs thereto which included restrcturing, dissolution and selling; that PSRC became an official Receiver only to a Corporation dissolved for non- performance in which case all powers of a Receiver would be exercised but it would not be in any ottiPr situations of restructuring like in the present cas 0 whr State Travel Services did not ceaze to exist b11t mpr·oly h~~ its share holding changed from 100% goyrnment owned to 25% while 75% went to a private investor; that as as a result there was no Receivership of the state travel services Ltd thus th said corporation has never ceazed to exist and could therefore be properly sued as was the case here and a garnishee order issuP~. 9

. Mr. Lutema's arguments did not end there. He argued in the ' . ! : . alternative_' that the· court should hold that there was no sale agreement as,such as S.5 of the Stamp Duty Act, Act 20\72, a '·l ., . . .. ·• mandatoiiproiision,requiring paymet of Stamp Duty was violated .. :•:.thus .. iea'iing_ihe ·state travel services as it was before the . . :· •;. .. ·.:'" . ...,, .. ,., . purportedsl agreement; that there should have been other supporting affidavits regarding the sources of the information (citing Bakari Ben and Jumaa Ben v Zainabu Arna Beni Jumaa (CA) Civil Application No. 85\97 (unreported) referred to in the affidavit which accompanied the chamber summons; that in the unlikely event it is found that the wr0ng prty was sued the court should exercise its owers providd under 0.1, Rule 10(2) CPC and add.the right party, PSRC, and finlly that if the court finds that there is need to lift the ga1·nishee Order the judgemen~-debtor should be called upon to deposit the sums stated to guarant,ee payment to his clients in t:he 1?.vent they win . . . ., .. ... . ; . 5 :1_· ,ftt :·::. · ,:. In replyJMr. Mujulizi maintained that depositing the decretal 'i::s?'in. cou;,t· can It be legally ordered as there would be no pending proceeings before the Court; that regarding the trust Accounts the--decree-?lder was duty bound to investigate and execute on the right accounts of the jugement-debtor; that the stamp duty}tas supposed to be paid only on the share "transfer certificate•• that _as the purpose of tha A~t was to allow amicable.and:smooth restructuring of pub]ic corporations and place them· in; hands ,'of private enterprene11rs I a Special Receiver

• PRSC) different from a Receiver appoint~~ under cap. 25; 212 or appointed by court, :was appointed under s. 43 of Act 16\93, with .; f· .... - w i de powers·going byond the mere dis:=:nl11tinn of the corporation hence PSRC's public·announcement in the Daily News paper that all claims against the specified Public Corror~tions should be registered with it, and finally that the garnishee order is not the only remedy and more so when PSRC oe not disclaim liability. 10 ... . •,: :· . ·J····:··.• .:,_.,.

Let us now turn to the core of the r.n.ntroversy - whether PSRC and Tourism services have established that they have an interest in the Accounts against which the garnishee order has been issued as against the judgement dbtor - State Travel Services. As rightly pointed out by both the learned Counsel the Amendment (Act 16\93) was geared at restructuring public corporations.and this is spelt out in the "Objects and Reasons" for its enactment prescribed in the Bill to that Act and which reflect the following, "This bill is designed to effect amendments to the Public Corporations Act, 1992, so that the Act becomes an appropriate vehicle for effer.ing the restructuring of public corporation. In efect, the Bill intends to narrow the scope ofithe Act to encompass only publ\c Corporations that are solely owned by the Government 0r mj0rity owned by the Government". This was, a time when the government was moving away from being the 'Kipg' in the commanding heights of the economy and switching over to privatization. This cn be discerned from the wide ranging·powers•given to PSRC as can be seen from the provisions of; the Act already quotea ?bove. The move was hastily and ambitiously hatched. It could not, in the circumstances be water-tight in each respect and some flRws on the legal side is a telling factor. I will start with the main argument - whether PSRC automatically becomes a Receiver of the public Corporation immediately it is designated a specifid public Corporation. s. 43 of Act 16 of 1993 is already quoted. As rightly submitted by both Counsel S. 43 can't be interpretP<l ln jsolation as that would lead to superfluity of other provisions. 11 -· .~ -.· . . ...

.. ·· ... ·: It has already been demonstrated tht he objectives and reasons for the enactment of the Act (16\93) was to restructure Public Corporations in which the government controlled 100% or majority.shares. The provisions of the At lready quoted clearly show thai in restructuring some speifiPd corporations could be liquidat~~ pt'/ restructured otherwise. S. 43 { 2) specifically authorises PSRC; in insolvent Corporations, to decide on whether they should.be liquidated or be put on Blternative restructuring ovtion which includes selling. It was in the exercise of these powers that PSRC did not liquidate the stt~ Travel Services Ltd but sold the majority of its shares t0 n private investor (Tourism International Services). The Bill to the relevant Act, giving ''Objectives and Reasons" for the enactment of S. 43 provided, ''It is proposed in S.43 that the CommisRion should act as the.official receiver of a specified public Corporation . • . • • .. I ·.•,: It4hould be entrusted with the powr to make decisions on liquidation or alternative rest.rttr:f-.uring option" . . ........ . Reading the intention of the Legislt11re in the provisions of S. 43·and other provisions of the Act above quoted and as guidedly pointed out in the quoted objectivRs and reasons found in the Bill to the relevant Act one is left in no doubt at all that indeedPSRC was appointed an automatic official Receiver of any Public Corporation upon the same being designated 'a '. ,·. Specified Public Corporation'. With respect to both learned Counsel the heated argument on this semingly issue seem to have emanated from. a misapprehension of what an official Receiver is. The way I understood their arguments they seemed to propose that a Receive.r· is; only appointed in venturP.s wh i.ch have to be liquidated or under liquidation. With rPspPct this is not necessarily the case. A distinction here should be made between Receiver and liquidator although the f0r~er may also be appoint· the latter and also between Receivers appninted by courts and those by individuals or specific statutPs 12

.. As defined in the Halburyfs Laws of England (Fourth Edition), Vol. 39, para. 801, A receiver is a person appointed for the collection or protection of property. He is appointed either by the Court or out of Court by in<lividuls or corporations. If_he is appointed by the Court, h~ is an officer of the court deriving his authority frnm the court's order. If he is appointed out of court, he is an agent and has such powers, duties and liabilitii:>!=: s re defined by the instrument or statute unrlPr which hA i::; appointed and derive from the general l-:iw of ::i.gency". ---,:-:-----,.·.-., A receiver is often appointed in generJ tPrms over all the property and assets, and his powers an duties must depend on th0 terms of his appointment. This would dApnd on the object of the appointment. It could be for the purposs of determining the rights of parties or to ascertain what encumbrance exist on a venture and what their priorities are 0r tn settle dispute as tr, title.

• .. ·:J '•:,.:"..:'. ·•·· ... ··. A receiver could also at the sametime be appointed a manager ., of the venture. What the above exposition leads to is that a Receiver can b appointed even for ventures not under ljqtiidation nor expected tn be liquidated, the controlling purpose f0r such appointments being the collection or presevation of the relevant property for the benefits f persons who have an interst in it. It was under this principle that; by statute, PSRC was formed and appointed an official Receiver of all 'Specified Public Corporations' so designated under Act 16 of 1993. I should reiterate that some distinction should be made between court appointed Receivers and other receivers. Generally, it is tru~ that receivers appointed by courts are so appointed for the preservation of a debtor 1 s property pending an action 13

against him or applying the said propArty to satisfy a credit0rs claim or right in situations where the possibility of injury, loss or removal of that property is looming but for Receivers appointed outside the Court, as earlier hinted upon, it could t,e for: theJprpoe of ascertaining the incumbrance or the exact state:, of: the-venture in preparation for another step to be taken. Act 16 of 1993 took both courses and appointed PSRC as official Receiver for both type of corporations - those which seemed insolvent hence were to be put on death roll by liquidation, and those which needed restructuring as the State Travel Services came to be. Mr. Lutema's argument is caught up jn the very web he knotted for the Applicants: that we should look at the intention of the legislature when passing that Act (I have already quoted . :. . the objeqts -and reasons contained in the bill). I must concede thats. 43 could have been better framed, but notwithstanding the wanting.wording, reading subsection l(a), reinforced by l(b), and supplemented by the intention of the Legislature as put in the objects and reasons for the enactment of the relevant law which were glaringly revealed in the very wid range of powers bestowed on PSRC, one is left in no doubt at all that the said PSRC was appointed an automatic official Receiver tn Rny specified Publi~ Corporation upon being so designated. Having· so conclude~, then what is its effect on the application before us? Mr. Mujulizi .::1rg11As that as a Receiver, then all actions must proceed against PSRC in order to protect other investors. S. 43, as already expressed appoint~d PSRC, out of Court, as an official Receiver. It however did n0t An0 there. This statut 0 (Act. 16\93) did not merely appoint PSRC in a mere capacity of a Receiver appointed by individuals n11t:-:i,lP t-hp rnurt: it wPnt ,,n 14

to cradlle this special creature wi. th vAry wide powers by pushir1g it into the domain of court appointed R~~eivers! It ''shall have the power and all the rights of a receivr ppointed in accordance with or pursuant to the Bankruptcy Ordinance (s.43 (l)(b))". An official Receiver under the Bankruptcy Ordinance is so considered for a particular matter after the Court has issued a "receiving order" for the protection nf th"' F.stote - this is after the debtor has committed an act of Bankruptcy, or upon prsentation of bankruptcy petition by either creditor or debtor. Among others, the "Receivirig Order" would specifically mention who the official Receiver is. However this situation is not applicable in our case because this Special "Official Receiveru, PSRC, is not the creature of the Court and in any case State . Travel Services was\is not under bankruptcy apart from the limitations of s. 11:-_8 of· this law - Banlo:uptcy Ord. , Cap. 2 5, which categorically. provides, "A receiving order shall not be made against any ., corporation o against any association or company registered under the Company Ordinance". Without attempting to reconcile the effects of this provision (s. 118) to the case at·hand as against the 0ther relevant laws like the companies ordinance it suffices to MY that there was no receiving order. The above observations notwithstanaing however we have th glaring s. 43 (l)(b)of Act 16 of 1993 before us. This prescribes : #': that PSRC.has{all powers and all rights of a receiver appointed in accordance,: with or pursuant to Bankruptcy Ord. It is under this clause-.tat Mr.;.t_Mujulizi prays to be allowed to take . • .,i,.,. shelter. Whatpowersare those? Are they of the nature and typ@ as referred to by Mr. Mujulizi? 15

. : . ·.-·. -~ An "official receiver 11 under the Bc-1nkr11ptcy Ord. has indeed wide powers=all geared at the protection and preservation of both .. • the debtor and creditors' interests. Under s. 75(1) '' ... the .- off icia.f:""receiver shall have relation both to the conduct of the . . debtor and to:the administration of he estate''. Receiver has a ... duty and,power to investigate the conduct of the debtor as a whole (s.' 76):. Under s. 77 Receiver, am0ng others, has to make sure that the:Estate is not wasted, can act as manager or trustee .,., when those vacancies:are open and even Rfter their appointment, Receiver has to keep a keen eye on the said manager or trustee (s.83). Other sections on incidental powers and privileges are not relevant to the situation at hand exept s. 9(1) which states that after the estate or pioperty of a debtor has been placed under an official Receiver, " ... _ thre after, except as directed by ordinance, no creditor to whom the debtor is inebted in respect of . anyj~.debt provable in bankruptcy sri.=111 hi3ve any remedy against:; the property or person of the debtor in respect • _1. · of the -ebt cir, shall commence any action or other legal : . .., .·· •. ~ proceedings-unless with the leave of the court and on . •'. •, ... · . ·: - such terms as the court may impr:,:=:P". Of all the. powers of<an "official Receiver" indicated above thos1= . : . ~ . under s. 9 of Cap. 25 should have been the ones specifically targeted bys. 43(1)(b) of Act. 16 of 1QQ3. I am saying so because the other powers of the Receivr und'=r cap 25 are almost covere~ under a string of wide powers bstnwed on PSRC under Act 16 of 1993. But these alone would not have sufficed. We have already observed that the intent ion 0 f ,- h,::, r.egislature was to afford a smooth restructuring of Public Corporations 100% or majority· share owned;by the government in the wake of· privatization._ Indeed if private invest0rs were to be attracted ' . there were to'be some kind of guarante on their investments and a guarantee cushioning against debts n li8bilities by the said Corporations as is the case in this ~~~~""r. I am fortified in my opinion on this by another factor t ha; "''' 10 !1 t: he sale agreement 16

. . (in which Tourism Services Internationl Ltd bought 75% of the State ravel Services Ltd) does not prnvi@ protection for this kind of liability - I believe this was due to the fact that it was thought thats. 43 of Act 16 of 1a91 h~~ taken care of all this otherwise the private investor couhl not simply dump in money which would only soon be fished out by creditors as the decree-holders are trying to do. Due to this, s. 43 of Act. 16 of 1993 created a Special official ReceivAr in the form of PSRC under which all properties of Specifje Publi~ Corporations wer~ placed in terms of s. 9 of Cap. 25 sAving them from being proceeded against by way of remedy by creditors apart from the barrage against the said crditors that they cannot file an action thereof without the leave of th court. With respect to Mr. Lutema no distinction was made between corporations that were to be placed under liquidation or restructuring. To attach any other int_erpretation would go counter tn the intention of the Legislature when passing the relevant act. Thus under Act 16 of 1993 thA prnpPrti~~ including hnk Accounts of the State Travel Services were placed under PSRC as an official Receiver, and in terms of s. 9 0f the Bankruptcy Ord. they cannot be attached as the garnish~~ 0r~~r purports to do. I have so concluded without going to the other side of the matter of whether the decree·on which the garnishee order is found is legally proper as no.Court's leave was s0ught and secured before the action was· f iled'•i in terms of s. 9 C-:1p. 2 5 because .. that is not the issue before meapart from lack of jurisdiction to question ,!!"·:. it and existence ofother avenue if relevant parties find it .''!:. necessary to pursue it. While still on this I should resp0nd to Mr. Mujulizi's contention that in the premises only PSPC can be proceeded against by any deserving creditor. Whil possibly desirable I have failed to see the basis of his prop0siti0n. S. 9 of Cap 25 17 ... . . : :.::· ·. - . ~~-:;:.:·

• .. . is silent.on who should be sued. In my opinion, with Courts leave,.the debtor, in this case, state travel services Ltd, can ., . be sued alone or jointly with PSRC as the former is still a corporateentity capable of suing or being sued. The: abov disposes the matter before us making it unnecessary to discuss other submissions, contentions and propositions made by both learned Counel. Howeve I should make 2 more observations. The law as it is leaves the creditors's plight at the mercy of PSRC. Speaking on the case at hand, having exercised its p0wers, possibly under s. 38 (2)(g):.and~(h).- discussing with employees leading to retrenchment 7 and having agreed on a pakag of terminal benefits, subsequentrefusal to pay thA same can't earn PSRC a ~~ . •, ·: ·-.• good name norcan it attract sympathy in case of any eventuality. As much a}it ;hastens to clamour for its rights and privileges as a receiver itshoul~;equally urgently and diligently pray its proper role as a Receiver for creditors' benefit. Its inaction : .., . can lead to embarrasments to various parties including the investors and defeat.the very purpose for which the whole restructuringproces was embarked upon. This is so because in this situation it is;not hard to envisRg~ creditors seeking and securing court's leaye to file actions against the relevant corporatins and PsRq itself which wo11la in turn lead to something. ·even worse,;than a garnishee orrler exemplified in this case. Also the existing law may need some plugging to avoid such embarrasments..; ·-secondly; the manner the garnishee order was sought and .:;.: _. . .,,. ,...... : ; .. :;; drawn· up ·1eaves a - lotfto be desired. It is no wonder that Mr . . Mujulizi. attacked. it;;_;as being vague and unf3.ir as it involved other parties~ accounts. The decree-holders Rcted wildly in their . : ,, '• application.for garnishee orders against 1.1 Bank accounts. Whil~ I agree with Mr. Lutema that there ts n0 pr00f that other 18

ff .. ·:_ .. .·•-:. parties's accounts were attached, the way the application was made and the garnishee order issued rlo~~ nnt prove either that .the 1L accounts belong to state Travel ~~~vices Ltd. Considering that the garnishee order simply directed respective Bank Managers to block: Bank'·:·Accounts so and so without specifying who the owner was there~is~ possibility of involving other unrelated Accounts. The Court Regstry should always make sure that in drawing up garnishee orders th• name of the account holder is specifically mentioned to uide ~~nk officials in their relevant actions and of course this goes hand in hand with the nect of decree-holders to be 0 more pa;ticular.in information they furnish to the court. In conclusion ~he application to lift the garnishee order .. ·. . ... · .. ,

• . is allowed, ·firstfor\lack of particulRrity as to whether the 11 •: :.·'.I ·_.. - - Bank accounts)attached belong to the judgement-debtor, State Travel Services Ltd}{and, secondly, even if they were, they are ··, . ·. .-. ·• . : ; '·;. . not liablto such ofder being under PSRr as an official Receiver ;" .. . t of State Travl S~~~i-es Ltd exercising j_ ts powers under s. 43 of Act 16 of 1993 read together withs. 9 of the Bankruptcy Ordinance. Considering the role played by ech party in the matter leading to:thJ_s situation - inaction by PSRC in not honouring what was agreed upon with the ~~cree-holders hence the filing of. the - suit, ;nd, the decree-ho 1 rli:>r!3 failure to fallow the prescribed. procedure:,..,"under s. 9 of Cap. ? i:; - I order that each . : :;,;;:· party meet own costs\ --~r

• .... , . .;, .. . i , (L. B. Kalegeya) ,JUDGE Delivered today the 30th July, 1998. AT DAR ES SALAAM 19 (f .. B. Kolegeya) ,JlTDGF.