EBERHARD SAPRAPASEN v NATIONAL BANK OF COMMERCE 1996 TLR 152 (HC)

 

EBERHARD SAPRAPASEN v NATIONAL BANK OF COMMERCE 1996 TLR 152 (HC)

Court High Court of Tanzania - Dar es Salaam

Judge Mackanja J

B

MISC CIVIL CASE NO 76 OF 1993

Flynote

Debtor and Creditor - Mortgage of property as security for a loan - Intended sale of

the property by C mortgagee - Injunction sought restraining the intended sale -

Whether grounds exist for such inunction.

-Headnote

The Applicant is a shareholder and a director of a company known as Union Metal D

Works Ltd (`the company'). The company obtained a loan from the Respondent on

15 June 1992 in the amount of Shs. 57,701,602.00. As security for that loan, the

Applicant mortgaged certain property in favour of the Respondent.

Acting on behalf of the company, the Applicant went to Europe to purchase certain E

machinery for the company's business. In order to facilitate the purchase, the

Respondent opened a letter of credit on behalf of the company in favour of FIDE, a

Swedish firm and seller of the machinery. Notwithstanding FIDE's failure to comply

with the terms of the letter of credit, the Respondent nevertheless and with full

knowledge of such failure paid over to FIDE the amount indicated in the letter of

credit. F

The Applicant contended that the company had not repaid the loan on account of the

Respondent having paid contrary to the letter of credit and having thus accepted

defective machinery.

The Applicant accordingly sought an injunction restraining the Respondent from

exercising its rights in respect of the mortgaged property and selling it. G

The Court noted that, although duly served, the Respondent did not appear, and thus

the application falls to be determined with reference solely to the Applicant's

affidavit.

Held:

H (i) The Applicant has given sufficient cause as to why the injunction

should issue.

(ii) The application succeeds.

Case Information

Ordered accordingly.

Lebba, for the Applicant. I

No appearance for the Respondent.

1996 TLR p153

[zJDz]Judgment

Mackanja J: A

The applicant has deponed in the affidavit which supports the application that he is a

shareholder and a director of a limited liability company known as Union Metal

Works Ltd. The aforesaid company secured from the respondent company a loan

which together with interest, was amounting to Shs 57,701,602.00/= as at 15 June

1992. The B applicant mortgaged as security for that loan his real property known as

`Plot No 8, Block `A' Service Trade Sinza in Dar Es Salaam' for which he holds a

letter of offer No D/KN/A/22620/1 dated 1 July 1992. The applicant states in his

affidavit that M/S Union Metal Works Ltd have failed to repay the loan and the

respondent wants to exercise his C rights under the mortgage by selling the security

for the loan.

The purpose of this application is to seek an injunction which will restrain the

respondent, its agents and/or servants from carrying out the proposed sale. The D

applicant swears in his affidavit that the sale, which amounts to foreclosing, offends

the law of this country. Mr Lebba, advocating for the applicant, did not address the

court on the legal issues his client claims are pertinent to this application. As well as

that, the applicant's affidavit is quiet on any possible course of action once, if at all,

the reliefs he E seeks are granted. The situation has been compounded by the

apparent lack of interest on the part of the respondent who, although duly served, did

not contest the application because it failed to appear. So there is only the evidence of

the applicant upon which this application will be determined. F

There is evidence from the applicant's affidavit to the effect that the funds which

were advanced to his company were provided by the Swedish International

Development Authority (SIDA) to developing entrepreneurs in the country. Having

secured the loan, and with the full knowledge of the respondent and the Swedish Coordinator

of the fund G the applicant left for Europe in search of appropriate

machinery. He swears that while in Frankfurt, Germany, the Swedish Co-ordinator

lured him to sellers in Sweden.

According to the applicant, the Swedish Co-ordinator with the full knowledge of the

respondent, advised him to procure the machinery from Sweden allegedly because it

H would be easier to pay for it. It is alleged further that the respondent facilitated the

purchase of the machinery from Sweden by opening a letter of credit No LCFB 233/88

for Swedish Kroner (SEK) 955,000 then equivalent to Tanzania Shs 16,114,446.00/= in

I favour of FIDE, a Swedish firm. It is

1996 TLR p154

the further contention of the applicant that the respondents were agents of Union

Metal A Works in all the above financial transactions. That, although the sellers

breached the conditions contained in the letter of credit, the respondent, with full

knowledge of that breach, went ahead to pay the sellers.

Ultimately the machinery arrived and the entire consignment was found defective

and B completely unfit. The applicant lodged a protest to the respondent in respect

of the defective machinery. The applicant now claims that the loan has not been

repaid due to the fact that the respondent failed to adhere to the conditions in the

letter of credit and consequently paid for defective machines. Hence this application.

C

I am satisfied, from the above evidence, that the applicant has given sufficient cause

why the injunction should issue. In the result the application is allowed and the

reliefs sought are granted. D

1996 TLR p154

E