TANZANIA DEVELOPMENT FINANCE CO. LTD v CALICO TEXTILEINDUSTRIES LTD AND ANOTHER 1996 TLR 80 (HC)

 

TANZANIA DEVELOPMENT FINANCE CO. LTD v CALICO TEXTILEINDUSTRIES LTD AND ANOTHER 1996 TLR 80 (HC)

Court High Court of Tanzania - Dar es Salaam

Judge Kyando J

E

MISC. CIVIL CAUSE NO. 51 OF 1992

3 September, 1992 F

Flynote

Company Law - Charge to secure a loan - Misstatement on charge document of

amount secured - Rectification of.

-Headnote

The Applicant in the present case applied for the rectification of two documents to

record G properly a secured amount of US$ 904,000, loaned by the Applicant to the

First Respondent. The two documents in question were `Form No.9', being the

particulars of a charge to secure a loan from the Applicant, and a Certificate of

Registration of Charge (`Form C.2'), held by the Registrar of Companies (Second

Respondent). H

Form No.9 repeated the terms of the debenture, issued by the First Respondent as

security for the loan from the Applicant, as follows: `Single debenture for US$

904,000 (or the equivalent thereto (sic) in other convertible currencies) being

approximately Shs.16,626,500/=.'

In Form C.2, however, the Second Respondent entered that the debenture was `to I

secure the sum of shillings sixteen million six twenty six thousand five hundred (Shs

16,626,500/=) only'.

1996 TLR p81

The Applicant contended that the amount in both documents expressed in shillings

was A a misstatement and that both documents should be rectified to state the

amount expressed in United States dollars only.

Held:

(i) The loan agreement, which gave rise to the two documents under

consideration, indicates clearly that the loan advanced by the Applicant to the B

First Respondent was US$ 904,000 by way of a foreign currency loan.

(ii) The amount secured by the debenture throughout it was stated to be

US$ 904 000.

(iii) The amount of Shs 16,626,500/= expressed in both documents was

clearly a misstatement. C

(iv) The preliminary objections raised by the Respondents, against the

bringing of the application itself, the validity of the affidavit used by the Applicant

and time-barring of the application, such preliminary objections are overruled.

(v) The application succeeds with costs. D

(vi) The Second Respondent is ordered, within 14 days from the date of

delivery of ruling, to rectify forms No.9 and C.2, as well as his register of charges, to

show that the amount secured is US$ 904,000.

(vii) The First Respondent is similarly ordered to rectify his register of

charges to reflect that the debenture is security for US$ 904,000 only. E

Case Information

Ordered accordingly.

Cases referred to:

1. In re Mechanisations (Eaglescliffe) Ltd [1964] 3 All ER 840

2. National Bank of Commerce v Mannbha Shankarbhai Desai [1969]

HCD 206 F

Kameja, for the applicant.

Ismail, for the first respondent.

[zJDz]Judgment

Kyando J: In this application Tanzania Development Finance Co Ltd, the applicant, G

applies for the following reliefs against the respondents:

`(a) An order that in both companies Form No 9, being particulars of a

charge created by the first respondent to secure a loan from TDFL misstated the

amount to Shs 16 626 500/= and a Certificate of Registration of Charge issued by the

second respondent in respect thereof be H rectified so as to properly record the

amount secured as being US$904 000 on grounds that the misstatement of the sum

secured was due to inadvertence or alternatively, that on grounds stated in the

supporting affidavit it is just and equitable to grant the relief. I

(b) Costs of this application.'

1996 TLR p82

KYANDO J

The deponent of the affidavit in support of the application is Rugambwa Cyril John A

Pesha, the Company Secretary of the applicant, and in his affidavit it is shown, inter

alia, that the objects for which the applicant was established are, amongst others, to

lend money with or without security. `As such lender,' he states in para 3 of his

affidavit, `the B applicant was to serve as a conduct for channeling external

assistance to economically feasible and financially attractive projects in the country so

as to effectively utilise the country's development potential. Shortly after its

incorporation it commenced to carry on and has since carried on the business in

pursuance of the said objects.' C

The above therefore are the functions of the applicant. Needless to say, both the

applicant and the first respondent, Calico Textile Industries Ltd, are companies

registered under the Companies Ordinance, Cap 212. The second respondent is the

registrar of companies in terms of the provisions of the Companies Ordinance. D

In para 4 of the affidavit in support of the application it is stated that pursuant to the

objective for the applicant's establishment the Government of the United Republic of

Tanzania in 1978 permitted the applicant to borrow funds from the International

Bank for E Reconstruction and Development (`The World Bank') for lending to

projects in Tanzania. In para 5, it is stated,

`5. That on 27 April 1979; the applicant agreed to provide Calico Textile

Industries Limited, the first Respondent herein, with Shs2,500,00/= by way of Income

Notes and US $904,000 (or the equivalent F in other convertible currencies) by way

of a foreign currency loan.'

The respondents do not dispute that this loan was advanced-as stated by the

applicant. It (the loan) was provided under a Loan Agreement entered into between

the applicant G and the first respondent dated 8 December 1985 (exh `C' annexed to

the affidavit of Mr Pesha). It was then secured by a debenture created and issued by

the first respondent. The debenture, in terms of s 79 of the Companies Ordinance,

was then registered by the second respondent.

On the top cover of the debenture it is stated in the form of a title or subject as

follows: H

`Single Debenture for US $904,000 (or the equivalent thereto in other

convertible currencies) being approximately Shs16,626,500/=.' I

In registering the debenture the second respondent entered in the

1996 TLR p83

KYANDO J

Certificate of Registration of a charge (form C2) (exh `F' to Mr Pesha's affidavit) that

the A debenture was to secure the sum of shillings sixteen million six twenty six

thousand five hundred (T Shs 16 626 500/=) only. The form for the particulars of a

mortgage or charge created by a company registered in Tanzania, pursuant to s 79

(supra) (form No 9) (exh `E' to Mr Pesha's affidavit (the second respondent says the

correct form No 9 is B annex (i) to his counter affidavit, and I think this is so) had

been presented to the second respondent and it was on the basis of it that he issued

form C2.

This year the first respondent sent to the second respondent a `Memorandum of C

Satisfaction of Mortgage or Charge', dated 6 May 1992. The memorandum is as

follows:

`CAP 212

MEMORANDUM OF SATISFACTION D

OF MORTGAGE OR CHARGE

CALICO TEXTILE INDUSTRIES LIMITED P.O. BOX 9021, DAR ES

SALAAM,

HEREBY gives notice that the registered Charge being DEBENTURE DATED

DECEMBER, 1985, TO SECURE THE SUM OF SHILLINGS SIXTEEN MILLION SIX

HUNDRED TWENTY SIX THOUSAND FIVE E HUNDRED (T.SHS.16,626,500/=

ONLY IN FAVOUR OF TANGANYIKA/TANZANIA DEVELOPMENT FINANCE

COMPANY LIMITED of which particulars were registered with the Registrar of

Companies on the TWENTIETH day of DECEMBER 1985, was satisfied on the

TWENTY THIRD day of F DECEMBER 1988 to the extent of T.SHS. SEVENTEEN

MILLION FOUR HUNDRED THIRTY EIGHT AND CENTS THIRTY FIVE

(T.SHS.17,418,438/35) ONLY.

In witness whereof the common seal of the company was hereunder affixed

the SIXTH day of MAY 1992.' G

A `Declaration Verifying Memorandum of Satisfaction of Mortgage or Charge' in

terms s 84 (exh G) was duly issued and the memorandum was annexed to it. On the

basis of the memorandum and exh `G' to Mr Pesha's affidavit, the second respondent

issued a H certificate (exh `H'). Certifying that the charge created on 18 December

1985 by the first respondent in favour of the applicant `to secure the sum of Shs

sixteen million six twenty six thousand five hundred (Shs 16,625,500/=) only has been

discharged'. I

The certificate is dated 7 May 1992 and is signed by the second respondent.

1996 TLR p84

KYANDO J

It is now the case for the applicant in this application that the sum of Shs 16 625 500/=

A which is indicated in form No 9 and the Certificate of Registration of Charge (form

C2) (exhs `E' and `F' respectively) was a misstatement and that it ought to have been

mentioned in them that the sum which was secured by the debenture was US $904,00

B only ie without stating the Shs 16 626 500/= as now stated therein. Hence the

request that:

`The register of charges be rectified by deleting therefrom reference to

T.Shs.16,626,500/= (both in words and figures) so as to reflect the amount secured by

the debenture as being US $904,000 only.' C

It is contended by the applicant that by the terms of the loan agreement and the

debenture, the money loaned, and secured, was US $904 000 (or the equivalent in

other convertible currencies) by way of a foreign currency loan. In para 6 of his

affidavit, Mr D Pesha states that the repayment of the loan was to be made in

shillings at the National Bank of Commerce selling rate on the date of payment for

the foreign currency. Finally, in para 15, he states that the only reference to Shs 16

625 500/= in the loan documents was, as shown already, on the cover of the

debenture, and that the reference thereon, E

`was solely meant to state the Tanzania shilling equivalent of the foreign

currency loan at the date thereof for the purposes of calculation of stamp duty which

was payable in Tanzania shillings. To the extent that T.Shs were referred to in the

loan agreement and the debenture it was solely for the F purposes of providing for

the manner of payment of the foreign currency loan and not for defining the

currency in which the loan was to be secured.'

It is finally the applicant's case that the declaration of satisfaction and the

memorandum G of satisfaction of a charge or mortgage (supra) are false and the

certificate issued by the second respondent certifying the discharge of the charge is

void ab initio.

I have already stated that the respondents do not dispute that the loan was advanced

as H asserted by the applicant. Looking through their counter affidavits and written

submissions (I required counsel for both sides to file written submission), they do not,

too, seem to dispute that the loan advanced was US $904 000 (or the equivalent in

other convertible currencies) by way of a foreign currency loan. They did not, in

other words, I contend that what was agreed between the parties to be loaned, and

what was actually loaned, was

1996 TLR p85

KYANDO J

Shs 16 626 500/=. Their contention appears to me to be that even if the agreed loan

was A US $904 000 (or the equivalent in other convertible currencies) by way of a

foreign currency loan, such amount in the documents of registration of charges Form

9 and C2 (supra) could only have been expressed in Tanzania currency and that

amount at the relevant time was equivalent to Shs 16 626 500/=. They make this point

in passionate B terms, the first respondent's counsel Mr Ismail submitting, for

instance as follows:

`My learned friend has dealt at great length on the loan agreement and the

admissions, but suffice it C so may it is the debenture that is important in the

application at hand.

The amount secured by the debenture in equivalent to the foreign currency

loan ie as at 1985 $904,000 was equivalent to Shillings 16,626,500/=. Indeed it would

have been impossible to inset a figure other than Shs.16,626,500/= as at that time that

was the value of $904,000. My learned friend is D seeking to insert a foreign

currency in the charge! It is my respectful submission that the suggestion is

preposterous. The Companies Ordinance like all other legislation in this country is

meant to provide for situations in this country. The Bank of Tanzania Act 1966

specifically states in Section 1, of Part III-that "the unit of currency in Tanzania shall

be the shilling, each shilling shall be E divided into one hundred cents".

Section 26 of the same Act states--"the bank shall have the sole right to issue

bank notes and coins for Tanzania and subject to Section 33, only bank notes and

coins issued by the Bank shall be legal tender in Tanzania" (Section 33 is only a

transitory section). F

Indeed it would be unlawful for any government department to accept or

quantify any documents in a currency other than the Tanzanian shilling. It should

always be remembered that currency, like a flag, national anthem etc, are the

ingredients of sovereignty and one should not treat such issues lightly. It G would

amount to Tanzania subjecting her sovereignty to that of the United States if my

learned friends' submissions were accepted. And one can imagine the chaos and mess

it would bring. What would be the position if a loan were pegged to the Japanese

Yen, Australian dollar, Saudi Arabia's rial, Oman's rial, Dubai's dirham etc etc? Indeed

it is a well known fact that institutions and our own H government received

aid/loans/grants from various foreign donors-but that it is a matter of international

trade and not within the precincts of our courts.

The evidence on record, and even my learned friend admits that the figure of

Shs.16 626,500/= was recorded in form 9 as against that of sus. $904,000 without

malice. He however submits that it was I done inadvertently. In my respectful

submission that that is the understatement of the year. All parties were aware that the

debenture was

1996 TLR p86

KYANDO J

for security of Shs.16,626,500-but the instalments were to be paid at the rate of

the dollar to the A shilling at the material time. Indeed the loan agreement was a

mere formality, as the money was disbursed to the First Respondent between 1980 to

January 1985 (Paragraph 8 of the First Respondent's affidavit)--whereas the debenture

and the loan agreement were registered and signed in December 1985.' B

And the second respondent submits:

`It is not my intention to reply to every submission by the Applicant because

most of them involve the C Loan Agreement which is a Contract between the

Applicant and the First Respondent and the Second respondent is a stranger to the

said contract, thus I will only devote to these submissions that concerns me and I

submit as follows:

(i) The relief sought by this Application is only one and is clearly stated in

paragraph 20 of Mr. D Pesha's Affidavit and with my foremost humble apologies to

your Lordship I beg to quote the same as I do hereby quote:

" That in the premises it is just and equitable for an order to be made by

this Honourable Court that the register of charges be rectified by deleting therefrom

reference to Tshs.16,626,500/= E (both in words and figures) so as to reflect the

amount received by the debenture as being US dollars 904,000 only" I quote. (The

emphasis is mine.)

(a) In this prayer the Deponent on behalf of the Applicant states

that the amount was received by the debenture.

F And this is the Content of his prayer of relief. What his

statement means is that the amount was received by somebody else or another entity

and not by the first respondent. One wonders as to why there should be an

application against the first respondent if the Applicant states that the Applicant was

not the recipient of the amount. G

(b) The Applicant is apparently praying for equity. It is my humble

submission that it is a principle of law that equity should follow the law and not vise

versa.

(c) It is apparent that the Applicant is not applying for an increase

or decrease of the amount H but is praying for the substitution, declaration and

erasing of the currency Tanzania Shillings and replacement with a foreign currency

called US dollars. This prayer is objected to in the strongest terms and intention due

to the fact that it is a prayer/application which is totally against the laws of the

Sovereign State of United I Republic of Tanzania and the said laws are.

1996 TLR p87

KYANDO J

(i) The Companies Ordinance A

Section 2(1) of the Companies Ordinance Cap 212 provides among

other things the definition of rules to the Companies Ordinance as follows and I

quote:

"Rules" means rules made under section 285 of this Ordinance and

includes forms; B

I humbly submit that the Certificate of Registration of a charge is a

form and is commonly known as form C2 and therefore is part of the rules to the

Companies Ordinance and it was so made under the provisions of Section 285 of the

said Cap. 212. Annexure marked (ii) to my Affidavit is a photocopy of the said form

C2 otherwise known as certificate of registration of a C charge. The greater part of

the said form is prepared and only provides some dotted gaps where the Registrar

enters the necessary entries eg. dates, name of the creator of the charge, name of the

entity for which the charge is created in favour of, the amount secured-etc.

The said form clearly mentions the currency shillings and leaves no

doubt that the currency to D be stated in shillings and no other currency. In

Annexure II to my Affidavit I have marked the place where the currency shillings is

stated in the form and the marking is in light red colour.

I humbly request your Lordship to see the said mark and note the

stated currency. E

The Applicant's prayer is that this Honourable Court should order the

deletion or erasing of the term (currency) shilling.

It is my humble submission that if such order was to be issued same

would amount to amending form C2 (Certificate of Registration of a Charge) and

therefore amending the F rules-which are made under Section 285 of the Companies

Ordinance Cap. 212. Section 285 gives the power to make rules to the Minister

responsible for Companies Incorporation and with due respect not to the Court.

I further submit that rules to any state are part and parcel of that

statute. An Application to the G Court for an order amounting to an amendment of

any rules is an application to the Court to amend the statute in question.

With all humbleness and due respect I have to inform the Applicant

and remind the Applicant's Advocate that courts of law have powers to interpret laws

but not to enact nor amend laws. H

(ii) The Bank of Tanzania Act No. 12 of 1966

(a) Section 24 of Act No. 12 of 1966 provides as follows and I quote

"The Unit of currency in I Tanzania shall be the Shilling, each shilling being divided

into one hundred cents."

1996 TLR p88

KYANDO J

(b) Section 26 of Act No. 12 of 1966 provides as follows and I quote:

A

"The Bank shall have the sole right to issue bank notes

and coins in and for Tanzania and, subject to Section 33, only bank notes and coins

issued by the bank shall be legal tender in Tanzania.

I submit that from the provisions of the above quoted Sections of the

bank of Tanzania Act, Act B No. 12 of 1966 it is too obvious that the currency and

legal tender of Tanzania is the shilling or to be more specific Tanzania Shilling and no

other currency.

The charge in question is a charge created by a Tanzanian Company in

favour of another C Tanzanian Company. It is a charge between two artificial

Tanzanians and it is absurd for them to be governed while within Tanzania by a

currency and legal tender other than their national currency.

National currency, are like national flags, anthems and borders, they

are the landmarks of D sovereignty and they cannot and should not be taken lightly.

We know from our recent history that when Idi Amin took our national borders

lightly we went to war against him to defend our sovereignty. National currency

shares the same status like the borders and the National anthem and an application

that the National currency should be deleted from a government E official document

is nothing less than an insult to Tanzania and its sovereignty.

It is my submission that this prayer should fail because it contravenes

an existing statute enacted by the Parliament of Tanzania. Further that if it is allowed

it will set a bad precedent F which will cause untold chaos, mess and confusion in

the carrying out of the duties of the Registrar of Companies and the registrar of

Charges under the custody of the Registrar will end up being a completely unsystematic

registrar containing every conceivable currency on G earth depending on

what every applicant prefers. Same would include Dutchemarks, Kroners, Rubles,

Rials, Rand, Kwachas, Naira etc.

While I concede that some of the foreign loans are given in foreign

currencies, that is a matter of international trade but not within the practice of our

Court. Indeed even the national budget H is composed of local resources and foreign

resources but the framing of the budget is strictly on the national currency and not

any other currency. To allow this prayer to succeed will, to quote the distinguished

words of the Honourable Judge Kyanod in the case of Seiff Hamad Shariff v R "will

create a bad policy and a wrong policy." I therefore repeat that this prayer and I the

whole Application should be dismissed.

1996 TLR p89

KYANDO J

He also disputes that there was a misstatement in the forms registering the charge and

A on this he submits as follows:

`To do some justice to the submissions of the applicant I will make the

following few submissions/replies.

(i) On page two (2) of the submissions of the Learned Advocate of the

applicant, the Learned B Advocate states that the first respondent misstated the

amount (of money) secured by stating in Form No 9 which is the Applicant's exhibit

`E'. This allegation is strongly denied and the true fact is as follows: C

Form No. 9 is divided into five (5) columns two (2) of the columns in

which the amount secured by the Mortgage or charge is stated. I humbly crave to

draw your Lordship's attention to my Annexure (i). In the said column two the first

respondent or his Advocate stated as follows and I quote "Amount Secured by the

Mortgage or Charge as US Dollars 904,500 D being approximately Shs.16,626,600/=.

The first respondent did not state that the amount secured is Shs.16,626,500/= being

approximately US Dollars 904,000." The statement is exactly in the same manner that

the Applicant is submitting to the Court and it is surprising E that the Applicant is

disputing it, a situation which amounts to disputing his own submission. I humbly

submit that there was no misstatement on the part of the first respondent and this

submission by the applicant should not be entertained.

There having been no misstatement on the part of the first respondent,

it is my submission F that the issuance of the Certificate of Registration of the

Charge by the second respondent in the manner it was issued was not occasioned nor

influenced by any misstatement by the first respondent. G

The registration and issuance of the certificate was done in accordance

with the provisions of the law.

I further submit that if the Second respondent had registered and issued

the certificate in any H other manner e.g. entering the amount secured in US Dollars

same would have been illegal because it would have contravened the provisions of the

governing law.'

The other important arguments made by the respondents are that there is no longer

any charge created by the first respondent in favour of the applicant `due to the fact

that the I then existing charge was discharged on 6 May, 1992', and that as no

application has

1996 TLR p90

KYANDO J

been made for a declaration that the discharge is null and void the application is A

incompetent as there is nothing presently to rectify.

The other argument relates to the legality of the loan agreement of the debenture. It

is contended that as execution of the agreement and debenture was made after the B

disbursement of the amount of the loan had been made, the loan agreement and the

debenture are tainted with illegality.

I propose to consider and deal with all these points seriatim.

The application is made under s 85 of the Companies Ordinance. The section

provides: C

`85. The Court, on being satisfied that the omission to register a charge within

the time required by this Ordinance, or that the omission or misstatement of any

particular with respect to any such charge or in a memorandum of satisfaction, was

altered or due to inadvertence or to some other sufficient D cause or is not of a

nature to prejudice the position of creditors or shareholders of the company, or that

on other grounds it is just and equitable to grant a relief, may on the application of

the company or any person interested, and on such terms and conditions as seem to

the court just and expedient, order that the time for registration shall be extended or,

as the case may be, that the omission or E misstatement shall be rectified and may

make such order as to costs of the alterations it thinks fit.'

Section 82 of the Ordinance provides for the Registrar of Charges to be kept by the

Registrar of Companies, the second respondent herein. F

There are three important documents to consider in this application: (1) the loan

agreement; (ii) the debenture and (iii) forms 9 and C2. In relation to this, especially to

the debenture, in the case of In re Mechanisations (Eaglescliffe) Ltd (1), a case cited

by G Capt. Kameja, learned counsel for the applicant, the mortgagee presented to the

companies registration form CF (corresponding to form No 9 supra) which had been

completed by the solicitors of the company in respect of a charge securing certain

sums. The particulars therein were misstated as to the amount secured in that no H

reference was made therein to interest and additional money secured by the charge.

The companies registrar registered the charge as per submitted particulars and issued

a certificate under s 98(2) of the Companies Act 1948 (corresponding to s 82 of the

Ordinance).

In a subsequent creditor's voluntary winding up, for the total sum advanced by them

I including the excess interest and the additional money not mentioned in the

particulars of the charge and the regis-

1996 TLR p91

KYANDO J

trar's certificate. The Liquidator sought a declaration that in respect of the excess the

A charges were void as against him or any creditor for want of registration, arguing

that the effect of s 98(2) aforesaid is to make the registrar's certificate conclusive

evidence of due registration of a charge securing such amount as is stated on the face

of the certificate. Rejecting the argument, Buckley J stated, at 35: B

`In order to discover the terms and effect of the charge ... one must look at the

document creating the charge and not at the register. It is from that document that

one will discover what moneys are secured and what is the total amount secured by

the charge.' C

Capt Kameja submits that the instrument creating a charge, `in this case debenture,

constitutes primary evidence of the extent of the charge and the amount thereunder'.

With respect, I agree. In addition I would add that though the amount stated in a loan

D agreement may not necessarily all have to be secured, where, as in this case, it is

contended the amount stated in the loan agreement was secured by a charge, the

agreement becomes, as I have stated already, an important document too, to look at in

order to discover what amount was loaned and then secured. E

Now, according to the loan agreement in this case, the loan advanced by the applicant

to the first respondent was US $904 000 (or the equivalent in other convertible

currencies by way of a foreign currency loan . Looking at the debenture, apart from

the cover as F shown, the amount indicated to be secured by it throughout its (the

Debenture's) body is stated to be US $904 000. This is the flow of the statement of

amounts in the two documents. According to these two documents, what was the

amount which was loaned and secured? Obviously US $904 000. There is no mention

of T Shs 16 626 500/= in the loan agreement or the body of the debenture. I agree

therefore that the G amount which was advanced by the applicant to the first

respondent which was then secured by the debenture created and issued by the first

respondent in this application is US $904 000. I have already said that even the

respondents in their counter-affidavits and submissions do not appear to dispute this.

H

Was it necessary to state the US $904 000 only in form No 9 and C2? (In the column

`Amount secured by the Mortgage or Charge (In form No 9 Annex (i) to the second

respondent's counter affidavit) it is stated that the amount secured is US $904 000

being approximately Shs 16 626 500/=). This is, as stated already, the crucial point in

this I matter. The responding arguments on it have been reproduced above. To them

Capt Kameja replies as follows:

1996 TLR p92

KYANDO J

`My Lord, the respondents' submission that the amount secured by the

debenture was T Shs A 16,626,500/= because under the laws of Tanzania no charge

could be registered in foreign currency is as far fetched as it is fanciful. The

respondents' arguments in support of national sovereignty, the national flag, national

anthem etc. may be patriotic and, perhaps, good material for a political dissertion but,

in my view, certainly not practical. Respondents' have not cited any authority, and I

am B not aware of one, to support the proposition that a Tanzania person, individual

or corporate, cannot borrow money in foreign currency, secure it as a foreign

currency debt and repay it in foreign currency.

Equally fanciful in the respondents' submission that the applicant, in the

words of counsel for the first C respondent, is "seeking to insert a foreign currency in

the charge". My Lord, the charge, being the debenture dated 18 December, 1985,

speaks for itself and, at the risk of repeating what I stated in the main submission, I

refer to condition 1 of the said debenture which clearly provides that "This Debenture

is security for principal moneys not exceeding US $904,000 (or the equivalent thereof

in D other convertible currencies) in aggregate together with interest thereon." In

this regard, I reiterate my arguments at pages 9 and 10 of the main submission and in

particular the fact, which the respondents have not disputed, that "the Tanzania

Shilling is not and has never at any material time E been a convertible currency". It

is too obvious to be seriously disputed that the Tanzania shilling, being a nonconvertible

currency, was not contemplated by the parties as being the currency of

the charge.

The second respondent also argues that the currency stated in Companies

Form C2, i.e. the certificate of registration, is Shillings and that recording the amount

secured in any other currency F would amount to amendment of the said form and

"therefore amending the rules which are made under section 285 of the Companies

Ordinance". My Lord, section 285 of the Companies Ordinance only provides for

"General rules and fees for Winding up" and, for sure, registers of such charges G

have nothing to do with section 285 aforesaid.

At any rate forms are applied as far as is practicable. Substitution of the word

"Shillings" by the words "United States Dollars" in the said form would not have

offended any law. In the said Form C.2 issued by the second respondent, and which

he apparently holds to be sacrosanct, the second H respondent crossed out the word

"charge" and substituted therefore the word "Debentures" so as, in our view, to clearly

identify the type of charge created. If the second respondent's argument is pursued to

its logical conclusion his own act, above, amounted to an amendment of the form and

the rules and the second respondent doesn't even suggest he has powers to make such

amendments. I How come then that substituting "United States

1996 TLR p93

KYANDO J

Dollars" for "Shillings" on the said form so as to specify the currency of the

charge suddenly A becomes an amendment of the rules! That would, in our humble

submission, be a classic case of hypocritical double standards.'

With extreme respect, I could not agree more with Capt Kameja in his above B

submissions. The immutability except by the Minister's hand, of form C2 has been, as

Capt Kameja rightly contends, violated by the second respondent himself. In that

form the word `Charge' has been cancelled out by the second respondent and above it

the word `Debenture' to accommodate the debenture in this case has been written. If

that C form can so easily be changed by the second respondent, why should

cancelling the word `Shillings' and writing the words `US Dollars' instead amount to

amending the rules, I simply do not comprehend this. As for the other arguments on

the point stated earlier on above, Capt Kameja has tackled them all in his reply and all

that I can say is D that these arguments of the respondents are to me nothing more

than sheer sophistry. I reject them here and hold that the US $904 000 should have

been expressed in forms No 9 and C2, including the register of charges, as the amount

secured by the debenture created and issued by the first respondent in this case. The

loan was a foreign currency E loan, and there was nothing wrong or improper to

express it in foreign currencies in form No 9 and C2.

The statement of T Shs 16 626 500/= in relation to US $904 000 in form No 9 and C2

does, in view of the fast falling value of the Tanzania Shilling, to any mind now look

F ludicrous. I accept as true the explanation given by the applicant for stating the

equivalent of T Shs 16 626 500/= and I think it was because of the purposes stated in

that explanation that the amount was stated as a mere approximation of US $904 000.

If indeed the amount was intended to be the amount to be secured by the debenture,

an G actual amount would have been stated and not a mere approximation.

Concerning the arguments or point that the charge has been discharged, I am of the

view that such arguments or points can be valid only if the loan of US $904 000 has

been paid or notified. The applicant says it has not and if that is so, the so-called H

discharge is no discharge at all. This is because it is based on the erroneous

assumption that the loan was for Shs 16 626 500/= whereas it was not, it was for US

$904 000. No valid discharge has ever taken place therefore. The one effected by the

second respondent on the basis of the first respondent's memorandum and declaration

I of correctness of the memorandum is hereby quashed and set aside.

1996 TLR p94

KYANDO J

As regards the legality or otherwise of the loan agreement and the debenture, I detect

no A illegality in these and I reject the respondents' arguments in relation to this.

The other arguments made by the respondents on the merits of the application do not

seem to be worth any consideration here. I find them all without any substance and I

reject all of them here. B

They (the respondents) have also raised several preliminary points of objection to the

application. One of them is that the application is wrongly made under s 95 of the

Civil Procedure Code 1966. I am of the view that this point would have been valid if

the C application did not cite s 85 of the Companies Ordinance as well. As it,

however, cites this latter section, s 95 Civil Procedure Code can be ignored without

the application being affected in any way.

Another point is that the affidavit of Mr Pesha is defective in that the sources of some

of D the information are not disclosed. Capt Kameja has replied to this by referring

the court to the decision of Georges CJ as he then was in The National Bank of

Commerce v Mannbha Shankarbhai Desai (2) wherein the learned Chief Justice

stated: E

`Similarly, paragraphs 9-1 are clearly sworn to on information and belief, and

since the source has not been set out, the paragraphs are clearly bad and should be

struck out. There remains a body of evidence sufficiently vouched in the affidavits

from personal knowledge or from information and belief F with sources specified to

enable the matter to be disposed of.'

In the present case, the information necessary for the full and final determination of

the application has been properly sworn to and the important documents exhibited.

These are the loan agreement, the debenture, forms No 9 and C2 and those relating to

the G `satisfaction' of the charge. The point raised therefore is of little, if any,

weight.

Finally, there is the point on limitation. It is contended by the respondents that the

application is time-barred. However, the following answer, with which I agree, by

Capt H Kameja in his reply to the contentions of the respondents suffices to dispose

of the contentions in favour of the applicant:

`My Lord, the first respondent has also raised an objection based on the law of

limitation. This objection holds no water. The application herein was based on the

ground that the misstatement of I the particulars was inadvertent or, alternatively,

that it is just and equitable to

1996 TLR p95

KYANDO J

grant relief. In Black's Law Dictionary, already cited, the word "inadvertence"

is said at page 759 A thereof to be used chiefly in statutory and rule enumerations of

the grounds on which a judgment or decree may be vacated or set aside; as

"mistake,...". It connotes a mistake occasioned by intention or excusable neglect. Thus

in this case the application is for relief from the consequences of the respondents'

mistakes. B

Section 26(c) of the law of Limitation Act, No. 10 of 1971 provides that where

the proceeding is for relief from the consequences of a mistake the period of

limitation shall not begin to run until the Plaintiff has discovered the mistake, or

could, which reasonable diligence, have discovered it. C

In this case, Mr. Pesha, the applicant's Company Secretary, has responded, in

paragraph 4 of the reply to the second respondent's counter affidavit, that he

inadvertently overlooked the misstatement of the amount secured at the time the

certificate of registration was issued and that he first discovered the misstatement

after receiving the second respondent's letter dated 16 April, 1992. The D

respondents have not tendered any evidence to show that the applicant was in fact

aware of the mistake, that is to say the misstatement of the amount secured, on a date

earlier than 16 April, 1992 or that he did not discover it earlier for lack of reasonable

diligence.

It is submitted that in this case the period of limitation did not start to run

until April, 1992 and since E the application was filed on 29 May, 1992 well within

the period of limitation of sixty days provided for under item 21 of Part III of the First

Schedule to the law of Limitation Act the objection cannot succeed.' F

On the whole, the preliminary objections raised by the respondents are really of faint,

if any, valued and that is why I did not consider them worthy to be dealt with before

dealing with the application on its merits. I overrule all of them.

Should the application be granted? The statement in forms No 9 and C2 that the loan

G secured by the first respondent's debenture was US $904 000 being equivalent to T

Shs 16 626 500/= or Shs 16 626 500/= respectively is clearly a misstatement. The

correct amount secured by the debenture is US $904 000 (or the equivalent in other

convertible currencies) by way of a foreign currency loan as per the debenture itself.

It was a H misstatement therefore to state in these forms that the amount of the loan

secured was US $904 000 being equivalent T Shs 16 626 500/= (form No 9) or Shs 16

626 500/= (form C2). That mistake has to be rectified in all justice and fairness. I find

and am satisfied, therefore, that it is just and equitable that the relief sought by this

application be I granted. As was done in

1996 TLR p96

the In re Mechanisations (Eaglescliffe) Ltd case (supra) therefore, I grant the

application A as prayed, with costs to the applicant. The second respondent is hereby

ordered to, within fourteen days from the date of the delivery of this ruling, rectify

forms No 9 and C2 (plus his register of charges) to show that the amount secured by

the debenture discussed in this case is US $904 000 (or its equivalent in other

convertible currency) by B way of a foreign loan, or, simply US $904 000 without

any reference to T Shs 16 626 500/=. The first respondent is ordered also to rectify his

register of charges in relation to this loan so that it is shown therein that the

debenture is security for US $904 000 only, as the debenture itself states. C

1996 TLR p96

D