Farrab Inc. S. A. v. The Ottoman Bank, Civ. Case 23-A-66, 23/3/68, Platt J.

Farrab Inc. S. A. v. The Ottoman Bank, Civ. Case 23-A-66, 23/3/68, Platt J.

Plaintiff company, incorporated and with its principal place of business in Tangier, but with a registered office in Tanzania, was in liquidation. It sued certain of its mortgagees for an accounting and to recover certain of its properties. The defendant banks sought an order under Order 25, rule 1 of the Civil Procedure Code and under section 344 of the Companies Ordinance compelling plaintiff argued that, because it had the office in Tanzania, it was not a person residing outside Tanzania – the only class of persons subject to the security for costs provisions of Order 25, rule 1. Auditors were unable to vouch for the accuracy of the valuations of the fixed assets on plaintiff’s books, and other valuations did not convince the Court of plaintiff’s solvency.

            Held: (1) The residence and domicile of a trading company are determined by the situs of its principal place of business – “Where the administrative business of the company is conducted, and this may not be the place where is manufacture or other operations are carried on.” As

Plaintiff is in liquidation, with all its assets in receivership, it has no place of business in Tanzania and its principal place of business must be elsewhere.(2) Under Order 25, rule 1, security for costs might not be required if the plaintiff had sufficient immovable property in Tanzania, apart from the property in suit, to cover the costs likely to be incurred by defendants; but plaintiff’s property was not sufficient here. (3) Plaintiff cannot avoid the requirements of Order 25, rule 1, by arguing that in a mortgage suit, costs would not be awarded against the mortgagor but would be added to the mortgage debt. In some cases, a mortgage may be permitted to apply for cost, and in such cases security for costs is proper. Such an order is within the court’s discretion here, where the mortgagor plaintiff is a company in liquidation. [Citing City of Moscow Gas Co. v. International Financial Society, 7 L.R. Chancery App. (1871/72)] (4) With respect to section 344 of the Companies Ordinance, the Court indicated that companies in liquidation should normally be required to give security for costs, but did not rely on this presumption; reliance for the order was rather placed on the finding of fact that plaintiff’s solvency was doubtful. Plaintiff ordered to furnish ₤1000 security for costs for each of the two defendants making the application.