IN THE COURT OF APPEAL OF TANZANIA

AT PAR ES SALAAM

rCORAM: MWANDAMBO. J.A.. MAIGE, J.A. And KHAMIS, J.A.1

CIVIL APPEAL NO. 362 OF 2021

CHIYANGA ENTERPRISES (T) L T D ........................ ...................... APPELLANT

VERSUS
EXIM BANK (TANZANIA) LIMITED (as the Successor of
THE FIRST NATIONAL BANK TANZANIA LTD) ................. 1st RESPONDENT

TRANQUIL BUREAU LIMITED BANK TANZANIA LTD ......2ND RESPONDENT

(Appeal from the Judgment and Decree of the High Court of Tanzania
Land Division at Dar es Salaam)

f Luvanda, J.^

dated 25th day of February, 2021

in

Land Case No. 46 of 2016

RULING OF THE COURT

5th & 13th August, 2024

MAIGE. J.A.:

On 12th September, 2014, the appellant procured an overdraft

facility of TZS 290, 000,000.00 from the first respondent (exhibit PI) for

a term of 12 months from 12th September, 2014 and which was payable

in equal monthly installments of TZS 9,000,000.00. It was to be secured,

by among others, a residential property at Plot No. 10 Block A, Kigogo

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area within the District of Kinondoni in the region of Dares Salaam which

is in the name of Francis George Manyama ("the first security") and

Commercial Property on plot No. KND/KGG/KAT4/96 Kigogo area within

Kinondoni District in Dares Salaam Region which is in the name of George

Manyama Mangaru,("the second security").

On 11th June, 2016, the appellant requested for a reschedule of

the loan repayments from TZS 9,000,000.00 to TZS 5,000,000.00 per

month. Subsequently, the second respondent, at the instance of the first

respondent, issued a 14 days - notice of sale of the two securities in

realization of the outstanding loan arising from the overdraft in question

(exhibit P3, collectively). Being aggrieved, the appellant commenced a

suit at the High Court of Tanzania, Land Division ("the trial court") for the

following reliefs: One, declaration that the first appellant was in breach

of the overdraft agreement; Two, a mandatory injunction compelling the

first respondent to adhere to the terms and conditions of the overdraft

agreement; Three, declaration that the notices issued by the second

respondent to the appellant under the mandate of the first respondent

are premature and therefore illegal; Four, a mandatory injunction

compelling the first respondent to reschedule the overdraft facility and

allow the appellant to remit to the first respondent the sum of TZS

5,000,000.00 per month; Five, an order suspending interest on principal

sum from the date of institution of the suit to the date of judgment. The

factual allegations constituting the appellant's cause of action were

pleaded at paragraphs 9, 10,11 and 12 of the plaint as follows:

"9. That instead o f receiving positive answer from the

1st Defendant as per clause 7 o f the overdraft facility
agreem ent the P lain tiff was served with 14 days'notice
from 2nd Defendant to se ll the Plaintiff's su it properties
on 11th June 2016. The said notice was not preceded
over by the notice o f default from the 1st Defendant and
thus the 2nd Defendant's notice is therefore illegal.
Furtherm ore the said notice does not specify the
amount which is due under which the Plaintiff's
properties should be sold.

Attached herewith and marked as JLC-3 is a copy o f the

said notice leave o f which is craved to form part o f this
Plaint

10. That apart from change o f circum stances as

explained above, the P lain tiff has, since the grant o f the
overdraft facility, been repaying the overdraft money in
accordance with the term s and manner as agreed
without failure.

11. That the P lain tiff states further that the 1st
Defendant's demand under the mandate from the 1st
Defendant o f selling the Plaintiff's properties before the
expiry o f contractual term is breach o f overdraft
 Agreem ent and a total disregard o f the Plaintiff's
change o f circum stances which has not been the
Plain tiff's fault but rather occasioned o f its main
contractor.

12. That the P lain tiff states that the said notices are
unlawful, illeg al and therefore inoperative."

In its judgment, the trial court found that, the appellant did not

adduce sufficient evidence to establish that the first respondent was in

breach of the overdraft facility or that, the notices of default were issued

against the law. It, therefore, dismissed the suit with costs.

Aggrieved, the appellant has instituted this appeal criticizing the

judgment of the trial court on the following grounds:

1. The Trial Court erred in law and fact by failure to take into
consideration that without change o f mode o f paym ent from
that o f an overdraft facility to that o f term loan facility, the
Appellant could not be in a position to discharge its lia b ility
freely as suggested by the Trial Court.
2. The Trial Court erred in law and fact by failure to take into
account that the Appellant did not fa il to discharge the
overdraft agreem ent rather it was the 1st Respondent who
had failed to create conducive environm ent to the Appellant
with a view o f enabling it to discharge its liability.
3. The Trial Court erred in law and fact by holding that the
allegation o f default notice was an afterthought while it was
 not as it had featured in the appellant's and respondent's
pleadings and evidence.
4. The Trial Court erred in law and fact by condemning the
appellant for failure to pay the overdraft facility fo r the period
o f six years without taking into account the 1st Respondent's
failure to change the m odality o f paym ent
5. The tria l Judge erred in law and fact by failure to take into
account the appellant's evidence which was stronger
compared with the 1st respondent's evidence on failure to pay
the overdraft money.

At the hearing, Mr. Philemon Mutakyamirwa, learned advocate

appeared for the appellant while Mr. Innocent Felix Mushi, also learned

advocate, appeared for the respondents. Right from the outset, Mr. Mushi

informed the Court that, the first respondent phased out of existence in

July 2022 and its assets and liabilities acquired by Exim Bank Tanzania

Limited (herein referred to as "the successor in title"). He prayed, which

was not objected by Mr. Mutakyamirwa, for leave so that the appeal

proceeds against the first respondent's successor in title. Pursuant to rule

4(2) (a) and (b) of the Tanzania Court of Appeal Rules, 2009, we granted

the prayer as reflected herein above.

As we were preparing ourselves for the hearing, we entertained

doubt, in the first place, whether, to the extent that it sought to challenge

the first respondent's realization of the two securities, the suit would stand
without the mortgagors being joined. In the second place/ we entertained

doubt that, to the extent that it sought to enforce an overdraft facility,

the suit in question was a land dispute which, in the absence of the claim

to challenge the enforcement of the securities, it would fall within the

jurisdiction of the trial court.

We, therefore; invited the learned advocates to address us on the

issue. Mr. Mutakyamirwa conceded that, it was wrong to proceed with a

suit on mortgage without the mortgagors being joined and, therefore, the

judgment and the whole proceedings of the trial court were a nullity for

non-joinder of the necessary parties. Conversely, while conceding that a

mortgagor is a necessary party in a suit founded on mortgage, Mr. Mushi

was of the contention that, the omission in the instant matter was not

fatal, as the mortgagor in the second security was a director of the

appellant and testified as PW1. On that basis, he urged us to proceed

determining the merit of the appeal. When asked on whether the

mortgagor in the second security was involved, he admitted that he was

not.

This issue cannot consume much of our time. As we demonstrated

herein above, the appellant's claims at the trial court was, among others,

a declaration that the notices of default in respect of the two securities

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were illegal. In accordance with the overdraft facility and the notices of

sale pleaded in the plaint, it is apparent that, while the first security

belongs to Francis George Manyama, the second security belongs to

George Manyama Mangaru. It is an elementary position of law and the

parties are not in dispute that, in a suit on mortgage, the mortgagor is a

necessary party. [See for instance, Order XXXII of the Civil Procedure

Code]. In here, the suit was commenced by the appellant as the borrower

without joining any of the mortgagors. Mr. Mushi contends that, the

omission was not fatal as one of the mortgagors testified. With respect,

we cannot agree with him because, as we understand the law, a person

does not become a party to the proceedings just because he appeared as

a witness. Assuming that was the law, the suit would remain incompetent

as the mortgagor in the second security was not involved howsoever in

the proceedings.

Determination of a suit without joining a necessary party is a fatal

irregularity which renders the decision and proceedings thereof a nullity.

See for instance, Abdulatif Mohamed Hamis v. Mehboob Yusuf

Othman & Another (Civil Revision No. 6 of 2017) [2018] TZCA 25 (1

August 2018; TANZLII) and Gapco Tanzania Limited & Another v.

Ramzan D. Walji Company Ltd (Civil Appeal No. 381 of 2020) [2024]

TZCA 558 (15 July 2024; TANZLII). Indeed, where, like here, the
enforcement of the mortgage is challenged, the proper plaintiff should be

the mortgagor.

In view of the foregoing, we invoke our revisional powers under

section 4(2) of the Appellate Jurisdiction Act, Cap. 141 R.E.2019 and set

aside the judgment and decree of the trial court and nullify the

proceedings thereof. We further strike out the suit for being incompetent.

Since the issue was raised by the Court on its own motion and, considering

Mr. Mutakyamirwa's stance, we make no order as to costs.

DATED at DAR ES SALAAM this 9th day of August, 2024.

L. J. S. MWANDAMBO
JUSTICE OF APPEAL

I. J. MAIGE
JUSTICE OF APPEAL

A. S. KHAMIS
JUSTICE OF APPEAL

The Ruling delivered this 13thday of August, 2024 in the presence

of Mr. Philemon Mutakyamirwa, learned counsel for the Appellant and Mr.

Godfrey Ngassa, learned counsel for the Respondents, is hereby certified

as a true copy of the original.

£t -
KALEGEYA