IN THEHIGH COURT OFTANZANIA (COMMERCIAL DIVISION) …...during which Mr. Yudathade Alexander Paul...
Transcript of IN THEHIGH COURT OFTANZANIA (COMMERCIAL DIVISION) …...during which Mr. Yudathade Alexander Paul...
IN THE HIGH COURT OF TANZANIA
(COMMERCIAL DIVISION)
AT DAR ES SALAAM
COMMERCIAL CASE NO. 80 OF 2015
MAHESHKUMAR RAOJIBHAI PATEL PLAINTIFF
VERSUS
KARIM SHAMSHUDDIN SULEMAN DEFENDANT
7th December, 2015 & 18th February, 2016
RULING
MWAMBEGELE, J.:
Against the suit filed by the plaintiff Maheshkumar Raojibhai Patel, the
defendant Karim Shamshuddin, through Mr. Audax Kahendaguza Vedasto,
learned counsel, has filed a preliminary objection. The preliminary objection
is composed of three points; namely:
i. The Honourable Court lacks jurisdiction to entertain this matter;
ii. The plaint is lacking facts showing that this court has jurisdiction; and
iii. The plaintiff seeks to enforce a contract which the law forbids him from
enforcing.
The preliminary objection (henceforth "the PO'') was argued on 07.12.2015
during which Mr. Yudathade Alexander Paul and Audax Kahendaguza
Vedasto, learned advocates, appeared for the plaintiff and defendant
respectively. The learned advocates had earlier filed their respective skeleton
written arguments as dictated by the provisions of rule 64 of the High Court
(Commercial Division) Procedure Rules, 2012 - GN No. 250 of 2012
(hereinafter "the Rules'') which both learned counsel sought to adopt at the
oral hearing.
It was Mr. Vedasto, learned counsel, who kicked the ball rolling. He
submitted in support of the first point of the POthat the plaintiff claims, interalia, for payment of USD3,300,000. He submits that this inappropriate as the
courts in this jurisdiction can only award reliefs in Tanzania Shillings. The
courts in this jurisdiction have no jurisdiction to grant reliefs in USDs, he
submits. The learned counsel has cited Berril & Co. Ltd Vs Lakhani and
Others [1970] HCD n. 264 to buttress this proposition. In that case, this
court (Georges,0) held:
"I find that courts in this country can give
judgment only in Tanzania shillings".
On this take, the learned counsel submits that the suit filed by the plaintiff be
dismissedwith costs.
The learned counsel for the defendant also argues in addition to the first
point of objection that the claim is seeking to enforce the laws of Mauritius.
The learned counsel urges this court to read the plaint and that by so doing it
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will realise that the Agreement sought to be enforced (Annexture MRP-1) in
which the joint venture is sought to be dissolved is controlled by the laws of
Mauritius. The learned counsel submits that the laws of Mauritius do not fall
within the group of laws that this country can enforce. The laws that this
court can apply and enforce, he submits, falls in four sets:
a) The Constitution of Tanzania, 1977 under the authority of Article
64 (5) and 30 (3) of the Constitution of Tanzania, 1977;
b) Written laws, under the authority of section 2 (3) of JALA, Cap 358
RE 2002. 'Written Laws,' are defined by section 4 Cap to be Acts of
Tanzania and of the Community and subsidiary legislation under them;
c) Received laws, under the authority of section 2 of JALA, Cap 358 RE
2002. These are mentioned in s. 2 (3) as common law, statutes of
general application and doctrines of equity in force in England as of
22/7/1920; and
d) Customary laws, under the authority of section 11 of the Judicature
and Application of Laws Act (JALA), Cap 358 RE 2002. Customary law'
is defined by s. 4 of the Interpretation of LawsAct, cap 1 to mean' any
rule whereby rights ... are acquired ... by usage in any African
community in Tanzania".
He states that the agreement between the parties is not enforceable under
section 23 (2) of the Law of Contract Act, Cap. 345 of the Revised Edition,
2002 as its obvious object is to defeat the provisions of sections 333 to 346 of
the CompaniesAct, Cap. 212 which provide for special procedure of winding
up companies.
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On the second point of the PO, the learned counsel for the defendant submits
that the plaint is lacking facts showing that this court has jurisdiction contrary
to the provisions of Order VIII rule 1 (f) of the Civil Procedure Code, Cap. 33
of the RevisedEdition, 2002. He states that what is stated at para 10 of the
plaint does not show the amount claimed and thus does not meet the
requirement of the law. The case of Assanand & Sons (Uganda) Ltd. Vs
East African Records Ltd. [1959] E.A. 360 which was followed by this court
in Lucas Mal/ya Vs Mukwano Industries Limited, Commercial Case No.
60 of 2004 (unreported) is cited in support of this proposition.
In addition, the defendant's counsel submits that in the circumstances of this
case where the dissolution agreement intended to be enforced is a contract
for a dissolution of a limited liability company alleged to have been formed in
Mauriutius, the plaintiff was enjoined to state in addition the facts showing
that although the company was incorporated in Mauritius, Tanzania courts
have jurisdiction.
On the third point of PO, the learned counsel for the defendant submits that
the contract sought to be enforced is forbidden by section 23 (2) of the Law
of Contract Act. The learned counsel submits further that the joint venture
dissolution agreement which sought to be enforced is unlawful because under
the Companies Act, the procedures of voluntary winding up of a company
differ depending on whether it is a voluntary winding up at the instance of
members (section 339-346 etc) or voluntary winding up at the instance of
creditors (section 347-355). The mode of winding up by the parties is stated
in preamble 'F' of the joint venture agreement (annexure MRP-1) in a
language which equates it with 'members voluntary winding up' under our
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CompaniesAct. Under this Act this processencompassesdetailed procedures,
conditions and limitations. The requirements include (a) a declaration of
solvency (section 338), (b) resolution of winding up (section 333 (1) (b), (c)
publication of the resolution of winding up (section 334), appointment of a
liquidator (s. 340) to adjust credits and debits of the shareholders, creditors,
the government and so on.
The learned counsel submits further that a liquidator is not a free person,
working on his own wishes. His businesses are statutorily controlled. The
CompaniesAct sets out a total of 14 sections (sections 294 - 307) under the
heading 'liquidators' to provide for the business of this person. Among the
things the liquidator and the controlling bodies are there to serve are interests
of the public at large. In short, he argues, under the Tanzania laws, a
company cannot to dissolved by the likes of the Dissolution of the 'Dissolution
of joint Venture Agreement' which is now in Court for enforcement. So, to
continue to hear this claim, the learnded counsel argues, means to do the
same business which section 23 (f) & 22 (2) have stated this Court cannot
entertain. He thus prays that the suit be struck out with costs.
The defendant's counsel has also argued that the plaintiff lacks locus standi in
that clause D of the preamble to the contract and clause 1:1 thereof the
object of the contract is for the defendant to compensate the plaintiff for the
contribution the defendant made in Pwani International Haulers Limited. He
submits further that a company is a different person from its shareholders
and therefore the plaintiff should have claimed the amount from defendant in
the name of company, for it is the company, if at all, to which he is indebted.
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In the same line of argument, the defendant counsel argues that the plaintiff
should have sued the company becausethe case before the court is a case by
the plaintiff to ask the court to order the defendant to repay the plaintiff the
money allegedly paid in excess by the plaintiff; not to the defendant but to
Pwani International Hauliers Limited. Thus the plaintiff wants the court to
order the defendant to repay him money he paid in excess to a third party.
This he submits is against our public policy in terms of section 23 (1) (e) of
the Law of Contract Act and therefore unenforceable under section 23 (2) of
the Act.
On the strength of all the above, the defendant's counsel urges the court to
dismiss the suit with costs.
On the other hand, the plaintiff's counsel submits on the first point of POthat
courts in this jurisdiction can grant reliefs in USD. He states that the
Lakhani case cited by the learned counsel for the defendant in support of
this point is no longer the position in this country. The learned counsel cites
Renair Limited Vs Phoenix Tanzania Assurance Company Limited,
Civil Case No. 77 of 2009 (unreported) in which the court of appeal granted
relief in USD.
On the point that this court will be enforcing the laws of Mauritius, the
learned counsel for the plaintiff states that the objection goes into the merits
of the case. He argues that a POcannot be raised in any fact which has to be
ascertained in the course of deciding it. He cites Karata Ernest & others
VsAttorney General, Civil Revision No. 10 of 2010 (unreported) to support
this point.
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Regarding the objection that the plaint does not have the facts showing that
the court has jurisdiction, the learned counsel for the plaintiff argues that the
facts contained in para 10 of the plaint are enough to show that this court has
jurisdiction to entertain and hear the case. He states that the cases cited by
the learned counsel for the defendant dealt with situations where such clause
was completely omitted.
On the objection to the effect that the plaintiff is seeking to enforce a contract
which is not enforceable at law; the contract being forbidden by law, the
plaintiff lacking locus standi and the plaintiff claiming against a wrong person,
the learned counsel reiterates the position that discussing the annexture at
this stage is tantamount to going into the merits of the case which is not
permissible under the authority of the Karata case (supra).
The plaintiff's counsel states further that the amount claimed is USD
3,300,000 which is a huge sum of money within the pecuniary jurisdiction of
this court. In the alternative, the plaintiff's counsel submits that they be
allowed to amend the plaint under the provisions of rule 24 (1) of the Rules
so that the amount is shown in Tanzania Shillings.
On the arguments above, the learned counsel for the plaintiff submits that the
POshould be dismissed with costs.
In rejoinder, the learned counsel for the defendant states on the first point of
PO that the decision of Gorges, CJ has not been overruled by any superior
court and urges this court to follow the principle in Tambueni Abdallah &
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89 others Vs National Social Security Fund, Civil Appeal no 33 of 2000
(unreported) at page 9 that the Renair case (supra) cited did not overrule
the Lakhani case. That since the Lakhani case has not been overruled, it is
binding upon this court as was heard in the Jumuiya ya Wafanyakazi
Tanzania Vs Kiwanda cha Uchapishaji cha Taifa [1988] 146, at 153 in
which it was held a subordinate court should be bound by its earlier decisions.
On the alternative prayer by the learned counsel for the plaintiff to have the
plaint amended so as the amount claimed is shown in Tanzania Shillings, the
learned counsel for the defendant submits that this is not permissible. He
promised to avail to the court with authorities on the subject and indeed the
learned counsel walked the talk. He supplied Kantibhai M. Patel Vs
Dahyabhai F. Mistry [2003] TLR 437, Petromark Africa Ltd &3 ors Vs
Exim Bank (T) Ltd Civil Appeal No. 58 of 2012. He also supplied a book he
authored titled Laws Applicable and International Conflict of Laws in
Tanzania, Idea International Publishers, Oar, 2009, pp 6 - 10 to buttress the
point that Tanzania courts cannot apply the laws of Mauritius.
As for clause 12 of the Joint Venture Agreement the learned counsel submits
that it is of no consequence as parties cannot confer jurisdiction upon the
court. An unreported decision of this court in Samwel Mjema Vs Editha
Phitipo, Civil Appeal No. 101 of 2013 is cited in support of this proposition.
He adds that clause 0 of the Joint Venture Agreement shows that there is
third person and as per Salomon VsSalomon and Company [1895-9] All
ER 33; also reported in [1897] AC 22, a company is a different person from
its shareholder.
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Let me start by pointing out the fact that the learned counsel for the
defendant fronted in the PO three points of objection as shown at the
beginning of this ruling. However, when arguing the same; in both skeleton
argument and oral hearing the learned counsel added one more point of
objection; the question of locus standi. This has been responded by the
learned counsel for the plaintiff but the obvious is no notice was given
thereof. It has been stated more often than not that a PO must be raised in
time and on reasonable notice - see MIS Majembe Auction Mart Vs
CharlesKaberuka Civil Appeal No. 110 of 2005 (unreported). In that case,
the Court of Appeal stated reasons why a PO must be raised in time and on
reasonablenotice in the following terms:
" ... reasonable notice of the preliminary objection
is to be given to the other parties including the
appellant as in this case. The logic behind this
provision hardly needs to be overemphasized.
With the notice given within reasonable time, the
other parties ... would not be taken by surprise.
In that situation the parties would be in a position
to respond in advance to the issues raised in the
preliminary objection. It is to be emphasized that
in fairness to the parties and in the interest of
justice, counsel intending to raise preliminary
objection are enjoined as far as possible to serve
the notice of preliminary objection within
reasonable time."
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In the case at hand, Mr. Yudathade for the plaintiff did not raise any alarm at
this point of objection being raised without notice. Instead, as already said,
he responded to this point of preliminary objection on which no prior notice
was given and I commend him for this. Be it as it may, and for that reason, I
will consider this point in this ruling despite its being raised without notice.
In determing the PO, I propose to put into one basket the points respecting
enforcing a contract which the law does not allow, the plaintiff lacking locus
standi, the plaintiff suing a wrong party and the plaintiff seeking to enforce
the laws of Mauritius. I have put these points together because, I think, as
rightly put by Mr. Yudathade, learned counsel for the plaintiff, they need
factual proof and touch upon the merits of the case. In arguing these points
of objection, the learned counsel for the defendant made heavy reliance on
the Joint Venture Agreement and its contents. Going into the contents of the
Joint Venture Agreement disqualifies these points to fall within the realm of a
preliminary objection. That this is the law has been stated in a number of
cases in this jurisdiction. These caseshave been drawing inspiration from the
oft-cited Mukisa Biscuit Manufacturing Co Ltd Vs West End
DistributorsLtd [1969] 1 EA 696. This case is so notorious and it is an
authority for the point that a preliminary objection should be on matters of
law and that a preliminary objection which requires factual proof to prove it is
not a preliminary objection. It should suffice to quote what was said by Law,
JA as to what His Lordship considered would be preliminary objection. His
Lordship stated:
"So far as I am aware, a preliminary objection
consists of a point of law which has been pleaded,
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or which arises by clear implication out of
pleadings, and which if argued as a preliminary
point may dispose of the suit. Examples are an
objection to the jurisdiction of the Court, or a plea
limitation, or a submission that the parties are
bound by the contract giving rise to the suit to
refer the dispute to arbitration."
The case has been consistently followed in this jurisdiction ever since it the
formulated principle. Such cases which have followed Mukisa Biscuit
include the Karata case cited by the counsel for the plaintiff, Shakida Abdul
Hassanali Kassim VsMahd Mohamed Gulamali Kanji, Civil Application
No. 42 of 1999 (unreported), Leila Jalaludin Haji Jamal Vs Shaffin
Jalaludin Haji Jamal, Civil Case No 373 of 2001 (unreported) Citi Bank
Limited Vs TTCL and 3 others, Civil Application No. 64 of 2003
(unreported) and Mohamed Enterprises (T) Ltd Limited Vs Masoud
Mohamed Nasser, Civil Application No. 33 of 2012 (unreported), to mention
but a few. This position is now settled law in our jurisdiction.
In the present case, deciding on this group of points of the PO would entail,
as the learned counsel did, travelling through the contents of the Joint
Venture Agreement which, as I have said above, disqualifies the point to fall
within the realm of preliminary objection. I would therefore, without
nesitation, overrule all the points falling within this basket.
This takes me to the point the remaining points of the PO. The first point is
that this court has no jurisdiction to entertain and grant reliefs on any
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currency other than Tanzania Shillings. The learned counsel has cited an
authority; the decision of this court in the Lakhani case which was decided in
1970 in which the court (Georges, CJ) held that courts in this jurisdiction case
enter judgment only in Tanzania Shillings. I have read the digest of the case
as reported in the High Court Digest of 1970. His Lordship decided the case
relying on the provisions of section 2 (2) of the then Judicature and
Application of Laws Ordinance, Cap 453 (now the Judicature and Application
of Laws Act, Cap 358) and Manners Vs Pearson & Son [1898] 1 Ch. 581
and decided that in England as at the reception date, courts would only grant
reliefs in pound sterling. From that premise, His Lordship, the then Chief
Justice of Tanzania, reached a verdict that Tanzanian courts would only give
judgment in the Tanzanian currency.
Mr. Vedasto, learned counsel for the defendant has urged me to be bound by
the authority arguing that it has never been overruled and therefore it binds
me. He relies on Jumuiya ya Wafanyakazi Tanzania (supra) for this
proposition. With unfeigned respect to the learned counsel, I am not
prepared to accept this proposition. The Lakhani case was decided by this
court. Then, appeals from the High Court of Tanzania lied to the Court of
Appeal for East Africa. Decisions of the High Court of Tanzania were
therefore not final; appeals against them lied to the Court of Appeal for East
Africa before which, they lied to the Privy Council - see: Dodhia Vs
National & Grindlays Bank Ltd & another [1970] EA 195 and Jumuiya
ya Wafanyakazi Tanzania; the decisions of Court of Appeal of East Africa
and the Court of Appeal of Tanzania respectively.
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The Lakhani case was decided by the High court of Tanzania; it does not
therefore bind me. However, as a matter of prudence, I am supposed to
respect it and whenever I feel like having a different opinion, instead of
dissenting lightly to the considered decision of my fellow judge, I have to give
reasons for taking that course. This is practically so because, as was stated
by this court [Bwana, J. (as he then was)] in ULC (Tanzania) Limited Vs
National Insurance Corporation And Another [2003] TLR 212, Judges of
the same Court should not give conflicting decisions over similar issues,
unless it is absolutely necessary. And in Ally Linus & 11 others Vs
Tanzania Harbours Authority & Another [1998] TLR 5, the Court of
Appeal at p. 11, underlined the need for a judge to not lightly dissent from
the considered opinions of his brethren. The Court of Appeal articulated:
" it is not a matter of judicial courtesy but a
matter of duty to act judicially which requires a
judge not lightly to dissent from the considered
opinions of his brethren."
Now let me revert to the subject at hand. I wish to state that a lot of water
has passedunder the bridge ever since the Lakhani case was decided that in
the present jurisprudence in this jurisdiction, courts now award reliefs in USD.
There is a string of cases of the Court of Appeal in which such course has
been taken. One such case is the Renair case; a case cited by the learned
counsel for the plaintiff. Other cases include Stanbic Bank Tanzania
Limited VsAbercrombie & Kent (T) Limited, Civil Appeal No. 21 of 2001,
Arabian Ventures Zanzibar Limited Vs t/.a Ocean Paradise Resort Vs
Max Village Limited & 2 Ors, Civil Appeal No. 120 of 2015, DT Dobie
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(Tanzania) Ltd Vs Phantom Modern Transport (1985) Ltd, Civil appeal
No. 74 of 2002; unreported decisions of the Court of Appeal and Tanzania
Steel Pipes Ltd Vs Y. K Yong, Commercial case No. 41 of 2007 an
unreported decision of this court, to mention but a few.
I have found it difficult to comprehend the argument by Mr. Vedasto, learned
counsel for the defendant when he argues that the Renair case did not
overrule Lakhani. I think the learned counsel wanted the Court of Appeal to
state in no uncertain terms that Lakhani has been overruled. But the Court
of Appeal could not have stated so because that was not the issue in that
case. What is obvious from the learned authorities cited above is that,
presently, courts in this jurisdiction give judgments in currencies other that
the national currency; the Tanzania Shilling. That means that the Lakhani
case has, technically, been overtaken by events. The Lakhani case was
therefore good law then but, by lapse of time and practice, it has lost its
strength given the new development in the jurisprudence of this court on the
matter.
I would therefore overrule the first point of PO.
Another point of PO is about facts showing that the court has jurisdiction.
The learned counsel for the defendant submits that the plaint is devoid of
facts showing that this court has jurisdiction to try this case. This, he states,
offends the provisions of Order VIII rule 1 (f) of the cpc. He states that what
is stated at para 10 of the plaint is not sufficient as it does not show the
amount claimed and thus does not meet the requirement of the provisions of
Order VIII rule 1 (f) of the cpc. The Assanand & Sons and Mal/ya cases
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are cited in support of this proposition. On the other hand, the plaintiff's
counsel states that what is stated at para 10 of the plaint is sufficient to show
that this court has jurisdiction. Let me, first, for easy reference, quote para
10 of the plaint. It reads:
"That the parties live in Dar es Salaam and the
amount claimed is within the jurisdiction of this
court."
As evident in the paragraph, there is no amount stated. The learned counsel
for the defendant is of the view that this omission is fatal. The amount is
stated elsewhere; at para 3. Respectfully, I do not think this is fatal. I find
fortification in Mogha's Law of Pleadings in India (18th Edition) by S. N.
Dhingra and G. C Mogha in which it is stated at p. 271 that:
"The jurisdiction can be of three types, territorial
jurisdiction, subject matter jurisdiction and
pecuniary jurisdiction. A plaintiff is supposed to
specify all the three types of jurisdiction in the
plaint. He must specify how the territorial
jurisdiction of the court was being invoked and
whether the court has jurisdiction over the subject
matter and if the suit fell within the pecuniary
jurisdiction of the court."
In my considered opinion the contents of para 10 of the plaint, read in
context of the whole plaint, is sufficient to show that the court has the three
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kinds of jurisdiction envisaged by the law; that is, the provisions of Order VIII
rule 1 (f) of the (PC. Failure to particularise in a specific paragraph that the
court has jurisdiction is not, in my view, an incurable ailment.
I would therefore overrule this point of POas well.
The foregoing disposes of all the preliminary points of objection raised by the
defendant. However I wish to state at this juncture on the prayer by the
counsel for the plaintiff to the effect that he should be allowed to amend the
plaint so that the claim is put in Tanzania Shillings. This prayer has met a
strenuous objection from Mr. Vedasto; learned counsel for the defendant. He
has cited the Kantibhai and Petromark cases to back up his strenuous
objection. I think Mr. Vedasto is right. In view of what I have found and
held above, the prayer seems to be redundant. I wish to reiterate that Mr.
Vedasto is right when he states that the course is unacceptable. The course
suggested is illegal and therefore not maintainable at law. He is, I repeat,
right. I shall demonstrate.
Taking the course suggested by Mr. Yudathade; counsel for the plaintiff, to
allow an amendment of the plaint after the preliminary objection has been
raised would mean pre-empting the preliminary objection raised by the
defendant which course is illegal. That this is the law has been stated times
without number in a string of cases in this jurisdiction. If I would be required
to cite one such case, I would cite Mary John Mitchell Vs Sylvester
Magembe Cheyo & ors, Civil Application No. 161 of 2008 (unreported) in
which the Court of Appeal reiterated its earlier position it stated in Method
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Kimomogoro VsBoard of Trustees of TANAPA,Civil Application No. 1 of
2005 (also unreported) in which it stated:
"This court has said in a number of times that it
will not tolerate the practice of an advocate trying
to pre-empt a preliminary objection either by
raising another preliminary objection or trying to
rectify the error complained of."
This was not the first case the Court of Appeal gave this guidance; that a
preliminary objection should not be pre-empted. The court of appeal had an
opportunity to state the principle in Shahida Abdul Hassanali Kassam Vs
Mahedi Mohamed Gulamali Kanji Application No. 42 of 1999
(Unreported), Almas Iddie Mwinyi Vs National Bank of Commerce &
Another [2001] TLR 83, Alhaji Abdallah Talib Vs Eshakwe Ndoto
Kiweni Mushi [1990] TLR 108, The Minister for Labour and Youth
Development and Shirika la Usafiri DSM VsGaspa Swai & 67 Others
[2003] TLR 239] and Frank Kibanga VsACCULtt/, Civil Appeal No. 24 of
2003 (unreported), to mention but a few.
Thus, even if I had sustained the objection by the learned counsel for the
defendant that courts in this jurisdiction would only grant reliefs in Tanzanian
Shillings, I would not have allowed Mr. Yudathade amend the plaint to rectify
the ailment for the reasons stated.
The above said and done, and for the reasons stated hereinabove, the three
point PO raised by Mr. Vedasto, learned counsel for the defendant, including
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an additional one raised without notice which surfaced in the skeleton
arguments and the oral hearing, is overruled in its entirety with costs. The
suit filed by the plaintiff should proceed for hearing on merits on a date to be
slated today.
Order accordingly.
DATED at DAR ES SALAAM this 18th day of February, 2016 ..--., ..•.
l<f7o'1~
J. C. M. MWAMBEGELEJUDGE
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