Court name
Court of Appeal of Tanzania

Sasa Enterprises (Z) Limited vs Mohamed Raza Hussein Dharamsi () [1989] TZCA 5 (17 May 1989);

Law report citations
1989 TLR 78 (TZHC)
Media neutral citation
[1989] TZCA 5

Nyalali, C.J., Omar, J.A. and Mfalila, Ag. J.A.: The respondent, namely, Mohamed Raza Hassan Dharamsi, successfully sued the appellant, that is, Sasa Enterprises (Z) Limited in the High Court of Zanzibar at Zanzibar for breach of contract E for repayment of a loan of shs. one million plus interest at Bank rate and with costs. The appellant was aggrieved by the decision of the High Court, hence this appeal to this court. Mr. El-Maamry, learned advocate, appeared for the appellant before us; whereas the respondent who was duly served with notice to appear, did not enter F appearance in his appeal. The hearing of this appeal proceeded in his absence under the provisions of Rule 105(2) of the Tanzania Court of Appeal Rules, l979.
From the proceedings at the trial and in this court, the following primary facts are not in dispute between the parties: The appellant is a company incorporated in l985 under the G Companies Decree of Zanzibar, initially it had four shareholders, that is, Ghalib Abdalla, Halfani Shuweli, Ali Sultani Issa and his wife, that is, Eshe. On the 15th February, 1986, the number of shareholders was reduced by resolution from four to two; and in that way the remaining shareholders remained Ali Sultani Issa, who H appeared as the only defence witness at the trial, and Ghalib Abdalla who did not testify at the trial. Sometime thereafter in l986 the respondent Mohamed Raza Hussein Dharamsi gave the said Ghalib Abdalla a loan of shs. one million repayable in a month's time. The said sum of money has not been repaid as agreed in spite of repeated I demand for

NYALALI CJ, OMAR JA AND MFALILA Ag JA
payment. It is also not in dispute that at the material time the said Ghalib Abdalla was A one of the Directors of the appellant company.
From the proceedings in this court and the court below the following matters are in dispute between the parties: It is the respondent's case apparent from the record that the loan of shillings one million was made to the appellant acting through its Director, B that is Ghalib Abdalla. On the other hand, it is the appellant company's case also from the record and the submissions made by Mr. El-Maamry, learned advocate for the appellant, that the said loan of shillings one million was a personal loan made to Ghalib Abdalla, and not in any way a loan made to the appellant company. C
The main issue which arises for consideration and decision in this appeal before us is a narrow one, and it is whether the loan of shillings one million was a personal loan made to Ghalib Abdalla or was a loan made to the appellant company. The learned trial judge considered this point and found as a fact that the loan was not a personal loan D but was a loan made to the company through one of its Directors, that is the said Ghalib Abdalla.
In his memorandum of appeal, elaborated upon by Mr. El-Maamry, the appellant complains against this finding of the court below and submits in effect that the evidence E adduced at the trial was not sufficient to prove on a balance of probabilities that the loan was made to the appellant company.
The evidence adduced by the respondent, who was the complainant at the trial, was given by the respondent himself (P.W.1) and by one Ibrahim Hassan (P.W.2) who is F the brother of P.W.1, and by one Ahmed Sultan Mugheiry (P.W.3). This latter witness is also known as Riami. The evidence of P.W.1 is to the effect that the loan agreement was made in the office of the appellant company for the purpose of financing the G construction activities of the appellant company, and that thereafter the money was conveyed to Ghalib by P.W.2. The evidence of P.W.2 corraborates that of P.W.1 concerning the transmission of the money to the said Ghalib Abdalla who passed it on to P.W.3. The evidence of P.W.3 corroborates that of P.W.2 concerning the delivery of the money. P.W.3 was the Operations Director of the appellant company. He Htestified to the effect that the appellant company needed the money because it happened to be in a bad financial position, and the money thus received was used in paying construction technicians of the company. That, in a nut-shell, is the evidence in support of the respondent's case. I

NYALALI CJ, OMAR JA AND MFALILA Ag JA
The appellant, on the other hand, adduced evidence through one of its Directors, that A is, Ali Sultan Issa (P.W.1) to the effect that the appellant company did not borrow any money from the respondent as the alleged loan did not comply with the procedures required for borrowing money by the company. This procedure entails a resolution by the Board of Directors, a recording of the transaction by the company, and an B endorsement of the company's seal on the documents embodying the loan agreement.
It is apparent that the central issue in this case is whether the said Ghalib Abdalla acted for and on behalf of the appellant company in borrowing the money as testified to by P.W.1, P.W.2 and P.W.3. In resolving the issue, one has to ask one self whether it is C improbable that the said Ghalib Abdalla acted as he is said to have acted, in contravention of the laid down procedures of the company. We see nothing improbable for any human being, including the said Ghalib Abdalla to act contrary to laid down procedures. To say otherwise would mean that it is also improbable for people to D contravene the law.
The Said Abdalla did not testify at the trial although the court made sure that he was available. Since he was an obvious witness for the appellant's case if the appellant's E denials of liability were true, one wonders why the appellant, acting through one of its Directors, that is, P.W.1 elected not to have him give evidence. Under the circumstances of this case, we think that an adverse inference can and should be drawn under the provisions of section 114 of the Evidence Decree of Zanzibar, Cap. 5, which states: F
The court may presume the existence of any act which it thinks likely to have happened, regard being had to the common cause of natural events, human conduct and public and private business, in their relation to the facts of the particular case. G
We are satisfied that the appellant refrained from having the said Ghalib Abdalla give evidence, whilst he should testify in support of the respondent's claim. We are thus satisfied that the learned Chief Justice was correct in accepting the evidence of P.W.1, H P.W.2 and P.W.3 concerning the conduct of the said Ghalib Abdalla in borrowing the money in question for and on behalf of the appellant company. This conduct is fully covered by the provisions of section 33(b) of the Companies Decree of Zanzibar, Cap. 153, which states: I

NYALALI CJ, OMAR JA AND MFALILA Ag JA
33- (1) Contracts on behalf of a company may be made as follows: A
(a) ...
(b) a contract which if made between private persons would by law be valid although made by parol only, and not reduce into writing, may be made by parol B on behalf of the company by any person acting under its authority, express or implied.
(2) A contract made according to this section shall be effectual in law, and shall bind the C company and its successors and all other parties thereto.
It is obvious from these provisions of section 33 that the appellant company was empowered in law to enter into a parol contract, as it did in the present case, D notwithstanding any internal procedure made by the company to the contrary, provided that such parol contract is made by a person acting under the company's authority expressly or impliedly. The question therefore arises whether the said Ghalib Abdalla was expressly or impliedly authorised by the company to enter into the loan contract E which is the subject of this case.
The learned Chief Justice relied, inter alia, on the provisions of Articles 14 and 15 of the Articles of Association of the appellant company, which state - in Article 14: F
The Directors may, from time to time, at their discretion, borrow and secure the payment of any sum or sums of money for the purposes of the Company.
As to Article 15, it states: G
The Directors may secure repayment of such monies in such manner and upon such terms and conditions in all respects as they think fit. H
On the basis of these provisions, the learned Chief Justice came to the conclusion that the said Ghalib Abdalla, acting as Director of the appellant company, had express authority to enter into the loan contract in question. The learned Chief Justice was furthermore of the view that although the provisions of Articles 14 and 15 must be I construed as requiring prior agreement between the

Directors before one of them acts for and on behalf of the company, a third party A dealing with one of the Directors is not obliged to ascertain whether that prior agreement existed. As authority for this stand, he cited the case of Royal British Bank v Torgand [l856] 6 EXB. We concur with his findings. We are satisfied that the said Ghalib Abdalla as a Director of the appellant company had express authority contained Bin Articles 14 and 15 of the articles of Association, to borrow money for and on behalf of the appellant company.
The final issue for consideration and decision in this case is whether the appellant company is liable to repay the loan as claimed by the respondent. We find no difficulty, C in answering this question by virtue of the provisions of section 33 (1)(b) and of the Companies Decree of Zanzibar above cited. The answer is thus in the affirmative.
It follows therefore that the judgment of the learned Chief Justice cannot be faulted, and we are bound to dismiss this appeal and we do so now with costs. D
Appeal dismissed.

E
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