Court name
High Court of Tanzania

The National Bank of Commerce vs Saidi Ally Yakut () [1989] TZHC 27 (20 July 1989);

Law report citations
1989 TLR 119 (TZHC)
Media neutral citation
[1989] TZHC 27

Mwalusanya, J.: The plaintiff the National Bank of Commerce, is claiming from the B defendant Saidi Ally Yakut shs.283,684/40 which is an outstanding sum in the defendant's current account by way of an overdraft at Karagwe Branch of the N.B.C. It is said the defendant fraudulently obtained overdraft facilities at the said bank to the tune of sum of money that is claimed. The defendant who was represented by counsel Mr. C Rugarabamu denied that he ever made an application for an overdraft, let alone a fraudulent application for an overdraft. The plaintiff was represented by counsel Mr. Banturaki from the Tanzania Legal Corporation.
The sole witness for the plaintiff was Mr. Edward E. Mbogo (PW l) who is the current branch manager of N.B.C. at Karagwe since May l985. Prior to that, the branch D manager was one Mr. Madaha. It is common ground that the defendant has a current account with the N.B.C. at Karagwe. According to the records in possession of PW 1 the defendant on 5/5/l984 deposited a sum of shs.279,500/= in his account using a country cheque of that sum that was drawn by a customer having an account at N.B.C. E Market Street, DSM. Then on 7/5/l984 the said defendant was allowed to draw the shs.279,000/= from his account using his cheque which is Exh.D in court. The witness said that they paid the defendant before his country cheque was cleared in DSM; and that was because they trusted the defendant. F
Then the witness PW1 testified that they sent the country cheque to Market Street, DSM for clearance. But it is said the said cheque never reached DSM, as it got lost. According to para 6 of the plaint it is said: 'That the cheque mentioned above was G destroyed at Karagwe Branch and never reached the paying Bank, Market Street, DSM.' So we can't tell if it was sent to DSM or it was lost at N.B.C. Karagwe Branch. Be that as it may, at the end of l985, it was decided to contact the defendant so that he accepts that sum to be an overdraft. H
However the defendant refused to accept the sum of shs.279,500/= as an overdraft. So that is why the bank filed this suit.
As earlier indicated the defendant in his defence emphatically denied that he ever applied for an overdraft let alone a fraudulent application for an overdraft. He testified that I throughout the transactions he dealt with the branch manager of the bank one

Mr. Madaha. He said that on 5/5/l984 the bank manager Mr. Madaha went to see him A with his relative who was allegedly coming from Shinyanga. It is said this relative of the bank manager was staying at the Guest House of the defendant in Room 5. It is further stated that the bank manager revealed that his relative wanted some cash and had a country cheque for shs.279,500/= drawn at the Market Street, N.B.C. DSM. The B defendant said that he told the manager that he had then only shs.l00,000/= cash, which he handed over to the manager, and the manager handed it over to his relative. At the same time it is said that the bank manager deposited the shs.279,500/= in the defendant's account vide paying-in-slip which is Exh.B in court. It is said two days later, C that is on 7/5/l984 the bank manager phoned the defendant stating that the country cheque he had deposited had been cleared in DSM and so he could come at the bank and draw the shs.279,500/= and pay the relative of the manager the outstanding sum of shs.l79,500/=. The defendant duly went to the bank and drew shs.270,000/= vide his D personal cheque Exh.D. The said cheque was authorised for payment by the bank manager and the bank accountant. After that it is said the defendant duly handed over shs.179,500/= to the bank manager so that he could hand over to his relative. E
The defendant further stated that at the end of 1985 he was surprised to learn that the country cheque had been lost and that they wanted him to pay the bank the shs.279,500/=. He said that he refused to accept the suggestion that shs.279,500/= should be regarded as an overdraft. F
Counsel for the defendant Mr. Rugarabamu submitted that his client was not liable. He said that the bank was negligent and so the blame lies squarely on them. He contended that as the bank had allowed his client to collect the money before the cheque was cleared in DSM and later the said country cheque was destroyed by the bank, then the G bank was to blame. He said that plaintiff bank owed a duty of care to the defendant not to destroy the country cheque or else they should not have allowed the defendant to withdraw the money until the cheque was cleared. Mr. Rugarabamu cited the case of National Bank of Commerce v Parma Shoe Company Civil Appeal No. 11/l988 by H the Tanzania Court of Appeal (unreported) which was a decision from an appeal in the case No. 56 of l983 which I decided at the High Court Mwanza.
In my judgment I find that this claim has absolutely no legal basis. The collecting bank I owes a duty of care to its customers, such that it conducts its activities with care and circumspection.

There is need for the banks to display vigilance when handling their customer's financial A matters. Here is the case when the defendant was allowed to withdraw the money from his account on the strength of the word of the bank manager that his country cheque had been cleared. The bank manager is a senior officer of the bank and so he B has to be trusted. It cannot be doubted that the defendant was so told, as the plaintiff bank had no courage to call that bank manager as a witness so that he could refute the word of the defendant. At the same time we are told that the country cheque was destroyed by some bank officials at the N.B.C. Karagwe Branch - see para six of the C plaint. In these circumstances how can the defendant be blamed for the destruction of the country cheque which was destroyed by employees of the plaintiff bank? The blame surely lies squarely on the plaintiff bank. The bank was grossly negligent and the defendant had no hand in it. D
I agree with the defendant that at no time did he ever apply for an overdraft, let alone made a fraudulent application for an overdraft. The loss to the bank was caused by the employees of the bank, arising from their negligent or deliberate conduct. I am surprised that the bank had the guts to come to court to seek relief in the mattet they have presented it. E
In the event this suit is dismissed with costs. I enter judgment for the defendant.
F Order accordingly.