Court name
High Court of Tanzania

Ernest Andrew Chitalika vs Francis  Philip Temba () [1995] TZHC 23 (21 November 1995);

Law report citations
1996 TLR 287 (TZHC)
Media neutral citation
[1995] TZHC 23
Coram
Bubeshi, J.

Bubeshi J: G
The petitioner Ernest Andrew Chitalika has filed this chamber summons for winding up of a company pursuant to s 163 as read together with ss 167(d), 172 and 173 of Cap 212. The grounds for this application are stated in the petition filed. I shall reproduce the salient features of the petition as follows: H
   --   that the petitioner is one of the only two directors and shareholders who appear in this petition, of a company known as Safe Business and Construction Company Ltd which is to be wound up by this Court. I
   --   that the respondent in this petition made impossible as to the

A       existence of the said company by `disqualifying' the petitioner no longer to be one of the directors by his letter dated 22 June 1994 herein attached as Annexure A. In fact his utterance that the other director was disqualified led the respondent to hold privately the property of the said company, namely M/V Land B Rover 109-with registration No UJ 2203, concrete vibrator, vacuum pump and an electric drilling machine. These properties are valued at Shs 12,495,000/= in total.
   --   that a demand note was sent to the respondent which so far has not been successful as expected, showing that the respondent is not ready to settle this C dispute out of Court. The said demand note was sent to the respondent by post under the power of attorney of one Joseph Mihayo, which were conferred to him, by the petition in this suit. A certificate of posting a registered mail is annexed hereto as Annexure B.
D    --   that the petitioner avers that Safe Business and Construction Company Ltd, under the directorship of the petitioner and respondent in this petition, and the same persons are the only subscribers to the Memorandum and Articles of Association as verified by a letter by one Mahingile, a Senior Assistant Registrar of Companies-his letter is Annexure C. E
   --   that the respondent unlawfully and contrary to the company's regulations, after he had written the aforementioned letter of disqualification, swindled company's fund to the amount of Shs 1,350,000/= without the consent of the petitioner as F shown by bank statements-Annexure D. The petitioner in this case cautioned the bank with a letter dated 1 December 1994-Annexure E.
   --   that the company incurred some costs for the maintenance of the said M/V Land Rover UJ 2203 amounting to Shs 718,950/= as per Annexure F. G
   --   that the cause of action has arisen in Dar es Salaam within the jurisdiction of this court; given the fact that the petitioner demands the respondent to surrender property of the said company valued at Shs 13,845,000/=. H
The petitioner is praying for
   (a)   an order of the court declaring the winding up of the aforementioned company;
I    (b)   an order that the said property as per paras 4 to 7 of the petition be surrendered by the respondent.

A    (c)   an order that the respondent pays to the petitioner costs of this application.
   --   an order that the respondent pays to the petitioner interest at the court's rate of interest on the decretal amount from date of filing of this petition to the date of full settlement. B
   --   any other relief as this court may deem fit to grant.
Mr Lyimo, who appeared for the petitioner, argued with some force that the existence of the company is not untenable. It was Mr Lyimo's argument that this company had initially C two directors-the petitioner and the respondent; that these two subscribers are also the shareholders to the company. It was Mr Lyimo's contention that since the disqualification of the petitioner by the respondent these two partners cannot work together. That the respondent has locked the office and moved out some of the D company's properties to an unknown place. It was therefore impossible for the company to operate under prevailing circumstances. Mr Lyimo was of the view that under the prevailing circumstances of disharmony between the two directors, the operation of the E company is in serious doubt and therefore it should be wound up by order of this court. In the alternative, added Mr Lyimo, the Court should find that due to the disagreement between the two directors, the operation of the company has been rendered impossible, this court, in exercise of its discretion to wind up the company and appoint an official receiver or liquidator so that the same may perform his legal duties to creditors and/or F shareholders.
The respondent who preferred to argue his own case before the Court put up some forceful arguments to challenge the petition.
He stated before the Court that since the inception of this company there were four G original shareholders: Steven, Ainea, Francis and Ernest. The subscribers were to be two-the petitioner Ernest and himself. The respondent told the Court that the petitioner is the cause of all the problems now facing their company. That the petitioner had withdrawn some Shs 872,000/= which he has not accounted for and referred the court H to Annexure D. The respondent disputed the contents in statement Annexure F produced by the petitioner. The respondent informed the Court that contrary to what has been stated by the petitioner, it is the same petitioner who has dissociated from the company and formed his own company by the name of Eric Business and Construction I Company. He added further that the petitioner has banked a forged

cheque in their account and a criminal case No 57 of 1994 is pending in Court. That the A petitioner is the one who has locked the office forcing the respondent to look for another venue from which to conduct their company business. As to the Land Rover the respondent said it was his own personal vehicle that he had left with the petitioner who took the registration card and added his (petitioner's) name. This matter also is still B pending in court with the registration card under police custody. The respondent also added that they have tried to summon the petitioner to come and attend to company's business but all in vain hence they sent him a message to hand over the office and C company's properties. To this request the petitioner has not responded. It was the respondent's submission that since theirs was a private company no winding up procedures can be applied--the respondent is relying on s 140 of Cap 212. He also argued that s 167(d) is confined to members of the company and not directors. The D respondent prayed for the dismissal of the petition as it does not apply in their case at hand.
In reply Mr Lyimo on behalf of the petitioner said that as far as this company is concerned it has only two directors and therefore any resolution that was passed to E disqualify the petitioner was therefore null and void.
Having heard the parties, it is evident that the two directors cannot work together any longer. The atmosphere within which they are supposed to transact business is tainted with accusations of fraud. Not only that but there are criminal charges filed in court against one of the directors and one wonders whether under such conditions, this F company can really survive.
The petitioner has asked this Court to wind up the company under ss 163, 167(d), 172 and 173 of Cap 212. Section 163 of Cap 212 reads: G
   `163 The High Court shall have jurisdiction to wind up any company registered in the Territory.'
And again s 167 lays down circumstances in which a company may be wound up by H court. The petitioner has relied on s 167(d) of Cap 212 which reads:
   `A company may be wound up by the Court if--
   (a)    . . . .
I    (b)   . . . .
   (c)   . . . .

A    (d)   the number of members is reduced, in the case of a private company below two or in the case of any other company below seven.'
Mr Lyimo arguing for the petitioner has submitted that as of 12 September 1994 their company had two directors: the respondent and the petitioner. Also these two persons B are also the subscribers to the memorandum and articles of association and therefore the shareholders and no change has been effected in the company since it was incorporated. This information was transmitted to the petitioner by the office of the Registrar of Companies. C
However this information is challenged by the respondent. According to him a certified board resolution was filed with the Registrar of Companies on 12 July 1994. The contents of the resolution were twofold-the disqualification of the petitioner as a director and the appointment of one Steven P Mgaya as a new Director. Pursuant to this D resolution, a demand note of 14 March 1995 was communicated to one Joseph Mihayo (purportedly holding a power of attorney on behalf of the petitioner) to inform him of the current situation. We have therefore two contradictory informations emanating from the office of the Registrar of Companies. While the petitioner is informed on 12 September E 1994 that he is still one of the directors to the company; the same office on 12 July 1994 acknowledged the change in directorship as presented by the respondent. It is therefore rather a confused state of affairs. And in that vein the respondent was correct to contend that their company has at the moment two directors-one Steven P Mgaya F having replaced the petitioner.
In terms of s 163 and 167(f) this court has the power to wind up any company registered in this country. Section 167(f) of Cap 212 reads: G
   `167 A company may be wound up by the court if:
   (a)    . . . .
   (b)   . . . .
   (c)   . . . . H
   (d)   . . . .
   (e)   . . . .
   (f)   the court is of opinion that it is just and equitable that the company should be wound up.'
In my considered view I think it would be just if this company is wound up because as I remarked earlier on in my ruling the former

directors are not in talking terms so to speak; each director is accusing the other A director of one of the other; accusations of fraud are abounding. The petitioner is contending that he is still one of the directors while the respondent has submitted evidence that the petitioner's name was deleted and a replacement appointed. The office B of the Registrar of Company is also not very helpful in this regard by giving contradictory statements of affairs.
In the final event, this Court in exercise of its discretion under s 167(f) has deemed it fit to wind up this company and appoints the Registrar of Companies to act as the official receiver in terms of s 179 of Cap 212. C
I make no order as to costs.

D