By FAUSTINE KAPAMA-Judiciary
THE High Court in Dar es Salaam has ordered the Director
of Deposit Insurance Board (DIB), Mr Isack Kihwili, to pay over 145.9bn/-to Coast
Textiles Limited in execution of court decree issued about seven years ago against
FBME Bank Limited.
Judge Amir Mruma gave such order recently against
the DIB Director, the respondent, who was appointed by the Bank of Tanzania
(BoT) as Liquidator of FBME Bank, after granting an application for execution
filed by Coast Textiles Limited, the applicant.
“Accordingly I grant the Applicant's application and
order the liquidator of FBME to satisfy the decree against FBME pursuant to the
provisions of Order XXI Rules 51 and 55 of the Civil Procedure Code as prayed
in the application,” the judge declared.
It was submitted generally that the execution of
such decree would be void because the judgment debtor's bank is being wound up
and in his show cause affidavit the Director of the liquidator asserted that
since FBME Bank Limited is being wound up, any execution against its assets
would be void.
However, Judge Mruma pointed out that as of the date
of the ruling the court could not have benefit of knowledge of the nature and
of any winding up and, or insolvency proceedings filed in any court so as to determine
whether granting the execution application would contravene the Companies' Act
or not.
“There is nothing in terms of evidence to show that
FBME is insolvent or that at the time of revocation of its banking business license
and compulsory liquidation order or subsequent to that period it was unable to
repay its loans or any other liability so as to term it as an insolvent bank,”
he said.
According to him, it would be inconceivable and
contrary to the provision of Article 107A of the Constitution of the United
Republic of Tanzania, which declares court as final authority in deciding
rights of the parties to subject a court decree to the scrutiny of the
liquidator of a company under liquidation.
The judge pointed out that as per section 3 of the
Civil Procedure Code, decree of the court is the formal expression of an
adjudication which so far as regards the court expressing it, conclusively
determine rights of the parties with regard to the matter.
“If the matter has been conclusively determined by
the court it cannot be re-adjudicated by a liquidator as to ascertain the
parties claim in terms of section 365 of the companies Act,” Judge Mruma said.
It was his view that a decree is not a claim against
the company, but an entitlement which has been conclusively proved and
determined thus, it is not the subject of section 365 which deals with claims
against the company.
“I thus, decline the invitation to make a finding
that execution process against FBME bank will be void and contrary to the
provisions of the law as suggested. To the contrary, I find that the Applicant
has right to execute its decree as prayed,” he said.
The company filed the application for execution,
requesting the sum of 145,946,500,641/- be realized from the DIB, the
Liquidators of FBME Bank, default of which the Director of Board be held
accountable.
Coast Textiles Limited, a local company, decided to
seek the Court intervention after failure by FBME Bank, whose operations were
taken over by the BoT, to implement the judgment given by Judge Aloysius
Mujulizi in 2015 on such payments.
Records show that the local company has been in
court corridors since 1997, which is 24 years, pursuing her rights against the
FBME Bank Limited, which was later taken over by the BoT having being
implicated with money laundering crimes to protect Tanzanians customers.
Coast Textiles Limited was at all material times a
customer of FBME Bank Limited since 1997 and had been granted an overdraft
facility by Trust Bank, through its branch in Kenya. But the amount involved,
which is about 600,000 US dollars, was not credited to Coast Textiles Limited
suppliers in India.
A dispute arose relating to repayment of the
overdraft, leading Delphis Bank, the predecessors of FBME Bank Limited to
consolidate two credit facilities. Coast Textiles Limited claimed that the
concentration of the two credit facilities granted by the bank was wrong and in
breach of the agreement.
By deed of transfer from Delphis Bank (T) Limited,
predecessor in title of FBME Bank Limited dated June 28, 2001, the latter
bank’s interest in Coast Textiles Limited were transferred to Loan and Advances
Realization Trust, the predecessor in title to Consolidated Holding
Corporation.
Consequently, the Consolidated Holding Corporation,
exercising powers granted to it under the law, transferred the landed property,
including plant and machinery as mortgaged by debenture in favour of FBME Bank
which latter fraudulently sold the property to Middle East Properties Limited.
The said Middle East Properties subsequently
transferred the property on Plot No. 3 LOT 20, Nyerere (Pugu) Road to Empire Properties
Limited and subsequent to Five Star Investments Limited. The transfer happened
while the matter was in court.
On December 31, 2015, the court issued a garnishee
order directing the Governor of BoT to attach accounts belonging to FBME Bank
Limited in execution of the decree issued by High Court Judge Aloysius Mujulizi
for the payments in question, which include principal sum and interests.
Following that garnishee order, the BoT filed an
application for investigation into legal ownership and, or status of the fund
held in bank accounts and eventually lift and set aside the order. In its
ruling, the court agreed to lift the garnishee order, but could not exonerate
the BoT to satisfy the decree.
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