IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA

ARUSHA SUB REGISTRY

AT ARUSHA

LAND CASE NO. 28 OF 2021

ROBSON ELISHILIA LASEKO...................... 1st PLAINTIFF
NELSON NICK NSAILO ©
NELSON ROBSON LASEKO...... ................ 2nd PLAINTIFF

VERSUS

AMANA BANK LIMITED .................................................. 1st DEFENDANT

M/S TANCHI BROTHERS CONSTRUCTION
COMPANY LIMITED............................................................. 2nd DEFENDANT

JUDGMENT

07th November, 2023 & 07th February, 2024

KAMUZORA, J.

The Plaintiffs herein; Robson Elishilia Laseko and Nelson Nick

Nsailo @ Nelson Robson Laseko are natural persons and businessmen

who works for gain here in Arusha. The first Plaintiff is the owner of two

properties described as Plot No. 14, Block C, Land Office No. 205932

with Certificate of Title No. 22084 at Kituoni street and Plot No. 113

Block 24, Land Office No. 4226 with Certificate of Title No. 1204 at

Kaloleni, all within Arusha Municipality. The second Plaintiff is the owner

of the property described as Plot No. 66, Block C, Land Office No. 17839

Page 1 of 63
with Certificate of Title No. 15528, West Meru within Arumeru District in

Arusha Region. The 1st Defendant, Amana Bank Limited is a financial

institution dealing with banking business while the 2nd Defendant

TANCHI Brothers Construction Company Limited (to be referred as

TANCHI) is a limited liability company whose major business is

construction activities.

The record reveals that sometimes in the year 2018, the 2nd 1

Defendant was awarded two tenders for construction projects; one at

Arusha Technical College (ATC) and another at Arusha Urban Water

Supply and Sanitation Authority (AUWSA). One of the projects conditions

was for the 1st Defendant to be guaranteed by a financial institution

before any amount could be released as advance payment and

performance payment for the projects. The 1st Defendant agreed to

guarantee the 2nd Defendant but demanded the 2nd Defendant to

produce immovable property as security or a guarantor who will issue

property as security for the facilities. The 2nd Defendant approached the

Plaintiffs whom at different times agreed to guarantee the 2nd Defendant

by depositing their properties as securities for the facilities. They

deposited the above mentioned properties as securities and the fund

was released for the 2nd Defendant to commence construction work.

Page 2 of 63
 Sometimes later, the claim arose over the 2nd Defendant's

performance for the projects. AUWSA raised the claim for non­

performance and claimed back the advance payment and performance

guarantee. The bank served notice to the Plaintiffs claiming for a total of

TZS. 2,784,741,099.90/= from each of the Plaintiffs. This triggered this

suit as Plaintiffs claimed that at the time the notices were served to

them, the guarantee period had lapsed thus, they had no obligation

arising out of the guarantee. They instituted this suit claiming for the

following reliefs: -

1. A declaration that the guarantee agreement between the Plaintiffs

and the second Defendant had expired by 2019,

2. A declaration that the detainment of the Plaintiffs' certificate of

titles by the 1st Defendant is illegal and unlawful,

3. The 1st Defendant be ordered to discharge the mortgage they

registered with the land registry,

4. The Defendants be ordered to remit the certificate of titles to the

Plaintiffs,

5. An order for permanent injunction restraining the Defendants and

their agents from dealing with the suit properties,

6. Payment of general damages and costs of suit.

Page 3 of 63
 The 1st Defendant disputed the Plaintiffs' claim and raised counter

claim against the Plaintiffs and 2nd Defendant jointly and severally for

the payment of TZS. 2,887,839,817 being the outstanding amount

financial facilities advanced to the 2nd Defendant to finance several

projects. The ^Defendant also prayed for penalties at the rate of 0.5%

of the outstanding amounts charged on daily basis from 1st July, 2022 to

the date of judgment, advance payment guarantee at TZS.

1,106,450,788/= for AUWSA project arising out of breach of contract by

the 2nd Defendant, interest at 7% to the date of satisfaction of the

decree and costs of the suit.

In their defence, the 2nd Defendant noted and admitted the

Plaintiffs' claim but prayed not to be held liable on account that

whatever loss incurred by the Plaintiffs was occasioned by the 1st

Defendant. The 2nd Defendant admits to be indebted to the 1st

I
Defendant but not for the amount claimed.

When the matter came for hearing the following were raised as

issues to guide the court in its determination;

1. Whether there was guarantee agreement between the Plaintiffs

and the Defendants.

2. Whether Plaintiffs' securities were issued for purpose of one-year

guarantee.

Page 4 of 63
 3. Whether the Plaintiffs' properties were strictly issued to guarantee
projects ofATC and AUWSA.
4. Whether the documents used to secure financial facilities were
genuine and valid.
5. Whether the amount claimed by the 1st Defendant was secured by
the Plaintiff's properties.
6. What is the outstanding amount in relation to financial facilities
advanced by the 1st Defendant.
7. To what reiief(s) are parties entitled.

Both parties were ably represented; the Plaintiffs were represented

by Mr. Edwin Silayo, the 1st Defendant was represented by Mr. Denis

Msafiri and Ms. Georgina Basil and the 2nd Defendant was represented

by Mr. Kapimpiti Mgalula and Ms. Tayon Mtei. For the Plaintiffs, three

witnesses testified before this court, Plaintiffs inclusive while on the

defence side, a total of six witnesses testified before this court. For easy

of refence, I have summarised evidence from each witness who was

paraded before this court.

PW1, Nelson Robson Laseko @ Nelson Nick Nsailo is the 2nd

Plaintiff in this case and the son of Robson Eshilia Laseko who is the 1st

Plaintiff herein. He testified that he knows TANCHI as construction

company which constructed one of their offices here in Arusha. That,

there was a time TANCHI was awarded government tender for projects

at ATC and AUWSA here in Arusha and TANCHI approached Amana Bank

Page 5 of 63
 requesting for finance to perform the projects. That, Amana Bank

agreed to guarantee them but on condition that TANCHI should deposit

immovable property as security or be guaranteed by a person with

immovable property. That, TANCHI approached the Plaintiffs who agreed

to offer their properties as security for three months so that advance

payment could be released to TANCHI. However, that, the Plaintiffs were

advised by bank officers to sign a one-year guarantee as acceptable and

standard guarantee period. That, they agreed and signed the guarantee

agreement and Mortgage documents for two properties on 19th March

2018; one at West Meru in the name of the 1st Plaintiff and another at

Kituoni street-Tengeru in the name of the 2nd Plaintiff.

PW1 explained that the documents were signed at their office in

the presence of people from TANCHI and Amana officers. That, the

documents were all typed and the guarantee agreement indicated

guarantors' responsibilities and guarantee period which was one year.

That, they signed and dated each page of the documents and were

informed that the bank signatories were at their headquarters at Dar es

salaam thus, the bank officers left with the documents for purpose of

taking the same to the bank head office for signature. That, they were

supposed to return the signed copies to the Plaintiffs for the Plaintiff to

register the mortgage but the same were never returned.

Page 6 of 63
 PW1 further testified that, four months later after they have signed

documents for ATC project, TANCHI earned another tender for AUWSA

project. That, again, TANCHI requested Amana for financial facility (the

advance payment bond) for that project and the Plaintiffs were

approached in July, 2018 with the same request. That, the 2nd Plaintiff

agreed to sign the guarantee agreement and mortgage deed for that

project for the period of one year. That, likewise, the Bank officers left

with the documents for them to be signed at their bank Head Quarter at

Dar es salaam. That, they promised to give to the Plaintiffs all

documents for them to register the mortgages to the registrar of titles.

That, the Plaintiffs tried to write emails and text messages to the bank

official requesting for the documents but they were not issued with any

despite promising to do so. That, ATC project commenced and it was in

good progress and AUWSA project also commenced and they witnessed

it in progress.

PW1 further testified that all original documents for the mortgaged

properties were handled to the Bank officials and they waited for the

lapse of one year for them to claim back their documents. That, after

the lapse of the guarantee period, in 2019 they started making follow up

through email and phone conversation to claim back their documents.

That, the bank officials specifically, the Bank Manager of Amana Bank at

Page 7 of 63
 Arusha Branch made them to believe that everything was ok and the

documents will be handled back to them. That, the situation remained

the same until July, 2021 when the Plaintiffs received two letters from

Amana Bank demanding them to pay approximately TZS. 2.7 billion. Two

demand notices dated 14th July 2021 were admitted collectively as

exhibit PEI.

PW1 explained that, one notice was directed to him for his

property at West Meru and it referred the obligation of the guarantor

after TANCHI defaulted to pay the principle and profit amount of TZS.

2,784,741,099.90. That, the notice indicated that the bank intended to

sell the mortgaged properties to realise the bank facilities. That, the

second notice was directed to PWl's father one Robson Elishilia Laseko

(the 1st Plaintiff herein). That, it referred two titles; one at Kituoni Street

and another at Kaloleni and indicating that there was default in payment

of the same amount of TZS. 2,784,741,099.90. That, the notices

required the Plaintiffs to pay the claimed amount within 60 days, default

of which, would amount to the selling the mortgaged properties.

PW1 further testified that after they received the notices, they

communicated with their lawyer and asked him to investigate the matter.

That, their lawyer conducted search at the office registrar of tittles and

discovered that all three titles were being held by Amana Bank. That,

Page 8 of 63
 they asked copy of mortgage documents and their lawyer obtained three

certified copies of the registered mortgages from the Registrar's office.

Three mortgage documents certified by the Senior Assistant Registrar of

titles were admitted collectively as exhibit PE2.

PW1 explained that upon search they discovered that the

mortgages were registered against their properties but the registered

mortgage deeds were not dated and signed in some of the pages while

those signed by them were dated and signed in all pages. That, all

mortgage deeds signed by the Plaintiffs indicated the purpose for the

same which was to provide advance payment guarantee to TANCHI for

ATC project using title at Kituoni Street and West Meru and AUWSA

project for title at Kaloleni but, the mortgages they received from the

Registrar did not contain that content. That, the mortgage was not

signed by bank officer as they only contained initials of the Bank officer

similar to the signature of Ayubu Horohondo, the company secretary of

Amana Bank. That, the mortgage which they signed indicated guarantee

period and the amount of advance payment but the one obtained from

the Registrar indicated that the mortgage was for unlimited period and

for unspecified amount. That, the Plaintiffs as mortgagor were required

to register the mortgage but the bank decided to register the mortgage

Page 9 of 63
 on their behalf without their consent. That, upon discovering the

inconsistencies they decided to go for legal action in court.

PW1 further explained that, when they signed mortgages for

Kituoni street and West Meru properties on 19th March, 2018, the Bank

officials informed them that they were sending the documents to their

head office at Dar es salaam for signature but the same shows that they

were registered on 20th March, 2018 at ll:00hrs and the bank officers
f
did not indicate the date they signed the mortgage documents. That,

contrary to paragraph 1.2 of the mortgage deed which required the

mortgagor to register the mortgage and pay registration costs and the

bank could only register mortgage if authorised by the mortgagor, the

bank registered the mortgage without the Plaintiffs' consent or request

to do so on their behalf and the Plaintiffs did not pay registration costs.

PW1 further explained that, Mortgage for the property at Kaloleni

was signed on 30th July, 2018 and the same was registered on 31st July

20218 at 13:00hrs for the costs of TZS, 10,000/=. That, the bank officer

did not indicate the date or month they signed the document except for

the year. That, despite the fact that this mortgage was signed four

months later after the first two mortgages, it had the same mistakes as

those found in the first two documents. That, upon search, they were

Page 10 of 63
 informed at the registry office that Amana Bank requested the

registration of the mortgage.

PW1 also testified that the Plaintiffs' obligations were stated in the

guarantee agreement. That, the guarantee agreements were collected

by officers from Amana bank but in their defence to this case, Amana

Bank denied the existence of guarantee agreement and claimed that

their relationship was on the mortgage deed only. PW1 insisted that

Amana are supposed to present guarantee agreement and show the

breached clauses as per paragraph 1.4 of all mortgage deeds.

PW1 added that the guarantee had time limit with specified

projects of ATC and AUWSA which TANCHI asked the Plaintiffs to

guarantee. That, the Plaintiffs guaranteed TANCHI for advance payment

for one year on each project. That, the time limit of one year is also

indicated in the first defence by Amana in which annexure ADL3 which is

a letter from AUWSA to Amana was to remind them that their one-year

guarantee has expired meaning that the Plaintiffs only guaranteed

TANCHI for one year. A letter dated 18th October 2019 was admitted as

exhibit PE3. PW1 insisted that, for the guarantee agreement signed in

July 2018, the Plaintiffs could only be liable until July, 2019.

PW1 added further that the Defendant's documents including the

affidavits and additional documents filed in court contained different

Page 11 of 63
 signatures but they refer the same person. That, the affidavit regarding

the signature on title and mortgage was deponed after the mortgage

was registered. That, while the affidavit was deponed on 21st March,

2018, the mortgage was registered on 20th March, 2018 meaning that

the documents were made to mislead the court. That, the notices show

that each Plaintiff has liability of 2.7 billion without indicating the liability

for each person or the claim from each project on the principal and

interest amount.

PW1 also testified that after they signed documents, they never

received any correspondence from the bank until when they were served

with default notices. He claimed that the incident affected the Plaintiffs'

business and office reputation and since Amana is still retaining their

documents, they cannot be trusted by banks to get capital. That, for the

tittle at Kituoni Street there was construction in progress but they could

not proceed with construction as there is a pending case. That, other

properties cannot be utilised fully as well because of unsettled matter.

That, the Plaintiffs were also affected psychologically and suffered

mental anguish thus, prays for damages. PW1 also prays this court to

order Amana and TANCHI to surrender back their tittle deeds. That, the

Plaintiffs are only ready to pay if there is any claim established within

one year of guarantee but if not, he prays this court to order the

Page 12 of 63
 Defendants to pay damage suffered by the Plaintiffs and costs of the

case.

On being cross examined, PW1 further testified that TANCHI

requested for three months guarantee and promised to pay the amount

within that period but the Bank officers claimed that three months was

short period as guarantee must at least be one year. That, PW1 agreed

to have not complained over any forgery to any authority. He added

that, it was not their obligation to make follow up of TANCHI

expenditure as QS was responsible to verify the performance of the

contract. That, he communicated with TANCHI on the claim and

admitted that Amana was claiming some amount, about 400 million but

not the figure indicated in exhibit PEI. That, TANCHI assured the

Plaintiffs that the claim was not associated with their securities as there

were other bank facilities issued to TANCHI and other securities were

deposited including; debenture at 3.8 billion, counter guarantee from

Insurance, a plot from Kunduchi valued approximately 4.8 billion and 8

company motor vehicles. PW1 added that based on TANCHI's assurance,

it was not correct to say that all facilities advanced by Amana to TANCHI

was guaranteed by Plaintiffs' properties.

PW1 also testified that, after the lapse of one year the Plaintiffs

communicated with TANCHI claiming for their documents and TANCHI

Page 13 of 63
 showed effort to release Plaintiffs' titles by submitting alternative

security for the property located at Kunduchi. That, Amana Bank

continued holding Plaintiffs' properties even after the lapse of one year

despite not showing to the Plaintiff any proof of default by TANCHI.

That, the notice in Exhibit PEI does not indicate the project in which

TANCHI failed to perform or the amount advanced to TANCHI on each

project. That, the Plaintiffs decided to sue TANCHI because the bank
I
claimed that TANCHI had defaulted in performing their obligation and

continued holding the Plaintiffs' documents on that claim. He insisted

that, TANCHI was responsible to pay if there was any default but he

maintained that, there was a need to refer the guarantee agreement.

PW2 is Robson Elishilia Laseko, the father to PW1, had similar

evidence with PW1 on how they came into contact with TANCHI and the

singing of the guarantee agreements and the mortgage documents. In

addition, PW2 testified that during guarantee process he was

approached by two bank officers; a lady called Mayasa and one Denis.

That, Mayasa was a branch manager of Amana at Arusha branch whom

he knew before as she previously worked at Standard Chartered and

served him as a customer. That, when they went to his office, they were

accompanied by Mr. Bao and his fellow Chines from TANCHI Brothers

and a lady advocate. That, the purpose was for them to sign the

Page 14 of 63
 guarantee agreements and mortgage deeds. That, after reading and

understanding the documents they signed and dated all pages and PW2

issued them with two titles for West Meru and Kituoni street. That, the

bank officers promised to issue copies after they were all signed by bank

officers at their headquarter, Dar es salaam but, they were never issued

with any document.

PW2's evidence is also similar to that of PW1 in relation to

registration of mortgage and commencement of ATC project. He also

testified that after four months, in July, 2018, bank officers and officers

from TANCHI went to him again for another project of AUWSA. That, he

asked them about the previous documents and Mayasa assured him that

they will be issued together. That, he signed another guarantee

agreement and mortgage deed for AUWSA project on 30/07/2018 and

the terms were similar to the prior documents. That, he gave them his

title of Kaloleni on one year guarantee for advance payment. That, after

they had collected the documents, he never saw the bank officer going

back to his office until when he was served with notice, exhibit PEI.

That, after lapse of one year, PW2 tried at different times to ask for his

documents and Mayasa was promising to return them. That, PW2

trusted her words as she was working with a Muslim bank which he

believed its staffs could be trusted. That, in 2021 they were served with

Page 15 of 63
 two notices, Exhibit PEI for the claim of 2,784,741,099.90 and the

notices contained the same amount and mentioned properties at Kituoni

Street, Kaloleni and West Meru.

The evidence by PW2 in relation to legal action and inconsistencies

in registering mortgage is similar to PW1. In addition, PW2 testified that

there is another agreement between Amana and TANCHI signed on

08/03/2018 indicating that TZS 1.7 billion was advanced as a loan and

the security was PW2's titles which was not yet issued to them as the

same was surrendered by PW2 to the Bank on 19/03/2018 at around

16:00hrs. PW2 claimed to have suffered loss and incurred costs for this

case. That, he had also suffered from hypertension and his business is

also affected as he was supposed to travel for business but he was

forced to cancel the trip to attend the case. He therefore prays for this

court to order the Defendants to surrender their titles and pay for

damages and costs.

On being cross examined, PW2 denied to have deponed the

affidavit to verify his signature to the registrar. He testified further that,

he was unable to continue with development of the plots despite having

building permit because the title is with the bank. That, TANCHI

informed him that the claim had no reality and TANCHI's director died

out of shock over that claim.

Page 16 of 63
 PW3, Judith Alfred Lohay is a private advocate/a Notary public and

commissioners for oath. She testified that, TANCHI Brothers were her

clients for a long time and there was a time they informed her that they

were awarded tender for construction at ATC. That, TANCHI wanted to

sign guarantee agreement with the Plaintiffs Robson Laseko and Nelson

Laseko so that they could use the Plaintiffs' title deeds to secure

advance payment bond from Amana Bank. That, on 19/03/2018 TANCHI

brothers informed her that the documents were already prepared by the

Bank and they wanted her to witness the documents. That, she went to

the office of Robson Laseko where she met Robson Laseko, Nelson

Laseko, two officers from TANCHI brothers and two officers from Amana

Bank. That, she witnessed the guarantee agreements and the mortgage

deeds and all parties signed on each page of all documents save for the

bank as the bank officers claimed that the documents were to be signed

at their head office. PW3 identified Exhibit PE2 as containing the

mortgage deeds which she witnessed and another was witnessed by

Aishinile Maimu, a lawyer from her office.

PW3 further testified that, apart from mortgage deeds, they also

signed guarantee agreement between Robson Laseko and TANCHI

brothers guaranteeing the bank for advance payment. That, parties

signed and dated documents in all pages but Exhibit PE2 has no

Page 17 of 63
 signatures and dates in all pages. That, all documents were collected by

Bank officers to be sent to their head office at Dar es salaam for

signature and they agreed for the documents to be returned for

registration but were never returned. That, when signing the second

agreement, the bank promised to submit all documents together as they

agreed that PW3's office was to assist in registering the mortgages at

the costs of 2,500,000/= for all documents but, the same was never

paid. On being cross examined, PW3 added that the mortgage deeds

indicated that it was the duty of mortgagor to register the mortgages.

After the testimony of PW3, the Plaintiffs' case was closed and the

defence side was allowed to present their evidence. The 1st Defendant

presented five witnesses DW1, DW2, DW3, DW4 and DW5 and 2nd

Defendant presented only one witness, DW6.

DW1, Fahd Ahmed Afif is the head of legal department and

company secretary of Amana Bank (the 1st Defendant herein). According

to his evidence, in 2018 he was working as legal manager at Amana and

was responsible for preparing contracts, vetting and reviewing contracts

and all other legal issues related to the company including attend court

cases. He testified that, Robson Elishilia Laseko was a guarantor of

credit facilities issued to TANCHI Brothers and was also a shareholder of

TANCHI with 500 shares equals to 4 percent. That, the Plaintiffs issued

Page 18 of 63
their landed properties to secure credit facilities advanced to TANCHI

who are customers of Amana bank. That, Plaintiffs deposited titles for

three landed properties as per Exhibit PE2; certificate of title No. 2284,

Plot 14 Block C, Kituoni Street Arusha Municipality in the name of

Robson Elishilia Laseko, certificate No. 1204, Plot No 113 Block 24

Kaloleni area, Arusha Municipality in the name of Robson Elishilia Laseko

and certificate of title No. 15528, Plot No 56 Block C West Meru Trading

centre Arusha Municipality in the name of Nelson Nick Nsailo. That, they

registered mortgages for facilities offered to TANCHI as advance

payment guarantee, performance guarantee and big bond guarantee.

DW1 explained that since Amana Bank is operating under Islamic

umbellar, credit facilities were recorded as Mrabaha agreements, free

interest loan agreement and offer letters. The documents were admitted

as exhibits as follows; the document dated 08/03/2018 as DEI, dated

27/03/2018 as DE2, dated 26/07/2018 as DE3, dated 30/11/2018 as

DE4, dated 16/01/2019 with a title "Payment Guarantee" as DE5, dated

16/01/2019 with a title "Approval for the Murabaha and commodity

Murabaha Amounted TZS 240,000,000.00 for purchases of construction

materials" as DE6, dated 25/03/2019 as DE7, dated 26/07/2019 as

DE8, dated 03/01/2020 as DE9, dated 19/03/2020 as DE10 and the

document dated 05/08/2020 as DE11.

Page 19 of 63
 DW1 explained that, the above exhibits referred to approval for

the financial facilities including working capitals and purchase of

construction materials. That, Exhibit DEI was for approval of advance

and performance guarantee and it used the word 'letter offer'. That,

Exhibit DE2 was approval for Marabaha facility of TZS. 40million and

Tawaruq (commodity Mrabaha) of TZS 60 million for purchase of

construction materials. That, Exhibit DE3 was approval for performance

and advance payments guarantees under working capital finance

amounting to TZS 2,940,840,647.00 for construction of AUWSA main

offices. That, Exhibit DE4 was approval for the Mrabaha and commodity

Mrabaha facility of TZS. 250 million to support construction of four

storey classrooms, laboratories and office blocks at ATC. That, Exhibit

DE5 was payment guarantee of TZS 100 million for procurement of

cement from Tanga Cement and Exhibit DE6 was approval for Mrabaha

and commodity Mrabaha of TZS 240 million for purchases of

construction materials. That, Exhibit DE7 was extension of advance and

performance guarantee of TZS 1,702,576,249.62 for ATC project arid

Exhibit DE8 was the approval for working capital of TZS 720 million for

procurement of building materials and payment of salaries. That, Exhibit

DE9 was approval for Mrabaha facility, commodity Mrabaha, renewal and

extension of advance payment and performance guarantee for two

Page 20 of 63
contracts in favour of ATC and AUWSA the amount of TZS.

3,610,433,902.96. That, Exhibit DE10 is the application for Mrabaha

facility, commodity Mrabaha for procurement of materials and labour

contracts at ATC and Exhibit DE11 is the extension of advance payment

guarantee amounting to TZS 528,992,329.80 and performance

guarantee amounting TZS 421,315,814.60. DW1 added that Exhibits

DEI to DE11 refers to facilities offered to TANCHI by Amana Bank and

all offers were accepted by TANCHI and utilised accordingly. He

tendered Mrabaha Facility agreements that were admitted as exhibits as

follows; the document dated 28/03/2018 as DE12, dated 27/06/2019 as

DE13, dated 27/09/2019 as DE14, dated 15/11/2019 as DE15, dated

22/12/2019 as DE16, dated 03/01/2020 as DE17, dated 19/02/2020

with schedule indicating TZS 11,621,296.25 as DE18, dated 19/02/2020

with schedule indicating TZS 837,852,547.08 as DE19. Interest Free

Loan Agreement dated 19/02/2020 was admitted as exhibit DE20,

Master Commodity facility agreement dated 11/05/2020 as DE21, and

the document dated 21/05/2020 with reference No. ABL/LD/CMFA/19-

09-20/000040 was admitted as DE22.

DW1 explained that Exhibit DE12 shows the amount of money

paid for purchasing of construction materials in favour of TANCHI

Brothers as bank customer. That, Exhibit DE13 shows the amount paid

Page 21 of 63
 as cost and profit of the bank and Exhibit 14 to 22 shows amount of

bank facilities issued in favour of TANCHI. That, for all transactions, the

securities were; one, Plot No. 113 Block 24 Kaloleni in Arusha with CT

No 1204 in the name of Robinson Elishilia Laseko (shareholder) with

market value of TZS. 2,093,000,000 and TZS. 1,360,450,000 as forced

value. Two, Plot No 14 Block C Kituoni Street area in Arusha with CT No.

22084 in the name of Robinson Elishilia Laseko with market value of

490,000,000 and forced value of TZS 318,388,500. Three, is Plot No 66

Block C West Meru area, Arumeru District Arusha with CT No. 15528 in

the name of Nelson Nick Nsailo, the Son of Robinson Elishilia Laseko

with market value of TZS. 931,000,000 and forced value of TZS.

605,150,000. That, other properties used as security includes; Plot No.

33A Kunduchi Beach area Kinodoni District at Dar es salaam with CT No.

23557 in the name of Proud Investment Ltd with market value of TZS.

4,538,000,000 and forced value of TZS. 3,403,500,000, specific

debentures over the company's motor vehicles and other moving

equipment valued at TZS. 419,650,000 whose forced value is TZS.

209,825,000, general debenture over the company's assets with

unspecified value and directors' personal guarantees for unspecified

value. That, the total security value is TZS. 8,471,650,000 and the

forced value is TZS. 5,492,625,000.

Page 22 of 63
 DW1 explained the process in obtaining bank facilities that, while

applying for the financing the client must state the business and security

to be used. That, the bank upon receiving the application, will conduct

business assessment and appoint the valuer to evaluate the proposed

security. That, the person in ownership of security must produce the

original copies of ownership document for purpose of valuation of

proposed security and conduct official search at the land registry as

required by BOT Regulations which requires the value of security to be

125% of the value of the financing facility. That, after being satisfied

and the approval issued internally, the client has to be issued with offer

letter/approval for endorsement. That, the bank will have to prepare

mortgage documents including; mortgage deed, notification for

disposition (Land Form No. 30), spouse consent or affidavit for

unmarried person.

DW1 added that, mortgage documents are in standard form and

are prepared at the Heard Quarter of Amana Bank at Dar es salaam

using a copy of title deed issued by the client or his guarantor. That, for

customers who are not at Dar es salaam, the documents are signed and

endorsed at HQ by the signatories and sent to the branch office where

the branch manager or any other officer will be required to send the

document to the guarantor and ensure that they are signed in their

Page 23 of 63
 presence together with witnesses and an advocate. That, after signing,

the bank will send the documents to the registrar of titles for registration

thus, the guarantor will have to surrender to the bank the original title

deed together with money for payment of registration fees and proof for

payment of land rent. That, the branch office of the bank which is near

to the client will send the document for registration to the registrar of

titles and in case of any problem, the responsible branch will have to

consult the guarantor for correction. That, after registration is complete,

the bank officers will send the registered document together with

original title deed to the bank's head office.

DW1 further testified that the Plaintiff's securities were used as per

exhibit DEI for the project of ATC with REF. No ME/024/2016-

17/HQ/W/03 for advance and performance guarantee. DW1 claimed to

be the one who prepared mortgage deeds using standard forms by

inserting names and properties' descriptions. That, he also prepared

notification of disposition of properties, land form No 29, spouse consent

and affidavit after he was informed that one on the guarantor was not

married. That, he ensured that the mortgage deeds were signed at HQ

by signatories who were the head of legal and company secretary, by

then Ayubu Omar Korogoto and the managing director Dr. Muhsin Salim

Masoud. That, he then indorsed the documents with the bank seal and

Page 24 of 63
 sent the same to Arusha Branch to be signed by the guarantors and be

registered. That, the branch manager for Arusha was Mayasa Halfan by

then and was assisted by Abdulatif. The Mortgage deed for plot No. 14

Bock C Kituoni Street was admitted as exhibit DE23, the Mortgage

deed for Plot No. 66 Block C West Meru trading centre was admitted as

exhibit DE24 and the mortgage deed for plot No. 113 Block 24 Kaloleni

area was admitted as exhibit DE25. The spouse consent for plot No.

14 Block C Kituoni street was admitted as exhibit DE26, affidavit for

certificate of Title No. 15528 West Meru was admitted as exhibit DE27

and spouse consent for plot No. 113 Block 24 Kaloleni Arusha was

admitted as exhibit DE28.

DW1 added that Exhibit DE23-25 does not indicate the date to

which the bank officers signed because they were prepared and signed

by Amana officers at their head office and sent to the branch where the

dates were to be inserted after the client had signed. That, the branch

Manager one Mayasa and another officer by the name of Abdullatif

Abdallah were responsible to oversee the signing of the documents and

insert dates but unfortunately, they forgot to insert the dates.

DW1 further added that, in Exhibit DE23 to DE25, the mortgages

were for unlimited amount and for no specific contract/project and this

is a standard procedure for all facilities issued by Amana to its clients.

Page 25 of 63
That, the mortgage deeds were registered the next day after signing

and the date for payment of registration fees is regarded as the date for

registration as per the procedure at the office of registrar of titles. That,

since the documents were prepared at HQ, the bank officer inserted

initials to ensure that the documents could not be altered.

DW1 also testified that, in 2018 Amana bank conducted due

diligence and discovered that Robison Elishilia Laseko was one of the

shareholders of TANCHI Brothers Ltd as shown in exhibit DE17 at page

10. That, Nelson Nick Nsailo is the son of Nelson Elishilia Laseko thus,

they have relationship with TANCHI Brothers Company. That, TANCHI

received Bank services for the projects of AUWSA and ATC but failed to

pay the financial facilities advanced to them and performance guarantee

to AUWSA. That, the bank had a meeting with TANCHI and when they

failed to reconcile, the bank issued demand notice, Exhibit PEI to the

guarantor (the Plaintiffs herein) to claim for the outstanding amount.

DW1 explained that, the bank procedures require them to claim

the whole amount from both guarantors and if any of the property is

sold and covers the whole claim, other properties will have to be

release. That, they issued notice after engagement with the client thus,

they believe that TANCHI knows the claim. He added that currently the

outstanding amount for TANCHI Brothers is almost 3 billion and since

Page 26 of 63
they also failed to complete AUWSA Project, the bank through Civil Case

No. 13 of 2021 was ordered by court to pay advance payment guarantee

of almost 1.2 billion thus, the claim has raised to almost 4 billion.

In relation to Civil Case No. 13 of 2021, DW1 explained that,

AUWSA reported to the bank that the contractor failed to perform the

project thus, they were claiming for advance payment guarantee of TZS.

1,106,000,000 and performance guarantee of TZS. 737,000,000. That,

the bank paid performance guarantee but did not pay advance payment

guarantee for it believed that there was a work performed by the

contractor. That, AUWSA instituted a civil case claiming for advance

payment and the High Court ordered the bank to pay. The swift

message evidencing payment of performance guarantee to AUWSA and

certificate of authenticity were admitted collectively as exhibit DE29.

DW1 further testified that the bank prepared loan schedule

showing the outstanding amount as TANCHI defaulted in servicing the

bank facilities. The document titled 'Loan Schedule Report' was admitted

as exhibit DE30. He added that, the demand notices were issued to

the guarantors and TANCHI Brothers. That, Exhibit PEI shows the

demand of TZS. 2,784,741,099.90/= but the amount in the counter

claim is TZS. 2,887,829,817 which was the outstanding amount at the

time of filing defence. That, the amount increased because of accrued

Page 27 of 63
 penalty of 0.5% charged on daily basis from the outstanding amount.

DW1 added further that the guarantee from the project owner indicate

one year but that has nothing to do with the guarantor to the bank.

That, apart from mortgage deed from the guarantor, the bank did not

sign any other agreement with guarantors.

On being cross examined, DW1 did not agree with the claim that

guarantee agreements were for one year but agreed that, as per exhibit

PE3, the guarantee was to expire on 22nd October, 2019. That, as per

exhibit DEI to DE11 proves the amount received by TANCHI and the

payment was directly made to suppliers on agreement with the client.

Exhibit DEI to DE11 are offer letters and proves that the amount was

received by TANCHI. He added that there were other personal properties

deposited as securities by TANCHI and they have tried to locate them

before going for the guarantors' properties but in vain. That, selling the

guarantors' properties was one of the options as other movable

properties deposited by TANCHI could not be located. That, Exhibit DE12

to 22 reflect actual disbursement but does not reflect performance

guarantee. That, the securities by the Plaintiffs did not refer to two

projects only as they were for unspecified amount and for any project.

That, Exhibits DE12, DE14, DE15, DE16, DE18, DE21 and DE22 shows

that the amounts released was for purchase of palm oil and in Exhibit

Page 28 of 63
 DE17 the purpose was for construction material but they did not indicate

the kind of construction material and the price as it was in DE12. That,

exhibit DE17 mention seven securities including the properties in dispute

and was for unspecified amount. That, Exhibit DE20 is interest free loan

between Amana and TANCHI but the purpose was not indicated and did

not mention security. He added that Exhibits DE14 to 22 securities were

not mentioned in Mrabaha document rather were mentioned in the offer

letter which are Exhibit DEI to 11. That, Exhibits DE12 to 22 reflect the

disbursement of the facility issued. That, in Exhibit DE9 and DE10 the

transactions are 3.6 billion and 163 million and there are changes on

dates inserted by hand writing and were not signed.

DW1 further testified that it was necessary for the bank to indicate

the date when signing the facility agreements. Regarding the affidavit,

DW1 testified that, the signature in the title deeds were different from

mortgage deeds and that is why the affidavits were prepared. That, the

issue over signatures were raised at registrars' office and the affidavits

were attested on 21/03/2018. That, some of documents in exhibits DE13

to 22 does not reflect security but other reflects. That, exhibit DE12

contain list of securities including insurance at realisable value of TZS.

1,276,932,187.215, debenture of company assets at TZS. 3,800,000,000

and director personal guarantee. That, the amount mentioned in exhibit

Page 29 of 63
 DE12 is secured by securities listed in that exhibit but the Insurance

Company objected the realisation. A document titled "Certificate of

registration of a charge and another title deed of debenture (Rahn)" was

admitted as Plaintiff exhibits and marked PE4 collectively. DW1 admitted

that the amount. claimed by the 1st Defendant was not secured by

Plaintiffs' properties only as there were other securities.

DW1 further testified that, in Islamic banks, facilities are different

from normal loan where the amount is deposited in client's account.

That, the repayment period for the facilities issued was 12 months from

disbursement date but the period was extended after TANCHI failed to

comply within given period. That, AUWSA projects was breached by

TANCHI in 2019 and after that breach no money was issued to TANCHI
I

for AUWSA project. That, in Exhibit DE9 the bank and TANCHI had

agreement to extend or renew guarantees which had expired. That, the

bank agreed to renew advance payment and performance guarantee for

ATC at TZS 533,948,875.57 as the Mortgage was for unspecified time

and unspecified amount. DW1 admitted that, the guarantee had one

year period and upon expiry, it was to be renewed. He however insisted

that, the guarantee agreement he was referring was between AUWSA

and the bank and not the guarantor. That, for AUWSA, there was no

renewal but for ATC, the guarantee period was renewed. That, the bank

Page 30 of 63
 had no obligation to notify the guarantor because the guarantee was for

unspecified period and unspecified amount and they funded different

projects with TANCHI as they were not bound to two projects of AUWSA

and ATC only.

DW1 explained that, the universal procedure for issuing Islamic

Bank facilities requires the purchase goods and not issue cash. That, the

client had a platform where he could buy goods online and sell to get

principal amount plus profit and the amount obtained was to be credited

in client's account. That, in the matter at hand the same procedure was

employed and after purchasing goods online, the cash was credited in

TANCHI account. That, procedurally, the bank issue the offer letter and

approval letter which had back dates and it lists the collaterals. That, the

bank is still looking for all properties used as securities so that they

could be realised to recover the amount claimed by the bank. When

asked about the insurance security DW1 respondent that, the insurance

was for TANCHI and it expired before TANCHI defaulted paying the

money.

DW2, Lazaro Kambona, works as a Banker at Amana Bank

Headquarter, credit department. He testified that apart from credit

services he is also responsible for making reconciliation of customers'

accounts and make follow up of defaulters. That, DW2 participated in

Page 31 of 63
 conducting reconciliation of TANCHI account in 2022 for it requested to

know the outstanding loan; the principal, profit and penalty. That, the

bank decided to conduct reconciliation jointly with the client TANCHI and

the outstanding amount was 2.8 billion. That, TANCHI accountant by the

name of Adela Alfred was appointed by Director Lee from TANCHI to

participate in the reconciliation and they reconciled different facilities;

Mrabaha facility, Commodity Mrabaha facility and Qardh Hassan and

came up with outstanding amount of TZS 2.8 billion.

DW2 further testified that, there was a time TANCHI wrote a letter

to Amana asking the bank to allow the outstanding amount of 2.1.

billion instead of 2.8 billion thus, they were admitting 2.1 billion. That,

TANCHI was informed by Amana Bank to start paying the admitted

amount of 2.1 billion while trying to communicate with the head office to

reconcile on the outstanding amount. That, the letter was sent to

TANCHl and received by one of the directors by the name of Happy

Mjema in January but Mr. Lee Zong responded that the director had

travelled and promised that upon his return, they will come up with a

plan on how to settle the debt. DW2 knew TANCHI directors as Happy

Mjema, Yu Bao and Lee Zong. That, since TANCHI was unable to

perform their obligation, AUWSA successful sued the bank claiming for

Advance payment guarantee of TZS 1.1 billion as decided by the court.

Page 32 of 63
The judgment in Civil Case No. 13 of 2021 was admitted as exhibit

DE31.

DW2 further testified that in Islamic transaction, not every facility

money is credited in client's account. That, other payments were made

directly to the supplier as requested by the client. That, after considering

all payments they came up with the outstanding amount of 2.8 billion.

On being cross examined DW2 testified that he was informed

about TANCHI audit report which came up with 400 million as the

outstanding amount but such amount was per the bank statement while

not every transaction passed in the client's account. He added that,

during reconciliation he also indicated other transactions but he

admitted to have not tendered statement showing disbursement to the

accounts of other people/suppliers or report showing debt of TZS. 2.8

billion. He explained that, the amount of TZS. 2.8 billion was calculated

from the finances advanced to TANCHI but does not include the advance

payment guarantee. That, a client with a loan must have two accounts;

operational account with account number and Loan Statement Account

which is also termed as loan schedule report.

DW3, Geophrey Wiliam Mauya works as Assistant Registrar of titles

at Arusha region. He testified that as Assistant Registrar of tittles, his

responsibilities are to register tittles and different documents including

Page 33 of 63
deed pool, power of attorney, lease agreement, chattel mortgage,

mortgage deeds and others. He explained that, in registering mortgage

deeds, a party must submit the mortgage deed and original tittle deed

and pay government fees. That, the mortgage deeds and other

documents must have barer bank seal and must be signed by client.

That, in case of any variation, the person who has sent the mortgage

will be notified to rectify the problem. That, procedurally, the date of

submission of the document is considered as the date of registration of

the document, and in case of any rectification, the date for registration

will still be the date of submission.

DW3 explained that, Exhibit DE24 was registered on 20/03/2018

as it was submitted for registration and registration fees paid on

20/03/2018 at ll:00hrs. That, when the documents were submitted on

20/03/2018, it was discovered that the mortgagor's signatures in the

mortgage deeds differed from that in the land registry. That, upon such

observation, on 22/03/2018, the affidavit of signature deponed by

Nelson Nick Nsailo on 21/03/2018 was submitted to the registrar's office

and registration continued. That, the mortgage document was collected

on 09/04/2018 by Abdallah Abdallah and the Plaintiffs applied for

certified copies of mortgage deeds on 19/08/2021 and were served with

Page 34 of 63
the same. He identified Exhibit PE2 as certified copies of the mortgage

deeds.

DW3 also testified that, the registrar's office received caveat from

Nelson Nsairo and Robson Laseko but the same were not registered for

not being attached with payment receipts and the signature ol

mortgagor was different. He agreed that, the registered mortgage deeds

recognised the existence of guarantee agreement but claimed to have

not seen the guarantee agreement as it is not in their record. He

explained that, although mortgage can be register without guarantee

agreement, the guarantee agreement is usually submitted together with

mortgage deed when registering mortgage deed but in this case, the

guarantee agreement was not submitted. He added that, when

registering mortgage, they mostly consider the date on attestation and

the bank seal and client's signature.

DW4, Aneth Mfinanga works with the Business Registration and

Licencing Agency (BRELA). She testified that her responsibilities include;

legal advice, registration of companies and giving report on companies.

That, she knows the company by name of TANCHI Brothers as it was

registered by BRELA in 2009 with Registration No. 71476. That, as per

the annual return for the year 2021 the directors were; Zang Hong

Quan, Happy Elias Mjema, Abdalah Hassan Kaswiza, Kenedy Raphael

Page 35 of 63
 Katera and Zhang Chaeng. That, in 2018/2019, the directors were Zang

Hong Quan, Happy Elias Mjema, Zhang Chaeng, Ling Rung Quing,

Lirong Quin and Lenana Soipei Lenganasa. That, by 2018, the

shareholders were Zang Hong Quan, George Ruben Mziray, Zhang

Cheng, Wang Yong, Lirong Quin, Bao Yu, Happy Elias Mjema and

Robson Elishilia Laseko. That, Robson Elishilia Laseko had 500 shares

and on 05/12/2019, he transferred his shares to Kennedy Raphael

Katera by way of sale at the price of TZS 5,000,000/= and tax clearance

was issued by TRA and currently, Robson Elishilia Laseko has no any

position in that company.

On being cross examined, DW4 admitted to have not tendered any

proof of annual return or payment of the annual return for 2018 to 2021

showing names of directors or shareholders. She also testified that for

transfer to be complete, there must be deed of transfer and board of

directors' resolution to allow the transfer of shares. She admitted to

have not tendered tax clearance showing that there was any transaction

for transfer of shares. She claimed that, Robson got shares from

allotment of shares but did not know if they were called up or uncalled

up shares as they were all paid up shares. She added that, for Paid up

shares, the certificate of shares has to be issued by the company and

BRELA has to be notified. That, BRELA received information from the

Page 36 of 63
 company but, she had no certificate of share for Robson Laseko. That, in

order to know the shareholders, the registrar rely on annual return and

forms filed for allotment or sale of shares.

DW5, Mayasa Hashim Halfan testified that she worked as branch

manager at Amana Bank from 2011 to 2018 when she was transferred

to the Head quarter at Dar es salaam. That, as branch manager, she was

responsible to supervise all branch operations and look for customers

and issue credit facilities. That, TANCHI Brothers Construction Limited

was Amana's client who maintained bank account at Amana bank, Dar

es salaam offices. That, there was a time TANCHI wanted credit facility

but securities for the facility were located at Arusha thus, DW5 was

assigned to accompany the credit officer Abdulatif Abdallah to the owner

of the properties and verify the properties and they visited the

properties with Mr. Robson Laseko. That, the documents were prepared

at Amana HQ, Dar es salaam and sent to the branch office at Arusha so

that they could assist in registering the documents after being signed by

the owners of securities. That, after the documents were signed,

Abdullatif Abdallah who was the credit officer at branch level sent them

to Moshi for registration. That, after being registered, he collected the

documents and sent them to the head quarter as they are the custodian

of registered assets. DW5 also testified that, before she was transferred

Page 37 of 63
to DSM, she used to communicate with Mr. Laseko as bank client. She

admitted that, Exhibit DE23, DE24 and DE25 were not dated by the

Bank and she did not know the reason.

On being cross examined, DW5 testified that she was informed by

the Headquarter that TANCHI Brothers received facilities which are

performance guarantee and advance payment. DW5 admitted to have

been reminded by Robson Laseko about the expiration of the guarantees

and she asked him to submit the original letter to the branch office so

that they could be worked on it as she was not in the office. She added

that, the bank procedures require the client to request for his deposited

property after the lapse of guarantee period. That, procedurally, no

facility can be issued after the agreed guarantee time has expired and if

issued, there must be extension. That, the security owner must

authorise and sign the extension for the bank to approve the facility.

That, Exhibit DE23 to DE25 were signed at DSM before they were sent

to Arusha branch for the client to sign. That, at branch level they were

not directly dealing with TANCHI as all the client's details were at Dar es

salaam HQ.

DW6, Bao Yu, testified that he is the shareholder and regional

manager of TANCHI Brothers. That, in March 2018, he asked Mzee

Laseko to give him his tittle deed so that TANCHI could use it to secure

Page 38 of 63
advance bond for the project at ATC and Mzee Laseko gave them two

titles. That, when they were awarded another project at AUWSA, Mzee

Laseko also gave them another tittle. That, they agreed for one year

guarantee and Exhibit PE3 which is the letter from AUWSA shows that

the guarantee for advance bond was to expire on 22nd October 2019.

That, after the expiry of one year, Mzee Laseko claimed his tittle deeds

and together, they tried to ask the bank for the same. That, Mzee

Laseko communicated with Mayasa who was the branch manager at

Arusha and one officer at the HQ by the name of Denis, and they told

him that they were working on it. That, after the expiry of one year, the

insurance company issued security with Amana Bank and TANCHI

deposited the company's properties including company equipment and

they also secured one tittle from Kunduchi Dar es salaam. That, Exhibits

DE12 to DE22 are not true documents as TANCHI is the construction

company and have never engaged in Palm oil business. DW6 claimed

that TANCHI have never made resolution to take credit facility based on

those exhibits and have never renewed any credit facility. That, there is

no any document in respect of any deposit and they asked Amana to

give them their bank statement but they were not issued with the same.

That, Amana informed them that they prepared internal account which

was not also served to them.

Page 39 of 63
 DW6 further testified that, TANCHI have never received any notice

of default from Amana showing claims against them. That, most of their

documents are made up referring Exhibit DE9 and the Counter affidavit

in Misc Land Application No. 71 of 2021 and its annexures that were

admitted as exhibit DE32. That, there is difference on the dates in

Exhibit DE32 and DE9. That, Lazaro Kambona claimed to have

conducted reconciliation but the same cannot be done while the case is

in court and the person Kambona mentioned by as Lee Zong was not

known to him. He denied to have conducted reconciliation or to have

sent anyone for reconciliation purpose. He prays for this court to order

the return of the title deeds to Laseko as Amana have no claim against

TANCHI.

On being cross examined DW6 added that, TANCHI applied for the

advance bond and performance bond and was issued with the same.

That, the document was signed by Zhang and Happiness Mjema who

are among the company directors. That, TANCHI Head office is at Da es

salaam and Happy Mjema and Zang were working at the head office.

That, TANCHI earned different construction projects apart from those in

Arusha. That, the contract at AUWSA was terminated but not because

TANCHI breached the contract but because consultant delayed to submit

the drawings. DW6 is aware that AUWSA filed a case in court against

Page 40 of 63
Amana and TANCHI. He added that, they tried to include Robson Laseko

as shareholder of TANCHI Brothers but did not succeed as he did not

pay for the shares thus, he could not be the shareholder without paying

for the shares. That, TANCHI purchased cement from Tanga cement

several times but have never purchased cement under bank guarantee.

That, their auditor found that Amana had claim for 400 million against

TANCHI which is yet to be paid.

DW6 also testified that, the money issued by AUWSA was

deposited at Amana Account and TANCHI had no access to that account

as it could not deposit or withdraw money from that account. He

admitted that, apart from exhibit DE12 other facilities were signed in

2019 and 2020 after the completion of ATC project and after the

termination of the contract with AUWSA. He contended that, by that

time, there was no reason for TANCHI to take money from Amana. That,

Exhibits DEI and DE2 have Zhang signature in all pages but other

documents are fake because they have no signature on every page.

That, they have not received any statement from Amana showing the

breakdown of the money claimed. That, the securities from Laseko were

for the period of one year which ended by 30th July and October 2019.

That, AUWSA wrote to Amana and issued a copy of letter to TANCHI

Page 41 of 63
 indicating that security guarantee issued by Laseko expired. That, at the

time of expiry, the project at ATC was already completed.

Being guided by the pleadings and evidence from both parties, I

find it pertinent to discuss jointly the 1st, 2nd and 3rd issues as they are

related to execution of documents which are the basis of this dispute.

There is no dispute that the Plaintiffs signed the mortgage deeds with

Amana Bank but what is disputed is the content of the documents

signed visa vis the documents registered with registrar of titles. While

the Plaintiffs claim that the mortgage documents signed indicated the

existence of guarantee agreement which specified the guarantee period

of 12 months and specified two projects for ATC and AUWSA, the 1st

Defendant claim that no guarantee agreement was signed between

parties and that, the Plaintiffs through the mortgage deeds guaranteed

the 2nd Defendant for unspecified period, unspecified project and

unlimited amount.

In business arena, it is basically necessary that a person issuing

property to secure any loan facility for the company has to be either a

shareholder or director of the company obtaining the loan facility. This is

so necessary to ensure sense of responsibility for the person who had

issued security to pay back the facility and safeguard his interest over

the property issued as security.

Page 42 of 63
 It is in evidence that the Plaintiffs are individual persons while

TANCHI Brothers is a construction company not owned by the Plaintiffs.

Although DW1 and DW4 tried to convince this court that by 2018 the 1st

Plaintiff was among the shareholders of TANCHI Brothers, their evidence

could not support such fact. DW1, claimed that they made search and

discovered that the 1st Plaintiff was a shareholder of TANCHI, but no

report was submitted for verification. DW4 claimed to be an officer from

BRELA but submitted no supporting evidence from the office record

verifying that the 1st Plaintiff was once a shareholder of TANCHI

Brothers. DW6 admitted that there was attempt to include the 1st

Plaintiff in the list of shareholders but did not succeed thus, he never

became one of the shareholders. Therefore, in the absence of BRELA's

office record supporting the 1st Defendant's evidence, it cannot be

concluded that 1st Plaintiff was a shareholder of the 2nd Defendant.

Having found that there is no evidence proving that the either of

the Plaintiffs was related to TANCHI Brothers, I asked myself the

circumstances under which a party who is neither a shareholder nor a

director of a company would have allowed that company to use his

properties for unspecified projects, unspecified period and for unlimited

amount. This is because, while the Plaintiffs and the 2nd defendant on

claim that guarantee agreement which spelt out the obligation of the

Page 43 of 63
guarantor was signed between parties, the 1st defendant claimed that no

guarantee agreement that was signed between parties.

Logically, the risk of standing as guarantor is too high as it was

well explained by the Court of Appeal of Tanzania in Civil Appeal No, 139

of 2017, CRDB Bank Limited Vs. Issack B. Mwamasika and 2

others. It makes the guarantor equally liable to fulfil the obligations of

the borrower if the borrower fails to fulfil its obligations. Thus, anyone

entering into such risk agreement, and especially a person who does not

own or have control over the company/borrower, is expected to take

precaution. Contrary to what the Plaintiffs claim, the 1st Defendant

intends to persuade this court that the Plaintiffs were aware of the risk

and opted to take the risk of allowing their properties to be used as

security to obtain bank facilities on behalf of the 2nd Defendant for

unspecified project, unspecified period and for unlimited amount.

From their evidence, the Plaintiffs do not dispute signing but allege

alteration of mortgage documents that were registered at the office of

registrar of titles. The evidence by PW1 and PW2 is that they signed and

dated each page of the guarantee agreement and the mortgage deeds

in the presence of a lawyer. PW3 happened to be a lawyer who

witnessed the signing of the documents and she confirmed so. Such

evidence was also supported by DW6. From the Plaintiffs' evidence,

Page 44 of 63
several inconsistencies regarding the validity of the mortgage documents

were pointed out; inconsistence related to signing and dating of the

document, registration of documents, existence of guaranteed document

spelling out the guarantee period, specification of the projects and

amount guaranteed.

In assessing the validity of the mortgage documents, I will not

dwell much on claim for forgery raised by both the Plaintiffs and the 2nd

Defendant. This is so because, there is nothing showing that at any

time, forgery complaint was lodged with responsible authorities. In

considering that the forgery is a criminal offence and its burden of proof

is higher than it is in civil cases, I hesitate from deliberating on forgery

allegation. However, I find it necessary to assess the documents and the

circumstances surrounding their execution.

Looking at the said mortgage deeds, there is no doubt that they

were dated and signed by the mortgagors at the end of each document.

It is however, initialised by bank on each page but not dated by the

bank. It was contended by DW1 that the heard office signed and

inserted initials on each page and sent the document at branch office to

be signed by the clients. To him, the bank officers at branch office were

responsible to ensure the documents were dated after they were signed

by the clients. He therefore denied the fact that the Plaintiffs signed the

Page 45 of 63
 documents before they were signed by the bank. DW5 one Mayasa was

a branch manager, but her evidence reveal that she did not know the

reason why the documents were not dated by the bank. In fact, she did

not seem to be aware if she was responsible in inserting the dates as

claimed by DW1. Since each of the party claim to be the first in signing

the document and the circumstances of this case is unclear on that feet,

it is hard to conclude on who was the first to sign and who was the last

one, and, or, who was responsible to insert dates and why the same

were not inserted. However, that in itself does not invalidate the

documents thus, it takes me to the assessment of other inconsistencies.

As well pointed above, the Plaintiffs do not dispute signing

mortgage documents but claim alteration of the contents related to the

tenure to which they guaranteed TANCHI, the projects so guaranteed

and the amount. Those facts are found on pages of the documents not

signed by the Plaintiffs. The Plaintiffs insisted that, along with the

mortgage documents, they also signed the guarantee agreement which

specified the guarantee period and the projects guaranteed.

As well pointed out in the Plaintiffs' closing submission, the

mortgage documents, exhibit PE2 contain clause 1.2 which specifically

requires the mortgagor to register the mortgage or request the bank to

do so on their behalf but, at the mortgagors' costs. There is no doubt

Page 46 of 63
 that in this matter, the bank registered the mortgages and were unable

to present evidence proving that they were authorised by the

mortgagors to do so on their behalf and if the mortgagors paid for

registration costs.

Again, the mortgage documents, Exhibit PE2 collectively which is

similar to exhibits DE23, DE24 and DE25 acknowledged the existence of

the guarantee agreement at Clause 1.1 of each mortgage deed. At

Clause 1.4, the covenant to pay specifically state that the liability will

arise in event of default spelt out in clause 9 of the guarantee

agreement. Similarly, clause 2 which deals with other covenants requires

the Mortgagor to comply to covenants spelt out in the guarantee

agreement; see clause 2.1 (a) and (d) of Exhibit PE2 collectively. In that

regard, it is clear that the mortgage documents that were registered

acknowledges the existence of guarantee agreement which spelt out the

covenants binding the mortgagor in discharging the liability.

The proof over existence of guarantee agreement can also be

found from the defence evidence. Clause 7 of Exhibit DEI (the bank

response to the request for Advance payment and performance

guarantee of 1.7 billion for ATC project) deals with conditions precedent

and specifically, clause 7.4 requires duly executed guarantee document

before the fund could be released. This is similar to clause 6.5 of exhibit

Page 47 of 63
DE5 which is an offer of 100 million for procurement of cement, Clause

7.4 of exhibit DE7 which is extension of advance and performance

guarantee of 1.7 billion and exhibit DE11 which is extension of advance

and performance guarantee of 528 million, both for ATC project.

DW1 denied the existence guarantee agreement and claimed that

the mortgage deeds stood as guarantee agreements. He insisted that

the guarantee agreement referred in the letter from AUWSA to Amana

(exhibit PE3) was not related to the Plaintiffs rather it was the guarantee

between the Amana and AUWSA. He however admitted during cross

examination that clause 1.1 and 2.1 (a) of the mortgage deed

acknowledged existence of guarantee agreement. When asked as to

why there was extension of guarantee, he admitted that it was because

the first guarantee agreement had expired. Exhibit DE31 tendered by

DW2 is a judgment of this court in Civil Case No. 13 of 2021 between

AUWSA and two Defendants who are also the Defendants in this case. It

shows that among the reasons for termination of the construction

contract by AUWSA was failure to extend the period for security. That

was after the lapse of one year guarantee. This suggest that the

extension was requested for the best know reason that the guarantee

was for one year only as also captured in exhibit PE3 (the letter by

AUWSA to Amana Bank).

Page 48 of 63
 From the assessment of evidence and exhibits tendered, I agree

with the Plaintiffs that there was guarantee agreements signed between

parties specifying obligation of the guarantor to the lender. Thus, the

contention by the 1st Defendant that no guarantee agreement was

signed between parties is unwarranted and the claim that the mortgage

deeds stand as guarantee agreements is speculative and an attempt to

conceal the real fact. These are two separate documents and this was

also conceded to by the bank officer Mayasa who testified as DW5.

While the mortgage document stands as security for the facility issued,

the guarantee agreement spills out the obligation of the mortgagor to

the bank/mortgagee and obligation of the person guaranteed by the

mortgagor/borrower. Thus, the two documents go parallel except that,

the mortgage document must be registered with registrar of titles while

it is not necessary for the guarantee agreement to be registered with

the registrar of titles. Thus, in a transaction where the borrower claims

to be guaranteed by another person, it becomes dubious for anyone to

claim that no guarantee agreement was signed between the parties.

In my view, the 1st Defendant's attempt to conceal the existence of

guarantee agreement was made purposeful for they knew that the

Plaintiffs' obligations were well spelt out in the guarantee agreement. All

Plaintiffs' witnesses claim that the Plaintiffs signed 12 months guarantee

Page 49 of 63
agreements for two specific projects of ATC and AUWSA. To them, such

conditions were spelt in the guarantee agreements. That was also

supported by the defence witness, DW6 who is the director of TANCHI

Brothers. In his evidence he claimed that when they were awarded ATC

and AUWSA projects is when the Plaintiffs signed mortgage documents

and guarantee agreements. DW6, admitted that the Plaintiffs

guaranteed the 2nd Defendant (TANCHI) only for two projects and it was

12 months guarantee period for each project. DW6 clearly stated that

for other projects, other securities were presented to the bank. During

cross examination DW5 also admitted to have been reminded by Mr.

Laseko on the expiration of the guarantee as he was claiming his titles.

She asked him to write a letter to the branch office as she was out of

the office by that time. The fact that the guarantee was for two projects

can also be found in the pleadings and in the 1st Defendant's counter

claim which basically referred two projects of ATC and AUWSA. In his

evidence DW1 also referred ATC and AUWSA projects to which the 2nd

Defendant failed to service the bank facilities advanced to them.

I therefore agree with the Plaintiffs' evidence and closing

submission that there were guarantee agreements and the Plaintiffs

guaranteed two projects of ATC and AUWSA and only for one year. By

denying the existence of guarantee agreements, the 1st Defendant

Page 50 of 63
intended to hide its existence knowing that they were the only

documents that spelt out the tenure and scope of the guarantee.

Having said that there were guarantee agreements which

guaranteed two projects only and for one year period, it takes me to the

4th issue on whether the documents used to secure financial facilities

were genuine and valid. Exhibits DEI to DE22 are documents on several

facilities allegedly requested and advanced to the 2nd Defendant by the

1st Defendant including; Advance and performance guarantee, working

capital, Murabaha facilities, master commodity Murabaha (Tawarruq)

facilities and interest free loan. There is also extension of advance and

performance guarantee. In all these documents, only exhibits DEI, DE3,

DE4, DE7, DE9, DE10 and DE11 mention two projects of ATC and

AUWSA as the purpose for the facilities. Other documents like exhibits

DE2, DE5, DE6, DE8, DE12, DE17 relate to purchase of construction

materials but for unspecified project. Exhibits DE13, DE14, DE15, DE16,

DE18, DE19, DE21 and DE22 relates to purchase of palm oil. In exhibit

DE20, the purpose for interest free loan is not indicated and the amount

as well. When he was cross examined on the exhibits he tendered, DW1

explained that Exhibit DEI to 11 reflect offer and Exhibit DE12 to 22

reflect actual disbursement but does not cover performance guarantee.

Page 51 of 63
 From the documents presented as exhibits by DW1, all facility

documents signed between the bank and TANCHI after the Plaintiffs

have deposited their documents to the bank, were listing Plaintiffs'

properties along with other securities. But there is no evidence from the

1st Defendant justifying the Plaintiffs' consent for their properties to be

used as securities for other purpose than the facilities related to two

projects for ATC and AUWSA. Exhibits DE7, DE9 and DE11 shows that

there was extension for advance payment for ATC project using the

same securities. It is unfortunate that nothing shows approval of such

extension by the owners of the securities. That was also well admitted

by DW1 during cross examination that the bank obtained no approval as

the guarantors were not informed of the expiration of guarantee

agreement and the extension. In my view, for those facilities which were

not related to the projects guaranteed by the Plaintiffs, the documents

were drafted in deceit and in the absence of any evidence proving the

Plaintiffs knowledge over those facilities. Those documents therefore

could not in any way bind the Plaintiffs.

Based on the above pointed out discrepancies, I agree with the

Plaintiffs that there were inconsistencies in the documents used to

secure the facilities. Thus, irrespective of the inconsistencies in

registration of the mortgage deed, the two projects which the Plaintiffs

Page 52 of 63
do not object their guarantee binds the Plaintiffs. However, the

mortgage deeds could not be considered as genuine for other facilities

issued to TANCHI which the Plaintiff did not guarantee. I say so

because, for all documents with unspecified purpose and period, it is

hard to conclude that the facilities were covered by the Plaintiffs'

securities in the absence of any document proving that the Plaintiff

guaranteed other facilities than those related to two projects. Similarly,

in the absence of consent to extend advance and performance

guarantee by the Plaintiffs, it cannot be said that the same were

extended using the same securities.

The above discussion also responds to the 5th issue on whether

the amount claimed by the 1st Defendant was secured by the Plaintiff's

properties. I reiterate that, apart from facilities related to ATC and

AUWSA projects, no other facility was covered by Plaintiffs' securities.

For the secured projects of ATC and AUWSA, the question is whether the

Plaintiffs' guarantee was still valid at the time of default. That goes

together with the assessment of whether the 1st Defendant was able to

prove that the amount in the counter claim was secured by the Plaintiffs'

properties. This will go hand in hand with the 6th issue on the

outstanding amount claimed by the 1st Defendant.

Page 53 of 63
 The evidence shows that the mortgage documents were signed on

19th March and 30th July, 2018. Based on the position that mortgages

were signed on the basis of one year guarantee, it becomes obvious that

the guarantee by the Plaintiffs expired by 19th March and 30th July, 2019.

Since there is no proof that the extension in exhibit DE7 signed on 25th

March, 2019 and DE11 signed on 05th August, 2020 were approved by

the Plaintiffs, the same cannot bind them. They also relate to ATC

project to which no complaint was raised against its performance. The

complaint for non-performance of the projects related to the Plaintiffs'

guarantee is for AUWSA project. However, that claim arose after the

Plaintiffs' guarantee had also expired thus, the Plaintiffs cannot be held

liable for the liabilities arising after expiry of guarantee period.

As per exhibit PE3, AUWSA notified the 1st Defendant on expiration

of advance payment guarantee amounting to TZS. 1,106,450,788.00 and

performance guarantee amounting to TZS. 737,633,859 by 22nd October,

2019. The contract between AUWSA and TANCHI was terminated by

December, 2019 on the grounds of breach and failure to extend period

for securities as per page 6 of exhibit DE31. This was after the Plaintiffs'

guarantee had expired by 19th March and 30th July, 2019. Thus, any

claim arising after the expiration of the guarantee period cannot be

Page 54 of 63
 pressed on to the Plaintiffs. However, the 2nd Defendant can be held

liable for such claims if so proved.

Although the 2nd Defendant did not specifically list other facilities

advanced to them by the 1st Defendant, they undoubtedly admitted that

apart from facilities for the two projects, they signed other facilities

using other securities. Now the question is how much was proved as

amount due against the 2nd Defendant.

The 1st Defendant's claim as per the counterclaim, is TZS.

2,784,741,099.09. According to their evidence, that amount was

computed based on the actual amount disbursed to the 2nd Defendant

plus profit and penalty. The 1st Defendant's computation is reflected on

what they referred as loan schedule report (Exhibit DE30). Going

through the said report, I discovered that among the items featured are

four important items; amount due, amount settled, amount overdue and

amount disbursed. At some point, the figures do tally in both items but

sometimes differ. But what is more relevant is the last figure which is

found under the item called 'amount overdue'. I believe that the claim by

the 1st Defendant is based on that item which reflects that at the time of

its preparation, the amount overdue was TZS. 2,777,337,344.36. This

amount differs with that reflected in the default notice served to the

Plaintiffs, the amount in the counterclaim and the amount mentioned by

Page 55 of 63
 DW1 in his testimony. The 2nd Defendant challenged that report on

account that they were not involved in its preparation. However, apart

from disputing the report and the facilities allegedly advanced by the 1st

Defendant, the 2nd Defendant did not present any corresponding report

or document showing the facilities advanced to them, the amount

settled and the unsettled amount. On that basis, I remained with no

choice but to assess the evidence from the 1st Defendant if they prove

the amount claimed.

On the claims related to Murabaha and Commodity Murabaha

i
facilities, payment guarantee and interest free loan, DW6 denied such

facilities alleging that there were forgeries over documents related to the

same. Exhibits DE2, DE5, DE6, DE8, DE12, DE17 relate to purchase of

construction material but for unspecified projects and Exhibits DE13,

DEM, DE15, DE16, DE18, DE19, DE21 and DE22 relates to purchase of

palm oil. The 2nd Defendant claimed to have not entered into

agreements for purchase of palm oil for one reason that, it deals with

construction activities and could not have obtained facilities for purchase

of palm oil.

DW1 also claimed that the signature on behalf of the 2nd

Defendant was forged in those documents. From their written statement

of defence, the 2nd Defendant claimed that the agreement in relation to

Page 56 of 63
 purchases of palm oil is vexatious and frivolous. That, upon observing

suspicious transactions over the loan facilities, the 2nd Defendant

decided to file a formal complaint at the Bank of Tanzania. The 2nd

Defendant also claimed to have initiated audit exercise to assess the

suspicious transactions of the 1st Defendant and the report came up with

only the balance of TZS. 412,047,711. It is unfortunate that the formal

complaint letter and the audit report were not made part of 2nd

Defendant's evidence. Despite being aware of the 1st Defendant's claim

based on those documents allegedly signed by the 2nd Defendant's

representative, the 2nd Defendant did not bother to demonstrate the

action taken towards what they called vexatious and frivolous

transactions. It was expected for DW2 to demonstrate to this court the

action taken upon becoming aware of the documents allegedly forged

intending to show that they entered into agreement for purchase of

palm oil. The documents tendered seemed to be executed in favour of

the 2nd Defendant and in the absence of any evidence to the contrary,

this court is convinced that facilities referred in those documents were

issued in favour of the 2nd Defendant.

I agree with the evidence and submission that the 2nd Defendant is

a construction company dealing with construction activities. However,

DW1, a witness from the 1st Defendant explained the transaction

Page 57 of 63
 process that resulted into such agreements. If the 2nd Defendant had

any concern over the legality of those documents and the whole

execution process, it was expected for them to demonstrate their non­

involvement to the same. The mere contention that the signature was

forged is not satisfactory and cannot exonerate the 2nd Defendant from
r
the liability arising out of those documents.

It was the evidence by DW1 that Exhibit DEI to 11 reflect offer

amount and Exhibit DE12 to 22 reflect actual disbursement but does not

cover performance guarantee. Thus, apart from exhibit DE30, there are

other evidence, Exhibits; DE12, DE13, DE14, DE15, DE16, DE17, DE18,
t
DE19, DE20, DE21 and DE22 proving that the 1st Defendant advanced

bank facilities to the 2nd Defendant. Since there is no corresponding

transaction proving payment by the 2nd Defendant, this court is

convinced that the 1st Defendant was able to prove their claim against

the 2nd Defendant. The question that remains, is how much was proved

as outstanding amount.

The notice issued to the Plaintiff shows that there was outstanding

amount of TZS 2,784,741,099.90 by 28th May, 2021. At the time of filing

counter claim, the outstanding amount was indicated as TZS

2,887,839,817 by June 2022. However, Exhibit DE30, which is the loan

schedule report cover the period up to November, 2023 and it shows the

Page 58 of 63
outstanding amount of TZS. 2,777,337,344.36. Since no counter report

was presented by the 2nd Defendant, I will consider the 1st Defendant's

report as reflecting the outstanding amount for that period. For that

reason, only TZS. 2,777,337,344.36 reflected in that report is considered

the outstanding amount arising out of facilities advanced to the 2nd

Defendant by July 2023.

In respect to the advance payment guarantee and performance

guarantee, I will not labour much because, this court had already

decided on that issue in Civil Case No. 13 of 2021. As per exhibit DE3,

AUWSA issued advance payment guarantee, performance guarantee and

working capital in favour of the 2nd Defendant. There is no dispute that

the 2nd Defendant was held liable for breach of contract and the 1st

defendant being guarantor to the 2nd defendant was ordered to pay to

AUWSA the amount of TZS. 1,106,450,788 released as advance payment

guarantee. It is also undisputed fact that the 1st Defendant also paid to

AUWSA the amount of TZS 737,633,859.00 as performance guarantee

by November, 2020 as evidenced by exhibit DE29, a swift message on

electronic transaction. From that record, the 1st Defendant was made to

suffer the consequence of 2nd Defendant's breach of contract with

AUWSA. For that reason and since the 1st Defendant guaranteed the 2nd

Defendant, the 1st Defendant is entitled for recovery from the 2nd

Page 59 of 63
 Defendant the amount claimed by AUWSA as advance payment

guarantee as also claimed under item 'c' of the counter claim.

On the advance payment guarantees and performance agreement

for ATC projects under exhibits DEI as well as extension of performance

guarantee under exhibit DE7, DE9 and DE11,1 find that since they are

related to ATC project, the same cannot stand without proof of 2nd

Defendant's default in performing ATC projects.

On the 2nd Defendant's claim that the notice of default was not

issued to them, this court finds that argument baseless. DW1, claimed

that TANCHI was served with default notice as they were the principal

borrower, he however admitted to have not presented that notice before

this court. The evidence by DW6 reveals that they were notified by the

Plaintiffs that the 1st Defendant served them with default notice. This

was also conceded to by PW1 who claimed to have approached TANCHI

after they received default notice. According to his evidence, TANCHI

admitted to them that there was outstanding balance of TZS. 400 million

and not amount raised in the notice. They also assured them that such

amount was secured by other securities and not Plaintiffs' properties.

Based on the above evidence, I am satisfied that although no

written notice was tendered in court, the 2nd Defendant was aware of

existence of 1st Defendant's claim. The fact that the plaintiffs informed

Page 60 of 63
them upon receiving a notice, in my view, stands as sufficient notice to

them as they became aware of existence of the claims raised by the 1st

Defendant. Since the purpose of notice is to notify the party over the

claim, the 2nd Defendant cannot claim that they were not aware of the

claim for default raised by the 1st Defendant.

This takes me to the last issue on reliefs to parties. Apart from

substantive claim, the Plaintiff raised the claim for damage while the 1st

Defendant raised claims for interest of 7% on the decretal sum to the

date of satisfaction of decree. Starting with the claim for damage, I find

that the circumstance of this case was complicated and makes it hard to

fault any party for damage in the case. The 1st Defendant refrained from

releasing the titles on assumption that they stood as securities for other

facilities advanced to the 2nd Defendant. The 2nd Defendant could not

release titles which was not in their possession. Now that the issue is

settled that the Plaintiffs' liability arising from their guarantee no longer

existed, they have right to recover back their titles but, no award for

damages.

On the claim for 7% interest on the decretal sum, this court find

that the 1st Defendant being Islamic bank, their transactions mode does

not attract interest thus, they cannot claim for interest in this matter.

However, it is in record that the 1st Defendant claimed penalty at 0.5%

Page 61 of 63
to be charged on daily basis. However, the agreement signed reflect that

the penalty was to be charged at 0.5% per annum which, I allow.

Based on the above discussion, this court is satisfied that the

Plaintiffs proved their case on balance of probabilities against both

Defendants but, the 1st Defendant (the Plaintiff in the counter claim) was

able to prove the counter claim against the 2nd Defendant only. I

therefore hold as follows: -

1. There was guarantee agreements between the Plaintiffs and the

Defendants which expired by 2019 and upon expiration of

guarantee agreements, the detainment of the Plaintiffs' certificate

of titles by the 1st Defendant is illegal and unlawful,

2. The 1st Defendant is ordered to discharge the mortgage they

registered with the land registry on behalf of the plaintiffs and

remit the certificate of titles to the Plaintiffs,

3. The Defendants and their agents are permanently restrained from

dealing with the Plaintiffs' properties,

4. The 2nd Defendant is ordered to pay TZS. 2,777,337,344.36 to the

1st Defendant being the outstanding amount arising from financial

facilities advanced to the 2nd Defendant.

Page 62 of 63
5. The 2nd Defendant shall pay advance payment guarantees of TZS.

1,106,450,788/= for AUWSA project arising out of breach of

contract by the 2nd Defendant,

6. The 2nd Defendant shall pay penalties at the rate of 0.5% of the

outstanding amounts charged yearly from November, 2023 to the

date of judgment,

7. The 2nd Defendant shall bear costs this suit.

Page 63 of 63