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Court rejects Luhumbo investment suit

THE High Court in the District Registry of Shinyanga has rejected the suit lodged by Luhumbo Investment Limited, seeking to recover its industry, dealing in cotton oil and plastic manufacturing in Shinyanga Municipality.

Judge Cyprian Mkeha ruled in favour of the National Bank of Commerce (NBC) Limited after holding that no effective decree can be passed in the absence of Bundaa Oil Industries Limited, as a nec- essary party, which had purchased the factory to recover 4 00m/-loan facility.

He noted that there was no dispute that, upon purchasing the property on Plot No.16 8 , Block “KK” Mhumbo Area, Shinyanga Municipality from Luhumbo Limited, the plaintiff, Bundaa Oil Industries, gained an interest in the mort- gage agreement between the plaintiff and NBC, the defen- dant.

“Therefore, in terms of Or- der X X X II Rule 1 of the Civil Procedure Code, Bunda Oil Industries Limited was a nec- essary party to the present suit by virtue of a sale agreement signed between her (purchaser) and the defendant,” the judge said.

Judge Mkeha underscored the effects of non joinder of a necessary party into proceedings that the court may fail to deal with the suit as it shall, eventually, not be able to pass an effective decree and that it would be idle for a court to pass a decree which would be of no practical utility to the plaintiff.

He noted that in terms of what the plaintiff pleaded in her plaint, the disputed prop- erty is now being owned by Bundaa Oil Industries Limited, having bought the same from the defendant.

“An order repossessing the disputed property to the plain- tiff if issued, would necessarily invite the purchaser during execution stage.

The law is, execution proceedings can only proceed against a party to civil proceedings which resulted into a decree subject of execution,” the judge said.

Judge Mkeha concluded that the plaintiff would not, therefore, be able to execute a repossession order against Bundaa Oil Industries Limited as she is not a party to this suit.

In terms of the plaint, the plaintiff is a limited liability company incorporated under the Companies Act, whose duties include dealing in cotton oil and plastic manufacturing in Shinyanga Municipality.

On the other hand the defendant is a limited liability company dealing in banking business. Between September 19, 2 005 and July 5, 2 006 , the plaintiff company obtained a loan of 4 00m/-from the defendant through mortgaging its property on Plot. No 16 8 Block “KK” Mhumbo Industrial Area, Shinyanga Municipality.

According to the plaintiff, on June 2 9, 2 009, without no- tice and without any lawful de- mand to the plaintiff’s company to settle the amount due and payable, the defendant illegally sold and transferred the plain- tiff’s property to Bundaa Oil Industries Limited at 4 00m/-.

The Plaintiff claimed that, the defendant sold and trans- ferred to Bundaa Oil Industries Limited the plaintiff’s property in question at a very low price and without actual valuation as to the true market value at the time of sale.

In particular, the Plaintiff claimed that, at the time of the purported sale, the prop- erty sold had a market value of over 1bn/-.

It was at that point in time when the plaintiff com- pany instituted the suit. Amongst other things, the plaintiff prayed for an order nullifying the sale between the Defendant and Bundaa Oil Industries Limited of the plaintiff’s property.

The plaintiff also prayed for a declaratory order to the effect that she is still the lawful owner of the disputed property.

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