THE International Commercial Bank (ICB) Tanzania seeks to file an appeal at the Court of Appeal of Tanzania against a decision by the High Court over defaulted overdraft amounting to 2.1bn/- given to Dar es Salaam-based Jaluma General Supplies Limited.

According to the Notice of Appeal which was received by the Court of Appeal Dar es Salaam sub-registry on 31st May, accessed by this paper, the bank indicates that it is dissatisfied with the decision pronounced by Justice W.P Dyansobera on 17th May 2024 in favour of the borrower.

The judgment, with the right to appeal to the Court of Appeal, discharged Jaluma from obligation under the overdraft as the performance of the overdraft agreement between Jaluma and ICB Bank had been made impossible by the government act through Tanzania Revenue Authority (TRA) thus frustrated the company’s ability to repay back the facility.

The court therefore ordered ICB Bank to release and hand over the original tittle deed of the landed property with certificate of title No. 4, LO No 92026, Block 34, Kariakoo area in Ilala Municipality, Dar es Salaam, which was presented as security for the overdraft, as well as bear all the costs of the suit filed by the borrower.

This came after Jaluma filed a suit at the High Court on 25th April, 2022 against ICB Bank, seeking the court’s declaration that the overdraft was rendered impossible due to the actions of TRA, thus the contract was frustrated and the borrower be discharged of repayment obligation.

However, in its defence, ICB through its lawyers JBK advocates had stated that the borrower not paying taxes to the government was the company’s internal affairs and not related to the overdraft and the TRA action against Jaluma was because of evasion of their tax liability. Further JBK advocate raised preliminary objection that TRA should be joined as a party to the suit but the court declined.

The bank also said at the time it issued the final 60-day notice on 12th May, 2022, the amount outstanding for default in repayment of the overdraft was 3.40bn/-.

According to the notice of the appeal, the bank believes that the trial judge erred in law and in fact by not recognizing the TRA as a necessary party to the suit and by declaring that performance of the overdraft was made impossible by government act through TRA and thus frustrated the repayment ability.

“Given the fact that TRA was not party in the suit, the bank also believes that discharging Jaluma from performing its obligations under the overdraft was an error in judgment,” reads the notice in part. 

“The bank also appeals against the court order to release and hand over the original tittle deed to the borrower and as well as bear the cost of the suit, by pointing out the High Court failure to analyse the evidence tendered, thereby reaching to an erroneous decision against ICB Bank.”

The overdraft dates back to 18th November 2018, when Jaluma General Supplies Limited owned by Lucas Pius Mallya secured an overdraft facility amounting to 2.10 bn/- from International Commercial Bank Tanzania (ICB) to meet the working capital requirement of its business.

The overdraft was secured by among other, mortgaging landed property held under certificate of title deed number 177932, plot number 3, block 34, situated at Kariakoo Area, registered under the name of Fereji Said Fereji.

The overdraft facility advanced to Jaluma was used to purchase consignment of goods for its line of business.

Sometime in December 2019, the government taskforce led by Regional Commissioner of Dar es Salaam started a manhunt of Lucas Pius Mallya, who was 3rd plaintiff,  on allegation that he owed TRA a tax debt to the tune of 15.20bn/- and on 29th December, 2019 TRA seized the consignment.

Jaluma’s hope of resuming business was completely frustrated as the goods (business stock) which could have been used to continue business operations were stolen under the custody of TRA.