Court saves CRDB in time of need

FAUSTINE KAPAMA

THE Court of Appeal has saved the CRDB Bank Limited from imminent financial embarrassment, for ‘staying’ execution of a High Court judgment for payments of about 90bn/- to businessman Issack Mwamasika and two other respondents in a contractual deal.

Such order of stay was, however, conditional upon CRDB, the applicant, depositing a bank guarantee from a reputable bank or syndicate of reputable banks, other than the applicant in a convertible sum equivalent to 42,997,298 US dollars within 21 days from the date of delivery of the ruling.

Justices Kipenka Mussa, Batuel Mmilla and Rehema Mkuye ruled in favour of the applicant bank after taking into consideration the application for stay of execution of the judgment and decree issued by the High Court on January 19, this year.

“This application partly succeeds in that the execution of the High Court decree should be stayed pending the determination of the applicant’s appeal to this court,” the justices declared in their ruling dated July 14, 2017.

During hearing of the application, advocates for the businessman and other respondents, Registered Trustees of Dar es Salaam International School Trust Fund and EDBP & gd Construction Co. Ltd, had not objected to the grant of the stay order, subject to provision of security as required by the law.

The only contention was whether the CRDB Bank should be allowed to provide self bank guaranteed. While advocates Richard Rweyongeza and Alex Nguruma were in favour of such proposal, counsel for the respondents, Gamaliel Mgongo Fimbo, Mpaya Kamara and Martin Matunda, resisted such position.

Advocates for the bank had submitted that on a true reflection, the decretal amount is colossal and, if collected, the business operations of the applicant were bound to be seriously affected.

They contended that as a well established banking institution, CRDB was ready to furnish her own bank guarantee. Expounding further on the matter, the counsel for the bank stated that it was proved very difficult to find in Tanzania a bank, other than the applicant, that would have the assets to issue a bank guarantee of the magnitude to cover the decretal amounts.

It was the prayer for the counsel for the applicant bank that the application be granted with an order for CRDB to furnish a self-bank guarantee for the due performance of the decree in question.

However, the advocates for the respondents vigorously resisted the applicant’s suggestion, submitting that the bank guarantee to secure the due performance of a decree is a tripartite collateral undertaking which involves three parties, the guaranteeing bank, decree holder and judgment debtor.

As regard to difficulties or impracticability of securing a third party bank guarantor, the advocates contended that the bank failed to provide any explanation to substantiate the claim.

For the sake of a balanced weighing of interests of the parties, they urged CRDB to look for another bank guarantee.

In their ruling, the justices of the appeals court pointed out that it was “indeed unprecedented and a novelty for the judgment debtor to justify as well wear the shoes of a guarantor and undertake to be answerable for the payment of an own debt.”