Pay 3.6bn/ - Bank Debt, Court Orders Company

By Faustine Kapama

THE High Court's Commercial Division has ordered a family owned company that imports and distributes building materials to pay a debt of 3.6bn/- to ...

Bank of India (Tanzania) Limited.

Judge Patricia Fikirini ruled against Fomcom International Limited and its directors, Furaha Mawamba and Farida Mawamba, the defendants, after granting a judgment in favour of the Bank, who was the plaintiff in the commercial dispute.

She pointed out that all evidence examined together in her view proved that there was an agreement between the plaintiff and Fomcom Company, where the latter defendant had obtained credit facilities from the plaintiff bank.

According to her judgment, the agreement was guaranteed and indemnified by the two directors.

She also ruled that the evidence produced by the plaintiff's Bank proved that Fomcom Company failed to service his debt loan, which in essence was a breach of an agreement.

"I find that the plaintiff has been able to prove his case against (Fomcom International Limited) and hence judgment in default is entered in that regard. Likewise the plaintiff has been able to prove the case against the (two directors)," the judge declared.

She also ruled that there was abundant evidence that the two directors of Fomcom International Limited have been obstructing the realization of the plaintiff's effort to recover the unpaid debt loan.

In that regard the judge found all the defendants jointly and severally liable.

The judge ordered immediate payment of 3, 674, 245, 170/-25 plus commercial interest at the rate of seven per cent per annum from September 30, 2017 till date of this judgment as specified in the Facility Agreement and ordered payments of 20m/- as general damages.

She further granted an order to pierce corporate veil of both Furaha Mawamba and Farida Mawamba to be personally liable to pay the full outstanding amount of debt, for their illegal acts, and as well being directors and owners of the company.

Fomcom International Limited obtained various credit facilities from the plaintiff with the second and third defendants guaranteeing the repayment of the money used from the credit facilities plus the accruing interest and other charges if the 1st defendant will fail to pay back.

On April 16, 2015, while operating under the directorship of the two directors, they obtained line of credit worth 1.6bn/-.

Prior on April 23, 2015, the company through its directors issued a fixed and floating rate as well as other charges, thereon in favour of the bank as a security for the provided credit facility.

The credit facilities were also secured by a mortgage by the company surrendering a Certificate of Title for a plot located within the Iringa Township in the name of Fomcom International Limited.

Furthermore, the two directors created personal guarantee and indemnity agreement that they shall fully repay on or before its due date and that in case of any default, they shall be fully personally liable to repay immediately upon demand the outstanding amount.

On December 17, 2015, the credit facilities limit was revised to be up to 2.6bn/-. A variation was made to the two debenture deeds to relate to the increased credit facility.

Each debenture was registered to cover 3,250,000,000/- plus interest and other charges thereon.

As additional security for additional credit granted, the company created equitable mortgage by depositing additional residential licenses and by passing a Board Resolution dated December 17, 2015 accompanied by a letter from the director of the company bearing the same date.

The two directors being guarantors of the credit facilities provided to the company, also made variations of the guarantee and indemnity agreement to cover the sum of 3,250,000,000/- plus interest and other charges for the credit facilities, which by then summed up to 2.6bn/-.

It was stated that despite all these, after obtaining the credit facilities from the plaintiff, the defendants refused and, or failed to repay the loan in accordance with the agreed terms and conditions of the loans.