IN THE COURT OF APPEAL OF TANZANIA

AT MWANZA
f CORAM: KOROSSO. J.A.. KENTE 3.A. AND MGONYA J.A.^

CIVIL APPEAL NO. 482 OF 2020

MASS TRADING COMPANY LTD.............................................. APPELLANT
VERSUS
CRDB BANK PLC........................................................... RESPONDENT
(Appeal from the Decision of the High Court of Tanzania at Mwanza)

fMruma. 3.)

Dated the 8thday of June, 2018

in
Commercial Case No. 20 of 2015

JUDGMENT OF THE COURT

2nd December, 2024 & l l th June, 2025

KENTE. J.A:

Prior to the occurrence of the facts which precipitated the trial in the

lower court and subsequently the present appeal, the appellant Mass

Trading Company Limited which is a private company incorporated in terms

of the laws of Tanzania, used to own and run shops which offered a range

of merchandize to its customers in Tabora Region. It would appear from

the evidence on the record that, until the time which is contemporaneous

with the beginning of this dispute, the appellant's business flourished

without any incident.

 The events leading up to this case are as follows: According to the

appellant, because of encouragement by the respondent bank, she was

lured into trading in cotton with the understanding that the respondent

would provide her with business loans in the form of working capital. To

actualize their intention and pursuant to their agreement, several loans

were advanced by the respondent to the appellant to enable her manage

the day to day operations and meet cotton business expenses.

However, according to the appellant who had to use her landed

properties as collaterals for the loans, as opposed to what the respondent

had made her to believe, the said business was very challenging. Before

the trial court, the appellant complained that, the challenges could be

attributed to the respondent's deliberate mispresentations, exaggerations

and falsehood regarding the prospects of the said business. Moreover, the

appellant contended that, the decline in cotton prices and the general crisis

in the cotton business which no doubt was unsettling for what had up to

that time been a tranquil commercial relationship between her and the

respondent, was largely attributable to the global economic crisis that was

sweeping the world at the time.

The appellant further contended that, because of the crisis, she could

not continue with the cotton business. She also claimed that, realizing the
economic hardship which cotton dealers all over the country were facing

and, in response to this alarming situation, the Government of the United

Republic of Tanzania offered them some financial rescue packages to

bolster their business. It is common ground that, under this arrangement,

the appellant was given T7S 314,700,000.00.

It was the appellant's complaint before the trial court that, even

though, to her most consternation, the whole amount of money which she

had received from the Government was converted by the respondent and

used to offset her contested liability while the said money was exclusively

intended to be used as a working capital in the cotton business. The

appellant further complained, apparently in the alternative that, the money

offered by the Government which was unjustifiably used by the respondent

to pay a portion of the loan, was sufficient enough to settle her outstanding

liability and therefore she was no longer indebted to the respondent. For

that reason, it was further pleaded by the appellant who was the plaintiff

before the trial court that, the demand notices issued by the respondent

expressing her intention to dispose of her properties which she had

furnished as collaterals, upon her default to pay TZS 911,200,000.00

allegedly being the outstanding amount together with accrued interest,

were totally unfounded. To arrest the situation, the appellant having taken
out an action against the respondent, claimed for the following substantive

reliefs:

i) A declaratory order that she was not in any way, indebted to the
respondent;
ii) A permanent prohibitory order restraining the respondent from
setting herproperties which she hadput up as coiiaterais to secure
the loan;
Hi) Issuance o f an order directing the respondent to immediately
release to the appellant aii documents relating to ownership o f the
properties Intended to be sold; and
iv) Refund of ali monies paid to the respondent on the pretext of
servicing the allegedly restructured loan.

For its part, the respondent denied all the claims put forward by the

appellant saying that, on the whole, it was the appellant herself who was

to blame. As part of her response to the appellant's claim, and equally

unhappy with the appellant's performance of her contractual obligations,

the respondent advanced a counterclaim for TZS. 933,898,224.83 allegedly

being the amount still outstanding on the loan.

After considering the evidence and the arguments marshalled by the

parties, the learned trial Judge found that the appellant could not be heard

to say that she was denied access to the proceeds of cotton sales. He

reasoned that, in terms of clause 5.2 of the Collateral Management

Agreement (exhibit P9), disbursement of funds into the appellant's

overdraft facility was subject to the availability of cotton stocks collected

by her. The learned trial Judge observed that, in the absence of such stocks

which was a condition precedent, the respondent could not receive any

cotton sale proceeds and allow the appellant to access them.

With regard to the appellant's complaint that the respondent had

delayed to release funds for mobilization and initial workings, the learned

trial Judge found that, the appellant had not discharged the burden of proof

which insists that, whoever desires any court of law to give a judgment as

to the legal right of facts which he asserts, he must prove that indeed those

facts do exist. Particularly, it was the learned Judge's finding that the

appellant had not ted any evidence showing that there was any amount of

money which she requested for and which was not honoured by the

respondent during any particular period of the cotton business.

As regards the appellant's complaint that the respondent had

undeservedly used 17 314,700,000.00 to offset her (appellant's)

outstanding restructured loan, the learned trial Judge found that, since the

said amount of money was granted by the Government to the appellant as

a rescue compensation package after the appellant had suffered a loss

during the financial crisis, it was proper for the respondent bank to use the

said money to offset part of the appellant's restructured loan. The trial
Judge observed that, this was particularly so insofar as the loan was given

as a working capital to support the cotton and not any other business.

Concerning the counter-claim, the trial Judge concured with the

position taken by the respondent that indeed the appellant had defaulted

repaying the loan in the agreed manner and as a result, by 30th March,

2015 the appellant's liability stood at T7S. 911,183,394.29. Having so

found, the trial Judge went on concluding that the appellant's claim against

the respondent had no basis both in law and in fact. He then dismissed the

suit with the attendant order for costs. On the other hand, the respondent's

counterclaim was diminutively reduced but mainly sustained.

Peeved by the above decision, the appellant has preferred an appeal

to this Court citing the following grounds of complaint.

1. That, on account of the evidence on record, the learned judge

misdirected himself both in iaw and in fact by dismissing the
appellant's claim and deciding that the Appellant in the counter claim
shallpay the Respondent Tshs 933,898,224.84 being the outstanding
loan and interest whiie there is no evidence supporting the said claim
as the record shows that the outstanding balance remaining was Tshs
362,682,278.26 only.

2. That, the learned trialJudge erred in iaw and facts by holding that a
mere appellant's acknowledgment of receiving a letter amounted to
consent by the Appellant to a set-offo f the restructured loan.
 3. That, the Learned trial Judge erred in facts by deciding that the
amountgiven by the Government(Tsh 362,682,278.26) was a rescue
compensation package thus the respondent had properly used that
amount to set-offpart of the appellants re-structured loan while the
record is dear that the appellant did not give consent for deduction
o f the said amount by the Respondent

Both parties filed written submissions which their respective counsel

briefly augmented during the hearing of the appeal. Essentially, the

substances of the oral submissions made by each counsel were, in the

main, a repetition of what is contained in their respective written

submissions and, on that account, we see no reason to reproduce them

here. Suffice it to say that with regard to the first ground of appeal as

correctly, submitted by Mr. Gallati in his reply submissions, it would appear

that the appellant's grievances are basically twofold. Accordingly, Mr.

Egbert Mujungu learned counsel who appeared before us to represent the

appellant, took a two-pronged approach to the first ground of appeal by

contending in the first place that, the dismissal of the appellant's claim was

against the weight of the evidence on the record and, in the second place

that, an order requiring the appellant to pay the respondent TZS.

933,898,224.84 which was claimed in the counter claim, was without any

justification as it was clear that the total outstanding balance owed to the

respondent as at 30th June 2015 was TZS. 362, 682,278. 26 only.

 With regard to the second ground of appeal which is closely related

to the third ground of appeal as both of them essentially challenge the trial

Judge for holding that the signing of the acknowledgment letter signified

the appellant's consent to the set off, the gist of Mr. Mujungu's argument

on this point is that, the money given to the appellant by the Government

was exclusively meant to boost her cotton business and not to pay her

debts to the respondent. According to Mr. Mujungu, that was the import of

the letter appearing at page 745 of the record of appeal which shows that

the said amount of money was a financial crisis rescue package. As such,

the learned counsel submitted that the appellant viewed the decision by

the respondent to use the said money to offset her liability as both arbitrary

and illegitimate. The trial court was, according to Mr. Mujungu, wrong to

have held that the sum of TZS. 314,1717,545. 28 granted to the appellant

by the Government of Tanzania was rightly used to reduce the appellant's

outstanding balance. At the end of his submissions, the learned counsel for

the appellant prayed fervidly that we allow the appeal.

In response, Mr. Gallati begun by urging us to dispel with the

subsidiary complaint raised by the appellant Company that it was denied

direct access to the cotton sale proceeds. The argument made by Mr.

Gallati regarding this complaint was that, whatever was done by the

respondent, it was in accordance with the terms and conditions contained

in the Collateral Management Agreement and, as such, the appellant

cannot be heard to renege on the agreement and blame the Collateral

Manager for doing what was agreed upon by the parties. Accordingly, the

appellant's lamentations on that aspect were discounted by Mr. Gallati as

being misplaced.

As regards the second limb of the appellant's complaint in the first

ground of appeal in which the appellant is faulting the trial court for

ordering her to pay the respondent TZS. 933,898,224.84 instead of TZS.

362,682,278.26 which, according to the appellant, was the outstanding

loan balance, Mr. Gallati submitted that, as the evidence on record shows,

apart from TZS. 362,682,278.26 which was the outstanding balance after

setting off part of the appellant's liability using the Government rescue

package, the appellant was granted another overdraft facility of TZS.

300,000,000.00 which, when taken together with TZS. 412,050,178.00 that

was outstanding from the term loan as at 17th December, 2010 combined

with accrued interests and penalties, made a total of TZS. 933,898,224.84

as at 30th June 2015.

Mr. Gallati referred to the factual basis upon which the trial Judge

made his decision and subsequently submitted that, the evidence adduced

by the respondent's witness in the counter-claim which was to the effect

that the appellant owed the respondent a total of TZS 933,898,224.84 was

not materially contested or otherwise controverted by the appellants

evidence. Extending his argument, Mr. Gallati posited that, the learned

Judge's finding on that aspect, was, for all intents and purposes

unassailable and he accordingly beseeched us to dismiss the appeal for

lack of merit.

Having considered the arguments debated before us, we perceive

that essentially what we have to determine in this case, is whether or not,

the trial court was right to hold as it did that the appellant's claim against

the respondent was not tenable both in fact and in law and that the

respondent had proved its claim against the appellant in the counter claim

to the required standard. As we shall hereinafter demonstrate and this is

beyond argument, our view is that, the determination of the above-posed

questions depends entirely on the weight of the evidence led by each party.

Notably, as opposed to the appellant's complaints, in determining the

liability of each party to this case, the learned trial Judge appears to have

carefully evaluated the evidence on the record. As correctly submitted by

Mr. Gallati, having analysed the evidence, the learned Judge accepted the

respondent's version that apart from the TZS. 362,682,278.26, which was

the outstanding balance after the unfinished set off, the appellant was

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granted another overdraft of TZS 300,000,000.00. The evidence on record

shows that when the above amount is added to TZS 412,050,178.00 which

was still outstanding on the term loan as at 17th December, 2010 together

with accrued interests and penalties, that makes a total of TZS

933,898,224.84 as at 30th June, 2015.

Upon our own re-evaluation of the above evidence which, as it turned

out, was not materially controverted, we find no cause to fault this finding

of fact by the learned trial Judge granted as it is that, the same is fully

based on the testimony of the respondent's witness. As stated above, the

evidence regarding the appellant's liability to the respondent, was not

challenged during cross - examination and, as it now turns out, and

further, as the law stands today in Tanzania, the appellant cannot be heard

to say that the said evidence was not true in view of the fact that, failure

to cross examine a witness on a crucial aspect of their testimony is

interpreted as tacit acceptance of that testimony, implying an admission of

the fact.

Having considered the evidence in total, we cannot fault the trial

Judge for finding that the appellant was indebted to the respondent to the

tune of TZS. 933,898,224.84. To that end, Mr, Mujungu's spirited

ii
arguments on that aspect cannot be sustained and accordingly, the first

ground of appeal is hereby dismissed for lack of merit.

As regards the complaint that the appellant was denied direct access

to the cotton sale proceeds, having considered the evidence before him,

the learned trial Judge found that, the evidence given by the appellant was

not sufficient to prove the claim. To the contrary, the Judge found that one

of the prerequisites to be met by the appellant before she could access the

proceeds of cotton sale was to have sufficient amounts of raw cotton held

in storage in designated places. This contractual requirement is contained

in the Collateral Management Agreement as found at page 751 through to

788 of the record of appeal. On the evidence led, the trial Judge found that

the appellant had not proved that she had, at all times, collected sufficient

amounts of cotton stocks for her to be allowed by the Collateral Manager

to have a direct access to the previous sale proceeds. Taking into account

the above evidence, the learned Judge found that, in essence the appellant

was not denied access to the cotton sales and cash withdrawal but the

respondent, through the Collateral Manager had to monitor the value of

the appellant's business magnitude and ensure it remained sufficient

enough to cover the loan.

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 On our part, we would have to agree with the learned Judge both in

his factual finding and conclusion. For, it is clear that, in considering

whether or not the respondent was justified to control the appellant's

access to the proceeds of cotton sales, the trial Court had to base on its

view and analysis of the evidence presented before it.

On our part, we are mindful that in contract law, parties are generally

considered legally bound by the terms and conditions of the contract if they

have entered into it with the intention of creating legal obligations. This

means the parties are obligated to fulfill their respective undertakings

outlined in the contract.

We have addressed our minds to the above requirement of the law

together with the evidence on the record. We hasten to find as did the trial

court that, the appellant had nobody except herself to blame in this dispute.

The evidence on record indicates that the appellant had entered into the

contract with the respondent freely. Further, the appellant is not disputing

the existence of the condition that she was required to have sufficient

amounts of cotton stocks before she could be allowed free access to the

proceeds of cotton sale.

In the light of the foregoing, we hold that the appellant's failure to

observe the above condition entitled the respondent to deny her a direct

13
access to the proceeds of cotton sales and therefore the trial court was on

firm ground when it found that the appellant was in breach of the Collateral

Management Agreement and was not entitled to freely access the proceeds

of cotton sales without the respondent's control.

As to the complaint that the respondent had underservedly used the

amount of TZS 314,700,000.00 which was granted to the appellant by the

Government as a rescue compensation package, we uphold the trial court's

finding that in sofar as the loan was given by the respondent to the

appellant as a working capital to support the cotton business, it was proper

for the respondent to use the money given to the appellant by the

Government to reduce a debt owed by the appellant to her. The appellant's

claim that the money was exclusively payable to him, is in the

circumstances, implausible. We must be quick to say, and this does not

need the deployment of any business acumen, that paying off one's

business debts as it happened in this case, can indeed boost their business.

In this connection, it is both needless and very elementary to say that, if a

business cannot meet its debt obligations, it could face severe financial

distress, including bankruptcy. In view of the foregoing discourse, we find

that the appellant's arguments to the contrary, are not tenable both in law

and in fact. We accordingly dismiss them.

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 All said and done, we find the entire appeal to have no merit. In the

ultimate event, the appeal fails on all grounds and we accordingly dismiss

it with costs.

DATED at DODOMA this 10th day of June, 2025.

W. B. KOROSSO
JUSTICE OF APPEAL

P. M. KENTE
JUSTICE OF APPEAL

L. E. MGONYA
JUSTICE OF APPEAL

The Judgement delivered this 11th day of June, 2025 in the presence

of Mr. Malikisa Sakila, learned advocate holding brief for Mr. Ergert

Mujungu, learned counsel for the appellant and Mr. Iche Mwakiyela,

learned advocate holding brief for Mr. Silwani Galati Mwantembe, learned

counsel advocate for the Respondent through video link; is hereby certified

as a 1"ri IP m n v n f thp nrininal.

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