LALCHAND FULCHAND SHAH & ANOTHER v INVESTMENTS & MORTGAGES BANK LIMITED [2000] KECA 16 (KLR)
The bottom line
#Kenya's Court of Appeal stopped a bank from selling charged property because the debt demanded wildly exceeded what the charge secured.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the applicants had raised a serious/frivolous-free issue for the intended appeal, including whether the charge was executed before an advocate as required by the Indian Transfer of Property Act as amended
- 2.Whether the demand of an unascertainable sum under the charge (KSh.145 million demanded against a charge securing KSh.30 million over property valued at KSh.20 million) raised a serious issue as to the exercise of the power of sale
- 3.Whether the intended appeal would be rendered nugatory if an injunction were not granted
Key legal issues
#Whether the applicants raised a serious issue as to the validity of the charge on the ground that it was not executed before an advocate
Yes - the applicants' unrebutted affidavit evidence that the charge was not executed before the named advocate or any other advocate, and that its effect was never explained, raised a serious issue going to the validity of the charge.
The applicants averred, on affidavit, that the charge was not executed before the advocate named in the document or before any advocate, and that no advocate explained its effect as required by the Indian Transfer of Property Act as amended. There was no contrary evidence from the advocate or the respondent. Since the onus lies on the person who asserts, the applicants discharged it prima facie, making the issue non-frivolous.
Whether the demand of varying and unascertainable sums raised a serious issue as to the exercise of the statutory power of sale
Yes - the discrepancy between the charge securing KSh.30 million, the notifications of sale demanding KSh.145 million, and the property valued at KSh.20 million raised a non-frivolous issue whether the chargors were entitled to have the amount established before the power of sale was exercised.
The charge secured sums up to KSh.30 million, yet the notifications of sale demanded KSh.145 million over property valued at KSh.20 million. The applicants argued the demand must be an ascertainable amount before the power of sale could be exercised. The documents showed these varying figures, so whichever view the court ultimately took, the issue was not frivolous.
Whether the intended appeal would be rendered nugatory if the injunction were refused
Yes - if the property were sold, the applicants would lose it forever, rendering the appeal nugatory.
The court was satisfied that sale of the charged property pending the intended appeal would make the appeal nugatory, since the property would be sold and the applicants would have lost it forever. Together with the existence of serious issues, this satisfied the rule 5(2)(b) test and justified granting the injunction.
Legal principles established
#- The onus of proving that a charge was not executed before an advocate, or that the advocate did not explain its effect, lies on the person asserting it; affidavit evidence to that effect, unrebutted, discharges that onus prima facie.
- An injunction will issue under rule 5(2)(b) where a serious issue is raised and the appeal would be rendered nugatory if the injunction is not granted.
Court orders
#- 1.Application for injunction allowed and the injunction sought granted
- 2.Costs of the application to be costs in the appeal
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya at Nairobi
- H.C.C.C. No. 2533 of 1997
- Jurisdiction invoked
- Rule 5(2)(b) of the Court of Appeal Rules (application for relief in an intended appeal)
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
I have had the advantage of reading in draft the rulings of my brothers AKIWUMI and SHAH, JJ.A. On my part, the application for an injunction under rule 5(2) (b) is irresistible.
The onus of proof is upon the person who asserts. Upon placing their affidavit evidence before the superior court on the matter, it would appear to me that the applicant discharged this onus, prima facie.
The applicants' argument is that the demand must be an ascertainable amount and that the chargors were entitled to have the amount established before any power of sale could be exercised.
For the reasons I have given above, I would allow the application and grant the injunction sought. I would order the costs of this application be costs in the appeal.
Issues in the judgment
#The judgment refers to draft rulings of Akiwumi and Shah, JJ.A., but only the ruling of Owuor, J.A. is reproduced in the copy provided; the separate rulings of the other two judges are not before the analyst.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "LALCHAND FULCHAND SHAH & ANOTHER v INVESTMENTS & MORTGAGES BANK LIMITED [2000] KECA 16 (KLR)", Case Analysis (2000). Civil Application No. 165 of 2000 (73/2000 UR). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2000/16/eng@2000-07-07
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.