LALCHAND FULCHAND SHAH & ANOTHER v INVESTMENTS & MORTGAGES BANK LIMITED [2000] KECA 405 (KLR)
The bottom line
#Kenya's Court of Appeal stopped a bank from selling charged property because the charge's validity and the demanded amount raised serious questions.
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 intended appeal raises arguable (not frivolous) issues, including the validity of the charge for want of execution before an advocate as required by the Transfer of Property Act
- 2.Whether the intended appeal would be rendered nugatory if an injunction restraining the sale of the charged property is not granted
Key legal issues
#Whether the requirement that a charge be executed before an advocate who explains its effect raises an arguable issue
Yes - the applicants' uncontradicted affidavit evidence that the charge was not executed before any advocate raised a serious issue going to the validity of the charge.
The applicants swore an affidavit stating the charge was not executed before the named advocate or any other advocate, and that no advocate explained its effect as required by the Transfer of Property Act of India as amended. There was no evidence to the contrary from the advocate or the respondent. Applying the rule that the onus lies on the person who asserts, the court found the onus prima facie discharged and the issue neither frivolous nor idle, since it went to the validity of the charge itself.
Whether varying and unascertainable demands under the charge raise an arguable issue
Yes - the discrepancy between the secured sum (KSh.30 million), the demanded sum (KSh.145 million) and the property valuation (KSh.20 million) was not frivolous.
The charge secured sums up to KSh.30 million, yet the notifications of sale demanded KSh.145 million while the property was valued at KSh.20 million. The applicants argued the demand must be an ascertainable amount before the power of sale is exercised. The court held that whatever view the court ultimately takes on appeal, the documents showing these varying figures meant the issue was not frivolous.
Whether the appeal would be rendered nugatory without an injunction
Yes - sale of the property would render the appeal nugatory because the applicants would lose the property forever.
On the second limb of the rule 5(2)(b) test, the court was satisfied that if the property were sold in the interim, the applicants would have lost it forever, making restoration on a successful appeal impossible. Both limbs of the test being satisfied, the injunction was irresistible and the application was allowed with costs in the appeal.
Legal principles established
#- Where a chargor asserts on affidavit that the charge was not executed before an advocate as required by statute and no contrary evidence is adduced, the chargor prima facie discharges the onus and raises an arguable issue as to the validity of the charge.
- A demand for an unascertainable or varying sum under a charge, before the amount due is established, raises an arguable issue as to whether the power of sale can be exercised.
Court orders
#- 1.Injunction sought in the application granted, restraining the respondent from exercising its power of sale pending the intended appeal
- 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.
On my part, the application for an injunction under rule 5(2) (b) is irresistible.
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.
The onus of proof is upon the person who asserts.
As regards the issue of whether the appeal would be rendered nugatory if an injunction is not granted, I am satisfied that would be the inevitable consequence.
Issues in the judgment
#The ruling states the judge read the draft rulings of Akiwumi and Shah, JJ.A., but only the ruling of Owur J.A is reproduced in the document; 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 405 (KLR)", Case Analysis (2000). Civil Appli 165 of 2000 (73/2000 UR). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2000/405/eng@2000-07-07
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.