Amichand Narshi Shah & 2 others v Alexander James Private Investigation Limited [2020] KEELC 1207 (KLR)
The bottom line
#A lender claiming to have paid a loan through a third party lost the property it took as security because it couldn't prove payment.
What this practically means
#Executive summary
#Key legal issues
#Validity of the loan agreement
The loan agreement dated 15th April 2014 was valid and binding on the parties; the plaintiffs failed to prove fraud, misrepresentation or the alleged absence of the 3rd plaintiff's signature
The court found no evidence of trick or misrepresentation, no proof that the 3rd plaintiff was abroad, and no expert evidence of forgery. The 3rd plaintiff did not testify despite an adjournment for that purpose, and the plaintiffs' expectation of performance of the agreement contradicted their claim that it was defective for want of her signature.
Whether the defendant disbursed the loan
The defendant failed to prove that it disbursed the Kshs. 10 Million to the plaintiffs and therefore did not perform its part of the agreement
The defendant paid cash to Sachin Patel without the plaintiffs' authorisation; a letter from Patel himself could not constitute the plaintiffs' authorisation. No withdrawal slip or bank statement was produced to prove the withdrawal. Facts of how, when and to whom payment was made were within the defendant's knowledge under Section 112 of the Evidence Act.
Whether the transfer of the suit property to the defendant was in accordance with the agreement
The transfer was irregular: no one-month default notice was issued, no joint valuation was carried out, and the property was transferred to DW1 personally rather than to the defendant
Clause 5 required notice of default and a joint valuation before transfer. DW1 admitted neither was done. Further, the property was registered in DW1's name although the agreement and instrument of transfer were in favour of the defendant, and no stamped or registered instrument of transfer was produced.
Legal principles established
#- A lender's release of loan funds to a third party without the borrowers' authorisation does not discharge the lender's obligation to disburse the loan to the borrowers
- Where the fact of payment is especially within the lender's knowledge, the burden of proving that payment was made rests on the lender under Section 112 of the Evidence Act
Court orders
#- 1.Declared that the plaintiffs are the owners of Flat No. A4 situated in Block A on L.R No. 209/3/10, I.R No. 78108
- 2.Issued a permanent injunction restraining the defendant, by itself or through its agents, from selling, transferring or in any way dealing with the suit property
- 3.Directed the defendant and its director James Kigathi Ndegwa to, within sixty (60) days, execute an instrument of transfer re-conveying the suit property to the plaintiffs and return the original lease handed over as security
- 4.Awarded the plaintiffs the costs of the suit
- Jurisdiction invoked
- Original civil suit instituted by plaint; specific provision not stated in judgment
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Amichand Narshi Shah & 2 others v Alexander James Private Investigation Limited [2020] KEELC 1207 (KLR)", Case Analysis (2020). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2020/1207/eng@2020-09-24
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.