The National Bank of Commerce v. Manubhai Shankarbhai Desai and Others, Civ. Case 12-D-68, -/3/69, Georges C. J.

The National Bank of Commerce v. Manubhai Shankarbhai Desai and Others, Civ. Case 12-D-68, -/3/69, Georges C. J.

The plaintiff – applicant filed a summons ex parte asking for an order of attachment before judgment of certain property of the second defendant, or for security of Shs. 60,000/-. The second defendant contested the application and an objection was also filed by a party claiming to have an interest in the property. The background to the application was this. The plaintiff sued, the second defendant and four others for Shs. 976,535/-. They were guarantors of a loan to Bombuera Limited – a sisal estate company in liquidation. The loan was secured by a debenture on the assets of the company. The plaintiff as the debenture – holder appointed a Receiver. Four of the defendants including the second defendant, were out of the country. The fifth defendant was a family holding company owned by the family of the second defendant. The plaintiff alleged that the second defendant was about to sell a property which he owned in Tanga to the objector, that it was the only property which he owned in Tanga, that the transaction was awaiting the consent of the Commissioner for Lands and that unless the property were attached the plaintiff would lose his right to satisfy at least in part any judgment he might obtain in the suit. The plaintiff’s Manager who swore to the affidavit, stated that in his opinion the property was worth Shs. 60,000/- and he asked that the second defendant be asked to supply security in that sum if the attachment was to be lifted.

Held: (1) “Before coming to the merits of the application ……. It is necessary to deal with a preliminary objection taken by Mr. Tahir ali [the advocate for the plaintiff] to the admissibility of the affidavits. Order X1X, Rule 3 of the Civil Procedure Code reads:- “(1) Affidavits shall be confined to such facts as the deponent is able of his own knowledge to prove except on interlocutory applications on which statements of his belief may be admitted: Provided that the grounds thereof are stated.” Mr. Tahir Ali’s argument was that the affidavits filed in this mater on behalf of the objector and the second defendant were deficient in form in that they did not specify that which the deponent knew of his own knowledge and that which he knew by information and belief specifying the grounds. Accordingly, they should be rejected and the applications dismissed. He relied on Bombay Flour Mills v. Patel (1962) E.A.805. A convenient point from which to begin the consideration of this objection s Standard Goods Corporation Ltd. v. Harakhchand Nathu and Co. (1950) 17 E.A.C.A. 99. In that case, there was an application for attachment before judgment. Paragraph 2 stated that “the facts stated herein were within the knowledge” of the deponent. Paragraph 7 stated that what was stated therein was true to the best of his knowledge, information and belief. The core of the affidavit was

a paragraph alleging that the “defendant company has been disposing of its goods and giving away some of them to person or persons who are alleged to be its creditors.” The Court held that: - “An affidavit of that kind ought never to be accepted by a Court as justifying an order based on the so called ‘facts’. What was within one’s knowledge could be said to be so either from physical observation or from information given by someone else. It was clear that the knowledge arose from both source and there had to be a clear statement as to the source from which each fact derived.” The Court added: - “It is well settled that where an affidavit is made on information it should not be acted upon by any Court unless the sources of the information are specified.: The above quoted passage from this case was cited with approval in Noormohamed Janmohamed v. Kassamali Virji Madhani (1952) 20 E.A.C.A. 8. In that case it would appear that there was nothing whatsoever in the affidavit to indicate whether or not the facts were deposed from the deponent’s own knowledge or from information and belief. In Bombay Flour Mills v. Patel (1962) E.A. 803, the cases were reviewed by Windham, C. J. He noted that the Indian case of Chandrika Prasad Singh & Others v. Hira Lal & Others (1924) A.I.R. Pat. 312, had not been drawn to the attention of the Court in either of the two carlier cases. There a distinction had been made between: - “an affidavit of the kind under consideration both there and here where nothing at all is said about whether the facts are deposed to from knowledge or from information and belief and one where it is stated that they are upon the deponent’s knowledge, information and belief without its being made clear which facts are from his knowledge and which upon information and belief. In that case it was held that an affidavit of the former kind was good while that of the latter kind was bad.” In the Indian case, Miller, C. J.., stated:- “In such a case [where the affidavit is said to be true to the best of the deponent’s knowledge, information and belief], it is clearly desirable and imperative that the deponent should state how much of the affidavit is sworn to from his own knowledge and how much is merely sworn from information which he believes to be true, but if the affidavit contains no such statement as that to which I have referred but merely alleges certain facts and is signed by the deponent who swears to them, it must I think, be taken that the statements made by him are true to his knowledge.” It is clear from the context that the learned Chief Justice was using the term “knowledge” here to mean knowledge from personal observation. The distinction appears to me to be valid, and from the tenor of the judgment of Windham, C. J., in the Bombay Flour Mills case, it is clear that he held it to be persuasive. He held, however, that the decision in the Noormohamed case was binding upon him, and he found it was not distinguishable. It is clear in the Noormohamed case that judgment was given for the appellant on a number of grounds. Under consideration then was a temporary injunction granted under Order XXX1X, Rule 1, of the Indian Civil Procedure Code. Rule 3 of that Order provided that such an injunction should not be granted, without notice of the application being given to the other side, unless it appeared that the object of granting the injunction would be defeated by the delay. No notice had been given to the other side. The Court held that the provision as to notice was mandatory and that there was no evidence to satisfy the Court that delay would defeat the purpose of the injunction. The summons contained no reference to Rule 3, and the only paragraph in the affidavit which could be prayed in aid of the issue of an immediate injunction was paragraph 10,

which stated that future, goods and effects were in danger of being wasted or wrongfully sold in execution. Unless particulars were set out in support of this opinion, it was clearly valueless. There was thus no evidence to justify the issue of an immediate injunction, irrespective of the form of the affidavit. The Court went on to consider the slovenness of the affidavit and quoted with approval the excerpts from the Standard Goods Co. Ltd. case already cited above. The distinction between the forms of the affidavit in the two cases was not considered, and I do not, with respect, think that the case should be considered as binding authority where the form of affidavit is different. The ratio decidenti of the case would appear to be the finding that there was no evidence to justify the granting of the injunction ex parte. There should have been notice. The criticism of the affidavit would appear to be obiter. In his affidavit, Vinubhai Shankerbhai Desai states that the facts as regards the sale of the property are within his personal knowledge …. Even assuming that paragraph 5 sets out facts which are not within his personal knowledge (and I see no reason why this should be assumed), they are not facts on which I propose to rely in reaching a decision in this matter ……. Paragraphs 6 and 7 deal with the sale which he has already stated to be within his personal knowledge, and he exhibits the relevant documents to the affidavit. Paragraphs 11 and 12 set out matters sworn to on information and belief, but the source is specified. The affidavit is one which contains relevant and admissible evidence on which I can act. The affidavit of Mrs. Serkarbhai Fakruddin does contain the general declaration that the facts stated in the affidavit are true to the best of her knowledge, information and belief. It does not; specify what is stated on information and belief and what from personal knowledge. It can, therefore, be criticized. On the other hand, she is the purchaser of the property and she took possession of it. She carried on repairs. Further, she has appended Photostat copies of the agreement for sale and the transfer, which speak for themselves. Though not specifically stated, paragraphs 1-8 are clearly from her personal knowledge. Similarly, paragraphs 9-11 are clearly sworn to on information and belief, and since the source has not been set out, the paragraphs are clearly bad and should be struck out. There remains a body of evidence sufficiently vouched in the affidavits from personal knowledge or from information and belief with sources specified to enable the matter to be disposed of.” (2) “Two matters arise for consideration – first, the second defendant’s arguments showing cause why the property should not be attached and why he should not be asked to provide security: and, secondly, the objector’s claim that the property is hers and not subject to attachment. I am satisfied that she has none. The Freehold Titles (Conversion) and Government Leased Act, Cap. 523, section 19(1) provides: - “A disposition of a Government Lease shall not be operative without the consent of the Commissioner.” Subsection (2) defines disposition, and this includes – “ a deed or arrangement or declaration of trust binding any party there to make any such deposition aforesaid, including a deed or agreement, entitling a party there to require a disposition to be made.” The agreement for sale is clearly an “arrangement entitling a party thereto to require a disposition to be made.” The Commissioner’s consent was not obtained. It is, therefore inoperative and could pass no interest. Similarly, the transfer signed by the second defendant is ineffective to pass any interest. Indeed, in the case of transfer, it will become void if the

Commissioner does not signify his consent within six months of its having been submitted to him. There is no evidence as to the exact date on which it was submitted but it is possible that it is not yet void. I agree that the Indian cases on the attachment of property which is the subject matter of a contract for sale cannot be examined for guidance because of basic dissimilarity. An agreement for sale of Government Leasehold land here is not capable of specific enforcement unless the commissioner’s consent has been obtained. I am satisfied that the property legally belongs to the second defendant and that he could, if he wished, sell it to another person without fear that the objector could successfully lay any claim to it. His liability would amount to no more than an obligation to return the Shs. 10, 000/- already paid and possibly to reimburse the objector the cost of repairs.  On the other hand, I am satisfied that the second defendant desires to carry out his obligations under the contract. The objector has clearly spent substantial sums on improving the property. There is no reason to doubt that the purchase price agreed between the second defendant and the objector represented the fair value of the property at the time of sale. The plaintiff now places the value at Shs. 60,000/- double the purchase price. This confirms that the objector did spend a sum in the region of Shs. 30,000/- on improvement. She asserts that it was Shs. 40,000/- and this is far from unlikely. For all these reasons, it is argued on behalf of the objector that she is in possession of the property in her own right and that her objection must succeed. Reluctantly, I must reject this argument. The law is clear. Though the objector is in possession, she is no more than a licence pending the Commissioner’s consent being obtained. If the consent is refused, then paragraph 8 of the agreement for sale provides that she will be deemed to be a tenant as from the date of her being let into possession at a rent of Shs. 300/- a month, until she has recouped her part payment and any sum she may have spent on the property. If she has spent Shs. 40,000/- as she says she has, that tenancy would not be operative, as it would clearly be a lease for a period longer than five years and would need the consent of the Commissioner. Her possession is not such as can support her objection. I would rule that he property could be attached. The claim of the objector is accordingly dismissed.” (3) “There remains for consideration the second defendant’s arguments showing cause why the property should not in any event be attached even if it is his property, and why he should not be called upon to give security. In as far as these arguments are based on the assertion that the plaintiff’s debt is otherwise adequately secured, I cannot accept them. I am also satisfied that the second defendant has no property here. I do not agree with Mr. Tahir Ali that the second defendant was in fact being fraudulent when he purported to sell the property to the objector. Clearly, however, if the sale is allowed to proceed, and if the second defendant is allowed to lay his hands on the balance of the purchase price, the plaintiff will be obstructed to that being fraudulent when he purported to sell the property to the objector  Clearly, however, if the sale is allowed  to proceed, and if the second defendant is allowed to lay his hands on the balance of the purchase price, the plaintiff will be obstructed to that extent in the execution of any decree which he might obtain. He should, therefore, be asked to furnish security, but not in the sum of Shs. 60,000/- as claimed. By the time the suit had been filed, the second defendant had done all that he could have done to transfer title to the objector. The absence of consent makes this inoperative, but, as I have indicated, I am satisfied that he wishes to honour his contract. Acting in good faith, the objector has spent a large sum of money on the improvement of the property. The plaintiff now wishes to have the advantage of that. This would be the effect of making an order that the

property be attaché unless security in the sum of Shs. 60,000/- is furnished. The second defendant has not shown cause why he should no furnish security, but he has shown ample cause why he should not furnish security in the sum of Shs. 60,000/-. He should be asked to furnish security in the sum of Shs. 20,000/-. If he does so, then the transaction can proceed as it does not appear that the Commissioner for Lands has any reason for withholding consent other than the claim put forward by the plaintiff.” (4) Objector’s claim dismissed. Shs. 20,000/- security to be deposited in Court within 4 weeks by second defendant failing which the property to be attached.