New Era Stores and Another v Ocean Trading Company (Civil Appeal No. 13 of 1950) [1950] EACA 53 (1 January 1950)

APPELLATE CIVIL

Before de LESTANG, J.

NEW ERA STORES (G. G. SHAH, R. L. SHAH, S. D. SHAH, AND K. P. SHAH), Appellants (Original Defendants)

ν.

OCEAN TRADING COMPANY, Respondent (Original Plaintiffs)

Civil Appeal No. 13 of 1950

(Appeal from decision of Resident Magistrate's Court at Mombasa-R. A. Campbell, Esq.)

Fraudulent Transfer of Business Ordinance, 1930—Section 3 (1)—Vicarious liability—Issue not raised in Plaint—Civil Procedure Code, O. VI. r.1— Material facts on which plaintiff relies—Cause of action depending on statute—All facts necessary for importing provisions of Statute to be pleaded -O. XIX, R.4, C. P. Code.

Appeal from the judgment, dated 3rd April, 1950, of R. A. Campbell, Esq., Resident Magistrate, Mombasa, in Civil Suit No. 826 of 1949, decreeing the plaintiff's claim.

Respondents sued appellant firm for the balance of price of goods sold and delivered in April, 1948. At the time of the sale, one J. P. Patel was sole proprietor of appellant firm, but before March, 1949, the firm belonged to a<br>partnership consisting of G. G. Shah, R. L. Shah, and S. Patel. The last name<br>dropped out on 1st March, 1949, and at the date of filing of the su August, 1949, the firm belonged to G. G. Shah and R. L. Shah, but before the summons was served the firm again changed hands, and S. D. Shah and K. T. Shah became the new owners. The four Shahs entered appearance in the suit and filed identical defences, in which they denied liability on the ground that they were not members of the firm when the debt was contracted. The trial Court, while accepting the above facts, held the four Shahs liable by virtue of the Fraudulent Transfer of Business Ordinance, section 3 (1), and decreed the claim against them.

The defendants, four Shahs, appealed, on the ground that there was no privity of contract between them and the plaintiff, and that the suit had not been framed under the provisions of the Fraudulent Transfer of Business Ordinance, 1930, which had not been pleaded, together with any facts bringing it into play, and that no opportunity had been given to the appellants to raise issues thereon, and that the Ordinance had no application to the merits of the case.

Held $(8-8-50)$ .—(i) That it is elementary law that a plaint must contain a statement, in concise form, of the material facts on which the plaintiff relies for the claim (O. VI, r. 1, C. P. Code).

(ii) That if a plaintiff's cause of action, his title to sue, depends on a Statute, he must plead all facts necessary to bring him within that Statute.

(Annual Practice, 1949, O. XIX, r.4, and notes thereunder, referred to.) Appeal allowed, Re-trial ordered.

D. N. Khanna for the Appellants. Mackie Robertson for the Respondents.

JUDGMENT.—This appeal from the decision of the learned Magistrate, Mombasa (Mr. Campbell) raises a short point of procedure.

The respondents sued the appellant firm for the recovery of Sh. 364/05, being the balance of the price of goods sold and delivered in April, 1948. At the time of the sale one Jashbhai P. Patel was sole proprietor of the appellant firm. It is not in evidence when or how it came about that J. P. Patel ceased to own the firm. The evidence merely shows that before March, 1949, the firm belonged to three persons in partnership, G. G. Shah, R. L. Shah and S. Patel. The latter dropped out on the 1st March, 1949. Thus at the date of the filing of the suit on the 24th August, 1949, the firm belonged to G. G. Shah and R. L. Shah. Before the summons was served, however, the firm again changed hands and S. D. Shah and K. T. Shah became the new owners. The four Shahs entered appearance in the suit and filed identical defences in which they denied liability on the grounds that they were not members of the firm at the time the debt was contracted. The learned Magistrate while accepting the above facts found the four Shahs liable by virtue of section 3, sub-section (1) of the Fraudulent Transfer of Business Ordinance, 1930. The short point for decision is whether on the pleadings as they stand it was open to the learned Magistrate to decide the question of the vicarious liability under the Fraudulent Transfer of Business Ordinance. In my view it was not since the liability under the Fraudulent

Transfer of Business Ordinance of the partners of the firm at various times was not an issue in the case at all. It is elementary law that a plaint must contain a statement $\frac{1}{2}$ in concise form of the material facts on which the plaintiff relies for his claim (Order 6, Rule 1) otherwise the object of pleadings which is secure that the parties shall know what are the real points in issue between them will be defeated. On the application of that principle it has been held that if a plaintiff's cause of action, or his title to sue, depends on a statute he must plead all facts necessary to bring him within that statute (vide Annual Practice, 1949, Order No. 19, Rule 4, verbo all materials facts and cases cited therein). In the present case the plaintiffs suit was founded on a personal debt due by the owner of the firm at the time the debt was incurred and no facts were pleaded so as to bring the claim within the vicarious liability created by the Fraudule 'Transfer of Business Ordinance. For these reasons it seems to me that the liability of the present and former members of the firm under the Fraudulent Transfer of Business Ordinance was not an issue in the case, and it is no doubt for that reason that the evidence in the case is so sketchy so far as the partners of the firm from the time that the debt was incurred is concerned. It may well be, however, that the

appellants are liable under the Fraudulent Transfer of Business Ordinance and for that reason in allowing this appeal I have decided that the only fair course to adopt to order a re-trial with the direction that leave should be given to the respondents to amend their plaint should they so wish in order to found their claim under the Fraudulent Transfer of Business Ordinance, and that the costs of this appeal and of the first trial and re-trial shall be costs in the cause. $\cdot$