Wakilii

Official Assignee of Venidas Nemchand's Insolvency v Dinshaw and Brothers (Civ. App. No. 14-1937)

East African Court of Appeal · [1938] EACA 29 · 1938 Appeal Allowed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Appeal from decision of H.M. Consul General's Court of Abyssinia at Addis Ababa
Decision
Respondents' claim rejected. Official Assignee's rejection of proof of debt upheld.

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that where a contract is made or to be performed in a foreign country so as to be a contract of that country, and the bankruptcy law of that country discharges a party from liability under the contract, that party is also discharged from liability in another jurisdiction. The contract was governed by the law of French Somaliland. The French Appellate Tribunal had discharged the insolvent's estate from liability in respect of the respondents' claim. Consequently, the insolvent's estate must also be discharged from liability in Ethiopia. Appeal allowed.

Outcome

Respondents' claim rejected. Official Assignee's rejection of proof of debt upheld.

Facts

An insolvent resident of Bombay carried on business at Bombay, Aden, Djibouti, Addis Ababa and Dire Dawa. Insolvency proceedings were instituted against him in the High Court of Bombay, the British Consular Court at Addis Ababa (acting in an auxiliary capacity to the Bombay High Court), and the French Courts at Djibouti. The respondents had carried goods by sea consigned to the insolvent at Djibouti. They delivered the goods under letters of guarantee in lieu of Bills of Lading which the insolvent could not produce. When the insolvent did not pay the Japanese shippers, the shippers claimed from the respondents, who paid Rs. 92,164/3/0. The insolvent's Djibouti branch had forwarded the goods to his branches at Addis Ababa and Dire Dawa. The respondents sought to prove their claim before the Official Assignee at Addis Ababa. The Official Assignee rejected the claim. The Consular Court allowed the claim. The French Upper Court of Appeal at Djibouti had rejected the respondents' claim, holding that handing over goods without receiving Bills of Lading was gross fault that would injure other creditors.

Issues

  1. Whether a debt arising from a contract made and to be performed in French Somaliland was provable in insolvency proceedings in Ethiopia where the French courts had discharged the insolvent's estate from liability under that contract.
  2. Whether the respondent was entitled to raise on appeal a ground not taken before the lower court in support of the original rejection of the proof of debt.
  3. Whether the letters of guarantee constituted a debt provable in bankruptcy.

Orders

  • Appeal allowed with costs.
  • As regards costs in the Consular Court, each party to pay his own costs.
  • Respondents' claim rejected.

Rules and key headnotes

Bankruptcy — Conflict of Laws — Lex Loci Contractus
The law of the country where a contract is made or is to be performed governs that contract, not merely with regard to its construction but also with regard to all conditions applicable to it as a contract.
Bankruptcy — Foreign Discharge — Recognition in Another Jurisdiction
Where a contract is made or to be performed in a foreign country so as to be a contract of that country, and there is a bankruptcy law of that country by which a party to the contract is discharged from liability, that party will be discharged from liability in another jurisdiction.
Appeal — New Grounds — Respondent Supporting Lower Court Decision
A respondent is entitled to support the decision of the court below upon any sufficient ground whether or not it be the ground on which the court below decided the matter, provided the ground is raised in the memorandum of appeal.
Bankruptcy — Proof of Debt — Letters of Guarantee
Letters of guarantee by which a party promises to pay by way of indemnification constitute a good contract provable in bankruptcy when the necessity to indemnify arises.

Cases cited (2)

  • Gibbs and Sons v Societe Industrielle et Commerciale des Metaux (1890) 25 QBD 399
  • In re Two Solicitors [1937] 4 AELR 451

Full judgment

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The original judgment as reported. Read the original PDF before relying on any passage.

Official Assignee of Venidas Nemchand's Insolvency v Dinshaw and Brothers (Civ. App. No. 14-1937) [1938] EACA 29 (1 January 1938)
Source: this page presents Wakilii’s issue analysis and metadata for a publicly reported Ugandan judgment. Any AI-generated summary is marked as such. Judgment text is sourced from the Uganda Legal Information Institute (ulii.org). Wakilii is not affiliated with ULII.