Wakilii

Sharma v Ram (C.A. No. 41-35.)

East African Court of Appeal · [1935] EACA 142 · 1935 Appeal Allowed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Appeal from Resident Magistrate's refusal to strike out defences under Order 6 rule 29 in execution proceedings
Decision
Property wrongly seized restored to appellants; execution proceedings against transferee's property set aside

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Where a business is transferred without publication of notice as required by the Fraudulent Transfer of Businesses Ordinance 1930, and a creditor seeks to make the transferee liable for debts incurred by the transferor, the creditor must bring a separate action against the transferee. Execution cannot be levied directly against the transferee's property in proceedings to which the transferee was not a party. An order refusing an application under Order 6 rule 29 is appealable as of right.

Outcome

Property wrongly seized restored to appellants; execution proceedings against transferee's property set aside

Facts

Feroz Din obtained judgment against Hansraj on two promissory notes on 24 August 1935. In execution, certain moveable property was attached. Dalip Chand and Mathra Dass Sharma (the appellants) filed notice of objection under Order 19 rule 55, claiming the attached property belonged to the Elburgon Fuel Stores, to whom Hansraj had transferred his business in May 1935. No notice of the transfer had been published as required by the Fraudulent Transfer of Businesses Ordinance 1930. The respondents filed defences asserting that in the absence of published notice, the transferee stood in the shoes of the transferor and execution could be levied against the transferee's goods without a separate action. The appellants applied under Order 6 rule 29 to strike out the defences as disclosing no reasonable answer. The Resident Magistrate refused the application, holding that execution could be levied against the transferee's goods without a separate action.

Issues

  1. Whether an order refusing an application under Order 6 rule 29 is appealable as of right.
  2. Whether, under section 3(1) of the Fraudulent Transfer of Businesses Ordinance 1930, a creditor can execute against property of a transferee without bringing a separate action against the transferee where no notice of transfer was published.

Orders

  • Appeal allowed.
  • Decision of the Resident Magistrate reversed.
  • Objection decided in favour of the appellants.
  • Property of the appellants wrongly seized to be restored to them.
  • Costs of and incidental to the seizure to be paid by the judgment creditor.
  • Costs in this Court and before the Resident Magistrate awarded to the appellants.
  • Costs payable under the order of 21-11-35 by the appellants to be set off pro tanto against the costs awarded against the judgment creditor.

Rules and key headnotes

Civil Procedure — Appeals — Order 6 rule 29 — Appealability of Orders Refusing Applications
An order refusing an application under Order 6 rule 29 to strike out pleadings is appealable as of right, equally with an order granting such application. The words 'in pursuance of' in Order 6 rule 29 should not be strictly construed as meaning only orders granting relief, but also orders refusing to grant that relief.
Commercial Law — Transfer of Business — Fraudulent Transfer of Businesses Ordinance 1930 — Liability of Transferee
Where a business is transferred without publication of notice as required by section 3 of the Fraudulent Transfer of Businesses Ordinance 1930, the transferee becomes personally liable for all liabilities incurred in the business by the transferor. This liability is not limited to the value of the assets transferred but extends to the whole of the transferee's property.
Commercial Law — Transfer of Business — Enforcement of Liability — Necessity for Separate Action
Where it is sought to make the transferee of a business liable under section 3 of the Fraudulent Transfer of Businesses Ordinance 1930 for debts of the business incurred by the transferor, a separate action must be brought against the transferee by the creditor. The liability cannot be enforced by process of execution in an action to which the transferee was not a party.
Statutory Interpretation — Statutory Liability — Remedy by Action
Prima facie, a liability created by statute must be determined by action. Where a statute creates a liability but does not prescribe a remedy, the remedy is by action. The reference to 'proceedings' and 'appeals' in the proviso to section 3(2) of the Fraudulent Transfer of Businesses Ordinance 1930 indicates that proceedings by way of institution of a suit are intended, not merely execution proceedings.

Legislation cited (7)

  • Fraudulent Transfer of Businesses Ordinance 1930 s.3(1)
  • Fraudulent Transfer of Businesses Ordinance 1930 s.3(2)
  • Civil Procedure Order 6 r.29
  • Civil Procedure Order 19 r.55
  • Civil Procedure Order 40 r.1(1)
  • Partnership Ordinance 1933 s.27(1)
  • Civil Procedure Order 19 r.46(1)

Cases cited (1)

  • Ballance v Palle (1884) 53 LJQB 459

Full judgment

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Sharma v Ram (C.A. No. 41-35.) [1935] EACA 142 (1 January 1935)
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.