[2018] KEHC 5971 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT MOMBASA

CIVIL SUIT NO. 192 OF 2012

NARODHCO (K) LTD..................................................................PLAINTIFF

VERSUS

MISS JAHANARA GULAMMUSTAFA & OTHERS...........DEFENDANT

J U D G M E N T

Outline of facts and introduction

1. The plaintiff herein sued the defendant jointly and severally for therecovery of the sum of Kshs.61,332,081/= together with interest thereon of Kshs.29,807,412/= making an aggregate sum of Kshs.91,139,493/= on account of goods sold and delivered to the defendants by the plaintiff at the defendants requests and instance during the year 2009/2010. The price of the goods is pleaded at Kshs.61,332,081/= while the sum of Kshs.29,807,412/= is pleaded to be the interest incurred by the plaintiff on an overdraft facility operated at Bank of Baroda, Mombasa, and used to procured the goods so supplied.

2. Together with the plaint the plaintiff filed a list of three namedwitnesses together with a list of some nine document which included, a search at the Registrar of Companies, (sic) business names), plaintiffs bank statement on the overdraft facility, list disclosed creditors of the 3rddefendants creditors in Bankruptcy Cause No. 4 of 2010 as well as rulings by court by which the receiving order was discharged. Later on the plaintiff filed two witnesses statements by one Bharat N. Ruparelia and Nicholas Kivuthe Musau together with an amended list of documents limited to some six (6) documents basically omitting the bank statements and introducing delivery notes. When served and upon entry of appearance the defendant filed a statement of defence as well as two witness statements by 1stand 2nddefendant without any list nor copies of documents.

3. The gist of the statement of defence is to the effect that the 1stdefendant resigned from being a director of the business name called Taanzym Store in 2009 that none of the defendant ever ordered any goods but instead the goods were ordered by oneRising Star Limitedand that they never signed any delivery notes in receipt of the goods. There was then a general denial that the defendant or any of them was liable to the plaintiff for the sum sued on and they then put the plaintiff to strict proof.

4. The witness statement by the 1st defendant was to the effect thatshe was a proprietor of the business name at incaption but ceased being a (director) in January 2009 and therefore by the time the goods were supplied to the business name of the defendants she was not a director, was not involved in any operations of the business after January 2009 and therefore was surprised to be made a defendant.

5. On behalf of the 2nd defendant, there was a statement whose effectwas that he did order for the goods but did so on behalf of one RISING STAR LIMITED and that he did issue postdated cheques to the plaintiff. He went on to say that when he confronted the director of the said RISING STAR LTD on what to do with the plaintiffs claim he was advised to file bankruptcy cause and given Kshs.50,000/= for that purpose. He then maintained that the goods were received by the said Rising Star Limited who should be held responsible rather than the defendants. For good measure he said he was ready to remit to the plaintiff any sums they received from rising star ltd for the goods so supplied without saying how much they so received.

6. With such pleadings and pieces of evidence parties filed no furthermaterials except an application seeking to strike out the name of the 1stdefendant on account of misjoinder. That application was heard before Kasango J and by a ruling dated 24/8/2015 the same was found to lack merits and was dismissed with costs to the plaintiff.

Evidence by the plaintiff

7. The trial commenced before this court on the 10/12/2015. Thatfollowed a pre-trial directions given on 9/12/2013 before Judge Kasango when the Judge said:-

“Accordingly parties shall only rely on the documents filed andserved and on witness statements filed at the full hearing”.

8. The plaintiff having filed two witness statements only called one ofthe makers of those statements as PW 1, NICHOLAS MUSAU. Hisevidence was that sometimes in July 2009, the 1stdefendant approached the plaintiff to be supplied with goods on terms that the defendant issues post-dated cheques of 40,50,60,70 & 90 days. The first order was placed by the 2nddefendant when he personally visited to the plaintiff’s premises. Once an Order was placed, the plaintiff would prepare an invoice which would be delivered to the defendants premises in Kitui by Coast Bus upon which a postdated cheque would be issued in satisfaction of the invoice and a transporter would be sent to collect the goods.

9. About 5-6 supplies were made against the cheques as agreed andindeed the first cheque was honoured but not the second one which was returned with remarks refer to drawer. The witness then sought to produce the invoices at pages 2-22 of the bundle dated 4/12/2013. The production was objected to by the defendant on the basis that originals needed to be produced but the objection was overruled and the documents were so produced.

10. The witness explained that the total value of supplies wasKshs.101,241,156. 05 out of which goods worth Kshs.2,696,420/= were returned and Kshs.38,417,295/= paid by the honoured cheques thus leaving a balance of Kshs.60,675,918/=. To the witness the goods were directed for delivery to the defendants as a business name and cheques were issued by the same defendant. He added that the difference between the sum due on delivery and that claimed in the plaint represented bank charges. That variation in my calculation is the sum of Kshs.656,163/=.

11. He added that when the plaintiff made demand for payment the 2nddefendant filed Mombasa Bankruptcy Cause No. 4 of 2010 obtained a receiving order which was later discharged upon application by the plaintiff.

12. The witness denied ever supplying Rising Star Ltd nor anydealings with it and added that the goods were supplied using funds obtained by an overdraft from a bank on which the plaintiff had paid interest as pleaded in the plaint. He sought that judgment be entered for the plaintiff as prayed in the plaint.

13. On cross examination by Mr. Osiemo, the witness confirmed that therequisitions/orders were by the 2nddefendant and were verbal. The witness was taken through the invoices and the details of truck owners and drivers and he confirmed that none of them had the defendants name nor signed by the defendant. He said once goods left their premises, he would not know their end destination and that the 2nddefendant indeed visited their premise three times and made most of the telephone calls to his managing director and that he was not directly involved in the negotiation leading to the supply. He denied having supplied Rising Star Ltd and confirmed having not exhibited any cheques issued by the defendant.

14. On re-examination he said the arrangements were grounded uponlong standing acquaintance between the plaintiff Managing Directorand the 2nd defendant and that it was agreed that the defendantwould provide own transport whose details were provided by the defendant before goods could be released. He reiterated that goods would be released on the strength of post-dated cheques some of which were delivered by the 2nddefendant in person and others sent by courier from Kitui. He denied any dealings between plaintiff and rising.

15. There was an attempt to adopt the witness statement by BHARATN. RUPARELIA without him attending court for cross examination which request was objected to by the defendant and the objection was upheld by the court hence the witness statement by that personis not part of evidence for consideration by the court with the one witness the plaintiff closed its case.

Evidence by the defendant

16. For the defence, one JAMALDIN ABDULKARIM MUSA, was calledas DW 1. He adopted his witness statement dated 6/2/2013 and reiterated being the sole proprietor of the business name after his wife resigned. He referred to a certificate of change of business particulars which however was never produced after an objection by the plaintiff.

17. On cross examination he said he was the sole proprietor of thebusiness name. He said he made the arrangements for the plaintiff to supply goods to one Rising Star Limited through him and that he issued cheques which bounced. He further confirmed having arranged for transport of the goods and when demand for payment he sought and obtained a receiving order which was later set aside and petition dismissed. In that petition he acknowledged indebtedness to the plaintiff.

18. In re-examination, the witness said that he issued cheques withoutthe figures and that he had not seen any delivery notes showing that any goods were ever picked and added that he had his own lorries. He maintained that the debt was about goods taken by Rising Star Ltd and not by the defendants.

19. An attempt by the defendant to produce a document not filed andserved beforehand was objected by the plaintiff and the objection was upheld hence the defendant opted to close his case without adducing any further evidence or producing any documents.

Issues for determination

20. When all the pleadings and evidence is taken regard of, thefollowing issues crystallise themselves for determination by the court:-

i) Did the plaintiff supply any goods to the defendant on credit and on account of post-dated cheques?

ii) Did the defendant pay for such goods if supplied?

iii) Who were the proprietor of that business name called Taanzym stores?

iv) Has the plaintiff proved its case against the defendants or any of them?

v) What orders should be made as to costs?

Analysis and determination

21. While the plaintiff pleaded that the defendant ordered goods fromthe plaintiff on credit, the defendants in their defence admitted having ordered the goods but for onward transmission to Rising Star Ltd. However, in the witness statement the same defendant says:-

“I then approached the Plaintiff herein who had the goodsthe said RISING STAR LIMITED needed and they agreed to supply the same to me for onward transmission to RISING STAR LIMITED.

We agreed with the director of RISING STAR LIMITED that he would take delivery of the goods from the plaintiff, after which they would inform me of the quantities and cost so that I could issue post dated cheques for the payments of the goods.

We had a clear understanding that RISING STAR LIMITED would credit our account with sufficient funds to cover the cost of the goods they had taken from the Plaintiff before the expiry of the duration agreed upon as the credit period which was 30/40/50/60/75 days.

RISING STAR LIMITED made several payments into our account when they first took goods in July, 2009.

At the same time when RISING STAR LIMITED was making the payments for the goods as agreed, they were taking delivery of more goods in the name of our business.

I was never aware that the payments that were being made into our account were far less than the value of goods that RISING STAR LIMITED was procuring from the plaintiff.

In May, 2010, I realized that RISING STAR LIMITED had stopped making payment into the account as agreed.

I am ready and willing to remit any payment. I receive from RISING STAR LIMITED for the goods they received from the Plaintiff”.

22. That statement was at trial adapted by the defendant as evidence inchief without more. I understand it to say unequivocally that the defendants did order goods on the understanding that the same would be paid for to the plaintiff. Wherever the money was to come from would not, to this court, be the concern of the plaintiff. It would equally be no concern of the plaintiff whether the defendant was paid or not paid by the persons he supplied. The contract of supply of the goods was between the plaintiff and the defendant and therefore only the two can get benefit and bear obligations on the contract.

23. I do find that the defendant did order the goods from the plaintiffwhich orders the plaintiff did supply and for which reason the plaintiff is entitled to payment for the value of the goods.

Have the defendants paid for the goods supplied?

24. While the plaint pleads with specific clarify the sum claimed andhow it is made up the defendant does not specifically deny the breakdown but is content to plead at paragraph 5 as follows:-

“In further reply to paragraphs 5, 6 & 7 of the plaint, thedefendants aver that they are not liable to pay any amountof money to the plaintiff and the plaintiff is put to strictproof thereof”.

25. Having found that the evidence by the defendant tendered admittedthe fact that orders and request were made to plaintiff who didsupply the goods, the law under Order 2 Rule 4 mandated the defendant to specifically plead why the purchase price thereof was not payable. That law reads:-

“4. (1) A party shall in any pleading subsequent to a plaintplead specifically any matter, for example performance, release, payment, fraud, inevitable accident, act of God,any relevant Statute of limitation or any fact showing illegality—

(a)which he alleges makes any claim or defence of theopposite party not maintainable;

(b)which, if not specifically pleaded, might take theopposite party by surprise; or

(c)which raises issues of fact not arising out of thepreceding pleading”.

26. In the context and circumstances of this matter it was not sufficientfor the defendant to merely deny liability for payment of the sum claimed. They needed to say more and justify why the debt was not payable. I do find that the defence put forth by the defendant is no more than a bare mere denial that does not answer to the plaintiffs claim.

27. In Reighbir Singh Chaltte vs National Bank of Kenya, theCourt of Appeal while quoting Jessel Mr, inThorn vs Holdworth[1876] Ech.637had this to say about what constitutes, a defence to aclaim for liquidated sum:-

“When a party in a pleading denied an earlier allegation of factin the previous pleading of the opposite party, he must not do soevasively but answer the points of substance. Thus, if it be alleged that he received a certain sum of money, it shall not be sufficient to deny that he received that particular amount, but he must state he received what sum or part thereof or else set out how much he received. And so, when a matter of fact is alleged with diverse circumstances, it shall not be sufficient to deny it as alleged along those circumstances, but fair and substantial answer must be given”.

28. Applying those principles to this matter and with what has beenstated in evidence by the defendant, I do find that the statement of defence at paragraphs 4 & 5 of defence did not sufficiently answer the plaintiffs claim nor did they give an explanation why the sum was not recoverable.

29. When considered in the light of the pleadings in the plaint and theevidence tendered in support thereof I do find that having been supplied with the goods at its request the defendant did not pay for the goods and the sum of purchase price as pleaded by the plaintiff is due and payable.

Who were the proprietors of Taanzym stores?

30. Under Order 30 Rule 9 Civil Procedure Act, a person carrying outbusiness in a name other than his own can sue and be sued in that name as if it was a firm.

31. In this matter, the business name was indeed registered asBN408364 and a certificate to that effect was exhibited by the plaintiff in its Amended List of documents. The document shows that the 1stdefendant was the proprietor of the firm till 4thFebruary 2010. The fact of registration is confirmed by the both 1stand 2nddefendants in their witness statements save that it is alleged that the 1stdefendant resigned from the firm in January 2009. However there was never any document to prove that the 1stdefendant ever resigned as alleged.

32. For that reason, I find no facts proved to persuade the court that the1stdefendant had ceased her interests in the business when the liability was contracted. I therefore find the defendants to be jointly and severally liable to the plaintiff and I therefore enter judgment for the plaintiff against the defendants, in the sum of Kshs.60,675,918/= being the balance of the purchase price of the good supplied. That is the sum proved because what is said to be bank charges were never proved. That sum shall attract interest at 24% p.a. being the contractual interest rate disclosed in the invoices dated 16/6/2009, 19/10/2009 and 16/12/2009. Such interest shall be calculated effective the 1stof February 2010 because I reckon that the last delivery was effected sometimes on 5/01/2010.

33. There was a claim for the sum of Kshs.29,807,412/= being theinterest paid on overdraft enjoyed by the plaintiff at the Bank of Baroda Ltd, Mombasa. I do find that claim not to have been proved in that even though bank statements were exhibited no evidence was led on such statements to show how the sum was arrived at. I find that the plaintiff failed on his duty to strictly prove this aspect of the claim even though it had been specifically pleaded.

34. I award the costs of the suit to the plaintiff to be paid by thedefendants jointly and severally.

35. It is so ordered.

Dated and delivered at Mombasa this 25th day of May 2018.

P.J.O. OTIENO

JUDGE