[1935] EACA 142

[1935] EACA 142

The court held that 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 incurred by the transferor, a separate action must be brought against the transferee by the creditor. The liability imposed by the Ordinance is personal and not limited to the value of the assets transferred, and enforcement by execution in an action to which the transferee was not a party is impermissible. The reference to 'proceedings' and 'appeals' in the proviso to section 3(2) indicates that the Ordinance contemplates institution of a suit against the transferee. The order refusing the application to strike out the...

Citation
[1935] EACA 142
Parties
Appellant: Dalip Chand and Mathra Dass Sharma; Respondent: Feroz Din and Hansraj s/o Nanak Ram
Court
East African Court of Appeal
Jurisdiction
Uganda
Judgment Date
1 January 1935
Case Number
C.A. No. 41/35.
Procedural Posture
Civil Appeal / Appeal From Order Refusing Application to Strike Out Defence
Outcome
appeal allowed; decision of Resident Magistrate reversed
Judges
Webb, J
Legal Topics
Fraudulent Transfer of Business, Liability of Transferee, Execution of Judgment, Notice Requirements, Personal Liability, Remedies for Creditors
Source Language
English
Commercial and Corporate Fraudulent Transfer of Business Liability of Transferee Execution of Judgment Notice Requirements Personal Liability Remedies for Creditors

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 2 Authorities cited 7 Party arguments 2
Sign in to unlock

Parties

Dalip Chand and Mathra Dass Sharma

Appellant

Feroz Din and Hansraj s/o Nanak Ram

Respondent

Procedural Posture

Civil Appeal / Appeal From Order Refusing Application to Strike Out Defence

Legal Issues

  1. 1 Whether a transferee of a business can be made liable for debts incurred by the transferor without a separate action against him.
  2. 2 Whether execution can be levied against the goods of the transferee in absence of notice of transfer under the Fraudulent Transfer of Businesses Ordinance, 1930.
  3. 3 Whether an order refusing an application under Order 6 rule 29 is appealable as of right.

Ratio Decidendi

The court held that 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 incurred by the transferor, a separate action must be brought against the transferee by the creditor. The liability imposed by the Ordinance is personal and not limited to the value of the assets transferred, and enforcement by execution in an action to which the transferee was not a party is impermissible. The reference to 'proceedings' and 'appeals' in the proviso to section 3(2) indicates that the Ordinance contemplates institution of a suit against the transferee. The order refusing the application to strike out the...

Court Disposition

appeal allowed; decision of Resident Magistrate reversed

Orders

  • Objection decided in favour of the appellants.
  • Property of the appellants to be restored to them.