THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA AT KAMPALA

COMMERCIAL DIVISION

MISC. APPLICATION NO. 815 OF 2014

RAJIV KUMAR::::::::::::::::::::::::::::::::::::::::::::::::::::::::: APPLICANT

VERSUS

PATEL SURESHBHAI:::::::::::::::::::::::::::::::::::::::::::: RESPONDENT

BEFORE: HON. JUSTICE H. P.ADONYO

RULING

1. Background:

The applicant brings this application for leave to appear and defend under the provisions of Order 36 rule 3 and 4 of the Civil Procedure Rules S.I 71-3. The application stems from High Court Civil Suit No. 630 of 2014 which was filed in this court on the 9^th of September 2014. 

The basis of this application is that the respondent on the 22^nd of March 2014 offered for sale a bakery located in Kasese including its machinery to the applicant. The two parties are said to have known each other over time and had built a business relationship.  The applicant thus agreed to purchase the bakery and an agreement was crafted by the Respondent’s Advocate. The terms of the agreement was that in consideration of the Applicant supplying to the Respondent goods worth 8,500,000/= and also issuing a Diamond Trust cheque for the value of 75,000,000/= (seventy Five Million Shillings only) balance, the Respondent would relinquish part of his share in the bakery which was the property of Star Oven Bakery in Kasese owned by Patel Sureshbhai Chautubhai and Surendra Ramdas. Mr. Surendra Ramdas who witnessed the contract, deponed a statutory declaration which is annexed RK 3 to the Affidavit of Rajiv Kumar the applicant with the said declaration, clearly showing that the disputed motor vehicle formed part of the contract and was part of the bakery. The applicant avers that the respondent failed on his part to furnish consideration and thus resulting in there being no contract at all and since the applicant believed that consideration had failed, he was shocked that he had been sued by the respondent at all. The applicant thus seeks leave to appear and defend High Court Civil Suit No. 630 of 2014.

1. Resolution of this Application:

The principles governing the consideration to be had when applications for leave to defend are made to courts of law are now well established for in an application for leave to appear and defend a summary suit, what the court has to determine is whether a defendant has shown good cause in order to granted leave to appear and defend. This principle is found in the Supreme Court case of Geoffrey Gatete and Another v William Kyobe Supreme Court Civil Appeal No. 7 of 2005 which is  Reported in HCB Vol 1. 2000 with the learned justices of the Supreme Court holding coming to this view among others that,

“…in an application for leave to appear and defend a summary suit, the court is not required to determine the merits of the suit. The purpose of the application is not to prove the applicants defence to the suit but to ask for an opportunity to prove it through a trail. What the court has to determine is whether the defendant has shown good cause to be given leave to defend…..what the courts have consistently held to amount to good cause is that the defendant has triable defence to the suit…”

The defence which has a good cause must be shown positively by affidavit evidence. If for example there is denial of indebtedness but there is positive evidence to show that there was indebtedness, then the denial becomes a sham as was the decision in the case  of Makula Interglobal Trade Agency Ltd v Bank of Uganda [1985] HCB 69 where it was held among others that “…The defence must be stated with sufficient particularity to appear genuine and general vague statement denying liability will not suffice.”

Relating the above holding to the instant matter, it is the duty of this court to establish whether the applicant has raised or shown any triable issue. From his affidavit dated the 16^th of September 2014 which is in support of this application, the applicant states that pursuant to an agreement to contract for the sale of the respondent’s share in the bakery stated therein, the applicant, through his company supplied materials worth 8,500,000/= to the respondent and that he also issued a bank cheque in favor of the respondent to secure the balance of the purchase price and that the receipt thereof was not denied at all by the respondent but that after the respondent supplied part of the agreed machinery  forming the bakery he forcefully removed a truck which formed part of the contract which the applicant intended to use the same for his hardware business. The Applicant insists that the truck formed part of the contract as agreed and that fact is confirmed by the respondent’s co-director called Surendra Ramadas.  The Applicant does not deny that an agreement was made between the parties in dispute but avers that no contract ever materialized since the consideration which was agreed on by the parties was never paid and so the  contract collapse.

The issue for determination which seems to run current in this matter is whether consideration flowed from one party to the other so as to construe the conclusion of a contract.

Under the Contracts Act 2010, the term Consideration is defined as;

 “ A right, interest, profit benefit accruing to one party or forbearance, detriment, loss or responsibility given suffered or undertaken by the other party.”

From the averments in the affidavit in support of this application, particularly, paragraph 5 read together with paragraph 3(a) of the plaint and paragraphs 5, 6, 7, 8 and 9 of the intended written statement of defense annexed to the applicant’s submissions and paragraphs 4, 5 and 6 of the applicant’s affidavit in support, it is apparent that  genuine and plausible triable issues that cannot  be summarily resolve at this stage of proceedings have been raised by the applicant in that by the deposed facts which tend to contest the opposite averments of the respondent. This contest is clearly shown by the fact that there are serious disagreement between the parties as to what constituted the consideration in the contract in question, the resolution of which would require the court to thoroughly investigate the one allegation as against the other since even my further perusal of Annexture “C” to the plaint show that a cheque with words “security cheque” and “Not to be deposited” apparently was in compliance with those words was never deposited and thus cannot be relied upon for conclusion summarily  this matter yet viewed on its face it raises contentious matters worthy of court’s investigation.

Further, the allegations by the applicant and respondent in both their affidavits in support and opposition coupled with annextures to the same thereto when read together with the claims and denials in the plaint and intended defence annexed by the applicant respectively would tend to show that indeed there are serious misinterpretations of the terms of the contract between the two parties which has led to disagreements which actually call for investigation in order to let the matter be determined on merit.

The disagreements by the parties as to what constitute the consideration for the contract between the two parties in principle would reinforce my belief that the applicant has shown that indeed he has triable issues upon his  defence is called for as can even be seen from the copy of the intended defence which shows the defence the applicant proposes to raise satisfy the dictum in the holding of Gatete’s case cited above that this court would be convinced that the best course to take in resolving the latent  dispute between the parties would be none other than to allow the applicant be involved in these proceedings in order to permanently and promptly determine the matter in dispute.

I am therefore convinced that the exercises of the unfettered discretion of this court would be in the interest of the justice of this matter. I would therefore exercise that discretion and grant the applicant unconditional leave to appear and defend with costs to be in the cause.

1. Orders:

1. The applicant is granted leave to unconditionally appear and defend High Court Civil Suit No. 680 of 2014 which action must be done within 15 days from the date of this ruling.
2. The cost of this application to be in the cause.

Hon. Justice H. P. Adonyo

Judge

4^th March, 2015