Lobo v Alibhai (Civil Appeal No. 38/1938) [1938] EACA 171 (1 January 1938)

## **APPELLATE CIVIL**

## Before Sir JOSEPH SHERIDAN, C. J.

## T. B. LOBO, Appellant (Original Plaintiff)

## E. ALIBHAI, Respondent (Original Defendant) Civil Appeal No. 38/1938

Moneylenders Ordinance, 1932, section 10 (1)—Delivery of copy of memorandum of the contract.

Appellant, a registered moneylender, sued the respondent in the Resident Magistrate's Court, Nairobi, for the amount of principal and interest due on a moneylending contract. The magistrate found that respondent approached the appellant for a loan and that a draft memorandum of the proposed contract and a copy thereof were handed to the respondent who took both documents away with him so that he could obtain independent advice before he signed the contract. Respondent later handed the original draft duly signed to the appellant and received the loan but he did not receive any further copy of the contract. The magistrate dismissed the case on the ground that the respondent had not been sent a copy of the memorandum within seven days of the making of the contract as provided by section 10 of the Moneylenders Orginance, 1932.

Held (27-2-39) — That the proper construction to put on the facts was that the borrower had received a copy of the memorandum contemporaneously with the signing of the memorandum. (Appeal allowed)

Kapila for the Appellant.

Madan for the Respondent.

JUDGMENT.—It is provided by section 10 (1) of the Moneylenders Ordinance, 1932:-

"No contract for the repayment by a borrower of money lent to him or to any agent on his behalf by a moneylender after the commencement of this Ordinance or for the payment by him of interest on money so lent, and no security given by the borrower or by any such agent as aforesaid in respect of any such contract shall be enforceable, unless a note or memorandum in writing of the contract be made and signed personally by the borrower, and unless a copy thereof be delivered or sent to the borrower, within seven days of the making of the contract; and no such contract or security shall be enforceable if it is proved that the note or memorandum aforesaid was not signed by the borrower before the money was lent or before the security was given, as the case may be."

If a note or memorandum in writing of the contract and a copy thereof are made out at the same time and both documents are handed to the borrower and if then the borrower takes the document away, and having them read by a friend, is satisfied and on the same day returns to the lender with the note or memorandum signed and thereupon obtains the loan he cannot be heard to say that he has not received a copy within the meaning of the section. Could

it be said for instance that where a borrower had been given similar documents while he was at dinner and said that he would consider them after dinner and having done so an hour later returns to the lender with the original signed that he had not received the prescribed copy thereof within seven days. The proper construction to put on the facts in such a case and in the present case in my opinion is that not only has the borrower been given the prescribed copy within seven days but he has been given it contemporaneously with the signing of the note or memorandum. Moneylenders are ringed round with statutory restrictions but in considering whether a particular provision has been complied with, the substance of the provision should be regarded. What was intended by the legislature was I am satisfied that within seven days of the making of the contract the borrower had to be in possession of a copy of the note or memorandum in writing of the contract. I should term the defence in this case as an extreme instance of the kind of case to which the words of Greer L. J. in Dunn Trust Ltd. v. Feetham (1936, 1 K. B. D. 22, at page 34) are applicable: "In many cases borrowers, having obtained money by way of loan from moneylenders, have refused to pay the money back, relying on some technical provision of the Act. That does not seem to me to be entirely just". I allow the appeal with costs in this Court and the Court below. On this decision it is agreed as a consequence that judgment will be entered for the plaintiff as prayed with costs.