(COURT OF APPEAL)*

ABDALLA HASSAN EL SAWAHLY v.  MOHAMED ABU KOLEIB

ABU KOLEIB

AC-REV-55-1965

 Principles

·  Contract-Illegal or void by statue-Nile Pumps control (general) Regulations s,12, (1)-Pumping licences not transferable without consent of Board-Agreement to transfer licence without consent of Board is not illegal or void  

 
An agreement to transfer pumping licence under Nile pumps Control (General) Regulations, s, 12 (1) which is concluded without obtaining consent of Board is not illegal or void because the section does not provide that ,if content is not obtained the transfer will be null and void but it requires some formality to be observed in the transfer of the e licence  i.e. consent of Board.

Judgment

Advocates: M.A. Oraby……………………………for applicant

                   Hammed Gumaa………………………for respondent

Hassan Abdel Rahim P.j. September 19.1965:--This is an application for revision submitted against the order passed by the Honourable the Judge of the High Court Khartoum circuit, vide which he reversed the decree passed by the District Judge (High Court ) in which he declared that the agreement concluded between the parties was null  and void for illegality and dismissed claim against applicant.

The relevant facts are:

Vide a written agr3eement dated August 14.1961 the respondent sold his agricultural scheme of El Duka (Um Gar) Deuim District  to applicant and others for the sum of Łs,2.500. the agreement and promissory notes.

were singed by applicant and his partners. In the agreement the parties agreed that respondent should take steps towards obtaining the necessary consent of the Nile Pumps Control (General) Regulations, 12(1) while applicant and his co-partners undertook to obtain the consent of the landowners in respect of the undertook to obtain the consent of the landowners in respect of the transfer. However, before the registration of the licence was completed,  applicant withdrew from the transaction and the licence was finally registered in the name of his co-partners. Applicant was sued for the sum of Łs,.500 being his share in the promissory notes.

It was not disputed by applicant before the court below that he entered into the original agreement or that he signed the promissory notes. His main defense was that the transfer of the scheme was not made with the consent of the Nile board and as such was illegal. This defense was accepted by the District Judge and rejected by the Honourable  the Judge of the High Court , who reversed the judgment of the  District Judge this application is raised against the order passed by the Judge of the High Court.

In my opinion this application should be dismissed. I entirely agree with Judge of the High Court that the claim is one which the court having regard to the circumstances ought to enforce. The main point for determination is whether the agreement of transfer is tainted with statutory illegality and should not be enforced . the Nile pumps Control (General) Regulations, s, 12 (1)read.

“Every pump license issued under these regulations shall be personal to the license and not transferable without the written consent of the Board.”

It is clear form the section that it does not expressly prohibit the transfer of the licence nor does it say that any such transfer effected  without obtaining the required consent shall be illegal or void. Moreover, a penalty is imposed for contravening  the regulations by Nile pumps Control (General) Regulations, s, 31. In other words section 12(1) of the Regulations is silent as to the Civil rights of the parties. In this respect I should refer to the following quotation from Chitty, Contracts, General principles (22nd ed, 1961) p. 370:

“But where the statute is silent as to the Civil rights of the parties, but penalizes the making of the making of the contract which they have made or performed the court will have to consider whether it merely prohibits the doing of some particular Act.”

A statute may prohibit the making or performance of a contract or regulate the way or manner in which it shall be made or performed.

Breach of the statute may  make the contract illegal, void or unenforceable of leave  it perfectly valid.

It is a question of construction whether the object of the statute was to impose a penalty for  the breach or to prohibit the contract. Thus the object of the Natives Disposition of Lands  Restriction  Ordinance was to protect the public from possible injury or fraud, and so it was provided in section 2 that:

“No native of the Sudan shall sell , mortgage charge or otherwise dispose of, nor agree to sell, mortgage, charge or  otherwise dispose of any land or any right or interest in or over the same ,unless with written consent of the Governor  of the Province within which such land is situated.”

Section 4 of the same Ordinance makes all disposition of lands to which the Governor has not given consent to be null and void. Moreover section 5 of the Ordinance provided that money paid in consideration of disposition to which the Governor has not given consent to be irrecoverable in any court of law. In these circumstances the law intended to make the transaction for which consent was not obtained illegal.

But in the case before us the Nile pumps Control (General) Regulations s, 12 (1) required some formality to be observed in the transfer of the licence ,i.e. (consent of the Board). It was not provided that if the consent was not obtained the transfer is null and void. In these circumstances the inference is that the only object of the regulation was to impose a penalty for its contravention and not to prohibit the contract.

Consequently I am of opinion that this application should be dismissed.

Osman Atayeb J. September 19.1965:-I agree that this application should be dismissed.

The claim is based on promissory notes, these were , admitted made and executed by defendant and his partners. the value of the notes was part of the price of the agricultural scheme. With its fixtures and including a flour mill, that were owned by plaintiff and purchased by defendant and his parents. Defendant and his parents took over the scheme, in pursuance of the sale agreement, his partners paid their share of the purchase price but he failed to pay as far as the sums shown in the promissory notes are concerned. Some time later he withdrew from the partnership in the scheme.

The defenses raised by defendant against the claim are not direct defenses against the promissory notes, but he is understood to mean that the consideration for their execution has wholly failed. the consideration was the agreement for the sale of the scheme which purported also to transfer the licence of the scheme issued under the Nile Pumps Control (General) Regulations. Defendant contended that that agreement was illegal because it was made in contravention of rule 12 of the said Regulations, which says:

“Every pumping licence issued under those regulations shall be personal to thee license and not transferable without the written consent of the Board”.

The second point of defence was that plaintiff failed to obtain the required consent for the transfer of the licence in beach of clause 7 of the agreement in which he undertook so to do. The said clause reads as follows:

“ The second party (plaintiff) undertakes to transfer the license of the scheme to the names of the second party (defendant and his partners) and the second party likewise undertakes to take all the necessary formal steps for that and provided that they obtain the consent of the landowners in the scheme.”

The third point of defence was that there was fraudulent misrepresentation as to the description  of the scheme, to mention one; that the pump house was situated in a place without sufficient water.

As to the first point, about the illegality, I do not think that the operation of section 12 is intended to render the agreement, that involves thee transfer of the pumping licence ,illegal or void, counsel for defendant referred us to the English case of Re Mahmoud and Ispahani (1921) 2K.B. 716, On which he seems to be relying. In this case there was in holding a licence issued by or under the authority of the Food Controller .The prohibition here  is imposed on the sale of linseed oil to a person not holding a licence issued by or under the authority of the Food Controller the prohibition here is imposed on  the sale of the said commodity to a dealer not specially licensed for the purpose; that the contract when illegal or of no effect and not enforceable by the court. In our case the law does not forbid the making of a contract of the authorities for such transfer of the licence. Supposing that the consent, for one reason  or the other  was withheld the contract would be discharged and every one of the other, was withheld, the contract would be discharged and every one of the parties to it would be restored to his original position before entering into it. Indeed  this would not be the position in the case of an illegal contract.

The parties in this case were well aware of the restrictions imposed on the transfer of the licence and so they provided for the matter in Their contract;  the plaintiff did not make it his absolute duty  to obtain the consent for the transfer of the licence, he only promised to transfer it when the required consent was obtained, and defendant and his partners promised to enter into agreements with the landowners, a prerequisite for the transfer, and then to take all necessary steps to obtain the required consent. This is a pure and plain agreement without any touch or taint of illegality.

The consent for the transfer was actually obtained, but as defendant withdrew from the agreement, the other two partners had the licence transferred to their names.

Form what I have said, it is clear that the second point of defence that plaintiff failed to obtain the consent for the transfer of the licence, appears to be appoint of a false argument. In conclusion, it must be held that the promissory notes were executed for adequate consideration, and defendant cannot avoid the consequences of his Act.  But  if he withdrew from the transaction, without sufficiently safeguarding his interest, he himself is to blame.

The application is dismissed with costs.

* Court : Osman El Tayeb J. and  Hassan Abdel Rahim  P. J