[2021] KEHC 267 (KLR)
The court found that the applicant failed to establish a prima facie case for the grant of an interlocutory injunction. The applicant did not provide affidavit or other evidence directly confronting the documents alleged to be forgeries, which were the basis for his removal as director and shareholder. The court...
Source-derived case information.
- Citation
- [2021] KEHC 267 (KLR)
- Parties
- Applicant: Samuel Mwangi Mwaniki; Respondent: Danny Muiruri Muchui
- Court
- High Court
- Court Station
- High Court at Nairobi (Milimani Commercial Courts)
- Jurisdiction
- Kenya
- Case Number
- Petition E. 003 of 2021
- Procedural Posture
- Miscellaneous Application / Ruling on Interlocutory Injunction Motion
- Outcome
- application dismissed with costs
- Judges
- F Tuiyott
- Legal Topics
- Company Membership Disputes, Oppression of Shareholders, Derivative Actions, Directorship Removal, Share Transfer Fraud
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Samuel Mwangi Mwaniki
Applicant
Danny Muiruri Muchui
Respondent
Procedural Posture
Miscellaneous Application / Ruling on Interlocutory Injunction Motion
Legal Issues
- 1 Whether the applicant established a prima facie case for interlocutory injunction against the respondent operating company accounts without concurrence.
- 2 Whether the applicant is entitled to proceed with the petition as a derivative action given his disputed membership status.
- 3 Whether the applicant provided sufficient evidence of forgery and fraud in the removal from directorship and shareholding.
Ratio Decidendi
The court found that the applicant failed to establish a prima facie case for the grant of an interlocutory injunction. The applicant did not provide affidavit or other evidence directly confronting the documents alleged to be forgeries, which were the basis for his removal as director and shareholder. The court emphasized that fraud must be proved by clear evidence, even at the interlocutory stage, and the applicant's allegations were unsupported. Additionally, the court held that the applicant could not proceed with the petition as a derivative action because he was not a current member of the company, and derivative actions are reserved for members. Consequently, the application for...
Court Disposition
application dismissed with costs
Orders
- The Notice of Motion dated 17th March, 2021 is dismissed with costs to the respondent.
Full Case Text
Judgment text and source record
24 paragraphs
In re Mwada Investments Company Limited (Petition E. 003 of 2021) [2021] KEHC 267 (KLR) (Commercial and Tax) (17 November 2021) (Ruling)
Neutral citation number: [2021] KEHC 267 (KLR)
Republic of Kenya
In the High Court at Nairobi (Milimani Commercial Courts Commercial and Tax Division)
Petition E. 003 of 2021
F Tuiyott, J
November 17, 2021
Between
Samuel Mwangi Mwaniki
Petitioner
and
Danny Muiruri Muchu
Respondent
Ruling
[1]At the heart of these proceedings is Mwada Investment Co. Limited. In a Petition dated 17th March, 2021, Samuel Mwangi Mwaniki (The Petitioner) seeks certain orders on the basis that the affairs of the Company are being conducted in an oppressive manner.
[2]The Petitioner prays that the registration of the company be ordered back to the status of the register prevailing on 19th September, 2013 and that one Danny Muiruri Muchui be ordered to render a detailed profit and loss account of the company for the three (3) years preceding this Petition.
[3]At the time of presenting the Petition, the Petitioner filed a Notice of Motion dated 17th March 2021 in which he seeks the following prayers:1. .......2. THAT the Respondent be and is hereby restrained from operating the accounts of MWADA INVESTMENT COMPANY LIMITED (the company) wheresoever held without the concurrence of the Applicant or the express authority of this Honourable Court.3. THAT the Petitioner be and is hereby granted the leave of this Honourable Court to proceed with the main petition filed herein as a derivative action.4. THAT the Registrar of Companies cause to be filed in this Honourable Court the documents filed with him/her with regard to the change of the directorship and/or shareholding of the company.5. THAT any alterations on the Companies Register with regard to the company made after its registration on 19/9/2013 be and are hereby nullified.6. THAT costs be in the cause.
[4]The Petitioner is no longer a registered shareholder or Director of the company. The status of the company in this regard as at 30th November, 2010 is that Danny Muiruri Muchui is the sole Director and Shareholder of the Company. In an affidavit sworn on 7th April, 2021 Muchui avers that the Petitioner, on his own volition, resigned as a Director of the Company and transferred his shares to his wife, one Nancy Wanjiru Njoroge.
[5]On his part the Petitioner alleges that he did not resign his Directorship nor transferred shares as alleged and that the documents used to remove him from the company are forgeries.
[6]For now, this Court is asked to consider and determine a motion pleading for an order of injunction and must therefore be screened through the lenses of the ever green principles in Giella vs Cassman Brown[1973] E.A 358which are:“First, an applicant must show a prima facie case with a probability of success. Secondly, an interlocutory injunction will not normally be granted unless the applicant might otherwise suffer irreparable injury, which would not adequately be compensated by an award of damages. Thirdly, if the court is in doubt, it will decide an application on the balance of convenience.”
[7]I fear for the Petitioner that he may not have established a prima facie case. The Petitioner has not by affidavit evidence or other evidence confronted the documents which he alleges are forgeries and which were the basis for the transfers he now challenges. Fraud must be proved on succinct evidence and so even at an interlocutory stage such an allegation needs to be backed by clear evidence. As things stand, this Court is unable to find that the Petitioner has a prima facie case making out for his restoration to membership and/or shareholding.
[8]Second, the Petitioner seeks an order to continue these proceedings as a derivative suit. This is not only confusing because what is before Court is a Petition for restoration of the status of the Company and not a suit but also because a derivative action is a preserve of a member of a Company. For now, the Petitioner is not a member of Mwada Investment Co. Limited.
[9]The Notice of Motion dated 17th March, 2021 is a cropper and is hereby dismissed with costs.
DATED AND SIGNED THIS 11TH DAY OF NOVEMBER 2021F. TUIYOTTJUDGEDATED AND DELIVERED AT NAIROBI THIS 17TH DAY OF NOVEMBER 2021A. MABEYA, FCI ArbJUDGE