[2010] KEHC 3278 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT NYERI

Civil Case 147 of 2009

JACKSON MIGWI NJOROGE..................................1ST PLAINTIFF

LUKE KIRATHE GITAU...........................................2ND PLAINTIFF

DAVID MWANGI NDIRANGU...................................3RD PLAINTIFF

JAMES MWANGI CHEGE.......................................4TH PLAINTIFF

GERALD KIMANI GITOGO......................................5TH PLAINTIFF

NAHASHON KURIA CHURU.....................................6TH PLAINTIFF

Versus

GITHAMBO TEA FACTORY CO. LTD...............1ST DEFENDANT

JULIUS MWERU KAMAU....................................2ND DEFENDANT

BENSON MWANGI KAMAU................................3RD DEFENDANT

JOSEPH KAGONDU KARANU............................4TH DEFENDANT

JOHNSON THEURI MWANGI...............................5TH DEFENDANT

RULING

The 2nd to 5th Defendants took out the motion dated 13th January 2010 in which they applied for the following orders:

1. That pending the hearing and determination of this application and the ruling of the court reserved for the 12th February 2010, the 1st Defendant be restrained from proceeding to hold an annual general meeting on the 25th January 2010 and undertaking such related processes including the nominations for the position of the office of directorship, scheduled for the 12th January 2010.

2. That this honourable court be pleased to grant leave to the applicants to take out contempt of court proceedings as against the secretary and directors of the 1st defendant.

3. Thatcost of this application be provided.

The Motion is supported by the affidavit of Joseph Kagondu Karanu sworn on 13th January 2010. When served with the motion the plaintiffs opposed the same by filing the replying affidavit of Jackson Migwi Njoroge sworn on 18th January 2010. The 1st Defendant opposed the motion by filing the replying affidavit of Christopher M’Maitsi sworn on 18th January 2010.

It is the submission of Mr. Njenga, learned advocate for the applicants that this court issued an order vide Nairobi H.C.C.C. No. 436 of 2009 in which the 1st Defendant was directed to hold a special general meeting on 5th October 2009. It is said that instead of complying with the aforesaid court order, the plaintiffs and the 1st Defendant filed this suit whereupon it obtained an exparte order to stop the meeting which was scheduled for 5th October 2009. The application was heard interpartes on 7th December 2009. The ruling is reserved for 12th February 2010. The 2nd to 5th Defendants are now before this court complaining that while the ruling is still pending, the 1st Defendant has proceeded to call for an Annual General Meeting for 25th January 2010. It is said that the processes of nominations for the position of directors who would be elected in the said annual general meeting would be explained.

It is argued that the move is intended to pre-empt the pending ruling of this court since the issue touching on the legality or otherwise of the annual general meeting of the 1st Defendant to is pending determination. It is the submission of the applicants that the 1st Defendant’s actions amount to contempt of the court order issued on 7th December 2009, which restrained all the Defendants from holding an annual general meeting pending the delivery of the ruling on 12th February 2010. Mr. Njenga is of the view that unless the present application is allowed then the ruling of 12th February 2010 shall be rendered vain and academic.

The Plaintiffs opposed the application by relying on the replying affidavit of Jackson Migwi Njoroge sworn on 18th January 2010. The deponent averred that by the time of filing this suit he was not aware of the existence of Nairobi H.C.C.C. 436 of 2009 nor the orders issued therein. Mr. Jackson Njoroge further deponed that the plaintiffs filed this suit to restrain the defendants from interfering with the rights of shareholders of the 1st Defendant by interrupting the business of the financial year whereas the Annual General Meeting had been conducted on 3rd April 2009. It is argued that whatever grievances the applicants had, would be raised at the Annual General Meeting on 25th January 2010.

The 1st Defendant on its part, opposed the motion by relying on the replying affidavit of Christopher M’Maitsi sworn on 18th January 2010. It is the submission of Mr. Kibichu for the 1st Defendant that it had called for an extra-ordinary General Meeting before it was restrained by this court. The Defendant admits that it has now called for an Annual General Meeting for 25th January 2010. In compliance with the 1st Defendant’s statutory obligations under its Memorandum and Articles of Association and under the Companies Act. It is the argument of the 1st Defendant that there is no order restraining it from holding it’s Annual General Meeting. It is admitted that the order issued on 2nd October 2009 restrained the 1st Defendant from holding its Extra-Ordinary General Meeting requisitioned by the 2nd to the 4th Defendants. It is further argued that if the 1st Defendant’s A.G.M. is stopped, its activities will grind to a halt hence its shareholders will suffer irreparable loss and damage. The 1st Defendant further stated that there is a difference between the agenda of an annual general meeting and that of an extra-ordinary general meeting. It is said that the convening of the A.G.M. cannot be prejudicial nor adverse to the purpose of the requested extra-ordinary meeting if and when it is held or at all. It is argued that the applicants are not in pursuit of justice but to stop the A.G.M. so as to paralyze the 1st Defendant’s company.

I have carefully considered the submissions of learned counsels from both sides. I have further considered the motion plus the facts deponed in the affidavits filed for and against the motion. It is not in dispute that the summons dated 29th September 2009 and the motion dated 5th October 2009 were heard together on 7th December 2009 and a ruling reserved for 12th February 2010. The interim order which was issued to stop the extra-ordinary general meeting called for 5th October 2009 was extended pending the ruling. There also no doubt that while the ruling is still pending the 1st Defendant called for an annual general meeting for 25th January 2010. This latest action provoked the 2nd to 5th Defendants to take out the motion dated 13th January 2010 the subject matter of this ruling. The motion has posed the following question inter-alia: First is whether or not the meeting called for 25th January 2010 is intended to pre-empt this court’s ruling?

Secondly, Whether the action of calling for such a meeting amounts to contempt of the interim order.

I will deal with the above issues together. In the plaint the one of the prayers sought by the plaintiffs is an order of injunction to restrain the defendants from calling and or holding a meeting of Githambo Tea Factory Ltd on 5th October 2009 or as currently requisitioned. What provoked the filing of this suit is the notice issued by the 1st Defendant’s Secretary which read in part as follows

“You are being notified that the meeting of 5th October 2009 will still take place as scheduled.

There are propagandas going on in our tea buying centres from KTDA and directors (former, as we sacked them) together with buying centre committee members. Agree with them not and inform them that their views are long overdue. Having they forgotten that the court case they took to court will be heard on 16th September 09?

The meeting will be held on 5th October 2009 and on that day we shall make decisions that concern us and also our factory company –Githambo Tea Factory.

NB: Come without fail even the disabled so that we can do away with this (in the myths – a big snake that lived in water and used to swallow people and domestic animals whole) KTDA and all its followers and we see if we shall get out of the chain we have been in all these years.

Yours one of your member in Githambo.”

That meeting was halted pursuant to an exparte order of 2nd October 2009 issued pursuant to the summons dated 29th September 2009 taken out by the Plaintiffs herein. That application was heard and is now pending for ruling. Some of the reasons advanced to oppose the meeting of 5th October 2009 are that the 2nd to the 5th Defendants were said to be involved in a tussle for control of the 1st Defendant’s company with the Board of Directors and that the meeting of 5th October 2009 was intended to perpetrate that tussle to the detriment of the company and its shareholders. From the notice calling for the meeting it is clear that the meeting of 5th October 2009 was intendedinteraliato discuss the general development of the 1st Defendant‘s company and to consider the company Memorandum and Articles of Association.

The complaint now before court is that the meeting of 5th October 2009 was called in compliance of this court’s order issued vide Nairobi H.C.C.C. No. 436 of 2009. It is said that 1st Defendant and the Plaintiffs despite notice of the aforesaid order proceeded to file this suit and obtained an exparte order to stop the meeting. It is said that the issue is pending the determination of this court in a ruling reserved for 12th February 2010. While that ruling is being awaited, it is said the 1st Defendant has proceeded to call for an Annual General Meeting for 25th January 2010. A copy of this court’s order issued on 23rd July 2009 vide Nairobi H.C.C.C. No. 436 of 2006 has been annexed to the affidavit of Joseph Kagondu Karanu. It is obvious from the face of that order that the same was recorded by consent before Lady Justice Koome. The 1st Defendant herein is named as the Plaintiff whereas the 2nd, 3rd, 4th and 5th Defendants herein were named as 1st, 2nd, 3rd and 4th Defendants in the Nairobi case. The consent order shows that the court authorized the holding of the extra-ordinary General meeting scheduled for 5th October 2009. It has been argued by the 1st Defendant herein that the meeting scheduled for 25th January 2010 is an Annual General Meeting as opposed to an extra-ordinary General Meeting. It must be noted that the 1st Defendant had prayed in the Nairobi case for an order to restrain the defendant from proceeding to hold an extra-ordinary General Meeting. I have already stated that in the summons dated 29th September 2009 the plaintiffs prayed for an order to stop the meeting scheduled for 5th October 2009. After a careful perusal of the application plus the affidavits filed for and against them, I am convinced that the issues raised therein are intertwined. If the meeting scheduled for 25th January 2010 is allowed to proceed as scheduled the entire scenario is likely to be altered. This will obviously pre-empt the aforesaid decision. At this stage I am unable to find that there was contempt on the part of the Respondents. The best I can do in the circumstances of this matter is to issue an order of injunction which I hereby make to restrain the 1st Defendant from proceeding to hold the annual General Meeting fixed for 25th January 2010 or from holding any other meeting pending the delivery of this court’s ruling scheduled for 12th February 2010. Costs of the application to be paid by the 1st Defendant.

Dated and delivered this 22nd day of January 2010.

J.K. SERGON

JUDGE

Mr. Muchiri h/b Njenga for Applicants.

Gachuki for 1st Respondent

Mwai for Plaintiff, Respondent.

J.K. SERGON

JUDGE