[2022] KEHC 9967 (KLR)

Ndeffo Co.Ltd v Ndegwa & 10 others (Civil Suit E035 of 2021) [2022] KEHC 9967 (KLR) (8 July 2022) (Ruling)

Neutral citation: [2022] KEHC 9967 (KLR)

Republic of Kenya

In the High Court at Nakuru

Civil Suit E035 of 2021

TM Matheka, J

July 8, 2022

Between

Ndeffo Co.Ltd

Applicant

and

Onesmus Matheri Ndegwa

1st Respondent

Elizabeth Wambui Muta

2nd Respondent

Daniel Njoroge

3rd Respondent

Mwaura Kariuki

4th Respondent

Waweru Muchiri

5th Respondent

Sospeter Kabuba Kariuki

6th Respondent

Muchoki Thuo

7th Respondent

Peter Chege Kimone

8th Respondent

Michael Njoroge Kinyanjui

9th Respondent

Ndun’gu Mwangi Wakaba

10th Respondent

Kahono Kaguruki

11th Respondent

Ruling

Brief Facts 1. The Applicant, Ndeffo Company Limited, filed a Notice of Motion dated December 3, 2021 brought under Order 40 Rule 1,2 and 4 of the Civil Procedure Rules and Sections 1A and 3A of the Civil Procedure Act seeking for orders:-(i)Spent;(ii)Spent;(iii)Thatpending the hearing and determination of this suit the court be pleased to restrain the Defendants/Respondents herein from submitting any resolutions of the meeting held on November 27, 2021 to the Registrar of Companies and or assuming the directorship of the Plaintiff company herein;(iv)Thatthe costs of this Application be provided for.

2. The Application is predicated on the grounds on its face and supported by an affidavit of Peter Mwangi Maina sworn on the even date. He is the plaintiff’s director and he acquired authority to swear this Affidavit through the resolution passed by the Board of Directors on November 29, 2021.

3. He deponed that on November 4, 2021the defendants/respondents convened an illegal extra ordinary general meeting of the plaintiff and the applicant on November 11, 2021 informed the registrar about this illegal meeting and also the respondent’s counsel about the illegal conduct of the respondents.

4. He stated that on or about November 12, 2021, the 1st Defendant filed Nairobi Chief Magistrate’s Civil Case Number E 12493/2021 and on or about November 12, 2021 he received an order stopping special and or extraordinary meeting of the plaintiff and that the respondents in the referred suit are not bona fide directors of the applicant herein.

5. It was his deposition that the plaintiff in that suit filed a Preliminary Objection and a Replying Affidavit in response to the application therein and the suit was fixed for a mention on December 9, 2021but the respondents illegally convened an Extra Ordinary General Meeting of the Plaintiff on November 27, 2021.

6. He deposed that the plaintiff’s Board of Directors became aware of the said illegal meeting through a notice forwarded on WhatsApp to one of its Board of Directors one Charles Rong’o and letter dated November 22, 2021 addressed to the Manager Kunste Hotel.

7. He stated that the Notice issued by the respondents for the Extraordinary General Meeting of November 27, 2021does not satisfy the requirements of a Notice under the Companies Act and as such null and void.

8. He contended that the persons, who convened the extraordinary General Meeting of November 27, 2021 were not authorized to do so and that the notice was short of the period provided for in the Companies Act.

9. He stated that the respondents proceeded with the meeting of November 27, 2021 purporting to elect themselves as the new board of directors for the plaintiff and currently they are in the process of forwarding the list of directors purportedly elected on November 27, 2021 to the Registrar of Companies for registration.

10. He believes that unless the respondents are restrained by an order of this court they will cause themselves to be registered as directors of the applicant and wreck further havoc into the affairs of the plaintiff.

11. That the applicant has more than 5000 shareholders who stand to be misled by the illegal conduct of the defendants/Respondents herein and that the plaintiff is public limited liability company and its affairs must be handled with utmost care and attention.

12. He verily believes that the applicant has established a prima facie case with probability of success against the defendants and that it will suffer irreparable damages that cannot be compensated in damages if the orders sought are not granted.

13. He prayed that this application be allowed with costs.

14. The respondent’s despite being duly served with the instant Application chose not to file any response.

15. The plaintiff took directions to dispose off its application by way of Written Submissions.

Submission 16. The applicant filed its Submissions on March 7, 2022. It was submitted that grant or refusal of temporary injunction is an exercise of judicial discretion which must be exercised judiciously and that for a plaintiff to be deemed worthy of the order, he must satisfy the well-established principles set out in Giella v Cassman Brown & Co. Ltd, [1973] EA 358, which are; Firstly, an applicant must show a prima facie case with a probability of success, secondly, the applicant to establish that they will otherwise suffer irreparable injury which would not be adequately be compensated by an award of damages and thirdly, if the court is in doubt, it will decide an application on the balance of convenience.

17. The Applicant argued that the above three conditions are to be applied as separate, distinct and logical hurdles which the applicant should surmount sequentially. For this proposition, the applicant relied on the case of Nguruman Limited v Jan Bonde Nielsen & 2 others [2014] eKLR.

18. The applicant submitted that a prima facie case is described in Mrao v First American Bank of Kenya Limited & 2 others [2003] KLR 125; Civil Appeal 39 of 2002; [2003] KECA 63 (KLR) as follows:-“a prima facie case in a Civil Application includes but is not confined to a “genuine and arguable case’. It is a case which, on the material presented to the court, a tribunal properly directing itself will conclude that there exists a right which has apparently been infringed by the opposite party as to call for an explanation or rebuttal from the latter”.

19. The plaintiff submitted that the defendants convened an Extra Ordinary General Meeting on November 27, 2021without following the proper procedures of the law and without issuing a proper notice. That Section 275 A (1) of the Companies Act requires companies to hold an Annual General Meeting once a year, Section 277 (1) and (2) of the same Act allows members to requisition the directors of the company to hold a meeting while section 278 of the said Act conveys a statutory duty on the directors to convene a General Meeting when required by members.

20. The Applicant thus submitted that it follows that before members can hold a meeting as was in this case, the proper procedure ought to have been followed which was not done and on this basis it has a prima facie case.

21. On the second condition, the plaintiff stated that he has attached a court order showing that the 1st defendant obtained an order restraining the directors from holding a special and or extraordinary meeting on behalf of the company. That thereafter the 1st defendant in cahoots with other members proceeded to hold an unlawful meeting. It argued that Section 279 (6) of the Companies Act makes a provisions for reimbursement of the reasonable expense incurred by members when they conduct a meeting and nothing is barring the defendants from demanding payments and or paying themselves expense for conducting a meeting without following the proper procedure, given the resolutions made that resulted in them being allegedly appointed as directors of the plaintiff. That if this happens then it will suffer losses and damages.

22. From the foregoing the plaintiff believes the balance of convenience tilts in its favour and urged the court to allow the application with costs.

Issues for Determination 23. Whether the applicant has met the threshold for a grant of a temporary injunction.

Analysis 24. This is a case for a temporary injunction. The legal requirements were well settled in Giella v Cassman Brown Company Ltd [1973] EA 358 to be as follows: An Applicant must show a prima facie case with a probability of success.

An Interlocutory Injunction will not normally be granted unless the Applicant might otherwise suffer irreparable loss which would not be adequately be compensated by an award of damages.

If the Court is in doubt, it will decide an application on the balance of convenience.

Prima Facie Case 25. In Mrao Ltd v First American Bank fo Kenya Ltd, the Court of Appeal gave this determination on what amounts to a prima facie case:-“…In civil cases, it is a case in which, on the material presented to the court a tribunal property directing itself will conclude that there exist a right which has apparently been infringed by the opposite party as to call for an explanation or rebuttal from the latter.”.

26. To answer whether the Applicant has made out a prima facie case, a look into its case as set out in the pleading is paramount. The applicant’s Director Peter Mwangi Maina deponed that on November 4, 2021the respondents convened an illegal Extra Ordinary General Meeting of the Plaintiff. Scrutiny of the Annexure marked as PMM3 (a) & (b) in support of this contention does not establish this position. The said annexure shows that there was an announcement of Limited Extra Ordinary General Meeting set for November 13, 2021by the 1st and the 2nd respondents who described themselves as plaintiff’s shareholder and director respectively. There is no evidence that this meeting indeed took place on the said date of November 13, 2021.

27. The Applicant also contended that the 1st respondent herein received an order stopping special and or extraordinary meeting of the plaintiff. Attached Annexure marked as PMM7 is not a court order but rather a Notice of Preliminary Objection by the Applicant filed before Nairobi Magistrate court in MCCC/E12493 of 2021.

28. The Applicant also averred that the respondents herein are not bona fide directors of the Applicant without attaching any concrete evidence where they have purported to be so.

29. It was also the Applicant’s contention that the respondents illegally convened an Extraordinary General Meeting of the Plaintiff on November 27, 2021and attached an Annexure marked as PMM9 which does not prove that such meeting was held but it’s an announcement of the meeting. Further the author of the said document is not disclosed. Similarly, the letter marked as PMM10 to the manager of Kunste Hotel by the 2nd Respondent herein is not a proof that the meeting materialized.

30. From the foregoing there is no evidence of any resolution passed by the respondents in a meeting purportedly held on November 27, 2021in which the Applicant is apprehensive the Respondents might submit to the Registrar of Political Parties to its detriment.

31. For the above reasons, on the material before court this far; the applicant has not made out a prima facie case with a probability of success. In the circumstances, it will be an academic exercise to consider the other conditions for granting orders of injunction as set out in the Giella case (supra).

32. That said there is the matter of the Milimani MCCC/E12493 of 2021 the applicant alludes to. That matter appears to be dealing with issues similar to the issues raised in this matter. Why would the applicant want to have two matters running at the same time in different courts, yet the issue he wants this court to address is related to the issue in that court.

33. In the upshot this application, though unopposed is unsupported by evidence and is therefore without merit and is accordingly dismissed.

DATED, SIGNED AND DELIVERED VIRTUALLY THIS 8TH DAY OF JULY, 2022MUMBUA T MATHEKA,JUDGE.C/A EdnaN/AWaiganjo & Company Advocates