Patel v Odex Chemicals Limited & 2 others (Petition E010 of 2023) [2026] KEHC 10410 (KLR) (Commercial and Tax) (2 July 2026) (Judgment)

Patel v Odex Chemicals Limited & 2 others (Petition E010 of 2023) [2026] KEHC 10410 (KLR) (Commercial and Tax) (2 July 2026) (Judgment) Neutral citation: [2026] KEHC 10410 (KLR) Republic of Kenya In the High Court at Nairobi (Milimani Commercial Courts) Commercial and Tax Petition E010 of 2023 MO Ado, J July 2, 2026 Between Anilkumar Chandrakant Patel Petitioner and Odex Chemicals Limited 1st Respondent Vijay Parsooram Patel 2nd Respondent Purav Vijay Patel 3rd Respondent Judgment 1.The Petitioner herein, Anilkumar Chandrakant Patel, a minority shareholder holding 24.55% of the issued share capital of Odex Chemicals Limited and its former Technical Director, commenced these proceedings 17th July 2023 under sections 780 and 782 of the Companies Act, 2015, alleging that the Respondents had conducted the affairs of the company in a manner that was oppressive and unfairly prejudicial to his interests. 2.The Petition is supported by the Petitioner's affidavit together with the documents annexed thereto. 3.The Petitioner states that he is a founding shareholder of the Company and presently holds approximately 24.55% of its issued share capital. He avers that he actively participated in the Company's business over several years and served as one of its directors until April 2019. He complains that from about 2016 the 2nd and 3rd Respondents embarked on a deliberate course of conduct intended to exclude him from the management of the Company and to appropriate to themselves benefits properly due to him as a shareholder and director. 4.First, the Petitioner contended that his shareholding was unlawfully diluted through alterations to the Company's share structure undertaken in 2016 and 2017 without his informed consent. He asserts that those changes diminished his proprietary interest in the Company while increasing the holdings of the majority shareholders. 5.Secondly, he alleged that on 3 April 2019 he was unlawfully removed as a director of the Company. According to him, the removal was predetermined, procedurally unfair, and intended to eliminate his participation in the affairs of the Company. He further contended that following his removal, he ceased receiving information concerning the Company's operations and financial affairs. 6.Third, it is his case that the Respondents unlawfully withheld directors' fees for the years 2018 and 2019, excluded him from directors' bonuses while awarding substantial bonuses to themselves, and retained profits and earnings which ought to have been distributed to him. He also complains that unexplained debit entries were introduced into his shareholder and director accounts without his authority, thereby reducing the sums allegedly payable to him by the Company. 7.It was further his case that despite his removal as a director, the Respondents continued benefiting from personal guarantees previously furnished by him to secure the Company's banking facilities while denying him any corresponding participation in the Company's management. 8.The Petitioner additionally contends that the Respondents persistently denied him access to the Company's books of account, financial records and other corporate information necessary to safeguard his interests as a shareholder. He argues that this conduct infringed both his statutory rights and the principles of good corporate governance. 9.On the basis of those allegations, the Petitioner seeks, among other reliefs—i.declarations that the Respondents' conduct amounts to oppression and unfair prejudice;ii.orders compelling the Respondents to grant him unrestricted access to the Company's financial records and corporate documents;iii.compensation for the alleged violation of his right to information;iv.payment of KES 139,492,582 being the alleged value of unpaid dividends, retained earnings, directors' fees and bonuses;v.an injunction restraining the Respondents from declaring or paying directors' bonuses or other financial benefits pending settlement of his claims; andvi.in the alternative, an order compelling the Respondents to purchase his shares in the Company at a fair value to be determined by an independent valuer pursuant to section 782 of the Companies Act. The Respondents' Case 10.The Respondents opposed the Petition through the Replying Affidavit sworn on 17 November 2023 by the 2nd Respondent, Vijay Parsooram Patel. They deny all allegations of oppression, unfair prejudice and breach of the Companies Act, maintaining that the Petition is founded on distorted facts, material non-disclosure and an erroneous appreciation of the Company's governance. 11.The Respondents admitted that the Petitioner is a shareholder of the Company but dispute the number of shares he claims to hold. They state that he holds 270,050 shares and not 275,000 shares as pleaded. They further contend that although the Petitioner has been a shareholder since the Company's incorporation, he made little or no financial contribution towards the Company's expansion and development, which was largely undertaken by the majority shareholders. 12.The Respondents deny that the Petitioner served as the Company's Technical Director. They maintain that he was a non-executive director whose involvement in the Company's affairs diminished considerably from September 2018. According to them, he ceased performing his responsibilities and expressed an intention to disengage from the Company's operations. 13.The Respondents averred that the Petitioner's removal as a director on 3 April 2019 was undertaken strictly in accordance with the Companies Act and the Company's Articles of Association. They state that an Extraordinary General Meeting was duly convened, the requisite notice issued, and the Petitioner afforded an opportunity to address the shareholders before the resolution removing him from office was passed. 14.The Respondents explained that the decision to remove the Petitioner was informed by a serious breakdown in trust following the discovery that he had participated in the establishment of PalamaCare Limited, a company engaged in the manufacture and sale of hygiene and cleaning products substantially similar to those produced by the 1st Respondent. They contend that such conduct fundamentally undermined the confidence expected of a director and justified his removal. 15.Concerning the alleged dilution of the Petitioner's shareholding, the Respondents maintain that the restructuring of the Company's share capital undertaken in 2016 and 2017 was approved by all shareholders through duly convened meetings. They contend that the Petitioner attended those meetings, participated in the deliberations, and voted in favour of the resolutions. Having acquiesced in the decisions at the material time, they argue that he cannot impugn them several years later. 16.The Respondents further deny unlawfully debiting the Petitioner's shareholder and director accounts. They explain that the impugned entries relate to monies advanced to the Petitioner through cash withdrawals, cheques and other payments made on his behalf. They rely on signed payment vouchers, accounting records and minutes of meetings in which the Petitioner acknowledged the balances reflected in his accounts. 17.In answer to the allegation that directors' fees and bonuses were withheld, the Respondents state that the Company adopted a performance-based remuneration policy in place of fixed directors' fees. They contend that bonuses were awarded in recognition of services rendered to the Company and not by virtue of shareholding alone. Since the Petitioner had ceased participating in the Company's business by the time the bonuses were declared, he was not entitled to receive them. 18.The Respondents further deny withholding dividends payable to the Petitioner. They aver that following the declaration of dividends for the year 2021, cheques amounting to KES 1,227,500 were prepared and forwarded to him. They contend that the cheques were never presented for payment and consequently became stale through no fault of the Company. 19.The Respondents also reject the allegation that the Petitioner continues to guarantee the Company's banking facilities. They state that following his exit from management, appropriate arrangements were made with the Company's bankers to substitute the securities and guarantees previously provided by him. According to the Respondents, subsequent borrowing facilities have been secured exclusively by the 2nd and 3rd Respondents. 20.On the question of access to information, the Respondents maintain that the Petitioner has never been denied any information to which he is legally entitled as a shareholder. They state that he continued receiving audited financial statements, notices of meetings and other statutory information. They point out that many of the documents relied upon in support of the Petition are themselves Company documents, demonstrating that he had access to the financial information he now claims was withheld. 21.The Respondents contend that while directors are entitled to unrestricted access to confidential corporate information necessary for the discharge of their fiduciary duties, shareholders do not enjoy an unrestricted right to inspect the Company's operational records. Following the Petitioner's removal as a director, they were under no legal obligation to provide him with confidential management information beyond that required by law. 22.The Respondents further challenged the Petitioner's computation of the sums claimed. They argue that the claim for KES 139,492,582 is speculative, unsupported by accounting evidence, and proceeds on the erroneous assumption that retained earnings automatically become distributable to shareholders. They maintain that distributable profits must first be determined after accounting for liabilities, provisions, bad debts, and the Company's operational requirements. 23.Finally, the Respondents contend that the Petition is an abuse of the Court process and an attempt to use the oppression remedy to advance private commercial interests rather than protect legitimate shareholder rights. They maintain that every decision complained of was taken transparently, approved through the Company's governance structures and consistent with the Companies Act. 24.The Respondents therefore urged this Court to find that the Petitioner has failed to establish oppression or unfair prejudice within the meaning of sections 780 and 782 of the Companies Act and to dismiss the Petition with costs. 25.The Petition was canvassed by way of written submissions. The Petitioner filed his submissions dated 3 July 2024 while the Respondents filed their submissions dated 15 July 2024. 26.The submissions largely restate the parties' arguments as highlighted in the pleadings. It would, therefore, in my view, not be necessary to regurgitate the same. Analysis and Determination 27.Having considered the pleadings, affidavits, documentary evidence and the rival submissions, the issues falling for determination are—i.Whether the Petitioner's Removal as Director was Unlawfulii.Whether the Respondents unlawfully diluted the Petitioner’s shareholdingiii.Whether the Respondents wrongfully withheld dividends, directors' remuneration, and bonuses.iv.Whether the Petitioner's right to information was infringed.v.Whether the Petitioner established oppression or unfair prejudice Whether the Petitioner's Removal as Director was Unlawful 28.At the center of the Petition is the contention by the Petitioner that his removal from office as director on 3 April 2019 was unlawfully orchestrated by the Respondents, and that the same was undertaken without due regard to his objections and in violation of section 141 of the Companies Act and Article 47 of the Constitution. 29.The Respondents, on the other hand, contend that a Special General Meeting was convened after notice was served; that the Petitioner attended the meeting; made oral representations; and thereafter the members resolved to remove him as a director. 30.The notice convening the Extraordinary General Meeting dated 6 March 2019, together with the minutes of the meeting produced as annexures VPP-18 and VPP-19, demonstrate that the meeting was duly convened. The minutes further show that the Petitioner attended the meeting and was afforded an opportunity to address the shareholders before the impugned resolution was passed. 31.Sections 139, 140 and 141 of the Companies Act preserve the right of shareholders to remove a director by ordinary resolution while simultaneously safeguarding the director's right to receive notice of the proposed resolution and to make representations before the shareholders determine the matter. 32.In Kenya Hospital Association & 7 Others v Maxwell Otieno Odongo & 5 Others [2019] eKLR, the Court held that section 141 is intended to ensure that shareholders hear both sides before deciding whether a director should remain in office. The section guarantees procedural fairness; it does not confer security of tenure upon directors. 33.Having examined the record, I am satisfied that the statutory safeguards contemplated under the Companies Act were substantially complied with. The Petitioner was notified of the meeting, attended it, and exercised his right to make representations before the shareholders voted on the resolution. 34.I am therefore unable to conclude that the Petitioner's removal was unlawful merely because the majority resolved against him. The evidence on record does not disclose procedural impropriety or abuse of that statutory power. 35.Consequently, the prayer seeking declarations based on the alleged unlawful removal fails. Whether the Respondents unlawfully diluted the Petitioner's shareholding 36.The Petitioner also alleged that his shareholding was unlawfully diluted through alterations made in 2016 and 2017. 37.The Respondents, however, produced minutes of shareholders' meetings showing that the restructuring of the Company's shareholding was considered and approved by the members. The Petitioner has not demonstrated that those resolutions were passed contrary to the Companies Act, the Company's Articles of Association or without the requisite majority. 38.Further, there is no evidence that the Petitioner challenged those resolutions at the time they were passed. On the contrary, the material before the Court indicates that he participated in the relevant meetings. 39.A shareholder who knowingly participates in and acquiesces to corporate resolutions cannot, several years later, and without cogent explanation, seek to invalidate those same resolutions through an oppression petition. No evidence of fraud, concealment or procedural illegality has been placed before the Court to justify such intervention. 40.I therefore find that the allegation of unlawful dilution has not been proved. Whether the Respondents wrongfully withheld dividends, directors' remuneration, and bonuses 41.The Petitioner claimed that the Respondents withheld dividends, directors' fees, bonuses, and retained earnings amounting to KES 139,492,582. 42.It is trite that he who alleges the existence of a particular fact must prove its existence; this is the burden of proof. The position is enunciated underMumbi M’Nabea v David M. Wachira [2016] eKLR stated as follows: -the provisions of Section 107, 108, and 109 of the Evidence Act. The Court of Appeal in“Whereas under Section 107 of the Evidence Act, (which deals with the evidentiary burden of proof), the burden of proof lies upon the party who invokes the aid of the law and substantially asserts the affirmative of the issue, Section 109 of the same Act recognizes that the burden of proof as to any particular fact may be cast on the person who wishes the Court to believe in its existence.” 43.The Respondents produced documentary evidence comprising dividend cheques and email correspondence demonstrating that dividends declared by the Company were communicated to the Petitioner. The evidence further shows that cheques in respect of the 2021 dividend for KES 1,227,500 were issued but were never presented for payment. 44.In the absence of evidence showing that the Respondents refused to pay declared dividends, I am unable to conclude that the Company unlawfully withheld the Petitioner's dividends. 45.Further, the Petitioner impugns various debit entries appearing in his shareholder and director accounts. However, the Respondents produced signed payment vouchers together with minutes acknowledging the balances reflected in those accounts. 46.The documents substantially corroborate the Respondents' explanation that the impugned entries represented monies advanced or paid to the Petitioner. Apart from making general allegations of manipulation, the Petitioner did not produce independent accounting evidence demonstrating that the entries were fictitious or fraudulently introduced. 47.Equally unpersuasive is the claim relating to directors' bonuses. 48.The minutes of the directors' meeting held on 17 June 2015 demonstrate that the Company resolved to adopt a performance-based remuneration structure in place of fixed directors' fees. The Petitioner participated in that meeting and appended his signature to the minutes. 49.Having accepted that remuneration framework, the Petitioner cannot subsequently contend that bonuses awarded under that policy were unlawful merely because he did not receive them after ceasing to participate in the Company's operations. 50.The evidence further discloses that by the time the impugned bonuses were declared, the Petitioner was no longer involved in the management of the Company. The Respondents' explanation that bonuses were linked to performance rather than shareholding has not been displaced by the evidence. 51.The Petitioner's claim for retained earnings is equally untenable. 52.Retained earnings do not automatically become payable to shareholders merely because they appear in the Company's financial statements. They remain part of the Company's reserves until lawfully appropriated or distributed in accordance with the Companies Act and the Company's constitutional documents. 53.The Petitioner did not demonstrate that any resolution declaring those retained earnings as distributable dividends had been passed. Neither did he explain the accounting methodology by which the figure of KES 139,492,582 was computed. 54.Consequently, the Court finds merit only in respect of that admitted dividend entitlement. The rest of the monetary claim is therefore unsupported by evidence. Whether the Petitioner's right to information was infringed 55.The Petitioner further alleged that the Respondents unlawfully denied him access to the Company's books of account and financial information. 56.The Respondents, on their part, acknowledged that the Petitioner remained a shareholder but maintained that access to information was limited to shareholder information and did not extend to sensitive operational data and trade secrets, particularly because the Petitioner was allegedly involved in a competing business. 57.Article 35 (1) (b) of the Constitution guarantees access to information where such information is required for the exercise or protection of a right of fundamental freedom. Equally, the Companies Act (Sections 93-98 thereof) grants shareholders rights to receive information necessary to safeguard their proprietary interests. 58.However, as correctly pointed out by the Respondents, for shareholders (such as the Petitioner herein), the right to access information in relation to the corporate entity is not absolute. 59.From the record, the Court notes that the Petitioner requested information relating to the affairs of the Company and was informed that release of such information required approval by the directors. 60.While the Respondents may validly withhold confidential operational information, they cannot wholly deny a shareholder access to financial information necessary for the protection of his rights and interests. 61.The Court finds that the Petitioner established limited interference with his shareholder right to information. However, the evidence does not demonstrate a total denial of information. The audited accounts and various financial statements were admittedly available and indeed form part of the record before Court. 62.Accordingly, while I find that greater cooperation ought to have been extended to the Petitioner as a shareholder, the evidence does not support the constitutional declarations sought. 63.This claim also fails. Whether the Petitioner established oppression or unfair prejudice 64.Section 780 (1) of the Companies Act provides that:“A member of a company may apply to the Court by application for an order under section 782 on the ground—a.that the company's affairs are being or have been conducted in a manner that is oppressive or is unfairly prejudicial to the interests of members generally or of some part of its members (including the applicant); orb.that an actual or proposed act or omission of the company (including an act or omission on its behalf) is or would be oppressive or so prejudicial.” 65.Upon the court being satisfied that the affairs of the company are being conducted in an unfair and prejudicial manner, it may grant the reliefs set out in section 782 of the Act, which provides that:“(2)In making such an order, the court may do all or any of the following:a.regulate the conduct of the affairs of the company in the future;b.require the company—i.to refrain from doing or continuing an act complained of; orii.to do an act that the petitioner has complained it has omitted to do;iii.authorise civil proceedings to be brought in the name and on behalf of the company by such person or persons and on such terms as the Court directs;iv.require the company not to make any, or any specified, alterations in its articles without the leave of the Court;v.provide for the purchase of the shares of any members of the company by other members or by the company itself and, in the case of a purchase by the company itself, the reduction of the company's capital accordingly.” 66.What amounts to oppressive and prejudicial conduct has been defined by the Court in the case of Velani & 6 others v Naran & 2 others, [2021] KEHC 75 (KLR), where it was held, and this Court agrees, that it is conduct which is burdensome, harsh and wrongful, or which lacks probity and fair dealing in reference to the affairs of the company. 67.The Court in Velani (supra) held that to establish unfair practice, the Court stated that two elements must be present:“(a)the conduct must be prejudicial in the sense of causing prejudice or harm to the relevant interest of the members or some part of the members of the company (i.e. shareholders), and,(b)it must be unfair within the context commercial practices.” 68.Sections 780 and 782 of the Companies Act are therefore intended to protect minority shareholders against conduct that is oppressive, unfairly prejudicial or unfairly discriminatory. 69.In this case, the Petitioner alleges that the Respondents unlawfully removed him as a director, denied him access to information, awarded themselves substantial bonuses in 2018 and 2019 while excluding him, failed to pay dividends due to him, and excluded him from participation in company affairs. 70.The allegations, when considered as a whole, and in view of the Court’s findings in the foregoing paragraphs, disclose more of a breakdown in the relationship between the shareholders, rather than oppressive conduct within the meaning of Sections 780 and 782 of the Companies Act. 71.Oppression is not established merely because a minority shareholder disagrees with decisions of the majority. There must be conduct that is burdensome, harsh, wrongful, and lacking in probity. 72.There is material indicating that the Respondents believed the Petitioner was involved in a competing enterprise through his daughters and that this concern motivated their decision to remove him as director. 73.While the Court makes no definitive finding on whether the Petitioner controlled the competing enterprise (PalamaCare Limited), there is sufficient material to demonstrate the existence of a genuine dispute and concern regarding conflict of interest. 74.Accordingly, the Court therefore finds that the evidence falls short of the statutory threshold necessary to establish oppression or unfair prejudice under sections 780 and 782 of the Companies Act. 75.The Appellant also sought for the appointment by this Court of inspectors under section 786 of the Companies Act. The Court is, however, of the view that given the findings in the foregoing paragraphs, such an order 76.Such an order is intrusive and is ordinarily granted where there exists credible evidence of fraud, serious misconduct, deliberate concealment or mismanagement warranting judicial intervention. 77.Section 786(2) of the Companies Act gives this Court the discretion to decline to appoint inspectors where the circumstances of the case does not warrant such an action. The provision states that:“The Court may decline to proceed with the application unless the applicants produce such evidence as the Court may require for the purpose of showing that the applicants have good reason for requiring the investigation.” 78.In the present case, as has already been established in the foregoing paragraphs of this judgment, the evidence discloses a shareholder dispute and disagreement regarding management decisions rather than circumstances necessitating a statutory investigation. 79.Although the relationship between the parties is clearly strained, I am not satisfied that sufficient grounds have been demonstrated to justify the appointment of inspectors 80.Accordingly, this prayer is equally declined. Disposition 81.For the foregoing reasons, the Court finds no merit in the Petition and therefore makes the following orders:i.The Petitioner's claim that his removal as director was unlawful is dismissed.ii.The claim for declarations of oppression and unfair prejudice under sections 780 and 782 of the Companies Act is dismissed.iii.The claim for payment of Kshs.139,492,582 is dismissed.iv.The Court finds that the Petitioner remains entitled to all shareholder information required by law and directs the 1st Respondent to furnish him annually with audited accounts, notices of meetings and such statutory shareholder information as is required under the Companies Act.v.The 1st Respondent shall, within thirty (30) days, re-issue and pay to the Petitioner the admitted dividend entitlement of Kshs.1,227,500 (if not already paid) together with interest at court rates from the date of filing of the Petition until payment in full.vi.The prayer for appointment of investigators under section 786 of the Companies Act is declined.vii.Each party shall bear its own costs. 82.It is so ordered. DATED, SIGNED, AND DELIVERED AT NAIROBI THIS 2ND DAY OF JULY 2026.HON. MR. JUSTICE MOSES ADOJUDGE OF THE HIGH COURTIn the Presence of:Moses C/A……………… for the Petitioner……………for the Respondents