[2019] KEHC 7758 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT KISII

CORAM: D.S. MAJANJA J.

PETITION NO. 7 OF 2017

BETWEEN

SYLVESTER BARAKE MAINA....................1ST PETITIONER

CASMIL LUCAS NYANGAU.........................2ND PETITIONER

AND

THE REGISTRAR OF COMPANIES.................RESPONDENT

JUDGMENT

1. The petitioners were among the directors of Gusii Mwalimu Investment Company Limited (“the Company”) when it was incorporated in 1982. They have brought this action against the respondent (“the Registrar”) in that capacity seeking the following reliefs;

a. Declaration that the alleged dissolution of Gusii Mwalimu Investment Company Ltd vide gazette notice No. 3586 of 10th June 1998 was irregular, never took place and was not in accordance with the provisions of the Company Act CAP 486 Laws of Kenya (Repealed);

b. Declaration that the company be restored to the register; and

c. An order that costs for this petition be borne by the respondent and such orders that the honourable court may deem just and expedient.

2. The petitioners’ case is set out in the petition dated 4th September 2017 supported by an affidavit sworn by Casmil Lucas Nyangau on the same day. The petitioners contend that in 1998, the Registrar, in association with persons who misrepresented themselves as directors, clandestinely dissolved the Company and advertised its dissolution in the Kenya Gazette on 16th June 1998. They complained that since then, their efforts to get information on the dissolution of the Company have been fruitless. When the Company’s file No. C/20/82 was finally traced on 16th July 2017, the petitioners realized that there was no record for the alleged voluntary winding up of the Company.

3. The petitioners aver that despite being struck off the register in 1998, Messrs Edward Ogoti Ogoti & Associates had been appointed as liquidator and an Annual General Meeting held in 1999, illustrating that the company was still operational. They state that the Company shareholders have never resolved to dissolve it and the liquidator had never called a meeting with the shareholders nor presented any accounts with the Registrar before the striking off of the Company. The petitioners are convinced that the Registrar should be compelled to reactivate the Company and a declaration made that the Company was not dissolved.

4. The Registrar has opposed the petition through grounds of opposition filed on 27th June 2018 in which it contends that the petition is time barred, offends the principles of alternative dispute resolution mechanisms provided in the law and is an abuse of the court process. In addition, Joyce Koech, an Assistant Registrar of Companies, swore an affidavit in response to the petition on 9th July 1998. She deponed that from their records, the Company held a Special General Meeting at Kisii Stadium on 10th September 1989, where it was resolved that the Company be wound up and sold to Gusii Mwalimu Savings and Credit Society (“the Sacco”). That meeting had been attended by 10 directors and 4,800 shareholders. That on 15th December 1997, the directors of the Company had requested the Registrar to wind up the Company in accordance with the resolutions of the shareholders. Following that request, the Registrar gave notice of the intended dissolution of the Company through Gazette Notice No. 1535 dated 13th March 1998 and proceeded to dissolve and strike off the Company from the register after the expiry of the three-month notice. The dissolution of the Company was also published in Gazette Notice No. 3586 dated 16th June 1998.

5. In her affidavit, the Assistant Registrar accused the petitioners of material non-disclosure for failing to divulge that at the meeting held on 10th September 1989, there had been a resolution to sell the Company’s assets to the Sacco, which in any case had not been joined to the suit. She also brought to the court’s attention other related cases including Kisii CMCC 771 A of 1999 and Kisii High Court Misc. Application No. 2 of 2017 which are still pending determination.

6. Following an interlocutory application by the petitioners for better particulars and cross examination of the Assistant Registrar, I directed the Registrar to provide a copy of the Company’s file No. C. 20/82 which was filed in court on 13th March 2019. The parties also filed their respective submissions which I have considered alongside their depositions. Although the parties raised the issue whether the petition is res judicataand whether the dissolution of the Company was done procedurally, I think the main issue for resolution that may dispose of the matter is whether the petition is time barred.

7. This preliminary issue was raised by the Registrar and canvassed by both parties in their written submissions. Counsel for the Registrar argues that the petition has been instituted 19 years after the dissolution and striking off of the Company contrary to sections 912 and 917 of the Companies Act, 2015. Counsel also argues that applying the provisions of sections 338 (1) and 339 (6) of the Companies Act (Repealed) (“the Repealed Act”) would not aid the petitioners. Even if the petition was founded on the tort of fraud, it would be time barred by dint of section 4 (2) of the Limitation of Actions Act (Chapter 22 of the Laws of Kenya) and the Public Authorities Limitation Act (Chapter 39 of the Laws of Kenya).

8. The petitioners’ claim against the Registrar is based on the Repealed Act. As submitted by the Registrar, an application challenging the dissolution of a company ought to move the court under section 338 (1) while a party aggrieved by the striking off of a company from the register ought to file an application to restore it under section 339 (6) of the Repealed Act.

9. Section 338 (1) of the Repealed Act provided as follows:

338 (1) Where a company has been dissolved, the court may at any time within two years of the date of the dissolution, on an application being made for the purpose by the liquidator of the company or by any other person who appears to the court to be interested, make an order, upon such terms as the court thinks fit, declaring the dissolution to have been void and thereupon such proceedings may be taken as might have been taken if the company had not been dissolved. [Emphasis mine]

Section 339 (6) provided:

339 (6) If a company or any member or creditor thereof feels aggrieved by the company having been struck off the register the court on an application made by the company or member or creditor before the expiration of ten years from the publication in the Gazette of the notice aforesaid may, if satisfied that the company was at the time of the striking off carrying on business or in operation, or otherwise that it is just that the company be restored to the register, order the name of the company to be restored to the register, and upon a certified copy of the order being delivered to the registrar for registration the company shall be deemed to have continued in existence as if its name had not been struck off; and the court may by the order give such directions and make such provisions as seem just for placing the company and all other persons in the same position as nearly as may be as if the name of the company had not been struck off. [Emphasis mine]

10. Undersection 338 (1) of the Repealed Act, applications for a declaration voiding the dissolution of a company were to be made within 2 years of the date of dissolution while under section 339 (6) actions to restore a company that had been struck off the register had to be made within 10 years from publication in the Gazette. The impugned gazette notice in respect of the Company was published on 16th June 1998. The petition, in so far as it seeks to reverse the process dissolution, is filed outside the prescribed time limits under both section 338(1) and 339(6) of the Repealed Act.

11. The application of the Companies Act, 2015 would still not salvage the petition as sections 912 and 917 thereof provide that applications to restore a company in the register whether by administrative restoration or through a court order should be made within 6 years of the dissolution. The relevant sections of the Act provide as follows

912. Application for administrative restoration to the Register

(1) An application may be made to the Registrar to restore to the Register a company that has been struck off the Register under section 894 or 897.

(2) An application under this section may—

(a) be made whether or not the company has in consequence been dissolved;

(b) be made only by a former director or former member of the company; and

(c) not be made after the expiry of six years from the date on which the company was dissolved.

917 (4) In any other case an application to the Court for restoration of a company to the Register may not be made after the expiry of six years from the date of the dissolution of the company, but this subsection is subject to subsection (5).

(5) If—

(a) the company has been struck off the Register under section 894 or 895;

(b) an application to the Registrar has been made under section 912 before the deadline for making such an application; and

(c) the Registrar has refused the application, an application to the Court under this section may be made within twenty-eight days after notice of the Registrar's decision is issued. This subsection has effect even if the period of six years referred to in subsection (4) has expired.

12. The petitioners sought refuge in section 26 of the Limitation of Actions Act which provides that the period of limitation does not begin running until the plaintiff has discovered the fraud or the mistake or could with reasonable diligence have discovered it. However, based on their own depositions and submissions, the petitioners were aware of the dissolution of the Company and the alleged fraudulent acts as early as 1999 and had proceeded to file Kisii CMCC Suit No. 711 A of 1999. In my view, the petitioners have been indolent in pursuing their rights and would have discovered the alleged fraudulent acts with a reasonable degree of diligence. I therefore find that the petition is time barred.

13. I would add that the Companies Act, 2015 and its predecessor legislation is a complete code in so far as the regulation of companies in Kenya is concerned. The procedure for restoring a company struck off the register and for voiding dissolution of a company is specifically provided for and regulated by specific provisions in the statute. In such a matter, the principle that comes to mind is that so clearly stated by the Court of Appeal in Speaker of National Assembly v Hon. James Njenga Karume [2008] 1 KLR 425 where it held that, “Where there is a clear procedure for the redress of any particular grievance prescribed by the Constitution or an Act of Parliament that procedure should be strictly followed”.

14. The petitioners had the opportunity to challenge the dissolution within the time provided by the Repealed Act, they did not. As I have shown, the door to this court under the Repealed Act is now shut and cannot be re-opened under the guise of a different cause of action or petition seeking to achieve the same object provided by the statute. Having reached this conclusion, it is not necessary to decide whether the petitioners’ case is res judicata save to re-iterate what Okwany J., stated in Casmil Lucas Nyangau and 9 Others v Gusii Mwalimu Sacco Ltd and Another KSI HC Misc. Appl. No. 2 of 2017 [2017] eKLR where she observed as follows:

21. To my mind, a company, just like a natural person is deemed to be dead upon the expiry of ten years after its dissolution in which case a dead person cannot be resurrected through an order of the court. I find it hard to believe that the applicants, being members of the defunct company, as they have claimed they were, could have all this time been in the dark about the goings on in the company including its dissolution and were only woken from their deep slumber last year when they allegedly went to register themselves as the “newly elected directors” of the company. One may also wonder under what circumstances the applicants could have conducted an election for directors in respect of a company that was already legally speaking, dead and buried.

22. I also find that the applicants cannot claim that they were ignorant of the dissolution or that the same was done in secrecy in view of their acknowledgement that the dissolution was posted in the Kenya gazette No. 3586 of 9thJune 1998. The publication of the dissolution in the Kenya gazette was in, itself, sufficient notice to all and sundry that the company had been struck off the register of companies and the applicants cannot therefore be seen to feign ignorance of the said dissolution or claim that it was conducted in secrecy. In my humble view, the expiry of the 10 years also marks the death and burial of the company as this court can only make an order for extension of the time for the company’s revival within the confines of section 339 (6) of the Act.

15. Further and as to whether the manner of dissolution was procedural is clearly matter that would have been determined in setting aside or voiding the dissolution or striking off of the Company under the provisions of the Repealed Act but since the door to such inquiry is now shut, the less I say the better.

16. Having reached this conclusion, there is only one order that commends itself to this court and it is one of dismissal. This petition is now dismissed but with no order as to costs.

DATED and DELIVERED at KISII this 9th day of MAY 2019.

D.S. MAJANJA

JUDGE

Mr Abobo instructed by Abobo and Company Advocates for the petitioners

Mr Odhiambo, State Counsel, instructed by the Office of the Attorney General for the respondent.