[2004] KEHC 400 (KLR)
The court held that the 2nd Plaintiff, as the sole surviving director, is entitled to run the affairs of the 1st Plaintiff company in accordance with the Articles of Association and Regulation 95 of Table A of the Companies Act. The purported transfer of shares by the widow of the deceased shareholder is invalid as...
Source-derived case information.
- Citation
- [2004] KEHC 400 (KLR)
- Parties
- Plaintiff: Tandor Restaurant Limited; Plaintiff: Mahendra Kamat; Plaintiff: Debendra Kamat; Plaintiff: Sitaram Kamat; Defendant: Estate of the Late Suresh Bhasin; Defendant: Kamlesh Bhasin; Defendant: Vishal Kochhar; Defendant: Registrar of Companies
- Court
- High Court
- Court Station
- High Court at Nairobi (Milimani Law Courts)
- Jurisdiction
- Kenya
- Case Number
- Civil Case 984 of 2004
- Procedural Posture
- Civil Case / Interlocutory Application Ruling
- Outcome
- interlocutory injunction granted
- Judges
- PJ Ransley
- Legal Topics
- Company Directorship, Share Transfer Disputes, Corporate Governance
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Tandor Restaurant Limited
Plaintiff
Mahendra Kamat
Plaintiff
Debendra Kamat
Plaintiff
Sitaram Kamat
Plaintiff
Estate of the Late Suresh Bhasin
Defendant
Kamlesh Bhasin
Defendant
Vishal Kochhar
Defendant
Registrar of Companies
Defendant
Procedural Posture
Civil Case / Interlocutory Application Ruling
Legal Issues
- 1 Whether the 3rd Defendant should be restrained from dealing with the business of the 1st Plaintiff pending determination of the suit.
- 2 Whether the 2nd Plaintiff is the proper person to run the affairs of the 1st Plaintiff after the death of a director.
- 3 Whether the widow of the deceased shareholder can lawfully transfer shares to herself and appoint an attorney before obtaining letters of representation.
Ratio Decidendi
The court held that the 2nd Plaintiff, as the sole surviving director, is entitled to run the affairs of the 1st Plaintiff company in accordance with the Articles of Association and Regulation 95 of Table A of the Companies Act. The purported transfer of shares by the widow of the deceased shareholder is invalid as she has not obtained letters of representation to the estate. The 3rd Defendant, appointed by the widow, has no lawful authority to run the business of the 1st Plaintiff. The court found no valid reason to exclude the 2nd Plaintiff from management on the basis of alleged lack of business acumen. The court therefore granted an order restraining the 3rd Defendant from running the...
Court Disposition
interlocutory injunction granted
Orders
- The 3rd Defendant is restrained from running the 1st Plaintiff business until the final determination of the suit or until proper representation is obtained for the estate of the late Suresh Bhasin.
- Costs in the cause.
Full Case Text
Judgment text and source record
27 paragraphs
REPUBLIC OF KENYA IN HIGH COURT OF KENYA AT NAIROBI CIVIL CASE 984 OF 2004
TANDOR RESTAURANT LIMITED…………………….1ST PLAINTIFF
MAHENDRA KAMAT…………………………………....2ND PLAINTIFF
DEBENDRA KAMAT………………………………….…3RD PLAINTIFF
SITARAM KAMAT……………………...…………….…4TH PLAINTIFF
VERSUS
ESTATE OF THE LATE SURESH BHASIN……..…1ST DEFENDANT
KAMLESH BHASIN……………………….……….…2ND DEFENDANT
VISHAL KOCHHAR……………………………….…3RD DEFENDANT
REGISTRAR OF COMPANIES……………………...4TH DEFENDANT
RULING
By their amended Notice of Motion of the 4th Of October 2004 the Applicant seeks an order that the 3rd Defendant, his servants, employees and or agents be removed and or restrained from dealing in any way with the business of the 1st Plaintiff until the final determination of this suit.
The orders sought in prayers 3 and 4 were not pursued as indeed they cannot as they are not proper matters to be dealt with in an interlocutory application. The 1st Plaintiff is a Company incorporated under the provisions of the Companies Act.
The original shareholders are Suresh Bhasin who held 510 ordinary shares of Kshs 100 each giving him control of the company. The other three shareholders are the 2nd, 3rd and 4th Plaintiffs who between own equally the balance of the shares of 490 shares of Kshs 100 each.
Suresh Bhasin died and as at present no one has been given letters of representation to his estate.
It is alleged the late Mr. Bhasin signed share transfer forms transferring 30 shares each to the 2nd, 3rd and 4th Plaintiff. However this transfer has not been concluded and cannot be taken into account at present in the share capital of the 1st Plaintiff.
The 2nd defendant the deceased’s widow, it is alleged purported to transfer her deceased husband shares to herself and appointed the 3rd Defendant as her attorney to run the business of the 1st Plaintiff.
There were two directors of the company, the deceased and the 2nd Plaintiff.
The Articles of the 1st Plaintiff provides for 2 directors, however if one director dies the remaining director can run the company but if need be that remaining director can appoint an additional director under the provisions of Regulation 95 of Table A of the Companies Act.
The 2nd Plaintiff is therefore the proper person to run the affairs of the 1st Plaintiff. It is no reason to exclude him on the grounds that he does not understand accounting or the running of a business.
I notice from a search at the Companies registry that the widow appears as a director and shareholder in the company. How this entry came to be there has not been explained, however, it is not in dispute that her late husband was the shareholder and director.
Mr. Odera took technicality points that there was no board mandate authorizing the suit. As the 4th Plaintiff is the sole director he was entitled to file the suit which must be presumed to be correctly filed until the application is proved.
The suit was filed on the 21st September 2004 being the date of the original Notice of Motion before amendment. This appears to be an order.
In the circumstances until the widow can gain control of the company after being appointed as her late Husband’s representative l give an order that the 3rd Defendant is restrained from running the 1st Plaintiff business. If the facts change the plaintiffs are at liberty to apply. Costs in cause.
DATED AND DELIVERED THIS 3RD DAY OF NOVEMBER 2004
PHILLIP J RANSLEY
JUDGE