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JudgmentBAHATI CHIVATSI KARISA VS ZABACH ENTREPRISES LTD8 min read

BAHATI CHIVATSI KARISA VS ZABACH ENTREPRISES LTD

High Court at Malindi High Court · · M Thande

 

  1. The Plaintiff filed a plaint dated 24.1.24 seeking a permanent injunction against the Defendants from dealing with the 1st Defendant’s property of whatever nature; an order directing the registrar of companies to rectify and restore the company register to be as of 25.10.16 and expunge entries made on 13.4.23; that the 3rd Defendant restore the Plaintiff as a mandatory signatory to account number 1203762399; general damages and costs.
  2. In addition to the OS, the Applicant filed an application of even date seeking the following orders:
  3. Spent.
  4. Spent.
  5. That pending the hearing and determination of this suit the court be pleased to issue restraining order, restraining the Defendants by themselves, agents, servants and/or their behalf and instruction from dealing with the Defendant company account number 1203762399 held at Kenya Commercial Bank - Town Centre branch Mombasa and any other property of the 1st Defendant in whatsoever manner.
  6. That the cost of this application be provided for.
  7. The grounds upon which the Application is premised are that the 2nd Defendant (the company) was incorporated on 25.10.16 and has 3 shareholders namely the Plaintiff, the 2nd Defendant and one Onesmus Shauri Mutsunga. Further that the Plaintiff holds 40 shares in the Company and is a signatory to its bank account held with the 3rd Defendant (the Bank).
  8. The Plaintiff contends that on 5.10.23, she realised that that his e-citizen account had been hacked and the shareholding in the Company illegally changed with him being removed as a shareholder and replaced with that of Joseph Mwangi Kaboyo, the alleged company secretary. The Plaintiff did a search on the Company and found that he had allegedly resigned as a shareholder and forfeited his shares to the Company at an alleged meeting held on 2.5.23. Further that a notice of special/ordinary resolution and notice of change of residential address of the secretary of the company had been filed with the 4th Defendant on 11.10.23. he further state that he wrote a complaint to the 4th Defendant.
  9. The Plaintiff contends that in furtherance of the fraud, the 2nd Defendant forwarded the said resolution and a fraudulently obtained Form CR12 together with to the Bank and had him removed as a signatory to the account. Further that the 2nd Defendant has as the sole signatory, been withdrawing company monies for his own use without the consent of other shareholders. He further stated that he reported the matter to the Central Bank.
  10. The Plaintiff urged that unless the orders sought are granted the Company’s monies and property will continue to be stolen and he stands to suffer loss and damage.
  11. The Application is opposed by the Company and the 2nd Defendant vide a replying affidavit sworn by the 2nd Defendant on 11.3.24 in which he denied the allegations by the Plaintiff. He averred that he and the Plaintiff entered into an agreement dated 10.1.23 by which the Plaintiff withdrew and ceased to be a director/shareholder of the Company. Further that due process was followed. He further denied the allegations of forgery and stated that no criminal case is pending against him in any court and further that no evidence has been provided in this regard. The 2nd Defendant added that upon withdrawal from the Company, the Plaintiff and other persons registered a company known as Zabash Enterprises Limited in which he is a director and shareholder.
  12. The 2nd Defendant further stated that it is settled law that fraudulent conduct must be distinctly alleged and proved and cannot be inferred from the facts.  Additionally, that for the Plaintiff to succeed, he must make a full and frank disclosure of all material facts and further show that he has a legal or equitable right requiring protection.  He urged that the suit and Application be dismissed for disclosing no reasonable cause of action against the 1st and 2nd Defendants. 
  13. Zachary Okoth, the branch manager of the Bank’s branch in Kilifi swore a replying affidavit on 13.3.24. He confirmed that the Company opened an account number 1203762399 with the Bank after meeting the account opening requirements as set by the Bank’s Standard Operating Procedures. Further that the monies held in the said bank account belong to the Company and the signatories thereto retain exclusive independence in the control and management thereof. He further stated that the Bank does not take sides in wrangles within incoming and outgoing directors of the Company nor get involved in the internal affairs thereof. Lastly that the Bank is ready and willing to abide by any orders given by the Court in relation to the Company’s account in question.

  1. I have given due consideration to the Application, the rival affidavits and the written submissions filed by the parties. The issue for determination in the Application is whether the Plaintiff has established a case for the grant of interlocutory injunction pending the hearing and determination of the plaint.
  2. The principles governing the grant of interlocutory injunction as set out in the case of Giella –vs- Cassman Brown [1973] EA 358). The Court of Appeal stated: 

The conditions for a grant of an interlocutory injunction are now I think well settled in East Africa. First, an applicant must show a prima facie case with a probability of success. Secondly, an interlocutory injunction will not normally be granted unless the applicant must otherwise suffer irreparable injury, which would not adequately be compensated by an award for damages. Thirdly if the court is in doubt, it will decide an application on the balance of convenience.

  1. In Nguruman Limited v Jan Bonde Nielsen & 2 others [2014] eKLR, the Court of Appeal had this to say about what constitutes a prima facie case:

The party on whom the burden of proving a prima facie case lies must show a clear and unmistakable right to be protected which is directly threatened by an act sought to be restrained, the invasion of the right has to be material and substantive and there must be an urgent necessity to prevent the irreparable damage that may result from the invasion. 

  1. Similarly in Mrao Ltd v First American Bank of Kenya Ltd& 2 others[2003] eKLR, the Court of Appeal defined a prima facie case as follows:

So what is a prima facie case? I would say that in civil cases it is a case in 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.

  1. The material before the Court shows that the Plaintiff and 1st Defendant were shareholders in the Company and that there has been a change in the shareholding where the Plaintiff is alleged to have ceased to be a shareholder and director. This is disputed by the Plaintiff. He claims that he was fraudulently removed as a director/shareholder of the Company as well as a signatory to its accounts. To my mind, there exists prima facie, a right of the Plaintiff which has apparently been infringed upon by the 1st Defendant, which calls for an explanation or rebuttal. Whether the change in ownership and directorship of the company and removal of the Plaintiff as a signatory to the account was done fraudulently or not is not for consideration at this stage. This can only be considered and determined upon hearing of the main suit.
  2. Interlocutory injunction orders are intended to preserve the subject matter of a suit, pending the hearing and determination of the same. The bank account in dispute herein belongs to the Company. Considering that the shareholding and directorship as well as the signatory of the account are all in dispute, it is necessary to preserve the said bank account and the operations thereof, pending the conclusion of the suit. If the orders sought are not granted, the suit will be rendered nugatory and a mere academic exercise. From the material placed before Court, I am persuaded that the Plaintiff has demonstrated a clear and unmistakable right to be protected, which is directly threatened by the act sought to be restrained. I am further persuaded that if the order of injunction is not granted, the Applicant is likely to suffer irreparable harm that may not adequately be compensated by an award of damages.
  3. On balance of convenience, I associate with Ombwayo, J. who in the case of Pius Kipchirchir Kogo v Frank Kimeli Tenai [2018] eKLR, stated:

The meaning of balance of convenience in favor of the plaintiff is that if an injunction is not granted and the suit is ultimately decided in favor of the plaintiffs, the inconvenience caused to the plaintiff would be greater than that which would be caused to the defendants if an injunction is granted but the suit is ultimately dismissed. Although it is called balance of convenience it is really the balance of inconvenience and it is for the plaintiffs to show that the inconvenience caused to them would be greater than that which may be caused to the defendants. Should the inconvenience be equal, it is the plaintiffs who suffer. In other words, the plaintiffs have to show that the comparative mischief from the inconvenience which is likely to arise from withholding the injunction will be greater than which is likely to arise from granting it.

  1. Given that the alleged cessation or removal of the Plaintiff as a director and shareholder of the Company is disputed, the inconvenience caused to the Plaintiff should the orders not be granted, would be greater than that which would be caused to the Defendants even if the suit were ultimately dismissed. In the premises, I find that the balance of convenience tilts in granting the orders sought. 

  1. The Plaintiff has further prayed for an injunction restraining the Defendants from dealing with “any other property” of the Company.  No particulars have been given of the properties referred to. I accordingly find that such a prayer would be a prayer at large and the same cannot be granted.

  1. In the end and in view of the foregoing, the Court finds that the Application dated 24.1.24 partially succeeds and makes the following orders:
  2. That pending the hearing and determination of this suit the Defendants by themselves, agents, servants and/or their behalf and instruction are hereby restrained from dealing with account number 1203762399 held by Zabach Enterprises Ltd at Kenya Commercial Bank - Town Centre branch, Mombasa.
  3. Costs in the cause. 

DATED, SIGNED and DELIVERED in NAIROBI this 29th day of November 2024

 

    BAHATI CHIVATSI KARISA VS ZABACH ENTREPRISES LTD BAHATI CHIVATSI KARISA VS ZABACH ENTREPRISES LTD