Office of the attorney General VS Al Habib Trading Company

(From the judgment in Civil Case No. E35 of 2020 delivered on 2^nd March 2022 by Hon. C. K. Kithinji (PM) at Voi Law Courts)

1. In a ruling delivered on 13^th October 2021, the learned Magistrate dismissed an application dated 15^th April 2021, filed by the appellant (Attorney General) by way of Notice of Motion seeking the striking out of the amended plaint dated 20^th January 2021 or, in the alternative, striking out the plaint dated 23^rd November 2020 and to direct the DCI and DPP to investigate and prosecute Hussein Hassan Amin, and concluded as follows:-

“10. The authority and basis for the substitution has been explained sufficiently with documents showing the position and the basis of the amendment.  It is the plaintiff’s case hence theirs to proof to the required standards.  They should have their day in court.  The defendant has not shown that they stand to suffer any prejudice by the amendment.  The court finds that both parties are guilty of lapses and treats the issues as procedural technicalities which should not hinder the cause of justice.

11. In the end the application is dismissed.  Costs will be in the course.  Matter be set down for case management conference.”

1. Dissatisfied with the above ruling, the Attorney General on behalf of the 2^nd and 3^rd defendants, has come to this court on appeal on the following grounds:-
2. The Hon. Learned Magistrate erred in law and in fact in allowing the amendment of the plaint dated 23.11.2020.
3. The Hon. Learned Magistrate erred in law and in fact in failing to strike out the amended plaint dated 20.1.2021.
4. The Hon. Learned Magistrate erred in law and in fact in allowing the substitution of the plaintiff, Alhabib Trading Company with Hussein Hassan Amin.
5. The Hon. Learned Magistrate erred in fact and in law in finding that the defendants did not show they would suffer any prejudice by the amendment of the plaint dated 23.11.2020.
6. The Hon. Learned Magistrate erred in fact and in law and misdirected herself on the prejudice the defendants would suffer by the amendment and thereby allowing the amendment of the plaint dated 23.11.2020 and caused the defendants to suffer prejudice.
7. The Hon. Learned Magistrate erred in law and in fact in failing to strike out the plaint dated 23.11.2020.
8. The Hon. Learned Magistrate erred in law and in fact in failing to consider the legal personality and status of the plaintiff company.
9. The Hon. Learned Magistrate erred in fact and in law and misdirected herself on the trite principles of company law in failing to find that a company is a legal creature with a distinct personality separate from its promoters, shareholders and directors.
10. The Hon. Learned Magistrate erred in fact and in law in treating casually the alleged engagements and arrangements between the plaintiff company and Hussein Hassan Amin without due regard to company law and the law of evidence.
11. The Hon. Learned Magistrate erred in fact and in law in failing to find that there was neither authority by the plaintiff company to institute the suit nor to instruct the firm of Messrs Abdirazak & Co. Advocates to so institute the suit.
12. The Hon. Learned Magistrate erred in fact and in law and misdirected herself on the applicability of Order 8, rule 2 of the Civil Procedure Rules, 2010 (as amended) (CPR) in the suit.
13. The Hon. Learned Magistrate erred in fact and in law and misdirected herself on the mandatory requirements of Order 9, rule 2 (c) and Order 4, rule 1 (4) of the CPR.
14. The Hon. Learned Magistrate erred in fact and in law and misdirected herself in finding that the plaintiff company had granted authority to Hussein Hassan Amin to swear the verifying affidavit.
15. The Hon. Learned Magistrate erred in law and in fact in failing to find that Hussein Hassan Amin gave false information under oath.
16. The Hon. Learned Magistrate erred in fact and in law in finding that there was sufficient authority to warrant the substitution of the plaintiff company.
17. The Hon. Learned Magistrate erred in fact and in law in finding that the lapses by the plaintiffs in occasioning the amendment of the plaint dated 23.11.2020 were procedural technicalities.
18. The Hon. Learned Magistrate erred in fact and in law in granting a prayer not sought by the plaintiffs.
19. The Hon. Learned Magistrate erred in law and in fact in dismissing with cost the Notice of Motion application dated 14.4.2021.
20. The appeal was canvassed through written submissions.  In this regard, I have perused and considered the submissions filed by the Attorney General the appellant, as well as the submissions filed by Abdirazak & Company Advocates for the respondent.
21. I note that in the appellant’s submissions, the issues are listed as two.  First, whether the Magistrate erred in allowing the amendment of the plaint and substitution of the plaintiff.  Secondly, whether the Magistrate erred in failing to find that the company is a separate legal entity from the promoters, shareholders and directors.
22. On their part, counsel for the respondent dwelt at length on whether the appellant had properly and legally filed defence.  I have to acknowledge that both sides relied upon decided court cases.
23. Having perused and considered the appeal and the submissions filed on both sides, I am of the view that the appeal will succeed with regard to the amended plaint, as it was not a properly amended plaint as envisaged by the law.
24. As the Magistrate clearly stated in the ruling delivered on 13^th October 2021 (paragraph 7) – the amendment required leave, on which there was no evidence or even a suggestion that such leave of the court was obtained for the amendment of the plaint.  In particular, the learned Magistrate stated as follows:-

“7. On whether the filing of the amended plaint was within time before pleadings close, it is acknowledged that the defence was received on 12^th January 2021 and amended plaint filed on 13^th March 2021.  The pleadings would then close 14 days after service of the reply to defence or service of the defence if none is filed.  A reply to defence is to be filed within the days upon service of the defence.  After the expiry of 14 days after service of the defence, pleadings close.  The amendment to the plaint would then require leave.  Clearly the plaintiff needed leave.”

1. It follows from the above observations and findings on leave to amend in the ruling that the learned Magistrate came to the conclusion that the amended plaint herein needed leave of the court in order to be properly on record.
2. In my view, the learned Magistrate was correct in finding that the amended plaint herein required leave of the court in line with the provisions of Order 2 rule 13 and Order 8 rule 1 of the Civil Procedure Rules.
3. Flowing from the above, once the learned Magistrate made the finding that leave to amend the plaint was required, and there being no request made to the court for leave to amend the plaint out of time, the Magistrate could not purport to save the said amended plaint the way the court did, as it was not a document properly filed in court, and there was no request to grant leave for the amendment.
4. I will thus strike out the amended plaint as it was an invalid pleading.  I note that even on appeal, the respondent has not requested for leave to validate his amended plaint, but has dwelt on other technicalities, such as whether the appellant properly filed and served responses.  Such issues would be properly and appropriately dealt with in the Magistrate’s court, not on appeal.
5. As regards the issue whether the Magistrate erred in not finding that the company was a separate legal entity from its investors, promoters, shareholders and directors, I note that this issue was argued extensively in submissions before the Magistrate’s court under the heading “whether the plaint dated 23.11.2020 is competent.”  The learned trial Magistrate in the ruling was reluctant to go into such technicalities, but stated that sufficient explanations had been given by the majority shareholder of Al Habib Company about the existence of the company and its operations.
6. On my part, though I am aware that a company is a separate legal entity from its promoters, directors, shareholders, I however hold that unless a bona fide member of the company files a complaint in court challenging the authority to prosecute a suit filed or brought under the company name, courts cannot make orders striking out proceedings on complaints from outsiders, as courts are not capable of supervising the internal operations of a company.
7. I thus find that the original plaint filed by the company cannot be struck out on the technicality raised by the Attorney General (appellant).
8. I thus allow the appeal in part.  I strike out the amended plaint for not having been filed with leave of the court as required by law.  As for the original plaint, it remains the only valid plaint in the proceedings before the Magistrate, and the case will either succeed or fail on the basis of that plaint.
9. Costs of this appeal will follow the determination of the case in the Magistrate’s court based on the original plaint.

Dated, signed and delivered this 23^rd day of May 2024 in open court at Voi virtually.

In the presence of:-

Trizah – Court Assistant

Mr. Njoka for appellant

Mr. Mohamed holding brief for respondent