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JudgmentREPUBLIC VS THE REGISTRAR OF COMPANIES14 min read

REPUBLIC VS THE REGISTRAR OF COMPANIES

High Court at Kisumu High Court · · M.S.Shariff

RULING
1. Pursuant to the leave of this Court in Kisumu HC Misc. JR NO. E011 of 2022, Order 53 Rule 3 of the Civil Procedure Rules and all other enabling provisions of law, the ex-parte Applicant herein, Auto Extreme Limited, vide a Motion of application dated 18th July 2022 and filed in Court on 20th July 2022, is seeking the following orders:

a. An order of Judicial review in the nature of certiorari to remove into the High Court and quash the decision of the Respondent contained in its letter to the ex-parte Applicant dated 8th June 2022, seeking to compel the ex-parte Applicant to change its company name.

b. An order of Judicial review in the nature of prohibition to restrain the Respondent from striking off the ex-parte Applicant from the register of companies under Section 58 (5) (6) and Section 70 of the Companies (Amendment) Act No. 28 of 2017.

c. An order of Judicial review in the nature of a mandamus to compel the Respondent to maintain the records of the ex-parte Applicant and further unarchive the ex-parte Applicant’s details in the Respondent’s “e-citizen” Business Registration Service portal as per the current CR12 in place.

d. Costs of the application.

2. The facts and grounds giving rise to the present application were stated in a Statutory Statement filed by the ex-parte Applicant’s Advocates dated 18th July 2022, and a Supporting Affidavit sworn on the same date by Trishul Vijay Chohan, the ex-parte Applicant’s Director. In summary, these are that the ex-parte Applicant Company was duly registered on 10th January 2013, under the Business Names Act (499) Laws of Kenya by its proprietor and subsequently following an application by the ex-parte Applicant’s proprietor, the Respondent upgraded the ex-parte Applicant from a business name to a full-fledged limited liability company under the Companies Act, 2015 on 7th March 2017.

3. That pursuant to successful incorporation, the ex-parte Applicant continued its normal operations and business as a limited liability company wherein it continued opening various bank accounts and entered into numerous contracts with its suppliers and clientele, and taking out business loans in the running of its operations.

4. The ex-parte Applicant averred that on 8th June 2022, the Respondent without notice or warning of any nature pulled down the ex-parte Applicant’s details from its e-citizen portal on an allegation that the ex-parte Applicant shared a similar name with the interested party herein. The efforts by the ex-parte Applicant and the interested party to clear the air with the Respondent that they were separate distinct companies and do not share names and that they had no problem with each operating the way they are were ignored.

5. The ex-parte Applicant averred that the actions of the Respondent is against the rules of natural justice that dictates that no one should be condemned unheard and as per the dints of Section 58 of the Companies Act, the time frame by the Respondent to compel a limited company to change its name is within 12 months from the date of registration, but the Respondent’s request was made 9 years after the ex-parte Applicant was registered as a business name and 4 years after it was incorporated as a limited liability company thus making the Respondent’s actions illegal and ultra vires.

6. On my perusal on the Court record, the ex-parte Applicant’s application was unopposed.

7. Vide orders issued by this Court on 5th July 2023, the ex-parte Application was to be canvassed by way of written submission, and the ex-parte Applicant’s Advocates, Bruce Odeny & Co. Advocates filed submissions dated 12th September 2023. The Respondent did not file any submissions.

8. The ex-parte Applicant reiterated its arguments on never been notified of the Respondent’s intention to remove its details from the e-citizen portal for allegedly bearing a similar name with another company. In these circumstances it was only evident that the ex-parte Applicant was only made aware of the Respondent’s concerns on the material date its company name was pulled down from the e-citizen portal which is contrary to the dints of Article 47 (1) of the Constitution of Kenya, 2010, Section 2 of the Fair Administrative Actions Act, Section 57 (2) of the Companies Act and the holding of the Court in the cases of : Leiyagu vs IEBC & 2 Others, Republic vs National Cohesion and Intergration Commission Chama Cha Mawakili Limited (ex-parte) (Judicial Review Application E057 of 2022 (2022) KEHC 10206 (KLR) (Judicial Review).

9. On whether the ex-parte Applicant is entitled to the reliefs sought, Counsel submitted that it is deserving of the sought reliefs on the basis of the illegality and impropriety of the actions of the Respondent. Counsel relied on the case of Civil Service Unions vs Minister for Civil Service (1985) AC 374 and Pastoli vs Kabale District Local Government Council & Others (2008) 2 EA 3030. Counsel insists that the Respondent’s decision was flawed by procedural impropriety denying the ex-parte Applicant the right to a fair hearing before arriving at its decision and failure to adhere to the dints under the Companies Act 2015.

10. I have considered the pleadings and written submissions made by the ex-parte Applicant which raise two issues, namely, whether the Respondent made an error of law in its decision to register the Interested Party, and whether this Court can issue the orders sought by the ex-parte Applicant.

11. I am guided by the broad grounds for the exercise of judicial review jurisdiction as were stated in the case of Pastoli vs Kabale District Local Government Council & Others [2008] 2 EA 300 at pages 303 to 304 as follows:

“In order to succeed in an application for Judicial Review, the applicant has to show that the decision or act complained of is tainted with illegality, irrationality and procedural impropriety: See Council of Civil Service Union v Minister for the Civil Service [1985] AC 2; and also Francis Bahikirwe Muntu and others v Kyambogo University, High Court, Kampala, miscellaneous application number 643 of 2005 (UR).

Illegality is when the decision making authority commits an error of law in the process of taking the decision or making the act, the subject of the complaint. Acting without Jurisdiction or ultra vires, or contrary to the provisions of a law or its principles are instances of illegality…..

Irrationality is when there is such gross unreasonableness in the decision taken or act done, that no reasonable authority, addressing itself to the facts and the law before it, would have made such a decision. Such a decision is usually in defiance of logic and acceptable moral standards: Re An Application by Bukoba Gymkhana Club [1963] EA 478 at page 479 paragraph “E”.

Procedural impropriety is when there is failure to act fairly on the part of the decision making authority in the process of taking a decision. The unfairness may be in non-observance of the Rules of Natural Justice or to act with procedural fairness towards one to be affected by the decision. It may also involve failure to adhere and observe procedural rules expressly laid down in a statute or legislative Instrument by which such authority exercises jurisdiction to make a decision. (Al-Mehdawi v Secretary of State for the Home Department [1990] AC 876).”

12. In addition, the parameters of judicial review were addressed by the Court of Appeal in the case of Municipal Council of Mombasa vs Republic & Umoja Consultants Limited, Nairobi Civil Appeal No. 185 of 2001, [2002] eKLR as follows:

“The court would only be concerned with the process leading to the making of the decision. How was the decision arrived at? Did those who made the decision have the power, i.e. the jurisdiction to make it? Were the persons affected by the decision heard before it was made? In making the decision, did the decision - maker take into account relevant matters or did he take into account irrelevant matters? These are the kind of questions a court hearing a matter by way of judicial review is concerned with, and such court is not entitled to act as a court of appeal over the decider; acting as an appeal court over the decider would involve going into the merits of the decision itself-such as whether there was or there was not sufficient evidence to support the decision – and that, as we have said, is not the province of judicial review.”

13. It was also emphasized by the Court of Appeal in Suchan Investment Limited vs. Ministry of National Heritage & Culture & 3 others, (2016) KLR that while Article 47 of the Constitution as read with the grounds for review provided by Section 7 of the Fair Administrative Action Act reveals an implicit shift of judicial review to include aspects of merit review of administrative action, reviewing Court has no mandate to substitute its own decision for that of the administrator. The Court can only remit the matter to the administrator and or make orders stipulated in Section 11 of the Act.

14. In the present application, the arguments raised are that the Respondent acted illegally, and regard is made to the description of illegality by Lord Diplock in Council of Civil Service Union v Minister for the Civil Service [1985] AC 374 at 410 as a failure by a public body to understand correctly the law that regulates its decision making power, or a failure to give effect to that law.

15. This Court is also guided by the expose on when errors of law will arise in decisions made by a public body, as expounded in Halsbury’s Laws of England, 4th Edition at paragraph 77 as follows:

“There is a general presumption that a public decision making body has no jurisdiction or power to commit an error of law; thus where a body errs in law in reaching a decision or making an order, the court may quash that decision or order. The error of law must be relevant, that is to say it must be an error in the actual making of the decision which affects the decision itself. Even if the error of law is relevant, the court may exercise its discretion not to quash where the decision would have been no different had the error not been committed. Where a notice, order or other instrument made by a public body is unlawful only in part, the whole instrument will be invalid unless the unlawful part can be severed. In certain exceptional cases, the presumption that there is no power or jurisdiction to commit an error of law may be rebutted, in which case the court will not quash for an error of law made within jurisdiction in the narrow sense. The previous law which drew a distinction between errors of law on the face of the record and other errors of law is now obsolete. A public body will err in law if it acts in breach of fundamental human rights; misinterprets a statute, or any other legal document, or a rule of common law, takes a decision on the basis of secondary legislation, or any other act or order, which is itself ultra vires; takes legally irrelevant consideration into account, or fails to take relevant considerations into account, admits inadmissible evidence, rejects admissible and relevant evidence, or takes a decision on no evidence, misdirects itself as to the burden of proof, fails to follow the proper procedure required by law; fails to fulfil an express or implied duty to give reasons or otherwise abuses its power.”

16. It is therefore necessary when deciding whether a law has been correctly interpreted and applied, to identify and construe the scope of the applicable statutory provisions. In the present application, the applicable law is Sections 57 and 58 of the Companies Act. Section 57 provide as follows as regards registration of companies with similar names:

“(1) The Registrar shall not register a company under this Act by a name that is the same as another name appearing in the index of company names.

(2) The regulations may provide—

(a) The regulations may provide—

(i) in specified circumstances; or

(ii) with a specified consent; and

(b) that, if those circumstances are existing or that consent is given at the at the time a company is registered by a name, a subsequent change of circumstances or withdrawal of consent, does not affect the registration.”

17. Section 58 provides the Respondent with the power to direct change of a company’s name in case of similarity to an existing name as follows:

“(1) The Registrar may direct a company to change its name if it has been registered by a name that is the same as or, in the opinion of the Registrar, too similar to—

(a) a name appearing at the time of the registration in the Registrar's index of company names; or

(b) a name that should have appeared in that index at that time.

(2) A direction under subsection (1) may be given only within twelve months after the date on which the company concerned was registered or within such extended period as the Registrar may specify in writing in a particular case.

(3) In giving a direction under subsection (1), the Registrar shall specify the period within which the company is required to comply with the direction.

(4) The regulations may further provide—

(a) that no direction is to be given under this section in respect of a name—

(i) in specified circumstances; or

(ii) if specified consent is given; and

(b) that a subsequent change of circumstances or withdrawal of consent does not give rise to grounds for a direction under this section.

(5) If the company does not comply with the direction issued under subsection

(1) within fourteen days, the Registrar shall publish a notice in the Gazette to strike the name of the company off the Register.

(6) As soon as practicable after striking the name of the company off the Register, the Registrar shall publish in the Gazette a notice indicating that the name of the company has been struck off the register.

(7) Upon publication of the notice under subsection (6), the company shall be deemed to have been dissolved.”

18. The Respondent vide a letter dated 8th June 2022, acknowledged the issuance of a directive to the ex-parte Applicant herein on 5th March 2020, notifying the director of allocation of the name Auto Extreme Limited to his company as inadvertent due to the case of double registration and therefore no longer tenable. In this regard, the Respondent conceded that its action to register the ex-parte Applicant was illegal, and expressed its willingness to remedy the situation. It is notable that there is a procedure required by law to be followed by the Respondent in remedying the situation including giving notice to the ex-parte Applicant and culminating in the publication in the Gazette of a notice striking off the name of the ex-parte Applicant.

19. Coming to the second issue as regards whether the relief sought by the ex-parte Applicant can issue, the Court of Appeal in Kenya National Examinations Council vs. Republic Ex parte Geoffrey Gathenji Njoroge Civil Appeal No. 266 of 1996 rendered itself as regards the nature of the judicial review orders of certiorari and mandamus as follows:

“…The order of mandamus is of a most extensive remedial nature, and is, in form, a command issuing from the High Court of Justice, directed to any person, corporation or inferior tribunal, requiring him or them to do some particular thing therein specified which appertains to his or their office and is in the nature of a public duty. Its purpose is to remedy the defects of justice and accordingly it will issue, to the end that justice may be done, in all cases where there is a specific legal right or no specific legal remedy for enforcing that right; and it may issue in cases where, although there is an alternative legal remedy, yet that mode of redress is less convenient, beneficial and effectual. The order must command no more than the party against whom the application is legally bound to perform. Where a general duty is imposed, a mandamus cannot require it to be done at once. Where a statute, which imposes a duty, leaves discretion as to the mode of performing the duty in the hands of the party on whom the obligation is laid, a mandamus cannot command the duty in question to be carried out in a specific way… These principles mean that an order of mandamus compel the performance of a public duty which is imposed on a person or body of persons by a statute and where that person or body of persons has failed to perform the duty to the detriment of a party who has a legal right to expect the duty to be performed. An order of mandamus compels the performance of a duty imposed by statute where the person or body on whom the duty is imposed fails or refuses to perform the same but if the complaint is that the duty has been wrongfully performed i.e. that the duty has not been performed according to the law, then mandamus is wrong remedy to apply for because, like an order of prohibition, an order of mandamus cannot quash what has already been done…Only an order of certiorari can quash a decision already made and an order of certiorari will issue if the decision is without jurisdiction or in excess of jurisdiction, or where the rules of natural justice are not complied with or for such like reasons. In the present appeal the respondents did not apply for an order of certiorari and that is all the court wants to say on that aspect of the matter.”

20. It is not contested that the Respondent’s decision was made in error of law. However, certiorari is not the appropriate remedy in the circumstances of this application in light of the procedure that is first required to be followed by the Respondent in Section 58 of the Companies Act. In addition, this Court cannot grant the order of mandamus on the terms sought by the ex-parte Applicant, as it cannot direct the Respondent to undertake its duties in a particular manner. However, Section 11 (1) (e) and (h) of the Fair Administrative Action Act permits this Court to remit a matter back to the decision maker for reconsideration, and the Respondent can therefore be compelled to act according to the applicable law.

21. In the premises, this Court finds that ex-parte Applicant’s Notice of Motion dated 18th July 2022 is merited to the extent of the following orders:

i. An order of Mandamus do issue compelling the Registrar of Companies to follow the procedure set out in Section 58 of the Companies Act in relation to change of the name of the ex-parte Applicant herein, within thirty (30) days from the date of this order, failure to which the name of the said Ex-parte Applicant shall be struck out forthwith from the Register of Companies.

ii. That the Respondent shall meet the costs of the ex-parte Applicant’s Notice of Motion dated 18th July 2022.

22. Orders accordingly.
Delivered, Signed and Dated at Kisumu this 21st day of September 2026.

M. S. Shariff
Judge

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