SAFARICOM PLC VS Simon Wallington Horner AND Michael John Mwaura AND 2 Others

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

COMMERCIAL & TAX DIVISION

HCCOMM NO. E 564 OF 2023

IN THE MATTER OF:  SECTION 58 OF THE CIVIL PROCEDURE ACT,

CAP 21 LAWS OF KENYA

IN THE MATTER OF:  INTERPLEADER FOR A DECISION ON WHO IS

ENTITLED TO THE SUBJECT AMOUNT AND HOW

MUCH IF AT ALL

-BETWEEN-

SAFARICOM LIMITED……………………...….APPLICANT/INTERPLEADER

-VERSUS-

SIMON WALINGTON HORNER.……………………………1^ST RESPONDENT

MICHAEL JOHN MWAURA………………………………...2^ND RESPONDENT

RADIO FREQUENCY SYSTEMS (E.A.) LIMITED…………3^RD RESPONDENT

THE REGISTRAR OF COMPANIES……………………...….4^TH RESPONDENT

RULING

1. The matter before me is an interpleader commenced by way of Originating Summons dated 16^th November, 2023 pursuant to the provisions of Section 58 of the Civil Procedure Act, Cap 21 Laws of Kenya and Order 34 Rule 1 of the Civil Procedure Rules, 2010. The interpleader/applicant is seeking the following orders: -
2. Spent;
3. Spent;
4. The Honourable Court be pleased to declare the rightful beneficiaries of the sum of Kenya Shillings Forty-Four Million, Seventy-Four Thousand, Three Hundred and Fifty-Six and Fifty-Six Cents (Kshs. 44,074,356.56);
5. The interpleader consequently be hereby indemnified against any claim by parties herein in relation to subject contract subsequent to the disposal of the subject matter into Court as hereinabove; and
6. Cost of this Application be provided for.
7. The application is brought on the grounds on the face of the Summons and is supported by an affidavit sworn on the same day by Daniel Ndaba, learned Counsel for the interpleader. In response thereto, the 1^st and 3^rd respondents filed a replying affidavit sworn on 30^th November, 2023 by Simon Wallington Horner, the 1^st respondent herein and the majority Shareholder/Director and Chief Executive Officer of the 3^rd respondent company. The 2nd respondent filed a replying affidavit sworn by John Kamau Mwaura, the 2^nd respondent herein on 29^th January, 2024, and the 4^th defendant filed a replying affidavit sworn on 18^th December, 2023 by Zacharia Mwangi, an Assistant Registrar of Companies.
8. The application was canvassed by way of written submissions. The 1^st and 3^rd respondents’ submissions were filed on 15^th December, 2023 by the law firm of Midenga & Company Advocates, whereas the 2^nd respondent’s submissions were filed by the law firm of Wambugu & Muriuki Advocates on 12^th February, 2024. The applicant and the 4^th respondent did not file any written submissions and/or make any oral submissions.
9. Mr. Midenga, learned Counsel for the 1^st & 3^rd respondents relied on the case of Paramount Universal Bank v Ali Ahmed Abound Maalim & 3 others [2010] eKLR and submitted that the interpleader in this case has acted in a manner likely to suggest that it colluded with the 2^nd respondent to frustrate the 3^rd respondent Company. This is because the interpleader did not write to the 3^rd respondent seeking clarification of the contents of the 2^nd respondent’s letter dated 17^th October, 2023 once it received it. Nevertheless, once the 3^rd respondent came to learn of the existence of the said letter, through a letter dated 26^th October, 2023, it forwarded to the interpleader a Deed of Indemnity duly executed by the 3^rd respondent Company and a recent CR-12 of the Company indicating that the 2^nd respondent is no longer a director of the 3^rd respondent Company so as to enable it settle the 3^rd respondent Company’s claims. The said letter was however not responded to by the interpleader.
10. Counsel referred to the case of China Young Engineering Company v L. Mwacharo T/A Mwacharo Associates & another [2015] eKLR and submitted that the interpleader did not carry out due diligence by engaging the 4^th respondent on the status of the directorship of the 3^rd respondent company before filing the instant application. Mr. Midenga contended that the 3^rd respondent having furnished to the interpleader a valid Board Resolution and Deed of Indemnity, there was no basis for it declining to release the funds to the 3^rd respondent.  He relied on the case of Foss vs. Harbottle [1843] 2 Hare 261 cited by the Court in Seruji Limited vs. Savannah Cement Limited & Another [2021] KEHC 26 [KLR] and asserted that it is an elementary principle that a Court does not interfere with the internal management of companies acting within their powers. Counsel asserted that since the interpleader admits that it owes the 3^rd respondent, the Court should direct that the Kshs.44,074,356.56 deposited in Court to be released to the 3^rd respondent.
11. Mr. Kiprotich, learned Counsel for the 2^nd respondent cited the provisions of Order 34 Rule 2 of the Civil Procedure Rules 2010 and submitted that it is clear from the pleadings filed and by virtue of the interpleader depositing the amounts in dispute in Court, that that the interpleader has no claim or interest other than for charges and costs in the subject matter in dispute. He relied on the case of Kuria Kiarie & 2 others v Sammy Magera [2018] eKLR, where the Court quoted the decision in Vijay Morjaria v Nansingh Madhusingh Darbar & another [2000] eKLR.  He submitted that despite the fact that the 1^st & 3^rd respondents alluded to the existence of collusion between the interpleader and the 2^nd respondent, no evidence was adduced to that effect.
12. Counsel relied on the case of Edwards v Halliwell [1950] All ER 1064 which is regarded as the locus classicus that laid out the exceptions in the Foss v Harbottle case (supra), relied on by the 1^st & 3^rd respondents. He asserted that the 2^nd respondent has demonstrated that he played a pivotal role in fulfillment of the obligations contained in the agreement dated 1^st May, 2017 thus his efforts and sacrifice should not go unrewarded.

ANALYSIS AND DETERMINATION.

1. From the outset, it is important to point out that as at the time of writing this ruling, the interpleader had not deposited the amount in issue in Court.
2. I have considered the application herein, the grounds on the face of the Summons and the affidavit filed in support thereof. I have also considered the replying affidavit filed by the respondents together with the written submissions by Counsel for the 1^st, 2^nd & 3^rd respondents. The issues that arise for determination are –
3. Whether the interpleader has satisfied the requirements of an interpleader under Order 34 rule 2 of the Civil Procedure Rules, 2010; and
4. Who is the rightful beneficiary of the sum of Kenya Shillings Forty-Four Million, Seventy-Four Thousand, Three Hundred and Fifty-Six and Fifty-Six Cents (Kshs. 44,074,356.56) being held by the interpleader?
5. In the affidavit filed by the interpleader in support of the application herein, Mr. Ndaba deposed that on 1^st May, 2017, the interpleader entered into an agreement with the 3^rd respondent company for the provision of design and construction services for the interpleader’s base transceiver stations on a Turnkey basis and network capacity upgrade services.  He   further   deposed   that   for   the   said   reason, the interpleader is under an obligation to pay the contractual amount, which obligation has fallen due and the 3^rd respondent has sent invoices totaling to Kshs.44,074,356.56 to the interpleader.
6.   It was stated by Mr. Ndaba that a dispute has arisen between the 1^st and 2^nd respondents who are both directors and shareholders of the 3^rd respondent company as to the bank account into which the aforesaid sum is to be paid, thus rendering it incapable for the interpleader to pay the contractual sum, as can be seen from the letters dated 17^th October, 2023 and 26^th October, 2023.
7. The 2^nd respondent in his letter dated 17^th October, 2023 stated that the 1^st respondent together with other directors forged his signature to gain access to the company’s accounts and purposed to remove him as a Director of the 3^rd respondent. Consequently, he reported the said actions to the relevant bank who froze the said accounts and thereafter he lodged a complaint with the DCI, and several individuals were arrested over the alleged acts of fraud.
8. The 2^nd respondent requested the interpleader to withhold any further payment to the 3^rd respondent until the dispute is resolved. Attached to the said letter was interalia a copy of the 3^rd respondent’s certificate of incorporation, its CR-12 listing the 2^nd respondent as a shareholder/director holding 30 ordinary shares.
9. The 1^st & 3^rd respondent’s letter on the other hand was drawn on the 3^rd respondent’s letter head and it stated that the 2^nd respondent had been removed as a director of the 3^rd respondent vide a Board Resolution dated 30^th July, 2021. It further stated that the interpleader will be indemnified and proceeded to attach a deed of indemnity for execution by the interpleader, indemnifying it in the event of it being sued on account of the subject payments  being made. Annexed to the 1^st & 3^rd respondents’ letter was a copy of the 3^rd respondent’s CR-12 which did not list the 2^nd respondent as a director.
10. It was stated by the interpleader that the contents of the letters dated 17^th October, 2023 and 26^th October, 2023 are in full contradiction of each other thus making the application herein necessary. Mr. Ndaba further stated that the interpleader has no interest in the subject contractual amount payable, other than for charges and costs. In addition, it has not colluded with any of the parties herein to file the instant application.
11. The 1^st & 3^rd respondents in their replying affidavit sworn by Mr. Horner   deposed that indeed the interpleader owes the 3^rd respondent Kshs. 44,074,356.56 as a result of various services rendered by the 3^rd respondent company to the interpleader. He averred that the 2^nd respondent is not a director of the 3^rd respondent as can be seen from the 3^rd respondent’s most recent CR-12 dated 4^th October, 2019.
12. It was stated by Mr. Horner that the 2^nd respondent’s letter dated 17^th October, 2023 is full of lies geared towards misleading the interpleader. For instance, the 2^nd respondent claims that his signature was forged by the 1^st respondent and used to gain access to the 3^rd respondent’s bank account, whereas the 2^nd respondent has never been a signatory to the 3^rd respondent company’s bank account since incorporation of the company to date.
13.   Mr. Horner contended that the 2^nd respondent’s letter dated 14^th August, 2022 addressed to the Regional Criminal investigations Officer, DCI,  was in respect to the 2^nd respondent’s complaint in Milimani Criminal Case No. E504 of 2022: Republic v Peter Maina Ngare where the 2^nd respondent lodged a criminal complaint on 29^th January, 2019 against the said Peter Maina Ngare, a former employee of the 3^rd respondent, alleging that the said employee forged his signature and opened the 3^rd respondent company’s bank account No. 0170296936184 at Equity Bank sometime in the year 2011. He stated that no several people were arrested or charged as claimed by the 2^nd respondent and that Peter Maina Ngare was acquitted on no case to answer on 2^nd August, 2023.
14. The 1^st respondent stated that the original shareholding of the 3^rd respondent was a nominal share capital of Ksh.100,000/- divided into 100 ordinary shares of Kshs.1,000/- each; Simon Horner - 40 ordinary shares; Michael Mwaura - 30 ordinary shares; and the Estate of Samson Mburu - 30 ordinary shares lawfully inherited by Harun Mburu Muiruri. He further stated that in May 2017 he learnt that there were forged documents relating to the 3^rd respondent company’s shareholding.
15. This prompted him to conduct an official search which revealed that there were discrepancies in the share capital and in the shareholding of the company. That   as at 25^th May, 2017, the 3^rd respondent’s nominal share capital was Kshs.5 Million, with Simon Horner holding 2,485 ordinary shares; the Estate of Samson Mburu with 30 ordinary shares; Kathleen Wanjiku Kihanya holding 2,000 ordinary shares; and Michael John Mwaura with 2,485 ordinary shares. That these discrepancies are reflected in the 3^rd respondent’s CR-12 dated 20^th September, 2019, which the 2^nd respondent is using to purport that he is still a director.
16. Mr. Horner asserted that the 2^nd respondent used a forged Board Resolution and CR-12 dated 20^th September, 2019 to illegally and fraudulently open bank account No. 0100005034048 at Stanbic Bank in the name of the 3^rd respondent. That thereafter, Mr. Horner sued the 2^nd respondent and his accomplices in Nairobi High Court Misc. Civil Appl. No. 393 of 2017.
17. He deposed that the Court vide a judgment dated 20^th September, 2018 reverted the situation and shareholding of the 3^rd respondent company into its original shareholding of a nominal share capital of Ksh.100,000/- divided into 100 ordinary shares of Kshs.1,000/- each; with Simon Horner holding 40 ordinary shares; Michael Mwaura holding 30 ordinary shares; and the Estate of Samson Mburu with 30 ordinary shares. He also deposed that the judgment has not been the subject of any appeal.
18. Mr. Horner stated that the 2^nd respondent’s suit in Nairobi High Court Misc. 682 of 2020 which was seeking interalia, for the Honourable Court to appoint one Jackson Mutiso Mwalali as an additional director of the 3^rd respondent company was dismissed on 2^nd November, 2020.
19. Mr. Horner averred that in view of the foregoing, the directors of the 3^rd respondent convened a Special General Meeting held virtually on 30^th July, 2021 whereupon the 2^nd respondent was legally removed from office as a director of the 3^rd respondent company. He averred that removal of the 2^nd respondent as a director of the 3^rd respondent company was done in strict compliance with the provisions of the Companies Act, No.17 of 2015. That the 2^nd respondent was duly furnished with the allegations levelled against him and the notice of the Special Meeting which he personally attended. Mr. Horner contended that the decision to remove the 2^nd respondent as a director of the 3^rd respondent has never been challenged by the 2^nd respondent in Court to date.
20. Mr. Horner contended that the 2^nd respondent’s selfish and extraneous interests cannot override the 3^rd respondent’s valid Board Resolution. He urged this Court to order the interpleader to pay the 3^rd respondent company the subject funds into its company’s Credit Bank account No. 0191006000122 and condemn the interpleader and the 2^nd respondent to pay costs of this suit.
21. The 2^nd respondent, Mr. John Michael Mwaura in his replying affidavit deposed that he was a director of the 3^rd respondent up until sometime in the year 2021 when the 1^st respondent and other shareholders connived to remove him as a director to defeat his interests in the 3^rd respondent company. He averred that the 1^st respondent made himself the sole signatory of the 3rd respondent’s bank accounts then domiciled at Equity bank where he proceeded to use the company’s funds therein for his pleasure to the extreme prejudice of the company and its shareholders.
22. The 2^nd respondent stated that sometime in the year 2017 in his capacity as the 3^rd respondent’s Executive Director, procured on behalf of the 3^rd respondent a contract with the interpleader for the provision of certain services. He further stated that the 1^st respondent’s work permit was cancelled on 14^th June, 2017 thus as at that date he could not work or lawfully carry out any activities for gain in Kenya. Mr. explained that to mean that he personally carried out the obligations under the contract with the interpleader on behalf of the 3^rd respondent which crystallized with the sum owed by the interpleader.
23. He contended that it is through his auxiliary industry that he managed to procure and execute an extension of the initial contract with the interpleader all the while knowing that once the project was complete, the 3^rd respondent would be fairly remunerated from which as a shareholder he would benefit from the profits. The 2^nd respondent asserted that one of the avenues he pursued in execution of the contract with the interpleader was guaranteeing credit financing from third parties to the 3^rd respondent from which he is now personally bound and liable as can be seen from the decrees issued against him in his individual capacity as a guarantor.
24. Mr. Mwaura averred that part of the funds held by the interpleader were intended at settling the aforesaid decretal sum in the matter that is actually coming up for a Notice to Show Cause why he should not be committed to civil jail on account of the debts accrued by the 3^rd respondent in performance of the contract. He further averred that in as much as the sum in dispute belongs to the 3^rd respondent, the 1^st respondent has always treated the 3^rd respondent’s funds as his own personal property.
25. He asserted that if the Court were to order for the said funds to be paid into the bank account proposed by the 1^st respondent, it would amount to payment of the said sums to the 1^st respondent who is in control of the 3^rd respondent to the exclusion of other shareholders once more. The 2^nd respondent stated that if the Court is inclined to order that the funds in dispute be deposited in the account proposed by the 1^st respondent, then it should direct that the said funds be maintained until such a time when HCCOMM No. E011 of 2024 will be heard and determined.
26. Mr. Mwaura urged this Court to order that all the debts accrued by himself on behalf of 3^rd respondent in performance of its obligations with the interpleader be paid forthwith, and the balance to be remitted to him for apportionment as per the shareholding or be preserved.
27. The 4^th respondent in its replying affidavit sworn by Mr. Mwangi deposed that according to records held by the Registrar of Companies, a letter dated 9^th July, 2021 was addressed to Mr. Michael Mwaura by Simon Horner informing him that there was a plan in the pipeline to remove him as a director of Radio Frequency in an upcoming Special General Meeting which was slated for 30^th July, 2021.
28. Mr. Mwangi averred that there is on record minutes of a special/ordinary meeting of directors/shareholders held on 30^th July, 2021 approving the removal of John Michael Mwaura as a director which was signed by Simon Horner and Harun Mburu on 4^th August, 2021. Subsequently, on the said date, the 4^th respondent received notification of the removal of John Kamau Mwaura alias John Michael Mwaura as a director of Radio Frequency Systems (E.A.), which was signed by Simon Horner.
29. Mr. Mwangi stated that on 4^th August, 2021, the Registrar received a CR-19 being a notice of special/ordinary resolution by the company removing John Michael Mwaura as a director of the company and as the signatory to the company account which was lodged by Mr. Harun Mburu Muiruri. Thereafter, on 4^th September, 2021, a CR-9 being a notice of cessation of office of directors being cessation of John Michael Mwaura was lodged by Mr. Harun Mburu.
30. Mr. Mwangi asserted that all the legal and procedural aspects were followed in removing Michael John Mwaura as a director of Radio Frequency Systems (E.A) Limited. 

         Whether the interpleader has satisfied the requirements of an interpleader under Order 34 Rule 2 of the Civil Procedure Rules, 2010.

1. As stated at the beginning of this ruling, this suit has been brought by way of an interpleader. Therefore, the applicant/interpleader must satisfy the conditions set out under Order 34 Rule 2 of the Civil Procedure Rules, 2010 for it to qualify as such. Order 34 Rule 2 of the Civil Procedure Rules, 2010 states that:

“In every suit of or application by way of interpleader the applicant shall satisfy the court by way of affidavit or otherwise—

1. that the applicant claims no interest in the subject-matter in dispute other than for charges or costs;
2. that there is no collusion between the applicant and any of the claimants;
3. that the applicant is willing to pay or transfer the subject-matter into court or to dispose of it as the court may direct”
4. In addition, Section 58 of the Civil Procedure Act provides that: -

“ Where two or more persons claim adversely to one another the same debt, sum of money or other property, movable or immovable, from another person, who claims no interest therein other than for charges or costs and who is ready to pay or deliver it to the rightful claimant, such other person may institute a suit of interpleader against all the claimants, or where a suit dealing with the same subject-matter is pending may intervene by motion on notice in such suit, for the purpose of obtaining a decision as to the person to whom the payment or delivery shall be made, and of obtaining indemnity for himself:

Provided that where any suit is pending in which the rights of all parties can be properly decided no such suit of interpleader shall be instituted”.

1. The Court in the case of Safina Properties Limited & another v Barclays Bank of Kenya Limited & another [2015] eKLR defined an interpleader as hereunder: -

“Interpleader is, therefore, a person who holds a debt, sum of money or other property, movable or immovable, to which two or more persons lay claims adverse to one another, but does not himself claim any interest therein except for charges or costs appurtenant to the property so held. The Interpleader should also be ready and willing to pay or deliver the property so held.”

1. It is not disputed that the interpleader entered into a contract with the 3^rd respondent for the provision of design and construction services for the interpleader’s base transceiver stations on a Turnkey basis and network capacity upgrade services. It was agreed by the parties that upon completion of the aforesaid works, the interpleader would pay the 3^rd respondent Kshs.44,074,356.56 being the contract sum. However, before the said monies could be paid, a dispute arose between the 1^st & 2^nd respondents both claiming to be directors and shareholders of the 3^rd respondent company and as to which account the said monies should be paid.
2. From the record, it is evident that vide a letter dated 17^th October, 2023 the 2^nd respondent informed the interpleader that the 1^st respondent had forged his signature to gain access to the company’s accounts and purposed to remove him as a director of the 3^rd respondent company. He therefore requested the interpleader to withhold payment of the amount in issue to the 3^rd respondent until the dispute was resolved. In support of the allegation that he was a shareholder of the 3^rd respondent company, the 2^nd respondent provided the interpleader with a copy of the 3^rd respondent’s certificate of incorporation and its CR-12 listing him as a shareholder/director holding 30 ordinary shares.
3. I am of the considered view that the interpleader had no reason to doubt that the 2^nd respondent was indeed one of the directors/shareholders of the 3^rd respondent company since it had been dealing with him on behalf of the 3^rd respondent in his capacity as an Executive Director of the said company. In addition, the 2^nd respondent is the one who executed the contract between the interpleader and the 3^rd respondent on behalf of the latter.
4. Through a letter dated 26^th October, 2023 written by the 1^st respondent on behalf of the 3^rd respondent, the interpleader was requested to pay the disputed amount into the 3^rd respondent’s bank account and execute a deed of indemnity indemnifying it in the event of it being sued on account of the subject payment being made. The said letter further stated that the 2^nd respondent had been removed as a director of the 3^rd respondent vide a Board Resolution dated 30^th July, 2021. Attached to the said letter was the 3^rd respondent’s CR-12 which did not list the 2^nd respondent as one of its directors. It was stated by the interpleader that the letter by the 1^st respondent was on the 3^rd respondent’s letter head.
5. In view of the foregoing contradictory positions as to the status of the 3^rd respondent’s directorship, and to which bank account the disputed amount should be paid by the interpleader, I agree with the interpleader that the prudent thing to do was to file the instant application for the Court to determine who the rightful beneficiary of the amount in issue is. Further, if the interpleader would continue holding the said monies, it would be exposing itself to interests accruing for late payment of the disputed amount and/or litigation on account of being sued by the 3^rd respondent for breach of contract.
6. In light of the foregoing, this Court finds that indeed the interpleader herein has no interest in the disputed amount. The 1^st & 3^rd respondents contended that failure to ask for clarification on the contents of the letter dated 17^th October, 2023 from the 3^rd respondent and failure to carry out a search at the 4^th respondent to ascertain the true position of the directorship of the 3^rd respondent before filing the instant application is evidence of collusion between the interpleader and the 2^nd respondent. It is however this Court’s finding that the said allegation on its own cannot be evidence of collusion. It is noteworthy that in as much as the 1^st & 3^rd respondents averred that there is collusion between the interpleader and the 2^nd respondent, no strong and cogent evidence has been tendered before this Court in support of that allegation. It is trite that he who alleges must prove, this maxim is founded on the provisions of Sections 107, 108 & 109 of the Evidence Act, Cap 80 of the Laws of Kenya. Accordingly, this Court finds that the 1^st & 3^rd respondents have failed to discharge their burden of proof in so far as the allegations of collusion are concerned.
7. It is evident from the forgoing that there are two competing claims to the disputed funds, it has not been proved that the interpleader has any interest in the said funds, and there is also no evidence of collusion between the interpleader and the 2^nd respondent. As a result, I am satisfied that the instant application meets the threshold of an interpleader.

Who is the rightful beneficiary of the sum of Kenya Shillings Forty-Four Million, Seventy-Four Thousand, Three Hundred and Fifty-Six and Fifty-Six Cents (Kshs. 44,074,356.56) held by the interpleader?

1. The 2^nd respondent in his relying affidavit in opposition to the instant application averred that he was a director of the 3^rd respondent company until sometime in the year 2021 when the 1^st respondent and other shareholders connived to remove him as a director. The 1^st respondent on the other hand contended that the 2^nd respondent was removed as a director of the 3^rd respondent vide a Board resolution dated 30^th July, 2021, which Resolution has not been varied and/or set aside by any Court of competent jurisdiction. In any event, the 4^th respondent in its replying affidavit asserts that all the legal and procedural aspects were followed in removing Michael John Mwaura as a director of Radio Frequency Systems (E.A) Limited. 
2. In as much as there several allegations of fraud being thrown around by the 1^st respondent against the 2^nd respondent and vice versa, both parties agreed that they did not enter into a contract with the interpleader in their own individual capacities, as the 3^rd respondent is the one which entered into the contract that gave rise to the payment of the amount in issue. On perusal of the contract between the interpleader and the 3^rd respondent it is evident that the same was executed by the 2^nd respondent, in his capacity as the then Executive Director of the 3^rd respondent thus any works, acts and/or obligations he participated in was for the benefit of the company at large and not for his own personal interest or gain.
3. The 2^nd respondent on one hand averred that the 1^st respondent intends to apply the disputed amount which belongs to the 3^rd respondent to his personal use, and on the other hand he states that part of the disputed amount was to be used to settle the decretal sum in a matter that is coming up for Notice to Show Cause as to why he should not be committed to civil jail on account of debts accrued by the 3^rd respondent. I have perused the pleadings annexed to the 2^nd respondent’s replying affidavit and it is clear that in CMCC No. E5607 OF 2020 the suit in which the 2^nd respondent is expected to Show Cause, He was sued in his own capacity together with the 3^rd respondent, and the Court therein entered judgment against both the defendants. This means that the 2^nd respondent intends to use part of the disputed amount belonging to the 3^rd respondent for his own personal use.
4. It is rather unfortunate that the 2^nd respondent believes that he is entitled to the disputed amount since he is the one who executed the contract between the interpleader and the 3^rd respondent, and carried out the 3^rd respondent’s obligations thereunder. However, as explained hereinabove, any works, acts and/or obligations carried out by the 2^nd respondent or any other party was for the benefit of the company at large and not for his own personal interest or gain. If he has any claim to make against the 3^rd respondent for work done in regard to the amount in issue, he is at liberty to pursue the same.
5. Although I agree with Counsel for the 2^nd respondent that indeed there are exceptions to the rule in Foss vs. Harbottle (supra), this application is however not a derivative claim, and the 2^nd respondent cannot benefit from the exceptions laid down by the Court in the case of Edwards v Halliwell (supra), in an application of this nature.
6. Having said that, this Court finds that the rightful beneficiary of the funds in dispute is the 3^rd respondent, therefore its lawful directors/shareholders are at liberty to decide which of the accounts the said funds should be deposited into.
7. Accordingly, this Court finds that the application herein is merited. As a result, I make the following orders -
8. That the 3^rd respondent is hereby declared the rightful owner of Kshs. 44,074,356.56 being held by the interpleader;
9. That the said amount of Kshs. 44,074,356.56 shall be released into the 3^rd respondent’s Credit Bank account No.  0191006000122 within seven (7) days from today.
10. That the interpleader is hereby indemnified against any claim by the respondents herein in relation to the subject contract and the contractual sum of Kshs. 44,074,356.56 upon payment of the said amount; and
11. Each party shall bear its own costs.

It is so ordered.

DATED, SIGNED and DELIVERED at NAIROBI on this 23^rd day of February, 2024. Ruling delivered through Microsoft Teams Online Platform.

NJOKI MWANGI

JUDGE

      In   the presence of:

Mr. Ali Ahmed holding brief for Mr. Nura for the interpleader/applicant

Mr. Midenga for the 1^st & 3^rd respondents

Ms Akoth h/b for Mr. Odhiambo for the 4^th respondent

Ms Aradi holding for Mr. Kiprotich for the 2^nd respondent

Ms B. Wokabi - Court Assistant.