THE REPUBLIC OF UGANDA
IN THE HIGH COURT OF UGANDA AT KAMPALA
MISC. APPLICATION NO. 505 OF 2004
(Arising from HCCS No. 539 of 2001)
MASAKA TEA ESTATES LTD::::::::::::::::::::::::::::::::::::: APPLICANT/OBJECTOR
1. SAMALIA (KIGANJA) TEA ESTATE LTD]
2. SHASHIKANT AMRATLAL KARIA] :::::::::::::::::::::::::::::::::::: RESPONDENTS
BEFORE: THE HON. LADY JUSTICE M.S. ARACH — AMOKO
This is an application under sections 34 and 98 CPA, Order 19 rr 55,56,57 and Order 48 rr 1 & 3 CPR for orders that the Applicant/Objector’s property attached by the Respondents on 23nd July 2004 be released from attachment and possession granted back to the Objector/Applicant.
The application is supported by the affidavit of Amir Chandrakat dated 28/7/2004 filed with the Notice of Motion and a rejoinder dated 4th August 2004.
Shakikant Amratlal Karia filed a reply on 29/7/2004 Mr. Edward Bamwite represented the Respondents while Mr. Kaggwa Brian argued the application on behalf of the Applicant/Objector.
The brief facts I have gathered from the affidavits and their annextures are that: Samalia Kiganja Tea Estates Ltd and S.A. Karia, the Respondents in this application, sued Chandrakant C. Patel, Kulsum Patel and Sheila Shashkant Patel (wife to 2nd Respondent) vide HCCS No. 539/01 out of which this application arose, for an order to nullify the sale of their company shares to the Defendants. The shares had been sold by the 3rd Defendant, Sheila Shashkant Patel. The Respondents won the case and Ogoola 3 (as the then was) found inter alia that the:
“purported sale and transfer of the company’s assets and property to the first and second Defendants was null and void, and are hereby set aside.”
He entered Judgment against them jointly and severally. A decree was extracted on the 27/9/2003 in the following terms:
“IT IS HEREBY ORDERED AND DECLARED:
THAT the purported sale and transfer of the company’s shares, assets and property to the first and second Defendants was invalid, null and void and is hereby set aside, and accordingly;
1. Judgment is entered for the Plaint/ifs against the three Defendants jointly and severally.
2. The appointment of the first and second Defendants as Directors of the first Plaintiff Company is hereby nullified.
3. The Defendants counter claim is hereby dismissed.
4. The second Plaintiff is awarded Shs. 15,000,000- (fifteen million shillings only) in general damages.
5. The Plaintiffs are awarded costs of this suit.”
Thereafter efforts were made to stay execution of the Decree by filing a consent. The consent order though signed by the counsel for both parties was never signed by the Registrar.
On 21/7/2004 the Registrar issued a warrant of vacant possession under Order 19 Rule 32 CPR, to the Respondents of Samaliya Kiganja Tea Estates Ltd properties namely, the Tea Estate at Mukungwe, Kiyanja, Masaka, the subject of this application. The Court Bailiff seized the said property on 23/7/2004 and handed it to the Respondents. The Applicant/Objector has brought this application to challenge the seizure on the grounds that:
1. The property seized/attached was not liable to attachment/seizure.
2. There was a consent filed in Court to stay execution of the decree between the suit parties pending the determination of the Appeal.
3. It is in the interest of substantive Justice if this Court releases the said property from seizure/attachment as the Objector/Applicant was not a party to the main suit.
Before dealing with the substance of the application, I think it is pertinent to deal with two points of objection raised by Mr. Bamwite to the application.
The first objection is that the application is incompetent, without merit, and was filed without authority. It is well known that for an action to be brought by and in the name of a company, a resolution must be filed authorising such action. The person who swears the affidavit on behalf of the company must also have that authority. There is no resolution for bringing this action on behalf of the Applicant/Objector filed in Court. Mr. Karia has sworn in paragraph 7 of his affidavit in reply that the Directors of the Applicant/Objector company are Shashikant Amratlal Karia (himself) and Sheila Shashikant Karia (his wife) and have never been removed (Annexture ‘B’).
During cross-examination of Amir Chandrakant, who deponed the supporting affidavit on behalf of the Applicant/Objector, he accepted that the Directors of the Applicant/Objector Company are Mr. Karia and his wife Sheila, and that he was not aware that they had been removed.
In paragraph 9 of his affidavit in reply, Mr. Karia states that the shareholders and the Directors of the Applicant/Objector have never passed a resolution authorizing this action.
Amir Chandrakant attached no evidence to show that he is a Director or shareholder of the Applicant, whereas he attached to his affidavit annexture ‘B’ which shows that the Directors of the Applicant/Objector were Mr. and Mrs. Karia. There is nothing on record to show that they were removed.
Mr. Bamwite cited the following authorities to support his submission, to the effect that, a case filed in the company’s name or an action taken in the company’s name with no resolution to that effect ought to be dismissed for lack of authority:
1. Nampara Trading Co. Ltd —Vs- Yusuf Ssemwanje & Anor. CS No. 604/71 — (by Lubogo J.)
2. Makerere Properties Ltd —Vs- Mansulal Ranji Karia  111 KLR 25 (holding No.2)
3. Walugembe Lugobe & Co. Ltd —Vs- Juma C.S. No. 349/67 (unreported).
In the Napeera Trading Co. Ltd the Court found that no resolution was passed for the institution of the suit and dismissed the action with costs.
In the Makerere Properties case, Berko J. held that a suit instituted in the names of a company without authority of the Directors is not maintainable in law. The suit was also struck off for want of authority to institute it.
In the case of Walugembe, Lugobe & Co. Ltd, the Court found that there was no meeting of the company at which the decision to institute the said suit in the name of the Plaintiff company against the Defendant was taken. Walugembe stated that he and Lugobe as majority shareholders decided to institute the suit. Lugobe stated that he, as a Director of the company, together with Walugembe gave authority for filing the suit. In view of this finding Phadke Ag. J (as he then was) held that:
“The suit was instituted without the authority of the Plaintiff Company, and I agree with Mr. Wilkinson’s submissions that it is misconceived and not maintainable this finding really disposes the suit in favour of the Defendants .... In the result I dismiss the suit against all the Defendants.”
The law therefore appears settled on this point.
Mr. Kaggwa, learned counsel for the Applicant/Objector opposed the objection. He contended that the application was competent. That Amir is a Director and a shareholder and duly authorized to swear the affidavit in support of this application as he stated in paragraphs 1 and 2. With due respect to counsel, these two paragraphs do not controvert the contention raised by Mr. Karia in paragraphs 7, 8 and 9 of his affidavit in reply that him and his wife are the Directors of the Applicant/Objector and that the shareholders are himself, his wife and his son Vikesh Karia; and that they never passed a resolution giving instructions to lawyers to file these proceedings. Amir had an opportunity to file such a resolution in Court if it existed, when he filed an affidavit in rejoinder to Mr. Karia’s affidavit in reply, on 4/8/2004. Annexture ‘B’ to his affidavit in support is actually a resolution of Mr. and Mrs. Karia as Directors of the Applicant/Objector dated 10/11/97.
During cross — examination this is what Amir stated:
“When I purchased the property the Directors of Masaka Tea Estates Ltd were Sheila and Shashkent Karia. I am not sure whether Shashkent resigned as a Director of Masaka Tea Estate Ltd. I am not sure whether me and my mother made any resolution to remove Shashkent as a Director of Masaka Tea Estates Ltd.
(Shown Annexture Q to affidavit in rejoinder) I believe that I became a Director in Masaka Tea Estate Ltd in 1997, (reads it) it is the Annual Return of Masaka Tea Estate Ltd up to 4/11/97. It shows the Directors as Mrs. K.C. Patel and Mr. CC. Patel i.e. my mum and dad.”
Mr. Amir therefore lied in paragraph 2 of his affidavit where he deponed that he is a Director of the Applicant/Objector.
Mr. Kaggwa has also relied on annextures ‘O’ again signed by Mr. & Mrs. Karia as Directors of the said company; P1 — transfer of shares to Kulsum Patel (Amir’s mother) by Mrs. Karia. P2 — a transfer of shares to Amir to support his arguments. I have read all these documents, but none of them authorizes Amir to institute these proceedings. In view of my findings on this point, I hold that this application was instituted without authority of the Applicant/Objector Company. I therefore accept Mr. Bamwite’s submission that it is misconceived and not maintainable.
The second point of objection Mr. Bamwite raised concerned the procedure adopted. Mr. Bamwite was of the view that the S.34 of the CPA does not apply to proceedings involving third parties. It only applies to questions which arise between parties to the suit in which the decree was passed or their representatives. Neither the Applicant/Objector nor Amir were parties to CS No. 539/01, out of which this application arose. Nor were they representatives of any of the parties.
I agree with Mr. Bamwite’s submissions. The section is very clear. It says:
“(1). All questions arising between the parties to the suit in which the decree was passed, or their representatives and relating to the execution, discharge or satisfaction of the decree, shall be determined by the Court executing the decree and not by a separate suit.
[Explanation: - For the purposes of this section, a Plaintiff whose suit has been dismissed, and a Defendant against whom a suit has been dismissed, are parties to the suit].”
The Applicant/Objector brought this application basically on the ground that it is not a party to the CS No. 539/01. That much is stated on the Notice of Motion. It therefore does not qualify under section 34 of the CPA. Mr. Kaggwa conceded that the parties under S.34 must be parties to the suit. His argument is that the Applicant/Objector has come to Court as a result of a decree in the same suit. He relied on the case of Francis Micah —Vs- Nuwa Walakira SCCA 24/94. With much due respect to counsel, that case is distinguishable from the instant one. In that case the application was brought against the Judgment Debtor and the Court Bailiff by the Judgment Creditor. The Court Bailiff was treated as the representative of the Judgment Creditor and therefore a party under section 34 of the CPA (then S.35). This is what the Supreme Court held in part of holding No. 1:
‘It is the Judgment Creditor who initiates the process of execution and it is the Judgment Creditor who points out to the Court Bailiff the property to be attached in execution. Therefore much as the Court Bailiff is an officer of Court, he is a representative of the Judgment Creditor to the extent of excess attachment, since it is he who directs to him the kind of property to be attached.”
That case was distinguished from the case of Hannington Wasswa & Anor —Vs- Maria
Onyango Ochola & 3 Ors SCCA 22/93 which dealt with fraud against a Court Bailiff. As
I stated earlier, the Applicant/Objector is not a party or a representative of any of the
parties to CS 539/01. This objection is accordingly upheld.
Mr. Bamwite also challenged the proceedings on the grounds that 019 rr 55, 56, 57 under which the application was brought refer to objection to attachment of property and not a situation where the Respondents have been put in possession of property to which they were entitled by the Judgment in CS No. 339/01. In his view, Order 19 rule 55 — 57 envisage a case where there has been attachment of property to recover sums of money or costs. This execution was not on attachment under 0 19 r 8 (2) (ii) which is by attachment and sale of property. The execution was conducted under 0.19 r (2) (J) (i), that is, by delivery of the property decreed. If the Applicant/Objector has any claim of interest in the property, the proper procedure is to file a suit against the Respondents to establish that claim.
Mr. Kaggwa disagreed with Mr. Bamwite’s contentions on this point as well. He challenged the Registrars warrant on the ground that the warrant was wrongly issued under rule 32 CPR since there was not decree to that effect and the property so attached was not specified in the decree. He also argued that there should have been a consequential order to that effect and an inventory taken prior to attachment. Much as he may have a point, I think he should have challenged the warrant at an appropriate time. He did not and the warrant remained valid and has been executed. Moreover this case is not about a wrongly issued warrant but about the release of property from attachment.
Going back to Mr. Bamwite’s point, I agree with him that the execution in this case was done under the provisions of 0 19 r 8 (2) (J) (i) which provides for the mode of execution including:
“(i), by delivery of any property specifically decree;
(ii). by the attachment and sale, or by the sale without attachment, of any property.”
In his view, the correct procedure therefore was for the Objector/Applicant to file a suit against the Respondents to establish his claim and interest in the said property and not Objector proceedings. According to him, if the execution had taken place by attachment and sale under 0 19 rule 8 (2) (J) (ii), then Objector proceedings would have been proper. This property was not attached, it was given back to the Respondents under a warrant of vacant possession and not a warrant of attachment.
The language of Order 19 rules 55 — 57 is clear. It talks of “attachment” throughout. It does not talk of possession. This point of objection is also upheld for these reasons.
In view of my findings above, it is therefore not necessary for me to go into the question whether the property should be released to the Applicant/Objector or not. This is coupled with the admission by the Applicant/Objector that it does not actually have any claim of interest in the property anymore because its interest was extinguished and reverted back to the 1st Respondent under a Surrender Deed Instrument No. 30991; registered on 5/7/2000. (RI) Mr. Amir confirmed this position in cross examination, where he stated that:
“I became aware recently. My lawyers told us that the property was surrendered back to the original owners. They told me this lease I am talking about is no longer in existence ... I agree with you that you cannot repossess something that is not in existence.”
Under the law, if a tenant surrenders his lease to his landlord who accepts the surrender, the lease merges in the landlord’s reversion and is extinguished. See: Law of Real Property by Megary and Wade. 3rd Edn page 611 under “Tenancies”. The registration of surrender and cancellation of a lease is valid and it is an effective way of terminating a lease. See: Stephen Kalani —Vs- Satwant Kaur SCCA 22/95  HCB 21. This finding really disposes the application in favour of the Respondents.
In the result, I dismiss the application with costs to the Respondents.
M.S. Arach — Amoko
Ruling delivered in Court in the Presence of:
1. Mr. Kaggwa for the Applicants.
2. Mr. Bamwite for the Respondents.
3. Director of Applicant Mr. Amir Patel.
4. 2nd Respondent/Director of 1st Respondent.
M.S. Arach — Amoko
Kaggwa: Applies for leave to appeal under S.40 Rule 3 of the CPR, and stay of execution.
Ct: There is no way this matter can succeed even in the Court of Appeal in the absence of any claim of interest by the Applicant in the property. Leave refused.
M.S. Arach — Amoko