Wakilii

Nagji Textiles Ltd v Popat and Others (Civil Appeal 5 of 2008)

Supreme Court · [2009] UGSC 42 · 2009 Appeal Dismissed ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
Second appeal to the Supreme Court from a Court of Appeal decision affirming a High Court judgment dismissing a civil suit
Decision
Appeal dismissed; the High Court and Court of Appeal decisions confirming the sales and transfers of the suit property upheld

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Cited — treatment unverified cited in 2 (treatment unverified) Derived from citing cases in the Wakilii corpus — not an assertion that this case is good law.

AI-generated summary. This summary was generated by AI from the full text of the judgment. It may contain errors or omissions — always read the source judgment before relying on it.

Holding

The Supreme Court dismissed the appeal, affirming the concurrent findings of the High Court and Court of Appeal. A power of attorney granted by two directors of a company cannot be revoked by a single director or shareholder acting alone; such purported revocation is null and void and ineffective. In any event, the alleged revocation was never registered nor communicated to the respondents before completion of the sale and transfer. Company affairs are administered by majority decisions of directors, and shareholders can only reverse directors' acts by valid company resolutions in general meeting. The sales and transfers were therefore lawful, no fraud was proved, and the directors acted as directors, not in a personal capacity.

Facts

Nagji Textiles Ltd owned Plot No. 3, Acacia Avenue, Kampala, which had been compulsorily acquired under Idi Amin's government and placed under the Departed Asians Property Custodian Board. Two directors of the appellant granted the first respondent, A.B. Popat, a power of attorney in July 1992 to repossess the property, and a further power of attorney in December 1996 authorising him to sell and transfer it. In January 1997 one of the two directors purported to revoke the powers of attorney by a document he alone signed. Popat sold and transferred the property to the second respondent, Anil Damani, who in turn transferred it to the third respondent, Joseph Ssempebwa. The appellant sued claiming the transfers were illegal, fraudulent, and that the second respondent paid below market value and had notice of a caveat. The High Court and Court of Appeal found the purported revocation ineffective and never communicated or registered, and held the sales lawful with no fraud proved.

Issues

  1. Whether the power of attorney granted to the first respondent was validly and legally executed by the appellant company.
  2. Whether the power of attorney was validly revoked before the sale and transfer of the suit property.
  3. Whether the sales and transfers of the suit property were lawful and within the authority conferred by the power of attorney.
  4. Whether fraud was proved against any of the respondents and whether the transferees were bona fide purchasers for value without notice.

Orders

  • Appeal dismissed.
  • Costs awarded to the 2nd and 3rd respondents in this Court and in the courts below.

Key headnotes

Company Law — Management by Directors — Powers of Attorney Granted by Board
A power of attorney granted on behalf of a company by two directors acting jointly cannot be validly revoked by a single director or shareholder acting alone; a purported revocation signed by one of the two directors is null, void and ineffective.
Company Law — Directors vs Shareholders — Reversal of Directors' Acts by Resolution
Company affairs are administered by majority decisions of directors, not by individual shareholders; shareholders may only reverse or fault a decision of the directors by passing a requisite resolution in a duly notified general meeting held in accordance with the memorandum and articles of association.
Company Law — Third Party Interests — Effect of Revocation Against Vested Interests
A resolution or revocation can affect the interests of third parties dealing with the company only where the directors' actions are halted in time before third-party interests have vested and the third party is notified, the notice being communicated and in some instances registered.
Agency — Revocation of Power of Attorney — Requirement of Communication and Registration
A purported revocation of a power of attorney is ineffective against an agent and third parties where it is neither communicated to nor received by the agent, nor registered, before the completion of the transactions effected under the power.
Evidence — Fraud — Burden of Proof Against Purchasers
An allegation of fraud against registered transferees of property must be strictly proved; concurrent findings of fact by the trial court and first appellate court that no fraud was established will not be disturbed on second appeal absent error.

Legislation cited (2)

  • Expropriated Properties Act, Cap 87
  • Stamps Act s.50

Cases cited (8)

  • Malanla InternatTonal Ltd V. Hls Grace Cardlnal Emmanuel Nsubuga
  • David Sejjaka Nalima v Rebecca Musoke (Supreme Court Civil Appeal No. 12 of 1998)
  • Kifamunte Henry v Uganda (Supreme Court Criminal Appeal No. 10 of 1997)
  • McConnell v Kimani [1967] E.A. 702
  • Bryant Powis and Bryant v La Banque du Peuple [1893] A.C. 170
  • Kampala Bottlers Ltd v Damanico (Supreme Court Civil Appeal No. 22 of 1992)
  • Lloyd v Grace, Smith and Company [1912] A.C. 716
  • Percy v Glasgow Corporation [1992] A.C. 299
Source: this page presents Wakilii’s issue analysis and metadata for a publicly reported Ugandan judgment. Any AI-generated summary is marked as such. Judgment text is sourced from the Uganda Legal Information Institute (ulii.org). Wakilii is not affiliated with ULII.