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Nagji Textiles Ltd v A.B Popat & 2 Ors [2010] UGSC 31

Supreme Court · 2010 Appeal Dismissed ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
Second appeal from the Court of Appeal in a civil suit concerning ownership and transfer of registered land
Decision
Appeal dismissed; concurrent findings confirming the validity of the sales and transfers of the suit property upheld

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Holding

The Supreme Court dismissed the appeal, upholding 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; the purported revocation was null and void and, in any event, was never registered or communicated to the respondents before completion of the sales. The directors acted in their capacity as directors, not personally, so the company was bound. No fraud was proved, and paying below market value or awareness of a caveat did not, on the facts, defeat the purchasers' status. Both sales and transfers of the suit property were therefore valid and lawful.

Facts

The appellant company's two directors granted the first respondent a power of attorney (16 July 1992) to repossess the suit property at Plot 3, Acacia Avenue, Kampala, which had been compulsorily acquired under the Idi Amin government and placed under the Departed Asians Property Custodian Board. A further power of attorney (5 December 1996) authorised him to sell and transfer the property. On 2 January 1997 a document signed by one director purported to revoke the powers of attorney. The first respondent sold and transferred the property to the second respondent for US$95,000, who later transferred it to the third respondent. The appellant alleged the transfers were fraudulent and that the purchasers had notice, including of a caveat. The High Court and Court of Appeal found the revocation by one director ineffective and never communicated or registered before completion, and that no fraud was established.

Issues

  1. Whether the powers of attorney granted to the first respondent were validly and effectively revoked.
  2. Whether the sales and transfers of the suit property were lawful and within the authority conferred by the powers of attorney.
  3. Whether fraud was committed by or proved against the respondents, including whether the second respondent was a bona fide purchaser 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 — Directors and Shareholders — Authority to Bind Company
A company's affairs are administered by majority decisions of its directors, not by individual shareholders; shareholders can only reverse directors' actions through requisite resolutions passed in a validly held general meeting, and such resolutions affect third parties only where the directors' acts are halted before third-party interests have vested and the third party is duly notified.
Land & Property — Power of Attorney — Revocation
A power of attorney granted under the authority of two directors of a company cannot be validly revoked by a single director or shareholder; such a purported revocation is null, void and ineffective, and in any event does not affect a transaction completed before the revocation is registered or communicated to the affected party.
Evidence — Fraud — Standard of Proof
Allegations of fraud must be specifically pleaded and strictly proved; payment of a price below market value or awareness of a caveat does not, of itself, establish fraud or defeat a purchaser's status as a bona fide purchaser for value without notice.
Land & Property — Repossessed Property — Expropriated Properties Act
Under the Expropriated Properties Act, the requirement to produce a repossession certificate to enable sale of a repossessed property is directory rather than mandatory, lodgment of the certificate being sufficient authority for a transfer.

Legislation cited (2)

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

Cases cited (8)

  • Makula International Ltd V. His Grace Cardinal Emmanuel Nsubuga
  • David Sejjaka Nalima v Rebecca Musoke (Civil Appeal No. 12 of 1998)
  • Kifamunte Henry v Uganda (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 (Civil Appeal No. 22 of 1992)
  • Lloyd v Grace, Smith and Co [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.