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Bayan Kampala Diagnostic Center Limited v Mukesh Kumar and 2 Others (Civil Miscellaneous Application 254 of 2021)

High Court · [2021] UGCOMMC 153 · 2021 Application Granted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Interlocutory application for review of registrar's order arising from civil suit for shareholder dispute
Decision
Review application allowed; matter remanded for mention

Observed later treatment

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Holding

The court allowed the review application, finding that the earlier audit order was insufficiently specific for enforcement as it did not identify the banks and account numbers. The court reviewed its order and directed three named banks to provide account information to the auditor. The court did not definitively rule on the arbitration objection, effectively proceeding with jurisdiction over the dispute by allowing the review and fixing the matter for mention.

Outcome

Review application allowed; matter remanded for mention

Facts

The applicant company undertakes medical tests for migrant workers. The 1st respondent, a director and Managing Director, allegedly took advantage of the absence of other directors residing outside Uganda to bring in additional shareholders including his daughter (2nd respondent) and the 3rd respondent without proper authorization. He allegedly filed forged documents indicating changes in shareholding and board resolutions increasing his withdrawal limits from USD 5,000 to USD 10,000. The 1st respondent allegedly communicated to the Gulf Council that he had restructured the company, leading to suspension of the company's licence. The applicant sought to permanently bar the 1st respondent from managing company affairs. The respondents denied fraud, claiming that shareholding changes were agreed by present shareholders in light of the 1st respondent's USD 88,000 personal investment in the company. The company obtained an audit order from a registrar, but banks declined to implement it stating they needed an order specifically directed at them with account details.

Issues

  1. Whether the court had jurisdiction to hear the matter despite the existence of an arbitration clause in the Articles of Association.
  2. Whether the arbitration agreement was null and void, inoperative or incapable of being performed under section 5(1) of the Arbitration and Conciliation Act.
  3. Whether the court should review its earlier order under Order 46 rule 1 of the Civil Procedure Rules.
  4. Whether the earlier order for audit was sufficiently specific to be enforceable.

Orders

  • The application is allowed.
  • The order is reviewed by directing Bank of India Uganda, Diamond Trust Uganda and Exim Bank to provide the auditor with information relating to the specified accounts.
  • The costs of this application are to abide the result of the suit.
  • The suit is hereby fixed for mention on the 3rd day of May, 2021 at 9.00 am.
  • Serve counsel for the respondents.

Rules and key headnotes

Arbitration & ADR — Scope of Arbitration Agreement — Binding on Non-Signatories
As a matter of principle, arbitration agreements bind only those who contract into them, and the scope of an arbitration agreement is limited to the parties who entered into it and those claiming under or through them. Unless the non-signatory's intention to be bound by the arbitration agreement can be established, such non-signatory cannot be referred to arbitration.
Arbitration & ADR — Arbitration Agreement — Incapable of Being Performed
The phrase 'incapable of being performed' under section 5(1) of the Arbitration and Conciliation Act relates to the capability or incapability of parties to perform an arbitration agreement and suggests something more than mere difficulty or inconvenience or delay in performing the arbitration. There has to be some obstacle which cannot be overcome even if the parties are ready, able and willing to perform the agreement.
Arbitration & ADR — Arbitration Agreement — Inoperative Agreement
The term 'inoperative' covers those cases where the arbitration agreement has ceased to have effect, including where the parties have implicitly or explicitly revoked the agreement to arbitrate, where the same dispute between the same parties has already been decided in arbitration or court proceedings, where a settlement was reached before the commencement of arbitration, and similar situations.
Arbitration & ADR — Interpretation of Arbitration Clauses — In Favorem Rule
An arbitration agreement should be construed in good faith and in a way that upholds its validity. A valid arbitration clause should generally be interpreted expansively and, in cases of doubt, extended to encompass disputed claims. The construction should start from the assumption that rational businessmen are likely to have intended any dispute arising out of the relationship to be decided by the same tribunal, unless the language makes it clear that certain questions were intended to be excluded.
Civil Procedure — Review — Error Apparent on the Face of the Record
Order 46 rule 1 of the Civil Procedure Rules empowers the court to review its own decisions where there is an error apparent on the face of the record. The error or omission must be self-evident and should not require an elaborate argument to be established. An error which has to be established by a long-drawn process of reasoning or on points where there may conceivably be two opinions can hardly be said to be an error apparent on the face of the record.

Legislation cited (2)

Cases cited (14)

  • British American Tobacco v Lira Tobacco Stores (High Court Civil Suit No. 924 of 2013)
  • Buwule Mohammed Kasasa v National Water and Sewerage Corporation (Miscellaneous Application No. 2 of 2016)
  • F X Mubuuke v UEB (High Court Miscellaneous Application No. 98 of 2005)
  • Busoga Growers Coop Union v Nsamba and Sons Limited (Miscellaneous Application No. 123 of 2000)
  • Re Nakivubo Chemists [1979] HCB 12
  • Munyagwa Edward and 6 Others v Lukonge Matovu (Miscellaneous Application No. 1183 of 2019)
  • Broken Hill City Council v Unique Urban Built Pty Ltd [2018] NSWSC 825
  • Lucky-Goldstar International (HK) Ltd v NG Moo Kee Engineering Ltd [1993] HKCFI 14
  • Bulkbuild Pty Ltd v Fortuna Well Pty Ltd & Ors [2019] QSC 173
  • Yan Jian Uganda Company Ltd v Siwa Builders and Engineers (High Court Miscellaneous Application No. 1147 of 2014)
  • Fiona Trust & Holding Corp v Privalov [2007] UKHL 40
  • Reckitt Benckiser (India) Private Limited v Reynders Label Printing India Private Limited and others (2019) 7 SCC 62
  • Chloro Controls (I) Pvt Ltd v Severn Trent Water Purification Inc and others (2013) 1 SCC 641
  • Nyamogo & Nyamogo Advocates v Kago [2001] 2 EA 173

Full judgment

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The original judgment as reported. Read the original PDF before relying on any passage.

Bayan Kampala Diagnostic Center Limited v Mukesh Kumar and 2 Others (Civil Miscellaneous Application 254 of 2021) [2021] UGCommC 153 (31 March 2021)
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.