Wakilii

Makerere Properties Limited v Ranji Karia (Civil Suit 32 of 1994)

High Court · [1995] UGHC 67 · 1995 Suit Struck Out AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit seeking declaration of fraudulent registration and rectification of title following earlier Companies Cause rectifying company register
Decision
Suit struck out for want of authority to institute proceedings

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

A person who is neither a director nor shareholder of a company has no authority to instruct solicitors to institute proceedings in the company's name. Where proceedings are improperly instituted without authority, ratification can cure the defect, but such ratification must come from persons properly constituted as directors or shareholders. A resolution signed by persons not registered as directors or shareholders cannot validly ratify proceedings brought without authority. The suit was struck out for want of authority to sue.

Outcome

Suit struck out for want of authority to institute proceedings

Facts

Makerere Properties Limited was incorporated in 1959 by members of an Asian family as a private company to hold leasehold property at Plot 13 Market Street, Kampala. The original directors and shareholders were expelled from Uganda in 1972. In 1982, the defendant and others allegedly fraudulently transferred the company shares to themselves and the defendant became registered proprietor of the property. Following President Museveni's invitation for expelled Asians to reclaim properties, Amin Mohamed Abdulaziz Pirani, a member of the original family, returned to Uganda in 1991. In Companies Cause No. 2 of 1992, the court ordered rectification of the company register, reinstating the original shareholders and directors. Before that rectification was implemented, Pirani instructed M/s Mulira & Co Advocates to institute this suit seeking a declaration that the defendant was fraudulently registered and an order reinstating the plaintiff company as proprietor. At the time of instructing the advocates and commencing the suit, Pirani was neither a director nor shareholder of the company. He claimed to have powers of attorney from family members and later obtained a signed resolution from his mother and brother, but neither the powers of attorney nor the resolution were properly evidenced or executed by persons validly registered as company members.

Issues

  1. Whether Amin Mohamed Abdulaziz Pirani had capacity to instruct advocates to institute proceedings in the name of Makerere Properties Limited when he was neither a director nor shareholder of the company at the time the suit was commenced.
  2. Whether the purported ratification of the institution of proceedings by signed resolution from persons not registered as directors or shareholders was valid.

Orders

  • The suit is struck out.
  • Amin Mohamed Abdulaziz Pirani to pay the company's costs as between solicitor and client.
  • Amin Mohamed Abdulaziz Pirani to pay the defendant's costs as between party and party.

Rules and key headnotes

Company Law — Proper Plaintiff — Authority to Institute Proceedings in Company's Name
The appropriate agency to start an action on behalf of a company is the board of directors, to whom the power is delegated as an incident of managing the company, including the right to instruct counsel to institute actions. A person who is neither a director nor shareholder has no authority to instruct solicitors to commence proceedings in the company's name.
Company Law — Ratification of Unauthorised Proceedings — Requirements for Valid Ratification
Where proceedings are started in a company's name without proper authority, it is open at any time to the purported plaintiff to ratify the act of the solicitor who commenced the proceedings and to adopt them. However, such ratification must come from the proper quarter — either from the directors or from the shareholders. A resolution signed by persons not registered as directors or shareholders cannot validly ratify improperly instituted proceedings.
Civil Procedure — Want of Authority to Sue — Power of Court to Strike Out
Where the court is informed of facts which prove conclusively that solicitors had no authority to bring an action, the action should be struck out. Although want of authority should ordinarily be raised by interlocutory application before trial, if want of capacity or authority to sue plainly appears at any stage, the court may strike out the action.
Civil Procedure — Costs — Proceedings Instituted Without Authority
Where a solicitor starts proceedings in the name of a company without verifying proper authority, and the proceedings are struck out for want of authority, the person who in fact instructed the solicitor may be ordered to pay the company's costs as between solicitor and client and the defendant's costs as between party and party.

Legislation cited (1)

  • Companies Ordinance 1935

Cases cited (8)

  • Gray v Lewis (1873) 8 Ch App 1035
  • Burland v Earle [1907] AC 83
  • United Assurance Co Ltd v Attorney General (Civil Appeal No. 1 of 1986)
  • John Saw & Sons (Salford) Ltd v Saw [1955] 2 QB 71
  • Danish Mercantile Co Ltd v Beaumont [1951] Ch 680
  • Cane v Jones [1981] 1 All ER 533
  • Buike Estate Coffee Ltd v Lutabi (1962) EA 528
  • Daimler Co v Continental Tyre and Rubber Co [1916] AC 307

Full judgment

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

Makerere Properties Limited v Ranji Karia (Civil Suit 32 of 1994) [1995] UGHC 67 (6 June 1995)
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.