Wakilii

Makerere Properties Ltd v Mansukhlal Ramji Karia (Civil Suit 32 of 1994)

High Court · [1995] UGHC 88 · 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 register following earlier Companies Cause ruling
Decision
Suit struck out for lack of authority to institute proceedings

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The court held that a person who has never been a director or shareholder of a company has no authority to instruct solicitors to institute proceedings in the company's name. The power to manage the company and institute legal proceedings vests in the board of directors under the articles of association. Ratification attempted after institution by persons who themselves were not registered directors or shareholders at the time cannot cure the defect. Where lack of authority plainly appears, the court may strike out the action at any stage, requiring the person who improperly instructed the solicitor to pay the company's costs as between solicitor and client and the defendant's costs as between party and party.

Outcome

Suit struck out for lack of authority to institute proceedings

Facts

Makerere Properties Ltd was incorporated in 1959 by members of the Pirani family as directors and shareholders. The family members, being Asian, left Uganda in 1972 following expulsion orders. In or about 1982, the defendant Mansukhlal Ramji Karia, together with others, transferred shares to themselves and the defendant became director, subsequently transferring the company's property (Plot 13 Market Street) to himself as registered proprietor. In 1991, Amin Mohamed Abdulaziz Pirani returned to Uganda following President Museveni's invitation to Asians to reclaim properties. He discovered the fraudulent transfers and brought Companies Cause No. 2 of 1992, in which the court ruled the transactions removing original directors and shareholders were fraudulent and directed reinstatement of the original shareholders. Following that ruling, Amin Mohamed Abdulaziz Pirani instructed M/s Mulira & Co Advocates to institute the present suit seeking declarations that the defendant was fraudulently registered as proprietor and orders for cancellation and reinstatement of the plaintiff company as registered proprietor.

Issues

  1. Whether Amin Mohamed Abdulaziz Pirani had capacity to instruct advocates to institute proceedings in the name of the company when he was neither a director nor a shareholder at the time of institution.
  2. Whether proceedings commenced by a solicitor without proper authority from the company can be ratified after institution.
  3. Whether the suit should be struck out for want of authority to sue.

Orders

  • Action struck out for want of authority to institute proceedings.
  • Amin Mohamed Abdulaziz Pirani ordered to pay the company's costs as between solicitor and client.
  • Amin Mohamed Abdulaziz Pirani ordered to pay the defendant's costs as between party and party.

Rules and key headnotes

Company Law — Locus Standi — Authority to Institute Proceedings — Non-Director and Non-Shareholder
A person who has never been a director or shareholder of a company has no authority to instruct solicitors to institute proceedings in the name of the company, as the power to manage the company's business and institute legal actions is vested in the board of directors under the company's articles of association.
Company Law — Company Actions — Ratification of Unauthorised Proceedings
Where proceedings are commenced in the name of a company without proper authority, ratification by persons who are not themselves registered directors or shareholders at the time of the purported ratification cannot cure the defect in the constitution of the action.
Civil Procedure — Striking Out — Want of Authority — Timing of Objection
An objection to the right to sue based on want of authority should ordinarily be taken by interlocutory application before trial, but where want of capacity or authority to sue plainly appears at any stage, the court may strike out the action even if the objection is not pleaded in the written statement of defence.
Company Law — Management Powers — Articles of Association — Day-to-Day Management
Where a company's articles of association vest the management of the business in the directors, the board of directors is the appropriate agency to start actions on behalf of the company, including the right to instruct counsel to institute proceedings, as an incident of managing the company.
Civil Procedure — Striking Out — Costs Consequences
Where an action is struck out because a solicitor commenced proceedings in the name of a company without verifying proper authority, the person who improperly instructed the solicitor shall 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 (9)

  • Gray v Lewis (1873) 6 Ch App 1035
  • Burland v Earle (1907) AC
  • United Assurance Co Ltd v Attorney General (Civil Appeal No. 1 of 1986)
  • Shaw and Sons (Salford) Ltd v Shaw (1935) 2 KB 113 CA
  • Danish Mercantile Co Ltd v Beaumont and Anor (1951) Ch CA 680
  • Cane v Jones (1981) 1 All ER 533
  • John Shaw & Sons Ltd v Shaw (1935) 2 KB 113 CA
  • Buike Estate Coffee Ltd and Two Others v Lutabi and Anor (1962) EA 328
  • Daimler Co v Continental Tyre and Rubber Co (1916) AC

Full judgment

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

Makerere Properties Ltd v Mansukhlal Ramji Karia (Civil Suit 32 of 1994) [1995] UGHC 88 (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.