Wakilii

Peoples Transport Company Limited (In recievership) v Afric Co-operatives SOC limited (Civil Appeal 41 of 1997)

Court of Appeal · [1999] UGCA 32 · 1999 Appeal Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Civil appeal from a High Court order striking out a suit on a preliminary objection that the plaintiff had no capacity to sue
Decision
Appeal dismissed; the order striking out the suit for want of capacity upheld

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The Court of Appeal dismissed the appeal, holding that under s.25(2) of the PERD Statute a private limited company subject to divestiture is converted into a public company registered under the Companies Act as the initial step of divestiture, thereby changing its personality. A rebuttable presumption that statutory steps were duly performed applied, and the appellant, having failed to reply to the defence, could not displace it. The receivers appointed under the PERD Statute (not under a debenture) derived their powers from the Statute, and the company under receivership could no longer bind its estate or sue for property that no longer belonged to it. Estoppel could not override statutory provisions; only the Government or its agents could sue.

Outcome

Appeal dismissed; the order striking out the suit for want of capacity upheld

Facts

Pursuant to the Public Enterprise Reform and Divestiture (PERD) Statute No. 9 of 1993, the Minister placed Peoples Transport Company Limited under receivership on 10 May 1994, having classified it under Class IV for total State divestiture. Two receivers were appointed under s.25(7) and advertised the company's assets for sale to wind it up. Afric Co-operative Society Ltd offered to buy the company and issued a cheque for Shs 200,000,000 as part payment of a purchase price of Shs 750,000,000, drawn in favour of "Peoples Transport Company Ltd in Receivership". The cheque was dishonoured twice. A suit to recover the purchase price was brought in the name of the company under receivership. On hearing, the defendant raised a preliminary objection that the plaintiff lacked capacity to sue and that the suit should have been brought by the Government or its agents. The Principal Judge sustained the objection and struck out the suit, prompting this appeal.

Issues

  1. Whether the plaintiff company under receivership had the capacity to file the suit to recover the purchase price.

Orders

  • Appeal dismissed with costs here and in the court below.

Rules and key headnotes

Company Law — Divestiture under PERD Statute — Change of corporate personality on conversion to public company
Under s.25(2) of the PERD Statute, a private limited liability company subject to divestiture must be converted into and registered as a public limited liability company under the Companies Act as the initial step of divestiture; upon commencement of that process the company's personality changes and it can no longer bind its estate or sue to recover property that no longer belongs to it.
Company Law — Receivership — Source of receivers' powers under statute versus debenture
A receiver appointed under an instrument made pursuant to statutory powers derives his powers from that statute, and a reference to appointment under an instrument includes appointment under powers implied by enactment; where receivers are appointed under the PERD Statute their powers flow from the Statute and not from the Companies Act.
Evidence — Presumption of regularity — Burden of proof of compliance with statutory steps
By the maxim omnia praesumuntur legitime facta donec probetur in contrarium, all things are presumed to have been legitimately done until the contrary is proved; under s.102 of the Evidence Act the party asserting non-compliance with statutory requirements bears the burden of proving it.
Statutory Interpretation — Estoppel cannot override statutory provisions
No question of estoppel can be invoked to override the provisions of a statute; the duty of each party is to obey the statute, and a party's act (such as issuing a cheque in the company's name) cannot confer a capacity to sue that the statute has removed.

Legislation cited (6)

Cases cited (1)

  • Gosling v Gaskell [1897] AC 575

Full judgment

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

Peoples Transport Company Limited (In recievership) v Afric Co-operatives SOC limited (Civil Appeal 41 of 1997) [1999] UGCA 32 (4 March 1999)
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.