Dinesh Jethalal t/a Kipsimatt Stores v Sigor Sot Company Ltd [2021] KEBPRT 405 (KLR) | Controlled Tenancy | Esheria

Dinesh Jethalal t/a Kipsimatt Stores v Sigor Sot Company Ltd [2021] KEBPRT 405 (KLR)

Full Case Text

REPUBLIC OF KENYA

BUSINESS PREMISES RENT TRIBUNAL

TRIBUNAL CASE NO 1057 OF 2019 (NAIROBI)

DINESH JETHALAL T/A KIPSIMATT STORES........TENANT/APPLICANT

VERSUS

SIGOR SOT COMPANY LTD..............................LANDLORD/ RESPONDENT

RULING

The Tenant’s/Applicant’s notice of motion dated 20th January 2020 seeks a declaration that the notice purportedly issued by the Landlord is defective and a further prayer that the same be set aside.

The grounds upon which the application is based and the contents of the affidavit in support of the said motion may be summarized as follows;

1. That the Landlord/Respondent is a limited liability company registered under the companies Act in 1977.

2. The statutory notice purportedly issued by the Company Secretary does not indicate the name of the individual who issued it.

3. That only the Company Secretary or the Directors may transact and communicate decision on behalf of the company.

4. The statutory notice having emanated from stranger and unauthorized persons is illegal.

5. That the notice served upon the Applicant does not contain any authorization for the person to deal with the Applicant on behalf of the company.

6. That the person who purported to issue the termination notice is neither a Director nor a Secretary of the Landlord Company.

7. That unless the notice is set aside, the Landlord will proceed to illegally terminate the tenancy.

The application is opposed.  The Landlord has filed a replying affidavit sworn by one David Kipng’eno Mutai which is to the effect;

1. That the Tenants were served with a six months’ notice to terminate their tenancies.

2. That the Landlord is desirous of making major improvements and or renovations on the building and the plans have been approved.

3. That the deponent served the notice to terminate personally on the Tenant/Applicant.

4. That the deponent is the elected secretary of the Landlord having been elected by the members and officials of the Landlord.

5. That the deponent is a fully paid up shareholder of the Landlord and his name needs not appear in the CR 12 form.

Both parties have filed written submissions for and against the application.  The Applicant’s submissions may be summarized as follows;

1. That the Tribunal has power to protect the Tenant from the arbitrariness of the purported Landlord.

2. That the drawer of the notice to terminate tenancy is not a secretary, director or shareholder of the Landlord.

3. That once a resolution is passed by a company, only the directors or the secretary of the company can communicate that decision on behalf of the company.

4. David Kipng’eno Mutai has not adduced any evidence to support his claim that he was elected as a company secretary for the Landlord.  his name does not appear in the CR 12, a fact he concedes.

5. That a defective notice is a nullity and has no effect in law.

6. That the impugned notice was drawn by an individual who is not the Landlord and without legal authority from the company.

The Respondents’ submissions in reply may be summarized as follows;

1. That the requirements of section 4 of Cap 301 in so far as termination of tenancies is concerned were met by the Respondent.

2. That under section 3 of the Company’s Act 2015 an “authorized signatory “in relation to a company means a Director and also means in the case of a private company that has a secretary, the secretary.

3. That section 37 of the Company’s Act does not apply in the present case.

4. That the tribunal can only invalidate a termination notice in case of fraud and non-compliance with section 4 of Cap 301.

5. That a corporation may be represented by its authorized officers which authority may be express or implied.

6. That rules of procedure are handmaidens and not mistresses of justice and should not be elevated to a fetish.

7. That under Article 159(2)(d) of the Constitution, justice should be dispensed without undue regard to procedural and technical technicalities.

8. That the notice of termination issued herein is in compliance with section 4 of Cap 301.

The above being the narration of the summarized cases of the parties herein, in my view, the issues for determination are the following;

1. Is the notice of termination of tenancy dated 25th September 2019 defective?

2. Is the Tenant entitled to the prayers he has sought in his application dated 20th January 2020?

On Issue No 1:

The landlord’s notice to terminate tenancy is the one dated 25th September 2019.  The reasons for termination are that the Landlord is desirous to make major alterations to the building as more fully particularized on the face of the said notice.  The notice has given the Tenant a period of six months to comply with the notice and vacate the premises.  It is addressed to the Applicant/Tenant and one Mr Arap Changina.

The tenancy notice satisfies the requirements of section 4(2) of Cap 301 which provides;

“A Landlord who wishes to terminate a controlled tenancy or to alter to the detriment of the Tenant any term or condition in or right or service enjoyed by the Tenant under such a tenancy shall give notice in that behalf to the Tenant in the prescribed form.”

The notice also satisfies section 4(4) which provides

“No tenancy notice shall take effect until such date, not being less than two months after the receipt thereof by the receiving party as shall be specified therein.”

The notice farther satisfies section 4(5) of Cap 301 which provides;

“A tenancy notice shall not be effective for any of the purposes of this Act unless it specifies the grounds upon which the requesting parties seeks the termination, alteration or reassessment concerned and requires the receiving party to notify the requesting party in writing whether one month after the date of the receipt of the notice, whether or not he agrees to comply with the notice.”

The Tenant/Applicant does not raise any issues with the contents and form of the notice served upon him.  His major and only contention is that the person who purported to issue the notice is a stranger to the Landlord and does not have the authority of the Landlord to issue the notice.

From the face of the notice, it is clear that the notice purports to be issued by “We Sigor Sot Company Ltd”.  The notice has expressed itself to be written by the Secretary, the Landlord, it does not bear the name of the person who signed it, other than the above designations.

The Applicant in support of his contention that the person who purported to issue the termination notice is neither a shareholder nor a director of the Landlord, has produced the CR 12 form from the Registrar of Companies.  The said form does not include the name of David Kipng’eno Mutai as a shareholder or Director of the Landlord.

David Kipng’eno Mutai while faced with this challenge from the Applicant only contended himself by stating that;

i. He is a member and shareholder of the Landlord and the Secretary of the Board of Directors of the Landlord.

ii. That he was elected by the members and officials of the company to be their secretary, a fact known to the Applicant.

If indeed the said David Kipng’eno Mutai is the secretary to the Board of Directors of the Landlord/Respondent, it would have been expected that faced with the allegations made by the Applicant, the Deponent would have placed before the Tribunal the minutes and resolutions of the meeting of the Landlord that elected him as the secretary of the Landlord.

Legally, he would be the custodian of the records of the Landlord.

Under section 37(2) of the Companies’ Act, a document is validly executed by a company if it is signed on behalf of the company;

a. By two authorized signatories or

b. By a Director of the company in the presence of a witness who attests the signature.

Is David Kipng’eno Mutai an authorized signatory of the Landlord?  Is he a Director of the Landlord?  has his signature been attested?

David Kipng’eno Muai has not presented any evidence before the Tribunal that he is any of the above.  His statements in his replying affidavit are not enough to dislodge the contents of the CR 12 form (search) from the Registrar of Companies.  He would have at least provided the minutes and resolutions of the Landlord appointing him an authorized signatory and/or electing him a Director.

I do not find any conflict between section 3 of the Companies’ Act and section 37 of the same Act.  Section 3 merely defines an authorized signatory, section 37 only requires these authorized signatories to be two in order to validate a document executed by a company.  It would be unsafe to assume that the person who issued the notice to terminate the tenancy herein is an authorized signatory and/or Director of the Landlord.

Lack of authority to execute documents on behalf of a company is not a merely procedural or technical issue.  It goes to the root of the operations of a company which can only act through the authorized agents.

The actions of the authorized organs of the company bind the company and it is critical to establish the bonafides of parties holding themselves out as acting on behalf of corporate entities.

I am satisfied on the evidence placed before the Tribunal that David Kipng’eno Mutai was not authorized by the Landlord to issue the notice of termination of tenancy dated 25th September 2019.  That further there is no material placed before the tribunal to show that the said David Kipng’eno Mutai is the secretary to the Board of Directors of the Landlord and/or that he is a Director of the Landlord.  the notice cannot therefore be said to be a validly executed notice by the Landlord.

Consequently, I hold that the said notice shall be of no effect and the same is set aside.  David Kipng’etich Mutai shall bear the costs of the Tenant’s application.

HON. CYPRIAN MUGAMBI NGUTHARI

CHAIRMAN

BUSINESS PREMISES RENT TRIBUNAL

Court:

Ruling dated, signed and delivered virtually by Hon Cyprian Mugambi Ngutharithis 21stday of July, 2021 in the presence of Mr Mutai holding brief for Kibetfor the Applicant and Mr Mukunyu for the Respondent.

HON CYPRIAN MUGAMBI NGUTHARI

CHAIRMAN

BUSINESS PREMISES RENT TRIBUNAL