East Africa General Insurance Company Ltd and Another v East Africa General Insurance Co. Ltd (Civil Application No. 22 of 2001) [2001] UGCA 66 (20 July 2001)

Full Case Text

### THE REPUBLIC OF UGANDA

### IN THE COURT OF APPEAL OF UGANDA AT KAMPALA

## **CORAM:** HON. JUSTICE G. M. OKELLO, JA. HON. JUSTICE A. E. MPAGI-BAHIGEINE, JA HON. JUSTICE S. G. ENGWAU, JA.

### **CIVIL APLICATION NO.22 OF 2001**

#### EAST AFRICA GENERAL 1. **INSURANCE COMPANY LTD ::::::::::::::: APPLICANTS** $2.$ **ATTORNEY GENERAL**

### **VERSUS**

### EAST AFRICA GENERAL **INSURANCE COMPANY LTD. ::::::::::::::::::::: RESPONDENT**

$20$

$10$

# RULING OF THE COURT (OKELLO, JA DISSENTING).

This was an application by way of Notice of Motion, under rules 42, 43 and 81 of the Court of Appeal Rules, seeking to strike out Civil Appeal No.26 of 2001 arising out of HCCS No.1728 of 2000. It is supported by two affidavits affirmed by Mr. Himatlal Gandesha, one of the Directors of the applicant Company.

The relevant affidavits in reply were filed in for and on behalf of the respondent Company by Mr. Samson Muwanguzi, its General Manager. The first affidavit was dated 9.4.2001. The supplementary one was dated

23.6.2001and was filed in reply to Mr. Gandesha's supplementary affrdavit which was allowed in evidence with leave of court under rule 43(3) of the Rules of this Court. On Mr. Muwanguzi's supplementary affidavit were annexed several documents which kept on being referred to by all counsel

The background to this application is briefly as follows: On l8e May lg4g, a Company called East Africa General Insurance Co. Ltd. was incorporated in Uganda, under the Companies Ordinance 1935(APl). The Memorandum and Articles of Association were wholly subscribed by persons of Indian t0 origin who were residents, or later citizens, of the three East African Countries, Uganda, Kenya, and Tanzania. On 9.8.1972, Idi Amin, the Military dictator of Uganda, decreed the expulsion of Asians from Uganda. He cancelled all the certificates of residence and entry permits required to be held by all non-nationals, under the Immigration (Cancellation of Entry Permits and Certificates of Residence) (Amendment) Decree No.30 of 1972. The holders were given ninety days to quit Uganda. A mass exodus of non citizen Asians ensued, leaving behind only a handful of them.

t\*) -t ,l a

Decree No.30 of 1972 removed all distinction of Asians who were welcome zo and those not so welcome on ground of their nationalities. The Military regime targeted the assets and businesses left behind by the departed Asians, under its declared Economic Policy. A number of Decrees were passed for this purpose. Decree No.26 of 1973 dealt with allocations of such businesses. It provided that no management or operation of business abandoned by departed Asians could be legally valid unless officially allocated. Under Decree No.27 of 7973, The Assets of Departed Asians

Property Decree, no title could rest in anyone unless such title were transferred to him by the Government, either directly or through the agency created, of the Departed Asians Property Custodian Board (DAPCB). Decree No.27 of 1973 was alive to the fact that some Asians ran or owned business or property respectively, in partnership with Ugandan Africans or unexpelled Asians. While Section 16 made it clear that the abandoned property were to be allocated to Uganda citizens only, if there was any citizen shareholder in such business or property such shareholder would either retain his share and the rights conferred upon him by such share or be l0 paid compensation in respect thereof (Section 17(2)).

However, in 1973, the African shareholders left behind in East Africa General Insurance Co. Ltd, registered a new Memorandum and Articles of Association under the same name as the 1949 Constitution. This new EAGEN of 1973 nonetheless continued to run the business of the old 1949 EAGEN and took over its assets, under a different Constitution (AP4) purportedly incorporated also under the Companies Ordinance 1935 on l8th June 1973. By then Section 409(l) of the Companies Act 1948 had repealed the 1935 Ordinance.

t :

t t

> On the overthrow of the Military Regime, the succeeding regime reversed the policy of seizure of properties and businesses of non Africans and non citizens. The Expropriated Properties Act No.9/82 was put in place for this purpose, to return all the assets and businesses left behind to their former owners. Most importantly the Act nullified all purchases, grants and "any dealings of whatever kind in properties and businesses" which the departed Asians had lost, whether such properties had before vested in the

Government or not so vested, under the Assets of the Departed Asians Decree, but dealt with in any way by any person other than the original owner. This Act which came into force in 1983, allowed the former owners 90 days within which to apply for their former properties, assets and businesses, but the time was extended by Legal Notice to March 1993.

The shareholders of the 1949 EAGEN applied for repossession of their properties, assets and businesses (AP2) within the prescribed time. The Acknowledgement Receipt of their application was issued and dated 16.5.83. On 7.12.2000 the Minister of Finance and Economic Planning issued a certificate of repossession (API) under Sections 4 aad 5 of the Act, returning the property, assets and businesses and corresponding 24,910 shares to the applicants, EAGEN of 1949. The Certificate of Repossession restored the 1949 EAGEN to its 1099 Departed Asian Shareholders as it existed as at 9.8.72,before the expulsion. On this certificate is schedule "A" reading that of all the ll32 shareholders holding 25,160 shares, 250 shares belonged to indigenous Ugandans and were therefore never the subject of expropriation as schedule "B" thereof indicates. After the repossession, the Registrar of Companies is entitled to reinstate the Company to its 1972 status quo ante.

On 13.12.2000, the respondents filed HCCS No.1728 of 2000, whose title read "Plaint/Memorandum of Appeal." It was against the Attorney General, Manubhai Madhvani, Himatlal Gandesha and Vivek Araujo, seeking orders amongst others that:

"(a) The certificate authorising repossession issued by the Minister of Finance on 7.12.2000 be revoked/cancelled.

(b) A permanent injunction against the 2no, 3'o and 4th defendants respectively restraining them, their servants, employees, agents/attorneys/any person claiming under the above certificate from trespassing or otherwise dealing with the shares/assets of the Plaintiff."

At the commencement of the hearing of the HCCS 1728 of 2000, some preliminary objections were raised by the defendants mainly that the plaintiffs (EAGEN 1973) had no locus standi to institute the suit, the plaintiffs were not at law persons aggrieved by the decision of the Minister in granting the certificate of repossession and that the defendants were wrongly sued along with the Attorney General in a Statutory Suit for the decision which were not taken by them or jointly with Attorney General. Adjournments were granted from time to time. On21.02.01 the defendants in the suit who are now the applicants made submissions in support of their preliminary objections to the competence of the suit. The court yet adjourned the matter until 27.02.01 for the answers and replies to be made and filed in by counsel for the plaintiff Company.

On 27.2.01 Mr. Katende failed to show up in time, though some of the zo directors and shareholders were present in court. The main suit could not commence either.

Mr. Deus Byamugisha, for the Attorney General is recorded as saying:

" I take it that our objections are not challenged.

Pray for dismissal. There is no reason for absence when the case is called up."

1 l( t ) l. tl:,,

Court "I will decide the case since counsel for the plaintiff has not shown up. Under Order 15 rule 4 of the Civil Procedure Rules this suit is dismissed with costs. Injunction vacated."

Consequent upon the above order, Civil Appeal No.26 of 2001 was filed in this court. An order is now being sought to strike it out on three grounds namely that:

- 1. The appeal was instituted without the authority of the Company in whose name it purports to have been brought because the persons who authorised institution of the appeal had no locus standi to do so. - 2. The Appeal was brought without leave of court.

't ar t t

3. The Appeal is time barred against the respondents named in it being the officials of the Company as represented under the Certificate Authorizing Repossession and all persons cited as respondents Nos.2,3 and 4.

When this application first came up for hearing, counsel for the respondent Professor Sempebwa, raised two preliminary objections to its competence. 20 First he argued that the application was brought under rule 8lof the Rules of this Court which required that only the person who had been served with a notice of appeal under rule 75 and had filed a notice of address could apply to have the notice of appeal or appeal struck out under rule 81. He submitted that it is only the Attorney General who had been served and not EAGEN, who could apply to have the Notice of Appeal/Appeal struck out under rule 81.

Secondly he submitted that by entertaining this application as presented we were assuming original jurisdiction in the matter which we were not mandated to do. After hearing Mr. Lule for the applicants we overruled the objections and ordered the matter to proceed promising to give our reasons in this ruling later which we now do.

On the first objection we recognize that the 2'o ,3'o and 4'h applicants are the directors of EAGEN of 1949 which company is named on the Certificate of Repossession as the repossessor of the assets and shares expropriated in l0 1972. These are the agents who are now in control of the businesses and assets of the Company. The Notice of Appeal was served on the Attorney General which is the principal party and the 2no, 3'o and 4th respondents. Under the law of agency, the 1949 company can safely step in to conduct any litigation on behalf of the Company. See: the case of J. B. Kohli and Others vs Bachulal Popatlal 1964) EALR, 219, for the principle that a person who regards himself as the correct party to a suit can substitute himself for the party wrongly or inappropriately sued. Further, the court is also entitled to investigate the circumstances to ascertain the true party to the proceedings before it.

'l Lr t I

Regarding the second objection that we are exercising original jurisdiction, the inherent powers of this court given to it by rule l(3) of the Rules of this Court are unlimited so as to make such orders as may be necessary for attaining the ends of justice and or to prevent abuse of the process of court. In any case section 12 of the Judicature Statute 1996 empowers this court to approach an appeal case as if the Court of Appeal were (in this case) the High Court and appraise all the proceedings in the High Court so as to come

to a just conclusion, including the question of locus standi and the cause of action when the suit was instituted.

We now go to the merits of this application.

Regarding ground I Mr. Lule submitted that the Appeal was instituted without the authority of the company in whose name it purports to have been brought because the persons who authorized the institution of the appeal had no locus standi to do so since the issuance of the certificate of repossession to the original shareholders of the 1949 EAGEN had restored all powers of 10 management and control of the Company to the 1949 EAGEN. Mr. Joseph Matsiko, Senior State Attorney representing the Attorney General fully associated himself with Mr. Lule's submissions.

Mr. Katende for the respondents argued that the applicant company was not aparty to the High Court Civil Suit and was never served with the Notice of Appeal nor the appeal itself, so they also have no locus standi to institute or defend the proceedings for and on behalf of the company. They therefore lack locus standi.

20 The position, as we see it, is that the proceedings in the High Court were under Section 14 of the Expropriated Properties Act No.9/82. Indeed the plaint was entitled "Plaint/\4emorandum of Appeal." The complaint against the 2nd, 3'd and 4ft applicants was in trespass to the company's affairs. The appeal was against direction of the Minister of Finance in issuing the Certificate of Repossession. The certificate of repossession is still in force. It has not been nullified. As long as it is still in force, it reverts the status of the 1949 EAGEN to the L972 status. The 2nd and 3'd applicants who were

-l !' ' i t ,lll

directors of lg4g EAGEN are still directors. The 4ft is merely an officer appointed by them. They can safely institute or defend proceedings for and on behalf of the company as agents of the company. Possession taken of the Company's property and management following the certificate of repossession cannot amount to trespass.

In the case of Jaffer Brothers Limited vs Mohamed Misid Balaliwo and Two Others Civil No.43 of 1998, Engwau JA held inter alia:

". . . all dealings of whatever kind with the expropriated properties were nullified by the Expropriated Properties Act No.9 of 1982

By the issuance of the letter of repossession by the Minister, the appellant has since hand locus standi to sue anybody blocking him from his property. . ."

In the same case, Okello, JA, observed:

"The certificate immediately clothed the appellant with equitable right over the Suit Property, pending the transfer of the legal right by Government on registration. Registration is a formality as Government is bound under the Act to transfer the property to former owner with a Certificate of Repossession. The equitable right enabled the appellant to serve a quit Notice to the l.'t respondent who occupies the Suit ProPerty il a

We are therefore of the view that the applicants have loctts to bring this application as opposed to the respondents who have been dispossessed of all matters pertaining to the 1949 company, its assets, business, shares, control and management which vested in the Government of Uganda and were returned to former owners. We should mention that the effect of Section l(i)

rllt T

o (a) and (c) of the Expropriated Properties Act is that where property and/or business were expropriated by any means, the same vested in the Government as from the commencement of the Act on 21.02.83. Section 2(1) of the Act empowered the Minister to return the expropriated properties to their former owners. Section 5(1) empowers the Minister to issue a certificate of repossession to a former owner and this issuance is in his absolute discretion. On 7.12.2000 the Minister issued the Certificate whose effect dated back to 09.08.72. This means that the authority and power to manage and take decision on behalf of the Company emanates from the 1949Constitution of the Company, if necessary, by the shareholders and directors appointed under the 1949 Constitution of the company.

In a nutshell, the policy of the Government of Uganda under the Expropriated Act, No.9/82, is to return expropriated properties to the former owners. The case of Kenva Aluminium and Industrial Works Ltd. vs The Minister for Asriculture (1961) EALR 248. illustrates the point that courts must pay due regard to the policy as set down by law. We would add that the case of Gokaldas Laximdas Tanna vs Sr. Rosemarv Muvinza & , is an authority on the effect of the zo Expropriated Properties Act, the powers of the Minister of Finance under the Act, and the authority of the certificate of repossession once issued. In this case it was held that any of the transactions listed in Section l(2) (a) of the Act, that is any purchases, transfers and grants of or dealings of whatever kind in the properties vested in the Government were nullified notwithstanding the provisions of any written law governing the conferring of title and passing or transfer of such title to land, property or business.

In Resistered Trustees of Kampala Institute vs DAPCB. SCCA No.21 of W, the Supreme Court confirmed the decision in Tanna's case (supra) but went further to establish that in order for a property of a departed Asian to vest in the Government pursuant to the Expropriated Act, such property need not have earlier vested in the Government or managed by the Custodian Board under the Decrees, but that the Act covered all properties wherever they were vested and managed, whether legally or illegally. It is noteworthy that the definition of "property" includes "shares."

Itt, I

t -a

> The position is that there are two Constitutions by the same name, the one of 18.05.49 (APl) and the one of 18.06.73 (AP4). The subscribers of each set are ethnically different in name and race. The 1949 one was subscribed by Asians while the 1973 one was subscribed by Africans. There are also two different registers of shareholders. The number of members in the 1949 register is stated to be 1099 Asians with 33 Africans. We think that by making and subscribing a new Memorandum and Articles of Association as well as sale of shares in the Company after 1972 and the appointment of directors, secretary and other officials of the Company, each constituted or amounted to a "dealing of whatever kind" prohibited by Section 1(2) of the Expropriated Properties Act. Consequently Mr. Samson Muwanguzi's appointment after 1972 as well as the Memorandum and Articles of Association subscribed in 1973 and all new ownership of shares in the Company after 1972, were nullified. t0 20

It follows therefore that neither the Company in a General meeting composed of those persons nor the Board of Directors put in place pursuant to the 1973 Memorandum and Articles of Association had legal competence

to act for the Company because between February 1983 and 07.12.2000, the date of the repossession Certificate, the Company was by law under the authority of the Government, and between 07.12.2000 up to now, the Company is in the hands of the repossessors. At the time of filing the High Court Civil suit, as at the time of filing the Notice of Appeal and the substantive Appeal, the certificate of repossession was in the hands of the original shareholders and management of the 1949 EAGEN. It stands to reason, therefore, that at the time of filing the appeal, as of now, the repossession certificate which has not been set aside, was effective. It was the authority by which that EAGEN's officials alone had power to act for and authorize litigation and other acts binding upon the Company and not the 1973 EAGEN.

It is trite law, that in an action to redress a wrong done to a Company or its property, the Company is the only proper plaintiff. Its name can only be used as plaintiff by the directors of the Company or its agents. Where the members complaining represent the majority of the Company, the action may be brought in the name of the Company. Any other person or aggrieved minority can only bring proceedings in his or their own names. See:

## 20 Burland vs Earle fl9021 AC 83 PC at 93: Edwards vs Halliwell (1950) 2 AER 1064 CA at 1076

The respondents can do this but only if they can prove their shareholding status in the 1949 EAGEN, in which case they can join the Company, EAGEN of 1949 as a co-defendant with the persons from whom they seek relief. See: Salim Jamal and Others vs Uganda Oxvqen Ltd.. and Others. Sunreme Court Civil Anneal No.64 of 1995.

\ltY t'

We are satisfied therefore, that Civil Appeal No.26 of 2001 was filed without the authority of the 1949 EAGEN and is thus incompetent. The minority respondents who have lost control as a result of the repossession certificate have no locus standi to institute these proceedings in the name of AEGEN while the certificate is still in place. It is not in dispute that by the date the suit and the appeal were instituted the applicants were, and still are, in possession and control of the company.

We turn to ground 2,that the appeal was instituted without leave of court.

This necessitates looking at the genesis of the Court's Order/Decree as the case may be. After the defendants had made their submissions, Counsel for the plaintiffs sought and were granted a seven days adjournment for the reply. On the appointed day, the respondents' Counsel was absent. The learned judge dismissed the suit under Order 15 rule 4 of the Civil Procedure Rules stating that it was "dismissed for want of prosecution." It is against this dismissal that Civil Appeal No.26 of 2001 was filed.

It was both applicants' contention that the dismissal of the High Court case was not a Decree entitling the respondents to a right of appeal, but an order 20 where leave to appeal is a mandatory requirement. The applicants submitted, therefore, that the respondents had to obtain leave of the High Court or of this court before lodging in their appeal. The respondents contended that it is not necessary to obtain leave because the trial judge made a "decision" which amounted to a decree which was extracted and executed by the applicants. The respondents were insistent that the court's "decision" amounted to a Decree. The decision meant judgement.

-''rr

-i D -

The learned judge clarified, however, that he had dismissed the suit under 015 rule 4 Civil Procedure Rules "for want of prosecution." It is clear that the learned judge inadvertently cited the wrong rule. It is under 015 rule 5 that a suit can be dismissed for want of prosecution when the plaintiff fails to adduce evidence, but even this must be by formal application by the defendant.

We agree with Professor Sempebwa that there was no trial and the decision was not on merits of the case. It follows that, there was no judgement upon l0 which a decree as defined in section 2 of the Civil Procedure Act, would follow. "Decree" is defined as:

> "the formal expression of an adjudication which, so far as regards the court expressing it, conclusively determines the rights of the parties with regard to all or any of the matters in controversy in the suit and may be either preliminary or final . .but shall not include

- (a).. - (b) any order of dismissal for default. ."

On the other hand "Order" is defined in the same section as "the formal 20 expression of any decision of a civil court which is not a decree, and shall not include a rule nisi."

The learned judge's decision was an order. Nevertheless, with due respect to the learned judge, it was an order not arising under rule 4 or 5 of Order 15. The facts which gave rise to the decision as revealed by the record of proceedings would rather support a dismissal under Section 101 of the Civil Procedure Act. That would still result into an order - See: the case of Ayub

!' a r

-D t'

Suleiman vs Salim Kabambalo SC Civil Anneal No.32 of 1995 where the Court unanimously dismissed the appeal and held that on the facts of the case the trial judge had inherent powers under Section 101 of the Civil Procedure Act to dismiss the suit for want of prosecution, and that citing the wrong law for the dismissal occasioned no miscarriage of justice. We also agree that in the circumstances of this case, the decision of the Supreme Court is applicable.

l 'r

\ a

Since a dismissal order for want of prosecution arising under Order l5 rule 5 t0 or under section 101 CPA is not contained in Order 40 rule (1), leave had to be sought from either the High Court or from this court before the Notice of Appeal could be lodged, failure of which renders the appeal to this court incompetent as no essential step was taken in that regard. The requirement for leave is provided in Order 40 Civil Procedure Rules and Rules 39 (l)(a) and (b), 39(2)(a) and (b), a0(l);41(1) and 86(l)(h) of the Rules of this court. Rule 86(l)(h) requires that the order giving leave must be contained in the record of appeal. The record of appeal without leave where leave is necessary is incompetent. See: Gurdial Sinsh Dhillon vs Sham Kaur and Others L1960) EALR 795 where the appeal was dismissed for want of 20 leave to appeal. The right to appeal against the Minister's decision in the instant case is conferred by Section 14 of the Expropriated Properties Act. Regulation 15 of the Expropriated Properties Disposal Rules provides that the Civil Procedure Rules will apply.

Lastly, regarding ground 3, namely that an essential step was not taken in time, it was submitted that the appeal is time barred against the respondents named in it, being the officials of the Company as represented under the

)

Certificate Authorizing Repossession and all persons cited as 2nd, 3'd and 4th respondents. Civil Application No.7 of 2001 seeking extension of time has been brought to the court's attention. This application could only be granted on showing that the delay was caused by sufficient reasons. It has not been granted but still pending. In addition the respondents' counsel conceded that service on the Attorney General was in time but was late by only two to three days as regards the 2nd, 3'd and 4th respondents and argued that such a short delay should not be allowed to prejudice the appeal.

b ) t I

1 t

-v D

l0 The position remains that there was delay. We think that the time schedule prescribed by the rules for taking certain actions is deliberately set to enable a bonafide appellant to pursue the appeal promptly as delay is equally prejudicial to the respondents to the appeals. It is, therefore, our view that failure to comply with the time set, however short the period may be, is fatal to the appeal.

Having considered the three grounds of the application in the affirmative we would make the following orders, namely that:

- 1. The appeal does not lie against the 2nd , 3'd and 4th respondents named in the Notice of Appeal because they are not the persons against whom this statutory appeal is provided to be preferred. Under section 14 of the Expropriated Properties Act the right to appeal to the High Court arises only against the decision of the Minister. The Attorney General, on behalf of the Minister, is the only lawful defendant/respondent to the litigation. - 2. Furthermore, the appeal does not lie against 2nd, 3"I and 4'h persons named as respondents in the Notice of Appeal and in the

Appeal because the Appeal was not served on them within the prescribed time.

---]

The shares of Asians, the Company and its assets to extent of the Asians' share interests, were expropriated. 3.

a t

- On issuance of the certificate of repossession, it at once clothed the repossessors with the power, right and duty to manage the Company and, accordingly, to institute or defend any litigation in the name of the Company as from the date set out in the certificate. 4. - The Appeal filed and conducted in the name and on behalf of, the Company by persons other than the repossessors, or their agents, after the issuance of the certificate of repossession was incompetent and not binding on the Company. l0 5. - All transactions relating to the Company's property, moveable or immovable, including shares, stocks, debentures and interests therein are null and void and the properties must revert to the Company as they \uere before expropriation of the Company in 1972. 6. - All contracts and transactions of whatever kind carried out between 09.08.1972 and the date of issuance of the Certificate Authorizing Repossession on 07.12.2000, between the new group or EAGEN and any other person whether shareholder, staff, or outsider, are not binding on the repossessed Company. 7. - The advocates who, after issuance of the certificate of repossession, filed proceedings against the repossessors had no authority of the Company and the Company is not obliged to meet their costs of the litigation. 8.

Costs incurred on litigation by the repossessed Company and its $9.$ agents must be met by the firm of advocates who acted for the respondents.

Dated at Kampala this $20$ the Dated at Kampala this $20$ the day of $200$

**G. M. OKELLO JUSTICE OF APPEAL**

1 CC A. E. MPAGI-BAHIGEINE

**JUSTICE OF APPEAL**

$\mathcal{N}$ S. G. ENGWAU **JUSTICE OF APPEAL**

$10$

$20$