Mogusii Farmers Group Co. Ltd & another v Mose & 27 others; Momanyi & 2 others (Interested Parties) [2022] KEHC 12087 (KLR)

Mogusii Farmers Group Co. Ltd & another v Mose & 27 others; Momanyi & 2 others (Interested Party) (Civil Case 5 of 2021) [2022] KEHC 12087 (KLR) (12 May 2022) (Ruling)

Neutral citation: [2022] KEHC 12087 (KLR)

Republic of Kenya

In the High Court at Nyamira

Civil Case 5 of 2021

FA Ochieng, J

May 12, 2022

Between

Mogusii Farmers Group Co. Ltd

1st Plaintiff

Mogusii Tea Co. Ltd

2nd Plaintiff

and

Hudson Mose

1st Defendant

Charles Ondari Achoki

2nd Defendant

Samwel Mogeni Maroko

3rd Defendant

Isaac Manono Achoki

4th Defendant

. Milka Motito

5th Defendant

Billiah Ongera

6th Defendant

Pastor Isaiah Agwata Okemwa

7th Defendant

Willian Birai

8th Defendant

Yobesh Openda Mokaya

9th Defendant

Steve Kaka Kimori

10th Defendant

Dancan Omenge Ondari

11th Defendant

Peter Okerio

12th Defendant

Justus Obino

13th Defendant

Elizaphan Nyakundi Nyatuka

14th Defendant

Charles Barongo

15th Defendant

Stephen Mboga

16th Defendant

Meshack Ochengo Mokua

17th Defendant

Atomic Nyasinga Nyakundi

18th Defendant

Richard Ayiera Ogeto

19th Defendant

Daniel Mokaya

20th Defendant

Johnstone Sagwe

21st Defendant

Fredrick Gochi

22nd Defendant

Alfred Onsomu

23rd Defendant

James Mokua

24th Defendant

Stanley Misati

25th Defendant

Irene Nyakundi

26th Defendant

Dancan Abuga

27th Defendant

Steve Orina

28th Defendant

and

Hon. Ben Orora Momanyi

Interested Party

The County Commissioner Nyamira County Commissioner

Interested Party

The Deputy County Commissioner Borabu Sub-County

Interested Party

Ruling

1. The application dated May 18, 2021 was filed by the plaintiffs.

2. It was an application for an interim injunction to restrain the Defendants from convening and holding the Extraordinary General Meeting which was scheduled for May 21, 2021.

3. Secondly, the plaintiffs sought an order that would allow them to proceed to convene and to hold an Extraordinary General Meeting in accordance with the provisions of section 279 of the Companies Act.

4. The Plaintiffs told the court that each of them was a shareholder in Mogusii Farmers Group Limited, (the 8th defendant).

5. In their capacity as shareholders, the Plaintiffs had served upon the respondents, a requisition for an Extraordinary General Meeting. The said requisition was served on 16th February, 2021.

6. The application was supported by the affidavit sworn by the 1st plaintiff, Elizaphan Nyakundi Nyatuga.

7. He recognized the 1st to 7th defendants as being the directors of Mogusii Farmers Group Limited.

8. However, he was of the view that the said directors had failed to undertake the crucial function of convening an Annual General Meeting for the Company.

9. After being served with a requisition, the respondents issued a Notice calling for an Extraordinary General Meeting, to be held on 21st May 2021.

10. Apart from the fact that the Notice issued by the Respondents was less than the period stipulated in the Memorandum and Articles of Association, of the Company, the Plaintiffs contend that the directors had no right to scuttle a legal process, through which the Plaintiffs had requisitioned for a meeting.

11. On May 20, 2021, A K Ndungu, J issued an order of injunction, to restrain the Defendants from convening and holding the meeting which they had scheduled for May 21, 2021.

12. Whilst the case was pending before this court, there was yet another case which pending before the High Court at Kisii.

13. By an Order dated October 21, 2021, R E Ougo, J ordered that the case at Kisii be transferred to the High Court at Nyamira.

14. On November 4, 2021, the parties agreed to the consolidation of the two cases, and the court duly ordered that they be consolidated.

15. After the cases were consolidated, the court encouraged the parties to explore the possibility of referring the dispute to Mediation.

16. At the end of some informal discussions, the court referred the matter to Mediation.

17. On January 26, 2022, the court was informed that the parties had not signed any Mediation Settlement Agreement. Therefore, all the parties felt that it was necessary to have the court make a determination on the issues.

18. The court then directed that the application dated 22nd June 2021 be marked as withdrawn. That was the application through which an order was sought, for the transfer of HCCC No. 3 of 2021 from Kisii to Nyamira.

19. As Ougo J had already ordered that the case before the court at Kisii be transferred to Nyamira, the application dated 22nd June 2021 had been overtaken by events.

20. At that stage, there remained two pending applications; dated May 18, 2021 and October 19, 2021 respectively.

21. The court allowed the respondents time and opportunity to answer to the application dated October 19, 2021.

22. Meanwhile, the court would deliver its Ruling on the application dated May 18, 2021.

23. Immediately after the court gave directions on those two applications, Mr. Ondieki, Advocate informed the court that he had filed an application dated February 22, 2022; that application was filed on February 25, 2022.

24. Mr. Ochoki, Advocate and Mr. Ombachi, Advocate both requested for time to be able to respond to the application dated February 22, 2022.

25. They were each allowed 14 days to file and serve their clients replying affidavits.

26. Thereafter, the plaintiffs would file their submissions, followed by the submissions of the defendants and also of the interested parties.

27. In determining the application dated May 18, 2021, I first take note of the fact that the date when the said meeting was scheduled to be held, has long passed. Therefore, whether or not this court were to reject the application, it would not be possible to hold the meeting as had been scheduled.

28. Secondly, the court did, at the interim stage, order that the defendants be restrained from convening and also from holding the meeting which they had planned to have on 21st May 2021.

29. Following the exparte orders made on May 20, 2021, through which the meeting was stopped, I hold the considered opinion that the substantive application was overtaken by events. I so hold because any order which may purport to give to the defendants, a go-ahead to hold the meeting on 21st May 2021, would be an act of futility. No orders of any court can bring back the dates which are long past.

Length of Notice 30. The Notice dated May 1, 2021 was published in “The Standard” Newspaper of that date.

31. The Notice was addressed to “All Shareholders”, who were being notified about an Extraordinary General Meeting that was scheduled to be held on May 21, 2021.

32. Pursuant to article 50 of the articles of Association of Mogusii Farmers Group Co. Limited, General Meetings shall be held at least once in every calendar year.

33. Directors were mandated to call for and to convene all Extraordinary General Meetings. However, in accordance with article 52, such meetings can also be requisitioned.

34. Pursuant to article 53, a Notice calling for an Extraordinary General Meeting shall have 21 days’ notice, in writing, at the least. The said Article stipulates thus: -“The notice shall be exclusive of the day on which it is served or deemed to be served and the day for which it is given….”

35. Accordingly, the 1st of May 2021, was to be excluded, when computing the duration of the notice. Similarly, the 21st of May 2021 would be excluded during computation of the notice period.

36. In the circumstances, it does appear that the Notice given by the defendants was inadequate, as it did not comply with the Articles of Association.

37. Therefore, I hold the considered view that the A K Ndungu J was right to have stopped the meeting which had been scheduled for May 21, 2021, albeit at an exparte stage.

38. I further find that there was really no need for the defendants to call for a meeting which was separate and distinct from that which had already been requisitioned.

39. The defendants may have good intentions in seeking to have the shareholders discuss the need to overhaul the original Memorandum and Articles of Association.

40. However, when the plaintiffs had already requisitioned for a meeting, that constituted a lawful procedure for convening an Extraordinary General Meeting.

41. Therefore, it does appear that the directors ought to have taken the next step, by calling for the meeting which had been requisitioned by the shareholders.

42. The directors have not provided the court with any plausible reason why they deemed it necessary to ignore the Plaintiffs’ action of requisitioning a meeting; and then calling for a separate meeting.

43. In conclusion, I find that if the circumstances prevailing at the material time had not conspired to frustrate the meeting scheduled for May 21, 2021, I would have issued an interlocutory injunction to restrain the Defendants from holding it.

44. But because the meeting cannot now be held, in any event, I find that the application dated May 18, 2021 was overtaken by events. In the event, I refrain from issuing an order in vain.

45. Each party will meet his or her own costs of the application dated May 18, 2021.

DATED, SIGNED AND DELIVERED AT NYAMIRA THIS 12TH DAY OF MAY 2022. FRED A. OCHIENGJUDGE