Nathvani Trading Co. (PVT) LTD (Civil Cause 2429 of 2000) [2000] MWHC 52 (21 August 2000)

IN THE HIGH COURT OF MALAWI PRINCIPAL REGISTRY CIVIL CAUSE NO. 2429 OF 2000 BETWEEN: NATEIVANT TRADING GO UPV TY LT Bciasnancniismssinannnnanennnnnapnaaaot PLAINTIFF -VS- THE LEASING AND FINANCE COMPANY OF MALAWI LIMITED CORAM: TWEA, J Chirwa, of Counsel for the Plaintiff Kasambala, of Counsel for the Defendant Balakasi, Official Interpreter RULING The applicant herein, Messrs. Natrhvani Trading Company Limited filed an application for an interlocutory injunction against the defendant, Messrs Leasing and Finance Company Limited of Malawi. The summons filed was ex- parte. On 24th July, 2000 the motion judge before whom the matter was called directed that the matter proceed inter-parte and set the case down for 28th July, 2000. The parties appeared on the said date. Then, the defendant had filed an affidavit in reply and the plaintiff filed a supplementary affidavit. The facts of the case are that the plaintiff are a private company. It has three directors, who are brothers, it would appear. The Managing Director is one Abdul Samad Yusuf Bhana. The said Abdul Bhana, obtained a business loan from the defendant and charged on of the motor vehicle BK 7128 registered under the plaintiff name as security for the loan among others. The said Abdul Bhana, who | will now refer to as the debtor failed to repay the loan and the defendant caused the said vehicle to the court officers. The plaintiff now claim that the debtor had no authority to pledge their vehicle and that he acted utra-vires the company. 2 The court is seeing such cases now and again where directors of mostly private companies are being allegedly said to have contracted debts without authority of the company. There seems to be one common feature in such cases; the business are virtually family businesses and the companies are run without conforming with the law as laid down in the Companies Act. There are no meeting or resolutions of the company. These companies, at law, run, virtually as non companies. In the present case the plaintiff applicant has not exhibited the companies memorandum and articles of associations, but in its affidavit, it exhibited AYB3 which indicates that the debtor had previously secured loans for their businesses on the property belonging to the families other businesses including the plaintiff company. These loans fortunately, it would appear, were paid. The law is quite clear in my view, where the director act in a way that the third party is led to believe he is acting within the powers of his company, then the third party will not be affected by any internal irregularities. This is the rule in Turquand’s case, see Limbe Properties Limited vs Leasing and Finance Company. Civil Cause No. 1386 of 2000 (unreported). In the present case the debtor, had previous similar dealing with the defendant in the name of the plaintiff. It makes no difference that the plaintiff claim that the debtor was known to have sought the loan in his personal capacity, he had done so before an the plaintiff were aware of this. | see no merit in the plaintiffs argument. More so when the loan was, yet again, for a family business and this has not been disputed. These courts should be very slow to protect companies that do not comply with the requirements of the Companies Act, when they seek legal protection on account of the law. | therefore decline to grant the injunction sought with costs to the defendant. Pronounced in Chambers this 21st day of August, 2000 at Blantyre.