Sighn v Mutua & 2 others [2023] KEHC 25561 (KLR)

Sighn v Mutua & 2 others (Civil Suit E440 of 2023) [2023] KEHC 25561 (KLR) (Commercial and Tax) (21 November 2023) (Ruling)

Neutral citation: [2023] KEHC 25561 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts Commercial and Tax Division)

Commercial and Tax

Civil Suit E440 of 2023

A Mabeya, J

November 21, 2023

Between

Ubhi Ripthuman Sighn

Plaintiff

and

Hon Dr Alfred Mutua

1st Defendant

Emily Chebet Loroupe

2nd Defendant

Brazilian Rodizio Limited

3rd Defendant

Ruling

1. This is a Motion on Notice dated 30/10/2023 by the 3rd Defendant (“the Company”). It is brought under sections 3 & 3A of the Civil Procedure Act, Cap 21. The same seeks immediate access of Kshs. 9,368,045/95 from its accounts in order to meet its immediate expenses. It further seeks permission to be withdrawing Kshs. 6,863,050/= monthly for its expenses pending the determination of the suit.

2. There are other orders sought for the applicant to file an account with the Deputy Registrar of this Court and for the plaintiff to furnish security for costs and an undertaking to damages.

3. The Motion was supported by the affidavit of Kamarow Joel Rionotukei sworn on 30/10/2023. The grounds for the application were that due to a dispute between the directors of the company, this court made an exparte order on 13/9/2023 freezing the company’s accounts. That the said freezing orders are affecting the running and operations of the Company. The deponent explained how the partial sum of Kshs. 3 million allowed by the Court to be withdrawn was spent. That the Company was unable to meet its daily commitments settling bills and other statutory payments. That the company has about 70 employees who might be affected if the company continues to keep away from its funds and ultimately close shop.

4. That the Company had resulted to borrowing in order to meet its needs for operations. The company requires Kshs. 9,368,045/95 immediately and Kshs 6,863,050/= each month to be able to continue operating its business. It was therefore sworn that the orders should be granted as the company was willing to be filing accounts with the Deputy Registrar of this Court.

5. The Motion was opposed vide the replying affidavit of the plaintiff sworn on 3/11/2023. That the accounts for the Kshs. 3 million accessed had not been filed with the Deputy Registrar as directed. That the previous 2 applications had been allowed pending the hearing of the suit. That in the circumstances the current application is res-judicata. That the business of the applicant is a going concern and the sources of funds are still intact. That there has been an addition of shareholders of the company of whom the plaintiff is unaware. He therefore sought protection.

6. I have considered the rival contestations and the submissions on record. This is an application to allow the company access its accounts for purposes of running its business. It is subjected to on the basis of it being res-judicata. That a similar application had been determined. That there is no evidence that the company requires the amount applied for.

7. On res-judicata, I do not think that the application is caught up by that doctrine. Although a similar application had been determined, before that in respect of one off payment. The present one is for subsequent expenses and not the one contained in the determined application, I reject that claim.

8. The other issue is that there is no evidence that the alleged expenses have arisen. That no invoices and other demands made on the company to prove that liability to settle the same has arisen. I have considered the explanation given by Kamorow Joel Rionotukei in his supporting affidavit. I am satisfied that the expenses are not fictitious. They are probable for a running business.

9. I should state here that it is not in the business of a Commercial Court to superintend and/or micromanage business entities. Companies are supposed to be run and managed by their respective boards. However, where boards decide to be inoperative, such as in the present case, such entities are likely to find themselves in serious operational difficulties. The funds in the subject accounts belong to the company and not for either of the directors or shareholders. The company must be left to run notwithstanding the infighting by its shareholders and/or directors.

10. In this regard, I am satisfied that, it is in the interest of justice that the freezing order be varied. However, in order to ensure that the parties move towards a permanent determination of the dispute and for the order for expedited hearing of the suit to be of any relevance, I will order that the payments be for only 3 months within which time the dispute should have been determined.

11. Accordingly, I allow the application as follows: -a.Prayer No. 2 is allowed.b.Prayer No. 3 is allowed for the months of November, December 2023, and January 2024 only.c.Prayer No. 4 is allowedd.The plaintiff do file an undertaking as to damages within 15 days of the date hereof in default whereof the injunctive orders in force to stand discharged.e.Hearing of the suit on 20th, 22nd and 23rd of November, 2023. f.The costs in the cause.It is so ordered.

DATED AND DELIVERED AT NAIROBI THIS 21ST DAY OF NOVEMBER, 2023. A. MABEYA, FCI ArbJUDGE