Josphat Kipchirchir Sigilai v Gotab Sanik Enterprises Limited & 4 others [2020] eKLR Case Summary

Court
High Court of Kenya at Eldoret
Category
Civil
Judge(s)
Hon. Olga Sewe
Judgment Date
September 30, 2020
Country
Kenya
Document Type
PDF
Number of Pages
3
Explore the case summary of Josphat Kipchirchir Sigilai v Gotab Sanik Enterprises Limited & 4 others [2020] eKLR. Delve into key legal principles and implications of this significant judgment.

Case Brief: Josphat Kipchirchir Sigilai v Gotab Sanik Enterprises Limited & 4 others [2020] eKLR

1. Case Information:
- Name of the Case: Josphat Kipchirchir Sigilai v. Gotab Sanik Enterprises Limited & Others
- Case Number: Civil Suit No. 146 of 2002
- Court: High Court of Kenya at Eldoret
- Date Delivered: 30th September 2020
- Category of Law: Civil
- Judge(s): Hon. Olga Sewe
- Country: Kenya

2. Questions Presented:
The central legal issues the court must resolve include:
- Whether the plaintiff, Josphat Kipchirchir Sigilai, resigned as a director of Gotab Sanik Enterprises Ltd.
- Whether the plaintiff's membership in the company was lawfully terminated.
- Whether the allotment of shares to the 3rd, 4th, and 5th defendants was lawful.
- Whether the plaintiff is entitled to the reliefs sought in the Amended Plaint.
- Whether there is merit in the 2nd defendant’s Counterclaim.

3. Facts of the Case:
The plaintiff, Josphat Kipchirchir Sigilai, sued the defendants—Gotab Sanik Enterprises Ltd, Kiprotich Arap Chepkwony (2nd Defendant), Susan Chemtai Chepkwony (3rd Defendant), Henry Kipkemboi Chepkwony (4th Defendant), and Clara Chepkoech Chepkwony (5th Defendant)—for various claims related to his shareholding and directorship in the company. The company was incorporated in 1984 with a share capital of Kshs. 100,000, shared equally between the plaintiff and the 2nd defendant. The plaintiff alleged that he was unlawfully removed from the Board of Directors in 1986 and that his shares were fraudulently transferred to family members of the 2nd defendant without his consent.

4. Procedural History:
The case began with the plaintiff filing a suit on 1st August 2002, seeking declarations regarding his shareholding, reinstatement to the Board of Directors, and other reliefs. The defendants denied the allegations and filed a Counterclaim asserting that the plaintiff voluntarily resigned from his position. The court heard testimonies from both parties and their respective witnesses over several years, culminating in written submissions from both sides by July 2019.

5. Analysis:
- Rules: The court considered the Companies Act, specifically Section 185(1) regarding resignation from directorship and Section 4(1)(a) of the Limitation of Actions Act concerning the time frame for bringing claims related to contracts.

- Case Law: The court referenced several cases, including *Foss v. Harbottle* (1843) which established that only the company can sue for wrongs done to it, and *Gathoni v. Kenya Co-operative Creameries Ltd* (1982), which emphasized the importance of the limitation period in bringing claims.

- Application: The court found that the plaintiff's claims were time-barred as they arose from events occurring between 1986 and 1996. Additionally, the court determined that the plaintiff's removal as a director was lawful based on the resignation letter dated 31 July 1986, which the plaintiff denied having written but which the defendants maintained was authentic. The court concluded that the plaintiff's suit was incompetent as it did not follow the proper procedures for derivative actions.

6. Conclusion:
The court ruled to strike out the plaintiff's suit and the defendants' Counterclaim, stating that the plaintiff had failed to establish a prima facie case and that the suit was time-barred. The court emphasized the necessity of following proper legal procedures in corporate governance and disputes.

7. Dissent:
There were no dissenting opinions reported in this case.

8. Summary:
The High Court of Kenya struck out the suit filed by Josphat Kipchirchir Sigilai against Gotab Sanik Enterprises Ltd and others, ruling that the claims were time-barred and that the plaintiff had not followed the necessary legal procedures for a derivative action. This case underscores the importance of adhering to corporate governance laws and the limitations on bringing claims related to company affairs.

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