Court name
Commercial Court of Uganda
Judgment date
19 February 2015

Homayoun Coudry v Raza Basit Hasan & Ors (Miscellaneous Application-2015/33) [2015] UGCommC 40 (19 February 2015);

Cite this case
[2015] UGCommC 40

THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA AT KAMPALA

COMMERCIAL DIVISION

MISC APPLICATION NO. 033 OF 2015

HOMAYOUN COUDRY::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: APPLICANT

VERSUS

RAZA BASIT HASSAN & OTHERS:::::::::::::::::::::::::::::::::::::::: RESPONDENTS

 

BEFORE: HON. JUSTICE H. P. ADONYO:

RULING

  1. Background:

This is an application by way of Chamber Summons by virtue of Section 6 of the Arbitration and conciliation Act, CAP 4   Laws of Uganda and Rule 3 of the Arbitration Rules and Section 98 of the Civil Procedure Act, CAP 71 Laws of Uganda. The application is grounded on a number of issues as stated in the application which was filed in this court on the 15th day of February, 2015.  Two affirmations support the application and lay out in details the reasons for the same. The application seeks for the following two orders;

  1. A temporary injunction to issue stopping any withdrawals of any money or dealings on the company’s bank accounts till the conclusion of the arbitration or when mutually agreed upon by all the shareholders of Yuasa Investments Ltd during the arbitration
  2. The costs of this application to be provided for.

Mr. Alex Rezida of M/s Nangwala, Rezida and Co. Advocates argued the application on behalf of the applicant. in his submission he stated that the application stems from a dispute the background of which is contained in the grounds in support this application which are seven but which are more specifically contained in the affirmation by one Homayoun Choudry dated the 15th day of January, 2015 together with a supplementary affirmation dated the 12th day of February, 2015 which support the same and they attached to this application and are on record.

  1. The case of the Applicant:

The applicant states that he and his wife own 50% shares in the 3rd Respondent Company while the 1st and 2nd respondents own the remaining 50% shares.  That for the operations of the 3rd Respondent Company the business, accounts and the day to day running of the 3rd respondent company was vested in the 1st respondent who is resident in Uganda while the applicant and wife are resident in Japan. It is stated that arising from the business operations of the 3rd respondent company the shareholders have since gone into dispute that arose out of issues in regards to accountability, access to company records  and general information relating to the business affairs of the company for period 2007 to date. The dispute has since  intensified and the applicant together with 1st and 2nd respondent agreed jointly resort to an  process arbitration upon which a panel of arbitrators were constituted and the arbitration proceedings has since commenced and are currently ongoing.

That from the supplementary affirmation and the affirmation in support the application, it shown that the applicant did request that the mandate for the operation of the 3rd respondent company bank accounts be changed such that the 1st respondent ceased to be the sole signatory to instead have the applicant added as a signatory in order in order to safeguard the 3rd respondent’s company finances pending conclusion of the arbitration proceedings. That this followed a decision which had been reached through a resolution of the 3rd respondent company with the applicant upon being presented with a resolution did signed it while the 1st and 2nd respondent refused to do so leading the applicant to contend that the refusal of the 1st and 2nd respondent posed a great danger  to the finances of the 3rd respondent company which could end up being depleted since the 1st respondent is still the sole signatory of the 3rd respondent company accounts yet the resources of the 3rd respondent including the operations of its accounts formed the basis of the very dispute which is under arbitration with the fear that if the orders which are sought herein not being granted then it may well be that at the end of the arbitration proceedings, the 3rd respondent company could become an empty shell without any resources resulting into a grave injustice to the applicant who is one of the shareholders. The dangers envisaged are better listed under paragraphs 9, 10, 11 of the affirmation in support of this application. I will well not repeat them as the preceding information gives their gist.

It is also submitted that in order to make this application possible as required by law, the applicant did request the chairperson of the panel of arbitration to confirm the obtaining situation as stated in the affirmations and summarised above with the said chairperson of the panel of arbitrators forwarding a certified copy of an arbitration agreement to that effect to this court which is annexed to this application and is marked Annexture CH2 to the affirmation in support to this application.

  1. The law:

This application is for an injunction. Its basis is Section 6(2) Of The Arbitration And Conciliation Act, Cap 4 Law of Uganda. This section provides in summary that where a party applies for an injunction or an interim order and the arbitral tribunal has ruled on any matter relevant to the arbitration, the court shall treat the ruling or any finding of facts made in course of the ruling of such arbitral body as conclusive for purposes of an application before it. The applicant herein prays that the decision of the arbitration tribunal be given due regards by the court granting this application as prayed bearing in mind that the details of the request herein are contained  in paragraph 5 of the affirmation in support of this application which proves the contention above that the issues between the parties were now subject to arbitration and that to safeguard the finances of the 3rd respondent company , a resolution had been made to the effect during the arbitration that the applicant be made additional cosignatory with the 1st respondent to safe guard the resources of the 3rd respondent company mindful of the effect of such an order in that if the application is granted, it should exist till the  conclusion of the arbitration proceedings which is proposed to be concluded in 30 days upon the making of such orders. The applicant further argued that the refusal of the 1st and 2nd respondents to sing the necessary resolution led to this application which could be avoided and thus they should be made to bear the costs of these proceedings personally.

  1.  Resolution :

My perusal of the affirmations in support of this application and the attachments thereon show that indeed the applicant and his wife own 50% shares in the 3rd Respondent Company and that the 1st and 2nd Respondents also do own the remaining 50% shares in the 3rd Respondent Company. My further reading of the same shows that the fact deposed  in the affirmation show that the business, the accounts and the day to day running of the company is vested in the 1st Respondent who is resident in Uganda while the applicant and wife are resident in Japan. These facts are thus proven by the affirmations.

In addition, the affirmations show that there is dispute between the parties which arose out the issue of accountability, access to record and information relating to the business affairs of the company for period 2007 to date and that the said dispute has been referred to arbitration but has intensified since then after a resolution to have the applicant become a co signatory to the accounts of the 3rd respondent with the 1st respondent.  This fact is proven by the affirmations and the arbitration agreement attached herein.

Indeed a  panel of seven arbitrators led by the convener called  Naeem Chopra is currently handling the matter and arbitration whose proceedings commenced by virtue of arbitration agreement dated the 22nd October 2014 which is attached to the affirmation in support of this application thus the fact of the existence of the arbitration process is proven and is said to be ongoing. The said supplementary affirmation and the affirmation in support the applicant show further a request that the mandate for the operation of the 3rd respondent company bank accounts be changed such that the 1st respondent ceases to be the sole signatory and instead the applicant be added as a co signatory so as to safeguard the 3rd respondent’s company finances pending conclusion of the arbitration proceedings.  The said affirmations further show that a decision was reached to that effect and the applicant when presented with the said resolution did sign it while the 1st and 2nd respondent refused to do so thus posing a danger to the finances of the 3rd respondent which could risk being depleted as the 1st respondent continued to be the sole signatory and was in dispute with the applicant as regards the accountability for resources and stock of the 3rd respondent.

Under Section 6(2) Of The Arbitration And Conciliation Act, Cap 4 Law of Uganda it is provided that where a party applies for an injunction or an interim order and the arbitral tribunal has ruled on any matter relevant to the arbitration the court shall treat the ruling or any finding of facts made in course of the ruling as conclusive for purposes of the application.  I have given due regards to the decision of the arbitral tribunal and also had regards to the very pertinent issues raised by the affirmations in support to this application and I am convinced that indeed a grave danger is posed to the resources of the 3rd respondent given that the parties herein are in dispute and there seem to be bad will on the side of the 1st and second respondents in that while it would have been simple to have a resolution to safeguard the company resources in the banks secured by a resolution freely obtained amongst shareholders of the 23rd respondent, the applicant had to resort to these proceedings in an effort to guard the said resources. In my view this shows complete breakdown of trust amongst the shareholders thus going proving that court intervention was necessary. The intervention of the court in matters before an arbitration tribunal is guaranteed under the aforementioned law.

Thus having satisfied myself that the proper procedure his obtaining in the circumstances of this application which has been properly supported by evidence on record and that this court is clothed with the authority to grant the orders sought, I would be inclined to grant the orders sought in order ensure that the interests of all parties in the dispute are protected until the parties themselves sought out what is amiss between themselves through the arbitral process or otherwise lawful means. Thus this application succeeds on the basis of the reasons cited above with the orders south granted as specifically indicated below.

  1. Orders:

The following orders are issued in respect of this matter;

  1. A temporary injunction is issued stopping any withdrawals of any money or dealings on the company’s bank accounts till the conclusion of the arbitration process or when mutually agreed upon by all the shareholders of Yuasa Investments Ltd during the arbitration process which is ongoing
  2. The arbitration proceedings are directed to be concluded within 30 days from date of making of the orders. 
  3. The costs of this application are to be borne by the 1st and 2nd respondents personally as their conducts have resulted in these proceedings.

 

These orders are made at the High Court of Uganda at the Commercial Division, Kampala.

 

 

 

Hon. Justice H. P. Adonyo

Judge

19/2/2015