Man wins battle for control of Manchester Outfitters
Business
By
Kamau Muthoni
| Apr 12, 2024
Businessman Mohan Galot has won a protracted battle over the ownership of a uniform production and distribution company against his nephews Pravin, Ganesh, Kevin and Rajesh Galot.
Justices Lilian Mutende, Chacha Mwita and Mugure Thande unanimously ruled that Manchester Outfitters shareholders are Mohan and his late father Lachman Pusharam (Pusharam).
According to the judges, Mohan and his brother Lalchand Pusharam Galot (Lalchand) hold one management shares with 349 shares each.
In addition, the court was of the view that Galot Limited, which is owned Mohan owns extra 700 ordinary shares.
They ruled that documents that Mohan's nephews were clinging on to claim that their fathers Ganeshlal Pusharam Galot (Ganeshlal) and Sohanlal Pusharam Galot (Sohanlal) also held a stake in the company were handwritten.
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"In light of the above position and taking into account the provisions of Section 77 of the Act, there could not have been any lawful acquisition of 349 shares in MOL by both Sohanlal and Ganeshlal. Accordingly, there could have been no forfeiture or subsequent allotment of any shares to Pravin and Rajesh or any other person."
"Having so determined, the claim by Pravin and Rajesh that each of them was allotted 349 shares in MOL following the purported forfeiture of the same, has no basis," the bench headed by Justice Mutende ruled.
At the same time, the court dismissed Pravin and Rajesh's claim that they were permanent directors of the firm.
According to the judges, there was no proof from the two.
The court noted that after the death of Lalchand, Mohan automatically took the mantle as the governing director of MOL.
"As the new governing director, Mohan could exercise all the power and authority of that position. One of the powers he could exercise was the removal at any time of a director of MOL, howsoever appointed, other than a permanent director," the court found.
Mohan had kicked out the two alongside Ganesh, and Kevin in 2007. Although Pravin, and Rajesh disputed the move claiming that they were permanent directors, Ganesh and Kevin did not put a challenge to the same.
In the case, Mohan narrated that Manchester Outfitters was established in 1954 by his father, the late Lachman as a sole proprietorship, to carry on the business of uniform production and distribution. Manchester Outfitters was later converted into a 50/50 partnership between Pusharam and Mohan.
The court heard that they employed Mohan's brothers, Lalchand Pusharam Galot (Lalchand), Ganeshlal Pusharam Galot (Ganeshlal) and Sohanlal Pusharam Galot (Sohanlal).
Unfortunately, Pusharam died on November 12, 1973 and left a will dated October 27,1973 in which he bequeathed his four sons a quarter each of his 50 per cent interest in the partnership.
As a result, Mohan's share in the partnership increased to 62.5 per cent while each of his three brothers got 12.5 per cent of the business.
The court heard MOL was incorporated on November 3, 1977 with Mohan and Lalchand as the only subscribers and shareholders.
In response, Pravin claimed he was appointed managing director of MOL in 1991 to replace Captain Moniz.
He claimed that his letter of appointment dated November 21, 1991 was signed by Mohan as a director.
He argued that on his appointment, he was not a shareholder but obtained shares on April 1, 1993 through allotment.
His case is that there was no board resolution removing him from an office he had held for 31 years.