Billionaire Mohan Galot rushed to court 14 years ago in an effort to regain control of his garments making company accusing his nephews of stealing billions of shillings in revenue.
But on Thursday, the High Court settled the rancorous family battle for the control of Manchester Outfitters Ltd (MOL) by declaring Mohan the legitimate director of the firm.
Mohan has been battling his nephew Pravin Galot in court for more than a decade as each sought to control Manchester Outfitters, which was incorporated on November 3, 1977.
However, Justices Chacha Mwita, Lilian Mutende and Mugure Thande on Thursday ruled that Mohan is the legitimate director and governing director of Manchester Outfitters.
Mohan testified in court that the firm was established by his father, the late Lachman Pusharam Galot, in 1954 as a sole proprietorship to produce and distribute uniforms.
It was later converted into a 50/50 partnership by Pusharam and Mohan who hired Mohans brothers, Lalchand Pusharam Galot, Ganeshlal Pusharam Galot and Sohanlal Pusharam Galot.
When Pusharam passed away on November 12, 1973, he left a will dated October 27, 1973, in which he bequeathed his four sons a quarter of his 50 per cent interest in the partnership.
As a result of this inheritance of shares, Mohan's share of the partnership increased to 62 per cent while each of his brothers got 12.5 per cent of the business.
According to the three-judge bench of the High Court, the issues for determination were who the rightful shareholders of the company are as well as its legitimate directors.
The judges pegged their decision on the firm’s Articles of Association, which indicated that, on the death of Lalchand, Mohan automatically assumed the position of governing director.
According to Article 13, Mohan was to hold office and exercise all the power and authority of the position at the company until his death or if he decides to vacate office before then.
“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 judges said in their ruling.
The judges also stated that Pravin’s appointment as MD was not in dispute, but no evidence was produced to prove that Pravin or Rajesh Galot were ever made permanent directors.
Pravin claimed in court that he was appointed MD in 1991 and further argued that there was no board resolution that ejected him from an office he had allegedly held for 31 years.
But the Judges ruled that Mohan’s removal of Pravin, Rajesh and Ganeshlal as MOL directors in 2007 was an exercise of powers conferred upon him as governing director by Article 10.
“In the circumstances, the conclusion we come to on this issue is that Pravin and Rajesh ceased to be directors of MOL on March 14, 2007, while Ganeshlal ceased to be a director on June 7, 2007,” the judges ruled.
They added: “It follows therefore that Mohan is the only remaining director of MOL.”
They also cited a record sent to the registrar of companies which contained a notification of change of directors and secretaries dated March 17, 2007 showing Pravin and Rajesh ceased to be MD and Executive Director respectively, with effect from March 14, 2007.
The bench subsequently found and held that the shareholders of Manchester Outfitters Limited are Lalchand Pusharam Galot with one management share and 349 ordinary shares.
Mohanlal Pusharam Galot enjoys one management share and 349 ordinary shares, while Galot is limited with 700 ordinary shares and the legally recognized director is Mohan.
Subsequently, Mohan welcomed the court decision affirming him as the sole director, chairman and Governing Director of Manchester Outfitters Limited.
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