Arjandas Hiranand Melwani V. Five Star Industries Limited (2002)

LAWGLOBAL HUB Lead Judgment Report

E. OGUNDARE, J.S.C. 

The plaintiff was a shareholder and director in the defendant Company (hereinafter is referred to as the company). The Board of Directors of the company, by a resolution, on 21st February 1986 transferred his shares to Edict Ltd. As the plaintiff did not request for such a transfer, and he was not a party to the resolution, he instituted an action against the company claiming:

“1. A declaration that the resolution of the Board of Directors of the defendant passed on the 21st day of February, 1986 transferring all the shares held by the plaintiff in the company to Edict Limited is irregular, illegal, null and void and of no effect.

2. An order for an account to be rendered by the defendant to the plaintiff in respect of all dividends, bonus shares and other rights and benefits due to the plaintiff in respect of shares held by him in the defendant company and for the payment of all such benefits to the plaintiff.”

The action was captioned:

“ARJANDAS HIRANAND MELWANI

(Suing through His Attorney LATEPH AKINGBADE ADENIJI) PLAINTIFF

AND

FIVE STAR INDUSTRIES LIMITED” DEFENDANT

In his rather brief statement of claim, plaintiff averred as hereunder:

“1. The plaintiff is a business man, shareholder and director of the defendant company.

2. The plaintiff avers that he authorised Mr. Lateph Akingbade Adeniji to prosecute this action on his behalf and the plaintiff will rely on the Power of Attorney dated the 18th day of April, 1988.
3. The defendant is a limited liability company incorporated under the Companies Decree 1968 with its registered office at Block E, Plot 1, Ilupeju Extension 2, Isolo Road, Oshodi Scheme, Lagos.
4. The plaintiff avers that by a resolution of the Board of Directors of the defendant passed on the 21st day of February 1986, it was resolved by the Board to transfer all the shares held by the Melwani family (which shares include that of the plaintiff) in the defendant company to a company called Edict Limited.
5. The plaintiff avers that the said resolution is irregular, illegal, null and void in that he never gave any instructions or mandated defendant or any person to transfer his shares in the defendant company to Edict Limited or to any other person.
6. The plaintiff avers that he is the second largest foreign shareholder in the defendant company and that his shares were paid for both in Naira and foreign currency. The plaintiff will at the trial rely on the books of account proof of same.
7. The plaintiff avers that as a shareholder in the defendant company, he is entitled to the payment of dividends and defendant to its shareholders.
8. The plaintiff avers that he has been denied of dividends and other benefits due to him by virtue of shareholding in the defendant even though dividends have been declared by the defendant. The plaintiff will at the trial rely on the audited accounts of the defendant.
9. Whereof the plaintiff claims as per his writ of summons”

The company, for its part averred, inter alia, thus:

“1. The defendant denies paragraph 1 of the statement of claim in so far as the status of the plaintiff as a shareholder and director is concerned, the defendant puts the plaintiff to the strictest proof thereof.

2 The defendant denies paragraph 2 of the statement of claim and puts the plaintiff to the strictest proof thereof.

3. The defendant admits paragraph 3 of the statement of claim.
4. Save that the defendant held a board meeting on 21st day of February, 1986, at which corporate matters, (including the passing of a resolution) were attended to, the defendant puts the plaintiff to the strictest proof of paragraph 4 of the statement of claim.

5 The defendant denies paragraph 5 of the statement of claim and pleads that the plaintiff and his four (4) other brothers/relations, Messrs. Ramchand, Deepak, Vinod and Lakhi held series of meetings in December, 1985, at which a separation arrangement was reached to the effect, among others, that all the shares of the five (5) brothers/relations including the plaintiffs, should be transferred to Edict Limited.

6. The defendant further pleads that subsequent to the separation agreement referred to in paragraph 5 hereof, all the parties to the agreement, upon realising that the plaintiff did not honour his own obligations under the separation agreement, decided to submit to a sole arbitrator in person of Mr. Damodar Kelwaran Chanrai, an Indian national and Chairman of Afprint Nigeria Limited.
7. The defendant further avers that the Sole Arbitrators award of 3rd day of April, 1987, confirmed the separation award of 3rd day of April, 1987, confirmed the separation agreement referred to in paragraph 5 hereof.
8. The defendant further pleads, that at the instance of the plaintiff during the arbitration, all arbitral parties appeared in the names of their registered nominee companies with the plaintiff using his (sic) company known as ‘Sharington S.A.’ as his nominee at the arbitration, while one of the parties, Mr. Ramehand Haranand Melwani, nominated Edict Limited, Messrs. Deepak, Vinod, Lakhi Melwani nominated ‘Wimberg Limited, ‘Traders Investors Limited’ and ‘Mantilla S. A.’ as their nominee companies respectively. The defendant shall rely on oral and documentary evidence including a letter dated 30th day of March, 1987, written to the arbitrator by the plaintiff, a copy of which was given to all the arbitral parties and the arbitration award itself. The defendant pleads that plaintiff is a beneficiary of and in fact one of the three managers of a ‘Pool’ into which the global settlement arrangements were to crystallise.
9. The defendant pleads that the plaintiff as a beneficiary of the awards has continued and still continues to enjoy benefits of the said awards while ignoring and/or refusing to implement his obligations to other beneficiaries both under the separation agreement and the arbitration award. The defendant shall rely on all equitable remedies available to it.
10. The defendant also pleads that the resultant shares held by Edict Limited from whatever source(s) are valid and legal as approval have been sought and obtained from them.
11. The defendant denies paragraph 6 of the statement of claim and puts the plaintiff to the strictest proof of it. The defendant pleads, that it is not aware of any ministerial approval(s) given or legal sanction to the plaintiff’s alleged company. The defendant puts the plaintiff to the strictest proof of the quantum of the relative or different currencies with which the alleged shares were paid and pleads that any such purchase (if any or at all which it denies) was and is illegal and unenforceable as against the defendant.
12. The defendant pleads paragraph 1 hereof in reply to paragraph 7 of the statement of claim and puts the plaintiff to the strictest proof thereof
13. The defendant denies paragraph 8 of the statement of claim and repeats paragraphs 1 and 7 hereof

Whereof the defendant states that the plaintiffs action is frivolous, speculative and unsustainable in law and equity and should be dismissed with substantial costs.”

The action proceeded to trial at which one Lateph Akingbade Adeniji, plaintiff’s attorney, testified and was cross-examined by counsel for the defence. No evidence was led for the defence. In his judgment subsequently delivered, the learned trial Judge found:

“1. As far as I can see the power of attorney must be presumed to have been given on 18 April 1988 which is the date of attestation by the notary public who clearly describes it as ‘power of attorney’ even though the effective power itself bearing the donor’s signature is headed ‘To whom it may concern’. The style adopted may be unfamiliar to us but it does not make it inadmissible since the intent is quite manifest on the attestation.”

2…. the register of members (Ex. A) was tendered without objection. The plaintiffs name is entered therein as the holder of 1, 129,170 shares, at any rate up to 21st February 1986. By virtue of section 26(2) of the Companies Act 1968 he is deemed to be a member of the defendant company to the extent of his shareholding.”

3. “The defendant company did not really deny that the selfsame shares were recorded in favour of the company known as Edict Limited at page 159 of Ex. A.” 4. “Once it has been established that the plaintiff was deprived of his shares in a manner contrary to section 75 of the Companies Act 1968 it follows that such a transfer must be illegal.”
4. “Even though the defendant alleged in their statement of defence that some oral and written separation agreements were reached between the parties no evidence of this was placed before me.”

The learned Judge, in the light of the above findings, entered judgment for the plaintiff “as claimed in his writ of summons.”

The company, being dissatisfied, appealed to the Court of Appeal which court allowed the appeal and set aside the judgment of the trial High Court “for reason of being incompetent.” The Court of Appeal found that the power of attorney, Exhibit B “particularly the page headed ‘To whom it may concern’ cannot by any stretch of imagination be construed to be adequate and create a power of attorney in favour of the donee.” Sulu-Gambari, JCA who delivered the lead judgment of the Court of Appeal (and with which Kalgo JCA, as he then was, and Tobi JCA agreed) further found: “I am at one with the submission of the learned counsel for the appellant that a fair construction of the whole of Exhibit B reveals that the donee has not had it couched in sufficient terms the authority to institute any action on behalf of the donor. I, therefore, come to the conclusion that had the learned trial judge examined the true ambit of the powers conferred by Exhibit B, he would have discovered that the donee of the power of attorney had no such authority to institute this action on behalf of the donor. On the whole, I come to the inevitable conclusion that the donee – Lateph Akingbade Adeniji – was not sufficiently armed or has not established proper authority with which to pursue or institute the action he has filed. The action, therefore, is incompetent.”

The plaintiff has now appealed to this court against the said judgment of the Court of Appeal. And in his brief of argument, he has raised three questions as calling for determination.

They are:

“(1) Was the Court of Appeal right in holding that Exhibit B is not a valid power of attorney as it was neither executed before nor authenticated before a ‘notary public’ pursuant to the provisions of Section 117 of the Evidence Act

(2) Was the Court of Appeal also right when it held that Exhibit B as drafted does not give the donee the right to sue

(3) Assuming that the Court of Appeal was right on issues 1 and 2 above, was the court right in holding that the action is incompetent and/or that there was no capacity to sue”

The company, in its respondent’s brief constricts the three questions into one issue that reads:

“Whether the Court of Appeal was right in setting aside the proceedings at the trial court for reason of being incompetent”.

I think the three questions raised by the plaintiff can be dealt with together and this is what I intend to do. In doing so I shall examine the issue of the power of attorney and determine whether the action as constituted was competent.

Exhibit B is the power of attorney Mr. Adeniji relied on in acting on behalf of the plaintiff. Exhibit B reads:

“PAGE 1

To All to whom these presents shall come I, Charles Cho Chiu Sin, M.A. (Cantab), Notary Public, duly Admitted, Authorised and Sworn, Practising at Victoria Hong Kong do hereby Certify that to the best of my knowledge and belief, the signature “A.H Melwani” subscribed to the Power of Attorney hereunto annexed is the signature of Mr. Arjandas H. Melwani which I have compared with his specimen signature filed in my records …

In Testimony whereof I have hereunto subscribed my name and affixed my Seal of Office this 18th day of April in the year of our Lord One Thousand Nine Hundred and Eighty-eight …..

(Sgd.)

Charles C. C. Sin

Notary Public

HONG KONG

“PAGE 2

TO WHOM IT MAY CONCERN

I, the undersigned, Arjandas Hiranand Melwani residing in Hong Kong in my capacity of shareholder of Five Star Industries Ltd. Lagos hereby appoint Mr. Lateph Akingbade Adeniji of Lagos (Nigeria) to act as my attorney and as such to act for and on my behalf in all matters relating to my shareholding in Five Star Industries Ltd. Lagos.

Sgd.

(ARJANDAS H. MELWANI)”

It is this document that the court below, per Sulu-Gambari JCA, held not to be “adequate and create a power of attorney in favour of the donee.” With respect to their Lordships of the court below, I think they are wrong in this conclusion. Exhibit B was made in Hong Kong, and not in Nigeria; there is no evidence that Exhibit B does not comply with the law of Hong Kong, a part of the Commonwealth at the time Exhibit B was executed. By virtue of section 117 of the Evidence Act (formerly section 116), the document was admissible for the same purpose for which it would be admissible in the United Kingdom. Section 117 provides:

“117. When any document is produced before any court, purporting to be a document which by the law in force for the time being in any part of the Commonwealth would be admissible in proof of any particular in any court of justice in any part of the Commonwealth, without proof of the seal or stamp or signature authenticating it, or of the judicial or official character claimed by the person by whom it purports to be signed, the court shall presume –

(a) that such seal, stamp or signature, is genuine; and

(b) that the person signing it held, at the time when he signed it, the judicial or official character which he claims,

and the document shall be admissible for the same purpose for which it would be admissible in the United Kingdom.”

Section 118 (formerly section 117) which the court below relied on and which counsel in their briefs have relied on too, will not, in my respectful view, apply in this case as that section deals with a power of attorney executed in Nigeria or before a consul or representative of Nigeria or of the President.

The conclusion I reach on Exhibit B is that if that document is admissible in Hong Kong (where it was made) – and there is no evidence to the contrary – as a power of attorney, it is equally admissible in this country as such – Section 118 of the Evidence Act refers.

It is argued in the respondent’s brief that there was nothing in Exhibit B authorising the donee of the power of attorney to sue on behalf of the donor. Bryant, Powis, & Bryant v. La Banque Du Peuple (1893)AC 170, 177 is cited in support of the submission that a power of attorney is to be construed strictly. If Exhibit B did not empower Mr. Adeniji to sue on behalf of the plaintiff, I think it is for the plaintiff to complain and not the company. Be that as it may, on a fair construction of Exhibit B, I think Mr. Adeniji had the power to sue on behalf of the plaintiff in respect of the latter’s shares in the company. The authority given by Exhibit B was “to act as my attorney and as such to act for and on my behalf in all matters relating to my shareholding in Five Star Industries Ltd. Lagos.” This authority must necessarily include taking all steps, legal action inclusive, that were necessary to protect plaintiff’s shareholding in the company. I have already set out in the early part of this judgment the caption of the action. It shows the plaintiff as Arjandas Hiranand Melwani. That he sued through his attorney, Lateph Akingbade Adeniji only makes the latter an agent. How an agent is to institute an action on behalf of his principal has just been considered by this court in a recent case. Vulcan Gases Ltd. v. G.F Ind. Gasverwertung A-G. (G.I.V) (2001) 9 NWLR (Pt.719) 610. In the case, this court reviewed the ways an agency may arise. It was decided in that case that generally there is no statutory requirement in Nigeria that a power of attorney for an agent to sue or defend on behalf of his principal should be by deed. It was also decided that in the circumstances of that case, the lawful attorney of the plaintiff properly took out the action under common law and that the action was competently constituted. In that case, as in the instant case, the agent took out the action in the name of his principal. This case, on the issues under consideration, is on all fours with the Vulcan Gases Ltd. case. And on the authority of that case I hold that the action here was competently constituted. The agent, Mr. Adeniji, unlike the agent, Mr. Nahman in United Nigeria Company Ltd. v. Joseph Nahman & Ors. (2000) 9 NWLR (Pt.671) 177, sued in the name of his principal, Arjandas Hiranand Melwani. It is interesting to observe that Mr. Olojo, in oral argument, concedes it that the action as revealed by the caption is between A. H. Melwani and Five Star Industries Ltd. With this concession, it is difficult to argue that the action as constituted, is incompetent. The Court of Appeal was in error when it held that the action was incompetently constituted. The appeal, therefore, succeeds and it is hereby allowed by me.

Mr. Olojo, learned counsel for the Company has argued in the respondent’s brief that as the issues placed before the Court of Appeal by the company were not decided, this case, in the event of the appeal being allowed, should be remitted to the court below for it to pronounce on the other issues raised in the appeal before that court. I regret I cannot accede to this request. The company has not appealed to this court against the failure of the court below to pronounce on all the issues it placed before it. That court took up only one of the issues and decided the appeal on it in favour of the company. The latter took a chance by being content with what that court did and thus did not complain about the former’s failure to pronounce on the other issues. The appeal against the judgment of the Court of Appeal on the only issue pronounced upon by it having succeeded, the judgment of that court is set aside. And the judgment of the trial Federal High Court is restored. I award to the plaintiff N2,000.00 costs of the appeal in the Court of Appeal and N10,000.00 costs of this appeal.

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SC.15/1994