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.