In a legal battle that spanned over a decade, Mohan Galot, a billionaire, successfully reclaimed his company, Manchester Outfitters Ltd (MOL), from his nephews who had embezzled billions of shillings in revenue. Yesterday, the High Court ruled in favor of Galot, declaring him the rightful director of the garment maker, bringing a satisfying end to the long-standing dispute.
Mohan and his nephew Pravin Galot have been battling in court for the control of the company incorporated on November 3, 1977.
But Justices Lilian Mutende, Chacha Mwita and Mugure Thande on Thursday found that the director of Manchester Outfitters Ltd is Mohanlal Pusharam Galot who is also the governing director.
Mohan testified in court that Manchester Outfitters was established in 1954 by his father the late Lachman Pusharam Galot as a sole proprietorship to carry on the business of uniform production and distribution.
It was later converted into a 50/50 partnership between Pusharam and Mohan.
They employed Mohans brothers, Lalchand Pusharam Galot, Ganeshlal Pusharam Galot and Sohanlal Pusharam Galot.
When Pusharam died 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, Mohan’s share of the partnership increased to 62 per cent while each of his brothers got 12.5 per cent of the business.
The issues for determination according to the bench were who the shareholders of MOL are, and who are the directors of MOL.
They relied on the company’s articles of association, specifically article 10 which indicated that once Lalchand died, Mohan was to automatically and without any meeting of shareholders or directors assume the position of governing director of MOL.
He was to hold office until his death or vacate office under Article 13.
As the new governing director, the Judges said Mohan could exercise all the power and authority of the 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,”
Judges said it is not in dispute that Pravin was appointed managing director but at the same time indicated no evidence was placed before the court to demonstrate that Pravin or Rajesh Galot were ever permanent directors in MOL.
“The claim by the defendants that they were permanent directors is therefore without any basis,” the judges ruled.
During the hearing, Pravin and Rajesh admitted that their father Ganeshlal, Mohan, Sohanlal and Lalchand are brothers and the sons of Pusharam.
According to Pravin, he was appointed Managing Director of MOL in 1991.
His case was that there was no board resolution removing him from an office he had held for 31 years.
But the Judges in their ruling found that the removal of Pravin, Rajesh and Ganeshlal as directors of MOL by Mohan in 2007, was an exercise of the power 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 14 March 2007 while Ganeshlal ceased to be a director on June 7, 2007,” they said
“It follows therefore that Mohan is the only remaining director of MOL,” they added.
The three-judge bench also cited a registrar record which contains notification of change of directors and secretaries dated March 17, 2007 showing that Pravin and Rajesh ceased to be managing director and executive director respectively, with effect from March 14, 2007.
They subsequently found and held that the shareholders of Manchester Outfitters Limited are Lalchand Pusharam Galot with 1 management share and 349 ordinary shares.
Mohanlal Pusharam Galot with 1 management share and 349 ordinary shares. Galot Limited with 700 ordinary shares and the director is Mohan.
Following the court’s ruling, Mohan in a notice to its employees welcomed the decision saying “I have been reaffirmed as not only the sole director but also its chairman and Governing Director of MOL.”
He assured the staff members that their employment remains secure amidst the changes which will be made.
“We appeal for your patience and cooperation during this period of transition,” read the notice.