CHIPAMBA & ANOR v LEES INN HOTEL (PVT) LTD (Under Final Liquidation)

CHIPAMBA & ANOR v LEES INN HOTEL (PVT) LTD (Under Final Liquidation)

HIGH COURT, HARARE

[Opposed Application HH 134-16]

December 3, 2015 and February 17, 2016

MUNANGATI-MANONGWA J

Company law  –  Winding up  –  Whether shareholders have right to receive notice of  –  Time within which interested party can oppose.

The two applicants being the shareholders in the respondent company had been instrumental in obtaining an order placing it under judicial management. Once appointed, the judicial manager took the view that the respondent had to be placed under provisional liquidation. Through the legal practitioners who had been approached by the applicants in placing respondent under judicial management, the judicial manager petitioned for respondent’s provisional winding up. He did not serve applicants with that process and eventually a final winding up order was granted. In an application for its rescission:

Held, that shareholders of a company are interested parties in an application for the cancellation of a judicial management order and its substitution with a provisional winding up order and must in terms of s 306 (m) of the Companies Act [Chapter 24:03] be served with any such process. The obligation to serve such process extends to everyone whose interests are known. Any failure to comply with that procedural requirement renders the order eventually granted fatally irregular.

Held, further, that if a provisional liquidation order does not set out the time limits within which an interested party must oppose its confirmation, it is not open to a party to set out a dies induciae in the publication order and any failure to comply with such dies induciae as set out does not result in a bar.

Case cited:

In re Stand Five Four Nought (Pvt) Ltd HH 767-15 (unreported), followed

Legislation considered:

Companies Act [Chapter 24:03], ss 30 (1), 227, 306 (m)

Companies (Winding Up) Rules, 1972 (RGN 841 of 1972), r 5 (2)

High Court Rules, 1971 (RGN 1047 of 1971), O 9 r 63, O 32 r 247 (3)(c), O 49 r 449, First Schedule Form 29D

T Mpofu, for the plaintiff

L Uriri, for the respondent

MUNANGATI-MANONGWA J:

The first and second applicants were shareholders and directors of Lees Inn Hotel (Pvt) Ltd, the respondent, which company is now under final liquidation. It was at the instance of the two applicants in their aforementioned capacities that an application was initially made to place the respondent under provisional judicial management. To achieve such status, the two instructed Mr GN Mlotshwa of GN Mlotshwa & Co to make the necessary application. Ultimately Mr Winsley Militala was appointed the provisional judicial manager on 18 December 2013, when the respondent was placed under provisional judicial management.

Midway through the process, the applicants had a fall out with the judicial manager. Mr Mlotshwa proceeded to work with Mr Militala leaving the applicants to seek legal representation elsewhere.

On 16 April 2014 an order for provisional liquidation was granted by Uchena J, with the return date set for 30 July 2014. It is common cause that no official notice was served on the applicants, however the respondent placed notices in the Herald and the Government Gazette on 9 July which notices only came out on 18 July 2014 as the original documents clearly show. The advert called upon interested parties to file opposing papers by 25 July 2014 effectively giving any interested parties exactly five working days to do so. The applicants only filed their opposing papers on 28 July 2014. The applicants attended court with their legal practitioner on 30 July 2014 but the court did not entertain them as they had been barred. Proceeding on the basis that the application was not opposed the court granted a final order placing the respondent under final liquidation.

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