Tanzania: Court Orders Businessman to Vacate Office

THE High Court's Commercial Division has ordered a Director of Motorrama (T) Ltd, Mr Jitesh Jayantlal Ladwa to vacate the office and business premises for use of the company and restore or surrender all company documents and properties.

Judge Dr Deo Nangela issued the orders after granting a petition lodged by four other directors of the company, Bhavesh Chandulal Ladwa, Aatish Dhirajlal Ladwa and Nilesh Jayantilal Ladwa. He gave him, without failure, 30 days to remove his personal business ventures from the company premises.

Dr Nangela declared the conduct and operations of Mr Jitesh, the respondent, as prejudicial to the interests of the company itself as well as other three directors and shareholders.

"The directors are directed to call for an annual general meeting of the company in accordance with the requirements of the law and one of the agenda of the meeting should include taking stock of the company assets and financial status," the judge directed.

He further directed the directors to call for a special meeting of the directors and in that meeting, they should as one of their agenda ascertain whether or not the running of their company is serving the intended purposes, and if not to make appropriate resolutions in line with the law.

"All the directors and shareholders of the company shall not be denied access to the company's office premises. It is further ordered that the respondent is hereby ordered to strictly refrain from all conduct that are violative and prejudicial to smooth running of affairs of (the company)," the judge ruled.

Judge Nangela, however, rejected the request by other directors and shareholders, the petitioners, to have the respondent condemned to pay general damages for his conduct. He noted that basically general damages flow from the wrongs alleged to have been occasioned to the claimants.

"If the damage be general, it must be averred that such damage was suffered. In their petition, I see nowhere that has been averred, except that it features in the prayers. In that regard, I will decline granting the prayer," he ruled.

There was another prayer by the four petitioners that the respondent be permanently barred from taking part in the management of the affairs of the company, and instead the court should make an order directing that the management of the company be placed to the three other directors.

In his decision, Judge Nangela said, "in my considered view, making of such order will not be for the healthy going of (Motorrama (T) Ltd). Instead, it will bring more tension to the company and contradict the basic principle and dictates of good governance of the affairs of companies." He pointed out that it was a settled principle that in exercising their powers, whether general or special, the company directors must always bear in mind that they hold a fiduciary position and must exercise their powers for the benefit of the company and for that alone.

The judge recalled that the petitioners as well as the respondent are both shareholders and directors of Motorrama (T) Ltd, thus, directors are to act in unison, apply to them and must all strive to work for the good of the company.

"In that regard, it is my view that at the moment, instead of banishing the respondent who is also a director, I find it imperative to leave the matter regarding his membership and involvement in the company affairs in the hands of all directors for them to decide in their lawful meetings," he said.

According to him, he did not think it was appropriate for the Court to go to that length at that time. The judge pointed out that the court's interference in the matters concerning the running of the affairs of a private entity is to be invoked when there is an absolute need to do so.

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