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ELCOtherELC No. 1132 of 2015 (with ELC Miscellaneous Application No. 290 of 2015)· [2019] KEELC 136 (KLR)
David Njihia Mbugua & another v Monicah Wanjiru Mbugua & another [2019] KEELC 136 (KLR)
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·~2 min to read original · ~4 min briefThe bottom line
#What this practically means
#Executive summary
#By an application dated 18 April 2019, the 2nd Defendant sought the striking out of ELC No. 1132 of 2015 together with ELC Miscellaneous Application No. 290 of 2015, in which the Plaintiffs had sought leave to institute a derivative suit, on the grounds that the Environment and Land Court lacked jurisdiction and the Plaintiffs lacked standing. The 2nd Defendant's supporting affidavit deponed that the dispute related to the internal affairs and management of J. M. Mugo Investment Company Limited, its directorship and shareholding, matters for the High Court. The 1st Plaintiff opposed, contending that the suit concerned ownership of L.R. No. 1/543 Nairobi and alleged fraud in its transfer, executed by the Defendants as majority shareholders without a resolution of the directors and shareholders, to the detriment of the company's assets and minority shareholders. Justice K. Bor declined to strike out the suit, holding that striking out would serve no useful purpose. Since the High Court has jurisdiction over derivative suits under the Companies Act and disputes over the management of a company, the court transferred both ELC No. 1132 of 2015 and ELC Misc. Appl. No. 290 of 2015 to the High Court, Commercial and Tax Division, for hearing and disposal, with costs of the application in the cause.
Key legal issues
#01
Jurisdiction of the ELC over a suit centred on company management and a disputed transfer of company land
Holding
The ELC lacks jurisdiction; the dispute, being about internal company affairs and a derivative action, belongs to the High Court.
Reasoning
The dispute concerns the directorship, shareholding and management of J. M. Mugo Investment Company Limited, and the Plaintiffs had sought leave to file a derivative suit. Such matters fall under the Companies Act and are for the High Court. Rather than strike out the suit, the court transferred both files to the High Court's Commercial and Tax Division.
p. 2
Legal principles established
#- The High Court, not the Environment and Land Court, has jurisdiction over derivative suits under the Companies Act and disputes over the management of a company
Court orders
#- 1.ELC No. 1132 of 2015 and ELC Miscellaneous Application No. 290 of 2015 transferred to the High Court, Commercial and Tax Division, for hearing and disposal
- 2.Costs of the application to be in the cause
- Jurisdiction invoked
- Jurisdiction of the Environment and Land Court under the ELC Act vis-à-vis the High Court's jurisdiction over company/derivative suits under the Companies Act
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "David Njihia Mbugua & another v Monicah Wanjiru Mbugua & another [2019] KEELC 136 (KLR)", Case Analysis (2019). ELC No. 1132 of 2015 (with ELC Miscellaneous Application No. 290 of 2015). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2019/136/eng@2019-12-13
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.