Shumaila Khan v Fahad Zeeshan & 1 other

c. That all the monies received by the Defendants in Kenya and deposited in the aforementioned bank accounts be held to await further orders from the court. d. That in the alternative to the order restraining the 1st Defendant from leaving Kenya, the Defendants jointly and severally be ordered to deposit the sum of Kshs. 150,000,000 as security before judgment and/or deposit the 1st Defendant’s passport in court to ensure the 1st Defendant’s availability during the hearing of the suit. e. That the Defendants do disclose whether they operate other bank accounts and if so, provide particulars thereof and further an order be made that no withdrawals for any money should be made by them from the accounts pending determination of the suit. f. That the court makes any further relief that it may deem fit and just to grant, and that costs of this application be provided for. 3. The application is premised on grounds and the Supporting Affidavit of Shumaila Khan that the Plaintiff and the 1st Defendant are married though currently separated. That they are both Pakistani nationals domiciled in Kenya and that the Plaintiff and the 1st Defendant hold 30% and 70% shares respectively in the 2nd Defendant. 4. That the 2nd Defendant has been running the business of selling imported used motor vehicles since 2016 and that the 1st Defendant has been in charge of the day to day operations of the 2nd Defendant. That the Defendants operate at least 4 bank accounts including the aforementioned accounts and that the Defendants have never accounted to the Plaintiff on the trading affairs of the 2nd Defendant which the 1st Defendant operates as though the 2nd Defendant were a one-man company. 5. That the Plaintiff’s 30% shareholding thereon has earned Kshs. 143,230,071.26 and that the 1st Defendant is on the verge of permanently leaving Kenya and hence the application herein is merited to avoid the suit from being rendered nugatory. 6. In response, the Defendants filed a Replying Affidavit sworn by the 1st Defendant that the 2nd Defendant was incorporated on 02/07/2014 where the 1st Defendant holding 70% shares of the company allocated 30% of the shares to his wife, the Plaintiff, even though she never contributed to the share capital of the company. That the 1st Defendant developed the business and oversaw its day to day running, which business grew into a lucrative car business in Mombasa. 7. That to ensure efficient operation of the company, the 1st Defendant opened several bank accounts including but not limited to the Dollar account at Equity Bank No. 0250264, Equatorial Commercial Bank Account No. 0XXXXXXX01 (company account), Co-operative Bank – Nkurumah Road Kshs. Account No. 01143446957500 (personal account), Co-operative Bank – Nkurumah Road Kshs. Account No. 0XXXXXXXXX00 (company account), and Co-operative Bank – Nkurumah Road USD Account No. 02100448015600. The 1st Defendant stated that he is the only signatory to the accounts and therefore the only one who operates and authorizes the transactions thereto. 8. The 1st Defendant deponed that in 2024, a matrimonial dispute arose between him and the Plaintiff. That on 10/12/2024, the 1st Defendant travelled out of the country for business engagements and upon return, he was detained at the airport for contempt of a court order issued on 6th December 2024 in Mombasa MCC No. E1821 of 2024, but he was released from custody. 9. That in the absence of the 1st Defendant, the Plaintiff ran the business recklessly to the extent of being unable to pay its liabilities including salaries, converted proceeds from the business to her own personal use and fired the manager. That when the 1st Defendant attempted to access the accounts at https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/4375/eng@2026-02-26 2

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Co-operative Bank Nkurumah Branch, he was informed that there were orders from the court denying access. 10. The Defendants also filed a Notice of Preliminary Objection dated 23/01/2025 on grounds that the suit does not disclose the real dispute between the Plaintiff and the Defendants. That the suit is for protection of company assets and the proper plaintiff is Al - Fadil Motors Ltd by virtue of the rule in Salomon v Salomon. 11. That the Plaintiff has never beneficially owned the 30% shares registered in her name in the 2nd Defendant, that the suit aims at defeating the 1st Defendant’s ownership of the company and to perpetrate fraud on the 2nd Defendant, therefore, offending public policy principles, and that the suit contravenes Sections 238 and 239 of the Companies Act, 2016. That the entire suit is therefore incompetent, an abuse of the court’s process, a waste of judicial time and ought to be struck out. 12. The application and the Notice of Preliminary Objection were canvassed by way of written submissions which have been duly considered. Analysis 13. 14. Having considered the Notice of Motion application, the Replying Affidavit, the Preliminary Objection, and submissions by the parties, the issues for determination are: a. Whether Notice of Preliminary Objection by the Defendants is merited b. Whether the Plaintiff has met the threshold for grant of interlocutory injunction c. What orders on costs should issue On the first issue, the principles governing preliminary objections are settled in Mukisa Biscuit Manufacturing Co. Ltd v West End Distributors Ltd (1969) EA 696 where it was held that: “ A preliminary objection is in the nature of what used to be a demurrer. It raises a pure point of law which is argued on the assumption that all the facts pleaded by the other side are correct. It cannot be raised if any fact has to be ascertained or if what is sought is the exercise of judicial discretion. The improper raising points by way of preliminary objection does nothing but unnecessarily increases cost and, on occasion, confuse the issues. This improper practice should stop.” 15. The Defendants argued that the suit offends the rule in Salomon v Salomon & Co. Ltd (1897) AC 22 on separate corporate personality, that the Plaintiff lacks locus standi as the proper plaintiff is Al Fadil Motors Ltd, and that the suit contravenes Sections 238 and 239 of the Companies Act for failure to seek leave to institute a derivative action. 16. Whether the Plaintiff’s claim is personal or derivative requires examination of pleadings and evidence regarding alleged oppression, mismanagement, and fraud. These are not purely legal issues but involve contested facts. Accordingly, the objection does not strictly meet the Mukisa threshold in so far as it invites factual inquiry. 17. On separate corporate personality, the rule in Salomon established that a company is a distinct legal person separate from its shareholders. The Plaintiff alleged that the 1st Defendant controls 70% of the shares, he is the sole signatory to accounts, he has failed to account for company funds, and he is mismanaging and oppressing the minority shareholder. https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/4375/eng@2026-02-26 3

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18. At this stage, the court cannot conclusively determine whether the claim is derivative or falls within statutory relief for unfair prejudice under the Companies Act without full hearing. 19. On the derivative action under Section 238 and 239, leave of court is mandatory before continuing a derivative claim. The court in Ghelani Metals Limited & 3 others v Elesh Ghelani Natwarlal & another [2017] KEHC 4629 (KLR) held that: “ The requirement to fall under the exceptions to the rule in Foss v Harbottle was replaced with judicial discretion to grant permission to continue a derivative action. Judicial approval of the action is what now counts and such approval is based on broad judicial discretion and sound judgment without limit but with statutory guidance.” 20. However, the Plaintiff argued that her claim is not derivative but seeks personal declaratory and monetary reliefs based on her 30% shareholding and alleged oppression. That distinction cannot be resolved summarily. Even assuming procedural defect, Section 239 allows regularization rather than automatic striking out. 21. The Plaintiff further prayed injunctive orders against the bank accounts and for an order of freezing accounts. It is on record that since incorporation pf the company in year 2016, the bank accounts have been solely operated by the 1st Defendant. It is until after the parties had matrimonial differences that the prayers vwere sought. Mere matrimonial discord does not establish asset flight. Until both parties are heard, only then can this court can establish whether or not the 1st Defendant has mismanaged the company assets. The application fails. 22. On travel restriction of the 1st Defendant from leaving Kenya, this court is of the view that freedom of movement is constitutionally protected. Travel restriction orders are therefore exceptional. In Braeburn Limited v Gachoka & another (2007) EA 67 the Court held that such coercive orders require clear proof that a defendant intends to abscond to defeat justice. The 1st Defendant demonstrated business travel and has previously returned to this jurisdiction. 23. It can however not be ignored that the Respondent counsel has a pending application to cease from acting for the Respondent as he has lost communication with his client. This is an indication of flight risk on the part of the 1st Respondent. On the basis that the 1st Respondent has lost contact with the advocate on record, I allow the application for travel restrictions as prayed. 24. On the prayer for security before judgment, Order 39 of the Civil Procedure Rules requires proof that the defendant intends to obstruct execution by disposing of property. However, no such evidence has been shown beyond speculation. It is on the said basis that the prayer for deposit of Kshs. 150,000,000 or passport surrender is declined. 25. On disclosure of bank accounts, given allegations of mismanagement and lack of transparency, limited disclosure of company bank accounts is justified to preserve subject matter and ensure accountability. The same shall be dealt with during the pre-trial proceedings. Determination 26. Accordingly, this court makes the following orders: a. The Preliminary Objection dated 23/01/2025 is dismissed with costs. b. The Notice of Motion application dated 04/12/2024 is partly allowed on the following terms; https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/4375/eng@2026-02-26 4

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c. i. That pending the hearing and determination of the suit, the 1st Defendant is hereby restrained from leaving Kenya until further orders of the court. ii. That this order be enforced through the Immigration Department. Costs of the application shall be in the cause DATED AND DELIVERED VIRTUALLY AT MOMBASA THIS 26TH DAY OF FEBRUARY, 2026 ……………………….. HON. F. WANGARI JUDGE OF THE HIGH COURT In the presence of: Ms. Gwahalla Advocate h/b for Mr. Gikandi Advocate for the Plaintiff Mr. Oyas Advocate for the Defendants Ms. Salwa, Court Assistant https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/4375/eng@2026-02-26 5

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