The High Court has settled a 14-year vicious ownership suit of garment maker Manchester Outfitters Limited (MOL) that pitted three family members against one of their own.

Yesterday, the handed ownership of the multi-billion shilling entity to Mohan Galot, a renowned billionaire businessman, who also owns London Distillers.

Verdict by Justices Lillian Mutende, Chacha Mwita and Mugure Thande over the vicious fight for control of Manchester is a big blow to his three nephews Pravin Galot, Rajesh Galot and Ganesh Galot, who claimed to be directors or majority shareholders. “We reiterate that we were tasked to determine the issue of directorship and shareholding of MOL. Having considered the evidence, submissions and the law, we find that the director of Manchester Outfitters Limited is Mohan Pusharam Galot who is also the governing director,” Judges ruled.

In their decision, Judges stated that the removal of Pravin, Rajesh and Ganesh as directors by Mohan in 2007, was in exercise of the power 15 conferred upon him as governing director by Article 10.

“The impugned removal cannot be faulted. In the circumstances the conclusion we come to on this issue is that Pravin and Rajesh ceased to be directors of MOL on March 14, 2007, while Ganesh ceased to be a director on June 7, 2007. It follows therefore that Mohan is the only remaining director of MOL,” Judges held.

Judges also determined that shareholders of  the garment maker to be Mohan’s late father, Lalchand Pusharam Galot, with one management share and 349 ordinary shares while Mohan Galot with one management share and 349 ordinary shares and MOL subsidiary Galot Limited with 700 ordinary shares. Pravin and his uncle Mohan had been embroiled over the legitimate managing director of the garment manufacturing company that was established in 1954. Manchester Outfitters was later converted into a 50/50 percent partnership between the late Pusharam and his son Mohan. Later they employed Mohan’s brothers, Lalchand Pusharam Galot (Lalchand), Ganeshlal Pusharam Galot (Ganeshlal) and Sohanial Pusharam Galot (Sohanlal).

Four sons

On November 12, 1973, Pusharam died and left a will dated October 27, 1973 in which he bequeathed his four sons a quarter each of his 50 per cent interest in the partnership. As a result, Mohan’s share in the partnership increased to 62.5 per cent while each of his three brothers got 12.5 per cent of the business.

In 2007, Mohan claimed his nephew Pravin was not a director or shareholders, leading to a court battle.

While declaring the businessman as the director of Manchester, Judges found that from the evidence tabled in court by the company Registrar’s record in a letter dated November 27,1984 indicated that Lalchand and Mohan were directors and held one management share and 349 ordinary shares each while Galot Investments Limited held 700 shares.

“This position remained unchanged, according to the Registrar’s letter dated December 3,1986. Registrar’s letter also confirmed that the share capital of MOL was Sh14 million divided into 1,400 shares of Sh10,000 each, comprising two management shares and 1,398 ordinary shares,” Judhes stated.

In addition, Justices noted that no major changes occurred between 1979 and 1987, regarding the shareholding of MOL since the Registrar confirmed before court that MOL filed annual returns consistently until 1987. They dismissed Pravin contention that he owns the company and has the majority shares of 349 followed by his brother Rajesh with 349 while the company itself owns 700.

Judges further stated that 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 were ever permanent directors in MOL.

“Claim by the defendants that they were permanent directors is therefore without any basis,” the Judges ruled.

According to Judges, Pravin’s case is that he was appointed managing director in 1991 in place of Captain Moniz, through a letter dated November 21, 1991 and signed by Mohan as director.

“Pravin admitted that as at the time of his appointment he was not a shareholder in MOL. He became a shareholder after Sohanlal forfeited his 349 ordinary shares for non-payment. The said shares were allotted to Pravin at a cash consideration of Sh10,000 each,” the ruling by the court states.

Similarly, Rajesh had told court that he holds 349 ordinary shares which he acquired through allotment from MOL after his father Ganeshlal forfeited the same. He said he paid Sh34 Million being Sh10,000 for each share.

Judges dismissed Pravin and Raject contentions that they owned majority shares, noting that all 1,400 shares had been taken up and fully paid for by the three shareholders and that the only way their fathers Sohanlal and Ganeshlal could have acquired any shares in MOL would have been by way of transfer from the existing shareholders.

“We have not seen any share transfer form executed by Lalchand and Mohan, in favour of Sohanlal or Ganeshlal in relation to those shares,” Judges ruled.