Dr Mcan Kalondi Mrema vs TIB Development Bank limited and another, civil Appeal not1e of 2020.

This case provide of proper plaintiffs when you sue company and its execeptions

It is a cardinal principle of law according to the case of Foss v. Harbottle (supra) that, in a suit for a wrong done to a company or for recovery of monies or damages alleged to be due to the company, the proper plaintiff 

should be the company itself, This rule, we agree with Mr. Materu, admits some exceptions. One of such exceptions is where the acts complained of are of fraudulent character or beyond the powers of the company and, the individual shareholder has no means to procure the suit to be instituted. In  which case, an individual shareholder can, on his own name, institute the suit. 

This position was stated in the case of Burland and Others v. Earle and Others [1902] A.C. 83. In the said case, the respondents as the shareholders to the American Bank Note company, instituted a suit against the first appellant  as one of the directors and the company for declaration that that certain investments of the company’s fund in the sole name of the first appellant were illegal.

 It was submitted for the appellants in the said case that, in the absence of conduct amounting to fraud or oppression, the court of first instance had no right or duty of interference. In resolving the issue, the Privy Council as thesecond appellate court, having reviewed the authority in Foss v. Harbottle

(supra) stated as follows:

“It is an elementary principle o f law relating to Joint Stock Company that the Court will not interfere with the internal management o f companies acting within their powers, and

in fact has no jurisdiction to do so. Again, it is dear law that in order to redress a wrong done to the company or to recover moneys or damages alleged to be due to the

company, the action should prima facie be brought by the company itself.

 These cardinal principles are laid down in

the well-settled cases o f Foss v. Harbottle (1) and Mozley v. Alston (2), and in numerous later cases which it is unnecessary to cite. But an exception is made to the second

rule, where the persons against whom the relief is sought themselves hold and control the majority o f shares in the company, and will not permit an action to be brought in the

name o f the company.”

As to the actions which can be brought under the said exception, the 

Court stated:

“The cases in which the minority can maintain such an action are, therefore, confined to those in which the acts

complained o f are o f a fraudulent character or beyond the powers o f the company.”