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Flower firm loses bid to save its directors in fraud case
Justice Roslyne Aburili dismissed the application after finding that the company was not the best-suited party to seek quashing of the criminal charges and that the prosecution was not unlawful.
Exporter Heritage Flowers Limited has lost a bid to free its two directors from a Sh110.6 million fraud and money laundering criminal case, which is alleged to have stemmed from a boardroom fight on the shareholding of the company.
The firm wanted the High Court to prohibit the Director of Public Prosecutions from continuing with the trial of Mr Shailesh Kumar Rai and Ms Ranjeeta Pandey Rai, who are accused of stealing the amount from the company. They are also directors of Rosalia Blooms Limited.
The criminal case started in July 2023 at the Milimani Chief Magistrate court in Nairobi, where the pair was arraigned over the theft accusations.
They were also charged alongside two other people with nine counts related to allegations of conspiracy to defraud Heritage Flowers cash of Sh10.5 billion between September 2021 and August 2022.
Asking the High Court to quash the trial, Heritage Flowers argued that the instigation of the criminal prosecution against the pair was a criminalisation of a shareholder dispute between them and Riyaz Punjani Muhamadali as shareholders of the company, for which it had not lodged any complaint with the Directorate of Criminal Investigations and the police.
But Justice Roslyne Aburili dismissed the application after finding that the company was not the best-suited party to seek quashing of the criminal charges and that the prosecution was not unlawful.
This is because the firm was not the subject of the criminal process, hence the judge said the application was misconceived and incompetent.
Justice Aburili ruled that a company cannot file judicial review proceedings to stop the prosecution of its directors or employees, where the company is not a party to the criminal charges unless it can demonstrate a direct legal interest or that its own rights are being infringed by the said prosecution.
The firm incorporated in 2014 as a limited liability company comprising three shareholders/directors.
"The company lacks standing to seek the reliefs sought and the use of its name to challenge personal criminal charges against its directors and employees amounts to a misuse of corporate personality and an abuse of court process," stated the judge.
She explained that the proper course would have been for the individuals facing the criminal proceedings to approach the court in their own names and demonstrate with cogent evidence that the prosecution against them meets the threshold for judicial intervention.
"I find and hold that the application dated August 16, 2023, having been filed by Heritage Flowers Limited and not by the Interested Parties (Mr Shailesh and Ms Ranjeeta), who are facing the criminal charges which are sought be quashed, and without the Company’s resolution and authorization, is incompetent and fatally defective. It is hereby struck out," said the judge.
The court observed that even assuming that the company had the locus standi to file the application proceedings, after reviewing the evidence adduced by the police in their replying affidavit, Justice Aburili said she was not persuaded that the process of investigation or prosecution of the two directors was unlawful, irrational, or procedurally improper.
"This court is persuaded that indeed, there exists valid suspicion that there are offences that might have been committed by the interested parties, and as such, it would only be prudent for the court to avoid interfering with the police and DPP constitutional mandate as contemplated under Articles 157 and 244 of the Constitution, respectively," said the judge.
They include Riyaz Punjani Muhamadali as a director holding 50 shares, Mr Shailesh who is the Managing Director and holder of 25 shares, and Ms Ranjeeta who is equally a director and holder of 25 shares. The court heard that Mr Shailesh and Ms Ranjeeta are husband and wife.
Police Chief Inspector Martin Munene, in opposition to the application, contended that the investigations into the alleged financial malpractices in the company were based on a complaint by Mr Riyaz.
The officer said the allegations by Mr Riyaz were that the Board resolutions had been forged. He said Mr Shailesh and his wife allegedly, as a result of the forged resolution, signed a commission agreement without involving the majority shareholder/director (Mr Riyaz) which agreement allowed for the deduction of two percent of total sale value.
