• Dhanjal Brothers Limited is at the centre of protracted court battles involving five siblings and their cousins.
• Daljit wants Joginder to pay Sh1.9 billion for allegedly engaging in ‘hostile activities’ against the company.
A property dispute involving two sons of the late Jaswant Singh Boor Singh Dhanjal is far from over.
Numerous coutle battles threaten to tear the family apart as siblings square it off over their father's company. Daljit Singh Dhanjal has accused his brother, Joginder Singh Danjal, of trying to sink the family business by “secretly” registering a rival company.
In court papers, Daljit also claims Joginder filed a windup suit against Dhanjal Brothers Limited (DBL) to divert business to his registered company, Dhanjal East Africa Limited.
The company, worth about Sh2 billion, is at the centre of protracted court battles involving five siblings and their cousins. It deals in the civil construction.
Daljit, a director at DBL, wants Joginder to pay Sh1.9 billion for allegedly engaging in "hostile activities" to the detriment of the company.
The High Court in Mombasa is expected to give a pre-trial date for the commencement of the case that has seen siblings fight over property over the last 16 years.
Daljit — through lawyer Francis Kadima, who filed the case — accuses his brother of instituting multiple suits against the company and him.
“Joginder engaged in adverse press peddling falsehoods about directors of DBL, and further stole, converted company property and vandalised new heavy machinery,” reads an affidavit filed by Daljit.
The activities, he says, hurt the company and effectively excluded it from tendering processes, resulting in a dwindling capital base as it incurred heavy losses to remain afloat.
Kadima had on October 2019 filed a list of issue, with Joginder later responding to the claims ahead of the pre-trial hearing.
“Joginder is a shareholder of DBL, and as such, he owed a fiduciary duty to the company,” Daljit said.
But Joginder, in his claim, says allegations are a gimmick by DBL to hoodwink the court about the actual state of the company and to paint a picture of a shell company when the fact is to the contrary.
“If at all the company’s income dwindled as alleged, which is totally denied, then it is not because of the winding-up suit but rather due to mismanagement of the company affairs, and the holding by the High Court, that Daljit was criminally culpable for illegal actions and also pilferage of funds from the company,” Joginder said in his affidavit.
He further argued that the name Dhanjal is not for the exclusive use by DBL, as the same is first, a family name and secondly, that DBL does not have any rights (exclusively or otherwise), which has been registered over the use of the name.
“The company has been managed and operated by Daljit for quite some time, without my involvement, and thus the depreciation, if any, of the company’s assets as alleged, is solely due to the mismanagement, pilferage, lack of honesty, and transparency, fraud by the Director,” Joginder added.
Daljit, in a plaint filed on September 12, 2019, accused his brother of unjustly enriching himself and wanted the court to strike out the suit claiming it is without any basis, made in bad faith and malicious.
A meeting held on April 13, 2017, as per a court order issued on March 17, 2017, proposed that their father’s estate, which holds 1,125, ordinary shares in the company, be dissolved in line with shareholding as directed by court.
In the meeting, there was a proposal that shareholders inject more money into the company to reduce its debt portfolio with DTB which resulted from accumulated interest due to delayed payment by debtors.
Pendency of windup petition was put to vote, with 71 per cent of the votes agreeing that it should be withdrawn as the same was working against the interest of the company, the minutes presented in court indicated.
The company’s income, the court heard, dwindled over the period the windup proceedings were ending affecting the total earnings per working taxable year as reflected by the financial audited statements between the year 2013 and 2018.
It was noted that the same period also witnessed devaluation of shares. In the documents, as of December 31, 2013, the value was Sh1,229, compared to the position as of December 31, 2017, whereby share value was zero.
The company engaged in small business ventures and its debt portfolio kept increasing as the earnings were insufficient to shoulder the debt portfolio.
“The defendant did expose the company to a rising debt due to a non-performing loan account with Diamond Trust Bank Limited which accumulated and weakened the company income,” Daljit explained.
In the breakdown, DBL is demanding more than Sh905 million as the costs in windup proceedings, a further Sh585 million as indebtedness to DTB Limited and Sh395.7 million for loss of business.
The company wants the court to assess damages for breach of fiduciary duty, and a further Sh28 million loss from conversion and vandalism.
Records presented in court indicate that during a windup case in 2016, the turnover dropped from Sh77 million to Sh72 million as other companies were reluctant to give large contracts.