• Accused brother filed winding up cause in 2013, diverting family company's business to his firm. Siblings say act led to loss of business.
• Court documents show that family firm's income dwindled between 2013 and 2018 when the winding up cause was pending.
Image: FILE
A five-year storm in tycoon Dhanjal's family has burst with two siblings suing their brother for more than Sh1.9 billion.
Daljit Singh and Surjeet Singh Dhanjal accuse their brother of trying to sink the family business by registering a rival company. They want the court to compel him to pay for damages and loss of business.
The suit papers say that Joginder Singh Dhanjal filed a winding-up cause five years ago against Dhanjal Brothers Limited in which he and the complainants are directors.
Joginder had secretly incorporated Dhanjal East Africa where all business was diverted to. However, he lost the winding-up cause.
His brothers accuse him of having had intentional malice towards the family company and his sole aim was to exclude it from tendering for work.
“The defendant secretly formed a rival company to take over work from the plaintiff (DBL) and also instituted multiple suits against the company while engaging in adverse press peddling falsehoods about its directors,” Daljit Singh Dhanjal, DBL managing director, said.
The brothers, through lawyer Francis Kadima, want to be paid Sh1.9 billion as special damages broken down as Sh905 million cost in one of the cases filed by Joginder for winding up the company, Sh585 million as indebtedness to Diamond Trust Bank Sh395 million loss of business to Dhanjal East Africa and Sh28 million loss from conversion and vandalism.
They also want to be paid for breach of fiduciary duty.
The duo has also accused their brother of stealing and converting the company property and vandalism of new machinery.
“The winding-up court observed correctly that the winding-up proceedings were actuated by reasons other than the protection of the company, and dismissed the petition with costs and any other additional costs incurred during the petition,” Daljit said.
In the court documents filed on Tuesday, the income of DBL is said to have diminished over the period the proceedings were pending.
“The same period also witnessed the devaluation of shares. As at December 2013, the value was Sh1,229, compared to the position as at December 2017 where the share value was zero and required the shareholders to inject Sh78,400 per share in the company,” he added.
The court heard that the company engaged in small business ventures and its debt portfolio kept increasing since the earnings were insufficient to shoulder the debt. The revaluation of shares slowed and as of December 31, 2018, the share value was at Sh13, 978.
This was based on revaluation of assets to cover debt obligations, hence it was not due to gainful business activity.
Daljit and Surjeet claim Joginder exposed DBL to a rising debt due to a non-performing loan account with DTB.
“The defendant passed off as the successor of DBL to win tenders because his company was involved in adverse litigation,” Daljit said.
He said the ‘hostile actions’ depreciated the company assets as many types of machinery have been rendered unserviceable and discarded.
The company had also incurred other statutory charges such as licenses to local authorities, National Construction Authority and other professional bodies.
Justice P.J. Otieno, while dismissing the winding-up suit on December 14, noted there was a need to respect the relationship between the parties, owing to what he was bad faith and lack of bona fides on the part of the petitioner.
Joginder had sued DBL, Daljit and Surjeet in another suit in 2017 after he was allegedly retired and removed as a director.
He had demanded Sh5.9 million in arrears of salary and allowance at the rate of Sh134,329 per month (salary) and Sh150,000 per month for allowances.
Edited by R.Wamochie