IN RE TIMBER AND TRANSPORT KUMASI-KRUSEVAC CO., LTD. ZASTAVA BONSU AND ANOTHER [1980]DLCA1588

Date	1980-03-05
Suit No.
Citation No.	[1980]DLCA1588

SOWAH JSC

ADADE J.S.C

ABBAN J.

TSATSU TSIKATA FOR THE APPELLANTS.

E. D. KOM FOR THE RESPONDENTS.

[1980]DLCA1588
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													<main id="main" class="content" style="min-height: 60rem" >IN RE TIMBER <o:p></o:p>AND <o:p></o:p>TRANSPORT KUMASI-KRUSEVAC CO., LTD.<o:p></o:p>ZASTAVA BONSU AND ANOTHER<o:p></o:p>[COURT OF APPEAL, ACCRA] <o:p></o:p>[1980] GLR 256<o:p></o:p><div style="mso-element:para-border-div;border:none;border-bottom:solid windowtext 1.5pt;
padding:0in 0in 1.0pt 0in">

DATE:
5
MARCH 1981<o:p></o:p>

</div>COUNSEL:&nbsp;&nbsp; <o:p></o:p><div style="mso-element:para-border-div;border:none;border-bottom:solid windowtext 1.5pt;
padding:0in 0in 0in 0in">

TSATSU TSIKATA FOR THE APPELLANTS.<o:p></o:p>

E. D. KOM FOR THE RESPONDENTS.<o:p></o:p>

</div>CORAM:
<o:p></o:p><div style="mso-element:para-border-div;border:none;border-bottom:solid windowtext 1.5pt;
padding:0in 0in 0in 0in">

SOWAH, ADADE JJ.S.C. AND ABBAN J.<o:p></o:p>

</div><o:p>&nbsp;</o:p>JUDGMENT OF SOWAH J.S.C.<o:p></o:p>Sowah
J.S.C. delivered the judgment of the court. It is appropriate for the proper
appreciation of the issues involved, to start with the history of the company,
Timber and Transport Kumasi-Krusevac Co., Ltd., hereinafter referred to as
TAT-KK Co., Ltd.<o:p></o:p><o:p>&nbsp;</o:p>On 8
March 1966 there was registered with the Registrar of Companies, a private
limited liability company, under the name and style of Timber &amp; Transport
Co., Ltd. (TAT) whose object, inter alia, was the exploitation and exportation
of timber. The company had a subsidiary known as TAT Furniture and Construction
Co., Ltd. The shareholders of the Timber and Transport Co., Ltd. were
principally Osei Bonsu, Snr. who held over 95 per centum, the others being his
son Osei Bonsu, Jnr. and his nephew Osei Tutu.<o:p></o:p><o:p>&nbsp;</o:p>It does
appear from the affidavits filed by the parties that from the period 1966 to
1971 the company ran at a loss and that by 1971 the losses had exceeded the
million-cedi mark. In the words of the appellant, by 1971 the company was in a
“paralytic state of malignant insolvency.” In passing, it ought to be mentioned
that Osei Bonsu, Snr. admits in his affidavit the company’s insolvency but says
its liabilities were not over a million but about ›791,890.90. He also admitted
that by 1971 one of the company’s creditors, namely, Barclays Bank (Ghana)
Ltd., had found it necessary to appoint a receiver to the Company.<o:p></o:p><o:p>&nbsp;</o:p>It is not
quite clear how the Yugoslavia company came into the picture, whether upon the
invitation of Osei Bonsu, Snr. or at its own request. Suffice it to note that
on 20 July 1971 an agreement was entered into between Timber and Transport Co.,
Ltd. (TAT) acting by its managing director, Osei Bonsu, Snr. of the one part
and Sumako Industrijski Kombinat Crevna Zastava, a corporation registered under
the laws of Yugoslavia (hereinafter referred to as Zastava or the petitioner)
of the other part.<o:p></o:p>The
substance of the agreement was that the two companies would merge and a new
company would be established under the name and style of Timber and Transport
Kumasi-Krusevac Co., Ltd. which would engage in a common enterprise in the
timber industry. Osei Bonsu, Snr. would transfer 50 per centum of the shares in
TAT to Zastava; the shares in the furniture company would be transferred to the
new company. Zastava would contribute the sum of US$250,000 as a consideration
for its shareholding. The new company would be responsible for all the debts of
the Timber and Transport Co., Ltd., with the understanding that Osei Bonsu,
Snr. would be personally liable for such debts as existed at the date of the
agreement. The repayment of the debts would in the first instance be deducted
from the dividends due to Osei Bonsu, Snr. but Zastava at its discretion, would
also contribute towards its liquidation, such sums as Zastava would pay would
be refunded to that company by Osei Bonsu, Snr.<o:p></o:p><o:p>&nbsp;</o:p>The new
company had a board of four directors, two of whom were to be nominated by
Zastava, the remaining two by Osei Bonsu, Snr. There were in the agreement,
inter alia, two important provisions, clauses 8 and 15 which we consider should
be reproduced in extenso:<o:p></o:p>“Clause
8. The management of the new company as well as of TAT Furniture, whether as to
day-to-day production, or as to any other matter, shall be in the exclusive
competence and control of Zastava, who shall ex</main>