[2008] KEHC 1821 (KLR)
The court held that the applicant, as the Official Receiver of Continental Credit Finances Ltd, could not be enjoined as an interested party in the suit without first obtaining leave of the court or the liquidation committee as required by the Companies Act. The court found that the applicant had not complied with...
Source-derived case information.
- Citation
- [2008] KEHC 1821 (KLR)
- Parties
- Plaintiff: Afrison Export Import Limited; Defendant: Nairobi City Council; Defendant: Rafiki Enterprises Limited; Applicant: Continental Credit Finances Ltd (Official Receiver)
- Court
- High Court
- Court Station
- High Court at Nairobi (Milimani Law Courts)
- Jurisdiction
- Kenya
- Case Number
- Civil Case 1536 of 1995
- Procedural Posture
- Civil Case / Ruling on Application for Leave to Enjoin Interested Party
- Outcome
- Application dismissed with costs to the respondents.
- Legal Topics
- Joinder of Parties, Company Liquidation, Leave of Court, Mortgage Recovery
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Afrison Export Import Limited
Plaintiff
Nairobi City Council
Defendant
Rafiki Enterprises Limited
Defendant
Continental Credit Finances Ltd (Official Receiver)
Applicant
Procedural Posture
Civil Case / Ruling on Application for Leave to Enjoin Interested Party
Legal Issues
- 1 Whether the Official Receiver of Continental Credit Finances Ltd can be enjoined as an interested party in the suit without leave of the court or liquidation committee.
- 2 Whether the Companies Act requires leave before a liquidator can be joined to proceedings involving a company under liquidation.
- 3 Whether the applicant has complied with the procedural requirements for joinder.
Ratio Decidendi
The court held that the applicant, as the Official Receiver of Continental Credit Finances Ltd, could not be enjoined as an interested party in the suit without first obtaining leave of the court or the liquidation committee as required by the Companies Act. The court found that the applicant had not complied with this mandatory procedural requirement. Furthermore, the court noted that the concept of an 'interested party' is not generally applicable in ordinary civil suits, but rather in judicial review proceedings. As such, the application to be enjoined was declined, and the applicant was directed to comply with the provisions of the Companies Act before seeking joinder.
Court Disposition
Application dismissed with costs to the respondents.
Orders
- The application by the Official Receiver to be enjoined as an interested party is declined.
- The applicant must comply with the provisions of the Companies Act before seeking joinder.
Full Case Text
Judgment text and source record
43 paragraphs
REPUBLIC OF KENYA IN THE HIGH COURT OF KENYA AT NAIROBI (NAIROBI LAW COURTS)
Civil Case 1536 of 1995
AFRISON EXPORT IMPORT LIMITED ……...…… PLAINTIFF
VERSUS
NAIROBI CITY COUNCIL ……………….. 1ST DEFENDANT
RAFIKI ENTERPISES LIMITED ….…….. 2ND DEFENDANT
RULING
APPLICATION FOR LEAVE TO ENJOIN PROPOSED
INTERESTED PARTY TO SUIT – OFFICIAL RECEIVER
DATED 14TH APRIL 2008
1: Background
1. There are various suit related to this present one that is before me. The cases are RMCC 4/91; RMCC 1239/93, Hccc1441/95 (OS), Misc Application 1135/07 and this current case Hccc1536/95.
2. The City Council of Nairobi had allegedly sold land
LR 7879/4 situated along Thika road to the 2nd defendant M/s Rafiki Enterprises Ltd for non payments of rates owed to the council. The registered owners then claimed that the value of sale was under estimated. A dispute ensured as to whether the said sale was regular or not.
3. It is without a doubt that a third party M/s Continental Credit Finances Ltd had advanced a mortgage to the registered owner. The suit having been sold they want their money.
4. Their notice was brought to this present suit where they are not parties to. They filed an application dated 14 April 2008 seeking to be enjoined to the said suit.
II: Application 14 April 2008
5. The applicant proposed interested party prayed that they be enjoined to recover Ksh.21 m advanced to the plaintiff. They were to safe guard their interest in this suit.
6. The applications was not opposed by the plaintiff. It was opposed by the 1st and 2nd defendant. The 1st defendant claim there was no such thing as an interested party. This is only found in a Judicial Review. The 2nd defendant relied on the three decisions which brought out the fact that Liquidation under the Companies Act must first seek leave of the court or of the committee.
7. The case law of:-
i) Trade Bank
v
L.Z Engineering Company
CA 14/98
Gicheru, Tunoi, Owuor JJA
ii)Tamil Enterprises
Official Receiver of Credit Finance Co. Ltd
Hccc1914/99
iii)Welcome Property
V
Karuga & 2 Others
(2001) KLR 402
Ringera, J.
8. In order to bring such application the applicant refused to first seek the authority and leave of the committee or of the court to be enjoined as a party to this suit. No such authority has been first sought from the court or committee to indicate that the proposed interested party may be enjoined to the suit. The provision of the Company’s Act has not been complied with.
9. (As to one related case the proposed applicant withdrew a suit on the same question).
10. I hereby decline to grant the prayers sought. The applicant requires to comply with the provision of the Company Act.
11. There will be costs to the respondents.
DATED THIS 18TH DAY OF JUNE 2008 AT NAIROBI.
M.A. ANG’AWA
JUDGE
C.N. Njenga instructed by D. Njogu & Co. Advocates for the Interested Party-applicant – present
S.N. Wachira instructed by Wetangula Adan Makhoha & Co. Advocates for the 1st defendant – present
M. Osundwa instructed by Havi & Co. Advocates for the 2nd defendant - present