https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/11352

REPUBLIC OF KENYA IN THE HIGH COURT OF KENYA AT NAIROBI COMMERCIAL AND TAX DIVISION CORAM: F. MUGAMBI, J CIVIL SUIT NO. E549 OF 2020 COMM BETWEEN ARM CEMENT PLC DH/APPLICANT (UNDER ADMINISTRATION) … VERSUS G.M KARIUKI HARDWARE LTD ….………. 1ST JD/RESPONDENT PETER MAHU MUTHEE ……………………… 2ND JD/RESPONDENT RULING Introduction and Background 1. This Ruling determines the Notice of Motion dated 7th November 2025 brought under Section 635 of the Companies Act, Sections 1A, 1B and 63(e) of the Civil Procedure Act and Order 22 Rule 35 and Order 51 Rule 1 of the Civil Procedure Rules 2010. 2. The Decree Holder seeks orders for summons to issue for the oral examination of ANNETTE EDNA HCCC NO. E549 OF 2020 RULING Page 1 MUTHONI MBATIA, a director of the 1st Judgment Debtor and also for the 2nd Judgment Debtor personally, to be examined on their businesses, affairs, properties and means of satisfying the decree. 3. Equally sought is the production of the 1st Judgment Debtor's sales ledgers from 2014, certified bank statements from Standard Chartered, ABSA and Co- operative Bank from 2013, audited financial statements and tax returns from 2013, together with the 2nd Judgment Debtor's personal tax returns, bank statements and other relevant financial documents from 2013. 4. Finally, the Decree Holder seeks warrants of arrest against the named individuals in default of attendance, production, or disclosure of means. 5. The application is supported by the affidavit of GEORGE MURIITHI WERU, a Joint Liquidator of the Decree Holder, sworn on 7th November 2025, the Supplementary Affidavit sworn on 23rd February 2026 and submissions dated 10th March 2026. The deponent avers that as at 7th November 2025 the decretal sum from a judgment delivered on 19th May HCCC NO. E549 OF 2020 RULING Page 2 2022 stood at Kshs.195,558,049.88, comprising the judgment sum of Kshs.190,633,745.69 and taxed costs of Kshs.4,924,304.19. 6. It was equally stated that the 1st Judgment Debtor owes Kshs.370,000,000.00 to Standard Chartered Bank (debenture dated 6th July 2015) and Kshs.420,000,000.00 to Co-operative Bank (debenture dated 11th September 2013) and also banks with ABSA, and that despite attachment of the 2nd Judgment Debtor's shares no further assets have been traced, leaving what the deponent terms an “almost paper decree”. 7. The Judgment Debtors oppose the application through the Replying Affidavit of the 2nd Judgment Debtor sworn on 17th February 2026 and submissions dated 29th May 2026. Their case is that the Standard Chartered and Co-operative Bank debentures ranked pari passu as fixed and floating charges, that the 1st Judgment Debtor's business collapsed around 2016, its accounts were frozen by KRA in 2018, its remaining assets were auctioned by creditors in 2019 and its offices closed with records now HCCC NO. E549 OF 2020 RULING Page 3 irretrievable and its directors relocated to the United States of America. 8. On this basis they submit the application is premature, exceeds the scope of Order 22 Rule 35, amounts to an oppressive fishing expedition into a defunct enterprise's historical affairs and that the prayer for warrants of arrest is speculative and unsupported by any demonstrated default. Analysis and Determination 9. I have considered the application, the affidavits in support and oppositions as well as the rival submissions and the record generally. 10. The application before the Court is brought under Order 22 Rule 35 whose purpose is to assist a Decree Holder who has been unable through other means, to identify satisfying assets. In Ultimate Laboratories V Tasha Bioservice, Nairobi HCCC No. 1287 of 2000 (Ringera, J.) , and in Ramaben Ramnikal Patani & 2 Others V Garden HCCC NO. E549 OF 2020 RULING Page 4 Chambers Limited, [2019] KEHC 12340 (KLR), the Court (Okwany, J) held that the rule enables the applicant to seek information in the nature of discovery to assist execution, and that examination is unnecessary only where the Decree-Holder already has definite information of the judgment debtor's debts and properties. The converse holds here that absent such definite information, the rule is available notwithstanding that other execution processes remain pending. There is therefore nothing premature about the application notwithstanding the attachment of the 1st Judgment Debtor’s shares which the 1st Judgment Debtor does not state have been sold. 11. The fact that there are secured creditors does not alter the need for the examination. Indeed, the position is as was stated in East Africa Cables PLC V Ecobank Kenya Limited, [2020] KEHC 7162 (KLR), where Majanja, J. held as follows: “I find that the law is settled that a secured creditor is entitled to exercise its rights under the security document or statute in the event of default by the company. HCCC NO. E549 OF 2020 RULING Page 5 That power is not subject to insolvency proceedings commenced against the company by any other creditor... any other creditor of the company cannot intervene in the exercise of the secured creditor's rights against the secured property.” 12. The above position explains why the specific assets charged under the 2013 and 2015 debentures may be unavailable to the Decree Holder as an unsecured creditor. However, it does not answer whether any surplus assets remained after realization, whether other unencumbered assets or income streams have since arisen, or whether the 2nd Judgment Debtor, bound independently as co-principal debtor, possesses personal means to satisfy the decree. These are unresolved factual matters that Order 22 Rule 35 exists to address. Once again, the plea of prematurity accordingly fails. 13. The threshold for an application under Order 22 Rule 35 requires that the applicant must show the existence of an unsatisfied decree and that the HCCC NO. E549 OF 2020 RULING Page 6 person named is able to speak to the judgment debtor's debts, property or means. In Robert Khamala Situma V Afrikon Limited, [2022] eKLR, Onyango, J cited from the holding of the Court in Ultimate Laboratories (supra), as follows: “... as long as the Applicant has shown that the Respondent is in a position to provide information in the nature of discovery ... as to whether any or what debts are owing to the judgment debtor, and whether the judgment debtor has any and what property or means of satisfying the decree, the Court should summon the person to attend and be examined.” 14. In Laborex Kenya Limited V Kileleshwa Pharmaceuticals Limited, [2024] KEHC 12934 (KLR), Njagi, J citing Tropical Wood Limited V Samilis International Investments, (2017) eKLR, confirmed the jurisdiction exists to ascertain whether the debt is owed and whether the debtor can settle it, and endorsed the caution of Kimaru, J. (as he then was) in Masefield Trading (K) Limited HCCC NO. E549 OF 2020 RULING Page 7 V Rushmore Company Limited & Another, [2008] eKLR that a party resisting examination on the footing that any later application to lift the corporate veil would be premature has “jumped the gun” since it is upon examination that the Court may, if warranted, lift the veil and hold directors personally liable. Oral examination is thus a precursor to and not a consequence of any question of piercing corporate personality. 15. The indebtedness of both Judgment Debtors stands judicially determined by the Judgment of 19th May 2022 which has neither been appealed nor stayed and the decretal sum continues to accrue interest. ANNETTE EDNA MUTHONI MBATIA is confirmed on the 1st Judgment Debtor's CR12 as its director, a fact uncontroverted in the Replying Affidavit. The 2nd Judgment Debtor remains bound as co-principal debtor under the Deed of Guarantee and Indemnity found valid in the said Judgment and is self-evidently able to speak to his own means. Applying Ultimate Laboratories, Robert Khamala Situma and Laborex (all supra), I am satisfied that both named individuals are properly the subject of oral examination in the present circumstances. HCCC NO. E549 OF 2020 RULING Page 8 16. The Judgment Debtors' more substantial complaint targets the breadth of documents sought, including sales ledgers from 2014, bank statements, audited accounts and tax returns from 2013, which they characterize as an indefinite retrospective audit unsupported by evidence of concealment or fraudulent transfer. To this, I appreciate that the jurisdiction under Order 22 Rule 35 is not unbounded. In Post Bank Credit Limited (In Liquidation) V Nyamangu Holdings Limited, [2015] eKLR, Gikonyo, J cited in Robert Khamala Situma (supra), held as follows: “The court's duty under the Order and Rule in question is limited to ensuring that the person being examined answers all the questions which are fairly, pertinent and properly asked, and it is thereafter up to the decree- holder to use the said information to proceed with execution where the examination unearths assets or other means of satisfying the decree.” HCCC NO. E549 OF 2020 RULING Page 9 17. It follows that the inquiry anticipated must be calibrated to establishing present financial position, not converted into a punitive or exploratory audit at large, a concern echoed in Gikandi Ngibuini T/A Gikandi & Company Advocates V Kwale Cement Factory Limited & 3 Others, [2022] KEELC 15496 (KLR) (Naikuni, J), which characterized a similar order as “purely an inquiry requirement of obtaining certain information within the knowledge of the Directors ... which will assist the Court in arriving at an appropriate decision with regard to the execution and satisfying the Decree”. 18. Applying this principle in the instant case, I do find that the time span over which the information is requested is not disproportionate. It coincides with the currency of the Co-operative Bank debenture (2013) and Standard Chartered debenture (2015), the very facilities the Judgment Debtors invoke to explain why the 1st Judgment Debtor's assets are unavailable. It is understandable that the Decree Holder would not be expected to accept, without means of verification, that Kshs.790,000,000.00 in secured facilities together with the proceeds of HCCC NO. E549 OF 2020 RULING Page 10 cement supplied on credit were exhausted leaving nothing recoverable. The documents sought are the only means of testing that assertion, and responding directly to the defences the Judgment Debtors themselves raised. I am not convinced that the application is a fishing expedition or punitive. 19. The proper course given the defense raised by the Judgment Debtors is to produce before the Court what remains retrievable, with any genuine unavailability explained on oath at the examination itself rather than a pre-emptively assumed on affidavit. Framed in such a manner, I do find that the orders sought are proportionate and fall squarely within the purpose identified in Post Bank Credit and Gikandi Ngibuini (both supra). 20. The prayer for warrants of arrest is however declined at this stage, without prejudice to the Decree Holder's liberty to apply afresh on a proper demonstration of willful default, should the persons summoned fail to attend for examination or produce the documents ordered below. Disposition and Final Orders HCCC NO. E549 OF 2020 RULING Page 11 21. For the foregoing reasons, the Notice of Motion dated 7th November 2025 partially succeeds and the following orders do hereby issue: i. That ANNETTE EDNA MUTHONI MBATIA, Director of the 1st Judgment Debtor and PETER MAHU MUTHEE, the 2nd Judgment Debtor shall attend before this Court for oral examination on the Judgment Debtors' property and means of satisfying the outstanding decretal sum on a date to be fixed by the Court, upon filing and serving upon the Decree Holder, the documents and books of accounts and statements as specifically sought. ii. The prayer for warrants of arrest against ANNETTE EDNA MUTHONI MBATIA and the 2nd Judgment Debtor is declined, without prejudice to the Decree Holder's liberty to apply afresh upon proven default in compliance with orders a to c above. iii. The costs of this application shall be in the cause. DATED, SIGNED AND DELIVERED AT NAIROBI HCCC NO. E549 OF 2020 RULING Page 12 THIS 24 TH DAY OF JULY 2026. F. MUGAMBI JUDGE Delivered in presence of: Onyancha for DH/applicant Ms Radol for respondent Court Assistant: Lillian HCCC NO. E549 OF 2020 RULING Page 13