[2021] KEHC 9716 (KLR)
The court held that the annulment of a bankruptcy order does not, by itself, entitle a creditor to execute for a claimed debt in the absence of a judgment establishing the debt. The proper procedure would have been for the applicant to institute a suit for recovery of the claimed amount and obtain judgment, or...
Source-derived case information.
- Citation
- [2021] KEHC 9716 (KLR)
- Parties
- Applicant: Ashwin Shah; Respondent: Mukesh Harakhchand Bid
- Court
- High Court
- Court Station
- High Court at Nairobi (Milimani Commercial Courts)
- Jurisdiction
- Kenya
- Case Number
- Insolvency Cause 10 of 2018
- Procedural Posture
- Insolvency Cause / Ruling on Application for Warrants of Attachment and Sale
- Outcome
- application struck out as premature and misconceived
- Judges
- WA Okwany
- Legal Topics
- Bankruptcy Annulment, Execution of Judgments, Attachment Before Judgment, Creditor Rights
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Ashwin Shah
Applicant
Mukesh Harakhchand Bid
Respondent
Procedural Posture
Insolvency Cause / Ruling on Application for Warrants of Attachment and Sale
Legal Issues
- 1 Whether the applicant is entitled to warrants of attachment and sale against the respondent for Kshs 147,000,000 without a judgment having been entered for the said amount.
- 2 Whether the annulment of a bankruptcy order automatically entitles a creditor to execute for the claimed debt.
- 3 Whether the applicant should have instituted a suit for recovery or sought attachment before judgment under the Civil Procedure Rules.
Ratio Decidendi
The court held that the annulment of a bankruptcy order does not, by itself, entitle a creditor to execute for a claimed debt in the absence of a judgment establishing the debt. The proper procedure would have been for the applicant to institute a suit for recovery of the claimed amount and obtain judgment, or alternatively, to apply for attachment before judgment under Order 39 Rule 5 of the Civil Procedure Rules if there was apprehension that the debtor would abscond or dispose of assets. Since no judgment had been entered and no application for attachment before judgment had been made, the application for warrants of attachment and sale was premature and misconceived. The court...
Court Disposition
application struck out as premature and misconceived
Orders
- The application dated 10th December 2020 is struck out.
- There shall be no orders as to costs.
Full Case Text
Judgment text and source record
32 paragraphs
REPUBLIC OF KENYA
IN THE HIGH COURT OF KENYA
AT NAIROBI
COMMERCIAL AND TAX DIVISION
INSOLVENCY CAUSE NO. 10 OF 2018
ASHWIN SHAH....................................................................APPLICANT/CREDITOR
-VERSUS-
MUKESH HARAKHCHAND BID......................................RESPONDENT/DEBTOR
RULING
1. This ruling is in respect to the application dated 10th December 2020 wherein the Applicant/Creditor seeks the following orders: -
1. Spent.
2. That pursuant to the Ruling made by this Honorable court on 3rd December 2020 annulling the Bankruptcy Order made to the respondent on 2nd December 2019, this honourable court be pleased to issue warrants of attachment and sale to the applicant as against the respondent for the amount of Kshs 147,000,000 together with interest at court’s rate owed to him by the respondent.
3. That this Honourable Court be pleased to grant an order directing the Officer Commanding Station (OCS) Nakuru Central Police Station and Kisumu Central Police Station to offer security to the Applicant when enforcing the warrants prayed for in this application.
4. That this Honourable Court be pleased to grant such orders as it may deem just and expedient in the circumstances.
5. That the costs of this application be in the cause.
2. The Application is supported by the affidavit of the debt collector one Festus M. Obare and is premised on the grounds that: -
1. That on 3rd December 2020 this Honourable Court made a Ruling on the Applicant’s application dated 17th November 2020 annulling the Bankruptcy Order issued to the Respondent on 2nd December 2019.
2. That the Applicant intends to execute the orders extracted from the above stated Ruling in order to recover the loan amounts of Kshs 147,000,000/- given to the Respondent in various installments, however, the same was inordinately left out in the prayers sought in the application dated 17th November 2020.
3. That it has come to the Applicant’s attention that the Respondent is disposing some of his assets and in in a plan to run away from this honourable court’s jurisdiction in a bid to curtail the Applicant’s attempts to recover the loan amounts advanced to him.
4. That due to the urgency of the matter, the Applicant is apprehensive that the Respondent will dispose all his assets and/or run away from this Honourable court’s jurisdiction before the Applicant obtains the necessary orders to recover his loan amount of Kshs 147,000,000/- from the Respondent.
5. That no prejudice will be occasioned to any party if the orders sought herein are granted.
6. That the interests of justice will be best served by granting the orders sought herein.
3. The respondent did not file any response to the application and when the matter came up for mention on 17th December 2020, Mr. Khisa, learned counsel for the creditor urged the court to grant the orders sought.
4. I have perused the affidavit of service dated 16th December 2020 and I am satisfied that the Debtor was duly served with the application. I have carefully considered the prayers sought in the application and I note that it seeks orders for warrants to execute for specific sum of Kshs 147,000,000 together with interest even though there has been no judgment entered by any court for the said amount.
5. My humble view is that the mere fact that this court annulled the Bankruptcy Order issued to the Debtor on 2nd December 2019 does not automatically entitle a party claiming monies against the Debtor to obtain warrants of attachment especially where the alleged debts have not been established. My take is that the proper approach that the applicant ought to have adopted, upon the lifting of Bankruptcy Order, should have been to sue the Debtor for the claimed amount and to obtain a judgment for the same before seeking warrants of execution. Alternatively, the applicant could still institute a suit against the Debtor and apply for attachment before judgment under Order 39 Rule 5 of the Civil Procedure Rules citing his apprehension regarding the Debtor’s intention to escape from the court’s jurisdiction as has been alleged in the instant application.
6. In the circumstances of this case, I find that the applicant has jumped the gun by seeking warrants of attachment before obtaining a judgment or orders for attachment before judgment. For the above reasons, I find that the instant application is premature and misconceived. I therefore strike it out with no orders as to costs.
Dated, signed and delivered via Microsoft Teams at Nairobi this 14th day of January 2021in view of the declaration of measures restricting court operations due to Covid -19 pandemic and in light of the directions issued by his Lordship, the Chief Justice on the 17th April 2020.
W. A. OKWANY
JUDGE
In the presence of:
Mr. Khisa for the applicant.
Court Assistant: Sylvia.