[2023] KEHC 2893 (KLR)
The court found that since the suit was filed before the defendant bank was placed under liquidation, and in light of the relevant statutory provisions, it was just and necessary to grant the plaintiffs leave to continue with the suit. This would allow the plaintiffs to have their claims determined and, if...
Source-derived case information.
- Citation
- [2023] KEHC 2893 (KLR)
- Parties
- Plaintiff: Frank Limited; Plaintiff: Sailes Chhaganlal Shah; Plaintiff: Chhaganilal Hansraj Shah; Defendant: Imperial Bank Limited
- Court
- High Court
- Court Station
- High Court at Mombasa
- Jurisdiction
- Kenya
- Case Number
- Civil Suit 202 of 2009
- Procedural Posture
- Civil Suit / Ruling on Application for Leave to Continue Suit Against Company in Liquidation
- Outcome
- Application allowed; leave granted to continue suit against defendant in liquidation, subject to conditions.
- Judges
- DKN Magare
- Legal Topics
- Company Liquidation, Leave to Continue Proceedings, Creditor Rights, Insolvency Procedure
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Frank Limited
Plaintiff
Sailes Chhaganlal Shah
Plaintiff
Chhaganilal Hansraj Shah
Plaintiff
Imperial Bank Limited
Defendant
Procedural Posture
Civil Suit / Ruling on Application for Leave to Continue Suit Against Company in Liquidation
Legal Issues
- 1 Whether the plaintiffs should be granted leave to continue with the suit against the defendant bank under liquidation.
- 2 What conditions, if any, should be imposed on the continuation of proceedings against a company in liquidation.
Ratio Decidendi
The court found that since the suit was filed before the defendant bank was placed under liquidation, and in light of the relevant statutory provisions, it was just and necessary to grant the plaintiffs leave to continue with the suit. This would allow the plaintiffs to have their claims determined and, if successful, participate as creditors in the liquidation process. The court imposed conditions: the liquidator must be served within 30 days, and the suit must be concluded within 360 days, failing which the suit would stand dismissed. The court emphasized the need to balance statutory restrictions on proceedings against companies in liquidation with the constitutional right of access to...
Court Disposition
Application allowed; leave granted to continue suit against defendant in liquidation, subject to conditions.
Orders
- Leave is granted to the plaintiffs to continue with the suit against the defendant in liquidation and the liquidator, on condition that the liquidator is served within 30 days from the date of the ruling.
- The plaintiffs shall proceed and conclude the suit within 360 days from the date of the ruling, failing which the suit shall stand dismissed without further application.
Full Case Text
Judgment text and source record
28 paragraphs
Frank Limited & 2 others v Imperial Bank Limited (Civil Suit 202 of 2009) [2023] KEHC 2893 (KLR) (22 March 2023) (Ruling)
Neutral citation: [2023] KEHC 2893 (KLR)
Republic of Kenya
In the High Court at Mombasa
Civil Suit 202 of 2009
DKN Magare, J
March 22, 2023
Between
Frank Limited
1st Plaintiff
Sailes Chhaganlal Shah
2nd Plaintiff
Chhaganilal Hansraj Shah
3rd Plaintiff
and
Imperial Bank Limited
Defendant
Ruling
1. The matter came up for hearing of the application dated 3/8/2022. The Applicant sought leave pursuant to Section 25 of the Kenya depositors Insurance Act and Sections 432(2) of the Insolvency Act. Section 432 of the Insolvency Act provides as follows: -432. Consequences of liquidation order (1)a.Within seven days after a liquidation order is made in respect of a company, the company shall lodge a copy of the order with the Registrar for registration and also lodge a copy of it with the Official Receiver.(2)When a liquidation order has been made or a provisional liquidator has been appointed, legal proceedings against the company may be begun or continued only with the approval of the Court and subject to such conditions as the Court considers appropriate.(3)An order for liquidating a company operates in favour of all the creditors and of all contributories of the company as if made on the joint application of all of them
2. The application is unopposed. I reserved the Ruling for today at 3 pm. The Respondent is under Liquidation. However, this suit had hitherto been filed and pending in court. I have seen several Sections of the Law that put stumbling blocks to the effective access to court. These Sections are not today for Review. They are however of doubtful legally in view of Article 22 of the constitution.
3. Nevertheless, today my task is simple to facilitate the Applicant to proceed with the matter subject to such condition as the court may deem fit.
4. I am alive to various conflicts within the law especially between the Insolvency Act and the Companies Act, Section 409 and the Kenya Depositors Insurance Act. Section 409 of the Companies Act, provides as follows: -409. Creditors entitled to object to reduction(1)When this section applies, each creditor of the company who, at the date fixed by the Court, is entitled to a debt or claim that, if that date were the commencement of the liquidation of the company would be admissible in proof against the company, is entitled to object to the reduction of capital.(2)The Court is required to settle a list of creditors entitled to object and for that purpose it—(a)shall ascertain, as far as possible without requiring an application from any of the creditors, the names of those creditors and the nature and amount of their debts or claims; andb)may publish notices fixing a day or days within which creditors whose names are not entered on the list-(i)can claim to have their names so entered; or(ii)are to be excluded from the right to object
5. This suit predated both the insolvency and the constitution. There is a need to have the same concluded one way or another to enable the party to participate in liquidation as a creditor.
6. I am therefore merited to allow the application and grant leave to the Plaintiff/Applicants to continue with the suit against the Defendant in liquidation and the Liquidator on condition that the liquidator is served forthwith and not later than 30 days from today. The plaintiff shall proceed and conclude the suit within 360 days from today failing which the suit hall stand dismissed without further application.
7. Parties to file compliance documents and such amended pleadings as may be necessary to effectuate this order and prepare in readiness for hearing. The witness statements be referenced by the time of the mention for directions given after this ruling.
8. Directions shall be given immediately after this Ruling.
9. Each party to bear their own costs
DELIVERED, DATED AND SIGNED AT MOMBASA ON THIS 22ND DAY OF MARCH, 2023. JUDGMENT DELIVERED THROUGH MICROSOFT TEAMS ONLINE PLATFORM.HON. MR. JUSTICE DENNIS KIZITO MAGAREJUDGE OF THE HIGH COURT, MOMBASAIn the presence of:-Saringi for the ApplicantNo appearance for the RespondentBen Wambua- court Assistant