[2007] KEHC 2212 (KLR)
The court found that under section 228 of the Companies Act, a party seeking to institute proceedings against a company in liquidation must first obtain leave of the court. The applicant demonstrated that it was owed a debt by the respondent, which had gone into liquidation before settling the debt. The court was...
Source-derived case information.
- Citation
- [2007] KEHC 2212 (KLR)
- Parties
- Applicant: Fuel & Lubricant Limited; Respondent: Kenya United Steel Co. Ltd (under liquidation)
- Court
- High Court
- Court Station
- High Court at Mombasa
- Jurisdiction
- Kenya
- Case Number
- ? 7 of 2006
- Procedural Posture
- Miscellaneous Application / Ruling on Application for Leave to Institute Suit Against Company Under Liquidation
- Outcome
- application allowed
- Legal Topics
- Leave to Sue Company in Liquidation, Company Liquidation Procedure, Creditor Rights
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Fuel & Lubricant Limited
Applicant
Kenya United Steel Co. Ltd (under liquidation)
Respondent
Procedural Posture
Miscellaneous Application / Ruling on Application for Leave to Institute Suit Against Company Under Liquidation
Legal Issues
- 1 Whether the applicant should be granted leave to institute a suit against the respondent company under liquidation pursuant to section 228 of the Companies Act.
Ratio Decidendi
The court found that under section 228 of the Companies Act, a party seeking to institute proceedings against a company in liquidation must first obtain leave of the court. The applicant demonstrated that it was owed a debt by the respondent, which had gone into liquidation before settling the debt. The court was satisfied that the applicant had provided sufficient material to justify the grant of leave. Accordingly, the court allowed the application and granted leave to the applicant to institute a suit against the respondent company in liquidation.
Court Disposition
application allowed
Orders
- Leave is granted to Fuel & Lubricant Limited to institute a suit against Kenya United Steel Co. Ltd (under liquidation).
- Costs of the motion to abide the outcome of the intended suit.
Full Case Text
Judgment text and source record
19 paragraphs
REPUBLIC OF KENYA IN THE HIGH COURT OF KENYA AT MOMBASA
Misc Civil Appli 7 of 2006
IN THE MATTER OF: THE COMPANIES ACT CHAPTER 486 LAWS OF KENYA
IN THE MATTER OF: AN APPLICATION OF FUEL & LUBRICANT LTD FOR LEAVE TO ISTITUTE SUIT
BETWEEN
FUEL & LUBRICANT LIMITED……...……PLAINTIFF/APPLICANT
VERSUS
KENYA UNITED STEEL CO. LTD
(UNDER LIQUIDATION).......... ...........DEFENDANT/RESPONDENT
R U L I N G
The applicant herein, Fuel & Lubricant Ltd, took out a motion pursuant to section 228 of the Companies Act (Cap.486 Laws of Kenya) in which it prayed for leave to institute a suit against the Respondent herein namely Kenya United Steel Company Ltd (under liquidation). The motion is supported by the affidavit of Faiza Banji sworn on 1st July 2006.
It is averred by Faiza Banji a director of the applicant that the applicant supplied to the Respondent with diesel and petrol amounting Kshs.1,243,584/17 in the period between 28th January 2003 and 28th August 2003 on credit. He attached to his affidavit copies of the Sales Invoices and statements. The Respondent so far has not settled the debt despite demand notices being served upon the company in liquidation.
The applicant further avers that the Respondent went into liquidation before paying a single cent. A copy of the official search at the registrar of companies is attached to the support of the aforesaid fact. In that search, the Registrar of companies states that Kenya United Steel Co. Ltd was placed under receivership on 20th September 2005 at the instance of Kenya Commercial Bank.
I have taken into account the submission made by the applicant’s Counsel. I have also considered the material placed before this court. what is clear is that under the provisions of Section 228 of the Companies Act, the applicant must obtain leave from this court to enable it institute a suit against a company under liquidation or receivership.
In the end I allow the notice of motion as prayed. Costs of the motion to abide the outcome of the intended suit.
Dated and delivered at Mombasa this 13th day of February 2007.
J.K. SERGON
J U D G E
In open court in the absence of the parties.