[2014] KEELRC 585 (KLR)
The court held that the claimants failed to comply with the mandatory legal requirement to obtain leave of the High Court before instituting proceedings against a company under receivership. The court found that the suit was improperly constituted as the receiver manager was not joined as a party and the statutory...
Source-derived case information.
- Citation
- [2014] KEELRC 585 (KLR)
- Parties
- Applicant: Grace Wanjiku Mburu; Applicant: Edward Githutwa; Applicant: Gilbert Atori; Applicant: William Ndungu Macharia; Applicant: Nicholas Mutiso; Applicant: Enock Nyamasege; Respondent: Kenatco Taxis Limited
- Court
- Employment and Labour Relations Court
- Court Station
- Employment and Labour Relations Court at Nairobi
- Jurisdiction
- Kenya
- Case Number
- Cause 1524 of 2011
- Procedural Posture
- Employment Cause / Ruling on Preliminary Objection
- Outcome
- preliminary objection upheld; suit dismissed with costs
- Judges
- AN Makau
- Legal Topics
- Company in Receivership, Leave of Court Requirement, Employment Claims Against Insolvent Employer
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Grace Wanjiku Mburu
Applicant
Edward Githutwa
Applicant
Gilbert Atori
Applicant
William Ndungu Macharia
Applicant
Nicholas Mutiso
Applicant
Enock Nyamasege
Applicant
Kenatco Taxis Limited
Respondent
Procedural Posture
Employment Cause / Ruling on Preliminary Objection
Legal Issues
- 1 Whether the claimants could institute proceedings against a company under receivership without first obtaining leave of the High Court.
- 2 Whether the proper party to be sued was the receiver manager rather than the company itself.
Ratio Decidendi
The court held that the claimants failed to comply with the mandatory legal requirement to obtain leave of the High Court before instituting proceedings against a company under receivership. The court found that the suit was improperly constituted as the receiver manager was not joined as a party and the statutory procedure was not followed. The court emphasized that the law is clear on the steps to be taken when seeking redress against an employer under receivership or bankruptcy, and that failure to adhere to these requirements is fatal to the claim. Consequently, the preliminary objection was upheld and the suit was dismissed with costs awarded to the respondent.
Court Disposition
preliminary objection upheld; suit dismissed with costs
Orders
- The entire suit against the respondent is dismissed.
- The respondent is awarded costs.
Full Case Text
Judgment text and source record
23 paragraphs
REPUBLIC OF KENYA
IN THE INDUSTRIAL COURT OF KENYA
AT NAIROBI
CAUSE NO. 1524 OF 2011
GRACE WANJIKU MBURU …………………….....……..…………..…1ST CLAIMANT
EDWARD GITHUTWA…..…...…………….……..……..…………….…2ND CLAIMANT
GILBERT ATORI…..……………………...…..…..…...……...…………3RD CLAIMANT
WILLIAM NDUNGU MACHARIA………..……….……..…..…..………4TH CLAIMANT
NICHOLAS MUTISO………….…..…..…………….……..……..………5TH CLAIMANT
ENOCK NYAMASEGE…………..…………………….…..………………6TH CLAIMANT
SUING ON THEIR OWN BEHALF AND ON BEHALF OF 89 OTHERS
VERSUS
KENATCO TAXIS LIMITED………...………..……………….….…………RESPONDENT
RULING
1. The Respondent sought by way of preliminary objection to determine the suit in limine arguing that the Claimants ought to have sued the receiver manager and after obtaining leave to commence the suit from the High Court.
2. The preliminary objection was canvased before my predecessor Hon. Kosgey on 16th May 2012 and he stated that the Ruling would be delivered on Notice. Mr. Obura revived the issue on 27th January 2014 and seeks the Ruling to be delivered.
3. In the submission made, the Respondent’s counsel urged that the Claimants commenced a suit against a company under receivership and should have sued the Receiver Manager and that the suit was instituted without the leave of the High Court.
4. Under Part VIII of the Employment Act 2007, the procedure to be followed in seeking redress against an employer that has gone under receivership or bankruptcy is set out. It is clear that any judicial process against an insolvent employer must follow the dictates of the law. Under the Companies Act, there are elaborate steps to be taken for the commencement of a suit against a company under receivership. The suit was filed on 8th September 2011. The Court has considered the plethora of authorities and legal writings on the issue of insolvency. I cannot depart from the law. There is no cause of action that can lie against a company under receivership without leave being obtained by the Claimants. Indeed their claim is one to which Part VIII of the Employment Act 2007 applied.
5. I uphold the preliminary objection raised and dismiss the entire suit against the Respondent. I will award the Respondent the costs as well as they ought not have been sued without leave of Court.
Orders accordingly.
Dated and delivered at Nairobi this 19th day of March 2014
Nzioki wa Makau
JUDGE