Great Body Gym Ltd v Shah and Patel Industries Ltd (Insolvency Cause E046 of 2024) [2026] KEHC 10843 (KLR) (Commercial and Tax) (16 July 2026) (Ruling)

Great Body Gym Ltd v Shah and Patel Industries Ltd (Insolvency Cause E046 of 2024) [2026] KEHC 10843 (KLR) (Commercial and Tax) (16 July 2026) (Ruling) Neutral citation: [2026] KEHC 10843 (KLR) Republic of Kenya In the High Court at Nairobi (Milimani Commercial Courts) Commercial and Tax Insolvency Cause E046 of 2024 BK Njoroge, J July 16, 2026 IN THE MATTER OF THE VOLUNTARY WINDING UP OF GREAT BODY GYM LIMITED AND IN THE MATTER OF THE COMPANIES ACT, 2015 AND THE REPEALED COMPANIES ACT IN THE MATTER OF THE INSOLVENCY ACT NO. 18 OF 2015 Between Great Body Gym Limited Petitioner and Shah and Patel Industries Limited Creditor Ruling 1.Liquidation is the corporate equivalent of the death penalty. It is an act of absolute finality. It is not an escape hatch for evasive debtors. The law of insolvency is a shield for the genuinely distressed. It must never be used as a sword to defeat legitimate creditors. Commerce relies on the honouring of debts. Background Facts 2.The Petitioner is Great Body Gym Limited. It is a private limited liability company. The Creditor is Shah & Patel Industries Limited. The genesis of this dispute is a commercial lease commencing on 1st July, 2012. The Petitioner defaulted on its lease obligations. The dispute proceeded to arbitration. 3.The Arbitrator delivered a Final Award on 1st October, 2017. The Creditor was awarded Kshs. 6,546,396.20. The High Court recognized this award as a Decree on 12th March, 2021. 4.The Petitioner claims that the COVID-19 pandemic ruined its business operations. It claims it ceased operations and vacated its rented premises on 22nd March, 2022 and cannot pay the debt. Consequently, the directors resolved on 10th June, 2024 to liquidate the company, under the supervision of the Court. The Creditor fiercely opposes the liquidation. The Creditor argues the Petitioner is hiding assets and selectively paying other debts, including a Stanbic Bank loan. Orders Sought in the Application 5.The Petitioner moves the Court via an Insolvency Petition dated 10th June, 2024. The Petitioner seeks the following brief reliefs:(a)That the Court makes an order for the liquidation of the Petitioner.(b)That an Official Liquidator be appointed to take over the management of the Petitioner.(c)That the Court makes such orders as may be necessary and just in the premises. Issues for Determination 6.The Court has considered the Petition filed, the Replying Affidavit, the written submissions as well as the oral highlights by Counsel for the parties. The Court frames two issues for determination:a.Whether the Petition is brought in good faith to warrant the issuance of an order of liquidation.b.Whether the Petition is merited. Analysis 7.The Court takes note and states that from the onset, the matter proceeded undefended by the general body of creditors. However, the specific Creditor herein has mounted a fierce and substantive opposition to the Petition. 8.The Court has considered the authorities cited by both parties. The Petitioner relies on Kenya Artisans Limited v Chemical & Allied Workers Union [2021] KEHC 4149 (KLR) and In re of Ukwala Supermarket (Eldoret) Limited [2020] KEHC 7332 (KLR). The Creditor relies on In re Ukwala Supermarket Limited [2019] KEHC 7877 (KLR). 9.Section 424(1)(e) of the Insolvency Act provides that a company may be liquidated if it is unable to pay its debts. Section 427 of the Act vests this Court with the discretion to make or refuse a liquidation order. 10.Judicial discretion must be exercised upon sound legal principles.The Kenya Power & Lighting Co Ltd V Matic General Contractors Ltd [2000] KEHC 479 (KLR) firmly established that winding-up procedures must never be made the vehicle of oppression. A Petition brought in bad faith must be summarily dismissed. 11.The evidentiary record exposes the Petitioner's true motives. The bank statements reveal significant financial activity despite the alleged insolvency. The Petitioner received substantial sums, including deposits of Kshs. 1,498,140 and Kshs. 900,000. 12.Crucially, the Petitioner admits to fully settling a separate loan with Stanbic Bank in November 2023. Yet, the Petitioner chose to completely ignore the Creditor's Decree. A company cannot cherry-pick its creditors. A responsible debtor must protect all creditors equally once insolvency looms, a principle correctly captured by Kasango, J. in In re Ukwala Supermarket Limited. 13.The Petitioner has engaged in selective payment. This is the hallmark of bad faith. This Petition is a mere tactical manoeuvre designed to defeat the Creditor's lawful decree. This Court will not sanitize such conduct. 14.The Court reminds itself of its duty not to reward wrongdoing or aid and abet mischief. It would be manifestly unfair and unjust for a company to incur debts, fail to pay or show bona fides towards settling the debts. When the creditors wake up and come calling and clamouring for payments, the directors commit a boardroom ‘harakiri’ or self-immolation. They then turn and present themselves to the Insolvency Court and plead for a liquidation order. This is on the basis of the suicide pact they entered into at the board room. In the recent past, several companies have gone through such corporate jungle manoeuvres leaving distress, financial heart break and economic ruins in their wake. This is not the kind of an Applicant deserving of the orders sought. 15.The Court is not persuaded that it should grant the order for liquidation of the Petitioner as sought in the Petition. 16.As to costs, the same follow the event. The same are awarded at this Court’s discretion. The exercise of such discretion calls upon this Court to award the costs of the Petition to the Respondent. Determination 17.The Court proceeds to make the following orders as regards the Petition dated 10th June, 2024: 1.The Petition dated 10th June, 2024 is HEREBY dismissed for lack of merit. 2.The application for liquidation is hereby dismissed. 3.The costs of this Petition shall be borne by the Petitioner. 18.It is so ordered. DATED, SIGNED AND DELIVERED AT MILIMANI THIS 16TH DAY OF JULY, 2026NJOROGE BENJAMIN K.JUDGEIn the presence of:Mr. Orwenyo for the Debtor/Petitioner.Mr. Odhiambo for the Creditor/Respondent.Mr. John Paul - Court Assistant.