[1990] KEHC 10 (KLR)
The court held that public examination of the debtor is a mandatory procedural step under Section 17 of the Bankruptcy Act, unless a statutory exception applies. No such exception was demonstrated in this case. The court further found that it must exercise discretion in adjudicating bankruptcy, and the holding of a...
Source-derived case information.
- Citation
- [1990] KEHC 10 (KLR)
- Parties
- Debtor: Leonard Kimani Kiarie; Applicant: Official Receiver
- Court
- High Court
- Court Station
- High Court at Nairobi (Milimani Law Courts)
- Jurisdiction
- Kenya
- Case Number
- Bankruptcy Cause 12 of 1988
- Procedural Posture
- Bankruptcy Cause / Ruling on Application for Adjudication of Bankruptcy
- Outcome
- application dismissed
- Legal Topics
- Bankruptcy Proceedings, Public Examination Requirement, Debtor Protection, Scheme of Arrangement
- Source Language
- en
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Summary, issues, holding and outcome
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Parties
Leonard Kimani Kiarie
Debtor
Official Receiver
Applicant
Procedural Posture
Bankruptcy Cause / Ruling on Application for Adjudication of Bankruptcy
Legal Issues
- 1 Whether the debtor can be adjudged bankrupt before being publicly examined as required by Section 17 of the Bankruptcy Act.
- 2 Whether the absence of a scheme of arrangement or proposal by the debtor precludes adjudication of bankruptcy.
Ratio Decidendi
The court held that public examination of the debtor is a mandatory procedural step under Section 17 of the Bankruptcy Act, unless a statutory exception applies. No such exception was demonstrated in this case. The court further found that it must exercise discretion in adjudicating bankruptcy, and the holding of a public examination is a prerequisite to such adjudication. Since the debtor had not been publicly examined and had not indicated a willingness to be adjudged bankrupt without such examination, the application for adjudication was premature and could not be granted.
Court Disposition
application dismissed
Orders
- The application to adjudge the debtor bankrupt is dismissed.
- No order as to costs.
Full Case Text
Judgment text and source record
20 paragraphs
REPUBLIC OF KENYA
IN THE HIGH COURT OF KENYA
AT NAIROBI (NAIROBI LAW COURTS)
Bankrupcty Cause 12 of 1988
LEONARD KIMANI KEARIE……………………………………………DEBTOR
RULING
This is an application pursuant to the provision of S.20 of the Bankruptcy Act, Cap 53 Laws of Kenya. The applicant is the official receiver as the receiver of the estate of Leonard Kimani Kiarie, the debtor. The official receiver prays that the debtor be adjudged bankrupt. The ground put forward for the application is that the creditors in the first creditors meeting passed a resolution that the debtor be adjudged bankrupt. the meeting was allegedly held on 15th May 1990.
The application has been opposed by the debtor on the ground on the ground that the application is premature. Premature because he had not been publicly examined putsuant to the provision of the Section 17 of the Bankruptcy Act; and secondly no scheme of compensation had been requested for or given before he could be adjudged.
Mr. Simani for the debtor submitted that in a debtors petition the purpose is mainly to seek the protection of the court from creditors and its assistance to manage his affairs. Consequently, he said, the court must be fully informed as to the position of the debtors estate. That can only be done if the debtor is examined publicly.
Mrs. W.B. Gachegu disagreed. She submitted that the public examination is intended to provide information to the Official Receiver for the purpose of the management of the debtor’s estate. Furthermore it was her submission that the debtor has not provided a scheme of arrangement or made any proposal as to how he intends to pay the debt owing.
S.17, above, is mandatory. The public examination is normally held at the request of the Receiver. Rule 151 of the Bankruptcy Rules Provides:
“It shall be the duty of the receiver to make an application to the court to appoint day and hour for holding the public examination of the debtor…”
But S.17, above is clear that there are instances when such public examination is not necessary. It provides in pertinent part as follows:
“17 (1) where the court makes a receiving order, it shall, save as provided in this Act,hold a public sitting ………..” (Emphasis supplied).
I could find no provision, nor was any brought to my attention, to bring the debtors case within the exception to the application of the above section. Moreover, whether or not to declare a debtor bankrupt is in the discretion of the court. Rule 181 of the bankruptcy rules seems to me to be clear that there are several matters a court must be satisfied on before adjudication. To my mind the holding of a public examination of a debtor is among those.
In the light of the foregoing I am disc inclined from adjudging the debtor bankrupt before he is publicly examined, or unless he himself indicates to the court that he should be so adjudged.
The application is dismissed. No order as to costs.
Delivered this 27th day of June 1990.
S.E.O BOSIRE
JUDGE