[2009] KEHC 3478 (KLR)
The court found that the defendant admitted the debt arising from a court decree and failed to pay the outstanding balance due to financial difficulties. The statutory requirements for inability to pay debts were satisfied, as the debt exceeded the threshold and remained unpaid after demand. However, given the...
Source-derived case information.
- Citation
- [2009] KEHC 3478 (KLR)
- Parties
- Plaintiff: Erastus Wahome t/a Lenana Chemicals; Defendant: Kwamatingi Farmers’ Co-operative Society Ltd.
- Court
- High Court
- Court Station
- High Court at Nairobi (Milimani Commercial Courts)
- Jurisdiction
- Kenya
- Case Number
- Winding Up Cause 18 of 2004
- Procedural Posture
- Winding Up Cause / Judgment
- Outcome
- judgment for plaintiff
- Legal Topics
- Winding Up of Cooperative Societies, Debt Recovery, Enforcement of Judgments
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Erastus Wahome t/a Lenana Chemicals
Plaintiff
Kwamatingi Farmers’ Co-operative Society Ltd.
Defendant
Procedural Posture
Winding Up Cause / Judgment
Legal Issues
- 1 Whether the defendant is unable to pay its debts within the meaning of the Co-operative Societies Act and Companies Act provisions.
- 2 Whether the petitioner is entitled to a winding up order or monetary judgment for the outstanding debt.
Ratio Decidendi
The court found that the defendant admitted the debt arising from a court decree and failed to pay the outstanding balance due to financial difficulties. The statutory requirements for inability to pay debts were satisfied, as the debt exceeded the threshold and remained unpaid after demand. However, given the complexity of winding up procedures for co-operative societies, the court exercised its inherent powers to grant a monetary judgment for the outstanding sum, with interest and costs, rather than order a winding up. The court emphasized the need to do justice to the petitioner, who had been deprived of payment for an extended period despite clear admission of liability by the defendant.
Court Disposition
judgment for plaintiff
Orders
- Judgment entered for the plaintiff against the defendant for Kshs.1,367,700 plus interest as ordered until payment in full.
- Defendant to pay costs of the suit to the plaintiff.
Full Case Text
Judgment text and source record
23 paragraphs
REPUBLIC OF KENYA IN THE HIGH COURT OF KENYA AT NAIROBI (MILIMANI COMMERCIAL COURTS) Winding Up Cause 18 of 2004
IN THE MATTER OF KWAMATINGI
FARMERS’ CO-OPERATIVE SOCIETY ….....................................…PLAINTIFF
VERSUS
IN THE MATTER OF CO-PERATIVESOCIETIES ACT ……….DEFENDANT
JUDGMENT
The petition of Erastus Wahome t/a Lenana Chemicals shows that the petitioner supplied goods and services to the amount of Kshs.966,000 on or about 1998 and 2000 and obtained judgment for Kshs.966,000/= plus interest at the rate of 20% p.a. And that by garnishee proceedings recovered Kshs.213,000/= only. The balance has not been paid.
The petitioner seeks order for the winding up of the said KWAMATINGI Farmers’ Co-operative Society Ltd. may be wound up by the court under the provisions of the Co-operative Society Act, Cap.485.
In replying affidavit, the society admits that goods were purchased on credit but later payment was made.
On 1/7/2004 = Kshs.200,000/=
On 9/12/2004 = Kshs.235,000/=
On 19/8/2005 = Kshs.400,000/=
Total - Kshs.835,000/=
It is also admitted there have been financial difficulties in the society but as at 27/4/09, the balance outstanding is Kshs.2,102,700/=. Regarding the winding up of a company by the court, Section 219 (e) provides that the company may be wound up by court if it is unable to pay its debts. The debt must be exceeding the sum of one thousand shillings and notice of filing petition is served upon the company demanding payment of the sum due and the company has for 3 weeks (21 days) thereafter neglected to pay.
In this case it is admitted that payment was not made because of financial difficulties. The debt of the society arose out of a decree of court. To-date, 27/4/09, a sum of Kshs.2,102,700/= is still unpaid. There is no evidence that the debt owing to petitioner is such as stipulated by the Section 76 of Society Act (Settlement of disputes).
Also Section 95 (1) provides that Cap.486 Companies Act other than those referred in Section 64 and 71 of this Act, Cap.486 shall not apply. However, Section 220 contains definition of liability to pay debt is applied.
Upon considering the petitioner’s case, it is true there is no dispute that the decree was made in December 1998. The amount was admitted but no payment was made. The petitioner has been kept out of his money all this time. It is clear that this debt is admitted but not paid.
I find that the petitioner has been denied justice. I therefore order that since the procedure of winding up the society is complicated, judgment in sum of Kshs.2,102,700/= less admitted Kshs.835,000/=, which comes to Kshs.1,367,700/=, plus interest as ordered as at date of payment be entered in favour of plaintiff against defendant with costs and interest until payment in full.
Orders accordingly.
In the interest of justice to petitioner, I apply inherent powers of court to make the orders above.
DATED and DELIVERED at Nairobi this 22nd day of May 2009.
JOYCE N. KHAMINWA
JUDGE