https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/7923

Intermart Manufacturers Ltd v Phoenix Properties Ltd (Insolvency Cause E168 of 2024) [2026] KEHC 7923 (KLR) (Commercial and Tax) (4 June 2026) (Ruling) Neutral citation: [2026] KEHC 7923 (KLR) Republic of Kenya In the High Court at Nairobi (Milimani Commercial Courts) Commercial and Tax Insolvency Cause E168 of 2024 BK Njoroge, J June 4, 2026 Between Intermart Manufacturers Ltd Applicant and Phoenix Properties Ltd Respondent Ruling 1.This Ruling arises out of an application seeking to set aside a statutory demand. It is filed by the Debtor/Applicant. Background Facts 2.The Applicant filed the Notice of Motion dated 18th March, 2025 seeking the following orders;1.Spent.2.This Honourable Court be pleased to strike out the Statutory Demand dated 1st August 2024 issued by Respondent against the Applicant, forthwith.3.This Honourable Court be pleased to declare that the Statutory Demand is invalid, unlawful, and incapable of enforcement on the grounds that the Applicant company was dissolved on 26th June 2007 pursuant to Section 339(5) of the Companies Act (Cap 486) (repealed).4.This Honourable Court be pleased to issue an order barring the Respondent from taking any further insolvency proceedings against the Applicant.5.The costs of this application be borne by the Respondent. 3.The Application was supported by the Affidavit of Divyesh Indubhai Patel, who stated that the Applicant was dissolved on 26th June, 2007 pursuant to Section 339(5) of the repealed Companies Act (Cap. 486) and has never been reinstated to the Register of Companies. Consequently, under Section 400 of the Companies Act, 2015, the Applicant ceased to exist as a legal entity and lacks the capacity to sue, be sued, or be subjected to any legal process, including insolvency proceedings. The Applicant therefore contended that the Respondent's issuance of a Statutory Demand against a non-existent entity was unlawful, rendering the demand a nullity ab initio and incapable of enforcement, and that unless restrained, the Respondent's intended liquidation proceedings would occasion substantial prejudice and constitute an abuse of the court process. 4.In response, the Respondent filed the Replying Affidavit sworn on 24th April, 2025 and stated that the Applicant's application to set aside the statutory demand was incompetent and fatally defective, having been filed outside the prescribed timelines under Regulations 16(1), (3) and (4) of the Insolvency Regulations. The Respondent maintained that the Applicant had been served with the statutory demand on 19th August, 2024, but failed to file its application within the statutory period and had omitted to annex a received copy of the demand. 5.The Respondent further contended that the Applicant had not demonstrated that it had been struck off the Register of Companies, noting that the Gazette Notice relied upon did not contain the Applicant's name. In any event, it was argued that even if the Applicant had been struck off, Section 339(5) of the repealed Companies Act and Section 894(7) of the Companies Act, 2015 preserve liabilities incurred before dissolution and permit the winding up of a struck-off company. 6.The Respondent also averred that the debt was founded on a valid judgment and decree issued in ELC Case No. 287 of 2005, which remained unsatisfied. It was emphasized that both the Trial Court and the Court of Appeal had found that there was no counterclaim against the Respondent and that the Applicant had failed to pay rent or settle the decretal sum for many years. Accordingly, the statutory demand was said to have been properly issued and the Applicant had failed to establish any ground for setting it aside under Regulation 17(6) of the Insolvency Regulations. Issues for determination 7.The Court has carefully considered the Application, the response, and the written submissions, and the issue for determination is;a.Whether the Statutory Demand should be set aside. Analysis 8.The Court’s power to set aside a statutory demand is anchored both in its inherent jurisdiction and in statute, and is expressly provided for under Regulations 16 and 17 of the Insolvency Regulations. In particular, Regulation 17(6) empowers the Court to set aside a statutory demand where:a.the debtor appears to have a counterclaim, set-off, or cross-demand equal to or exceeding the amount demanded;b.the debt is disputed on grounds which appear to the Court to be substantial;c.the creditor holds security whose value equals or exceeds the debt; ord.the Court is satisfied, on other grounds, that the demand ought to be set aside. 9.Further, Regulation 16(1) of the Insolvency Regulations, 2016 provides that a debtor may apply to set aside a statutory demand within twenty-one (21) days from the date of service of the demand, or where the demand has been advertised, from the date of the advertisement’s first appearance. 10.It is clear that the Regulation confines the Court’s jurisdiction to setting aside a statutory demand to four grounds only, namely: where there is a counterclaim/set‑off/cross‑demand equal to or exceeding the debt; or where a debt is genuinely disputed on substantial grounds; or where security equal to or exceeding the debt; or where other sufficient reason. 11.Before delving any further into the merit of the Application, it is notable that the Respondent pointed out that the Application was filed out of time contrary to Regulation 16(1) of the Insolvency Regulations, as it ought to have been filed by 22nd August, 2024 or at the latest by 9th September, 2024. The Applicant deliberately failed to annex a stamped copy of the statutory demand to conceal the delay. Consequently, the Application is incompetent and should be struck out for non-compliance with the applicable Regulation. 12.The Applicant argued that it obtained leave from this Court (Hon. Noelle Kyanya) on 18th March, 2025 to file the application out of time, and therefore, the application is properly on record both factually and legally. The Applicant added that leave was granted in the presence of counsel for the Respondent herein, who at the time did not raise any objection and up to date the said leave has neither been reviewed, set aside, nor appealed against, and thus remains in situ. 13.The Court has perused the Court record and particularly on 18th March, 2025 and, notably, the Applicant did not mention the issue of seeking leave and the record itself doesn’t indicate that the same was discussed. Hon. Noelle Kyanya Deputy Registrar simply placed the matter before Hon. Adisa Deputy Registrar and issued a mention date.“Njoroge – RespondentCreditor – AWe haven’t put in our response as we haven’t been served with the claim – we pray for 14 days to comply.DR – Mn 18/3/2025Ouma – CreditorDebtor – Chirchir h/b Mrs. NjorogeOuma – its related to E164, E165, E166, E167, E168 and E169 which is coming before Hon. Adisa on 20/3/25. I pray it be placed before her so that directions are given wholesomely.DR – Matter is placed before Hon. Adisa on 20/3/25 for mention alongside the other matters” 14.Regulation 16 of the Insolvency Regulations, 2016, provides as follows: -1.The debtor may, apply to the Court for an Order to set aside the statutory demand-a.Within twenty-one days from the date of service on the debtor of the Statutory demand;- orb.If the demand has been advertised in a Newspaper, from the date of the advertisement’s appearance, whichever is earlier.2.Subject to any Order of the Court under Regulation 17(7), time limited for compliance with the statutory demand shall cease to run from the date on which the application is lodged with Court.3.The debtor’s application shall be in Form 7 set out in the First Schedule and shall be supported by an affidavit which shall be in Form 8 set out in the Frist Schedule.4.The affidavit referred to under paragraph (3) shall-a.Specify the date on which the statutory demand came into the debtor’s possession.b.State the grounds on which the debtor claims that it should be set aside.c.Annex a copy of the statutory demand. 15.The Court observed that indeed the Applicant has not disclosed when it received the statutory demand, as pointed out by the Respondent, and it has also not stated why it did not file the application to set aside the statutory demand within 21 days, as provided in Regulation 16(1)(a) of the Insolvency Regulations. 16.The Statutory Demand is dated 1st August, 2024, and the Respondent having served the Statutory Demand on 19th August, 2024, therefore, the Application to set aside should have been made between 22nd August, 2024 and 9th September, 2024. Notably, the present Application was filed on 18th March, 2025, over seven months later. In addition, the Applicant did not seek the leave of this Court to file the Application out of time. 17.The Applicant, having not even attempted to seek leave to file the Application out of time before filing the application to set aside the statutory demand, there is no competent application before the Court seeking to set aside the statutory demand. 18.In addition, the Court wishes to point out that Gazette Notice No. 6030, annexed as “DIP-1” in support of the application, did not contain the name of the Applicant, Intermart Manufacturers Limited, among the companies allegedly struck off pursuant to Section 339(5) of the repealed Companies Act. Accordingly, the allegation of dissolution was unsupported by any documentary evidence and does not form a basis for impugning the statutory demand. 19.The Application fails. 20.As to costs the same lie at the Court’s discretion. Costs ordinarily follow the event. This Court will not deny a successful party their costs unless for cogent reasons. The successful Respondent is awarded costs to be paid by the Applicant. Determination 21.The Applicant’s Application by way of a Notice of Motion dated 18th March, 2025 is Herebystruck out. 22.The Respondent is awarded the costs thereof. 23.It is so ordered. DATED, SIGNED AND DELIVERED AT MILIMANI THIS 04TH DAY OF JUNE, 2026.NJOROGE BENJAMIN K.JUDGEIn the presence of;Mr. Odhiambo for the Debtor/Applicant.Mr. Ouma for the Creditor/Respondent.Mr. John Paul - Assistant.