Intrertractor Company Limited v Phoenix Properties Limited (Insolvency Notice E166 of 2024) [2026] KEHC 7903 (KLR) (Commercial and Tax) (4 June 2026) (Ruling)

Intrertractor Company Limited v Phoenix Properties Limited (Insolvency Notice E166 of 2024) [2026] KEHC 7903 (KLR) (Commercial and Tax) (4 June 2026) (Ruling) Neutral citation: [2026] KEHC 7903 (KLR) Republic of Kenya In the High Court at Nairobi (Milimani Commercial Courts) Commercial and Tax Insolvency Notice E166 of 2024 BK Njoroge, J June 4, 2026 Between Intrertractor Company Limited Debtor and Phoenix Properties Limited Creditor Ruling 1.This is a Ruling arising out the Debtor/Applicant’s application seeking to set aside a statutory demand. Background Facts 2.The Applicant filed the Notice of Motion dated 18th March 2025 seeking the following orders;1.Spent.2.The Honourable Court be pleased to set aside and/or strike out the statutory demand issued by the Respondent against the Applicant dated 1t August 2024, in its entirety.3.This Honourable Court be pleased to grant an interim order restraining the Respondent from presenting or proceeding with any liquidation petition against the Applicant pending the hearing and determination of this application.4.The costs of this application be borne by the Respondent.5.This Honourable Court be pleased to grant any further orders it deems just and appropriate in the circumstances. 3.The Application was supported by the Affidavit of Divyesh Indubhai Patel. He stated that the statutory demand dated 1st August, 2024 is defective, invalid, and an abuse of the Court process, as there exists a genuine dispute regarding the alleged debt of Kshs. 309,003,638.98. It is further argued that the alleged debt is the subject of ongoing Court proceedings and/or an appeal, rendering the demand premature and unenforceable. 4.In addition, the Applicant maintained that it has a valid counterclaim or set-off against the Respondent. This substantially reduces the claimed amount below the statutory threshold of Kshs. 100,000 under the Insolvency Act. Consequently, the statutory demand is being improperly used as a tool of coercion rather than for legitimate insolvency purposes, thereby amounting to an abuse of process. 5.Vide its Replying Affidavit sworn on 24th April 2025, the Respondent stated that Regulation 16(3) and (4) of the Insolvency Regulations require that an application to set aside a statutory demand be supported by an affidavit. It should detail, inter alia, the date of service, the grounds for setting aside, and annexing a copy of the demand. In this case, the Applicant was served on 19th August, 2024 as evidenced by the Affidavit of Service sworn on 25th September, 2024. Yet it failed to file the application within the prescribed timelines under Regulation 16(1). Thus, rendering it grossly out of time. Further, the Applicant has failed to annex a stamped or received copy of the statutory demand, suggesting deliberate non-disclosure. Consequently, the application is incompetent and liable to be struck out for non-compliance with the mandatory provisions of the Insolvency Regulations. 6.The Respondent stated that following the Applicant’s failure to vacate leased premises after expiry of the lease, it filed ELC Case No. 287 of 2005, in which judgment was delivered on 30th August, 2018 in its favour. The Court ordered the Applicant to vacate the premises, pay Kshs. 23,699,000/= with interest, mesne profits of Kshs. 900,000/= per month from 1st November, 2004 until vacant possession, and costs. These were later taxed at Kshs. 3,809,942.93/=. The Court further rejected the Applicant’s alleged claim of Kshs. 129,026,793/= for lack of proof and noted that no counterclaim had been filed. Subsequent proceedings before the Court of Appeal upheld this position, emphasizing that no counterclaim existed. That the Applicant had not paid rent for over a decade, and that the Respondent was entitled to enjoy the fruits of its judgment. To date, no appeal has been filed against the ELC judgment and the Applicant has not settled any part of the decretal sum. 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 and determination 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.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 hereby struck 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.