https://new.kenyalaw.org/akn/ke/judgment/keelrc/2026/1524

Mariga v General Plastics Limited & another (Miscellaneous Application E506 of 2025) [2026] KEELRC 1524 (KLR) (4 June 2026) (Ruling) Neutral citation: [2026] KEELRC 1524 (KLR) Republic of Kenya In the Employment and Labour Relations Court at Nairobi Miscellaneous Application E506 of 2025 HS Wasilwa, J June 4, 2026 Between Josphat Ogeto Mariga Applicant and General Plastics Limited 1st Respondent Director of Occupational Health And Safety Services 2nd Respondent Ruling 1.In opposition to the application dated 28th November 2024, the 1st Respondent filed a notice of preliminary objection dated 3rd March 2026 on grounds that: the continuation and/or prosecution of these proceedings, including the hearing of the said application, is incompetent and is barred by law, for the reason, inter alia, that the institution and/or continuation of legal proceedings against the 1st Respondent (being a company under administration as evidenced by the attached Gazette Notice No. 931) is prohibited and/or stayed by operation of the statutory moratorium under the Insolvency Act, No. 18 of 2015 (Laws of Kenya), unless and until the requisite consent and/or leave is obtained as required by the Act. 2.In opposition to the preliminary objection, the Applicant filed a notice of motion application dated 7th April 2026 on ORDERS THAT:1.Spent2.This Honorable Court be pleased to grant leave to the Applicant to continue with the prosecution of Miscellaneous Application No. E506 of 2025 against the Respondent notwithstanding the moratorium resulting from the 1st Respondent being placed under Administration.3.The costs of this Application be in the cause. 3.The 1st Respondent filed Grounds of Opposition dated 20th April 2026 opposing the Applicant’s application dated 7th April 2026 on the following grounds:1.The Application is incompetent, misconceived, and bad in law.2.This Honourable Court lacks jurisdiction to hear and determine the Applicant’s prayer for leave to continue or prosecute proceedings against the 1st Respondent while it is under administration.3.Under section 2 of the Insolvency Act, 2015, “the court” for purposes of insolvency proceedings means the High Court, and not the Employment and Labour Relations Court.4.The leave, approval, or permission contemplated under sections 560 and 561 of the Insolvency Act can only be granted by the High Court seized of the insolvency process, being the court with original insolvency jurisdiction.5.The Applicant has invoked provisions of the Insolvency Act whose administration and supervision fall within the jurisdiction of the High Court exercising insolvency jurisdiction, and this Honourable Court cannot assume or confer upon itself powers reserved to another court by statute.6.The statutory moratorium arising from the 1st Respondent’s administration cannot be lifted, varied, or circumvented through an application filed in this Court.7.The Applicant’s prayer for leave to proceed is therefore fatally defective for having been presented before a court without jurisdiction, and the same ought to be struck out at the threshold.8.The question whether proceedings may be commenced, continued, or enforced against a company under administration is an insolvency issue that must be determined centrally by the insolvency court in order to safeguard the statutory objectives of administration and ensure orderly treatment of all creditors.9.Allowing this Court to grant the orders sought would undermine the statutory insolvency framework and open the door to parallel processes before different courts, contrary to the purpose of the moratorium under the Insolvency Act.10.The Applicant has approached the wrong forum, and the present Application is an abuse of the court process.11.The Applicant’s reliance on Articles 48 and 50(1) of the Constitution does not clothe this Court with jurisdiction where none exists in statute, and constitutional provisions on access to justice and fair hearing cannot be used to defeat an express statutory allocation of jurisdiction.12.The Application is incurably defective and the orders sought cannot issue. Applicant’s Case 4.The Applicant avers that he was an employee of the 1st Respondent and was involved in an accident in the course of his employment on 19th May 2021, as a result of which he sustained injuries. 5.The Applicant avers that he subsequently moved this Court through a Miscellaneous Application seeking compensation arising from the injuries sustained at work, the same having been assessed by the Director of Occupational Safety and Health Services on 8th September 2022. 6.He states that the 1st Respondent has since been placed under administration and that a Preliminary Objection has been raised seeking a stay of the proceedings on account of the statutory moratorium applicable to companies under administration. 7.The Applicant contends that the moratorium does not operate as an absolute bar to proceedings and that this Court retains discretion to grant leave where significant loss is demonstrated. 8.He avers that he has filed submissions setting out the prejudice and significant loss he is likely to suffer if the proceedings are stayed. 9.The Applicant further asserts that he is a natural person of limited means and that the subject matter of the suit constitutes his primary source of livelihood. 10.He states that any further delay in the determination of the matter will occasion him irreparable harm as he is presently unable to meet his basic needs; and the 1st Respondent’s assets are being managed under administration in a manner that may leave nothing available for unsecured or unproven creditors. 11.It is the Applicant’s case that unless leave is granted to proceed with the matter, his constitutional right of access to justice guaranteed under Article 48 of the Constitution will be rendered illusory. He therefore urges the Court to allow the application and permit the proceedings to continue. 1st Respondent’s Submissions 12.It was submitted that the 1st Respondent is under administration and that the Applicant seeks orders whose effect would be to continue proceedings against a company under administration contrary to the statutory moratorium established under the Act. 13.The 1st Respondent argued that under the Insolvency Act, legal proceedings against a company under administration may only be commenced or continued in two circumstances; namely, with the consent of the administrator or with the approval of the Court. It submitted that the Applicant had not exhausted the first avenue provided by law as there was no evidence that he sought or obtained the administrator’s consent before approaching the Court. 14.It was submitted that despite the Respondent filing Grounds of Opposition to the intended continuation of the suit, the Applicant proceeded to file the present application seeking leave to continue the proceedings. 15.The 1st Respondent further submitted that Section 2 of the Insolvency Act defines “the Court” to mean the High Court and, where applicable, the Insolvency Division of the High Court. Further, Section 560(1)(d) of the Insolvency Act provides that while a company is under administration, a person may begin or continue legal proceedings, including execution proceedings, against the company or its property only with the consent of the administrator or with the approval of the Court. 16.It is the 1st Respondent’s submission that the issue before this Court is not the determination of the substantive employment dispute but whether leave should be granted to continue proceedings against a company under administration. It argued that such an application constitutes an administration dispute falling within the jurisdiction of the High Court as contemplated under the Insolvency Act. 17.In support of this position, the 1st Respondent relied on Lelopa Ole Parsaurei v County Land Registrar & 13 others [2019] eKLR, where the Environment and Land Court considered whether it had jurisdiction to entertain proceedings against a company under receivership. The Court observed that the plaintiff had not sought leave as required under the Insolvency Act and further noted that the Act refers to the High Court as the Court contemplated thereunder. The Court consequently held: “I hold that this Court is devoid of jurisdiction to grant leave to a party seeking to institute a suit against a Company under receivership.” 18.The 1st Respondent submitted that the reasoning in the foregoing decision is applicable to the present matter and demonstrates that leave to proceed against a company under administration can only be granted by the High Court. 19.The 1st Respondent further relied on Fredrick Okoth Owino v T.S.S. Grain Millers [2017] eKLR, where the Employment and Labour Relations Court was called upon to determine whether it had jurisdiction to grant leave to continue proceedings and to enjoin an administrator in a suit involving a company under administration. The Court held that Section 2 of the Insolvency Act expressly defines the Court as the High Court and that Parliament did not extend that definition to include the Employment and Labour Relations Court. The Court further held that the proper forum for obtaining such leave is either the High Court or the administrator himself and that once leave is granted, the Employment and Labour Relations Court may thereafter proceed with the substantive dispute. 20.The 1st Respondent submitted that the foregoing decision is directly on point and conclusively demonstrates that this Court lacks jurisdiction to entertain the present application. 21.The 1st Respondent further argued that the Applicant’s application undermines the statutory objectives of administration. It submitted that administration is intended to preserve the company and facilitate the orderly management of its affairs for the benefit of all creditors and stakeholders. 22.It is the 1st Respondent’s submission that permitting individual proceedings to continue without adherence to the insolvency framework would defeat the purpose of the statutory moratorium. They cited In Re Hi-Plast Limited [2020] KEHC 9385 (KLR) where the Court adopted the reasoning in AIB Capital Markets PLC & Another v Atlantic Computer Systems PLC & Others (1990) EWCA Civ 20 wherein it was held: “The making of an administration order triggers the prohibition on proceedings being brought or continued against the Company...” The Court further explained the rationale for the moratorium as follows: “The Prohibition in Section 11(3)(c) & (d) is intended to assist the Company, under management of the administrator, to achieve the purpose for which administration was made.... The Court has to carry out a balancing exercise, balancing the legitimate interest of the lessor and the legitimate interest of other creditors of the Company.” 23.The 1st Respondent submitted that the stay imposed under the Insolvency Act is neither punitive nor permanent but is intended to enable the administration process to achieve its statutory objectives. It argued that the interests of the Applicant must be balanced against those of other creditors and the collective insolvency process. 24.It is the 1st Respondent’s submission that all matters concerning administration, including applications seeking leave to continue proceedings against a company under administration, fall within the exclusive jurisdiction of the High Court. 25.I have considered all the averments and submissions of the parties herein. It is not denied that the respondent has been placed under moratorium. The effect of a moratorium is to suspend any action in law which in effect may affect this suit before court. The moratorium was issued by the High Court and it is in fact the high court that can set aside the said moratorium and allow further action against the respondent. I agree with the findings of this court in Fredrick Okoth Owino vs T.S.S Grain Millers (supra) that it is only the High Court that can grant leave to continue this cause against the respondents. 26.In the circumstances, I find the preliminary objection raised having merit and I allow it and suspend the hearing and continuation of this cause until such a time as the moratorium will be lifted or until further orders from this court. Costs in the cause. DATED, SIGNED AND DELIVERED VIRTUALLY AT NAIROBI THIS 4TH DAY OF JUNE, 2026.HELLEN WASILWAJUDGE