Kenya Revenue Authority v Hawaye Construction Limited & 3 others (Miscellaneous Application E1022 of 2023) [2026] KEHC 9123 (KLR) (Commercial and Tax) (25 June 2026) (Ruling)

**REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA AT NAIROBI** **MILIMANI LAW COURTS** **COMMERCIAL AND TAX DIVISION** **MISC. APPLICATION NO. E1022 OF 2023** **KENYA REVENUE AUTHORITY ...... APPLICANT/RESPONDENT** **VERSUS** **HAWAYE CONSTRUCTION LIMITED …………...1ST RESPONDENT** **ILIUS ELEMA HARRO …….…….. 2ND RESPONDENT/APPLICANT** **ALEX ALI KUNNI ………..…….….. 3RD RESPONDENT/APPLICANT** **REGISTRAR OF COMPANIES …………………….. 4TH RESPONDENT** **RULING** 1. Before this Court for determination is a Notice of Motion Application dated 15th December, 2025, seeking orders that the Applicants’ Notice of Appeal dated 11th December, 2025, and filed in court on 11th December, 2025, be deemed as duly filed. 2. The application is supported by the supporting affidavit sworn by Bercil C. Ogara, Counsel for the Applicants. He deposes that the High Court delivered its ruling on 14th November, 2025, ordering the registrar of companies to reinstate the Applicant to the Register of Companies. However, although the ruling was delivered on that date, it was only uploaded on the e-filing platform and made accessible on 24th November, 2025. Counsel avers that upon accessing the ruling, it was necessary to seek instructions, particularly given the statutory issues arising from it. 3. He further states that the statutory deadline for filing the Notice of Appeal was 28th November, 2025, leaving the Applicants with only four days to obtain instructions and file the Notice of Appeal. Due to this limited time, the Notice of Appeal was filed out of time on 11th December, 2025. He contends that the delay of 13 days is reasonable and adequately explained. He further avers that upon confirming that the statutory period had lapsed, and obtaining instructions to appeal, he promptly prepared the present application seeking extension of time. He maintains that the intended appeal raises substantial and arguable issues of law that warrant appraisal by the Court of Appeal. 4. The application was opposed by Kenya Revenue Authority (KRA) through a Replying Affidavit sworn on 15th January, 2025, by Josiah Nyangweso. He deposes that although the Applicants claim that the ruling was only “generated” on 24th November, 2025, it was in fact delivered in open court on 14th November, 2025, in the presence of Counsel for the Applicants. He asserts that the time for filing an appeal begins to run from the date of delivery of the ruling and not from the date it is uploaded or made available administratively. He further contends that delays attributable to registry processes, Counsel’s internal arrangements or delayed access to the ruling do not constitute sufficient grounds for enlargement of time. 5. On the issue of prejudice, the Respondent contends that granting the extension sought would occasion substantial and continuing prejudice. He explains that the impugned ruling ordered the reinstatement of the 1st Applicant company to the Register of Companies thereby enabling KRA, as a creditor, to pursue recovery of outstanding taxes lawfully due. It is argued that further delay would impede enforcement, recovery and compliance processes under the tax laws, thus undermining KRA’s statutory mandate and constitutional obligation to collect revenue. Additionally, the Respondent contends that the continued delay exposes it to risks of assets dissipation, frustration of recovery mechanisms and continued tax evasion. He argues that such prejudice affect not only the institution but also public revenue and the wider public interest, which, outweighs any inconvenience to the Applicants. 6. The Respondent also disputes the Applicants’ contention that they have an arguable appeal. He argues that the intended appeal is based on the alleged reliance on inadmissible electronic evidence. Further that the existence of tax arrears at the time of the company’s dissolution was not in dispute. He contends that the Applicants have failed to demonstrate sufficient cause for enlargement of time, have not shown that the Respondent will not suffer prejudice, and have not established that the intended appeal is arguable. He characterizes the application as a procedural tactic aimed at delaying lawful tax recovery and urges the Court to dismiss it with costs 7. The application was canvassed by way of written submissions. The Applicants filed their submissions dated 2nd June 2026 while the Respondent filed submissions dated 28th May 2026. 8. The 1st & 4th Respondents though duly served, did not file any document either in support of or in opposition to the application. ***Applicant’s submissions*** 1. The Applicants’ submissions begin with an introduction, followed by the factual background of the matter. The Applicants identify three issues for determination: whether they have established sufficient cause to warrant enlargement of time and validation of the Notice of Appeal filed on 11th December, 2025; whether the intended appeal raises arguable points of law; and who should bear the costs of the application. 2. On the first issue, the Applicants submit that the Court has unfettered discretion under Section 7 of the Appellate Jurisdiction Act, Order 50, rule 6 of the Civil Procedure Rules and Rule 77(2) of the Court of Appeal Rules, 2022 to extend time where sufficient cause has been demonstrated. They rely on ***Nicholas Kiptoo Arap Korir Salat v Independent Electoral and Boundaries Commission & 7 Others [2014] eKLR,*** where the Supreme Court set out guiding principles for extension of time, including the need to explain the delay, demonstrate good faith, show absence of prejudice and establish promptness in filing the application. The Applicants contend that they have satisfied these criteria. 3. They further submit that the delay of approximately thirteen days was modest and excusable. In that regard, they rely on ***Simon v Oira (Civil Appeal No. 215 of 2024) [2025] KEHC 7211 (KLR)****.*They argued that the delay in this case is comparatively short and should not bar them from exercising their constitutional and statutory right of appeal. 4. To support their request for the exercise of judicial discretion, the Applicants cite ***Fakir Mohamed v Joseph Mugambi & 2 Others [2005] eKLR****,* and ***Thuita Mwangi v Kenya Airways Ltd [2003] KECA 201 (KLR)*** for the proposition that Court’s discretion exists to prevent injustice arising from excusable mistakes, or circumstances beyond a litigant’s control. The Applicant asserts that the delay resulted from late access to the ruling and the need to obtain client instructions, which should not be interpreted as indolence, or bad faith. 5. The Applicants reject the Respondent’s allegation that they misled the Court by stating that the ruling was “generated” on 24th November, 2025. They clarify that they do not dispute that the ruling was delivered on 14th November, 2025, in the presence of Counsel. Their position, however, is that the written ruling was not available for review until 24th November, 2025. They argue that while delivery signifies pronouncement of the decision, proper evaluation of the prospects of appeal requires access to the ruling and its reasoning. Accordingly, the time spent awaiting access and consulting the clients was justified. 6. The Applicants further invoke constitutional principles, relying on Articles 48 and 50(1) as well 159(2)(d) as of the Constitution. They urge the Court to prioritize substantive justice over procedural lapses. In support, they cite **Richard Ncharpi Leiyagu v IEBC & 2 Others [2013] eKLR**. 7. On whether the intended appeal is arguable, the Applicants submit that they are not required to prove that the appeal will succeed but only required to prove that the appeal will succeed but only that it raises bona fide issues for determination. Reliance is placed on ***Kenya Commercial Bank v Nicholas Ombija [2009] eKLR*** for the proposition that an arguable appeal is one that raises even a single bona fide point worthy of judicial determination. The Applicants contend that their intended appeal raises substantial questions regarding the admissibility and evidentiary value of iTax records produced without compliance with Section 106B of the Evidence Act; the legal consequences of dissolution under Section 897 of the Companies Act; and the procedural safeguards applicable to dissolved companies facing disputed tax liabilities. They maintain that these are weighty legal issues, not frivolous claims. 8. The Applicants reiterate that the threshold of arguability is met upon identifying a single bona fide issue. They submit that the issues they intend to raise before the Court of Appeal are substantial and merit appellate consideration. 9. On costs, the Applicants submit that while costs ordinarily follow the event, the Court retains discretion. They rely on ***Macharia v NIC Bank [2025] KEHC 33 (KLR) and Jasbir Singh Rai & 3 Others v Tarlochan Singh Rai & Others [2014] eKLR*** to argue that, if the application is allowed, costs should be awarded to them. 10. The Applicants urge the Court to exercise its discretion in the interests of substantive justice, by enlarging time, deeming the Notice of Appeal filed on 11th December, 2025, as properly filed, and permitting the intended appeal to proceed on its merits. ***Respondent’s submissions*** 1. The Respondent, Kenya Revenue Authority (KRA), commenced its submissions with an introduction before outlining the applicable legal framework and principles governing extension of time. Reliance was placed *on* ***Leo Sila Mutiso v Rose Hellen Wangari Mwangi [1999] 2 EA 231,*** the Supreme Court decision in ***Nicholas Kiptoo Arap Korir Salat v Independent Electoral and Boundaries Commission & 7 Others [2014] eKLR,*** and ***Paul Musili Wambua v Attorney General & 2 Others [2015] eKLR*** to contend that the Applicants have failed to meet the threshold for enlargement of time. 2. On the issue of delay, KRA submits that the Applicants have not to provide a satisfactory explanation. It is argued that the ruling sought to be appealed from was delivered in open court on 14th November, 2025, in the presence of counsel for the 2nd and 3rd Respondents/Applicants, as reflected on the face of the ruling. Consequently, the Applicants were fully aware of the decision from the date of delivery. KRA contends that the assertion that the ruling was only “generated” on 24th November, 2025, is legally untenable. According to KRA, the Applicants cannot legitimately claim ignorance of the ruling when their advocates were present in court at the time it was delivered. In support of the proposition that litigants have a duty to actively pursue their cases, KRA relies on ***Wachira v Mugekenyi & Others [2022] KECA 1207 (KLR), which cited Habo Agencies Limited v Wilfred Odhiambo Musingo [2015] eKLR****,* to submit that the Applicants’ conduct demonstrates a lack of diligence and disentitles them from the equitable relief sought. 3. The Respondent further submits that the delay is not an innocent procedural lapse but a deliberate stratagem intended to frustrate the lawful recovery of taxes. It argues that the ruling reinstated the 1st Respondent company to the Register of Companies to enable KRA to pursue recovery of outstanding taxes lawfully due. Consequently, any delay in finalising the matter undermines KRA’s constitutional and statutory mandate to collect revenue on behalf of the people of Kenya. KRA maintains that the prejudice it stands to suffer is not merely institutional but extends to public revenue and the broader public interest. Reliance is placed on ***Fakir Mohamed v Joseph Mugambi & 2 Others [2005] eKLR***. It is further contended that continued delay exposes the Respondent to the risk of asset dissipation and tax evasion, thereby impairing its enforcement mandate. Accordingly, KRA argues that public interest outweighs any inconvenience to the Applicants. 4. On whether the intended appeal is arguable, KRA submits that the Applicants have not demonstrated any bona fide ground of appeal. It contends that the intended appeal is premised on the alleged reliance on inadmissible electronic evidence, namely iTax ledgers not accompanied by a certificate under Section 106B of the Evidence Act. However, KRA argues that this contention is misconceived, as the Court did not determine the validity, quantum, or enforceability of the tax assessments. Rather, the Court expressly held that such matters fall to be determined under the dispute resolution mechanisms provided by the Tax Procedures Act. Consequently, the iTax records did not form the basis of any substantive determination against the Applicants. 5. KRA further submits that the Court found that the Applicants did not dispute the existence of tax liabilities at the time the company’s dissolution. Their contention was limited to whether the taxes were time-barred or unenforceable. Accordingly, the iTax ledgers were relied upon only to establish KRA’s prima facie status as a creditor under section 900 of the Companies Act, and not as conclusive proof of tax liability. It is therefore argued that the admissibility of the iTax records under section 106B of the Evidence Act was immaterial, and cannot form the basis of an arguable appeal. 6. The Respondent also faults the Applicants for failing to annex a draft Memorandum of Appeal. It is submitted that, in the absence of such a draft, the Court is unable to assess the proposed grounds of appeal or determine whether any arguable issues arise. KRA therefore contends that the Applicants have failed to demonstrate even a single bona fide issue, and that the intended appeal is merely an attempt to delay enforcement. 7. In conclusion, KRA submits that the Applicants have failed to satisfy all the requirements for enlargement of time and urges the Court to dismiss the Application with costs with costs. ***Analysis and Determination*** 1. I have carefully considered the rival affidavits and submissions filed by the parties. In my view the sole issue for determination is **Whether the Applicants have established sufficient cause to warrant the enlargement of time and for the Notice of Appeal dated 11th December 2025 to be deemed as duly filed**. 2. The Court’s jurisdiction to enlarge time for the filing of a Notice of Appeal is anchored in Section 7 of the Appellate Jurisdiction Act and Order 50 Rule 6 of the Civil Procedure Rules. The principles governing the exercise of that discretion are now well settled. In ***Nicholas Kiptoo Arap Korir Salat v Independent Electoral and Boundaries Commission & 7 Others [2014] eKLR****,* the Supreme Court emphatically stated that extension of time is not a right of a party but an equitable remedy granted at the discretion of the court to a deserving party. The Court outlined relevant considerations, including the length of delay, the reason for the delay, the degree of prejudice to the Respondent if the extension is granted, whether the application has been brought without undue delay and, where relevant, whether the intended appeal is arguable. 3. The first consideration is therefore whether the delay has been satisfactorily explained. The Applicants contend that whereas the impugned ruling was delivered on 14th November, 2025, the written ruling was not made available on the Judiciary e-filing platform until 24th November, 2025. They submit that upon accessing the ruling, it was necessary to analyse the court’s reasoning, advise their clients, and obtain instructions on whether to lodge an appeal. Given that the statutory deadline for filing the Notice of Appeal fell on 28th November, 2025, the Applicant had only four days within which to undertake these steps. They therefore attribute the delay to the late availability of the ruling and the practical necessity of obtaining instructions. 4. The Respondent, on its part, argues that this explanation is untenable, emphasizing that counsel for the Applicants was present when the ruling was delivered on 14th November, 2025. It is contended that time began to run from the date of delivery and not from the subsequent administrative act of uploading the ruling. According to the Respondent, reliance on the date of upload as a basis for extension is misplaced and reflects a lack of diligence. 5. I have considered the competing arguments. There is no dispute that Counsel for the Applicants was present when theruling was delivered. It is equally, uncontested that the ruling became available on the e-filing platform on 24th November, 2025. While I agree with the Respondent that, as a general rule, time begins to run from the date of delivery of the decision, this court cannot ignore the practical realities. 6. A litigantintending to challenge a decision is ordinarily entitled to the benefit of the Court’s reasoning before making an informed decision whether to appeal. The explanation advanced by the Applicants is therefore not premised on ignorance of the ruling, but rather on the delayed availability of its written form and the necessity to obtain informed. In the circumstances, that explanation in my view, is reasonable and plausible. 7. Further, the delay in question is relatively short. The Notice of Appeal was filed on 11th December, 2025, approximately thirteen days after the expiry of the prescribed period. Such a delay cannot, be characterized as inordinate, particularly where a reasonable explanation has been proffered. 8. The next consideration is whether the intended appeal raises arguable issues. The Applicants have identified several proposed grounds of appeal. They challenge the finding that KRA qualified as a creditor within the meaning of Section 900 of the Companies Act; the reliance placed on electronic iTax records allegedly produced without compliance with Section 106B of the Evidence Act; and the interpretation of Sections 897 and 900 of the Companies Act regarding dissolution and restoration of companies. The Respondent maintains that these issues are not arguable, as the Court did not make any definitive findings on the enforceability or validity of the tax liabilities but merely established a prima facie basis for being treated as a creditor. 9. At this stage, this Court is not required to undertake a definitive analysis of the merits of the intended appeal. The Court need only satisfy itself that the intended appeal is not frivolous and raises at least one bona fide issue deserving consideration by the appellate court. In ***Kenya Commercial Bank Limited v Nicholas Ombija [2009] eKLR***, an arguable appeal is not one that must necessarily succeed but one that is not frivolous and raises a legitimate question for determination. Without expressing any concluded view on the merits of the proposed appeal, I am satisfied that the questions raised are neither idle nor frivolous. They raise legitimate legal questions deserving of consideration by the appellate court. 10. On the issue of prejudice, the Respondent has argued that any further delay would undermine its constitutional and statutory mandate to collect revenue and may expose public revenue to risk. That concern is both legitimate and weighty. However, the prejudice identified is more closely associated with the pendency of the appellate process itself rather than the relatively short extension of time sought herein. Conversely, dismissal of the present application would have the far reaching consequence of permanently depriving the Applicants of their right of appeal. In striking a balance between these competing considerations, I am persuaded that any prejudice to the Respondent can adequately be mitigated by an award of costs, whereas refusal to grant the application would occasion irreparable prejudice to the Applicants. 11. I am further guided by the constitutional imperatives under Articles 48, 50(1) and 159(2)(d) which underscore the need to facilitate access to justice, uphold the right to fair hearing and determine disputes on their merits without undue regard to procedural technicalities. While compliance with procedural timelines remains important the court still retains the discretion to enlarge time where sufficient cause has been demonstrated and where the interests of justice so require. 12. Having considered the totality of the material placed before the Court, I am satisfied that the Applicants have provided a reasonable explanation for the delay, that the delay is not inordinate, that the intended appeal raises arguable issues of law and that the interest of justice favours allowing the Applicants an opportunity to ventilate their grievances before the Court of Appeal. 13. Accordingly, the Notice of Motion Application dated 15th December, 2025, is hereby allowed. The Applicant is granted 7 days to file and serve it intended Notice of Appeal. 14. Costs of the application shall abide the outcome of the intended appeal. ***Delivered, Dated and Signed virtually this 25th day of June, 2026*** **RHODA RUTTO** **JUDGE** **In the presence of;** **Court Assistant: Wabwire**