[2022] KEHC 16577 (KLR)

Patel (Insolvency Cause 1 of 2021) [2022] KEHC 16577 (KLR) (16 December 2022) (Ruling)

Neutral citation: [2022] KEHC 16577 (KLR)

Republic of Kenya

In the High Court at Kericho

Insolvency Cause 1 of 2021

AN Ongeri, J

December 16, 2022

IN THE MATTER OF SECTION 32 AND 33 OF THE INSOLVENCY ACT, 2015 AND RULE 18 OF THE INSOLVENCY REGULATIONS, 2016

In the matter of

Prakash Babubhai Patel

Debtor

Ruling

1. The creditor filed a Notice of Preliminary Objection(NOPO) dated 24/3/2022 on the following grounds ;a)That the Petitioner has not complied with Section 32(4) of the Insolvency Act, 2015b)That the Petitioner has not accounted for the proceeds of the sale transactions stated in the Petition hence the court should reject the statement under Section 32(3) of the insolvency Act.c)That the Petition has not been filed in good faith but is only intended to defeat the ends of justice.d)That the Petitioner has not complied with the substantive law and regulations in relation to insolvency proceedings.e)That the Petition is frivolous, vexatious and unmerited.

2. The parties filed written submissions in the NOPO as follows:The creditor submitted that the petitioner had failed to comply with mandatory requirements of the law such as Section 32 (4) of the Insolvency Act, as the petitioner only placed the advertisement on the Kenya Gazette only.

3. The creditor also submitted that the petitioner did not comply with regulation 77B (1) of the Insolvency Regulations Act. It was further submitted that the petition does not give the list of all the creditors if any, is sketchy when it comes to the assets being held by the petitioner and it does not have a verifying affidavit accompanying it which makes it defective and the court should strike out the petition as it has not complied with statutory provisions.

4. The petitioner submitted that for a preliminary objection to succeed, it should raise a pure point of law, it is argued on the assumption that all the facts pleaded by the other side are correct and that it cannot be raised if any fact has to be ascertained or if what is sought is the exercise of judicial discretion.

5. It was submitted that the preliminary objection has not been raised by the creditor on pure points of law, and in addition it has not been argued on the assumption that facts as pleaded by the petitioner are correct and that some of the grounds of the preliminary objection requires the court to look into the evidence to ascertain whether or not the petitioner has complied.

6. The petitioner submitted that the preliminary objection raised raises a number of disputed facts which require the court to ascertain the said disputed facts; and further that the creditor has not met the required threshold of raising a preliminary objection as set in the Mukisa Biscuit case and the creditors intention is to deny the petitioner a hearing before this court.

7. The petitioner submitted that he has unnecessarily incurred incidental costs of the instant preliminary objection and should therefore be awarded costs.

8. The sole issue for determination is whether the court should strike out the Petition for failure to comply with the provisions of the Insolvency Act.

9. In the case of Mukisa Biscuit Manufacturing Company Ltd v Westend Distributors [1969] EA pg. 696 the court defined a Preliminary Objection as follows;“…. A Preliminary Objection consists of a point of law which has been pleaded, or which arises by clear implication out of pleadings and which if argued as a preliminary point may dispose of the suit. Examples are an objection to the Jurisdiction of the court or a plea of limitation, or a submission that the parties are bound by the contract giving rise to the suit to refer the dispute to arbitration.”

10. In the current case I find that the issues raised require to be ventilated through evidence to determine whether the Petitioner has complied with the Insolvency Act.

11. The Constitution of Kenyain Article 159 (2) states the principles to guide the court in determining disputes as follows: -“(2)In exercising judicial authority, the courts and tribunals shall be guided by the following principles: -(a)justice shall be done to all, irrespective of status;(b)justice shall not be delayed;(c)alternative forms of dispute resolution including reconciliation, mediation, arbitration and traditional dispute resolution mechanisms shall be promoted, subject to clause (3);(d)justice shall be administered without undue regard to procedural technicalities; and(e)the purpose and principles of this Constitution shall be protected and promoted.”

12. It is not in the interest of justice to strike out the Petition without giving the Petitioner a chance to be heard.

13. The Court of Appeal in Martha Wangari Karua v Independent Electoral & Boundaries Commission & 3others [2018] eKLR, stated as follows: - “To conclude the point, we think what the petitioner did or omitted to do, but was sufficiently supplied by the respondents, was not so felonious as to be incurable under Article 159 of the Constitution. In striking out the petition without addressing the nature and ramification of the said Article, the trial court wrongly exercised its discretionary power. The Rules of natural justice require that the court must not necessarily drive any litigant from the seat of justice without a hearing, however weak his or her case may be.”

14. In Kiai Mbaki & 2othersv Gichuhi Macharia & Another [2005] eKLR, the court of appeal stated that: - “The right to be heard is a valued right. It would offend all notions of justice if the rights of a party were to be prejudiced or affected without the party being afforded an opportunity to be heard.”

15. I find that the Preliminary Objection lacks in merit. I dismiss it and direct that the Petition proceeds by way of viva voce evidence.

16. The earlier directions to proceed by way of written submissions are accordingly set aside since the court has reached a finding that the issues need to be ventilated by evidence.

17. The costs of the Preliminary Objection to abide the cause.

Delivered, dated and signed at Kericho this 16th day of December, 2022. A. N. ONGERIJUDGE