[2022] KEHC 11357 (KLR)

Ruhangi v The Registrar of Companies & another; Young Traders Limited (Applicant) (Miscellaneous Application E733 of 2021) [2022] KEHC 11357 (KLR) (Commercial and Tax) (6 May 2022) (Ruling)

Neutral citation: [2022] KEHC 11357 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts Commercial and Tax Division)

Commercial and Tax

Miscellaneous Application E733 of 2021

A Mabeya, J

May 6, 2022

Between

John Peter Ruhangi

Respondent

and

The Registrar of Companies

1st Respondent

The Honourable Attorney General

2nd Respondent

and

Young Traders Limited

Applicant

Ruling

1. The Motion for consideration is dated 9/3/2022. It was brought under Articles 47 and 50 of the Constitution of Kenya, sections 1A, 1B 3A and 80 of the Civil Procedure Act, section 917(2) (3) of the Companies Act, and order 45 of the Civil Procedure Rules.

2. It sought to stay, review and/or set aside the orders made by this Court on 15/12/2021 which restored the name of Gumchem (K) Limited (“the Company”) to the Companies Register and reinstated its directors and shareholders. It also sought that Mr. John Peter Kamau Ruhangi (Mr. Ruhangi”) be summoned to Court for cross examination on his affidavit of 29/9/2021 and for an order finding him to have committed perjury and in contempt of court.

3. The application was supported by the affidavit of Monica Wambui Kinuthia sworn on 9/3/2022. The grounds were that that; Mr. Ruhangi had obtained the subject orders by making false averments and had misled the court. He had failed to disclose that the company was dissolved pursuant to Gazette Notice No. 2217 of March, 2006. That the dissolution was an issue in HCC 1260 of 2004 Gumchem Kenya Limited v Young Traders Limited and Anor and was also a ground of appeal in the ensuing appeal CA No. E532 of 2020 Young Traders Limited v Gumchem Kenya Limited.

4. That prior to the applicant conducting a search on the company, the Registrar of Companies had on 8/12/2020 confirmed that the company had been struck off from the Register of Companies via gazette notice No. 2217 of March 2006. That the application for restoration of the company was filed long after limitation of time.

5. It was further contended that adverse allegations were made against the applicant but it was not given a chance to respond thereto. That the Company now sought to rely on the said orders as a defence in the above appeal.

6. Mr. Ruhangi filed a notice of preliminary objection dated 18/3/2022 and grounds of opposition of even date. The grounds were that; the applicant lacked locus standi in the suit; the subject orders had been consummated and effected; the orders were issued in the presence and full participation of the two other respondents and the applicant was but a stranger to the suit.

7. It was also contended that the order was already an issue in CA No. E532 of 2020 and could not be litigated both in the Court of Appeal and in this Court and that the application was meant to defeat a lawful decree issued on 6/11/2020.

8. Mr. Ruhangi also swore a replying affidavit on 28/3/2022. He deposed that the applicant lacked locus standi and had no reasonable cause of action in the matter. That the application had been overtaken by events as the company had already been reinstated and granting the orders sought would be in vain. That the orders were given with the full participation of the registrar of companies and Counsel from the office of the Hon. Attorney General.

9. He also contended that the application was an abuse of court process and an attempt by the applicant to evade settling the decree of Kshs. 11,090,530/= issued against it in HCC 1260 of 2004 Gumchem Kenya Limited v Young Traders Limited and Anor(2020) eKLR. That the applicant had also filed Civil Application E006 OF 2021 in the Court of Appeal where it was challenging the subject orders and sought stay of execution.

10. He further stated that the applicant had also filed Civil Appeal No. E532 of 2020 Young Traders Limited v Gumchem Kenya Limited wherein the subject order was an issue and the matter was still pending in that court which is superior to this Court. That the appeal had the same set of facts and the applicant could not be heard on an application for review.

11. That the application did not meet the standards for granting of orders for review including error, omission, and self-evident without requiring an elaborate argument established. That the application sought cross-examination and made numerous elaborate arguments contrary to the decision in National Bank of Kenya Ltd v Ndungu Njau (1997) eKLR.

12. The applicant filed a further affidavit sworn by Monica Wambui Kinuthia on 28/3/2022 in response. It was contended that the applicant only knew of the instant proceedings on 2/3/2022 after being served with a replying affidavit in Civil Application No. E006 of 2021 Young Traders Limited v Gumchem (K) Limited. That there was no mention of the instant suit in the appeal filed by the applicant and the applicant only filed this application after finding out the existence of the subject order. That the instant application was filed in good faith and ought to be allowed.

13. The Court has considered the entire record together with submissions. The Court will first deal with the preliminary objection dated 18/3/2022 before delving into the application.

14. In Mukisa Biscuits Manufacturing Co. Ltd v West End Distributors Ltd (1969) EA 696, it was held: -“So far as I am aware, 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.”

15. A preliminary objection raises pure point of law, which is argued on the assumption that all facts pleaded by the other side are correct. However, it cannot be raised if any fact is to be ascertained from elsewhere or if the court is called upon to exercise judicial discretion.

16. The preliminary objection as raised was overflown with factual grounds which the Court will not attempt to analyze. The only ground that capable of being raised as a preliminary objection is that of locus standi. This ground, if successful, is capable of disposing of the application.

17. It was submitted that the applicant did not have locus to bring the application as it was not a party to the suit. On the other hand, the applicant retorted that section 80 of the Civil Procedure Act and order 45 of the Civil Procedure Rules provide that an “aggrieved party” could bring an application for review against an order or decree of the court.

18. Section 80 of the Civil Procedure Act provides: -“Any person who considers himself aggrieved-(a)by a decree or order from which an appeal is allowed by this Act, but from which no appeal has been preferred; or(b)by a decree or order from which no appeal is allowed by this Act,May apply for a review of judgement to the court, which passed the decree or made the order, and the court may make such order thereon as it thinks fit.”

19. On the other hand, Order 45 Rule 1 of the Civil Procedure Rules, 2010 provides: -“1 (1) Any person considering himself aggrieved-(a)By a decree or order from which an appeal is allowed, but from which no appeal has been preferred; or(b)By a decree or order from which no appeal is hereby allowed, and who from the discovery of new and important matter or evidence which, after the exercise of due diligence, was not within his knowledge or could not be produced by him at the time when the decree was passed or the order made, or on account of some mistake or error apparent on the face of the record, or for any other sufficient reason, desires to obtain a review of the decree or order, may apply for review of judgement to the court which passed the decree or made the order without unreasonable delay.”

20. From the forgoing, it is clear that the provisions deliberately use the words ‘any person who considers/considering himself aggrieved’. It then follows that, the test to apply is not whether the person is a party to the proceeding but rather, whether the person has sufficient reason to consider himself aggrieved.

21. In Margaret Walegwa Wamwandu & 157 others v Changamwe Housing Scheme Limited & another; Garissa Mattresses Limited (Aggrieved Party) [2019] eKLR, the Court held: -“In any event, section 80 of the Civil Procedure Act and Order 45 of the Civil Procedure Rules is worded in such a way that any party affected by the order can move the Court. The plaintiffs herein in their execution process will have the applicant’s title nullified/cancelled. This makes the applicant qualified to challenge such an order so as to get an opportunity to present her case. Lastly, the plaintiffs have accused the applicant of obtaining his title fraudulently and that the compensation was only for the structures and not for purchase of the land. This is a question that can only be determined after the orders of 20. 6.18 are set aside.”

22. In the present case, the applicant contended that the dispute of dissolution of the company was an issue before HCC 1260 of 2004 Gumchem Kenya Limited v Young Traders Limited and Anor and was also a ground of appeal in the ensuing appeal Civil Appeal No. E532 of 2020 Young Traders Limited v Gumchem Kenya Limited.

23. That the appeal was filed 8 months before the respondent filed the application for restoration of the company leading to this court’s orders of 15/12/2021. That adverse allegations were made against the applicant which it was unaware of. In conclusion, that the respondent intended to rely on that order as a defence in the appeal.

24. In this Court’s opinion, the matters raised by the applicant are not without basis. They justify the applicant’s grievances against the subject order. The order affected the applicant negatively to justify its being aggrieved. In the circumstances, the Court finds that applicant has locus to bring the application for review. The preliminary objection must fail.

25. The second and main issue is whether the applicant’s application meets the threshold for review. Under Order 45 of the Civil Procedure Rules, a review will be made where there is discovery of new and important matter which, after the exercise of due diligence, was not within the knowledge of the applicant, or on account of some mistake or error apparent on the face of the record, or for any other sufficient reason.

26. The applicant’s case was that it was unaware of the application for restoration of the company. It only discovered of it on 2/3/2022 when a replying affidavit in Civil Application No. E006 of 2021 Young Traders Limited v Gumchem (K) Limited was served upon it. This fact was not disputed by the respondent.

27. In view of the foregoing, it is clear that the present application was filed timeously. It was filed 7 days after the discovery of the subject orders and existence of these proceedings.

28. The respondent submitted that the order was an issue before the appeal case. A close look at the documents on record reveals that the applicant had not sought a stay of execution of the subject orders. What it had sought in the appeal is a stay of execution of the judgment and decree in HCC 1260 of 2004 Gumchem Kenya Limited v Young Traders Limited and Anor. In as much as the issue of dissolution of the company may be an issue before the Court of Appeal, the subject order is not.

29. In any event, it was it was incumbent upon the respondent to have revealed to this Court, at the time of applying for the application, that there was a pending appeal relating to the issue of dissolution and restoration of the company. This would have had an effect on the Court’s determination as the Court would have wished to know who the parties in appeal were and whether all those parties were before it. This was a material non-disclosure.

30. In view of the foregoing, this Court makes a finding that the respondent deliberately misled this Court into making the subject orders. It cannot be said that the orders of 15/12/2021 were arrived at fairly. They were obtained for a purpose not disclosed to Court and with a view to steal a match against the applicant who had an interest in the status quo then obtaining.

31. Accordingly, there is sufficient grounds to review the orders of 15/12/2021. Let the parties settle the dispute between them fairly through merit. The dissolution of the company is a live issue in Civil Appeal No. E532 of 2020 Young Traders Limited v Gumchem Kenya Limited.

32. Accordingly, the application is allowed as follows: -a.The notice of preliminary objection and grounds of objection both dated 18/3/2022 are found to be unmerited and are dismissed.b.Prayer number 3 is spent.c.Prayer numbers 4 and 7 are hereby allowed as prayed.d.The registrar of companies is hereby ordered to cancel any transaction or entries made pursuant to the orders of 15/12/2021 and restore the company to the status it was before that date.

It is so ordered.

DATED AND DELIVERED AT NAIROBI THIS 6TH DAY OF MAY, 2022. A. MABEYA, FCIArbJUDGE