https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/10932

**REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA AT ELDORET** **CONSTITUTIONAL PETITION NO. E030 OF 2025** **IN THE MATTER OF ARTICLES 22, 23, 40, 47, 22 AND 50(1) OF THE CONSTITUTUTION OF KENYA 2010** **AND** **IN THE MATTER OF THE COMPANIES ACT, 2015** **AND** **IN THE MATTER OF THE CIVIL PROCEDURE ACT AND RULES** **AND** **IN THE MATTER OF THE LEGAL DOCTRINE OF CORPORATE PERSONALITY** **BETWEEN** **KAVIT MUKESH SHAH………………………………………………………..PETITIONER** **VERSUS** **ELDOHOSP PHARMACEUTICALS LIMITED…………………………….RESPONDENT** **AND** **CITY MED PHARMACEUTICALS LIMITED……………………..INTERESTED PARTY** **JUDGMENT** 1. The Petitioner was at all material times, a director and shareholder at the Interested Party, a private limited liability company duly incorporated under the **Companies Act**. He has sued the Respondent contending that it has taken steps, without legal basis, to pursue him personally in connection with liabilities incurred by the company without the corporate veil being first lifted by any Court of law. 2. He has, through **Messrs Maranga Nyang’ute and & Co. Advocates**, filed the Petition dated 26/07/2023 and seeks orders as follows: 3. **A declaration that the actions of the Respondent in seeking to enforce corporate liabilities of the Interested Party against the Petitioner personally, in the absence of a Court Order lifting the corporate veil, are unconstitutional and unlawful.** 4. **A declaration that the Petitioner ceased involvement in the Interested Party's affairs as a director in 2023, and as such bears no personal liability for any debts, liabilities, or obligations of the Interested Party incurred thereafter.** 5. **That, in the alternative and without prejudice to Prayer (2), this Honourable Court be pleased to declare that the Petitioner lawfully resigned as a director and transferred all his shares in the Interested Party on 14th August, 2024. and as such bears no personal liability for any debts, liabilities or obligations of the Interested Party incurred thereafter.** 6. **A permanent injunction restraining the Respondent, its agents, and any creditor known or unknown, whether present or future, from initiating, continuing, threatening or in any manner pursuing any legal or execution proceedings against the Petitioner personally in connection with any liabilities, debts or obligations of the Interested Party.** 7. **A permanent injunction restraining all creditors, including the Respondent, whether existing, contingent, known or unknown, from seeking, enforcing or pursuing personal liability against the Petitioner in relation to the debts, liabilities or obligations of the Interested Party, whether arising before or after his resignation****.** 8. **An order directing the Companies Registry to process and confirm the resignation and share transfer of the Petitioner from the Interested Party as lodged on 14th August 2024 within 14 days from issuance of the judgment,** 9. **A declaration that any enforcement of judgment or execution against the Petitioner personally, whether by the Respondent or any other creditor, arising from obligations solely incurred by the Interested Party, is unconstitutional, unlawful and void ab initio.** 10. **Costs of this Petition be borne by the Respondent.** 11. **Any other orders or directions that this Honourable Court may deem just and appropriate.** 12. Together with the Petition, the Petitioner had also filed an Application seeking conservatory orders, which orders I granted at the ***ex parte*** stage on an interim basis. I however subsequently discharged the same when it was disclosed to the Court by the Respondent at the ***inter partes*** stage, that the Petitioner had filed another Application seeking more or less similar orders in the primary suit, namely, **Eldoret Chief Magistrates Court Civil Suit No. E950 of 2024**, from which the instant Petition has arisen, but which fact the Petitioner had not disclosed at the ***ex parte*** stage, which omission the Court therefore deemed to have amounted to non-disclosure of a material fact. With this turn of events, the Petitioner’s Counsel, **Mr. Maranga**, opted to abandon the Application altogether and proposed, instead, to prosecute the Petition. The proposal having been accepted, the matter proceeded to hearing of the Petition. 13. The Petition is supported by the Affidavit sworn by the Petitioner in which he deponed that he was formerly a director and shareholder of the Interested Party but from which he formally resigned and transferred all his shares on 14/08/2024, and all registration and transfer documents lodged or filed at the Companies Registry and are currently pending final processing and confirmation. He averred that his resignation was motivated by long-standing differences with the management, that despite his resignation and disassociation from the company, certain creditors and particularly the Respondent agents have sought to enforce the company's debts against him personally, without any Court-sanctioned lifting of the corporate veil. He stated that he was issued with the Notice to Show Cause (NTSC) Order dated 2/07/2025 issued in **Eldoret Chief Magistrates Court Civil Suit No. E950 of2024**. despite not being a party to that suit and without him being served with the relevant application, that he has not been involved in the affairs of the company since early 2023, he has not guaranteed or personally assumed any of its liabilities, and that the debt in question arose over 1 ½ years after he had ceased involvement in the company’s affairs. He deponed further that no evidence of fraud or wrongdoing on his part has been presented, nor has there been any judicial finding warranting personal liability, and that the actions of the creditors have placed his constitutionally protected rights to property at risk. 14. In opposition, the Respondent, through **Messrs Kitiwa & Partners Advocates**, filed the Replying Affidavit sworn on 15/09/2025 by **Geoffrey W. Kusinyi** who introduced himself as a Senior Accountant of the Respondent. He deponed that the Respondent entered into a contract with the Interested Party for supply of pharmaceutical products, upon which the Interested Party was supplied with such products by the Respondent on credit, that however, the Interested Party defaulted in paying for the same and the amount accrued to a sum of Kshs. 14,258,298.34. He urged that as a result of the default, the Respondent instituted **Eldoret CMCC No. E950 of 2024: Eldohosp Pharmaceuticals Limited Vs City Med Pharmaceuticals Limited** wherein it sought to recover the debt, that and then filed an Application by which he sought for issuance of the NTSC, and that due to the failure by the Interested Party to respond to the Application, the NTSC was issued and directed personally at the directors of the Interested Party. 15. He averred that due process was followed and there being no response to the Application, the Petitioner cannot now seek to challenge the orders on ground of procedural irregularity or breach of natural justice, when he failed to defend his alleged rights in a timely manner. He therefore contended that the ongoing proceedings in **Eldoret CMCC Number E950 of 2024** is therefore justified and lawful as it will allow the Petitioner to present his case and contest the evidence presented against him. He asserted further that despite the Petitioner alleging that he had ceased decision making in the company in early 2023, no evidence has been brought forth to prove the allegation, that the liabilities sought to be recovered, majorly accrued prior to August 2024, which is the date the Petitioner alleges to have ceased acting in the company, and that the doctrine of corporate personalities has not been violated as alleged. He thus denied any alleged infringement of constitutional rights and urged that the Petitioner is acting mischievously and in bad faith, having initiated **Insolvency Petition No. Nairobi HCCOMM E021 of 2025** after institution of the said **Eldoret CMCC No. 950 of 2024**, in a calculated attempt to circumvent and frustrate the outcome and judgment in **Eldoret Civil Case Number E950 of 2024**. 16. The Petitioner then, with leave of the Court, filed the Further Affidavit he swore on 27/11/2025. He denied ever being served with any pleadings or being notified of the proceedings in **Eldoret CMCC Civil Case No. E950 of 2024**, and deponed, that he only learnt of the matter upon receipt of the NTSC. He then reiterated that having ceased involvement in the management or decision making of the Interested Party in early 2023, and formally resigned as director on 14/08/2024, he is a stranger to the allegations that the Respondent entered into a contract for supply of pharmaceutical products with the Interested Party. He therefore restated that he could not have been responsible for, involved in, or liable for any actions, debts, or transactions giving rise to the said **Eldoret CMCC No. E950 of 2024**, which was filed after he had already ceased management of, and formally resigned from being a director of the Interested Party. He reiterated his denial of being served with the Application that led to issuance of the NTSC, and pointed out that the record shows that service of the application was effected only upon the Interested Party’s Advocates. He asserted that his exclusion from the said proceedings curtailed his right to a fair hearing and due process as guaranteed under **Article 50** of the **Constitution** and his right to fair administrative action under **Article 47(1)** as he was condemned unheard, that prayer in the Application that gave rise to the NTSC was expressly directed at the directors of the company only, and thus, did not extend to past directors such as himself, who were therefore not within the scope of that prayer. 17. He urged further that, similarly, the Ruling giving rise to the NTSC was directed at the directors of the Interested Party, not at past directors. He restated that no application has been brought to lift the corporate veil, nor has the Court made any finding that he was personally liable for the company’s debts and, as such, issuance of the NTSC against him has no legal basis and is plainly misconceived, as directors and shareholders are not personally liable for the debts of a company save in exceptional circumstances where the corporate veil is lifted and the Court makes a specific finding of personal liability. He asserted further that insolvency or inability by a company to pay its debts does not constitute a ground to impose personal liability on its directors, which liability only arises where there is misconduct, fraud, or abuse of the corporate structure, none of which has been alleged or proved against him. He also denied instituting **Insolvency Petition No. HCCOMMIP E021 of 2025**, urging that the record clearly shows that the same was instituted by the Interested Party, not by him. According to him, this misrepresentation further illustrates that the Respondent has improperly sought to associate him with matters in which he played no role, thereby attempting to unjustly implicate him in liabilities that are exclusively those of the Interested Party. 18. I then granted the parties leave to file written Submissions. **Mr. Ogada** for the Interested Party however notified the Court that his client is not taking any positions in the Petition and as such, he will not be filing any Affidavits or Submissions. On their part, the Petitioner filed the Submissions dated 27/11/2025 and the Respondent filed the Submissions dated 5/01/2026. **Petitioners’ Submissions** 1. Counsel for the Petitioner, **Mr. Maranga**, reiterated that under **Article 50(1)** of the **Constitution**, a fair hearing presupposes prior notice of the case one is required to meet and a reasonable opportunity to be heard, that Courts have consistently held that a decision made against a person who has not been given an opportunity to be heard violates the rules of natural justice and is invalid, and that in the context of civil proceedings, service of Summons and pleadings is the statutory mechanism through which this constitutional guarantee is actualised. He reiterated that the Petitioner was never served with any pleadings of the proceedings in **Eldoret CMCC No. E950 of 2024** and only learnt of the matter upon receiving the NTSC, and that the Respondent has not adduced any evidence to demonstrate that service was effected upon the Petitioner. He thus insisted that he was condemned unheard, and that the Court also violated his right to fair administrative action under **Article 47(1)** of the **Constitution**, and the **Fair Administration Act**. 2. He urged that in the present case, the Ruling that resulted in the issuance of the NTSC was made under **Order 39 Rule 1** of the **Civil Procedure Rules**, which empowers the Court to require a Defendant to furnish security for appearance, and that nothing in the provision authorises the Court to pierce the corporate veil, or to impose obligations on a person who is neither a Judgment Debtor nor a party to the underlying suit, and as such, the provision cannot be invoked to extend liability to a former director who was not sued nor heard, and that that the order now places the Petitioner’s right to property under **Article 40** of the **Constitution** at risk of infringement. The rest of the Submissions however consist basically of repetition of the matters already urged in the Supporting and Further Affidavits. Counsel also cited several authorities to support the various limbs of his submissions. **Respondent’s Submissions** 1. Counsel for the Respondent restated that the Petition emanates from the civil proceedings instituted against the Interested party in **Eldoret Chief Magistrates Court Civil Case Number E950 of 2024**, in which the Interested Party, the company which the Petitioner is a director, participated in, which company and its directors was represented by an Advocate. He thus urged that the allegation by the Petitioner that he was never served with the pleadings or notified of the proceedings of that suit is not factual for the reason that the pleadings were served upon the Interested Party, which service acted as a notification to its directors. He also termed the Petitioner’s claims that he is a stranger to the fact that the Interested Party entered into a contract for supply of pharmaceutical products with the Respondent as false averments factually and legally untenable as the Respondent has demonstrated, through the Credit Review Application Form exhibited that the Petitioner was expressly listed as the director and contact person for financial inquiries of the company. He maintained that a director who was in office at the time a contract was entered into cannot later claim to be a stranger to the transaction merely because the company is a separate legal entity, and that the actions complained of were undertaken strictly within the framework of the law and legal process, and therefore cannot amount to a violation of constitutional rights. He contended further that at the institution of the said suit, the Petitioner was a director of the Interested Party and the Respondent was never made aware, if at all, of any changes made within the structure of the company. He submitted that the purpose of a NTSC is not punitive but protective, as it affords the affected party an opportunity to be heard before execution, and as such, it is a safeguard, and not a violation of constitutional rights, and urged that **Article 47** of the **Constitution** applies to administrative actions, not judicial proceedings conducted by Courts of law. He also submitted that a director may be personally liable where there is evidence of personal participation or control over the impugned transaction, and that resignation does not erase liability for acts done while still in office. The rest of the Submissions are however repetitions of the matters already urged in the Replying Affidavit. Counsel, too, cited several authorities to support the various limbs of his submissions. **Determination** 1. In my view, the broad issue that arises for determination in this matter is “***whether this Court should declare the Notice to Show Cause issued in Eldoret Chief Magistrates Court Civil Case Number E950 of 2024, against the Petitioner as violating his constitutional rights insofar as it requires him to satisfy debts of a company in which he alleges to have resigned from, and without him being a party to that suit, or being served with pleadings, and without the corporate veil being first lifted***”. 2. It is true that a company possesses its own separate legal personality and therefore, requiring directors of the company as individuals to satisfy its debts requires the lifting of the corporate veil. The Courts may pierce the corporate veil, in instances such as where the company is used to commit fraud, evade obligations, or act as a mere façade. This position was restated by the Court of Appeal, in the case of **Riccatti Business College of East Africa Limited v Kyanzavi Farmers Company Limited [2016] eKLR**. 3. In this case however, the Petitioner already applied before the Magistrate’s Court that had issued the order, for setting aside thereof and lost. This is apparent from the exhibited Ruling dated 4/09/2025 rendered by **Hon. P. N. Areri**. Given these circumstances, and the order challenged being a decision of a competent Court, “**did the Petitioner’s recourse lie in filing this Constitutional Petition**?” 4. Although the Respondent did not raise it as a defence, the above question necessarily gives rise to the need to first conduct an inquiry on an important preliminary issue, namely, “**whether the principle of *“constitutional avoidance”,* also referred to as *“ripeness”* applies here**”. Considering the nature of this identified inquiry, I will deal with it first as a preliminary issue since upholding it would dispose of this entire Petition. 5. On the doctrine of “***constitutional avoidance***”, the Supreme Court, in the case of **Communications Commission of Kenya & 5 Others v Royal Media Services Ltd & 5 Others Pet. 14A, 14B & 14C of 2014 of [2014] eKLR**stated as follows: **[105]. We shall now turn to the Constitutional-Avoidance Doctrine. The doctrine is at times referred to as the Constitutional-Avoidance Rule. Black’s Law Dictionary, 10th Edition at page 377 defines it as:** **“The doctrine that a case should not be resolved by deciding a constitutional question if it can be resolved in some other fashion”** 1. Similarly, in the case of [**Uhuru Muigai Kenyatta vs Nairobi Star Publication Limited**](http://kenyalaw.org/caselaw/cases/view/87460)**(2013)** **eKLR, Lenaola J (as he then was**) stated as follows: **“Where there is a remedy in civil law, a party should pursue that remedy and I say so well aware of the decision of *Haco Industries* where the converse may have been expressed as the position. My mind is clear however that not every ill in the society should attract a constitutional sanction as stated in *AG v Dutambala*Criminal Appeal No 37 of 1991 (Tanzania Court of Appeal) such sanctions should be reserved for appropriate and really serious occasions ….....”** 1. On the same issue, **Mativo J (as he then was)**, in the case of **KKB v SCM & 5 others (Constitutional Petition 014 of 2020) [2022] KEHC 289 (KLR) (22 April 2022) (Ruling)**, remarked as follows: **“32. The doctrine of avoidance is primarily viewed by courts from the position that although a court could take up a matter and hear it, it would still decline to do so if there is another mechanism through which the dispute could be resolved. In that regard, the Supreme Court stated in**[***Communication Commission of Kenya & 5 Others v Royal Media Services Ltd & 5 others***](http://kenyalaw.org/caselaw/cases/view/101689/)**(at para 256) that the principle of avoidance means that a Court will not determine a constitutional issue when a matter may properly be decided on another basis. In the South African case of *S v Mhlungu (supra) Kentridge A*J, stated in the dissenting opinion respecting the principle of avoidance (at paragraph 59), that he would lay down as a general principle that where it is possible to decide any case, civil or criminal, without reaching a constitutional issue, that is the course which should be followed. And in *Ashwander v Tennessee Valley Authority***[**20**](http://kenyalaw.org/caselaw/cases/view/232575/#arguments__para_32__p_1__authorialNote_1)**the U.S. Supreme Court held that it would not decide a constitutional question which was properly before it if there was also some other basis upon which the case could have been disposed of. Courts will not normally consider a constitutional question unless the existence of a remedy depends on it; if a remedy is available to an applicant under some other legislative provision or on some other basis, whether legal or factual, a court will usually decline to determine whether there has been, in addition, a breach of the Declaration of rights.**[**21**](http://kenyalaw.org/caselaw/cases/view/232575/#arguments__para_32__p_1__authorialNote_2)**Currie and de Waal**[**22**](http://kenyalaw.org/caselaw/cases/view/232575/#arguments__para_32__p_1__authorialNote_3)**opine that the principle of constitutional avoidance is of crucial importance in the application of the Bill of Rights.** **……………………………………………………………..** **33 ..… It is the fact that every legal dispute is capable of either direct or indirect application of the Bill of Rights. Every dispute is essentially a constitutional issue when one looks at it. This arises necessarily because of the principle of constitutional supremacy.**[**23**](http://kenyalaw.org/caselaw/cases/view/232575/#arguments__para_33__p_1__authorialNote_1)**One needs to be aware however of the singleness of the legal system. This is embodied in the fact that the supremacy of/ the Constitution does not detract from the usefulness of the rest of the body of law. In essence all other laws give full expression to the ideals of the Constitution until found to be inconsistent to it.** **……………………………………………………………….…..** **34. The doctrine of ripeness and constitutional avoidance gives credence to the concept that the Constitution does not operate in a vacuum or isolation. It has to be interpreted and applied in conjunction with applicable legislation together with other available legal remedies. Where there are alternative remedies the preferred route is to apply such remedies before resorting to the Constitution. The possibility of the elevation of any dispute to a constitutional issue is what is sought to be averted by the doctrines of ripeness and constitutional avoidance. It is borne out of a realisation that all legislative or common-law remedies are part of the legal system.** **...............................................................................** **36. In summation, the doctrines of ripeness and constitutional avoidance shun to deal with a constitutional issue where there exists another legal course which can give the litigant the relief he seeks. In other words, a constitutional issue is not ripe for determination until the determination of the constitutional issue is the only course that can give the litigant the remedy he seeks. Both constitutional avoidance and ripeness avert the determination of the constitutional issues until it becomes very necessary to the extent that it is the only course available to assist the litigant‘s cause. The exceptions to the application of the doctrine of constitutional avoidance are: -** 1. **where the constitutional violation is so clear and of direct relevance to the matter,** 2. **in the absence of an apparent alternative form of ordinary relief and** 3. **where it is found that it would be a waste of effort to seek a non-constitutional resolution of the dispute.**[**25**](http://kenyalaw.org/caselaw/cases/view/232575/#arguments__para_36__subpara_iii__p_1__authorialNote_1) **.............................................................................................................** **39. ...... Courts abhor the practice of constitutionalizing every dispute. Flowing from the issues discussed above, the 1st and 2nd Respondent’s objection succeeds and on this ground the Petitioners Petition is dismissed with no orders as to costs. .....”** 1. Applying the above principles to the facts of this case, my view of the Petitioner’s case is that the issues raised in the instant Petition do not amount to constitutional issues that can only be determined in a Constitutional Petition. It is trite that in determining whether an argument raises a constitutional issue, the Court is not strictly concerned with whether the argument will be successful, but the question is whether the argument forces the Court to consider constitutional rights or values. Constitutional Courts must be cautious to ensure that their mandate is not abused or trivialized and that the mere allegation that a human right or fundamental freedom has been or is likely to be contravened is not by itself sufficient to entitle an applicant to invoke the jurisdiction of a Constitutional Court especially if it is made for the purpose of avoiding the laid down normal judicial avenues. 2. It is an accepted principle of constitutional law that the Courts will not consider an alleged constitutional question unless the existence of a remedy depends entirely upon it. If a remedy is available to a claimant under some other legislative provision or on some other basis, whether legal or factual, a Constitutional Court will usually decline to determine whether there has been, in addition, a breach of the Declaration of Rights. Courts have consistently rejected cases that are disguisedly instituted as constitutional disputes when in reality they are not. I find this to be one such case disguisedly instituted as a constitutional dispute. 3. It must however be clarified that the doctrine of “***constitutional avoidance***” does not absolve the Court of its authority to consider and rule on constitutional Petitions. It only prohibits the Court from entertaining litigation when there is another suitable forum capable of doing so. 4. Upon considering the matters raised herein, I have no hesitation in finding that the Petitioner’s grievances ought to have been pursued by way of an Appeal since he had already applied for setting of the orders and his Application was dismissed by way of the Ruling rendered on 4/09/2025. As the Petitioner is simply aggrieved by a decision of the Magistrate’s Court which he failed to have overturned, which according to him, is an error in law, his recourse was in appealing against that order. He has however, without giving any explanation whatsoever, ignored that laid down avenue and, instead, purported to challenge the decision by filing this Constitutional Petition. It is clear that the instant case is such Appeal cleverly disguised as a Constitutional Petition. Unless in exceptional and clear cases, a decision of a competent Court, even if legally unsound, if it can be challenged by way of an Application for setting aside or for review, or by way of appeal, cannot be packaged as a Constitutional Petition. **Final Orders** 1. In light of the above, the Petition is hereby dismissed, but since the Interested Party did not file any pleadings, only the Respondent is awarded the costs of the Petition as costs follow the event. **DELIVERED, DATED AND SIGNED AT ELDORET THIS 17TH DAY OF JULY 2026** **…………………………** **WANANDA JOHN R. ANURO** **JUDGE** **Delivered in the presence of:** | | | | --- | --- | | **Mr. Maranga for the Petitioner** | | | **Ms. Kitiwa for the Respondent** | | | **N/A for the Interested Party** | | | **Court Assistant: Brian Kimathi** | |