https://new.kenyalaw.org/akn/ke/judgment/keelc/2026/4682

**REPUBLIC OF KENYA** **IN THE ENVIRONMENT AND LAND COURT AT ELDORET** **ELC CASE NO. E101 OF 2025** **TEJASWINI BUILDERS LIMITED ……………………..… PLAINTIFF** **VERSUS** **SOI DAIRIES INDUSTRIES LIMITED ……………….... DEFENDANT** **AND** **BHAVESH PRAVINCHANDRA** **DOBARIYA......................... PROPOSED 1ST INTERESTED PARTY** **VIVEK MANSUKHBHAI** **DOBARIYA …..................… PROPOSED 2ND INTERESTED PARTY** **RULING:** 1. The Proposed Interested Parties/Applicants filed a Notice of Motion Application dated 17th December, 2025 seeking the following orders: - * 1. Spent. 2. That Bhavesh Pravinchandra Dobariya and Vivek Mansukhbhai Dobaroya, be joined as Interested Parties to this suit. 3. That upon being joined as Interested Parties, the applicants be served with all pleadings filed by the Plaintiff. 4. That pending the hearing and determination of this Application and for purposes of preventing alienation, sale or disposition of the land parcel known as KAKAMEGA/SOY/3008, this honourable court be pleased to issue an order preventing the plaintiff and the defendant by themselves, their employees, servants or agents from transferring its possession from the defendant to the plaintiff. * + 1. That pending the hearing and determination of this suit and for purposes of preventing alienation, sale or disposition of the land parcel known as KAKAMEGA/SOY/3008, this honourable court be pleased to issue an order preventing the plaintiff and the defendant by themselves, their employees, servants or agents from transferring its possession from the defendant to the plaintiff. 2. That costs of this application be provided for. 1. The application is premised on 7 grounds on the face thereof and on the 1st Proposed Interested Party/applicant’s Supporting Affidavit sworn on even date, on his own behalf and on behalf of his co-applicant. 2. The 1st applicant deponed that they are directors and shareholders in the defendant company. That Soi Dairy Industries Limited was incorporated in Kenya under the Companies Act, 2015 on 17.10.2019 and a Certificate of Incorporation Registration No. PVT – AJU962P issued thereto. 3. It is his claim that as at 26.04.2024, the defendant company had 4 directors/shareholders, namely, Gaurang Jugdishbhai Patel, Chetan J. Khunti, Vivek Mansukhbhai Dobariya and himself. He annexed a copy of the Company Registration Form CR12 to confirm the names of the said directors. In addition, one of the assets owned by the defendant company was the parcel of land known as KAKAMEGA/SOY/3008, the suit land herein. 4. It is the 1st applicant’s contention that vide an Agreement dated 21.03.2021, the plaintiff and the defendant entered into a contract for the construction of dairy plants, staff quarters, external works, aluminum partitioning works, water tanks platform, show room, office security cabin and staff toilet at an agreed price of Kshs. 43,785,000/= out of which the defendant has made a payment of Kshs. 7,291,267/=. He attributed the failure by the defendant to finalize the outstanding balance to unexpected challenges in the operating environment and a dysfunctional board. 5. Consequently, the plaintiff wrote a letter dated 15.04.2025 to the defendant, demanding the payment of Kshs.36,493,733/- being the outstanding amount as well as the sums for penalties, interests and damages for the breach of contract. 6. That the plaintiff thereafter filed the present suit, seeking to take over possession of the defendant’s premises and the suit land on the basis of a document referred to as the “Acknowledgment of Indebtedness and Undertaking dated 27th June, 2024”. It is his claim that they (the proposed interested parties) did not sign the said document neither is there a resolution by the defendant company before the making of the said agreement allowing the plaintiff to take over the ownership of the suit land. He did therefore maintain that the said undertaking is not binding on the defendant company. 7. It is therefore the applicants’ claim that being directors and shareholders of the defendant company, they possess a substantial and identifiable interest in the defendant’s premises and the suit land, hence the need to be joined into the suit. 8. Further, it is also their claim that the 2 other directors of the defendant company have expressed their unwillingness to defend the present suit on behalf of the defendant vide their email communication of 08.11.2025, alluding to the temporary injunction issued in the proceedings known as Eldoret HCCC Misc. No. E343 of 2025. 9. The applicants thus contend that due to the expressed disinterest to defend the suit by Gaurang Patel, there is an imminent risk that the suit might proceed undefended and as a result the risk of the defendant losing possession and ownership of the suit land. 10. In addition, with respect to the document referred to as the “Acknowledgment of Indebtedness and Undertaking dated 27th June, 2024”, the applicants did aver that from a copy of the valuation of the suit property dated 05.07.2025 by Prime Valuers, shared by the Gaurang Patel, the value of the land, plant and machinery were all valued at Kshs. 92,973,800/= which amount is in excess of the amount claimed by the plaintiff. 11. It is also pleaded that the construction contract dated 21.03.2021 between the plaintiff and the defendant, provides that in the event of any claim or dispute, the same should be referred to arbitration, which process was deliberately overlooked. 12. In conclusion, the applicants contend that their joinder into the present proceedings will not occasion any prejudice to any of the existing parties and assert that their joinder is essential for the fair, just and complete determination of the suit. They thus urged the court to allow their application and award the reliefs sought. 13. The application was opposed. Both the Plaintiff and the Defendant filed their respective Replying Affidavits diversely dated, in response to the application. 14. The plaintiff/respondent filed a Replying Affidavit dated 16th January, 2026, sworn by Bhatia Bharat Kulbhushan, one of the directors of the plaintiff company in response to the averments made by the applicants. 15. He dismissed the instant application as being incompetent, frivolous, vexatious and an abuse of the court process. He particularly denied the averments made that the directors of the defendant residing in Kenya have expressed their unwillingness to defend the suit or that the applicants have a vested interest in the suit land herein raised as the basis for their application for joinder. 16. It was admitted that the plaintiff and the defendant entered into a construction contract dated 21.03.2021. That pursuant to the said agreement, it was agreed that the plaintiff would undertake general construction works relating to the construction of a dairy plant, ETP, servant room, dog room, external works, water tanks platform, show room, office and external works at a general consideration of Kshs. 60,000,000/= 17. It is his contention that clause 10.4 of the said construction contract provided that the plaintiff would take possession and take over the project if the defendant failed to complete the payment within 6 months from the date of the final invoice until full payment together with an interest of 20%. 18. It is therefore his claim that while the plaintiff accomplished its obligations and performed their part as per the contract, the defendant on its part has only paid a portion of the agreed consideration price leaving an outstanding balance of Kshs. 38,893,733/= and is thus in breach of the said contract dated 21.03.2021. 19. That as a result of the said breach and/or persistent failure by the defendant to settle the outstanding amount, parties entered into a Consent dated 27.06.2024, which contained among other terms, the payment of the outstanding amount and in default thereof the takeover of the constructed premises and the parcel of land known as L.R. No. Kakamega/Soy/3008. 20. It is further his claim that as a result of the breach by the defendant, the plaintiff has suffered irreparable loss and damage since they invested immensely and spent colossal amounts of money while performing their contractual duty and obligation. 21. With regard to the validity of the Acknowledgment of Indebtedness and Undertaking, the plaintiff/respondent did aver that parties are bound by the terms of the contract. That the two directors having legally executed the 2 agreements, the defendant is bound by the terms thereof and must be compelled to perform its contractual duties in accordance with the said terms. 22. He thus maintained that the orders sought in the present application are untenable and intended at delaying the expeditious determination of the of the dispute. 23. Further, it is the Plaintiff/Respondent’s contention that at the time of entering into the 2 agreements, the construction contract and the Acknowledgment of Indebtedness and Undertaking, the applicants had not become directors of the defendant company and therefore the 2 directors who executed the said agreements had the authority to do so and remains binding upon the defendant. 24. In conclusion, he maintained that the application is an afterthought and thus urged the court to dismiss the same with costs. 25. The Defendant/Respondent also filed a Replying Affidavit dated 22nd January, 2026 and jointly sworn by Gaurang Jagdishbhai Patel and Chetan Jivabhai Khunti, both being Directors of the defendant company, in response to the averments made by the Proposed Interested Parties in their Application. 26. They confirmed that the defendant company has 4 directors; the proposed interested parties and themselves. It is therefore their contention that the 1st and 2nd proposed interested parties being directors of the defendant are in essence already parties to the present suit. 27. In response to the claims on their unwillingness to defend the suit against the defendant, it is averred that as soon as they were served with the pleadings in the suit, they forwarded the same to the proposed interested parties/applicants informing them of the same and seeking the way forward. However, the applicants never responded nor filed any response in respect to the pleadings. They annexed copies of email extract in support of the same. 28. They did further admit and acknowledge that the defendant entered into a construction agreement dated 21/3/2021 with the plaintiff, whereupon the plaintiff agreed to construct a dairy plant for the defendant. That under clause 10.4 of the said agreement, it was expressly stated that the contractor shall resume possession and take over the project in the event that payment is not completed within 6 months from the date of the final invoice with interest of 20% on the outstanding amount. He confirmed that the construction had since been completed but they have been unable to offset the amount owed to the plaintiff. 29. It is also deponed that with regard to the payment of the amounts due and owing to the plaintiff, that despite being consulted on how to offset the debt, the applicants/proposed interested parties only stated that they would come up with a plan to settle the debt and revert but have never responded to date. 30. In conclusion, they reiterated that the proposed interested parties are already parties to the present suit by virtue of being directors of the defendant and instant application for joinder should thus be dismissed with costs. 31. The present application was canvassed by way of written submissions. The proposed Interested Parties/Applicants filed their submission dated 14.05.2026, the Defendant/respondent filed its submissions dated 09.04.2026 while the plaintiff/respondent filed its submissions dated 17.06.2026 together with authorities, which I have read and duly considered in arriving at my decision as hereunder. **Analysis and Determination:** 1. I have carefully considered the Application and the grounds therein, the Supporting Affidavit and the annexures thereto, the replying affidavits in response to the application as well as the rival submissions in totality and I identify the following issues for determination: - 2. *Whether the orders sought herein for joinder are tenable in the circumstances.* 3. *Whether the applicants herein can be joined in the proceedings as interested parties.* 4. *Whether the present application is merited*. 5. *Who shall bear the costs of the present Application.* 6. The above issues for determination having been duly identified, I will now proceed to discuss the same as hereunder. 7. **Whether the orders sought herein for joinder are tenable in the circumstances;** 8. The first issue herein seeks to determine and ascertain whether the orders sought in the present application are legally tenable in the circumstances. 9. The intended interested parties/ applicants have sought to be joined in the proceedings as interested parties as well as restraining orders against the plaintiff and the defendant. 10. Order 1 Rule 10(2) allows the joinder of a party to the proceedings before a court and provides as follows: - ***(2) The court may at any stage of the proceedings, either upon or without the application of either party, and on such terms as may appear to the court to be just, order that the name of any party improperly joined, whether as plaintiff or defendant, be struck out, and that the name of any person who ought to have been joined, whether as plaintiff or defendant, or whose presence before the court may be necessary in order to enable the court effectually and completely to adjudicate upon and settle all questions involved in the suit, be added. (emphasis added)*** 1. The main purpose for joinder as provided under Order 1 Rule 10 (2) of the Civil Procedure Rules is to assist the court in effectually and effectively determining the issues in controversy before it and adjudicating upon all the questions involved in the suit. 2. At the center of the dispute herein is the Agreement dated 21.03.2021 between the plaintiff company and the defendant company, for contract for the construction of dairy plants, staff quarters, external parts among other works at an agreed price of Kshs. 43,785,000/=. The said agreement thereafter culminated into the agreement dated 27.04.2024 hence the suit herein. 3. The crux of the applicants’ claim and basis for their application for joinder is that they are directors and shareholders of the defendant company and they therefore possess a substantial and identifiable interest in the defendant’s premises and assets hence the need to be joined in the proceedings. It is their contention that the joinder is essential for the fair, just and complete determination of the suit. 4. The plaintiff/respondent on its part denied the claims and averments made by the applicants that they have a vested interest in the suit land and thus urged the court to dismiss the application for joinder. 5. The Defendant/Respondent on their part confirmed that the defendant company has four directors, including the intended interested parties/applicants. It is however their claim that by virtue of the intended interested parties/applicants being directors of the defendant company, they are in essence already parties to the suit. They therefore aver that the orders sought are not legally tenable and the same should be dismissed. 6. It is not in dispute that the substratum of the instant suit concerns the contract and/or agreements, dated 21.03.2021 and 27.04.2024, between the plaintiff company and the defendant company. A company is a separate legal entity and distinct from its directors and shareholders. 7. The question that therefore follows is whether the application for joinder by the applicants herein on the basis of being directors and shareholders is legally tenable. 8. The court in the case of ***Omondi v National Bank of Kenya Ltd [2001] eKLR***, stated and observed as hereunder:- ***“It is a basic principle of company law that the company has a distinct and separate personality from its shareholders and directors even when the directors happen to be the sole shareholders (see Salmon v a Salmon & Co Ltd [1897] AC 22). The property of the company is distinct from that of its shareholders and the shareholders have no proprietary rights to the company’s property apart from the shares they own. From that basic consequence of incorporation flows another principle: only the company has capacity to take action to enforce its legal rights. The contention by counsel for the plaintiff that the investment in LVF is by the plaintiffs and they are accordingly the proper plaintiffs in this action is manifestly without legal foundation. And although it is true that the appointment of a receiver manager has the effect of rendering the board of directors functus officio, it does not destroy the corporate existence and personality of the company.”*** 1. Thus, guided by the statutory provisions and the decision hereinabove, it is the finding of this court that the orders sought in the present application for joinder are not legally tenable. 2. The real questions in dispute between the parties herein concern the defendant company, which is vested with the legal capacity to take action and enforce its legal rights and proprietorship. 3. It is common ground that the intended interested parties/applicants herein are directors of the defendant company. It is however evident from the pleadings herein that the 4 directors hold divergent positions and views as to the legality and enforceability of the 2 agreements made between the plaintiff and the defendant. 1. Nevertheless, these divergent views and opinions are in my considered opinion internal affairs of the defendant company and which do not fall within the confines of the jurisdiction of this court as enshrined in the Constitution of Kenya as read with the ELC Act. 2. Be that as it may, these divergent views cannot in my opinion be interpretated as ‘substantial and identifiable interest and stake’ in the suit property to warrant a basis of being joined into the proceedings herein. 3. Consequently, this court finds that the orders sought in the present application are not legally tenable in the circumstances. 4. **Whether the applicants herein can be joined in the proceedings as interested parties;** 5. The second issue seeks to ascertain whether the intended interested parties/applicants have satisfactorily met the criteria for joinder and sufficiently proved the necessary elements required by a party who seeks to be joined in proceedings as an interested party. 1. However, in light of the findings in issue no. (i) above, this court finds no need to delve into the merits of this issue and ascertain whether or not the applicants have sufficiently met the criteria for joinder as the same would amount to an academic exercise. 2. **Whether the present application is merited;** 3. In view of the findings in issue No. (i) above, this court finds that the present application is not merited and the applicants/ intended interested parties are therefore not entitled to the grant of reliefs sought therein. 4. **Who shall bear the costs of the present Application;** 5. The general rule is that costs shall follow the event in accordance with the proviso to section 27 of the Civil Procedure Act, unless the court is satisfied otherwise. 6. However, in view of the circumstances of the present case and application, where the interested parties are directors of the defendant company, it is my humble and considered view that costs of the present application should only be awarded to the plaintiff/respondent. **Disposition:** 1. The upshot of the above is that the present application vide the Notice of Motion dated 17th December, 2025 is **not merited** and is hereby **dismissed** with costs to the plaintiff/respondent. 2. It is so ordered. **DATED**, **SIGNED** and **DELIVERED** at **ELDORET** this **23rd** day of **JULY, 2026.** **HON. C. K. YANO** **JUDGE** Ruling delivered in the presence of: - Ms. Cherono for Defendant. No appearance for Mr. Songok for Plaintiff. Ms. Ngina holding brief for Ms. Grace Katasi for Applicants. Court Assistant – Laban