[2020] KEHC 4759 (KLR)
The court held that the application for committal of the directors of the judgment debtor company to civil jail was premature and not grantable in the absence of a specific request for the lifting of the corporate veil. The oral examination of a director had already been conducted, and the next procedural step would...
Source-derived case information.
- Citation
- [2020] KEHC 4759 (KLR)
- Parties
- Applicant: Vimal Velji Shah; Respondent: Chemafrica Limited; Respondent: Srungarapu Raja Sekhah; Respondent: Sathya Narayana Vasu; Respondent: Venkajeswar Rao; Respondent: Swasthika Investors Limited; Respondent: Baba Enterprises Limited
- Court
- High Court
- Court Station
- High Court at Nairobi (Milimani Commercial Courts)
- Jurisdiction
- Kenya
- Case Number
- Civil Case 509 of 2013
- Procedural Posture
- Miscellaneous Application / Ruling on Post Judgment Application for Oral Examination and Committal of Directors
- Outcome
- Application struck out with costs to the respondents.
- Judges
- F Tuiyott
- Legal Topics
- Execution of Decree, Lifting Corporate Veil, Oral Examination of Directors, Committal to Civil Jail
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
More case intelligence is available
Unlock the full research layer for this judgment.
Parties
Vimal Velji Shah
Applicant
Chemafrica Limited
Respondent
Srungarapu Raja Sekhah
Respondent
Sathya Narayana Vasu
Respondent
Venkajeswar Rao
Respondent
Swasthika Investors Limited
Respondent
Baba Enterprises Limited
Respondent
Procedural Posture
Miscellaneous Application / Ruling on Post Judgment Application for Oral Examination and Committal of Directors
Legal Issues
- 1 Whether the court can order committal to civil jail of directors of a judgment debtor company without first lifting the corporate veil.
- 2 Whether the application for oral examination and production of company documents by directors is properly before the court after oral examination has already occurred.
Ratio Decidendi
The court held that the application for committal of the directors of the judgment debtor company to civil jail was premature and not grantable in the absence of a specific request for the lifting of the corporate veil. The oral examination of a director had already been conducted, and the next procedural step would have been for the applicant to seek an order to pierce the corporate veil if they wished to pursue the directors personally for the company’s debt. Without such an application, the drastic remedy of committal to civil jail could not be entertained. The court therefore struck out the application with costs.
Court Disposition
Application struck out with costs to the respondents.
Orders
- The Notice of Motion dated 16th October 2017 is struck out with costs.
Full Case Text
Judgment text and source record
33 paragraphs
REPUBLIC OF KENYA
IN THE HIGH COURT OF KENYA AT NAIROBI
COMMERCIAL & ADMIRALTY DIVISION
HCCC. NO. 509 OF 2013
VIMAL VELJI SHAH......................................APPLICANT/DECREE HOLDER
VERSUS
CHEMAFRICA LIMITED................1st RESPONDENT/JUDGMENT DEBTOR
SRUNGARAPU RAJA SEKHAH...2ND RESPONDENT/JUDGMENT DEBTOR
SATHYA NARAYANA VASU......... 3RD RESPONDENT/JUDGMENT DEBTOR
VENKAJESWAR RAO....................4TH RESPONDENT/JUDGMENT DEBTOR
SWASTHIKA INVESTORS
LIMITED...........................................5TH RESPONDENT/JUDGMENT DEBTOR
BABA ENTERPRISES
LIMITED............................................6TH RESPONDENT/JUDGMENT DEBTOR
RULING
1. This Court is not certain that the Decree holder herein has appreciated the efficacy of the provisions of Order 22 Rule 35 of the Civil Procedure Rules in respect to a corporation:-
[Order 22. r. 35]. Where a decree is for the payment of money, the decree-holder may apply to the court for an order that— (a) the judgment-debtor; (b) in the case of a corporation, any officer thereof; or (c) any other person, be orally examined as to whether any or what debts are owing to the judgment-debtor, and whether the judgment-debtor has any and what property or means of satisfying the decree, and the court may make an order for the attendance and examination of such judgment-debtor or officer, or other person, and for the production of any books or documents.
2. The orders that can be granted upon the oral examination of an officer of a corporation under this Rule is the lifting of the veil of incorporation. As stated by Kimaru J in Masefield Trading (K) Ltd vs Rushmore Company Limited & 2 others:-
“I think the above rule grants this court jurisdiction to summon any officer of a company to attend court so that he may be examined on the assets and means of the company to settle the sum decreed to be paid by the company. By examining such an officer, the court may or may not lift the veil of incorporation”.
3. Before this Court is an application dated 16th October 2017 by the Decree holder for the following substantive prayers:-
1. That the Directors of the Judgment Debtor company, the 1st Respondent herein, be orally examined on the assets of the Judgment debtor company and the said Directors be compelled to produce all the books, accounts and all other relevant materials relating to the said company for examination by the Decree holder.
2. That in default of the said Directors producing the books, accounts and all other relevant materials and in default their satisfying the Court as to the whereabouts of the assets of the company the said Directors be committed to civil jail for such a period as this Honourable Court may deem fit and just.
4. The prayer for oral examination of the directors of the Judgment debtor Company is spent because Abotula Venkata Sathya Narayana Vasu, a director of Company, was orally examined before Court on 8th July 2019.
5. A consequent step would be for the Applicant to seek that the veil of incorporation of the Defendant Company be lifted. Only upon grant of such order can the directors or shareholders of the Company be pursued to answer the judgment debt by whichever means of execution that the Decree Holder may elect.
6. Instead, the Decree Holder has sought that the directors of the Company be committed to civil jail. That is to jump the gun.
7. The Court is unable to make such a drastic order as piercing of the corporate veil in the absence of a specific request for such order! The Notice of Motion of 16th October 2017 is not grantable as prayed and is hereby struck out with costs.
Dated, Signed and Delivered in Court at Nairobi this 14th Day of February 2020
F. TUIYOTT
JUDGE
PRESENT:
Ouma for Wanjeri for Respondent
Oweya for the Applicant
Court Assistant: Nixon