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ELCDismissedExparte Notice of Motion dated 27/4/2021· [2021] KEELC 3040 (KLR)

Bernard Kamau Mbugua v Reandani Njoroge Wa Ndaani Francis Mwangi Kariuki Daniel Muthii Karimi (Being Trustees of Ruiru River Neighbourhood Society Limited & 2 others [2021] KEELC 3040 (KLR)

Environment and Land Court
24 May 2021
BEB M Eboso
824 words in judgment
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The bottom line

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If a company is in liquidation in Kenya, only the High Court's Insolvency Division—not the Environment and Land Court—can grant you permission to sue.

What this practically means

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Executive summary

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The applicant, Bernard Kamau Mbugua, moved the Environment and Land Court by exparte notice of motion dated 27/4/2021 seeking leave to commence legal proceedings against the Official Liquidator of Ngundu Farmers Co-operative Society Limited, invoking Section 432(2) of the Insolvency Act and Sections 1A, 1B, 3 and 3A of the Civil Procedure Act. His counsel argued that the ELC had jurisdiction because the intended suit concerned title to land, and that under Section 2 of the Insolvency Act a court 'exercising jurisdiction' over the matter could grant leave, the ELC being a superior court of equal status to the High Court under Section 4 of the Environment and Land Court Act. The court framed two questions: whether it had jurisdiction to grant leave under Section 432(2), and if so, whether the criteria were met. Holding that Section 2 of the Insolvency Act defines the relevant 'court' as the High Court or its Insolvency Division, and reasoning that leave must be granted by the court seized of the liquidation proceedings to preserve orderly consolidation of assets and settlement of liabilities, Eboso J found the ELC was not the contemplated court. The second question became moot. The notice of motion was declined for lack of jurisdiction, with no order as to costs since the application was exparte.

Key legal issues

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01

Jurisdiction to grant leave under Section 432(2) of the Insolvency Act

Holding

The Environment and Land Court lacks jurisdiction; only the High Court or its Insolvency Division, being the court seized of the liquidation proceedings, may grant such leave

Reasoning

Section 2 of the Insolvency Act defines 'court' as the High Court or its Insolvency Division. Section 432(2) requires approval of the court in respect of proceedings against a company under liquidation. Centralising leave in the liquidation court ensures orderly consolidation of assets, settlement of liabilities, and prevents leave being granted in relation to already wound-up companies.

p. 2

Legal principles established

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  • The court contemplated under Section 432(2) of the Insolvency Act to grant leave to commence proceedings against a company in liquidation is the High Court (or its Insolvency Division) seized of the liquidation proceedings, not any other court with jurisdiction over the underlying dispute

Court orders

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  1. 1.The applicant's notice of motion dated 27/4/2021 is declined for lack of jurisdiction on part of this court
  2. 2.No order as to costs

Authorities

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Legislation

  • Insolvency ActSection 432(2)
  • Insolvency ActSection 2
  • Insolvency ActPart VI
  • Civil Procedure ActSections 1A, 1B, 3 and 3A
  • Environment and Land Court ActSection 4
Jurisdiction invoked
Section 432(2) of the Insolvency Act, 2015; Sections 1A, 1B, 3 and 3A of the Civil Procedure Act

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (2)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Bernard Kamau Mbugua v Reandani Njoroge Wa Ndaani Francis Mwangi Kariuki Daniel Muthii Karimi (Being Trustees of Ruiru River Neighbourhood Society Limited & 2 others [2021] KEELC 3040 (KLR)", Case Analysis (2021). Exparte Notice of Motion dated 27/4/2021. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2021/3040/eng@2021-05-24

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.