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ELCAllowedNot stated in the judgment (high court civil suit, Nairobi)· [2024] KEELC 1806 (KLR)

Devnarayan Enterprises Ltd v Rotice & 6 others (Environment & Land Case 315 of 2019) [2024] KEELC 1806 (KLR)

Environment and Land Court
11 April 2024
OAO. A. Angote
2,056 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan court ordered company directors to personally appear and answer questions about their company's finances after it failed to pay a court-awarded debt.

What this practically means

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Executive summary

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The 1st to 3rd Defendants, holding a taxed costs decree of Kshs 2,428,210 entered on 24th February 2022 against the Plaintiff Company, moved the court under Order 22 Rule 35 of the Civil Procedure Rules seeking the oral examination of the company's directors, Patel Ravji Lalji and Devraj Ravji Lalji, including disclosure of bank accounts and production of statements, after execution efforts failed to reveal attachable assets. The Plaintiff, through its director, responded by producing income tax returns for 2015-2019, KRA acknowledgement receipts for 2020 and 2021, financial statements and annual reports for 2015-2020, and Guardian Bank statements to August 2023, contending that it had fully complied with Order 22 Rule 35. The Plaintiff also argued that the Applicants forfeited the relief by arguing by written submissions. Framing a single issue - whether the directors should be orally examined on the company's state of affairs - the court held that Order 22 Rule 35 exists to enable a decree-holder to discover a corporation's assets where execution has failed. It found the Plaintiff's documents substantially related to 2015-2020, whereas the relevant period was post-2022; the only post-decree material was an unprocessed KRA receipt and bank statements from an account the company had stopped depositing into. Unanswered questions about the nature and value of current assets could only be resolved by oral examination. Allowing the application, the court ordered the directors to attend court for examination and to produce books of accounts showing the company's current financial position, with costs of the application borne by the Plaintiff/Respondent. Judgment delivered virtually in Nairobi on 11th April 2024 by O. A. Angote, Judge.

Key legal issues

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01

Whether directors of a judgment-debtor company should be summoned for oral examination under Order 22 Rule 35

Holding

Yes. Despite production of tax returns, financial statements and bank statements, the documents mostly covered 2015-2020 and did not sufficiently demonstrate the company's current financial position post-2022, so oral examination of the directors is warranted.

Reasoning

Order 22 Rule 35 confers jurisdiction on the court to assist decree-holders to discover information from officers of a corporation whose assets are unknown. The power is circumscribed by the purpose of the Rule: establishing debts owing to the judgment debtor and property or means of satisfying the decree. The decree here (taxed costs of Kshs 2,428,210 entered on 24th February 2022) is undisputed and outstanding. The respondent's documents were largely pre-2022; the only post-decree material was an unprocessed KRA acknowledgement receipt and Guardian Bank statements showing the account was no longer being used for deposits. Unanswered questions about the nature and value of currently held assets could only be answered by oral examination.

p. 5

Legal principles established

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  • The purpose of an Order 22 Rule 35 summons is to ascertain the financial position of a judgment debtor after the decree holder's attempts to execute have been unsuccessful

Court orders

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  1. 1.Patel Ravji Lalji and Devraj Ravji Lalji, being Directors/Shareholders of the Plaintiff Company (Judgment Debtor), to attend court and be examined on the Respondent/Judgment Debtor's property and/or means of satisfying the decree and to produce the Respondent's books of accounts and other documentary evidence showing its current financial position
  2. 2.Costs of the application to be borne by the Plaintiff/Respondent

Authorities

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Legislation

  • Civil Procedure RulesOrder 22 Rule 35
  • Civil Procedure ActSection 1A(3)
  • Constitution of KenyaArticle 48

Cases cited (4)

  • Joseph Nyamamba & 4 Others v Kenya Railways Corporation
    [2015] eKLR
  • Ultimate Laboratories v Tasha Bioservice Limited
    NBI HCCC No. 1287 of 2000 (unreported)
  • Tropical Wood Limited v Samilis internatinal Investments
    [2017] eKLR
  • Postbank Credit Limited (in Liquidation) v Nyamangu Holdings Limited
    (2015) eKLR
Jurisdiction invoked
Order 22 Rule 35 of the Civil Procedure Rules

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (1)

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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, "Devnarayan Enterprises Ltd v Rotice & 6 others (Environment & Land Case 315 of 2019) [2024] KEELC 1806 (KLR)", Case Analysis (2024). Not stated in the judgment (high court civil suit, Nairobi). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2024/1806/eng@2024-04-11

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