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ELRCDismissedNairobi ELRCC No. 11 of 2017 (application dated 17/5/2024)· [2025] KEELRC 874 (KLR)

Kenya Engineering Workers v Guru Mechanical Engineering Ltd (Cause 11 of 2017) [2025] KEELRC 874 (KLR)

Employment and Labour Relations Court
13 March 2025
MNMATHEWS N. NDUMA
790 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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The Employment Court dismissed a bid to hold directors personally liable for a company's judgment debt because the correct enforcement procedure was never followed.

What this practically means

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Executive summary

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This is a ruling of the Employment and Labour Relations Court at Nairobi on an application dated 17/5/2024 brought by the Claimant/Applicant following a judgment delivered on 16 December 2021 in Nairobi ELRCC No. 11 of 2017 in favour of the grievant. The Applicant sought interim orders against two named persons, Surinder Singh Guru and Jovinder Singh, alleged to be directors of the Respondent company, Guru Mechanical Engineering Nairobi, including orders directing where they should reside, a declaration that they be personally responsible for debts owed to former employees, and orders for their arrest and production before the Court. The Applicant alleged that after judgment, the two closed the business premises and hid company property to defeat the decree. The Respondent, through the affidavit of Surinder Singh Guru, denied hiding assets and pointed out that no execution proceedings had been undertaken since the dismissal of the Respondent's application on 7/12/2023. The court considered Order 22, rule 35 of the Civil Procedure Rules 2010, which provides for oral examination of a judgment-debtor, an officer of a corporation, or another person as to the judgment-debtor's property and means of satisfying a decree. The court held that where an applicant seeks to lift the veil of incorporation, the proper procedure is to seek examination of the alleged directors, and the evidence from that examination is then used to decide, per Salomon v Salomon, whether the conditions for lifting the veil are satisfied. The court found the prayers indiscernible and noted the absence of any certificate of incorporation or other document proving directorship. The application was dismissed with no order as to costs.

Key legal issues

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01

Procedure for lifting the corporate veil to attach personal property of directors for a company's judgment debt

Holding

The application fails because it did not follow the prescribed procedure: there must be an application for oral examination of the directors and evidence, including proof of directorship, before the veil can be lifted.

Reasoning

Order 22 rule 35 allows the decree-holder to apply for oral examination of a judgment-debtor, an officer of a corporation, or any other person as to debts owed to and property of the judgment-debtor. The evidence from such examination is then used to determine whether the Salomon v Salomon conditions for lifting the veil are met. Here the prayers were unclear and there was no certificate of incorporation or other document proving the named persons were directors, so the application was dismissed.

p. 2

Legal principles established

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  • Before lifting the veil of incorporation to hold directors personally liable for a judgment debt, the applicant must seek oral examination of the directors as to the company's property and means of satisfying the decree, and it is the evidence from that examination that determines whether the conditions for lifting the veil are satisfied.

Court orders

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  1. 1.The application dated 17/5/2024 is dismissed
  2. 2.No order as to costs

Authorities

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Legislation

  • Civil Procedure Rules 2010Order 22, rule 35

Cases cited (1)

  • Salomon versus Salomon and Co Ltd
    (1897) AC 22
Jurisdiction invoked
Order 22, rule 35 of the Civil Procedure Rules 2010 (enforcement jurisdiction over a decree of this Court)

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Kenya Engineering Workers v Guru Mechanical Engineering Ltd (Cause 11 of 2017) [2025] KEELRC 874 (KLR)", Case Analysis (2025). Nairobi ELRCC No. 11 of 2017 (application dated 17/5/2024). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/874/eng@2025-03-13

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