Kenya Engineering Workers Union (In Receivershiр) & 173 others v Athi River Steel Plant (In Receivership) & another (Cause 661 of 2019) [2025] KEELRC 2162 (KLR)
The bottom line
#What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether leave of the Court was required to file the suit against the 1st Respondent under receivership
Key legal issues
#Whether leave of the court is a prerequisite to instituting a suit against a company under receivership
No. Leave is required only where a liquidation order has been made or a provisional liquidator appointed under section 432(2) of the Insolvency Act; the 1st respondent was merely under receivership and could be sued without leave.
The court accepted, as common ground, that the 1st respondent was under receivership with the 2nd respondent as receiver. It distinguished receivership from liquidation: under receivership the company retains its legal personality and capacity to sue and be sued, whereas section 432(2) of the Insolvency Act restricts proceedings only upon liquidation. The court adopted the authorities relied on by the claimants to that effect.
Whether section 67 of the Employment Act required leave before instituting proceedings against an insolvent employer
No. Section 67 of the Employment Act only defines insolvency for purposes of proceedings before the Cabinet Secretary under section 66 and is not the relevant law on a company's capacity to be sued.
The respondents had anchored the preliminary objection on section 67(b) of the Employment Act, which defines insolvency to include the appointment of a receiver. The court held that this Part of the Employment Act governs employee claims for payment out of the National Social Security Fund through the Cabinet Secretary, and does not require leave of the court; capacity to be sued is governed by the Insolvency Act.
Legal principles established
#- Leave of the court to commence or continue legal proceedings against a company is required only where the company is in liquidation under section 432(2) of the Insolvency Act, not where it is merely under receivership
- A company under receivership retains its corporate status and capacity to be sued without leave of the court
- Section 67 of the Employment Act concerns proceedings before the Cabinet Secretary and is not the relevant law on a company's capacity to be sued; the relevant law is the Insolvency Act
Court orders
#- 1.The Notice of Preliminary Objection dated 11th February 2025 is dismissed
- 2.Costs of the preliminary objection awarded to the claimants
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
- Jurisdiction invoked
- Not expressly invoked; first-instance employment and labour relations dispute before the Employment and Labour Relations Court (Employment and Labour Relations Court Act)
Relief refused
#Striking out of the claimants' suit as fatally defective for want of leave to sue a company under receivership
The court found that a company under receivership retains capacity to be sued and leave is only required upon liquidation under section 432(2) of the Insolvency Act
Costs
The Notice of Preliminary Objection dated 11th February 2025 is dismissed with costs to the claimants.
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
In the upshot, the Notice of Preliminary Objection dated 11th February 2025 is dismissed with costs to the claimants.
The court agreed with the claimants that the status of the 1st respondent was only receivership. The leave is to be sought when the company is under liquidation which is not the case here.
The court upheld the decisions relied on by the claimants above to efiect that a company under receivership had capacity to be sued and the leave of the court was not required.
The court finds that section 67 of the Employment Act, relied on by the Respondent/applicant, concerns proceedings before the Cabinet Secretary and not the court under section 66 of the Employment Act
Issues in the judgment
#The cause number and title of the main suit are not stated in the judgment; the judgment opens with blank numbered headings and refers only to the Notice of Preliminary Objection dated 11th February 2025
Inconsistent references to the number of claimants - the submissions heading refers to the 2nd-174th Claimants while the appearance list refers to 2nd-173 claimants
The judgment describes the 1st respondent as 'the applicant' in the Decision, though the applicant was stated at the outset to be the respondent in the suit
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Kenya Engineering Workers Union (In Receivershiр) & 173 others v Athi River Steel Plant (In Receivership) & another (Cause 661 of 2019) [2025] KEELRC 2162 (KLR)", Case Analysis (2025). Not stated in the judgment (Cause number not disclosed). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/2162/eng@2025-07-18
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.