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High CourtDismissedCivil Case 288 of 2007· [2008] KEHC 1652 (KLR)

Multi Options Ltd (In Receivership) v Kalpana S. Jai & 2 Others

High Court of Kenya
25 September 2008
JKJoyce N. Khaminwa
1,225 words in judgment
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The bottom line

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Kenya's High Court threw out a company receivership case because the wrong filing procedure was used, and no amendment could fix it.

What this practically means

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Executive summary

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The plaintiff company in receivership filed an Originating Summons on 11th June 2007 and, by chamber summons dated 21st May 2008, sought leave to amend it to invoke sections 351 and 352 of the Companies Act and rule 9 of the Companies (High Court) Rules, to add a second property (L.R. No. 37/89), to add prayers for documents and injunctive relief over that land, and to compel the first and second respondents to submit and verify a statement of affairs. The first and second respondents supported striking out the application as a muddle, alleging laches; the third respondent, who claimed to have purchased the suit property, filed a preliminary objection contending that both the Originating Summons and the application were defective and should be struck out with costs, relying on KCB vs Osebe and Wepukhulu to argue that complex disputed facts fall outside Order 36 Originating Summons procedure. The plaintiff relied on Shah vs Shah and Sirma. Justice Khaminwa held that the Companies (High Court) Rules make no provision for Originating Summons, deeming proceedings suits under the Civil Procedure Act, so Order 36 applies; an application under Section 348 of the Companies Act should instead be brought under the Winding Up (High Court) Rules. Since the issues were highly contested and involved injunctions over complex facts and law, the Originating Summons was incompetent and amendment could not cure the defect. The preliminary objection was upheld and the Originating Summons and amendment application dismissed with costs to the respondents.

Key legal issues

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01

Competence of the Originating Summons

Holding

The Originating Summons was incompetent because the complex, highly contested issues fell outside the Order 36 procedure and no Originating Summons is provided for under the Companies (High Court) Rules

Reasoning

The court reasoned that an application under Section 348 Companies Act should be made under the Winding Up (High Court) Rules; the Companies Rules deem proceedings to be suits under the Civil Procedure Act, so Order 36 applies. Following binding Court of Appeal authority, complex factual disputes requiring viva voce evidence cannot be resolved on an Originating Summons, and amendment cannot cure the defect.

p. 3
02

Scope of Originating Summons procedure

Holding

Originating Summons procedure is designed for summary determination of simple points of law or construction; injunctions involving complex facts cannot be granted on it

Reasoning

Relying on KCB vs Osebe and Wepukhulu, the court held that disputed factual matters such as undervalue sale or mismanagement should not be resolved on affidavit evidence; although Order 36 rule 10 allows adjournment for viva voce evidence, the issues must still fall within the ambit of Order 36.

p. 3

Legal principles established

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  • Proceedings under the Companies (High Court) Rules are deemed suits under the Civil Procedure Act, and since the Rules prescribe petitions, notices of motion, summons and originating motion but no Originating Summons, an Originating Summons must comply with Order 36
  • Issues under an Originating Summons must be simple, not complex; complex contested issues of fact and law fall outside the ambit of Order 36

Court orders

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  1. 1.Preliminary objection of the third respondent upheld
  2. 2.Originating Summons filed on 11th June 2007 declared incompetent and dismissed
  3. 3.Application to amend the Originating Summons dismissed
  4. 4.Costs awarded to the respondents

Authorities

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Legislation

  • Companies ActSections 348, 351 and 352
  • Companies (High Court) RulesRule 9
  • Winding Up (High Court) Rulesnull
  • Civil Procedure CodeOrder 36, including rule 3 and rule 10
  • Civil Procedure Actnull

Cases cited (5)

  • KCB Ltd. vs. James Osebe
    (1982-1988) 1 KLR 48

    Judge has no power to award damages on an Originating Summons under Order 36; disputed factual matters should not be resolved on affidavit evidence

  • Wepukhulu vs. Board of Governors Buruburu Secondary School
    Civil Appeal No.310/2002

    Dispute outside the ambit of Originating Summons renders the procedure wrong, even if viva voce evidence is ordered

  • Shah vs. Shah
    Civil Appeal No.34/1981

    Procedure under Originating Summons is not limited to matters in respect of which facts are agreed; Order 36 rule 10 allows adjournment for evidence

  • Sirma vs. Eric Kipkurgat Kiprono

    Where issues on an Originating Summons are complex, the suit proceeds as if commenced by plaint

  • Anti Corruption vs. Pattni and others

    Originating Summons under Order 36 is designed to deal with simple matters

Jurisdiction invoked
Section 348 Companies Act; companies (High Court) Rules read with Civil Procedure Act and Order 36 Civil Procedure Code

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (7)

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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, "Multi Options Ltd (In Receivership) v Kalpana S. Jai & 2 Others", Case Analysis (2008). Civil Case 288 of 2007. Source:

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