REPUBLIC OF KENYA IN THE ENVIRONMENT AND LAND COURT AT MOMBASA ELC CASE NO. E136 OF 2022 MWALIMU KASSIM MWALIMU OMAR MWINYIHAJI GONGO AZIZ KAMBI ON THEIR OWN BEHALF AND ON BEHALF OF ALL MEMBERS OF CENTI KUMI RESIDENTS SOCIETY ............. APPLICANTS VERSUS BLUE SHIELD INSURANCE COMPANY LTD (UNDER STATUTORY MANAGEMENT) ........................ 1ST RESPONDENT LANDS REGISTRAR MOMBASA................................... 2ND RESPONDENT RULING 1. By a notice of motion dated 23.09.2025 filed pursuant to Section 432(2) of the Insolvency Act, 2015, Sections 1A, 1B, and 3A of the Civil Procedure Act, Order 2 rule 15(1)(3) and Order 51 rule 1 of the Civil Procedure Rules, and all enabling provisions of the law, the 1st respondent sought the following orders: a) Spent b) That the Honourable Court be pleased to strike out and/or dismiss the 2nd respondent’s originating summons dated 12th October 2022 for want of jurisdiction. MOMBASA ELC CASE NO. E136 OF 2022(RULING) Page 1
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c) That this Honourable Court be pleased to make a finding that it lacks the requisite jurisdiction to continue to entertain the claim herein as it contravenes section 432(2) of the Insolvency Act (Cap 53). d) 2. That the costs of this Application be provided for. The application was based on the grounds set out on the face of the motion and the contents of the supporting affidavit sworn by Longet Terer on 23.09.2025. The gist of the application was that the 1st respondent was placed under liquidation vide an order made on 03.07.2024 in Nairobi High Court Commercial and Tax Division Misc. Application No. 238 of 2017 and that the applicants had failed to obtain leave of court to proceed with their suit under section 432(2) of the Insolvency Act, 2015. 3. The applicants filed a replying affidavit sworn by Mwalimu Kassim Mwalim on 27.02.2026 in opposition to the application on two main grounds. First, it was contended that section 432 of the Insolvency Act was not applicable to them at the material time because the 1st respondent was still under management in 2022 when the suit was filed. statutory Second, it was contended that, in any event, such leave was granted on 25.04.2024 when this court allowed their application dated 05.10.2023. MOMBASA ELC CASE NO. E136 OF 2022(RULING) Page 2
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4. The court has considered the application dated 23.09.2025 and the replying affidavit dated 27.02.2026 in opposition thereto. The court has also perused the material and submissions on record. The main question for determination is whether or not the 1st respondent has made out a case for striking out the applicants’ suit on account of section 432(2) of the Insolvency Act. 5. Section 432(2) of the Insolvency Act, 2015 stipulated as follows: “(2) when a liquidation order has been made or a provisional liquidator has been appointed, legal proceedings against the company may be begun or continued only with the approval of the court and subject to such conditions as the court considers appropriate.” 6. It is thus clear that the statutory restriction in Section 432(2) applies to both new and existing proceedings. It may well be the case that by the time the applicants filed the instant suit in 2022 the 1st respondent was still under statutory management. However, upon the making of a liquidation order on 03.07.2024, the applicants were legally obligated to obtain leave of court to continue with the suit. MOMBASA ELC CASE NO. E136 OF 2022(RULING) Page 3
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7. It was contended by the applicants that vide their application dated 05.10.2023 they sought and obtained leave to continue with the instant proceedings against the 1st respondent. It was contended that such leave was granted on 25.04.2024. However, a perusal of the material on record shows that while the applicants sought leave to join the Managing Trustee of the Policy Holders Compensation Fund in the suit as well as leave to continue with the suit, only the order for joinder was granted. 8. The court is also of the view that under section 2 of the Insolvency Act, a court is defined as “the court means the High Court and if there is an insolvency division of the court, means that division.” The court is thus of the view that even if the applicants had obtained leave from the Environment and Land Court, such leave would not be regular in view of the clear provisions of the Insolvency Act. The Environment and Land Court cannot take up or usurp the jurisdiction of the insolvency court to grant such leave. 9. In the case of Republic vs Official Receiver and Liquidator & Another ex-parte Transmatter Kenya Company Ltd [2020] eKLR it was held, inter alia, that: “In the premises the provisions of Section 432(2) of the Insolvency Act would be applicable and any suit MOMBASA ELC CASE NO. E136 OF 2022(RULING) Page 4
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affecting the society in liquidation would have to have the sanction of the court. Any action commenced without such sanction would be fatally defective and incompetent in law. Both under the Insolvency Act and the Companies Act, where a company or a society is under liquidation it is mandatory to obtain leave to commence a suit against such a party. 10. The upshot of the foregoing is that the court finds merit in the 1 st respondent’s application for striking out the suit. The requirement for obtaining leave arose after the making of the liquidation order on 03.07.2024 during the pendency of the proceedings. As a consequence, the applicants’ originating summons dated 12.10.22 is hereby struck out with no order as to costs. DATED, SIGNED AND DELIVERED VIRTUALLY ON THIS 8 TH DAY OF OCTOBER 2026 Y. M. ANGIMA JUDGE In the presence of: No appearance for the Applicant No appearance for the 1st, 2nd and 3rd Respondent Court Assistant: Hinga MOMBASA ELC CASE NO. E136 OF 2022(RULING) Page 5
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