Jaav Global Cargo Limited v Panier Vert Fruits & Veg Limited

5. Mr. Chege contended that it is contradictory for the respondent to pursue liquidation proceedings against the applicant, while at the same time restrain it from accessing or utilizing its funds necessary to satisfy any such demand. He stated that the statutory demand has caused the applicant hardship and unless set aside, it is likely to result to unnecessary exposure to insolvency proceedings. 6. He deposed that it is in the interest of justice for the Honourable Court to grant the orders being sought herein, to prevent an abuse of the Court process and to enable the parties to first ventilate their issues in the pending commercial suit. 7. In opposition to the application, the petitioner/respondent filed a replying affidavit sworn on 28th July 2025 by Mr. Jaynesh Patel, a Director of the petitioner. He stated that the application is mischievous, unmeritorious and an abuse of the process of the Court and it should be dismissed with costs to the petitioner. 8. He averred that his Advocate had advised him that the applicant’s prayers to be granted leave to file the application dated 17th June 2025 is time barred and does not fall within the time limit as set out in Regulation 16(1) of the Insolvency Regulations. 9. Mr. Patel contended that the plaintiff had not discharged the burden of proof under Regulation 17(6) of the Insolvency Regulations to warrant the setting aside of the statutory demand. 10. He also contended that the applicant had not proved that it had a counterclaim, set off or cross-demand which equals or exceeds the amount of debt specified in the demand. He stated that the applicant has not filed a statement of defence in Milimani Commercial Courts Commercial case No. E445 of 2024. 11. Mr. Patel averred that the petitioner had taken out a statutory demand against the applicant as a way to ascertain whether or not they are solvent enough to perform their obligations as itemized in the invoices. He stated that the debt stands undisputed and unpaid which is an indication that the applicant is unwilling and/or unable to repay the debt. 12. He expressed the view that it is more than likely that assets and properties belonging to the applicant have been dissipated to an unknown jurisdiction and that will leave no guarantee for the payment of the subject debt. 13. He deposed that as a result of the applicant’s careless and negligent action, they should bear the implications of their inaction and the potential consequences until the subject matter is settled in full. 14. Mr. Patel contended that the applicant has not shown even a single issue that has sufficient degree of cogency as required under Rule 17(6) of the Insolvency Regulations of 2016. 15. He stated that the inherent jurisdiction of the Court under Rule 17(6)(d) of the Insolvency Regulations, 2016, is not only to set aside a statutory demand but also to make such order(s) that it deems fit and just in the circumstances. Mr. Patel prayed for the application to be dismissed. 16. The firm of Njeru Nyaga & Co. Advocates LLP filed written submissions dated 14th August 2025 for the applicant. The petitioner despite having been directed to file written submissions upon service by the applicant, had not filed any submissions as at the time of writing the Ruling herein. 17. Mr. Njeru, learned Counsel for the applicant submitted that under Regulation 16 of the Insolvency (Amendment) Regulations, 2021, a company may apply to set aside a statutory demand if there is substantial dispute as to the existence or the amount of the debt, or the demand was made prematurely or improperly or there is a reasonable excuse for not paying the debt. Counsel stated that the applicant meets the threshold on all the three limbs. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19304/eng@2025-12-23 2

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18. On the issue of whether there is a bonafide dispute as to the debt claimed, Mr. Njeru submitted that it is not in contention that Commercial Case No. E445 of 2024 is pending before the Milimani Commercial Courts, involving the same parties and subject matter. He stated that the debt demanded in the statutory demand is the same amount in dispute in that suit. He cited the case of Elgon Road Developments Ltd [2019] eKLR, where the Court held that where there is a genuine and substantial dispute as to the existence or amount of the debt, the statutory demand ought to be set aside. 19. Counsel submitted that is the case of Kenya Trade Combine Ltd v Shanema Company Ltd & another [2021] eKLR, the Court affirmed that insolvency proceedings are not to be used as a debt collection tool, especially where the debt is disputed. He contended that the existence of a live case over the same debt is a sufficient basis to set aside the statutory demand. 20. In submitting that the statutory demand served upon the applicant is an abuse of the Court process, Mr. Njeru stated that the respondent has obtained interim injunctive Orders in the Commercial case as per the Order of 16th May 2024, restraining the applicant from accessing its bank accounts, yet the same respondent now demands that the applicant pays the alleged debt, failing which liquidation proceedings will follow. 21. Counsel contended that the said position is contradictory, as held in Re African Safari Club Limited [2012], he asserted that it is an abuse of the Court process to demand payment from a party whose funds are already frozen by the creditor. Counsel posited that it is inequitable and unjust to pursue liquidation while frustrating the debtor’s ability to settle or dispute the debt. 22. On the issue of whether the applicant will suffer prejudice or hardship, Mr. Njeru submitted that the issuance of a statutory demand automatically exposes the applicant to a 21 days’ liquidation timeline as per Section 384 Insolvency Act, as failure to respond within that window is deemed as inability to pay debts. He stated that given the existence of the ongoing Court dispute coupled with frozen accounts, the risk of an unjust and premature liquidation is very real. 23. Counsel relied on the case of Re Mboya Wangong’u & Waiyaki Advocates [2021] eKLR, which emphasized the Court’s duty to protect businesses from unjust insolvency proceedings where there are alternative legal remedies or pending suits. 24. Counsel concluded by stating that the applicant has demonstrated a substantial dispute as to the debt, as the statutory demand was served in bad faith and amounts to an abuse of the Court process. He further stated that the applicant will suffer disproportionate prejudice if the statutory demand is not set aside. 25. He urged this Court to allow the application dated 17th June 2025 in its entirety with costs to the applicant. Analysis and Determination. 26. I have read the application filed herein and the affidavit in support thereof, as well as the replying affidavit and the written submissions by the applicant. The issue for determination is if I should set aside the statutory demand issued by the petitioner/respondent. 27. The statutory demand served upon the applicant is dated 19th March 2025. It was lodged in the High Court of Kenya at Nairobi (Milimani) on 25th March 2025. 28. In the application dated 17th June 2025 the 2nd prayer by the applicant is for leave to file the application out of time. Despite the said prayer, in its affidavit, the applicant did not at all address the issue as to https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19304/eng@2025-12-23 3

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why it failed to file the application to set aside the statutory demand within the 21 days of service of the statutory demand. 29. Regulation 16 of the Insolvency Regulations, 2016, provides as follows:1. The debtor may, apply to the Court for an Order to set aside the statutory demanda. Within twenty-one days from the date of service on the debtor of the Statutory demand;- or b. If the demand has been advertised in a Newspaper, from the date of the advertisement’s appearance, whichever is earlier. 2. Subject to any Order of the Court under Regulation 17(7), time limited for compliance with the statutory demand shall cease to run from the date on which the application is lodged with Court. 3. The debtor’s application shall be in Form 7 set out in the First Schedule and shall be supported by an affidavit which shall be in Form 8 set out in the Frist Schedule. 4. The affidavit referred to under paragraph (3) shalla. Specify the date on which the statutory demand came into the debtor’s possession. b. State the grounds on which the debtor claims that it should be set aside. c. Annex a copy of the statutory demand. 30. In the instant application, the applicant has not disclosed when it received the statutory demand and as earlier noted, it has also not stated why it did not file the application to set aside the statutory demand within 21 days as provided in Regulation 16(1)(a) of the Insolvency Regulations, 2016. 31. In the case of Ochanda (suing on his behalf and on behalf of 996 Former employees of Telkom Kenya Limited (Motion 24 of 2014 [2024] KESC 7 (KRL) (25 November 2014) (Ruling), the Supreme Court when dealing with an application for extension of time within which to file and serve a Notice of Appeal stated as follows;This Court in the Nicholas Kiptoo Arap Korir Salat v The independent Boundaries Commission & others Supreme Court Application No. 16 of 2014. The Nick Salat case acknowledged that extension of time is a discretionary and a very powerful tool which should be exercised with abundant caution, care and fairness. It should be used judiciously and not whimsically to ensure that the principles enshrined in our constitution are realized. The Court proceeded to lay down the following principles that should guide the Court, at page 31 thus:This being the first case in which this Court is called upon to consider the principles for extension of time, we derive the following as the underlying principles that a Court should consider in exercise of such discretion:1. Extension of time is not a right of a party. It is an equitable remedy that is only available to a deserving party at the discretion of the Court; 2. A party who seeks for extension of time has the burden of laying a basis to the satisfaction of the Court; https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19304/eng@2025-12-23 4

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3. Whether the Court should exercise the discretion to extend time, is a consideration to be made on a case to case basis; 4. Whether there is a reason for the delay. The delay should be explained to the satisfaction of the Court; 5. Whether there will be any prejudice suffered by the respondents if the extension is granted. 6. Whether the application has been brought without undue delay; and 7. Whether in certain case, like election petitions public interest should be a consideration for extending time” 32. In the instant application, although the applicant is not seeking extension of time to file an appeal out of time, it is nonetheless seeking an extension of time to file the instant application out of time. As noted earlier, the applicant has steered clear of explaining the delay in filing the instant application. 33. In the absence of such explanation, which means that the applicant has not met the underlying principles outlined in paragraphs (2), (3) and (4) in the Nick Salat case above, the applicant has fallen short of satisfying the underlying principles for extension of time as pronounced by the Supreme Court in the said case. 34. In the end, having not even made an attempt to explain the delay in filing the application to set aside the statutory demand, this Court cannot consider the merits of prayer No. 3 of the application, as that prayer could only have been considered if the filing of the instant application late, had been explained. 35. In the result, the application herein is dismissed with costs to the petitioner/respondent. It is so ordered. DELIVERED, DATED AND SIGNED AT NAIROBI ON THIS 23RD DAY OF DECEMBER 2025. RULING DELIVERED THROUGH MICROSOFT TEAMS ONLINE PLATFORM. NJOKI MWANGI JUDGE In the presence of:Ms Mutuku for the respondent/applicant Ms Kirui for the petitioner/respondent Ms B. Wokabi – Court Assistant. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19304/eng@2025-12-23 5

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