Amra Leasing Limited v Dac Aviation (ea) Limited

monies so released together with accrued interest; a direction for immediate transfer of all remaining balances to the Interim Liquidator; an order for a full account of the Company’s bank accounts for the relevant period; costs; and such further orders as the Court may deem fit. 4. The application is grounded on the contention that following the commencement of liquidation and the appointment of the Interim Liquidator, the Respondent bank released or permitted the utilization of funds standing to the credit of the Company for the benefit of third parties, in disregard of the liquidation order. It is contended that such conduct undermines the statutory mandate of the Interim Liquidator, whose duty is to collect, preserve, and protect the Company’s assets for the benefit of creditors, and that failure to secure the said assets would frustrate the liquidation process. 5. The second application is the Notice of Motion dated 5th May 2025, filed by Emmanuel Anassis, who describes himself as an Interested Party. The application is brought under sections 3(1)(c), 416(2), 447, 464(4), 465, 484, 485, 488 and 489 of the Insolvency Act, Order 51 Rule 1 of the Civil Procedure Rules, sections 1A, 1B, 3A and 3B of the Civil Procedure Act, and Article 159 of the Constitution. 6. The Interested Party seeks, pending the hearing and determination of the application: access to the Company’s entire business and financial records in the possession of the Receiver Manager to facilitate inspection by potential investors with a view to buying off the Company’s indebtedness; an order staying the transfer or alienation of the Company’s property known as LR No. 12310 (IR 142930), DAC Aviation, Wilson Airport, Nairobi; an order compelling the Receiver Manager to file detailed accounts, operational reports, and statements of secured creditors’ claims; an order holding the Receiver Manager personally liable for losses allegedly occasioned in breach of statutory and constitutional duties; and costs in the cause. Analysis and determination 7. Both applications were heard together by way of written submissions, which I have carefully considered. 8. The issues that arise for determination are: i. Whether the Respondent bank violated the Insolvency Act by releasing funds after commencement of liquidation, as alleged in the application dated 11th September 2024; ii. Whether the Applicant in the application dated 5th May 2025 has locus standi to seek the reliefs prayed for; iii. Whether the reliefs sought in the application dated 5th May 2025 are legally sustainable or have been overtaken by events; and iv. What orders should be made as to costs. Application dated 11th September 2024 9. The Official Receiver submits that upon the issuance of the liquidation order and his appointment as Interim Liquidator, all the Company’s assets vested in him by operation of law. It is argued that despite notification of the liquidation, the Respondent bank released funds from the Company’s accounts, thereby violating sections 411, 430, 444 and 445 of the Insolvency Act, usurping the Liquidator’s statutory mandate and prejudicing the interests of creditors. 10. The Official Receiver further contends that any attachment, execution, or dealing with the Company’s assets after the commencement of liquidation is void, and that the Respondent ought to be compelled to account for and refund all monies released. https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/838/eng@2026-01-29 2

page 2 of 5

11. In opposition, the Respondent bank submits that it was not a creditor of the Company but a garnishee, and that it acted in compliance with valid Garnishee Orders Absolute issued by the Employment and Labour Relations Court. It maintains that at the time of compliance, there was no stay, injunction, or order vacating the garnishee proceedings, and that it merely obeyed subsisting court orders. 12. The Respondent further argues that it was not a party to the liquidation proceedings, owed no fiduciary or supervisory duties in respect of the liquidation, and cannot be penalized for complying with lawful orders of a court of competent jurisdiction. 13. I have weighed these rival positions. There is no dispute that upon liquidation, the Company’s assets vest in the Liquidator, and that executions commenced thereafter are, as a general rule, prohibited under section 430 of the Insolvency Act. However, this statutory protection must be balanced against the settled principle that court orders are binding and must be obeyed unless and until set aside. 14. The Court of Appeal in Kenya National Examination Council v Republic; GGN & 9 others (Ex parte) [1997] KECA 58 (KLR) affirmed that public bodies and third parties are bound to comply with court orders unless lawfully vacated. Similarly, in Teachers Service Commission v Kenya National Union of Teachers & 2 Others [2013] eKLR, the Court emphasized that parties should not be punished for obeying subsisting court orders. 15. The evidence before the Court demonstrates that the Respondent released the funds pursuant to garnishee orders that had crystallized into orders absolute, and that no stay or injunctive relief had been issued restraining compliance. There is no evidence of bad faith, collusion, or unilateral dissipation of funds by the Respondent. 16. The Court is persuaded that although the effect of compliance may have been detrimental to the liquidation estate, the Respondent’s actions do not amount to unlawful interference with the Liquidator’s mandate to justify restitutionary or punitive orders. To hold otherwise would expose third parties to liability for obeying subsisting court orders, an outcome inimical to legal certainty. 17. Accordingly, I find no legal basis to impose personal or restitutionary liability upon the Respondent bank. Application dated 5th May 2025 18. Turning to the second application, the Applicant asserts that as a former director, beneficial owner, and personal guarantor, he has a legitimate interest in the affairs of the Company and in the manner in which the receivership and liquidation were conducted. 19. The Receiver Manager opposes the application on the ground that the Applicant lacks locus standi, contending that he is neither a party to the insolvency proceedings nor has he sought or obtained leave to be joined, and that he cannot prosecute claims on behalf of the Company. 20. The principle of separate corporate personality is settled. In Salomon v A Salomon & Co Ltd [1897] AC 22, the House of Lords established that a company is a legal person distinct from its shareholders and directors. This position has been consistently applied in Kenya and reaffirmed by the Supreme Court in Imanyara & 2 Others v Attorney General [2022] KESC 78 (KLR). 21. In insolvency, section 411 of the Insolvency Act provides that upon appointment of a liquidator, the powers of directors cease, while section 444 vests exclusive authority over the company’s property in the liquidator. https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/838/eng@2026-01-29 3

page 3 of 5

22. Further, in George W M Omondi & Another v National Bank of Kenya Ltd & 2 Others [2001] eKLR, the Court held that shareholders have no enforceable proprietary interest in company assets capable of grounding injunctive relief. 23. The role of an Interested Party was clarified by the Supreme Court in Trusted Society of Human Rights Alliance v Mumo Matemo & 5 Others [2014] eKLR, where it was held that such a party cannot seek substantive reliefs or take over the litigation. 24. Applying these principles, the Court finds that the Applicant lacks locus standi to seek access, injunctive, mandatory, or supervisory orders in respect of the Company’s assets and affairs. Even assuming he were properly before the Court as an Interested Party, the reliefs sought exceed the limited participatory role accorded by law. Whether the reliefs sought have been overtaken by events 25. The Respondents further submit that events have overtaken the application dated 5th May 2025. The evidence shows that the property known as LR No. 12310 (IR 142930) was transferred to a third party on 24th February 2025, and that the Receiver Manager ceased to act on 30th April 2025. 26. These facts are not seriously controverted. While the Court appreciates the Applicant’s concerns regarding accountability, it is trite that courts do not issue orders in vain. 27. In Kenya National Examinations Council v Republic [1997] eKLR, the Court of Appeal held that courts must refrain from making orders incapable of enforcement. Similarly, in Kamulu Academy Ltd & Another v British American Insurance (K) Ltd & 2 Others [2018] eKLR, the Court held that once a charged property has been sold and transferred, injunctive relief is unavailable. 28. Any allegations of misconduct must therefore be pursued through appropriate proceedings grounded in evidence and proper standing. 29. The Court accordingly finds that the substantive reliefs sought in the application dated 5th May 2025 are both unsupported by standing and incapable of enforcement. Disposition 30. For the foregoing reasons, the Court makes the following orders: i. The Notice of Motion dated 11th September 2024 is hereby dismissed for want of merit. ii. The Notice of Motion dated 5th May 2025 is hereby dismissed for lack of locus standi and for having been overtaken by events. iii. Each party shall bear its own costs, these proceedings being in the nature of court-supervised insolvency administration. Orders accordingly. RULING DELIVERED VIRTUALLY, DATED AND SIGNED AT NAIROBI THIS 29TH DAY OF JANUARY 2026. P.M. MULWA JUDGE In the presence of: Mr. Oduol for Applicant/Petitioner https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/838/eng@2026-01-29 4

page 4 of 5

For Creditors - Ms. Nyangweso, Mr. Ole Ntome, Ms. Wambui, & Mr. Mbaya Court Assistant: Carlos https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/838/eng@2026-01-29 5

page 5 of 5