Suleiman Buya Ramadhan v The Monarch Insurance Company Limited

2. THAT the Petition is fatally defective and ought to be struck out or dismissed as it is contravention of Section 2 and 384(1) (a) of the Insolvency Act. 3. THAT the Petitioner’s Statutory Demand which is undated upon which this Petition is founded was not issued by the Creditor but by an Advocate who had purported to have it signed by the Deputy Registrar contravening the provisions of Section 2 and 384(1)(a) of the Insolvency Act. 4. The Preliminary Objection was disposed of by way of written submissions. Respondent`s submissions 5. The Respondent submitted that the Statutory Notice relied upon by the Petitioner is incurably defective, invalid and incapable of grounding an insolvency petition within the meaning of sections 2 and 384(1) (a) of the Insolvency Act in that the statutory Notice was not issued by the Petitioner but by an advocate who purported to have it signed by the Deputy Registrar. That this violates the express wording of section 384(1) (a) which requires that only a creditor may issue a statutory demand. Reliance was made in the case of Blueline Properties Limited v Mayfair Insurance Company Limited (2019) KEHC 7673 (KLR) where the court held the following on the provisions of section Section 384 (1) (a) of the Insolvency Act : ….That Section requires the Statutory Notice to be issued by a creditor. A creditor is defined under section 2 of that Act as: “includes a person entitled to enforce a final judgment or final order.” That definition does not include an agent, such as an advocate. A creditor on the facts before Court would be Blueline, not its advocate. It follows, as rightly submitted on behalf of Mayfair, that the Statutory Notice issued to Mayfair did not meet the threshold set out in Section 384 (1) (a) of Insolvency Act. Blueline was therefore not Insolvency No. E002/2025 Ruling 2|Page

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entitled to rely on the Statutory Notice issued by its advocate to seek liquidation of Mayfair. It follows that without that Statutory Notice Blueline is unable to prove that Mayfair is unable to pay its debts. 6. It was further submitted that a statutory Notice cannot be signed by the Deputy Registrar. Reliance was placed in the case of Global Truck Limited v Borderless Tracking Limited (2020) eKLR where a Statutory Notice/Demand had been signed by the deputy registrar and the court concluded that the statutory notice had been issued contrary to statute and was not valid to mount a petition for liquidation of a company. 7. That the position in the latter case was affirmed in East African Cables Limited v Trans Africa Energy Limited (2022) KEHC 12260 (KLR) where the court stated: In the case at hand, the statutory demand was not signed by Cables or even the advocate, but by the Deputy Registrar. The Deputy Registrar is not the creditor and had no instruction from Cables. The Deputy Registrar could not issue the statutory notice on behalf of Cables. Counsel for Cables did not point out any provision that empowers the Deputy Registrar to issue and sign the statutory notice on behalf of a creditor. 8. It was emphasized that a statutory Notice must be signed by the Creditor for it to be considered valid. That the Petition herein was founded on an invalid Notice as it is not signed by the Creditor thus rendering it void ad initio. That the defects are substantial and cannot be cured by Article159 of the constitution or by exercise of judicial discretion. The Petitioner urged the court to uphold the Preliminary Objection. Petitioner`s submissions 9. The Petitioner/Creditor on the other hand submitted that the statutory demand was properly signed by the advocate who is an agent of the creditor and is therefore capable of supporting the Insolvency No. E002/2025 Ruling 3|Page

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petition. Reliance on this legal position was placed in the case of Yang in the Care of Yang Zenghuiv Suraya v Properties Group Limited (Insolvency Petition E042 of 2021) (2023) KEHC 2021(KLR) (Commercial and Tax) (7 July 2023) (Ruling) where the court held that: The statutory demand was signed by Triple OK Law LLP Advocates on behalf of the creditor. The position espoused in Halsbury’s Laws of England 4th Ed Vol 7(2) para 1446 is that a statutory demand should be dated and signed by the creditor himself or by a person authorized to make the demand on the creditor’s behalf. The person who can issue a statutory demand on behalf of the creditor would include an advocate who acts as the authorised agent of the creditor. I, therefore, find and hold that the statutory demand signed by advocates acting on behalf of the creditor was properly signed for purposes of the Act. 10. Further reliance was placed in Re F.M. Macharia (K) Limited (2017) eKLR where it was held that: The statutory demand must be dated and be signed by the creditor himself or by a person authorized to make the demand on the creditor’s behalf. The statutory demand must state the amount of the debt and consideration for it or if no consideration the way if (debt) arises…The statutory demand must include an explanation to the Company of the following matters: (a) Purpose of demand and fact that if demand is not complied with, proceedings may be initiated for winding up; (b) time for compliance with notice if consequential is to be avoided and (c) methods of compliance open to the company. Insolvency No. E002/2025 Ruling 4|Page

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In addition, it was submitted that a petition cannot be struck out on mere technicality. Reliance in this respect was placed in Kipsigis Stores Limited ML HC IP N o. 14 of 2016 (2017) eKLR where the late Onguto J. held as follows: [40] Clearly, an application to set aside or vacate a statutory notice on the basis of invalidity should be looked at in the light of the full circumstances of the case. The notice should not be set aside on the basis of a mere technicality. Rather regard should be had to all the circumstances including but not limited to whether the debt is owed as well as whether the overriding objective would be defeated by setting aside the notice. If no injustice flows from the consequences of non-compliance, then it would serve no purpose to set aside a statutory demand and to cause the statutory demand to be served again at cost. 11. It was further submission of the Petitioner that after the Statutory Notice is signed by the Creditor or his advocate, it must be endorsed by the Deputy Registrar of the High Court before it is served on the creditor. That the endorsement certifies that the demand has been duly made and lodged with the court. 12. It was submitted that the Statutory Demand is drawn as provided for in the regulations. That the Debtor was served with the Statutory Demand and did not seek to have the same set aside within the statutory period and did not dispute the sum owing. They failed to pay the same. The Petitioner urged the court to dismiss the Preliminary Objection. Analysis and determination 13. I have considered the arguments advanced in support of the Preliminary objection and the grounds in opposition thereto. The issues for determination are – Insolvency No. E002/2025 Ruling 5|Page

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(1) Whether the statutory demand can only be signed by the Creditor, and (2) Whether the statutory demand ought to be endorsed by the Deputy Registrar of the High Court. 14. On the first issue the Debtor/Respondent submitted that for a statutory notice to be valid it must be signed by the creditor and in so holding relied on the case of Blueline Properties Limited v Mayfair Insurance Company Limited (supra). The Petitioner on the other hand submitted that a statutory Notice can be signed by the Creditor or his advocate. Reliance was placed in the case of Yang in the Care of Yang Zenghuiv Suraya Properties Group Limited (supra) and in Re F.M. Macharia (K) Limited (2017) eKLR where it was held that a statutory notice can be signed either by the creditor or his advocate. Section 384 (1) (a) of the Insolvency Act provides: “For the purposes of this Part, a Company is unable to pay its debtsa. If a creditor (by assignment or otherwise) to whom the Company is indebted for hundred thousand shillings or more has served on the Company, by leaving it at the Company’s registered office, a written demand requiring the Company to pay the debt and the Company has for twenty –one days afterwards failed to pay the debt or to secure or compound for it to the reasonable satisfaction of the creditor.” 15. I have considered the import of the above section and the two conflicting decisions of the High Court on whether a Statutory Notice should be signed only by a creditor or it can also be signed by an agent for the creditor such as an advocate. In my humble view, I think the correct legal position is the one espoused in the cases of Yang in the Care of Yang Zenghui v Suraya Properties Group Limited (supra) and in Re F.M. Macharia (K) Limited (2017) eKLR, citing The Insolvency No. E002/2025 Ruling 6|Page

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Halsbury’s Laws of England 4th Ed Vol 7(2) para 1446 that a statutory demand should be dated and signed by the creditor himself or by a person authorized to make the demand on the creditor’s behalf. An advocate is an agent for the Creditor and can therefore lawfully sign and issue a statutory notice on behalf of his client, the Creditor. I am thus not persuaded by the argument that a statutory notice can only be signed by a Creditor. 16. The second issue is on whether the Statutory Notice ought to be endorsed by the Deputy Registrar of the court. Section 425 of the Insolvency Act provides for applications to the court for liquidation of companies. Rule 77B of the Insolvency Regulations provide as follows: 77B. Liquidation by court (1)For the purposes of section 425 of the Act an application for liquidation shall be— (a) by way of a petition in Form 32C as set out in the First Schedule; and (b) accompanied by a verifying affidavit in Form 32D as set out in the First Schedule. (2) The petition for liquidation shall be accompanied by the following documents— (a) a statutory demand in Form 32E set out in the First Schedule if the reason for petition is indebtedness; and (b) a statement of financial position in Form 32 as set out in the First Schedule where necessary. 17. Form 32C as set out in the First Schedule is the Liquidation Petition which as held above can be signed by the Creditor or his advocate. Form 32D as set out in the Schedule is the verifying affidavit in support of the Petition while Form 32E is the statutory Demand which as indicated in the form is required to be signed by the Registrar of the Court where the reason for filing the petition is indebtedness. Insolvency No. E002/2025 Ruling 7|Page

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18. The reason for filing the Petition in this case is indebtedness. I find the Statutory Demand to have been properly signed by the Deputy Registrar of this court as required by Rule 77B (2)(a) of the Insolvency Regulations Act, 2016. The authorities cited by counsel for the Respondent were in respect of situations where the Deputy Registrar signed the Statutory Demand in support of the petition and the same was not signed by the creditor or this advocate, East African Cables Limited v Trans Africa Energy Limited (2022) KEHC 12260 which was not the case here. The Deputy Registrar in this matter signed the Statutory Demand to confirm the indebtedness. The authorities were therefore not relevant for purposes of this case. 19. In view of the foregoing, I find the Statutory Demand was lawfully signed by the advocate on behalf of the Petitioner/Creditor. The same was signed by the Deputy Registrar of this court in accordance with the Regulations. The Preliminary Objection has in the premises no merit and is dismissed with costs to the Petitioner. Delivered, dated and signed at GARSEN this 28th day of May 2026 J. N. NJAGI JUDGE In the presence of: Miss Nkocho for Petitioner/Creditor Miss Wafula for Respondent/Debtor Court Assistant - Rahma Insolvency No. E002/2025 Ruling 8|Page

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