HCCOMM NO. 611 OF 2010 P. MULWA, J. REPUBLIC OF KENYA IN THE HIGH COURT OF KENYA AT NAIROBI COMMERCIAL AND TAX DIVISION CIVIL CASE NO. 611 OF 2010 C.J. SECURITIES.……………………..PLAINTIFF/DECREE HOLDER VERSUS S.S. SEHMI GENERAL BUILDING & CIVIL CONTRACTORS LIMITED…..DEFENDANT/JUDGEMENT DEBTOR RULING 1. In its ruling of 12th February 2026, this court made orders that: i. Saranjit Singh Sehmi and Gurmukh Singh Sehmi, being directors/shareholders of S.S. Sehmi General Building & Civil Contractors Limited, shall attend Court on a date to be fixed for oral examination on oath regarding the assets and means of the Judgment Debtor satisfying the Decree; ii. The said directors shall produce books of account and such documentary evidence as relates to the assets, liabilities, and financial position of the Judgment Debtor. 2. Mr. Saranjit Singh Sehmi, a director of the judgment debtor company, availed himself for examination on 4 th June 2026. He stated that the company which had been incorporated about 16 to 17 years ago was only for a specific project which was completed and thereafter it collapsed. That the sole contractor for the specific project was the decree holder who was fully paid. Page 1 of 4
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HCCOMM NO. 611 OF 2010 P. MULWA, J. 3. Mr. Sehmi further stated that the company never did any other business with the decree order, that it had no assets and he had no records to produce. He could only recall that the only financial information was that the contract sum for the specific project was Kshs. 9.5 million out of which the sole contractor (the decree-holder) was paid Kshs. 6 million, and thereafter the company collapsed. 4. Mr. Sehmi stated he was not in a position to meet the liabilities of the collapsed company. 5. As I observed in my earlier ruling, the purpose of examination proceedings is to enable the court and the decree holder to ascertain the assets and means of the judgment debtor and to prevent the corporate form from being used to defeat lawful decrees. The aim is to ensure that decrees are not rendered nugatory by deliberate opacity on the part of judgment debtors. 6. It is trite that a Company is a judicial person. The law expressly permits the incorporation of a business to enable its shareholders and directors to escape personal liability (Salomon v Salomon & Co (1897) AC). However, there are instances when the veil of incorporation may be lifted. In such instances, the law goes behind the corporate personality to attach responsibility shareholders or directors, thereby to ignoring the the individual separate personality of the company in favour of the economic reality prevailing in the circumstance. Page 2 of 4
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HCCOMM NO. 611 OF 2010 P. MULWA, J. 7. A Court will only lift the corporate veil if there has been serious misconduct or if the Company, shareholders, or directors have acted reasonably egregiously. 8. In other words, to warrant an order for the lifting of the corporate veil of a company against which a decree has been issued, the Applicant has to demonstrate that there is some wrong-doing on the part of the company’s directors. 9. The Applicant has to demonstrate for instance, that soon after the decree or in anticipation of an unfavorable judgment, and with the intention of defeating the decree, the company’s directors embarked on the fraudulent falsifying the company’s records; fraudulent transfer of the company’s property or shares; the fraudulent disposal of the company’s property or share; concealment of the company’s property; or other similarly fraudulent conduct. 10. In this case, having considered the statement of Mr. Sehmi on examination, there is not established the existence or perpetration of such actions/conduct against the company director(s). There is no proven grounds for lifting the corporate veil. I find that the Directors/Shareholders of S.S. Sehmi General Building & Civil Contractors Limited, being the Judgment Debtor herein, are not personally liable to satisfy the decree issued on 11th December 2019. RULING delivered virtually, dated and signed at NAIROBI This 31st day of July 2026. PETER M. MULWA JUDGE Page 3 of 4
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HCCOMM NO. 611 OF 2010 P. MULWA, J. In the presence of: Mr. Odoyo for Plaintiff/Decree Holder Court Assistant: Lispa Page 4 of 4
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