Adan Meat Supply Limited v Hotel Rainbow Superhighway Limited (Insolvency Cause 1 of 2020) [2024] KEHC 8568 (KLR) (15 July 2024) (Ruling)
Neutral citation:
[2024] KEHC 8568 (KLR)
Republic of Kenya
Insolvency Cause 1 of 2020
DO Chepkwony, J
July 15, 2024
Between
Adan Meat Supply Limited
Claimant
and
Hotel Rainbow Superhighway Limited
Respondent
Ruling
1.The Claimant has moved the court by way of a Liquidation Petition dated 30th July, 2020 over a debt of Kshs Seven Hundred and Seventeen Thousand Seven Hundred and Eighty (Kshs. 717,780/=) owed by the Respondent, Hotel Rainbow Superhighway Limited.
2.Before delving into the merits of the Petition herein, the Respondent filed a Notice of Preliminary Objection dated 26th June, 2023 in respect to the Petition based on the following grounds:-
3.The court shall start with the consideration of the Notice of Preliminary Objection as it may have the effect of disposing off the whole Insolvency Petition. In the case of Mukisa Biscuits Manufacturing Ltd –vs- West End Distributors (1969) EA 696 is on definition of ‘Preliminary Objection’ as follows:-In the same case Sir Charles Newbold, P. stated:-
4.It is trite that that a debt must be proved for the order of liquidation to issue. The Court of Appeal decision in the case of Universal Hardware Limited –vs- African Safari Club Limited, MSA CA Civil Appeal No. 209 of 2007 [2013] eKLR, was that:-
5.In this case, the gist of the Preliminary Objection is that the debt amount hasbeen disputed. It is the argument of the Respondent that it has paid andsettled the debt it owed the Petitioner in the sum of Kshs. 409,169/=, so thatwhat is still disputed by the Respondent is the balance of Kshs. 308,611/=.
6.It is also trite that the purpose of liquidation of Companies is to show that a Company is unable to pay its debts as and when they are due. The purpose for this is so as not to exert pressure upon Companies to pay their debts as this would amount to abuse of court process. In this regard, the Court of Appeal in the case of Matic General Contractors Limited –vs- Kenya Power and Lighting Company Limited [2001] eKLR 3493 had this to state:-
7.Relying on the afore cited case, the court finds that since the alleged debt has been disputed on substantive reasons it will be a draconian move to send the Respondent to its death bed at this juncture. This, coupled with the fact that in the course of the proceedings herein, the parties had engaged in negotiation which was almost materialising, and thus the Petitioner should be at liberty to use other remedies available to claim for the balance owed.
8.In the circumstances, the court proceeds to strike out the Liquidation Petition dated 30th July, 2020 filed herein as the debt herein had been disputed on genuine and substantial grounds.It is so ordered.
RULING DATED, SIGNED AND DELIVERED AT KIAMBU VIA ELECTRONIC MAIL THIS 15THDAY OF JULY 2024.D. O. CHEPKWONYJUDGE