REPUBLIC OF KENYA
IN THE HIGH COURT OF KENYA AT NAIROBI
COMMERCIAL AND TAX DIVISION
INSOLVENCY PETITION NO. E001 OF 2022
IN THE MATTER OF THE COMPANIES ACT NO. 17 OF 2015 AS READ TOGETHER WITH THE INSOLVENCY ACT NO. 18 OF 2015
-AND-
THE INSURANCE ACT CAP 487 LAWS OF KENYA
-AND-
IN THE MATTER OF WINDING UP XPLICO INSURANCE COMPANY LIMITED
-BETWEEN-
ANNA KAVEE MBITHI & JEREMIAH KISAINGU
KIILU (Suing as administrators to the estate
of SERAH KATITI WAMBUA (Deceased)…………………….…..CREDITORS
-AND-
XPLICO INSURANCE COMPANY LIMITED…………………………DEBTOR
RULING
1. The creditors filed a petition against the debtor under the provisions of Sections 121, 122 & 203 of the Insurance Act and Sections 384, 423, 424, 425 & 427 of the Insolvency Act seeking the following orders-
i) That Xplico Insurance Company Limited be liquidated by an order of this Court;
ii) That this Court appoints an Official Receiver/Statutory Manager who is an authorized Insolvency Practitioner to act as the provisional liquidator;
iii) That costs of this petition and the petitioner’s debt of a total amount or more than Kshs.1,599,094.00 be provided for from the assets if any of Xplico Insurance Co. Limited;
iv) That this Court do issue an order forthwith stopping the Insurer from issuing insurance policies under Cap 405 Laws of Kenya pending its liquidation;
v) That all premiums owed by the Insureds of the Insurer be paid to the liquidator;
vi) That the assets of all directors and shareholders of Xplico Insurance Company Limited using monies appropriated to them by the Insurer be traced and reserved for sale by the Liquidator to pay this debt and any dealing in them by sale, transfer, lease, mortgage or whatsoever stopped pending liquidation;
vii) Costs of this petition be paid by the Insurer; and
viii) Such orders that this Honourable Court may deem fit and just in the circumstances.
2. The petition is supported by an affidavit sworn on 2nd August, 2021, by Anna Kavee Mbithi & Jeremiah Kisaingu Kiilu the creditors herein. In reply thereto, the debtor filed an answer to creditor’s petition dated 18th February, 2022 and a Notice of Preliminary Objection dated 18th February, 2022 raising the following grounds: -
i) The petition is incurably defective for offending the express provisions of Regulation 77B, of the Insolvency Act (Amendment) Regulations, 2018;
ii) The debtor failed to issue the mandatory statutory demand prior to instituting the petition; and
iii) The petition is an abuse of the Court process.
3. In reply to the said Preliminary Objection, the creditors filed a replying affidavit sworn on 21st September, 2022 by Lawrence M. Wambua, learned Counsel for the creditors.
4. On 15th June, 2023, the Court gave directions that the debtor’s Notice of Preliminary Objection shall be canvassed by way of written submissions. The debtor’s submissions were filed on 14th July, 2023 by the law firm of Muthoga & Omari Advocates, whereas the creditor’s submissions were filed by the law firm of L. M. Wambua & Company Advocates on 7th August, 2023.
5. Mr. Omari, learned Counsel for the debtor referred to the provisions of Regulation 77B(2)(a) of the Insolvency Regulations, 2016 and submitted that the creditor served the debtor with a demand letter dated 19th April, 2021 and not a statutory notice in Form 32E as provided for under Section 384(1)(a) of the Insolvency Act, 2015. Counsel relied on the case of Joyce Murugi Njagi t/a Crossworld Institute of Professional Studies v Twiga Properties Ltd (Insolvency Cause E006 of 2021) [2022] KEHC 12 (KLR) and urged this Court not to entertain the creditors’ petition herein since it was not accompanied by a statutory demand, which means that the creditors’ claims in this petition were never verified by the Hon. Deputy Registrar of the High Court.
6. Counsel for the debtor referred to the Court of Appeal case of Muchanga Investments Limited v Safaris Unlimited (Africa) Ltd & 2 others Civil Appeal No. 25 of 2002 [2009] KLR 229 as cited in the case of Nancy Musili v Joyce Mbete Katisi [2018] eKLR and argued that since the creditors have instituted the instant petition against the debtor without first verifying the sum of money due and owing to them despite the fact that these liquidation proceedings have been instituted on grounds of indebtedness, the proceedings herein amount to an abuse of the Court process.
7. Mr. Karita, learned Counsel for the creditor submitted that this petition has been brought under the provisions of Section 424(1)(e) of the Insolvency Act since the creditors hold a valid decree against the debtor that they have been unable to execute by way of attachment as the attached property belonged to a third party. He relied on the case of Joyce Murugi Njagi t/s Crossworld Institute of Professional Studies v Twiga Properties Ltd (Insolvency Cause E006 of 2021 [2022] KEHC 12 KLR, and asserted that it is evident that the debtor is unable to pay its debts thus necessitating this petition.
8. Counsel referred to Regulation 77B of the Insolvency Act (Amendment) Regulations, 2018 and argued that the creditors issued the debtor with a statutory demand dated 19th April, 2021 prior to the filing of this petition and the debtor acknowledged receipt of the said demand by stamping on the face of it. Mr. Karita stated that this petition is in compliance with the provisions of Regulation 77B of the Insolvency Act (Amendment) Regulations, 2018. He referred to the case of Oldonyo Nairasha Estate (Narok) Limited v OCP Kenya Limited [2021] eKLR and asserted that despite the fact that the statutory demand does not conform to the form set out in Form 32E, it has captured all the ingredients of a valid statutory demand. For this reason, the petition herein should not be struck out on grounds that the creditor’s statutory demand does not conform to the form set out in Form 32E, and that it was not endorsed by the Deputy Registrar.
ANALYSIS AND DETERMINATION.
9. Upon consideration of the debtor’s Notice of Preliminary Objection, the replying affidavit by the creditors and the written submissions by Counsel for parties, the issue that arises for determination is whether the debtor’s Preliminary Objection is merited.
10. The creditors in their replying affidavit deposed that this petition complies with the provisions of Regulation 77B of the Insolvency Act, 2018 as it has been accompanied with a statutory demand that was issued to the debtor before this petition was filed.
11. The creditors averred that the debtor’s Preliminary Objection is an abuse of the Court process since it raises no valid point of law but factual issues which can be determined at the hearing of the petition.
Whether the debtor’s Preliminary Objection is merited.
12. A Preliminary Objection should raise pure points of law. It should be argued on the assumption that all the facts pleaded by the other side are correct. It cannot be raised if any fact has to be ascertained or if what is sought is the exercise of judicial discretion. The Court in the case of Mukisa Biscuits Manufacturing Co. Ltd v West End Distributors Ltd [1969] EA 696 set out what constitutes a Preliminary Objection in the following words –
“So far as I am aware, a preliminary objection consists of a point of law which has been pleaded, or which arises by clear implication out of pleadings, and which if argued as a preliminary point may dispose of the suit. Examples are an objection to the jurisdiction of the court, or a plea of limitation, or a submission that parties are bound by the contract giving rise to the suit to refer the dispute to arbitration.”
13. In the said case, Sir Charles Newbold P., stated that-
“…… the first matter related to the increasing practice of raising points, which should be argued in the normal manner, quite improperly by way of preliminary objection. A preliminary objection is in the nature of what used to be a demurrer. It raises a pure point of law which is argued on the assumption that all facts pleaded by the other side are correct. It cannot be raised if any fact has to be ascertained or if what is sought is the exercise of judicial discretion. The improper raising of points by way of preliminary objection does nothing but unnecessarily increase costs and, on occasion confuse issues. This improper practice should stop.” (emphasis added).
14. The debtor submitted that the creditors did not serve and/or issue it with a statutory demand before filing this petition, as they served it with a demand dated 19th April, 2021 which is not the document contemplated under Regulation 77B of the Insolvency Act (Amendment) Regulations, 2018.
15. The creditors on the other hand submitted that prior to the institution of the liquidation proceedings herein, the debtor was issued with a statutory demand dated 19th April, 2021. They further submitted that even if the said statutory demand does not conform to the form set out in Form 32E, it has captured all the ingredients of a valid statutory demand.
16. Regulation 77B of the Insolvency Act (Amendment) Regulations, 2018 states the following-
“(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. The debtor’s case is that the petition herein offends the aforementioned provisions since it was not issued with a statutory demand by the creditors before the petition was filed, hence the petition has not been accompanied by a statutory demand as provided for under Regulation 77B 2(a) reproduced hereinabove. Section 384(1)(a) of the Insolvency Act provides for service of statutory demands in the following terms-
(1) For the purposes of this Part, a company is unable to pay its debts-
a) 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.”
18. Courts have in a multiplicity of cases determined that the fact that a statutory demand does not conform to the prescribed form outlined in Form 32E of the First Schedule of Regulation 77B of the Insolvency Act (Amendment) Regulations, 2018, is not in itself fatal as long as it captures all the statutory elements. In Re Sucasa at Mombasa Road Limited ML HC IP No. 9 of 2018 [2019] eKLR, the learned Judge quoted with approval Halsbury’s Laws of England (4th Ed, Vol 7(2)) para. 1446 on the ingredients of a statutory notice to the effect 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.”
19. I have perused the demand letter dated 19th April, 2021 served to the debtor by the creditors as annexed to the creditor’s affidavit in support of the petition herein. The said demand is dated and signed by Counsel for the creditors. It states the amount of the debt owed to the creditors by the debtor and how the debt arose, it indicates the purpose for the demand, and that the consequence of not complying with the said demand within twenty-one days is that the creditors shall institute liquidation proceedings against the debtor. From the details captured on the demand letter dated 19th April, 2021, I am satisfied that it complies with Form 32E as it sets out all the elements provided for under Section 384(1)(a) of the Insolvency Act.
20. The debtor drew the Court’s attention to the fact that the said demand letter was however not stamped and/or endorsed by the Deputy Registrar of the High Court, and submitted that the debt claimed by the creditors has not been verified by the Deputy Registrar which is prejudicial to it as it can lead to a miscarriage of justice. In the case of East Africa Cables Limited v SMB Bank (K) Limited [2020] eKLR the Court in declining to strike out a petition held as follows-
“It is evident that unlike Regulation 6 of the Regulations which introduced an amendment to Regulation 15 of the Regulations, 2016 to provide that the “The Statutory Demand …… shall be endorsed by the Deputy Registrar of the High Court before it is served on the debtor”, Regulation 77B of the Regulations, 2016 is silent on the issue of endorsement. As I have stated elsewhere, the former provision is in relation to bankruptcy and not insolvency of a company. Though the requirement for endorsement appears in Form 32E, such requirement is not imposed by Regulation 77B of Regulations, 2016 which applicable to this case. Nothing would have been easier than for the rule maker, to impose a requirement for endorsement in Regulation 77B aforesaid if it was indeed necessary. I therefore find and hold that failure to endorse the statutory demand by the Deputy Registrar does not invalidate the demand issued by the petitioner.
21. I agree with the above findings that failure to endorse the statutory demand by the Deputy Registrar does not invalidate the statutory demand as it affects the form rather than the substance of the demand. In addition, it does not take away the fact that the debtor was duly notified that it has 21 days to pay its debt owed to the creditor failure to which insolvency proceedings will be instituted against it.
22. In the end, this Court finds that this petition does not offend the provisions of Regulation 77B of the Insolvency Regulations since it is duly accompanied by a demand letter dated 19th April, 2021 that was served upon the debtor, and the debtor acknowledged receipt of the same.
23. The upshot is that the debtor’s Preliminary Objection dated 18th February, 2022 is devoid of merits. It is hereby dismissed with costs to the creditors.
It is so ordered.
DATED, SIGNED and DELIVERED at NAIROBI on this 19th day of April, 2024. Ruling delivered through Microsoft Teams Online Platform.
NJOKI MWANGI
JUDGE
In the presence of:
No appearance for the debtor/applicant
Ms Kavita for the creditors/respondents
Ms B. Wokabi – Court Assistant.
IN THE HIGH COURT OF KENYA AT NAIROBI
COMMERCIAL AND TAX DIVISION
INSOLVENCY PETITION NO. E001 OF 2022
IN THE MATTER OF THE COMPANIES ACT NO. 17 OF 2015 AS READ TOGETHER WITH THE INSOLVENCY ACT NO. 18 OF 2015
-AND-
THE INSURANCE ACT CAP 487 LAWS OF KENYA
-AND-
IN THE MATTER OF WINDING UP XPLICO INSURANCE COMPANY LIMITED
-BETWEEN-
ANNA KAVEE MBITHI & JEREMIAH KISAINGU
KIILU (Suing as administrators to the estate
of SERAH KATITI WAMBUA (Deceased)…………………….…..CREDITORS
-AND-
XPLICO INSURANCE COMPANY LIMITED…………………………DEBTOR
RULING
1. The creditors filed a petition against the debtor under the provisions of Sections 121, 122 & 203 of the Insurance Act and Sections 384, 423, 424, 425 & 427 of the Insolvency Act seeking the following orders-
i) That Xplico Insurance Company Limited be liquidated by an order of this Court;
ii) That this Court appoints an Official Receiver/Statutory Manager who is an authorized Insolvency Practitioner to act as the provisional liquidator;
iii) That costs of this petition and the petitioner’s debt of a total amount or more than Kshs.1,599,094.00 be provided for from the assets if any of Xplico Insurance Co. Limited;
iv) That this Court do issue an order forthwith stopping the Insurer from issuing insurance policies under Cap 405 Laws of Kenya pending its liquidation;
v) That all premiums owed by the Insureds of the Insurer be paid to the liquidator;
vi) That the assets of all directors and shareholders of Xplico Insurance Company Limited using monies appropriated to them by the Insurer be traced and reserved for sale by the Liquidator to pay this debt and any dealing in them by sale, transfer, lease, mortgage or whatsoever stopped pending liquidation;
vii) Costs of this petition be paid by the Insurer; and
viii) Such orders that this Honourable Court may deem fit and just in the circumstances.
2. The petition is supported by an affidavit sworn on 2nd August, 2021, by Anna Kavee Mbithi & Jeremiah Kisaingu Kiilu the creditors herein. In reply thereto, the debtor filed an answer to creditor’s petition dated 18th February, 2022 and a Notice of Preliminary Objection dated 18th February, 2022 raising the following grounds: -
i) The petition is incurably defective for offending the express provisions of Regulation 77B, of the Insolvency Act (Amendment) Regulations, 2018;
ii) The debtor failed to issue the mandatory statutory demand prior to instituting the petition; and
iii) The petition is an abuse of the Court process.
3. In reply to the said Preliminary Objection, the creditors filed a replying affidavit sworn on 21st September, 2022 by Lawrence M. Wambua, learned Counsel for the creditors.
4. On 15th June, 2023, the Court gave directions that the debtor’s Notice of Preliminary Objection shall be canvassed by way of written submissions. The debtor’s submissions were filed on 14th July, 2023 by the law firm of Muthoga & Omari Advocates, whereas the creditor’s submissions were filed by the law firm of L. M. Wambua & Company Advocates on 7th August, 2023.
5. Mr. Omari, learned Counsel for the debtor referred to the provisions of Regulation 77B(2)(a) of the Insolvency Regulations, 2016 and submitted that the creditor served the debtor with a demand letter dated 19th April, 2021 and not a statutory notice in Form 32E as provided for under Section 384(1)(a) of the Insolvency Act, 2015. Counsel relied on the case of Joyce Murugi Njagi t/a Crossworld Institute of Professional Studies v Twiga Properties Ltd (Insolvency Cause E006 of 2021) [2022] KEHC 12 (KLR) and urged this Court not to entertain the creditors’ petition herein since it was not accompanied by a statutory demand, which means that the creditors’ claims in this petition were never verified by the Hon. Deputy Registrar of the High Court.
6. Counsel for the debtor referred to the Court of Appeal case of Muchanga Investments Limited v Safaris Unlimited (Africa) Ltd & 2 others Civil Appeal No. 25 of 2002 [2009] KLR 229 as cited in the case of Nancy Musili v Joyce Mbete Katisi [2018] eKLR and argued that since the creditors have instituted the instant petition against the debtor without first verifying the sum of money due and owing to them despite the fact that these liquidation proceedings have been instituted on grounds of indebtedness, the proceedings herein amount to an abuse of the Court process.
7. Mr. Karita, learned Counsel for the creditor submitted that this petition has been brought under the provisions of Section 424(1)(e) of the Insolvency Act since the creditors hold a valid decree against the debtor that they have been unable to execute by way of attachment as the attached property belonged to a third party. He relied on the case of Joyce Murugi Njagi t/s Crossworld Institute of Professional Studies v Twiga Properties Ltd (Insolvency Cause E006 of 2021 [2022] KEHC 12 KLR, and asserted that it is evident that the debtor is unable to pay its debts thus necessitating this petition.
8. Counsel referred to Regulation 77B of the Insolvency Act (Amendment) Regulations, 2018 and argued that the creditors issued the debtor with a statutory demand dated 19th April, 2021 prior to the filing of this petition and the debtor acknowledged receipt of the said demand by stamping on the face of it. Mr. Karita stated that this petition is in compliance with the provisions of Regulation 77B of the Insolvency Act (Amendment) Regulations, 2018. He referred to the case of Oldonyo Nairasha Estate (Narok) Limited v OCP Kenya Limited [2021] eKLR and asserted that despite the fact that the statutory demand does not conform to the form set out in Form 32E, it has captured all the ingredients of a valid statutory demand. For this reason, the petition herein should not be struck out on grounds that the creditor’s statutory demand does not conform to the form set out in Form 32E, and that it was not endorsed by the Deputy Registrar.
ANALYSIS AND DETERMINATION.
9. Upon consideration of the debtor’s Notice of Preliminary Objection, the replying affidavit by the creditors and the written submissions by Counsel for parties, the issue that arises for determination is whether the debtor’s Preliminary Objection is merited.
10. The creditors in their replying affidavit deposed that this petition complies with the provisions of Regulation 77B of the Insolvency Act, 2018 as it has been accompanied with a statutory demand that was issued to the debtor before this petition was filed.
11. The creditors averred that the debtor’s Preliminary Objection is an abuse of the Court process since it raises no valid point of law but factual issues which can be determined at the hearing of the petition.
Whether the debtor’s Preliminary Objection is merited.
12. A Preliminary Objection should raise pure points of law. It should be argued on the assumption that all the facts pleaded by the other side are correct. It cannot be raised if any fact has to be ascertained or if what is sought is the exercise of judicial discretion. The Court in the case of Mukisa Biscuits Manufacturing Co. Ltd v West End Distributors Ltd [1969] EA 696 set out what constitutes a Preliminary Objection in the following words –
“So far as I am aware, a preliminary objection consists of a point of law which has been pleaded, or which arises by clear implication out of pleadings, and which if argued as a preliminary point may dispose of the suit. Examples are an objection to the jurisdiction of the court, or a plea of limitation, or a submission that parties are bound by the contract giving rise to the suit to refer the dispute to arbitration.”
13. In the said case, Sir Charles Newbold P., stated that-
“…… the first matter related to the increasing practice of raising points, which should be argued in the normal manner, quite improperly by way of preliminary objection. A preliminary objection is in the nature of what used to be a demurrer. It raises a pure point of law which is argued on the assumption that all facts pleaded by the other side are correct. It cannot be raised if any fact has to be ascertained or if what is sought is the exercise of judicial discretion. The improper raising of points by way of preliminary objection does nothing but unnecessarily increase costs and, on occasion confuse issues. This improper practice should stop.” (emphasis added).
14. The debtor submitted that the creditors did not serve and/or issue it with a statutory demand before filing this petition, as they served it with a demand dated 19th April, 2021 which is not the document contemplated under Regulation 77B of the Insolvency Act (Amendment) Regulations, 2018.
15. The creditors on the other hand submitted that prior to the institution of the liquidation proceedings herein, the debtor was issued with a statutory demand dated 19th April, 2021. They further submitted that even if the said statutory demand does not conform to the form set out in Form 32E, it has captured all the ingredients of a valid statutory demand.
16. Regulation 77B of the Insolvency Act (Amendment) Regulations, 2018 states the following-
“(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. The debtor’s case is that the petition herein offends the aforementioned provisions since it was not issued with a statutory demand by the creditors before the petition was filed, hence the petition has not been accompanied by a statutory demand as provided for under Regulation 77B 2(a) reproduced hereinabove. Section 384(1)(a) of the Insolvency Act provides for service of statutory demands in the following terms-
(1) For the purposes of this Part, a company is unable to pay its debts-
a) 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.”
18. Courts have in a multiplicity of cases determined that the fact that a statutory demand does not conform to the prescribed form outlined in Form 32E of the First Schedule of Regulation 77B of the Insolvency Act (Amendment) Regulations, 2018, is not in itself fatal as long as it captures all the statutory elements. In Re Sucasa at Mombasa Road Limited ML HC IP No. 9 of 2018 [2019] eKLR, the learned Judge quoted with approval Halsbury’s Laws of England (4th Ed, Vol 7(2)) para. 1446 on the ingredients of a statutory notice to the effect 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.”
19. I have perused the demand letter dated 19th April, 2021 served to the debtor by the creditors as annexed to the creditor’s affidavit in support of the petition herein. The said demand is dated and signed by Counsel for the creditors. It states the amount of the debt owed to the creditors by the debtor and how the debt arose, it indicates the purpose for the demand, and that the consequence of not complying with the said demand within twenty-one days is that the creditors shall institute liquidation proceedings against the debtor. From the details captured on the demand letter dated 19th April, 2021, I am satisfied that it complies with Form 32E as it sets out all the elements provided for under Section 384(1)(a) of the Insolvency Act.
20. The debtor drew the Court’s attention to the fact that the said demand letter was however not stamped and/or endorsed by the Deputy Registrar of the High Court, and submitted that the debt claimed by the creditors has not been verified by the Deputy Registrar which is prejudicial to it as it can lead to a miscarriage of justice. In the case of East Africa Cables Limited v SMB Bank (K) Limited [2020] eKLR the Court in declining to strike out a petition held as follows-
“It is evident that unlike Regulation 6 of the Regulations which introduced an amendment to Regulation 15 of the Regulations, 2016 to provide that the “The Statutory Demand …… shall be endorsed by the Deputy Registrar of the High Court before it is served on the debtor”, Regulation 77B of the Regulations, 2016 is silent on the issue of endorsement. As I have stated elsewhere, the former provision is in relation to bankruptcy and not insolvency of a company. Though the requirement for endorsement appears in Form 32E, such requirement is not imposed by Regulation 77B of Regulations, 2016 which applicable to this case. Nothing would have been easier than for the rule maker, to impose a requirement for endorsement in Regulation 77B aforesaid if it was indeed necessary. I therefore find and hold that failure to endorse the statutory demand by the Deputy Registrar does not invalidate the demand issued by the petitioner.
21. I agree with the above findings that failure to endorse the statutory demand by the Deputy Registrar does not invalidate the statutory demand as it affects the form rather than the substance of the demand. In addition, it does not take away the fact that the debtor was duly notified that it has 21 days to pay its debt owed to the creditor failure to which insolvency proceedings will be instituted against it.
22. In the end, this Court finds that this petition does not offend the provisions of Regulation 77B of the Insolvency Regulations since it is duly accompanied by a demand letter dated 19th April, 2021 that was served upon the debtor, and the debtor acknowledged receipt of the same.
23. The upshot is that the debtor’s Preliminary Objection dated 18th February, 2022 is devoid of merits. It is hereby dismissed with costs to the creditors.
It is so ordered.
DATED, SIGNED and DELIVERED at NAIROBI on this 19th day of April, 2024. Ruling delivered through Microsoft Teams Online Platform.
NJOKI MWANGI
JUDGE
In the presence of:
No appearance for the debtor/applicant
Ms Kavita for the creditors/respondents
Ms B. Wokabi – Court Assistant.