1. In the suit and accompany application dated 15.08.2023, the Plaintiff seeks an injunction restraining the 1st Defendant from taking over the suit property or interfering with the operations of DAC Aviation East Africa Ltd through its appointed receiver.
2. When the application came up for directions I directed the Plaintiff to show cause why the suit should not be struck out on the ground that the Company, which owns the suit property, is under liquidation.
3. The Plaintiff argues that as a guarantor, he has an interest to see that the property is sold at the highest possible price in order to secure the business of the Company and to resolve the debt due to the Bank.
4. At the hearing, counsel for the Plaintiff conceded that the Company is under liquidation and that the Plaintiff does not have any proprietary interest in the suit property.
5. Counsel for the Defendants submitted that the Company is separate from its shareholders and directors and that once the court issued the liquidation order, the directors and shareholders lost control of the Company. That they, including the Plaintiff, lack any standing to prosecute this suit. The Defendants also contended that the appointment of a receiver is one of the remedies the 1st Defendant is entitled to exercise under the charge over the suit property.
6. I am constrained to strike out the suit as the Plaintiff, in the position of director or shareholder of the Company or as a guarantor lacks any standing to file this suit to protect the property of the Company. Under section 444 of the Insolvency Act, once the liquidation order is made, the liquidator assumes control of the property of the Company to the exclusion of the shareholders and directors. Further, the Plaintiff does not have any proprietary interest in the suit property which charged to the Bank.
7. Since the Company is in liquidation, any cause of action against the Defendants can only be agitated by the Liquidator and not the Plaintiff. The Plaintiff cannot intervene in the 1st Defendant's right to appoint a receiver over the suit property.
8. The suit is therefore struck out The Plaintiff shall pay costs of the suit and application assessed at Kshs. 20,000.00.
DATED and DELIVERED at NAIROBI this 22nd day of AUGUST 2023
D. S. MAJANJA
JUDGE