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JudgmentHELLER PETROLEUM LIMITED VS IVRCL LIMITED AND DINESH DEGWEKAR AND 1 Others13 min read

HELLER PETROLEUM LIMITED VS IVRCL LIMITED AND DINESH DEGWEKAR AND 1 Others

High Court at Milimani High Court · · Andayi W.F.

1. The defendants/respondents’ application dated 1/4/2025 is for striking out the plaint herein dated 11/10/2018.
2. The plaintiff filed the suit herein seeking an injunction to restrain the defendants from carrying out any transaction that would cause the diminution of the funds deposited in the 1st defendant’s bank accounts in various named banks pending the commencement, hearing and determination of arbitration proceedings between the plaintiff and the defendant. The plaintiff also prayed that the court refers the parties to arbitration.
3. The plaintiff and the 1st defendant, a company incorporated in India and with regional offices in Nairobi, Kenya on 1/4/2016 entered into a supply agreement for the provision of automotive gas oil (diesel) by the 1st defendant to the plaintiff.
4. The 2nd and 3rd defendants are officers of the 1st defendant in respective capacities for the Africa region.
5. The three defendants filed a common statement of defence dated 6/6/2019 and termed the suit as bare, raising no reasonable cause of action against the defendants, incompetent, frivolous, vexatious, an abuse of the court process and bad in law and asked that the same be dismissed with costs.
6. The defendants enjoined the 3rd party herein Afrikon Limited to the proceedings. The 3rd party did not participate in this application.
7. The defendants have now filed the present application by way of notice of motion dated 1/4/2025 seeking for an order to strike out the suit. The application is brought under sections 1A, 1B and 3A of the Civil Procedure Act, Order 2 Rule 15 of the Civil Procedure Rules and all other enabling provisions of the law.
8. The grounds in support of the application and expounded in the supporting affidavit sworn by Kimani Wachira advocate on 1/4/2025 are that the 1st defendant, a legal entity incorporated in India ceased operations in Kenya and was subsequently wound up in India, its country of registration. The 2nd and 3rd defendants were joined to the suit as officers of the 1st defendant. By virtue of dissolution of the 1st defendant, its legal personality was extinguished and obligations, thereby affecting the legal capacity of the 2nd and 3rd defendants to participate in legal proceedings as such. For that reason, the suit by the plaintiffs fails to disclose any reasonable action against the defendants.
9. The second ground is that the contract between the plaintiff and the 1st defendant contained a valid arbitration clause but the plaintiff did not institute any such arbitral proceedings to resolve the dispute between the parties.
10. Third, that there existed a sub-contract dated 18/8/2016 between the 1st defendant and the 3rd party herein which required the 3rd party to honour sub-contracts issued by the 1st defendant including that of the plaintiff herein. It is therefore the 1st defendant’s contention that the 3rd party is the proper party against whom the plaintiff’s claim should be directed.
11. The plaintiff opposed the application through a replying affidavit sworn on 2/5/2025 by Dekow Mohamed Barrow, a director of the plaintiff. He deposes that the application is fatally defective for reasons that the affidavit in support of the application is sworn by the advocate for the defendants on highly contentious issues and for that reason application lacks a supporting affidavit and the same should be struck out.
12. It is the plaintiff’s contention that from the documents annexed to the 1st defendant’s supporting affidavit as an order “Exhibit “K2”” the 1st defendant was sold as a going concern and was not liquidated and/or wound up.
13. The plaintiff deposes further that the defendants having submitted to the jurisdiction of this court by filing a defence to the suit herein, they are estopped from contesting the jurisdiction of this court to hear and determine the matter.
14. The application was disposed of by way of written submissions filed by learned counsels for both parties.
15. I have considered the application, the grounds in support thereof, the submissions for and against this application and cited cases. The issue for determination is whether the application meets the threshold for striking out a pleading.
16. The power of the court to strike out a pleading is provided for under Order 2 rule 15 of the Civil Procedure Code (CPC) which provides as follows: -
“15(1) At any stage of the proceedings the court may order to be struck out or amended any pleading on the ground that—
(a) It discloses no reasonable cause of action or defence in law; or
(b) It is scandalous, frivolous or vexatious; or
(c) It may prejudice, embarrass or delay the fair trial of the action; or
(d) It is otherwise an abuse of the process of the court,
and may order the suit to be stayed or dismissed or judgment to be entered accordingly, as the case may be.”
17. The defendant’s application is premised on Rule 15(1)(a) of the CPC that is, that the plaint discloses no reasonable cause of action.
18. In the case of DT Dobie & Co. (Kenya) Limited v Muchina & Another [1982] KLR 1 stated regarding the principles of striking out pleadings that:
'No suit ought to be summarily dismissed unless it appears so hopeless that it plainly and obviously discloses no reasonable cause of action, and is so weak as to be beyond redemption and incurable by amendment. If a suit shows a mere semblance of a cause of action, provided it can be injected with real life by amendments, it ought to be allowed to go forward for a Court of justice ought not to act in darkness without the full facts of a case before it'.
19. The Court of Appeal in the same case stated further that a triable issue is not necessarily one that the defendant would ultimately succeed on and need only be bona fide.
20. The first issue that is common from both parties for determination is whether there is a competent affidavit supporting the application, since the same was sworn by an advocate for the parties. It is the applicant’s position that the advocate was competent to swear the affidavit while the respondent contends otherwise.
21. Order 19 Rule 3 (1) of the Civil Procedure Rules, 2010 provides with respect to matters that may be deposed to in an affidavit to be used in court proceedings that:
“Affidavits shall be confined to such facts as the deponent is able of his own knowledge to prove: Provided that in interlocutory proceedings, or by leave of the court, an affidavit may contain statements of information and belief showing the sources and grounds thereof.”
22. Rule 9 of the Advocates (Practice) Rules provides with respect to when an advocate may swear an affidavit for use in court proceedings in which the advocate appears for a party that:-
“No advocate may appear as such before any court or tribunal in any matter in which he has reason to believe that he may be required as a witness to give evidence, whether verbally or by declaration of Affidavit, and if, while appearing in any matter, it becomes apparent that he will be required as a witness to give evidence whether verbally or by declaration on affidavit, he shall not continue to appear.
Provided that this rule does not prevent an advocate from giving evidence whether verbally or by declaration or affidavit on formal or non-contentious matter of fact in any matter in which he acts or appears.”
23. In Magnolia Pvt Limited v Synermed Pharmaceuticals (K) Ltd [2018] KEHC 1866 (KLR) the High Court while considering the authority of advocates to swear affidavits on their clients’ behalf observed that:
“Whereas there is nothing barring an advocate from swearing an affidavit in appropriate cases, where the matters deponed to are agreed or on purely legal positions, advocates should refrain from the temptation of being the avenue through which disputed facts are proclaimed. The rationale for the said principle is to insulate the advocate, an officer of the court, from the vagaries of litigation which, on occasions may be very unpleasant. By swearing an affidavit on such issues an advocate subjects himself to the process of cross-examination thus removing him from his role of legal counsel to that of a witness, a scenario which should be avoided like plague. In my view, however innocent an averment may be, counsel should desist from the temptation to be the pipe stem through which such an averment is transmitted.”
24. In the present case, the advocate has sworn to the fact that 1st respondent has been dissolved. He has provided various documents which he wishes this court to rely upon to determine that indeed what he states is correct. The documents he relies upon are from outside Kenya and he has not disclosed how he obtained them. The documents are not even authenticated as required by law. The documents sought to be relied upon are said to be court orders. Section 82(f) of the Law of Evidence Act (Cap. 80) Laws of Kenya provides that:
Without prejudice to any other mode of proof, prima facie evidence of the following public documents may be given in the manner hereinafter shown, that is to say—
(f) proclamations, treaties and other acts of State of any foreign country or of any part of the Commonwealth, and judgments, decrees, orders and other judicial proceedings of any court of justice in such country or part, and all affidavits, pleadings and other legal documents filed or deposited in any such court, by the procedure required by section 7 of the Evidence Act, 1851, of the United Kingdom.
25. Under section 7 of the Evidence Act, 1851, of the UK, for the document to authentic, the judgments, decrees, orders, and other judicial proceedings, the copy must be sealed or, if the court has no seal, signed by a judge, with a statement confirming the court's lack of a seal. None of the documents annexed to the supporting affidavit herein in the manner of orders of the Tribunal is under seal or is there a statement confirming the court’s lack of a seal. They are therefore not admissible to prove what they purport to say, that the 2nd defendant/applicant was dissolved.
26. The next issue is whether the alleged dissolution of the 1st defendant, if at all, would extinguish the plaintiff’s cause of action against it. Under the Companies Act (Cap. 486), sections 912 and 917, a creditor who feels aggrieved by the dissolution of a company can petition the Registrar of Companies for the restoration of the dissolved company onto the register. It has not been shown that the limitation period for such restoration in India has elapsed. The said sections provide as follows:
912. (1) An application may be made to the Registrar to restore to the Register a company that has been struck off the Register under section 894 or 897.
(2) An application under this section may—
(a) be made whether or not the company has in consequence been dissolved;
(b) be made only by a former director or former member of the company; and
(c) not be made after the expiry of six years from the date on which the company was dissolved.
917 (4) In any other case an application to the Court for restoration of a company to the Register may not be made after the expiry of six years from the date of the dissolution of the company, but this subsection is subject to subsection (5).
(5) If—
(a) the company has been struck off the Register under section 894 or 895;
(b) an application to the Registrar has been made under section 912 before the deadline for making such an application; and
(c) the Registrar has refused the application, an application to the Court under this section may be made within twenty-eight days after notice of the Registrar's decision is issued. This subsection has effect even if the period of six years referred to in subsection (4) has expired. there is no dispute that the 1st defendant company existed at the time the cause of action accrued.
27. Section 974 of the Companies Act requires that any foreign company doing business in Kenya must be registered. Therefore the 1st defendant herein must have been registered in Kenya either as a branch of subsidiary if the current company in Kenya for it to have entered into the contract with the plaintiff. Registration in either of these forms has its legal ramifications on the operations of the company and even its dissolution. For instance, a subsidiary has a distinct legal identity separate from the foreign company which would in such a case be the parent company. All these are triable issues that can only be canvassed fully at the hearing of the suit and not on affidavit evidence of the advocate on an interim application.
28. The other common issue raised by the applicant and submitted upon by both parties is whether or not the arbitration clause in the contract between the parties precludes this court from hearing the case filed herein. Section 6 of the Arbitration Act as follows:
(1) A court before which proceedings are brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than the time when that party enters appearance or otherwise acknowledges the claim against which the stay of proceedings is sought, stay the proceedings and refer the parties to arbitration unless it finds—
(a) that the arbitration agreement is null and void, inoperative or incapable of being performed; or
(b) that there is not in fact any dispute between the parties with regard to the matters agreed to be referred to arbitration.
(2) Proceedings before the court shall not be continued after an application under subsection (1) has been made and the matter remains undetermined.
(3) If the court declines to stay legal proceedings, any provision of the arbitration agreement to the effect that an award is a condition precedent to the bringing of legal proceedings in respect of any matter is of no effect in relation to those proceedings.
29. Considering this section of the Act, the High Court in the case of Dioces of Marsabit Registered Trustees v Technotrade Pavilion Ltd [2014] KEHC 4810 (KLR) cited by learned counsel for the plaintiff explained it thus:
"… the requirement in section 6(1) of the Arbitration Act is not a mere technicality which can be diminished by Article 159(2) (d) of the Constitution as claimed by the Applicant. It is a substantial legal matter which aims at promoting and attaining efficacious resolution of disputes through arbitration by providing for stay of proceedings but only where a party desirous of taking advantage of an arbitration clause in a contract has applied promptly for stay of proceedings and made a request to have the matter referred to arbitration. Needless to state that arbitration falls in the alternative forms of dispute resolutions which under Article 159(2) (c) of the Constitution should be promoted by courts except in so far as they are not inconsistent with any written law. By these provisions of the Constitution and the fact that the process of arbitration is largely consensual, a party who fails to adhere to the law such as section 6(1) of the Arbitration Act forfeits his right to apply for and have the proceedings stayed or matter referred to arbitration. And for all purposes, such is an indolent party who should not be allowed to circumvent the desire and right of the other party from availing itself of the judicial process of the court. With that understanding, a delay of fourteen (4) days becomes unreasonable in the eyes of the law and the circumstances of the case. On that ground alone, the application herein having been made fourteen days after the filing of appearance, should fail.” (underlining by this court for emphasis).
30. In the present case, the 1st defendant after entering appearance not only filed defence but went ahead to bring in a third party to the proceedings, meaning that he had acquiesced to the jurisdiction of this court to at least hear and determine the application. As held in the above case, it cannot waive the card of jurisdiction at this moment after more than five years to say that the plaintiff was wrong to file this suit in this court. In any case, that ground is misplaced because, the suit is not for determination of the dispute arising out of the contract between the parties. The suit is for interim relief and that is permitted under section 7 of the Arbitration Act which provides that:
(1) It is not incompatible with an arbitration agreement for a party to request from the High Court, before or during arbitral proceedings, an interim measure of protection and for the High Court to grant that measure.
(2) Where a party applies to the High Court for an injunction or other interim order and the arbitral tribunal has already ruled on any matter relevant to the application, the High Court shall treat the ruling or any finding of fact made in the course of the ruling as conclusive for the purposes of the application.
31. The plaintiff’s first prayer herein was for injunction while the second prayer was that the matter be referred to arbitration. The plaintiff needed not make the second prayer and so the same is surplusage. But the first prayer was well in line with the section 7 of the Act above.
32. For the foregoing reasons, I find that this application is without merit and the same is dismissed with costs to the respondent/plaintiff.
Orders accordingly.
Written, dated, signed and delivered this 17th day of July 2025.
ANDAYI W. F.
JUDGE
In the presence of:
Nzei for the defendants/applicants.
Nyaroku for the Respondent.
Ummu: Court assistant.