' 1. Before this Court is the Decree Holder’s Notice of Motion dated 16th January 2025 brought pursuant to the provisions of Order 22 Rule 35 of the Civil Procedure Rules, Sections 1A, 1B, 3A of the Civil Procedure Act, and Article 159(2)(d) of the Constitution. The Decree Holder seeks the following substantive reliefs—
i. That Notice to Show Cause and for summons to issue compelling the Directors of the Respondent/Judgment Debtor, Prabhaki Developers Limited, namely, Atul Bhagwanji Shah and Pradipkumar Bhagwanji Shah to personally attend Court on such date as may be ordered or allocated and be examined on oath as to whether the judgment debtor has assets or means to satisfy the decree herein;
ii. That summons issue compelling the Directors of the Respondent/Judgment Debtor, Prabhaki Developers Limited, namely, Atul Bhagwanji Shah and Pradipkumar Bhagwanji Shah, to personally attend Court on such date as may be ordered or allocated and be examined on oath and produce such all and any books of accounts and documents relating to operations of the Judgment Debtor;
iii. That the Honourable Court be pleased to pierce the Corporate Veil of the Respondent/Judgment Debtor herein, Prabhaki Developers Limited, and the said directors, namely, Atul Bhagwanji Shah and Pradipkumar Bhagwanji Shah be and hereby jointly and severally held personally liable to pay the Applicant/Decree holder the decretal sum of Kshs. 118,735,724.28 plus interest at 18% p.a from 10th March, 2021 to date and costs of Kshs. 27,470,824 in terms of the Decree of this Court issued on 20th January, 2022;
iv. That warrants of attachment and sale of assets of the Directors and Shareholders of the Respondent/Judgment Debtor namely, Atul Bhagwanji Shah and Pradipkumar Bhagwanji Shah, do issue in execution of the Decree herein; and
v. That in the alternative to prayer (i) above, a Notice to Show Cause be and hereby issued upon the said Directors of the Respondent/Judgment Debtor, namely, Atul Bhagwanji Shah and Pradipkumar Bhagwanji Shah, to show cause why they should not be committed to civil jail for failure to pay or satisfy the decretal sum in this suit.
vi. That the costs of this Application be provided for.
2. The Application is based on the grounds on its face and is supported by the affidavit of Karsan Harji Ragwani, who deponed that an arbitral award made in favour of the decree holder on 24th February 2021, and adopted as a decree of the court on 20th January 2022 for the sum of Kshs. 118.735,724.68. However, despite demand and attempts to execute, the Judgement Debtor failed to settle the decretal sums which have since gained interest to a tune of Kshs. 64,117,291.11 as at 10th March, 2024, and continues to accrue further.
3. The decree holder stated that property known as L.R. No. 7879/26, registered in the judgement debtor’s name, had been attached but later released following successful Objector proceedings filed by Mahitaji Enterprises Limited, Napro Industries Limited and Prabhaki Investments Limited. It was contended that the said companies were owned and controlled by the judgement debtor’s directors, and were used as alter egos to shield the judgment debtor’s assets from execution. The Decree Holder averred that Company searches revealed that the same directors and shareholders were common among the judgment debtors and the said entities.
4. The decree holder asserted that the directors of the judgment debtor had transferred or disposed of the judgment debtor’s assets during the arbitral proceedings in order to defeat execution. It therefore urged the court to pierce the corporate veil, hold the directors personally liable, and grant the orders sought to enable it to realize the fruits of its decree.
5. In opposition to the application, the judgment debtor filed a preliminary objection and grounds of opposition dated 21st January 2025. The judgment debtor further filed a replying affidavit sworn by its director on 27th February 2025.
6. In the Preliminary Objection, the judgment debtor asserted that this court lacks the jurisdiction to entertain the decree holder’s application which is res judicata, as Justice Prof. (Dr.) Sifuna Nixon issued directions/ruling on the 3rd October 2024 on a similar application dated the 30th April 2024 filed by the decree holder herein.
7. In its ground of opposition, the judgement debtor contended that the court, Hon. Prof. (Dr.) Nixon Sifuna, had already pronounced itself on the matter in a ruling delivered on 3rd October 2024. Consequently, the court had become functus officio and lacked jurisdiction to hear or entertain any further application touching on the same issues.
8. It was the Respondent’s position that the present application was misconceived, bad in law, and devoid of any legal foundation, amounting to a misuse of judicial time and resources. The Respondent asserted that the application was a deliberate attempt to circumvent the said ruling, brought in bad faith and with unclean hands. It was therefore described as vexatious, frivolous, and an abuse of the court process, warranting dismissal with costs.
9. In the replying affidavit sworn on 27th February 2025, the managing director of the Respondent asserted that the application was substantially similar to one dated 20th May 24, which had already been determined by Justice Prof. (Dr.) Sifuna Nixon on 3rd October 2024, rendering the current one res judicata under section 7 of the Civil Procedure Act.
10. The judgment debtor did not oppose several averments in the supporting affidavit but clarified that Mahitaji Enterprises, Napro Industries and Prabhaki Investments, were separate legal entities that lawfully purchased property from the Respondent through properly registered and stamped transactions. He denied that the companies were related beyond his directorship, stating that each was incorporated at different times and maintained distinct legal and operational identities.
11. He further explained that the arbitration arose from a contractual relationship beginning in April 2016, and that the leases between the Respondent and the three companies were executed in September 2018—before the dispute with the Applicant arose in October 2018. He maintained that the sales and leases were legitimate and not in violation of any law.
12. Mr. Shah argued that the application was procedurally improper since it sought injunctive relief and orders to lift the corporate veil through a miscellaneous application rather than a substantive suit as required by Order 40 of the Civil Procedure Rules. He emphasized the principle of corporate separateness under section 20 of the Companies Act, 2015, and cited various international instruments, including the UNCITRAL Model Law, WTO and ICC guidelines, OECD principles, and treaties such as AfCFTA, COMESA and the EAC Treaty—which all uphold the doctrine of separate legal personality.
13. He contended that lifting the corporate veil could only be done through a substantive suit and upon proof of fraud or improper conduct as provided under sections 1002, 426 and 428 of the Companies Act. He added that the Applicant had not joined the three companies as parties contrary to Order 1 Rule 10(2) of the Civil Procedure Rules and had provided no evidence to justify holding them liable for the Respondent’s debts.
14. The judgment debtor also invoked the doctrine of privity of contract under section 53 of the Law of Contract Act and international conventions arguing that the contracts in question bound only the parties thereto. He detailed that each of the three companies was separately incorporated, maintained distinct tax and bank records, employed separate staff, and individually contracted and paid the Applicant for construction services.
15. He maintained that the Applicant’s attempt to enforce a decree against non-parties contravened Order 21 Rule 1 of the Civil Procedure Rules and violated Article 50 of the Constitution, Article 14 of the ICCPR, and Article 7 of the African Charter, all of which guarantee the right to a fair hearing. He concluded that the application amounted to an abuse of the court process and urged that it be dismissed with costs.
16. The Decree Holder’s Application is also opposed by the Objectors herein vide a replying affidavit sworn on 28th February 2025 by Pradipkumar Bhagwanji Shah, a director of the 1st, 2nd, and 3rd Objectors. He reiterated that the Applicant’s application dated 16th January 2025 was identical to an earlier one filed on 20th May 2024, which had been conclusively determined by the court on 3rd October 2024 by Justice Prof. (Dr.) Sifuna Nixon and was therefore barred by res judicata under section 7 of the Civil Procedure Act.
17. He denied that the three companies were interrelated beyond sharing his directorship, noting that each maintained distinct legal identities and stated that the parties’ contractual relationship began on 2nd April 2016, and lease agreements between Prabhaki Developers Ltd and the Objector companies were executed on 6th September 2018. According to the Objectors, the dispute arose following the Applicant’s demand of 11th October 2018, one month after the leases had been executed. He asserted that the leases were lawfully entered into, unchallenged, and consistent with legal provisions.
18. The Objectors maintained that the Applicant had not met the legal threshold for the orders sought and that execution against the Objectors’ properties was factually and legally untenable. He stated that LR No. 209/13279 was lawfully acquired and registered in favour of the Objectors, and that Prabhaki Developers Ltd had no ownership, control or interest in the said property. The Objectors were neither subsidiaries nor affiliates of the judgment debtor and operated independently with separate bank accounts, tax PINs, staff, business operations, and governance structures.
19. Mr. Shah added that Prabhaki Investments Ltd had no business relationship with the Applicant. He asserted that LR No. 7873 had been divided into three portions leased separately to Mahitaji, Napro and Prabhaki Developers, each contracting independently with the Applicant for construction works. Payments, certificates, and obligations were separately issued and discharged. He emphasized that the arbitration proceedings involved only the Applicant and Prabhaki Developers Ltd, not the Objectors, and that the present application was a deliberate attempt to distort the established contractual framework.
20. He stated that the court had previously issued orders on 14th April 2023 (Hon. Stephany Bett) and 3rd October 2024 (Justice Sifuna) protecting the Objectors’ properties from attachment. Despite this, the Applicant continued to pursue execution in contravention of those orders.
21. He deposed that execution would cause severe and irreparable harm to the Objectors by disrupting operations, causing financial loss, jeopardizing employment, breaching contracts, damaging business reputation, and exposing them to litigation.
22. The Application proceeded by way of written submissions. The Decree Holder filed their submissions dated 2nd April 2025 through the law form of Dr. Mutubwa Law Advocates. The Judgment debtor, through Swaka & Co. Advocates, filed their submissions dated 6th March 2025, whilst the Objector’s Submissions dated 21st May 2025 were filed by Amutallah Robert & Co. Advocates.
Analysis and determination
23. Having considered the pleadings and submissions filed by the parties, and the law, I find that the issues for determination are: -
i. Whether the Decree Holder’s application is properly before the Court
ii. Whether the Corporate Veil Should Be Pierced
iii. Whether the Directors Should Be Examined Under Order 22 Rule 35
Whether the Decree Holder’s application is properly before the Court
24. The Judgment Debtor’s primary objection is that this application has been filed as a miscellaneous cause instead of being made in the parent suit where the judgment and decree were issued.
25. The general principle is indeed that execution proceedings should be undertaken within the suit in which judgment was pronounced, as execution is a continuation of the original proceedings. (See Bwana Mohamed Bwana v Silvano Buko Bonaya & 2 Others [2015] eKLR).
26. However, in line with Article 159(2) (d) of the Constitution, which obliges a court of law to administer justice without undue regard to procedural technicalities, I am of the view that a more pragmatic approach ought to be adopted, especially in cases where a Decree Holder demonstrates a clear link to an existing decree, and where the new filing serves purely procedural convenience, provided the application does not prejudice the Judgment Debtor.
27. In the present case, the decree annexed to the Supporting Affidavit is traceable to the earlier suit, and there is no ambiguity as to the identity of the parties or the nature of the decree.
28. Accordingly, the Court declines to elevate form over substance and finds that the application is properly before it in line with Article 159(2)(d) of the Constitution
29. On the issue of res judicata, the judgment debtor and objectors stated that the issues raised in the application are res judicata, having been determined by Sifuna J in his ruling of 3rd October 2024.
30. The said ruling was produced as ‘KHRG 3’ in the decree holder’s supporting affidavit, sworn on 16th January 2025. Having read its contents, I can see that the court rejected the decree holder’s application to attach the assets of the objectors herein in order to satisfy the decree in this matter.
31. However, as rightly submitted by the Decree Holder, the learned Judge at paragraph 14 of the Ruling, stated that where the decree holder feels that a judgement debtor is suppressing information regarding its property with the intention of defeating a decree, it may apply for cross examination of the Judgement Debtor’s directors, which is one of the prayers sought in the instant application.
32. It is evident from the face of the Application and the nature of the orders sought that the issues raised in the two applications are substantially distinct. The Application dated 16th January 2025 introduces fresh issues that have not previously been adjudicated upon, specifically relating to the cross-examination of the Judgment Debtor’s directors, the lifting of the corporate veil, and the potential personal liability of the said directors for the company’s debts.
33. Notably, the Application does not, in any of its prayers, seek the attachment of assets belonging to companies allegedly beneficially owned by the Judgment Debtor, which was the principal subject matter in the earlier Application dated 30th April 2024.
34. Accordingly, the issues raised in the Application dated 16th January 2025 are distinct and independent of those previously determined. The doctrine of res judicata is therefore inapplicable, and the Application ought to be heard and determined on its merits.
Whether the Corporate Veil Should Be Pierced
35. The Decree Holder contends that the directors of the Judgment Debtor should be held personally liable for the decretal amount on account of alleged diversion of assets to associated companies.
36. The doctrine of separate corporate personality was settled in Salomon v Salomon & Co. Ltd [1897] AC 22 (HL), where it was held that a company is a distinct legal person, separate and distinct from its members. This principle has been reaffirmed in numerous local decisions, including the case of Multichoice (Kenya) Ltd v Mainkam Ltd & Another [2013] eKLR, where Mabeya J stated that:
“I agree that directors are generally not personally liable on contracts purporting to bind their company. If the directors have authority to make the contract, then only the company is liable on it. To my mind, there is no doubt that ever since the famous case of Salomon V. Salomon & Co. (1897) A.C, 22 Courts have applied the principle of corporate personality strictly. But exceptions to the principle have also been made where it is too flagrantly opposed to justice or convenience. Other instances include when a fraudulent and improper design by scheming directors or shareholders is imputed. In such exceptional cases, the law either goes behind the corporate personality to the individual members or regards a subsidiary and its holding company as one entity.”
37. The veil of incorporation may be lifted in exceptional circumstances where it is demonstrated that the company is being used as a vehicle for fraud, to evade contractual or statutory obligations, or to perpetrate injustice. In MASEFIELD TRADING (K) LTD v RUSHMORE COMPANY LIMITED & another [2008] KEHC 798 (KLR), the Court, citing the decision of Ringera J in Ultimate Laboratories vs. Tasha Bioservice Limited, Nairobi HCCC No. 1287 of 2000 (unreported) stated that:-
“However, that fundamental principle of incorporation may be disregarded, lifted, or pierced in exceptional circumstances both under express statutory provisions (of which Section 323 of the Companies Act is but one example only) and under judicial interpretation or intervention. As regards the latter, English authorities establish the broad principle that the corporate veil will be lifted by the courts if, among other situations, corporate personality is being used as a mask for fraud or improper conduct (See the cases of GILFORD MOTOR CO. VS. HORNE [1933] Ch. 935 and JONES VS. HIPMAN [1962] 1W.L.R. 832).”
38. In the present case, the Decree Holder has not provided documentary or tangible evidence showing fraudulent intent, diversion of assets, or abuse of the corporate form. Mere allegations that the Judgment Debtor has not satisfied the decree, without more, do not justify the lifting of the corporate veil. This can only be determined where the results of the directors’ examination necessitate action.
39. Accordingly, the Court finds that the prayer for lifting or piercing the corporate veil has not been substantiated at this stage, and the same is hereby dismissed. For the avoidance of doubt, this dismissal does not bar the Decree Holder from seeking similar relief should the outcome of any director’s examination warrant such action.
Whether the Directors Should Be Examined Under Order 22 Rule 35
40. Order 22 Rule 35 of the Civil Procedure Rules stipulates as follows:-
“35. Where a decree is for the payment of money, the decree holder may apply to the court for an order that—
(a) the judgment-debtor;
(b) in the case of a corporation, any officer thereof; or
(c) any other person, be orally examined as to whether any or what debts are owing to the judgment-debtor, and whether the judgment-debtor has any and what property or means of satisfying the decree, and the court may make an order for the attendance and examination of such judgment-debtor or officer, or other person, and for the production of any books or documents.”
41. The purpose of this provision is to aid in the enforcement of decrees by enabling the Decree Holder to obtain information on the assets and means of a corporate judgment debtor.
42. In Masefield Trading (K) Ltd v Rushmore Company Limited & Another [2008] eKLR, it was held:-
“I think the above rule grants this court jurisdiction to summon an officer of a company to attend court so that he may be examined on the assets and means of the company to settle the sum decreed to be paid by the company. By examining such an officer, the court may or may not lift the veil of incorporation.”
43. The court in Jepkemoi v Zaburi Enterprises Company Ltd & 2 others (Miscellaneous Civil Application 43 of 2023) [2024] KEHC 2343 (KLR) held:
“22. It is therefore evident that in a case such as the instant one, the corporate veil will only be lifted where it is demonstrated that the actions of the directors or shareholders smacks of bad faith and that the corporate veil is being used as a mask to fraudulently shield such directors or shareholders from execution of the decree. The veil may therefore be pierced where it appears that the business of the company has for instance been carried on with intent to defraud creditors of any other person or for any fraudulent purpose. Only where justice of the case demands should the corporate veil be disregarded and lifted. 23.The proper procedure before a Court determines whether to lift the veil of incorporation is to first summon such directors to Court to be orally examined as to whether it has any and/or what property and/or means of satisfying the decree. The directors may in the process be also called upon to produce any books of accounts or documents, for purposes of scrutiny. It is during this process that the Court may then determine whether the directors are guilty of bad faith, or wilful acts meant to avoid settlement of the decree or even outright fraud. Should the existence of such circumstances be established, then the Court may go ahead to lift the corporate veil and hold the directors or shareholders personally liable to settle the decree.”
44. In the instant case, it is not in contention that an arbitral award was made in favour of the decree holder as against the judgment debtor on 24th February 2021. The award was adopted as an order of the court vide a decree issued on 20th January 2022. A certified copy of the decree was produced as ‘KHRG’ in the decree holder’s supporting affidavit.
45. The amounts awarded to the decree holder remain outstanding as the judgment debtor has not settled the same. consequently, the directors of the Judgment Debtor are, therefore, proper subjects for examination under Order 22 Rule 35. I find merit in this aspect of the application.
46. Accordingly, in exercise of the jurisdiction conferred upon this Court under Order 22 Rule 35 of the Civil Procedure Rules, I hereby summon Atul Bhagwanji Shah and Pradipkumar Bhagwanji Shah, the directors of the judgment debtor to attend court in order to be examined on the assets and means of the company to settle the sum under the decree. Additionally, I order the directors to produce the judgment debtor’s books of accounts for scrutiny.
47. The other prayer in the application, i.e., prayer 6,7&8, shall be considered after the said Atul Bhagwanji Shah and Pradipkumar Bhagwanji Shah, the directors of Judgment Debtor, have been orally examined by the court.
48. The directors will be examined by the decree holder in court, after which the court will determine whether the conditions for lifting of the corporate veil have been met.
49. The Costs of this application shall be in the cause.
50. It is so ordered.
SIGNED, DATED, and DELIVERED IN VIRTUAL COURT THIS
21ST OCTOBER 2025
ADO MOSES
JUDGE
In the presence of: -
C/A – Moses
Swaka…………..for theJD
N/A……………for the DH
N/A………….for the Objector
'
i. That Notice to Show Cause and for summons to issue compelling the Directors of the Respondent/Judgment Debtor, Prabhaki Developers Limited, namely, Atul Bhagwanji Shah and Pradipkumar Bhagwanji Shah to personally attend Court on such date as may be ordered or allocated and be examined on oath as to whether the judgment debtor has assets or means to satisfy the decree herein;
ii. That summons issue compelling the Directors of the Respondent/Judgment Debtor, Prabhaki Developers Limited, namely, Atul Bhagwanji Shah and Pradipkumar Bhagwanji Shah, to personally attend Court on such date as may be ordered or allocated and be examined on oath and produce such all and any books of accounts and documents relating to operations of the Judgment Debtor;
iii. That the Honourable Court be pleased to pierce the Corporate Veil of the Respondent/Judgment Debtor herein, Prabhaki Developers Limited, and the said directors, namely, Atul Bhagwanji Shah and Pradipkumar Bhagwanji Shah be and hereby jointly and severally held personally liable to pay the Applicant/Decree holder the decretal sum of Kshs. 118,735,724.28 plus interest at 18% p.a from 10th March, 2021 to date and costs of Kshs. 27,470,824 in terms of the Decree of this Court issued on 20th January, 2022;
iv. That warrants of attachment and sale of assets of the Directors and Shareholders of the Respondent/Judgment Debtor namely, Atul Bhagwanji Shah and Pradipkumar Bhagwanji Shah, do issue in execution of the Decree herein; and
v. That in the alternative to prayer (i) above, a Notice to Show Cause be and hereby issued upon the said Directors of the Respondent/Judgment Debtor, namely, Atul Bhagwanji Shah and Pradipkumar Bhagwanji Shah, to show cause why they should not be committed to civil jail for failure to pay or satisfy the decretal sum in this suit.
vi. That the costs of this Application be provided for.
2. The Application is based on the grounds on its face and is supported by the affidavit of Karsan Harji Ragwani, who deponed that an arbitral award made in favour of the decree holder on 24th February 2021, and adopted as a decree of the court on 20th January 2022 for the sum of Kshs. 118.735,724.68. However, despite demand and attempts to execute, the Judgement Debtor failed to settle the decretal sums which have since gained interest to a tune of Kshs. 64,117,291.11 as at 10th March, 2024, and continues to accrue further.
3. The decree holder stated that property known as L.R. No. 7879/26, registered in the judgement debtor’s name, had been attached but later released following successful Objector proceedings filed by Mahitaji Enterprises Limited, Napro Industries Limited and Prabhaki Investments Limited. It was contended that the said companies were owned and controlled by the judgement debtor’s directors, and were used as alter egos to shield the judgment debtor’s assets from execution. The Decree Holder averred that Company searches revealed that the same directors and shareholders were common among the judgment debtors and the said entities.
4. The decree holder asserted that the directors of the judgment debtor had transferred or disposed of the judgment debtor’s assets during the arbitral proceedings in order to defeat execution. It therefore urged the court to pierce the corporate veil, hold the directors personally liable, and grant the orders sought to enable it to realize the fruits of its decree.
5. In opposition to the application, the judgment debtor filed a preliminary objection and grounds of opposition dated 21st January 2025. The judgment debtor further filed a replying affidavit sworn by its director on 27th February 2025.
6. In the Preliminary Objection, the judgment debtor asserted that this court lacks the jurisdiction to entertain the decree holder’s application which is res judicata, as Justice Prof. (Dr.) Sifuna Nixon issued directions/ruling on the 3rd October 2024 on a similar application dated the 30th April 2024 filed by the decree holder herein.
7. In its ground of opposition, the judgement debtor contended that the court, Hon. Prof. (Dr.) Nixon Sifuna, had already pronounced itself on the matter in a ruling delivered on 3rd October 2024. Consequently, the court had become functus officio and lacked jurisdiction to hear or entertain any further application touching on the same issues.
8. It was the Respondent’s position that the present application was misconceived, bad in law, and devoid of any legal foundation, amounting to a misuse of judicial time and resources. The Respondent asserted that the application was a deliberate attempt to circumvent the said ruling, brought in bad faith and with unclean hands. It was therefore described as vexatious, frivolous, and an abuse of the court process, warranting dismissal with costs.
9. In the replying affidavit sworn on 27th February 2025, the managing director of the Respondent asserted that the application was substantially similar to one dated 20th May 24, which had already been determined by Justice Prof. (Dr.) Sifuna Nixon on 3rd October 2024, rendering the current one res judicata under section 7 of the Civil Procedure Act.
10. The judgment debtor did not oppose several averments in the supporting affidavit but clarified that Mahitaji Enterprises, Napro Industries and Prabhaki Investments, were separate legal entities that lawfully purchased property from the Respondent through properly registered and stamped transactions. He denied that the companies were related beyond his directorship, stating that each was incorporated at different times and maintained distinct legal and operational identities.
11. He further explained that the arbitration arose from a contractual relationship beginning in April 2016, and that the leases between the Respondent and the three companies were executed in September 2018—before the dispute with the Applicant arose in October 2018. He maintained that the sales and leases were legitimate and not in violation of any law.
12. Mr. Shah argued that the application was procedurally improper since it sought injunctive relief and orders to lift the corporate veil through a miscellaneous application rather than a substantive suit as required by Order 40 of the Civil Procedure Rules. He emphasized the principle of corporate separateness under section 20 of the Companies Act, 2015, and cited various international instruments, including the UNCITRAL Model Law, WTO and ICC guidelines, OECD principles, and treaties such as AfCFTA, COMESA and the EAC Treaty—which all uphold the doctrine of separate legal personality.
13. He contended that lifting the corporate veil could only be done through a substantive suit and upon proof of fraud or improper conduct as provided under sections 1002, 426 and 428 of the Companies Act. He added that the Applicant had not joined the three companies as parties contrary to Order 1 Rule 10(2) of the Civil Procedure Rules and had provided no evidence to justify holding them liable for the Respondent’s debts.
14. The judgment debtor also invoked the doctrine of privity of contract under section 53 of the Law of Contract Act and international conventions arguing that the contracts in question bound only the parties thereto. He detailed that each of the three companies was separately incorporated, maintained distinct tax and bank records, employed separate staff, and individually contracted and paid the Applicant for construction services.
15. He maintained that the Applicant’s attempt to enforce a decree against non-parties contravened Order 21 Rule 1 of the Civil Procedure Rules and violated Article 50 of the Constitution, Article 14 of the ICCPR, and Article 7 of the African Charter, all of which guarantee the right to a fair hearing. He concluded that the application amounted to an abuse of the court process and urged that it be dismissed with costs.
16. The Decree Holder’s Application is also opposed by the Objectors herein vide a replying affidavit sworn on 28th February 2025 by Pradipkumar Bhagwanji Shah, a director of the 1st, 2nd, and 3rd Objectors. He reiterated that the Applicant’s application dated 16th January 2025 was identical to an earlier one filed on 20th May 2024, which had been conclusively determined by the court on 3rd October 2024 by Justice Prof. (Dr.) Sifuna Nixon and was therefore barred by res judicata under section 7 of the Civil Procedure Act.
17. He denied that the three companies were interrelated beyond sharing his directorship, noting that each maintained distinct legal identities and stated that the parties’ contractual relationship began on 2nd April 2016, and lease agreements between Prabhaki Developers Ltd and the Objector companies were executed on 6th September 2018. According to the Objectors, the dispute arose following the Applicant’s demand of 11th October 2018, one month after the leases had been executed. He asserted that the leases were lawfully entered into, unchallenged, and consistent with legal provisions.
18. The Objectors maintained that the Applicant had not met the legal threshold for the orders sought and that execution against the Objectors’ properties was factually and legally untenable. He stated that LR No. 209/13279 was lawfully acquired and registered in favour of the Objectors, and that Prabhaki Developers Ltd had no ownership, control or interest in the said property. The Objectors were neither subsidiaries nor affiliates of the judgment debtor and operated independently with separate bank accounts, tax PINs, staff, business operations, and governance structures.
19. Mr. Shah added that Prabhaki Investments Ltd had no business relationship with the Applicant. He asserted that LR No. 7873 had been divided into three portions leased separately to Mahitaji, Napro and Prabhaki Developers, each contracting independently with the Applicant for construction works. Payments, certificates, and obligations were separately issued and discharged. He emphasized that the arbitration proceedings involved only the Applicant and Prabhaki Developers Ltd, not the Objectors, and that the present application was a deliberate attempt to distort the established contractual framework.
20. He stated that the court had previously issued orders on 14th April 2023 (Hon. Stephany Bett) and 3rd October 2024 (Justice Sifuna) protecting the Objectors’ properties from attachment. Despite this, the Applicant continued to pursue execution in contravention of those orders.
21. He deposed that execution would cause severe and irreparable harm to the Objectors by disrupting operations, causing financial loss, jeopardizing employment, breaching contracts, damaging business reputation, and exposing them to litigation.
22. The Application proceeded by way of written submissions. The Decree Holder filed their submissions dated 2nd April 2025 through the law form of Dr. Mutubwa Law Advocates. The Judgment debtor, through Swaka & Co. Advocates, filed their submissions dated 6th March 2025, whilst the Objector’s Submissions dated 21st May 2025 were filed by Amutallah Robert & Co. Advocates.
Analysis and determination
23. Having considered the pleadings and submissions filed by the parties, and the law, I find that the issues for determination are: -
i. Whether the Decree Holder’s application is properly before the Court
ii. Whether the Corporate Veil Should Be Pierced
iii. Whether the Directors Should Be Examined Under Order 22 Rule 35
Whether the Decree Holder’s application is properly before the Court
24. The Judgment Debtor’s primary objection is that this application has been filed as a miscellaneous cause instead of being made in the parent suit where the judgment and decree were issued.
25. The general principle is indeed that execution proceedings should be undertaken within the suit in which judgment was pronounced, as execution is a continuation of the original proceedings. (See Bwana Mohamed Bwana v Silvano Buko Bonaya & 2 Others [2015] eKLR).
26. However, in line with Article 159(2) (d) of the Constitution, which obliges a court of law to administer justice without undue regard to procedural technicalities, I am of the view that a more pragmatic approach ought to be adopted, especially in cases where a Decree Holder demonstrates a clear link to an existing decree, and where the new filing serves purely procedural convenience, provided the application does not prejudice the Judgment Debtor.
27. In the present case, the decree annexed to the Supporting Affidavit is traceable to the earlier suit, and there is no ambiguity as to the identity of the parties or the nature of the decree.
28. Accordingly, the Court declines to elevate form over substance and finds that the application is properly before it in line with Article 159(2)(d) of the Constitution
29. On the issue of res judicata, the judgment debtor and objectors stated that the issues raised in the application are res judicata, having been determined by Sifuna J in his ruling of 3rd October 2024.
30. The said ruling was produced as ‘KHRG 3’ in the decree holder’s supporting affidavit, sworn on 16th January 2025. Having read its contents, I can see that the court rejected the decree holder’s application to attach the assets of the objectors herein in order to satisfy the decree in this matter.
31. However, as rightly submitted by the Decree Holder, the learned Judge at paragraph 14 of the Ruling, stated that where the decree holder feels that a judgement debtor is suppressing information regarding its property with the intention of defeating a decree, it may apply for cross examination of the Judgement Debtor’s directors, which is one of the prayers sought in the instant application.
32. It is evident from the face of the Application and the nature of the orders sought that the issues raised in the two applications are substantially distinct. The Application dated 16th January 2025 introduces fresh issues that have not previously been adjudicated upon, specifically relating to the cross-examination of the Judgment Debtor’s directors, the lifting of the corporate veil, and the potential personal liability of the said directors for the company’s debts.
33. Notably, the Application does not, in any of its prayers, seek the attachment of assets belonging to companies allegedly beneficially owned by the Judgment Debtor, which was the principal subject matter in the earlier Application dated 30th April 2024.
34. Accordingly, the issues raised in the Application dated 16th January 2025 are distinct and independent of those previously determined. The doctrine of res judicata is therefore inapplicable, and the Application ought to be heard and determined on its merits.
Whether the Corporate Veil Should Be Pierced
35. The Decree Holder contends that the directors of the Judgment Debtor should be held personally liable for the decretal amount on account of alleged diversion of assets to associated companies.
36. The doctrine of separate corporate personality was settled in Salomon v Salomon & Co. Ltd [1897] AC 22 (HL), where it was held that a company is a distinct legal person, separate and distinct from its members. This principle has been reaffirmed in numerous local decisions, including the case of Multichoice (Kenya) Ltd v Mainkam Ltd & Another [2013] eKLR, where Mabeya J stated that:
“I agree that directors are generally not personally liable on contracts purporting to bind their company. If the directors have authority to make the contract, then only the company is liable on it. To my mind, there is no doubt that ever since the famous case of Salomon V. Salomon & Co. (1897) A.C, 22 Courts have applied the principle of corporate personality strictly. But exceptions to the principle have also been made where it is too flagrantly opposed to justice or convenience. Other instances include when a fraudulent and improper design by scheming directors or shareholders is imputed. In such exceptional cases, the law either goes behind the corporate personality to the individual members or regards a subsidiary and its holding company as one entity.”
37. The veil of incorporation may be lifted in exceptional circumstances where it is demonstrated that the company is being used as a vehicle for fraud, to evade contractual or statutory obligations, or to perpetrate injustice. In MASEFIELD TRADING (K) LTD v RUSHMORE COMPANY LIMITED & another [2008] KEHC 798 (KLR), the Court, citing the decision of Ringera J in Ultimate Laboratories vs. Tasha Bioservice Limited, Nairobi HCCC No. 1287 of 2000 (unreported) stated that:-
“However, that fundamental principle of incorporation may be disregarded, lifted, or pierced in exceptional circumstances both under express statutory provisions (of which Section 323 of the Companies Act is but one example only) and under judicial interpretation or intervention. As regards the latter, English authorities establish the broad principle that the corporate veil will be lifted by the courts if, among other situations, corporate personality is being used as a mask for fraud or improper conduct (See the cases of GILFORD MOTOR CO. VS. HORNE [1933] Ch. 935 and JONES VS. HIPMAN [1962] 1W.L.R. 832).”
38. In the present case, the Decree Holder has not provided documentary or tangible evidence showing fraudulent intent, diversion of assets, or abuse of the corporate form. Mere allegations that the Judgment Debtor has not satisfied the decree, without more, do not justify the lifting of the corporate veil. This can only be determined where the results of the directors’ examination necessitate action.
39. Accordingly, the Court finds that the prayer for lifting or piercing the corporate veil has not been substantiated at this stage, and the same is hereby dismissed. For the avoidance of doubt, this dismissal does not bar the Decree Holder from seeking similar relief should the outcome of any director’s examination warrant such action.
Whether the Directors Should Be Examined Under Order 22 Rule 35
40. Order 22 Rule 35 of the Civil Procedure Rules stipulates as follows:-
“35. Where a decree is for the payment of money, the decree holder may apply to the court for an order that—
(a) the judgment-debtor;
(b) in the case of a corporation, any officer thereof; or
(c) any other person, be orally examined as to whether any or what debts are owing to the judgment-debtor, and whether the judgment-debtor has any and what property or means of satisfying the decree, and the court may make an order for the attendance and examination of such judgment-debtor or officer, or other person, and for the production of any books or documents.”
41. The purpose of this provision is to aid in the enforcement of decrees by enabling the Decree Holder to obtain information on the assets and means of a corporate judgment debtor.
42. In Masefield Trading (K) Ltd v Rushmore Company Limited & Another [2008] eKLR, it was held:-
“I think the above rule grants this court jurisdiction to summon an officer of a company to attend court so that he may be examined on the assets and means of the company to settle the sum decreed to be paid by the company. By examining such an officer, the court may or may not lift the veil of incorporation.”
43. The court in Jepkemoi v Zaburi Enterprises Company Ltd & 2 others (Miscellaneous Civil Application 43 of 2023) [2024] KEHC 2343 (KLR) held:
“22. It is therefore evident that in a case such as the instant one, the corporate veil will only be lifted where it is demonstrated that the actions of the directors or shareholders smacks of bad faith and that the corporate veil is being used as a mask to fraudulently shield such directors or shareholders from execution of the decree. The veil may therefore be pierced where it appears that the business of the company has for instance been carried on with intent to defraud creditors of any other person or for any fraudulent purpose. Only where justice of the case demands should the corporate veil be disregarded and lifted. 23.The proper procedure before a Court determines whether to lift the veil of incorporation is to first summon such directors to Court to be orally examined as to whether it has any and/or what property and/or means of satisfying the decree. The directors may in the process be also called upon to produce any books of accounts or documents, for purposes of scrutiny. It is during this process that the Court may then determine whether the directors are guilty of bad faith, or wilful acts meant to avoid settlement of the decree or even outright fraud. Should the existence of such circumstances be established, then the Court may go ahead to lift the corporate veil and hold the directors or shareholders personally liable to settle the decree.”
44. In the instant case, it is not in contention that an arbitral award was made in favour of the decree holder as against the judgment debtor on 24th February 2021. The award was adopted as an order of the court vide a decree issued on 20th January 2022. A certified copy of the decree was produced as ‘KHRG’ in the decree holder’s supporting affidavit.
45. The amounts awarded to the decree holder remain outstanding as the judgment debtor has not settled the same. consequently, the directors of the Judgment Debtor are, therefore, proper subjects for examination under Order 22 Rule 35. I find merit in this aspect of the application.
46. Accordingly, in exercise of the jurisdiction conferred upon this Court under Order 22 Rule 35 of the Civil Procedure Rules, I hereby summon Atul Bhagwanji Shah and Pradipkumar Bhagwanji Shah, the directors of the judgment debtor to attend court in order to be examined on the assets and means of the company to settle the sum under the decree. Additionally, I order the directors to produce the judgment debtor’s books of accounts for scrutiny.
47. The other prayer in the application, i.e., prayer 6,7&8, shall be considered after the said Atul Bhagwanji Shah and Pradipkumar Bhagwanji Shah, the directors of Judgment Debtor, have been orally examined by the court.
48. The directors will be examined by the decree holder in court, after which the court will determine whether the conditions for lifting of the corporate veil have been met.
49. The Costs of this application shall be in the cause.
50. It is so ordered.
SIGNED, DATED, and DELIVERED IN VIRTUAL COURT THIS
21ST OCTOBER 2025
ADO MOSES
JUDGE
In the presence of: -
C/A – Moses
Swaka…………..for theJD
N/A……………for the DH
N/A………….for the Objector
'