' Background
1. The Applicant, Shri Krishana Overseas Limited, moved this Court by a Notice of Motion dated 25th April 2023 seeking, inter alia, that summons do issue to Mr. Mungai Karanja, the Director and shareholder of the Respondent, Duro Farms Limited, to attend Court for oral examination on oath as to the affairs, assets, and means of the Respondent and its ability to satisfy the decretal sum in Milimani SCCCOMM Case No. 974 of 2021 – Shri Krishana Overseas Limited v Duro Farms Limited.
2. The Applicant also prayed that the said Director be compelled to produce the Respondent’s books of accounts, audited financial statements, VAT returns, bank statements, title deeds, and other statutory or financial documents for the last five (5) years; and in default of attendance or compliance, that the Court lift the corporate veil of the Respondent and hold the said Director personally liable for the decretal sum.
3. The record shows that the Respondent was duly served with the application and hearing notice but did not file any response or attend Court. The Motion, therefore, proceeded unopposed.
4. The application arises from a judgment in Milimani SCCCOMM Case No. 974 of 2021, where the Applicant obtained a decree for Kshs. 905,923.00 plus costs and interest. Despite service of the decree, the Respondent has failed to settle the amount and has, according to the Applicant, closed its operations and concealed its assets to frustrate execution. The Applicant’s attempts through auctioneers have been fruitless.
5. Pursuant to the directions of this Court, the application was canvassed by way of written submissions. The Applicant through the law firm of Bryan Khaemba, Kamau Kamau & Company Advocates filed its submissions dated 20th June 2023. No submissions were filed by the Respondent.
Analysis and Determination
6. Having carefully considered the application, the supporting affidavit, and the written submissions filed by the Applicant, I find the following issues requiring determination by this Court:
i. Whether this Court should issue summons to the Respondent’s Director to attend Court for oral examination and production of documents under Order 22 Rule 35 of the Civil Procedure Rules; and
ii. Whether the circumstances justify lifting the corporate veil of the Respondent and holding its director personally liable for the decretal sum.
Whether the Director Should be Examined Under Order 22 Rule 35
7. Order 22 Rule 35 of the Civil Procedure Rules provides that:
“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. where the judgment-debtor is a corporation, any officer thereof; 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, and for the production of any books or documents.”
8. The rule therefore gives a decree-holder a right to invoke the Court’s process to ascertain the means of a judgment-debtor, including a company’s officer. The only precondition is the existence of a valid and unsatisfied decree.
9. In the present case, the Applicant has demonstrated that there is a decree in its favour which remains wholly unsatisfied. The Respondent’s refusal to pay or to avail attachable assets entitles the Applicant to seek the attendance of the Director for examination.
10. In John Ogada & Compnay Advocates v Copitex Knitwear Mills Ltd [2025] KEHC 11555 (KLR), the Court (PM Mulwa J) held that where a decree remains unsatisfied, the Court should allow oral examination of company officers to establish the company’s financial status. The learned Judge stated that:
“8. Further, the Judgment Debtor has failed to satisfy a valid decree, and its means remain undisclosed. I am therefore satisfied that a proper basis has been laid for the issuance of summons under Order 22 Rule 35. Accordingly, the application succeeds to this extent, and I hereby direct that Mr. Bhagubhai Bhailal Ranchod, a Director of the Judgment Debtor, do attend Court for oral examination on the company’s means and financial status.”
11. Likewise, in Postbank Credit Limited (in Liquidation) v Nyamangu Holdings Limited [2015] eKLR, the Court affirmed that directors may be summoned to produce financial records relevant to the company’s ability to settle debts.
12. The uncontroverted affidavit evidence in this case shows that the Respondent has closed its offices, concealed its assets, and frustrated execution. These facts justify the invocation of Order 22 Rule 35 to compel the attendance of its director. consequently, I am satisfied that the Applicant has met the threshold for the orders sought at this stage.
Whether the Corporate Veil Should be Lifted
13. The next question is whether this Court should, upon non-compliance or established evasion, pierce the corporate veil of the Respondent and hold its Director personally liable.
14. The general principle is well settled in Salomon v Salomon & Co. Ltd [1897] AC 22 (HL) that a company is a separate legal person distinct from its shareholders and directors. However, that separate personality is not absolute. Courts will pierce the veil where the company form is used as a cloak for fraud, to evade existing obligations, or to defeat justice.
15. In Arun C. Sharma v Ashana Raikundalia & 5 Others [2014] eKLR, the Court (Gikonyo J) while referring to Paragraph 90 of the Halsbury’s Laws of England 4th Edition observed that the instances when corporate veil will be lifted are not limited to fraud or improper conduct of the directors but also include all cases where the character of the company, or the nature of the persons who control it. The Court stated that:
“Notwithstanding the effect of a company’s incorporation, in some cases the court will ‘pierce the corporate veil’ in order to enable it to do justice by treating a particular company, for the purpose of the litigation before it, as identical with the person or persons who control that company. This will be done not only where there is fraud or improper conduct but in all cases where the character of the company, or the nature of the persons who control it, is a relevant feature. In such case the court will go behind the mere status of the company as a separate legal entity distinct from its shareholders, and will consider who are the persons, as shareholders or even as agents, directing and controlling the activities of the company. However, where this is not the position, even though an individual’s connection with a company may cause a transaction with that company to be subjected to strict scrutiny, the corporate veil will not be pierced.”
14. Similarly, in Justine Nyambu v Jaspa Logistics [2017] eKLR, Makau J. held that a company’s deliberate closure or relocation to evade creditors amounts to dishonest conduct warranting the lifting of the veil. The Court stated that:
“11. In this case there is no mention of fraud on the part of the respondent and her directors or shareholders. There is however unrebutted allegations that the respondent has deliberately given a cheque which was dishonoured by their bank and that the company has relocated her offices to unknown place to evade creditors. In my view that is an act of dishonesty and also breach of the law for the respondent to deliberately issue a cheque which she knew it will bounce. It is also an act of dishonest to close office or change location by the respondent in order to evade creditors after a decree is passed against her.
12. The respondent being an artificial person, is committing such acts of dishonesty through her officers or shareholders who are physically around but shielding themselves from their legal obligation to pay debts using corporate veil. Are there assets or debts owing from third parties behind the veil which can satisfy the decree of the court? The claimant is curious to know and that is why he wants to examine the said officers and to have them held liable personally.”
16. The Applicant’s evidence shows that Mr. Mungai Karanja is both a shareholder and controlling mind of the Respondent, and that he operates through related entities, including Duro Goods Limited, to conceal assets. The Respondent’s failure to pay a lawful debt, coupled with its concealment of assets and non-attendance in these proceedings, points to an abuse of the corporate form.
17. The Court in John Ogada & Compnay Advocates v Copitex Knitwear Mills Ltd (supra) lifted the corporate veil where company directors failed to appear for examination and to produce relevant records, finding such conduct to be evidence of dishonesty.
18. Guided by those authorities, I find that the Respondent’s conduct—non-compliance with the decree, closure of its offices, and concealment of assets—demonstrates bad faith and misuse of the corporate structure. This is a proper case for the Court to exercise its equitable power to pierce the corporate veil if the Director fails to comply with the Court’s summons.
19. Accordingly, I am persuaded that the application dated 25th April 2023 is merited. I therefore allow the same and issue the following orders: -
i. Summons shall issue to Mr. Mungai Karanja, Director of the Respondent, Duro Farms Limited, to personally attend Court on a date to be fixed by the Deputy Registrar for oral examination on oath regarding the business, affairs, and property of the Respondent, and its means and ability to satisfy the decree in Milimani SCCCOMM Case No. 974 of 2021.
ii. The said Director shall at that examination produce the Respondent’s books of account, audited financial statements, annual returns, VAT returns, bank statements, cheque books, title deeds, bank guarantees, and any other financial documents for the last five (5) years.
iii. In default of attendance or production, the Court shall be at liberty to lift the corporate veil of the Respondent and hold Mr. Mungai Karanja personally liable for satisfaction of the decretal sum.
iv. The costs of this application shall be borne by the Respondent.
20. It is so ordered.
SIGNED, DATED, and DELIVERED IN VIRTUAL COURT THIS
27TH NOVEMBER 2025
ADO MOSES
JUDGE
In the presence of: -
C/A – Moses
Were h/b for Khaemba………...for the Applicant
N/A..………….…..... for the Respondent
'
1. The Applicant, Shri Krishana Overseas Limited, moved this Court by a Notice of Motion dated 25th April 2023 seeking, inter alia, that summons do issue to Mr. Mungai Karanja, the Director and shareholder of the Respondent, Duro Farms Limited, to attend Court for oral examination on oath as to the affairs, assets, and means of the Respondent and its ability to satisfy the decretal sum in Milimani SCCCOMM Case No. 974 of 2021 – Shri Krishana Overseas Limited v Duro Farms Limited.
2. The Applicant also prayed that the said Director be compelled to produce the Respondent’s books of accounts, audited financial statements, VAT returns, bank statements, title deeds, and other statutory or financial documents for the last five (5) years; and in default of attendance or compliance, that the Court lift the corporate veil of the Respondent and hold the said Director personally liable for the decretal sum.
3. The record shows that the Respondent was duly served with the application and hearing notice but did not file any response or attend Court. The Motion, therefore, proceeded unopposed.
4. The application arises from a judgment in Milimani SCCCOMM Case No. 974 of 2021, where the Applicant obtained a decree for Kshs. 905,923.00 plus costs and interest. Despite service of the decree, the Respondent has failed to settle the amount and has, according to the Applicant, closed its operations and concealed its assets to frustrate execution. The Applicant’s attempts through auctioneers have been fruitless.
5. Pursuant to the directions of this Court, the application was canvassed by way of written submissions. The Applicant through the law firm of Bryan Khaemba, Kamau Kamau & Company Advocates filed its submissions dated 20th June 2023. No submissions were filed by the Respondent.
Analysis and Determination
6. Having carefully considered the application, the supporting affidavit, and the written submissions filed by the Applicant, I find the following issues requiring determination by this Court:
i. Whether this Court should issue summons to the Respondent’s Director to attend Court for oral examination and production of documents under Order 22 Rule 35 of the Civil Procedure Rules; and
ii. Whether the circumstances justify lifting the corporate veil of the Respondent and holding its director personally liable for the decretal sum.
Whether the Director Should be Examined Under Order 22 Rule 35
7. Order 22 Rule 35 of the Civil Procedure Rules provides that:
“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. where the judgment-debtor is a corporation, any officer thereof; 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, and for the production of any books or documents.”
8. The rule therefore gives a decree-holder a right to invoke the Court’s process to ascertain the means of a judgment-debtor, including a company’s officer. The only precondition is the existence of a valid and unsatisfied decree.
9. In the present case, the Applicant has demonstrated that there is a decree in its favour which remains wholly unsatisfied. The Respondent’s refusal to pay or to avail attachable assets entitles the Applicant to seek the attendance of the Director for examination.
10. In John Ogada & Compnay Advocates v Copitex Knitwear Mills Ltd [2025] KEHC 11555 (KLR), the Court (PM Mulwa J) held that where a decree remains unsatisfied, the Court should allow oral examination of company officers to establish the company’s financial status. The learned Judge stated that:
“8. Further, the Judgment Debtor has failed to satisfy a valid decree, and its means remain undisclosed. I am therefore satisfied that a proper basis has been laid for the issuance of summons under Order 22 Rule 35. Accordingly, the application succeeds to this extent, and I hereby direct that Mr. Bhagubhai Bhailal Ranchod, a Director of the Judgment Debtor, do attend Court for oral examination on the company’s means and financial status.”
11. Likewise, in Postbank Credit Limited (in Liquidation) v Nyamangu Holdings Limited [2015] eKLR, the Court affirmed that directors may be summoned to produce financial records relevant to the company’s ability to settle debts.
12. The uncontroverted affidavit evidence in this case shows that the Respondent has closed its offices, concealed its assets, and frustrated execution. These facts justify the invocation of Order 22 Rule 35 to compel the attendance of its director. consequently, I am satisfied that the Applicant has met the threshold for the orders sought at this stage.
Whether the Corporate Veil Should be Lifted
13. The next question is whether this Court should, upon non-compliance or established evasion, pierce the corporate veil of the Respondent and hold its Director personally liable.
14. The general principle is well settled in Salomon v Salomon & Co. Ltd [1897] AC 22 (HL) that a company is a separate legal person distinct from its shareholders and directors. However, that separate personality is not absolute. Courts will pierce the veil where the company form is used as a cloak for fraud, to evade existing obligations, or to defeat justice.
15. In Arun C. Sharma v Ashana Raikundalia & 5 Others [2014] eKLR, the Court (Gikonyo J) while referring to Paragraph 90 of the Halsbury’s Laws of England 4th Edition observed that the instances when corporate veil will be lifted are not limited to fraud or improper conduct of the directors but also include all cases where the character of the company, or the nature of the persons who control it. The Court stated that:
“Notwithstanding the effect of a company’s incorporation, in some cases the court will ‘pierce the corporate veil’ in order to enable it to do justice by treating a particular company, for the purpose of the litigation before it, as identical with the person or persons who control that company. This will be done not only where there is fraud or improper conduct but in all cases where the character of the company, or the nature of the persons who control it, is a relevant feature. In such case the court will go behind the mere status of the company as a separate legal entity distinct from its shareholders, and will consider who are the persons, as shareholders or even as agents, directing and controlling the activities of the company. However, where this is not the position, even though an individual’s connection with a company may cause a transaction with that company to be subjected to strict scrutiny, the corporate veil will not be pierced.”
14. Similarly, in Justine Nyambu v Jaspa Logistics [2017] eKLR, Makau J. held that a company’s deliberate closure or relocation to evade creditors amounts to dishonest conduct warranting the lifting of the veil. The Court stated that:
“11. In this case there is no mention of fraud on the part of the respondent and her directors or shareholders. There is however unrebutted allegations that the respondent has deliberately given a cheque which was dishonoured by their bank and that the company has relocated her offices to unknown place to evade creditors. In my view that is an act of dishonesty and also breach of the law for the respondent to deliberately issue a cheque which she knew it will bounce. It is also an act of dishonest to close office or change location by the respondent in order to evade creditors after a decree is passed against her.
12. The respondent being an artificial person, is committing such acts of dishonesty through her officers or shareholders who are physically around but shielding themselves from their legal obligation to pay debts using corporate veil. Are there assets or debts owing from third parties behind the veil which can satisfy the decree of the court? The claimant is curious to know and that is why he wants to examine the said officers and to have them held liable personally.”
16. The Applicant’s evidence shows that Mr. Mungai Karanja is both a shareholder and controlling mind of the Respondent, and that he operates through related entities, including Duro Goods Limited, to conceal assets. The Respondent’s failure to pay a lawful debt, coupled with its concealment of assets and non-attendance in these proceedings, points to an abuse of the corporate form.
17. The Court in John Ogada & Compnay Advocates v Copitex Knitwear Mills Ltd (supra) lifted the corporate veil where company directors failed to appear for examination and to produce relevant records, finding such conduct to be evidence of dishonesty.
18. Guided by those authorities, I find that the Respondent’s conduct—non-compliance with the decree, closure of its offices, and concealment of assets—demonstrates bad faith and misuse of the corporate structure. This is a proper case for the Court to exercise its equitable power to pierce the corporate veil if the Director fails to comply with the Court’s summons.
19. Accordingly, I am persuaded that the application dated 25th April 2023 is merited. I therefore allow the same and issue the following orders: -
i. Summons shall issue to Mr. Mungai Karanja, Director of the Respondent, Duro Farms Limited, to personally attend Court on a date to be fixed by the Deputy Registrar for oral examination on oath regarding the business, affairs, and property of the Respondent, and its means and ability to satisfy the decree in Milimani SCCCOMM Case No. 974 of 2021.
ii. The said Director shall at that examination produce the Respondent’s books of account, audited financial statements, annual returns, VAT returns, bank statements, cheque books, title deeds, bank guarantees, and any other financial documents for the last five (5) years.
iii. In default of attendance or production, the Court shall be at liberty to lift the corporate veil of the Respondent and hold Mr. Mungai Karanja personally liable for satisfaction of the decretal sum.
iv. The costs of this application shall be borne by the Respondent.
20. It is so ordered.
SIGNED, DATED, and DELIVERED IN VIRTUAL COURT THIS
27TH NOVEMBER 2025
ADO MOSES
JUDGE
In the presence of: -
C/A – Moses
Were h/b for Khaemba………...for the Applicant
N/A..………….…..... for the Respondent
'