Introduction and Background
1. Before the court is an application dated 30th July 2024. It seeks to stay and set aside the statutory demand and to stop the publication of the liquidation petition herein. The applicant argues that the said statutory demand is premature and that there is a disputed debt.
2. The applicant further contends that the statutory demand dated and filed on 26th April 2024 claiming an alleged sum of Kshs. 2,672,265/- was not received on email as it went to the applicant’s spam box. The applicant contends that as soon as they became aware of it, they filed the present application. The application is opposed.
Analysis and determination
3. I have carefully considered the application, responses and submissions filed by the parties. Regulation 15 of the Insolvency Act provides for the form, timelines and procedure in a statutory demand. It states as follows;
(1) For the purposes of section 17 of the Act, the procedure for complying with or setting aside a demand is as provided under regulations 16 and 17.
(2) …
(3) The petition shall be preceded by a statutory demand and shall be in Form 6 set out in the First Schedule.
(4) …
(5) The statutory demand specified in sub-regulation (3) shall be served on the debtor at least twenty-one days before the filing of the petition.
4.
4.Regulation 15 then refers to Regulations 16 and 17 which provide for the procedure for complying with or setting aside a demand. For the avoidance of doubt, this court has previously held that although the aforesaid provisions apply to the bankruptcy of natural persons, the principles outlined in Regulations 16 and 17 are equally applicable to the insolvency of corporate persons. (See DAC Aviation (EA) Limited v Stevenson Kibara Ndung’u & 8 others [2020] eKLR and Re Libya Arab Africa Investment Company Kenya Ltd HC IN No. E031 of 2020 [2021] eKLR amongst others).
5. My understanding of Regulations 15, 16 and 17 is that it is a statutory demand that triggers the process of liquidation as it is a test of solvency under section 384 of the Insolvency Act. Once served with a statutory demand a respondent has 21 days within which to apply for the setting aside of the same (see Regulation 16(1)(a)).
6. It is evident that the statutory demand was served on the applicant. While I am prepared to give the benefit of the doubt to them that the statutory demand may have been delivered to their spam account, I notice that the demand was also served by way of registered post. This is evidenced by the certificate of postage at page 38 of the petitioner’s documents. The applicants have not denied that indeed the statutory demand was sent. There is no good reason that has been provided to the court as to why the demand was not responded to. I further note that the statutory demand had attached to it, copies of delivery notes and invoices for monies due to the petitioner.
7. The 21 days having lapsed before the statutory demand was challenged and in the absence of any good reason for such delay, it means that the petitioner had met the threshold required under the Act to establish that the applicant was unable to pay its debts as and when they fell due. The petitioner was therefore at liberty to file a liquidation petition based on the statutory demand notice.
Disposition
8. Accordingly, the application dated 30th July 2024 is hereby dismissed with costs.
DATED, SIGNED AND DELIVERED IN NAIROBI
THIS 5th DAY OF February 2025
F. MUGAMBI
JUDGE