Mutembei t/a Markfive Suppliers v Galaxy Merchants Ltd (Civil Appeal E042 of 2022)  KEHC 24 (KLR) (12 January 2023) (Ruling)
Neutral citation:  KEHC 24 (KLR)
Republic of Kenya
Civil Appeal E042 of 2022
EM Muriithi, J
January 12, 2023
Kenneth Mutembei t/a Markfive Suppliers
Galaxy Merchants Ltd
(Being an appeal from the ruling of hon. chief Magistrate J. Njoroge delivered in Meru Cmccc No. 40 of 2014 on 2nd march 2022)
1.The court has considered the Motion dated 24/11/2022 on the principles for the grant of stay of execution pending appeal set out in Order 42 Rule 6 of the Civil Procedure Rules with regard to the appellant’s prayer that the court “be pleased to stay execution of the lower court decree by way of committing me to civil jail pending the determination of this appeal.”
2.The supporting affidavit of the appellant sworn on 24/11/22 and the replying affidavit of the respondent sworn, together with submissions made orally before the court by the appellant and Counsels for the Respondent have been considered.Sufficient causeArguability of appeal
3.The central issue before the court is the effect on the execution of a judgment of the admission and discharge of a debtor to the No Asset Procedure of the Insolvency Act, 2015.
4.Section 359 of the Insolvency Act provides, so far as material, as follows:“”
5.The appellant contends at paragraph 5 of his supporting Affidavit that having been “admitted and discharged from the No Asset Procedure in accordance with section 359 and 360 of the Insolvency Act 2015… this debt ceased to exist since then. (see Annexture KMMM1 being a letter and documents from Official Receiver addressed to Meru Law Courts).”
6.The Official Receiver’s letter refereed to above is dated 24/2/2022 and addressed to the Executive Officer of the Meru Law Court gratuitously that the application of the appellant for admission to the No Asset Procedure had been gazette in gazette notice no. 11664 and advertised in the Daily Nation on September 30, 2019 and that –
7.For the respondent Creditor, it was urged that the debt is undisputed and an appeal from the judgment was dismissed by the High Court and the appellant does not benefit from the NO Asset Procedure of the Insolvency Act because he had given cheques which were dishonoured and this amounted to fraud taking him from the protection of the Act in terms of section 360(2) thereof. The Respondent’s case is set out in the Replying Affidavit of the Managing Director sworn on 15/12/2022 as follows:It is further submitted that the applicant has not met the requirements for stay of execution pending appeal relating to delay, substantial loss and security for the due performance of the decree.
8.I do not consider that the appellant is guilty of unreasonable delay in seeking stay of execution of pending appeal from the trial court’s ruling of 2/3/2022 in view of the application for leave to appeal dated 2/3/202 filed before the trial court.
9.The dispute in the appeal appear to revolve around the interpretation of the provisions of section 360 of the Insolvency Act and the nature of the transaction between the appellant and the Respondent giving rise to the debt. Section 360 of the Insolvency Act is in the following terms:
10.The appellant urges that the criminal offence on dishonoured cheques does not relate to postdated cheques. The question to be determined is whether there is proof of fraud in terms of section 360 (2) of the Insolvency Act, which is, in the respectful view of this court, different from the question whether an offence of presenting dishonored cheques is proved.
11.Section 316A of the Penal Code on dishonoured cheques provides as follows:
12.The trial court in the ruling subject of this appeal found the appellant had committed a fraud in relation to issue of the dishonoured cheques as follows:
13.Without deciding at this stage so as not to prejudice the hearing the of the appeal, I consider that there is an arguable case, not necessarily one that must succeed, on appeal to warrant an investigation at the hearing by the appellate court.
Whether appeal may be rendered nugatory
14.The application seeks an order for “stay of execution of the lower court decree by way of committing me to civil jail pending determination of this appeal.” I do not think it could be argued that the detention in civil jail in execution of a judgment the appeal, which eventually succeeds is not rendered nugatory, or that the incarceration on civil jail is not a substantial loss that may be suffered by an applicant on refusal of stay of execution. The court finds that the appellant stands to suffer substantial loss by way of committal to civil jail if stay is not granted.
15.The court notes that the trial court had already set a Notice to Show Cause why the Appellant should not be committed to civil jail for hearing/mention when the hearing of this application was scheduled for 20/12/2022. This court agrees that the appeal herein would be rendered nugatory if the stay of execution by way of committal to civil jail is not granted.
Security for performance of the decree
16.From the nature of the proceedings before the court where the appellant claims protection under the No Assets Procedure of the Insolvency Act, the appropriate security where execution proceedings by way of committal to civil jail have been commenced appears to be to ensure that the appellant is available to perform his civil jail in execution should his appeal be unsuccessful. The Court will therefore order that the appellant provides security for his availability for execution in terms of the application for execution by committal to civil jail, and for that purpose a security by way of deposit of his travel documents and restriction from traveling out of jurisdiction without leave of court is sufficient.
Expeditious disposal of the appeal
17.The court has noted that the ruling of 2nd March 2022 appealed from is already typed and certified and the Record of Appeal should only take short time to prepare. The appellant shall be required in the interests of an expeditious disposal of the dispute consistent with sections 1A and 1B of the Civil procedure Act to file the appeal with forty-five (45) days.
18.Accordingly, for the reasons set out above, the court makes the following orders:1.There shall be a stay of execution of the judgment and decree of the trial court delivered on 8/2/2017 pending the hearing and determination of the appeal herein.2.As security for the eventual performance of any decree that may eventually become binding on him, the appellant shall not leave the jurisdiction of the court without leave, and, for that purpose, the appellant shall deposit his Passport into court within the next seven (7) days, in default of which the stay herein granted shall lapse.3.In the interests of expeditious disposal of the appeal, the appellant shall file Record of Appeal within forty-five (45) days, in default of which the appeal shall stand dismissed.
19.Costs to abide the outcome of the appeal.Order accordingly.
DATED AND DELIVERED ON 12TH DAY OF JANUARY, 2023.EDWARD M. MURIITHIJUDGEAppearancesAppellant in Person.Mr. K. Muriuki Advocate for the Respondent.