5.The Court has carefully considered the pleadings, submissions and evidence placed before it by rival parties. Before I venture into the substance of the application, I wish to deal with the question of validity of the statutory demand. The applicant contends that the demand was defective as it was not endorsed by the Deputy Registrar before it was served on the Company. This is supposedly in contravention of the mandatory terms under regulation15(3) and (4) as read together with Regulation 77B(2)(a) of the Insolvency Regulations, 2016.
6.For the avoidance of doubt, these provisions read as follows: Regulation 15:
7.Regulation 15 of the Insolvency Regulations falls under Part V of the Regulations which relates to personal insolvency. The introductory part to regulation 15 in fact refers to section 17 of the Act which is to be found in Part III of the Act, again on Bankruptcy of Natural Persons. It is clear therefore that regulation 15 does not apply to insolvency but to bankruptcy of natural persons. On the converse, regulation 77B(2)(a) of the regulations requires that:
8.The format of Form 32E which is a statutory demand, contains a provision for the form to be endorsed by the Deputy Registrar before service. The statutory demand which was served on the applicant was not endorsed.
9.Even then, I note that while the requirement for endorsement appears on the face of the Form 32E, such requirement is not imposed by regulation 77B of the regulations as it is in regulation 15. The former is applicable in this case and I therefore find and hold that failure to endorse the statutory demand by the Deputy Registrar does not invalidate the demand issued by the petitioner.
10.As to the requirements of form, I concur with the observation of the Court in Re: Sucasa at Mombasa Road ML HC INC No. 9 of 2018  eKLR. The Learned Judge quoted with approval from the Halsbury’s Laws of England (4th Ed, Vol 7(2)) para. 1446 on the ingredients of a statutory notice:
11.I have carefully studied the statutory demand dated 1st December 2022. While the same is not signed, it does state the amount of the debt, the timelines for compliance, and it does contain a notice of liquidation if the debt is not paid and finally the methods of compliance open to the Company.
12.Moreover, it is now settled that non-compliance with the form of the statutory demand is not fatal as long as there was substantial compliance with the requirements of the law. (see for instance Re: Kipsigis Stores Limited ML HC INC No. 14 of 2016 and Re: Sucasa at Mombasa Road ML HC INC No. 9 of 2018  eKLR and Re: F. M. Macharia (K) Limited  eKLR. I associate myself with this position.
13.While I am cognizant of the phraseology of regulation 77B of the regulations to the extent that compliance with Form 32E is mandatory, in view of the decisions I have cited, I find that the statutory demand issued by the respondent dated 1st December 2022 substantially complies with the Form 32E and it sets out all the ingredients of a statutory demand as required by section 384(1)(a) of the Act.
14.Having said that, I now turn to the substance of the application. Regulation 17(6) of the Insolvency Regulations provides the grounds upon which the Court can set aside a statutory demand as follows:
15.The applicant disputes the amounts as stated in the statutory demand. In Flower City Limited V Polytanks & Containers Kenya Limited,  KEHC 34 (KLR) the Court, Mativo J (as he then was) was emphatic that even though it may not be possible to provide a closed list of the elements of a genuine dispute, the applicant must:
16.This view was espoused in Universal Hardware Limited V African Safari Club Limited,  eKLR, where the Court noted that:
17.Likewise, in Flower City Limited V Polytanks & Containers Kenya Limited [supra], the Court also held that:
18.It is against the aforesaid principles that I shall now consider the matter in light of the correspondence furnished by the parties in their respective depositions. By way of a letter dated 3rd March 2022, the respondent advanced to the applicant a credit facility of USD 5,273,332.22. The facility was subject to various securities listed in the offer letter comprising of a legal charge, an all asset debenture, individual, corporate guarantee and indemnity, an individual guarantee and indemnity as well as a joint and several guarantee and indemnity.
19.In satisfaction of the requirement under the letter of offer, the applicant attached a charge dated 15th September 2020 over LR. No. NAIROBI/BLOCK31/219 in favour of the respondent for Kshs. 1,200,000,000/=. A valuation was conducted by Ms. GIMCO Ltd evidenced by the valuation report dated 20th December 2022. The said valuation places the value of the security at Kshs. 1,361,800,000/= for the land and USD 24,265,109.75 for the preliminary works.
20.The applicant has also annexed a contract between the applicant and Ms. Zhongjiao Third Highway Engineering Ea Company and other documents relating to the proposed redevelopment of Jevanjee Bachelors Housing. Finally, the applicant annexed a letter dated 21st Aril 2022 from the respondents demanding arrears of USD 6,803,485.51.
21.I note that there is no evidence to support the allegation by the respondent of the debt due, such as bank statements. I further note that while the letter of 21st Aril 2022 from the respondents demands arrears of USD 6,803,485.51, the statutory demand issued was for USD 4,700,000. Noteworthy is the fact that the demand letter was written one (1) month after the offer letter for the facilities.
22.Of importance also is that the respondent does not deny that it holds securities for the facilities advanced to the applicant. It is not controverted that these securities are sufficient to settle the debt. I must say that I do not agree with the argument by the respondent that liquidation proceedings are an ideal alternative of pursuing its debt where there are sufficient securities.
23.The issuance of a statutory demand should be understood as a test of corporate solvency. One of the grounds that the Court may apply to set aside a demand is where it appears that the creditor holds some security in respect of the debt claimed by the demand, and either paragraph (6) is not complied with in respect of the demand, or the Court is satisfied that the value of the security equals or exceeds the full amount of the debt.
24.Once this is established it means that the debtor passes the test of solvency. This may be understood in the sense that a debtor may be technically solvent but may lack liquid cash to settle his debts. There is sufficient case law to support the fact that a creditor’s petition should not be entertained if it is used to enforce a debt that is disputed where the company is solvent. Such would otherwise amount to abuse of the process of the Court and an abuse of the insolvency law and should be struck out on that basis.
25.This is what the Court of Appeal observed on the subject in Matic General Contractors Limited V Kenya Power and Lighting Company Limited,  eKLR as follows:In applying the foregoing judicial pronouncements, I am not satisfied that the respondent has made out a case to have the statutory demand against the applicant upheld.