EZEKIEL KIPLELEI BARNGETUNY v KENYA COMMERCIAL BANK LTD [2006] KEHC 1479 (KLR)

REPUBLIC OF KENYA IN THE HIGH COURT OF KENYA AT ELDORET

Civil Case 186 of 2000

HON. EZEKIEL KIPLELEI BARNGETUNY .................................................................... PLAINTIFF

VERSUS

KENYA COMMERCIAL BANK  LTD ......................................................................... DEFENDANT

R U L I N G:

At the hearing of an application for leave to amend Defence and Counter claim filed by Defendant, the Plaintiff’s Counsel presented in court a Gazette Notice No. 83 of 7th February, 2003 publishing a Receiving Order against the Defendant, Ezekiel Barngetuny.  The receiving order was caused to be gazetted by the Official  Receiver and was made on 18th December, 2002.  This fact is not disputed by the Defendant.

On the basis of this and the provisions of section 9(1) of the Bankruptcy Act, the plaintiff has asked this court to stay all proceedings in this suit.  The defendant has opposed the said oral application saying that there is no provision for stay of proceedings and  that the Defendant can prosecute its counter claim.

I have considered the provisions of Section 9(1) of the Bankruptcy  Act which stipulates as followed:-

“9(1) on the making of a receiving order the official receivershall be thereby constituted receiver of the property of the debtor,and thereafter, except as directed by this Act, no creditor to whomthe debtor is indebted in respect of any debt provable in bankruptcyshall have any remedy against the property or person of the debtor in respect of the debt, or  shall commence any  action or other legal proceedings, except with the leave of the court  and on such terms inthe court may impose.”

This suit  was pending in court when the receiving order was given.  A careful reading shows that one must obtain leave of the court before commencing any action or other legal proceedings against a debtor.  However, there is no reference to any stay of proceedings in respect of existing and/or pending suits as of the time a Receiving Order is made.  It would appear that the court has a discretion to order stay of proceedings when granting a Receiving Order.  Rule 144 of the Bankruptcy Rules reads:-

“144:  There may be included in a receiving order an orderstaying  any action or proceeding against the debtor or stayingproceedings generally”

This demonstrates that there is no automatic stay of proceedings.  However, once a receiving order is given, no proceedings can be prosecuted by or against the debtor without the consent of the Receiver.  In fact under the provisions of section 9(1), it is my view, the Receiver is required to take over all suits pending in court filed by the debtor or filed against such a debtor.

In the premises, I  do hereby order that this suit be stayed until the Official Receiver is notified of it and decides whether to terminate it or take it over.  The Defendant is to serve all process in this suit on the Official Receiver as the Debtor has no capacity to retain counsel in any commercial litigation without the consent and  involvement of the Receiver.

DATED  AND DELIVERED AT  ELDORET ON  THIS 28TH  DAY OF JULY 2006

M. K. IBRAHIM

JUDGE

28/7/06

Coram  -  Ibrahim  J

CC  Chelanga

Mrs. Manani for the plaintiff

Mr. Shivaji for the defendant/respondent

Ruling read in their presence.

M. K. IBRAHIM

JUDGE