Kirti Enterprises Limited v Wadia Contruction Company Limited; I&M Bank Limited (Objector) [2022] KEHC 13734 (KLR) | Setting Aside Judgment | Esheria

Kirti Enterprises Limited v Wadia Contruction Company Limited; I&M Bank Limited (Objector) [2022] KEHC 13734 (KLR)

Full Case Text

Kirti Enterprises Limited v Wadia Contruction Company Limited; I&M Bank Limited (Objector) (Civil Suit E263 of 2021) [2022] KEHC 13734 (KLR) (Civ) (11 October 2022) (Ruling)

Neutral citation: [2022] KEHC 13734 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Civil

Civil Suit E263 of 2021

CW Meoli, J

October 11, 2022

Between

Kirti Enterprises Limited

Plaintiff

and

Wadia Contruction Company Limited

Defendant

and

I&M Bank Limited

Objector

Ruling

1. Before the court for determination are three motions. The first, dated March 14, 2022 is by Wadia Construction Co Ltd (hereinafter defendant), the second by I&M Bank Limited (hereinafter the objector) dated March 30, 2022, and the third by Kirti Enterprises Limited (hereafter the plaintiff) dated May 31, 2022. For convenience the court will hereafter refer to the motions in the sequence in which they were filed, as the 1st, 2nd and 3rd motion, respectively.

2. The 1st motion primarily seeks to set aside the judgment entered against the defendant on December 16, 2021. The motion is expressed to be brought under section 1A, 1B & 3A of the Civil Procedure Act, order 22 rule 22, order 40 rules 1(a) & (b) and order 42 rule 6 of the Civil Procedure Rules. The grounds on the face of the motion are amplified in the supporting affidavit sworn by the Shyam Wadia who describes himself as a director of the defendant. To the effect that the defendant is involved in real estate development and other related business. That on March 9, 2022 the defendant’s moveable assets listed in the warrants of attachment of this court, which assets are essential in its business operations were attached by Moran Auctioneers for the sum of Kshs 29,718,546. 46/- being the decretal sum herein.

3. He swore that summons to enter appearance and the plaint were never served upon the company secretary or other principal officers of the company as required by law. He disputes the contents of the plaintiff’s return of service indicating that the summons to enter appearance was left at the reception of the defendant company and does not indicate the name of the person who received the said summons. Moreover, he complains that the plaintiff did not also serve the defendant with the ten-day notice of entry of judgment prior to execution. He deposes further that the defendant has a good defence that raises triable issues which ought to go to trial and that it is in the interest of justice that the court sets aside the interlocutory judgment entered on December 16, 2021 and accords the defendant the right to be heard.

4. The plaintiff opposes the motion through the replying affidavit of Praful Lathia who views the 1st motion as misconceived, an afterthought, incompetent, lacking merit, frivolous and incurably defective as it is based on falsehoods aimed at misleading the court. He deposes that defendant is a dilatory litigant who did not take the plaintiff’s claim seriously having disregarded the plaintiff’s evinced intention to institute legal proceedings and that despite due service of summons to enter appearance, the defendant failed to enter appearance or file a defence within the prescribed time and a default judgment was entered by the court. He further states that that the disputed return of service bears the defendant’s official stamp which has not been challenged as a forgery and is the same stamp used to acknowledge correspondence exchanged before and after the judgment was entered; that the affidavit of service indicates that the defendant’s receptionist had authority to accept service of summons on behalf of the principal officers and therefore service of summons was properly effected at the defendant’s registered office and ; the defendant was only roused from slumber by the commencement of the proper and lawful execution process.

5. He emphasizes that the defendant was well aware of the summons and had requested the plaintiff to hold off on instituting the suit to enable the parties to negotiate an out of court settlement; that the notice of entry of judgment was duly served contrary to the defendant’s averments; and that the defendant’s statement of defence and counter-claim does not raise any triable issues but is only an attempt to postpone the inevitable payment of a debt that has fallen due. He asserts that there was inordinate and unexplained delay on the part of the defendant in filing the 1st motion and stated that the motion ought to be dismissed with costs.

6. The 2nd motion brought by the objector is expressed to be brought under section 1A, 1B & 3A of the Civil Procedure Act, order 22 rule 51 (2) & 52 and order 52 rule 1 of the Civil Procedure Rules. Therein , the objector seeks to set aside the warrants of attachment and sale issued herein and an order unconditionally raising or lifting the attachment of the defendant’s assets proclaimed on March 8, 2022; and an order directing the plaintiff to restrain (sic- I believe the correct word here is refrain) from the attaching and selling the defendant’s motor vehicle registration number KCP 717N, KCA 295C, KBF 689F, KBL 945A, KAP 860G, KAT 101U, KBL 831T, KCM 299F, KCG 011R, KBV 967N, KAM 226Y, KCP 866M, KCY 082T, KBL 026D, KAV 020M, Loader Trailer Reg. No. ZF 7448, KAU 941T, 6 Concrete Mixers, KCP 858M, KCE 907G, KBX 276C, KBY 142H, KAY 248L, KAU 491A, KAH 581G KBF 688H, KBN 938A, KAV 310Q, KBE 095P, KBE 665P, KAV 201V; Other machinery being - Cargo making machine, Concrete Reach Mix Machine, Power Generator, 2 Aquatic Vibrator Machines, Hitachi Excavator and 2 Tower Cranes which were proclaimed by Moran Auctioneers and which are listed in the proclamation notice by Moran Auctioneers dated March 8, 2022.

7. The grounds in support of the motion are amplified in the supporting affidavit sworn by the Andrew Muchina who describes himself as a senior manager at the legal department of the objector and duly authorized by the objector depose. The gist of his affidavit is that there exists a banker-customer relationship between the objector (as the banker) and the defendant (as the customer). That pursuant to the said relationship the defendant was granted several financial facilities by the objector and as of March 30, 2022 the outstanding amount with respect to the said facilities was Kshs 459,019,256. 58/-.

8. He asserted that the various financial facilities advanced to the defendant were secured by various fixed and floating debentures the common terms of the debentures being inter alia that the defendant thereby charged in favour of the objector all its assets and rights including all plant machinery, vehicles and other equipment of the defendant both present and future; that the security agreements ranked as a first charge on all property and assets charged therein; that under the security agreements the defendant could not, without the written consent of the objector, subsequent to the charge create any charge or other encumbrance to rank either in priority to or pari passu with the first charge; and that each of the security agreements constituted a continuing security for the payment and discharge of the secured obligations. That the defendant executed the credit facility letters and security agreements signifying acceptance of the terms and conditions therein.

9. The deponent further states that the assets subject to the proclamation and attachment form part of the objector’s security by virtue of the facility agreements which were advanced to the defendant. He further contends that on account of the foregoing, it was a term of the facility agreement and security document that would constitute an event of default under the said agreements if any judgment or order made against the defendant is not complied with within seven (7) days or if any execution, distress, sequestration or other process is levied or enforced upon or against any part of the charged assets and that the facilities would become payable immediately should such an event of default occur. That default having occurred in this instance, the objector is entitled to call for payment of the entire outstanding amounts and that the objector has a valid legal and equitable interest over all the attached motor vehicles and machinery which right ranks higher in priority to the right of the decree holder herein. He asserts that the objector being a secured creditor in respect of the defendant’s assets, the said movable assets cannot be attached by any other creditor to the prejudice of the objector.

10. The plaintiff through the replying affidavit of Praful Lathia opposes the objector’s motion. He asserts that the motion is misconceived, an afterthought, incompetent, lacks merit, frivolous and incurably defective as it is based on falsehoods aimed at misleading the court. That the motion has been made in bad faith and in a deliberate attempt to obstruct the course of justice and with the intention of denying the plaintiff the fruits of judgment. He contends that the purported floating debenture only crystalizes upon appointment of a receiver and or an administrator under the Insolvency Act 2015 and as such, the defendant’s movable assets are available for attachment the plaintiff rights outranking those of the objector. He asserts that at the time of proclamation of the subject goods, the floating debentures in the objector’s favour were yet to crystalize and therefore the rights of the objector must be subordinated to the plaintiff’s rights. The deponent states further that there was no notice to third parties as to the subsistence of the debentures because the defendant’s motor vehicles were not encumbered either by joint registration in the names of the objector and defendant or by a registered a hire purchase agreement. He urged that the objector’s motion ought to be dismissed.

11. By way of rejoinder the objector filed a further affidavit equally sworn by the Andrew Muchina. He reiterates that the objector has a valid and equitable interest over all the attached motor vehicles and machinery which right ranks higher in priority to the decree holder. He disputes the plaintiff’s assertion that the debentures were floating in nature and which purported to create a fixed charge over all the assets of the company and asserted that each of the debentures created a first fixed charge over the assets of the defendant including motor vehicles and machinery; that the debentures further provided that the defendant had no power to part with, dispose of or alienate any part of its property or assets without the consent of the objector; that plaintiff’s assertion that the defendant’s movable assets were free from encumbrance is false as the debentures were also duly registered at the Movable Property Security Rights (MPSR) registry; and that even if the debentures were floating debentures, the same provided for automatic crystallization of floating charges upon any person levying or attempting to levy any distress, execution or other process against the assets of the defendant. He proceeds to depose that there was no requirement to register jointly the defendant’s movable assets as the objector was not a financier of the same. In conclusion he asserts that the objector’s interest ranks higher in priority and are superior to those of the decree holder.

12. The 3rd motion was filed by the plaintiff seeking to strike out and expunge from the court record the affidavit of Shyam Wadia together with the 1st motion dated March 14, 2022. The 3rd motion is expressed to be brought under section 1A, 1B & 3A of the Civil Procedure Act, order 2 rule 15(b), (c) & (d) and 51 of the Civil Procedure Rules. The grounds on the face of the motion are elaborated in the supporting affidavit sworn by the Praful Lathia. To the effect that the defendant’s motion dated 14. 03. 2022 was filed by the firm of HKM Associates Advocates and that the affidavit in support of the motion was commissioned by Cosmas Chaenza, an advocate purporting to practice as such in the firm of HKM Associates Advocates, who are on record for the defendant.

13. He contends that information obtained by counsel from the Law Society of Kenya portal confirms that Cosmas Chaenza practices in the firm of HKM Associates Advocates and that by dint of section 4 of theOaths and Statutory Declaration Act, a commissioner for oaths is barred from commissioning documents drawn by his or her own firm of advocates and hence the affidavit drawn by his firm and commissioned by Cosmas Chaenza, is fatally defective and ought to be expunged from the court record. He also deposes that further information obtained from the Law Society of Kenya as of May 17, 2022, indicates that Cosmas Chaenza did not hold a current practicing certificate for the year 2022 which is a condition precedent to being appointed a commissioner of oaths and that the latter position attaches to the practice of law and cannot exist independently on its own. He contends that Cosmas Chaenza’s action of witnessing legal documents thereby verifying their credibility while not holding a valid practicing certificate amounts professional misconduct and an abuse of the court process. He asserts that as a consequence of the foregoing the affidavit sworn by Shyam Wadia is incurably defective and ought to be struck out together with the 1st motion.

14. The defendant opposes the plaintiff’s motion through the replying affidavit of sworn by Cosmas Chaenza who asserts to be a commissioner for oaths and an active member of the Law Society of Kenya hence competent to depose. He asserts that he has since regularized his position with the Law Society of Kenya and his practicing status updated as active hence authorized to practice law for the year 2022. That a cause of action in law belongs to the client and not the advocate hence the mistake of an advocate ought not to be visited upon an innocent litigant. He goes on to depose that the by dint of the spirit of article 159(2) (d) of the Constitutionthe court ought to look at substantive justice as opposed to legal formalism, or statutory interpretation which denies an innocent party of a valid and substantive claim owing to an omission of his counsel which is unrelated to the matter before the court. That in the interest of justice and pursuant to section 34B of the Advocates Act, non-compliance by an advocate as at the date of commissioning the affidavit is a technicality. Finally, he deposes to not having any commercial interest in the defendant’s cause of action and that it is in the interest of justice that plaintiff’s motion be dismissed with costs.

15. The defendant and objector’s motions was canvassed by way of written submissions whereas the plaintiff’s motion was canvassed by way the affidavit material filed on record.

16. Regarding the 1st motion, the defendant’s counsel placed reliance on order 5 rule 3 of theCivil Procedure Rules, the decisions in Total Kenya Limited v Supa Haulier Limited [2003] eKLR, Agigreen Consulting Corp Limited v National Irrigation Board [2020] eKLR and James Kanyiita Nderitu & Another v Marios Philotas Ghikas &another [2016] eKLR to argue that no attempts were made to trace the officials of the defendant nor explanation given why the process server opted to serve the receptionist who is not a principal officer of the corporation, and as such proper service of the summons was not effected and the ex-parte judgment ought to be set aside ex-debito justitiae.

17. While calling to aid the decisions inJames Kanyiita Nderitu (supra), Maina v Muriuki(1984) KLR 407 and Pravinchandra Jamnadas Kakad v Lucas Oluoch Mumia[2015] eKLR counsel submitted that if the ex parte judgment is not set aside, the defendant will be condemned unheard contrary to the principles of natural justice. That the instant motion was initiated without undue delay and is not a dilatory or intended to obstruct the course of justice. Counsel went on to cite the decisions in Patel v East African Cargo Handling Services Ltd(1974) EA 75 and Jeremiah O Samba & Benson M Mogaka t/a Merve Commercial & Insurance Agency v Kenindia Assurance Co Ltd[2010] eKLR to argue that the draft statement of defence and counterclaim raises triable issues and that the plaintiff will not suffer any prejudice that cannot be compensated by an award of costs if the interlocutory judgment is set aside.

18. In opposition to the 1st motion, counsel for the plaintiff reiterated the contents of the affidavit in opposition and placed reliance on order 10 of theCivil Procedure Rules and the decisions in Ecobank Kenya Limited v Minoita Limited & 2others[2018] eKLR and Board of Management St Augustine Secondary School v Chambalili Trading Co Ltd [2021] eKLR to submit that there was proper service of the summons upon the defendant at its registered office. Reiterating the plaintiff’s affidavit material on service counsel asserted that the motion does not meet the required threshold to warrant this court’s exercise of its discretion. Counsel asserted that whether or not a defence raises triable issues is not subjective and depends on the facts of the case. That from the facts deposed in the affidavit material, the defence does not raise any triable issues and the counterclaim therein is a sham and mere afterthought. The Court was urged to dismiss the motion with costs.

19. Counsel for the objector did not participate in the 1st and 3rd motion. In urging the 2nd motion counsel citedNational Bank of Kenya Ltd v Pipeplastic Samkolit (K) Ltd &another [2001] eKLR to submit that the intention of the parties in debentures between the objector and defendant was to create a fixed charge over the defendant’s movable assets. And invoking Section 878(4)(c) of the Companies Act 2015, Section 92 of the Movable Property Security Rights Act, the decisions in KenyaChemical Allied Workers Union v Packaging Manufacturers [2014] eKLR andASG Scan Cargo v Nairobi Conveyors Limited [2000] eKLR it was contended that the debentures having been registered created a first fixed charge that is valid and enforceable. That the Movable Property Security Rights Act (MPSRA) does not require joint registration of movable property with the chargee for the charge to be effective against third parties and that the objector having complied with registration requirements under the MPSRAachieved third party effectiveness of its security with respect to the defendant’s movable assets.

20. Counsel further relied on the decisions inDesbro (Kenya) Limited v General Printers Limited; I & M Bank Limited &another[2021] eKLR andMenengai Rolling Mills Limited &anotherv Blue Nile Wire Products Limited &another[2019] eKLR to assert that the debentures in question were not floating debentures but debentures that created a fixed charge on the assets of the defendant and which did not require additional crystallization to become effective i.e. appointment of a receiver. That even if the debentures were floating in nature, which is denied, the objector still has a legal and equitable interest in the proclaimed goods due to the automatic crystallization of the debentures upon default by the defendant and or proclamation of its assets and as such the decree holder cannot defeat the interest of the debenture holder. In conclusion counsel cited decisions in Diversey Lever East Africa v Mohanson Food Distributor Ltd &another[2004] EA 43 andKenya Chemical Allied Workers Union v East African Portland Cement Company Limited & Kenya Commercial Bank Kenya Limited [2018] eKLR to argue that the objector’s interest has priority over the decree holder’s interest. The court was urged to find in favour of the objector with respect to the defendant’s movable assets.

21. In support of the 2nd motion, the defendant submitted that the various facilities with the objector were duly registered in accordance with the Movable Property Security Rights (MPSR) Act 2017as such the objector had a legal interest over the items proclaimed by the plaintiff in accordance with order 22 rule 51 (1) of the Civil Procedure Rules and the said assets are not available for attachment by the plaintiff. That the fact of the objector having created a fixed charge over the assets of the defendant herein and the plaintiff decree holder not having completed the execution process over the assets of the defendant, gave the objector’s legal interest priority of over that of the plaintiff. Counsel relied on the English case of Agnew & Anor v Commissioner of Inland Revenue [2001] 2 AL 710, the decisions in Lochab Brothers v Kenya Furfural Co Ltd [1983] eKLR and Menengai Rolling Mills Limited & Another v Blue Nile Wire Products Limited &another [2019] eKLR to support the submission.

22. Counsel for the plaintiff in opposing the 2nd motion cited several decisions including Landmark Port Conveyors Limited v Buzeki Enterprises Limited &another [2019] eKLR andSokhi International (K) Limited v Giro Commercial Bank Limited [2006] eKLR to argue that the judgment against the defendant herein is not subject to the terms of the debenture and that the defendant is in default in its relationship with the objector due to non-satisfaction of the decree herein. That the floating debenture by the objector only crystallizes upon the appointment of a receiver and that at the time of proclamation of the defendant’s assets, the objector had not appointed an administrator and or receiver hence the charge was yet to crystallize, and the goods were available for attachment.

23. It was further submitted that the defendant being aware that the execution of the judgment was inevitable had colluded with the objector to ensure the said judgment was not enforced. Counsel asserted that priority already vested in the plaintiff by operation of the law could not be extinguished by subsequent appointment of a receiver by the objector who only had an equitable interest over the goods subject to the plaintiff’s interest. In conclusion the court was urged to dismiss the objector’s motion.

24. The court has considered the material canvassed in respect of the three motions and proposes to first consider and determine the 3rd motion. There is no dispute that Cosmas Chaenza was during the material time an advocate practicing in the firm of HKM Associates and Advocates who were seized of this matter on behalf of the defendant, and which firm drew the affidavit supporting the 1st motion. There is no dispute similarly that at the time Cosmas Chaenza commissioned the said affidavit, he did not possess a valid or current practicing certificate. In his replying affidavit the said advocate dismisses the omission as a mere formality and invokes the provisions of article 159(2) (d) while taking refuge in section 34B of the Advocates Act, the latter which provides that:“Validity of legal documents (1) A practising advocate who is not exempt under section 10 and who fails to take out a practising certificate in any year, commits an act of professional misconduct. (2) Notwithstanding any other provisions of this Act, nothing shall affect the validity of any legal document drawn or prepared by an advocate without a valid practising certificate. (3) For the purpose of this section, "legal document" includes pleadings, affidavits, depositions, applications, deeds and other related instruments, filed in any registry under any law requiring filing by an advocate. (Emphasis added)

25. In my reading, section 34B (2) above is intended to cover legal documents drawn or prepared by an advocate without a valid practicing certificate. The objection taken by the plaintiff in this case relates to commissioning of the defendant’s affidavit or in other words, the administration of an oath by an advocate without a valid practising certificate, and secondly, by an advocate practicing in the same firm that prepared the affidavit. Regarding the latter, section 4 of the Oaths and Statutory Declarations Act states that:“Powers of commissioner for oaths (1) A commissioner for oaths may, by virtue of his commission, in any part of Kenya, administer any oath or take any affidavit for the purpose of any court or matter in Kenya, including matters ecclesiastical and matters relating to the registration of any instrument, whether under an Act or otherwise, and take any bail or recognizance in or for the purpose of any civil proceeding in the High Court or any subordinate court: Provided that a commissioner for oaths shall not exercise any of the powers given by this section in any proceeding or matter in which he is the advocate for any of the parties to the proceeding or concerned in the matter, or clerk to any such advocate, or in which he is interested.” (Emphasis added)

26. To my mind, there is a world of difference between the acts of drawing or preparing a document, in this instance an affidavit, and the commissioning thereof. The affidavit in question was properly drawn by the firm of advocates acting for the defendant but pursuant to the proviso in section 4 above, an advocate in the same firm was precluded from commissioning it, more so as he did not at the time hold a practicing certificate entitling him to administer oaths. The rationale behind this prohibition is self-evident; to guard against conflict of interest and to protect the advocate acting for a party from becoming embroiled in the dispute between the parties in the event he was required to give evidence where the oath administered to such party or related matter comes into question.

27. Regarding conflict of interest Halsbury Laws of England 4th Edition at paragraph 527, page 353 states:“A practicing barrister must not accept any instruction if there is or appears to be a conflict or risk of conflict either between the interests of the barrister and some other person or between the interests of any one or more clients, unless all relevant persons consent to the barrister accepting the instructions….”

28. Black’s Law Dictionary Tenth Editiondefines conflict of interest as:“1. A real or seeming incompatibility between one’s private interests and one’s public or fiduciary duties.2. A real or seeming incompatibility between the interests of two of a lawyer’s clients, such that the lawyer is disqualified from representing both clients if the dual representation adversely affects either client or if the clients do not consent”.

29. In the same vein, The Law Society of Kenya Code of Standards of Professional Practice and Ethical Conduct, 2016 defines conflict of interest in Rule 6 paragraph 96 as follows: -“A conflicting interest is an interest which gives rise to substantial risk that the Advocate’s representation of the client will be materially and adversely affected by the Advocate’s own interests or by the Advocate’s duties to another current client, former client or a third person.”

30. Rule 9 of theAdvocates (Practice Rules)which provides that: -“No advocate may appear as such before any court or tribunal in any matter in which he has reason to believe that he may be required as a witness to give evidence, whether verbally or by declaration or affidavit; and if while appearing in any matter it becomes apparent that he will be required as a witness to give evidence whether verbally or by declaration or affidavit, he shall not continue to appear.Provided that this rule does not prevent an advocate from giving evidence whether verbally or by declaration or affidavit on formal or non-contentious matter of fact in any matter in which he acts or appears”.

31. The administration of oaths is a serious matter touching on the administration of justice and lapses in that regard cannot be dismissed as mere formalities. The advocate concerned has not cited in the Oaths and Statutory Declarations Act or the Advocates Act, any or other provision equivalent to section 34B of the Advocates Act immunizing an affidavit commissioned by an advocate not holding a valid practicing certificate. An affidavit is essentially sworn evidence hence the requirement for commissioning. It is my considered view therefore that an affidavit that is not commissioned or whose commissioning is irregular because it was done by an unauthorized person can hardly fit that description. Nor can it satisfy the requirements of Order 19 as read with Orders 51 and 10 of the Civil Procedure Rules, the latter which the defendant did not invoke in his application despite the 1st motion appearing to fall thereunder. The Oaths and Statutory Declarations Act prescribes persons, namely practicing advocates and magistrates as among those who may administer oaths and the manner thereof, and pursuant to section 7 of the Act, any person who falsely holds himself out as commissioner for oaths commits an offence.

32. I think I have said enough to demonstrate that the 3rd motion has merit and is allowed with costs, the consequence being that the affidavit supporting the 1st motion is found to be defective and is hereby struck out for want of requisite commissioning. The 1st motion must suffer the same fate as, devoid of the supporting affidavit, it is incompetent. The 1st motion is similarly struck out with costs.

33. Turning now to the 2nd motion, the court has carefully reviewed the respective affidavits and submissions. There is no dispute regarding the debentures executed from 2005 to 2016 between defendant and the objector that were exhibited in support of the 2nd motion and to which the attached properties were subject. The key question falling for determination was the nature of the debentures, whether creating fixed or floating charges over the assets in question. Having perused the debentures executed in 2005, 2009, 2014, 2016, (See annexure AM 1 to AM 16), the court notes that each contained a provision that the debenture created a first specific fixed charge over the defendant’s plant machinery and vehicles both present and future inter alia. Reference to a floating charge in these documents was in respect of other assets such as stock-in-trade which is immaterial to this case. Once a default event had occurred there was no requirement for additional crystallization by way of appointment of a receiver in order for objector’s interest under the fixed charge to take effect.

34. As the objector has ably demonstrated, and which is not disputed by the plaintiff, it was a common term of the debentures that the defendant’s failure to satisfy any judgment passed against it within 7 days constituted an event of default which immediately rendered the outstanding debt payable by the defendant. Further, annexures marked A.M1 in the further affidavit of the objector are proof of registration of the debentures in the Moveable Security Rights Registry as required under the Companies Act and Moveable Security Rights Act, which registration rendered them effective against third parties. See Kenya Chemical & Allied Workers Union v Packaging Manufacturers(1976) Ltd (2014) e KLR and ASG Cargo v Nairobi Conveyors Limited (2000) eKLR.

35. The fixed charge created by the debentures ranks higher in priority over an execution process commenced after the creation of the charge as held in Diversey Lever East Africa Ltd v Mohanson Food Distributor Ltd &another (2004) EA 43. Here, as in the case ofKenya Chemical and Allied Workers Union v East African Porland Cement Company Limited & another (2018) eKLR the defendant had by prior agreements created a first fixed charge over all its plant machinery and vehicles both present and future in favour of the objector placing the objector in a privileged position over the said properties. Hence the charged assets of the defendant under the debentures were not available for attachment in satisfaction of the decree passed herein. The objector’s motion must therefore succeed and is allowed in terms of prayers 3 and 4 with costs.

DELIVERED AND SIGNED ELECTRONICALLY AT NAIROBI ON THIS 11TH DAY OF OCTOBER 2022. C.MEOLIJUDGEIn the presence of:For the plaintiff: Mr. OnyinkwaFor the defendant: Mr. MwanikiFor the objector: N/AC/A: Carol