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ELRCDismissedNot stated on face of judgment (Statement of Claim filed 1 June 2024)

Kimanzi & 2 others (Suing on their own Behalf and on Behalf and Representatives of 32 other Claimants) v Kalu Works Limited (Cause E423 of 2024) [2025] KEELRC 1059 (KLR)

Employment and Labour Relations Court
3 April 2025
1,097 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~4 min to read original · ~4 min brief

The bottom line

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A Kenyan court ruled that a company rescued from insolvency must still pay workers their gratuity once administration ends.

What this practically means

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Executive summary

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The 3 Claimants (and others named in the Statement of Claim) sued Kalu Works Ltd on 1 June 2024 claiming gratuity which the Respondent had itself determined but refused to pay. The Respondent filed a Notice of Preliminary Objection on 9 November 2024 seeking striking out of the suit on twelve grounds: abuse of process, want of jurisdiction because the claims should have been raised in Milimani High Court Commercial Insolvency Case No. E019 of 2021 (Kaluworks Ltd under administration), res judicata under section 7 of the Civil Procedure Act, various alleged breaches of sections 566, 570, 591, 628, 629, 630 and 631 of the Insolvency Act and paragraph 3 of its Second Schedule, failure to lay claims at the creditors' meeting of 20 May 2022, want of locus standi, and laches. The 1st Claimant replied by affidavit and both sides filed submissions. The Court found the cause of action accrued on dismissal on 31 May 2021, that administration (from 27 May 2021) was terminated with effect from 25 August 2022 with the High Court's permission, so the Respondent could no longer claim Insolvency Act protections; the company continued operating as a going concern and acknowledged in meetings of 12 September 2023 and 19 April 2024 that gratuity remained unpaid. No evidence of res judicata was produced. The Court also noted the Claimants filed on the last day of limitation. The Preliminary Objection was dismissed with costs on 3 April 2025, and the suit proceeds to hearing.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether the suit is an abuse of the Court process
  2. 2.Whether the Court lacks jurisdiction because the cause of action should have been raised in Milimani High Court Commercial Insolvency Case No. E019 of 2021 (company under administration)
  3. 3.Whether the suit is res judicata under section 7 of the Civil Procedure Act
  4. 4.Whether the suit offends sections 566, 570, 591, 628, 629, 630 and 631 of the Insolvency Act and paragraph 3(1) and 3(2) of the Second Schedule to the Insolvency Act
  5. 5.Whether the Claimants have locus standi
  6. 6.Whether the suit is barred by the doctrine of laches

Key legal issues

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01

Effect of termination of administration on insolvency-law defences

Holding

Once administration was terminated with effect from 25 August 2022, the Respondent could not claim protections under the Insolvency Act, and remains liable for liabilities incurred before administration

Reasoning

The Court traced the chronology: dismissal on 31 May 2021, administration from 27 May 2021, gazettement on 18 June 2021, and termination of administration gazetted on 2 September 2022 with effect from 25 August 2022 with the High Court's permission. Section 522 of the Insolvency Act places a company under administration as a going concern; the company did not 'die' but was 'ill and under medical care'. Having recovered, it cannot hide behind the Insolvency Act to escape liabilities surviving administration.

p. 3
02

Res judicata

Holding

The preliminary objection on res judicata failed because the Respondent adduced no evidence that the claims had been heard and determined by a competent court

Reasoning

The Respondent contended under section 7 of the Civil Procedure Act that the claims should have been raised in the insolvency proceedings. The Court held that no material or evidence was placed before it supporting the contention that the claims were res judicata or had been conclusively determined by a court of competent jurisdiction. The objection therefore collapsed on the evidentiary burden resting on the objector.

p. 3

Legal principles established

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  • A company whose administration has been terminated cannot invoke the protections of the Insolvency Act to defeat claims of creditors/employees
  • A party asserting res judicata must place material or evidence before the Court showing the claim was heard and determined conclusively by a court of competent jurisdiction

Court orders

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  1. 1.The Notice of Preliminary Objection is found without merit and is dismissed with costs.

The bench

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One judgment of the whole court — no separate or dissenting opinions.

majority

Wrote the judgment

Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over the dispute (Issue in Dispute: refusal by the Respondent to pay gratuity determined by itself to the Claimants); no specific constitutional provision invoked

Relief refused

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Striking out/dismissal of the suit with costs to the Respondent as sought in the Preliminary Objection

The Respondent is no longer under administration and could not invoke the Insolvency Act protections; no evidence of res judicata was placed before the Court

p. 3

Costs

The Notice of Preliminary Objection is dismissed with costs (costs to the Claimants).

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

The Respondent is, therefore, no longer under administration to claim the protections assured to companies under the Insolvency Act.
p. 3Effect of termination of administration
The Respondent continues to operate and is alive and kicking and cannot seek to hide under the cover of the Insolvency Act.
p. 3Company cannot evade liabilities after administration ends
the Respondent cannot run away from its liabilities incurred before it was put under administration and surviving after the termination of administration.
p. 3Survival of pre-administration liabilities
The Notice of Preliminary Objection is found without merit and is dismissed with costs.
p. 3Final orders - disposition

Issues in the judgment

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minor

The judgment does not state the case number or the names of the Claimants, referring only to 'The 3 Claimants' and 'others named in paragraph 9 of the Statement of Claim'

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Kimanzi & 2 others (Suing on their own Behalf and on Behalf and Representatives of 32 other Claimants) v Kalu Works Limited (Cause E423 of 2024) [2025] KEELRC 1059 (KLR)", Case Analysis (2025). Not stated on face of judgment (Statement of Claim filed 1 June 2024). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/1059/eng@2025-04-03

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.