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IndustrialDismissedNot stated in judgment· [2014] KEIC 91 (KLR)

Kenya Chemical & Allied Workers Union v Packaging Manufacturers [1976] Ltd (Cause 130 of 2012) [2014] KEIC 91 (KLR)

Industrial Court (Employment and Labour Relations Court)
5 December 2014
OMO. N. Makau
1,933 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan court threw out a lender's attempt to stop asset seizure because its charge was never registered within the required 42 days.

What this practically means

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Executive summary

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The objector moved the court by Notice of Motion dated 3/9/2014 seeking lifting of the attachment of the judgment debtor's movable assets proclaimed on 28/8/2014 and setting aside of execution, on the basis that it held a fixed charge over all the judgment debtor's movable and immovable assets under a debenture dated 19/5/2014 securing a loan of USD 400,000 plus an overdraft of Ksh.1.5 million. The claimant, a decree-holder under a consent judgment of 2/10/2013 payable in monthly instalments of Ksh.5,000,000, opposed the objection, alleging collusion between the objector and the judgment debtor to defeat the decree, and pointing out that the charge was never registered. The judgment debtor supported the objection, attributing its financial difficulties to tax burdens. The court framed three issues: whether a valid fixed and floating charge existed in favour of the objector, whether it took precedence over execution, and whether the orders sought should issue. Relying on Section 96 of the Companies Act, the court held that the charge and debenture were never delivered for registration within 42 days of creation and that, although the objector argued fixed charges fell outside Section 96(2), the legislature would have expressly stated any such exclusion. The charge was therefore void against the executing creditor. The court declined to determine the question of priority between the charge and execution, and dismissed the objection with costs, lifting the interim stay order.

Key legal issues

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01

Validity of the unregistered fixed charge under the debenture dated 19/5/2014

Holding

The charge was void against the executing creditor because it was never registered with the Registrar of Companies within 42 days of its creation

Reasoning

Section 96 of the Companies Act requires that prescribed particulars of every charge, together with the instrument creating it, be delivered to or received by the Registrar for registration within 42 days of creation. The objector argued fixed charges were excluded from registration under Section 96(2), but the court held that if the legislature intended such exclusion it would have said so expressly. Since the debenture charged assets of the kind listed in Section 96(2)(a)-(i), registration was mandatory and non-registration rendered the charge void.

p. 4

Legal principles established

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  • A charge created by a company must be registered with the Registrar of Companies within 42 days of its creation, failing which it is void against the liquidator and any creditor of the company

Court orders

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  1. 1.The objection proceedings generally and the Notice of Motion dated 3/9/2014 specifically shall stand dismissed with costs
  2. 2.The interim stay order lifted
Jurisdiction invoked
Objection proceedings in execution of a consent decree of the court

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, "Kenya Chemical & Allied Workers Union v Packaging Manufacturers [1976] Ltd (Cause 130 of 2012) [2014] KEIC 91 (KLR)", Case Analysis (2014). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keic/2014/91/eng@2014-12-05

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