Automated Summary
Key Facts
The court ruled to revoke a Receiving Order issued to Benedict Mutia Mwova on 25 August 2004 after he defaulted on monthly installment payments agreed to in a 2007 consent order. The creditor, Associated Motors Limited, obtained a judgment in Milimani CM.CC.No.2159 of 2002 for Kshs 721,466 plus costs and interest. The debtor secured the Receiving Order to avoid execution of the decree, then failed to make any of the agreed Kshs 500,000 installments starting 30 January 2008. The Official Receiver and debtor did not contest the creditor's application to rescind the order.
Issues
- The court was asked to determine if the Receiving Order issued on 25th August 2004 should be revoked because the debtor, Benedict Mutia Mwova, defaulted on agreed monthly installments under a consent order dated 27th November 2007. The creditor, Associated Motors Limited, argued that the debtor's non-compliance justified revocation, allowing them to execute the decree from Milimani CM.CC.No.2159 of 2002.
- The court considered if the creditor, Associated Motors Limited, could execute the decree obtained in Milimani CM.CC.No.2159 of 2002 following the revocation of the Receiving Order. The debtor's failure to make payments as per the consent order led to the automatic revocation, enabling the creditor to enforce the judgment.
Holdings
The court rescinded the Receiving Order dated 25th August 2004 issued to the debtor Benedict Mutia Mwova. The order was revoked due to the debtor's failure to make monthly installments as agreed under a consent order from 27th November 2007. The creditor, Associated Motors Limited, is now permitted to execute the decree in Milimani CM.CC.No.2159 of 2002. The debtor was found to have abused the court process by obtaining the Receiving Order to avoid debt repayment, and the costs of the application were awarded to the creditor.
Remedies
- The creditor is at liberty to execute its Decree in Milimani CM.CC.NO. 2159 OF 2002.
- The Receiving Order dated 25th August 2004 is rescinded, revoked, vacated, and set aside.
- The costs of the application shall be borne by the debtor.
Legal Principles
The court applied the principle of Pacta Sunt Servanda (agreements must be kept) in enforcing the terms of the consent order between the creditor and debtor. The debtor's failure to make agreed monthly installments triggered the automatic revocation of the Receiving Order as per the parties' agreement.
Cited Statute
Bankruptcy Act (Cap 53 of the Laws of Kenya)
Judge Name
- J. W. LESIIT
- P. M. MWILU
Passage Text
- Nothing is shown to stop me from exercising my powers under Rule 147 of the Bankruptcy Rules to rescind the Receiving Order herein. Accordingly I order the Receiving order dated 25th August 2004 rescinded revoked, vacated and set aside.
- I have given due consideration to the application herein. As already stated the debtor does not deny that he obtained the Receiving Order so as to avoid execution of the decree obtained in the Chief Magistrate's court. He similarly does not deny that he has not made a single payment contrary to the agreement entered between him and the creditor. The judgment creditor is being kept away from enjoying the fruits of its judgment by a debtor who would obtain a Receiving Order enter into a consent order and promise to liquidate the decretal sum by installments then pay nothing.
- The debtor's general conduct in these proceedings amounts to an abuse of the process of this court.