High Court orders criminal case against businessman Kotecha, Midland Hauliers to proceed

The High Court in Nairobi has dismissed an application seeking to halt and withdraw criminal proceedings against businessman Jayesh Kumar Kotecha Prabhudas and Midland Hauliers Limited, ruling that the case should proceed to its full course.

Justice Alexander Muasya Muteti, sitting at the Milimani High Court on August 18, dismissed the revision application and upheld an earlier decision by the trial court that had rejected the prosecution’s attempt to withdraw the charges.

The case stems from criminal proceedings at the Milimani Chief Magistrate’s Court in which the accused persons face charges including conspiracy to defraud, fraudulent disposition of mortgaged goods and offences relating to the management of a company under administration. They had pleaded not guilty to the charges.

The Office of the Director of Public Prosecutions (ODPP) had sought to withdraw the charges under Section 87(a) of the Criminal Procedure Code, arguing that the dispute was essentially civil in nature and was already the subject of two pending insolvency petitions before the High Court.

The ODPP argued that continuing with the criminal case could result in conflicting outcomes and would not serve the public interest.

The application was opposed by the interested party, who argued that the criminal allegations arose from the administration of the company and should be determined through the criminal justice process.

The complainant also challenged the manner in which the withdrawal application had been handled, arguing that the victim had not been adequately informed or consulted.

In determining the matter, Justice Muteti noted that the existence of insolvency proceedings did not, by itself, resolve the criminal allegations against the accused.

The court observed that the predominant purpose of an insolvency petition is not to determine criminal acts allegedly committed by company directors.

The judge further held that the mere existence of the insolvency petitions could not shield directors from alleged criminal conduct that may affect the administration of a company.

The court found that the prosecution appeared ready to proceed with the criminal case and that there was no indication that evidence was lacking.

It consequently held that it would be fair for the criminal proceedings to run their full course, with the issues to be determined on the basis of evidence presented before the trial court.

Justice Muteti also rejected the argument that withdrawing the case was in the public interest, holding instead that prosecuting persons alleged to have disposed of property belonging to a company under administration serves a public policy objective by deterring such conduct and supporting the implementation of the Insolvency Act.

The court dismissed the revision application, vacated the stay of proceedings and directed that the file be returned to the lower court for further proceedings.

The parties were, however, encouraged to consider alternative justice mechanisms to resolve their wider dispute even as the criminal matter proceeds.

The ruling leaves the criminal case against Kotecha and Midland Hauliers Limited active before the lower court.