Central Bank of Kenya v Ashok L. Doshi & 2 others
The bottom line
#Kenya's Court of Appeal ruled that creditors of a bank in liquidation must follow the Kenya Deposit Insurance Act's claims process and cannot get special repayment deals outside it.
What this practically means
#Executive summary
#Key legal issues
#Sufficiency of the sanction sought under section 56(2) of the Kenya Deposit Insurance Act
The respondents' prayer for 'leave' was synonymous with sanction; seeking it contemporaneously with substantive prayers was a curable matter of form, not a fatal defect.
The court construed section 56(2) as a mandatory statutory bar making sanction a condition precedent, following Kirtesh Premchand Shah and Joseph Kaara Mwethaga. But the statute prescribes no timing or form; 'sanction' and 'leave' are synonymous per Black's Law Dictionary. Following Johnson Mbugua Mugo, combining the sanction prayer with substantive prayers is procedural technicality curable under Article 159(2)(d), and the court implicitly granted sanction by proceeding to the merits. Citing Harihar Nath, continuation without leave renders a decree voidable, not void, at the liquidator's instance.
Whether the 15th July 2016 consent order bound the Central Bank of Kenya
It did not. Only Imperial Bank gave the undertaking; CBK's appointment of KDIC as receiver did not amount to taking control of the bank by operation of law, and KDIC acts as agent of the institution without assuming its liabilities.
The court examined sections 43, 45, 50, 50(7)(b) and 51 of the Act: KDIC as receiver is autonomous and not subject to CBK's direction; CBK's role in systemic-risk situations is advisory or technical. Since no term of the consent imposed any obligation on CBK, the Judge's 'ripple effect' finding effectively varied the contract, contrary to National Bank of Kenya v Pipeplast and Pius Kimaiyo Langat. Consent orders bind only parties on whom terms impose obligations.
Whether the court could order an undertaking to pay after the bank entered liquidation
No. The order circumvented the statutory moratorium and execution bar and gave preferential treatment contrary to sections 33, 50(2), 56(3) and 57 of the Act.
From receivership, the section 50(2) moratorium applied equally to all creditors; on liquidation section 56(3) bars attachment, execution or enforcement against the institution or its assets. Sections 33 and 57 prescribe the claims framework without priority for litigating depositors. Relying on Kirtesh Premchand Shah's pari passu principle from Re Oak Pitts Colliery, the court held the undertaking breathed new life into a receivership-era consent in violation of the liquidation regime.
Granting prayers not sought - leave to hear subsequent applications and the main suit during liquidation
The Judge erred: the respondents neither sought that sanction nor canvassed it, and issues must flow from the pleadings unless an unpleaded issue is left to the court.
Applying Galaxy Paints v Falcon Guards and Antony Francis Wareham, the court held that sanction to continue the main suit did not arise as an issue framed by the parties. The exception in Kinyanjui Kamau/Odd Jobs - that a court may decide an unpleaded issue fully canvassed - did not apply because the point was not argued. The conditional discharge of the ex-parte stay was already moot, having been stayed by this Court on 26th May 2023, but the Judge was at fault in making it contrary to statute.
Legal principles established
#- The statutory requirement under section 56(2) of the Kenya Deposit Insurance Act to obtain the court's sanction before commencing or continuing proceedings against an institution in liquidation is a condition precedent; however, a prayer for leave combined with substantive prayers in one application satisfies the requirement and is not fatally defective.
- A consent order under which only the bank in receivership gives an undertaking does not bind the Central Bank merely because CBK placed the bank under receivership and appointed KDIC as receiver; a court cannot vary or re-write such a consent to impose liability on a non-assuming party.
- Once an institution is in liquidation, courts may not order undertakings or security that create an enforcement avenue outside the statutory liquidation framework or prefer individual depositors over others.
- A court may not grant sanction or relief that was neither sought in the application nor canvassed by the parties, as issues flow from the pleadings.
Court orders
#- 1.Civil Appeal No. E008 of 2023 and Civil Appeal No. E010 of 2023 allowed
- 2.The Ruling and Orders of the High Court of Kenya at Mombasa (Njoki Mwangi, J.) dated 25th November 2022 set aside
- 3.The costs of the two appeals to be borne by the 1st and 2nd respondents
- On appeal from
- High Court of Kenya at Mombasa
- Mombasa HCCC No. 36 of 2016
- Jurisdiction invoked
- First appellate jurisdiction over the High Court ruling under the Court of Appeal's appellate jurisdiction (specific statutory/constitutional provision not stated in the judgment)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Central Bank of Kenya v Ashok L. Doshi & 2 others", Case Analysis (2026). Civil Appeal No. E008 of 2023 (consolidated with Civil Appeal No. E010 of 2023). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2026/909/eng@2026-05-15
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.