Lake Quarry Limited & another v Bank of Baroda (Kenya) Ltd [2017] KEELC 1271 (KLR)
The bottom line
#A Kenyan court struck out Lake Quarry Limited's suit against Bank of Baroda because the company had no board resolution authorising it and did not own the property it sought to protect.
What this practically means
#Executive summary
#Key legal issues
#Authority of a company to institute suit
The plaint and verifying affidavit deposed by the 2nd Applicant disclosed no board resolution authorising the suit, so the 1st Applicant lacked capacity and the suit is for striking out
The Respondent raised the absence of authority in its replying affidavit. The 2nd Applicant's response that the point was raised six years late did not answer the challenge, as no board resolution authorising the filing of the suit or the deponing of affidavits was exhibited. Following the cited authorities, a company without a board resolution authorising proceedings cannot sue, and such a suit should be struck out.
Proprietary interest and capacity to seek injunctive relief over charged land
The 1st Applicant/Plaintiff, not being the registered owner of the charged property L.R. Kisumu Municipality/Block 6/70, has no legal capacity to initiate the suit or the application
The evidence showed the charged property is registered in the name of the 2nd Applicant, who charged it to the Respondent. Relying on Mamba Village v National Bank of Kenya and Venture Capital and Credit Ltd v Consolidated Bank of Kenya Ltd, a plaintiff who is not the owner of the charged property would lose no proprietary right even if the property were sold in exercise of the chargee's statutory power of sale; hence no injunction could issue.
Application for leave to amend the plaint and joinder of the 2nd Applicant
Leave to amend could not be granted because there was no valid suit in which the 2nd Applicant could be enjoined
Having found that the suit lacked authority from the 1st Applicant's board and that the 1st Applicant had no proprietary interest in the charged property, the court held the notice of motion had no merit. The amendment and joinder prayers fell with the finding that the suit itself was a nullity liable to be struck out.
Legal principles established
#- In the absence of a board of directors' resolution authorising commencement of proceedings, a company (being an artificial person) cannot institute a suit, and such a suit should be struck out
- A plaintiff who is not the registered owner of charged property loses no proprietary right even if the chargee exercises its statutory power of sale, and lacks capacity to sue to restrain that sale
Court orders
#- 1.The notice of motion by the Applicants dated 28th January 2016 is dismissed with costs
- 2.The suit commenced by Lake Quarry Limited against Bank of Baroda (Kenya) Ltd by plaint dated 6th July 2010 and amended on 16th January 2013 is struck out with costs
- 3.The file be closed
- Jurisdiction invoked
- Original civil jurisdiction of the Environment and Land Court over a charge/land dispute (no specific constitutional or statutory provision cited in the judgment)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Lake Quarry Limited & another v Bank of Baroda (Kenya) Ltd [2017] KEELC 1271 (KLR)", Case Analysis (2017). . Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2017/1271/eng@2017-10-18
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.