Fidelity Commercial Bank Limited v Hiten Shantilal Shah [2018] KEELC 4281 (KLR)
The bottom line
#A Kenyan bank that has already sold a charged property cannot use a fast-track procedure to evict the former borrower; it must file a full lawsuit.
What this practically means
#Executive summary
#Key legal issues
#Whether the grounds raised constituted proper preliminary objections
Only two grounds (locus standi and res sub judice under Section 6) qualified as pure points of law; the rest required ascertainment of facts
The court applied the Mukisa Biscuits definition: a preliminary objection must be a point of law pleaded or arising by clear implication from the pleadings, capable of disposing of the suit. Grounds requiring evidence or exercise of judicial discretion do not qualify. The locus standi and Section 6 grounds were self-evident from the pleadings and instruments on record and could be determined without ascertainment of facts.
Whether the former chargee has locus standi under Order 37 rule 4 after completing the statutory power of sale
The plaintiff lacks locus standi because the charge was discharged, the title transferred to Dong Fang Development Company Limited, and a new charge created; the mortgagor-mortgagee relation was extinguished
Order 37 rule 4 specifies who may take out an originating summons and the relief available. The instrument is available to a chargee who still has a valid charge registered against the title. Having exercised its statutory power of sale, discharged the title, transferred it to a third party which then charged it to the same bank, the plaintiff was a former mortgagee, outside the framework. Its forum, if entitled to vacant possession, is a suit by plaint.
Whether the suit is statute-barred under Section 6 of the Civil Procedure Act by virtue of Nairobi HCCC No. 308 of 2013
The suits are not directly and substantially in issue in both; the present suit seeks vacant possession (an Environment and Land Court matter) while HCCC 308/2013 seeks the balance of the loan (a Commercial Division matter)
Section 6 bars a court from trying a suit where the matter in issue is directly and substantially in issue in a previously instituted suit between the same parties. Here the reliefs and causes of action differ: vacant possession versus recovery of the loan balance, and the properly seised courts differ accordingly. Section 6 must be interpreted within the current constitutional architecture of the courts. The ground was rejected.
Legal principles established
#- Only an existing mortgagee or mortgagor, not a former one who has completed sale and transferred the title, may take out an originating summons under Order 37 rule 4
- A preliminary objection must consist of a pure point of law which, if argued, may dispose of the suit, and ceases to be one if facts must be ascertained or discretion exercised
Court orders
#- 1.The originating summons is struck out as incompetent
- 2.The defendant shall have costs of the suit
- Jurisdiction invoked
- Environment and Land Court jurisdiction under the Environment and Land Court Act; originating summons under Order 37 rule 4 of the Civil Procedure Rules
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Fidelity Commercial Bank Limited v Hiten Shantilal Shah [2018] KEELC 4281 (KLR)", Case Analysis (2018). Nairobi ELCC OS No. 466 of 2013 (originating summons dated 9/9/2013). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2018/4281/eng@2018-02-23
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.