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ELCStruck OutEnvironment and Land Case Civil Suit 851 of 2015· [2022] KEELC 12784 (KLR)

Onyango & another (Suing as administrators of the Estate of Dismas Juma Onyango Kamb (Deceased)) v Meridien Biao Bank Limited (In Liquidation)

Environment and Land Court
30 September 2022
MMM.D. Mwangi
1,955 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan court struck out a family's land suit against a bank in liquidation because they never got court permission before filing and never served summons.

What this practically means

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Executive summary

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The plaintiffs, administrators of the estate of Dismas Juma Onyango Kamb (deceased), sued Meridien Biao Bank Limited (in liquidation) in 2015 seeking stay of transactions over suit property, a permanent injunction against sale, delivery of title documents with a discharge of charge, and a declaration that the bank was in breach by failing to substitute the deceased's security. An interlocutory injunction had been granted by L. Gacheru J on 7 September 2017, with a direction that the plaintiffs take out summons to enter appearance. The defendant then filed a notice of motion dated 7 April 2022 under Section 56(2) of the Kenya Deposit Insurance Act and Order 5 Rule 6 of the Civil Procedure Rules, seeking striking out of the suit as a nullity for want of leave to sue a bank in liquidation, or in the alternative, a declaration that the suit had abated for failure to take out summons. The application was unopposed; the plaintiffs filed neither a response nor submissions. The court framed a single issue: whether the application was meritorious. Relying on Bisai v Kenya Commercial Bank and Andrew G Muchai v Chase Bank, M.D. Mwangi J held that leave under Section 56(2) is a mandatory prerequisite before filing suit against an institution in liquidation and, the record showing no leave was sought, the striking-out prayer had merit. Independently, the plaintiffs' five-year failure to take out and serve summons, contrary to Order 5 rule 1(6), caused the suit to abate. The suit was struck out with costs to the defendant, who also received the costs of the application.

Key legal issues

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Whether the suit was fatally defective for want of leave under Section 56(2) of the Kenya Deposit Insurance Act

Holding

Yes - leave is a mandatory prerequisite before filing suit against a bank in liquidation; the plaintiffs never sought it, so the suit is struck out

Reasoning

Section 56(2) prohibits commencing or continuing proceedings against an institution in liquidation without the court's sanction. Relying on Bisai and Andrew G Muchai v Chase Bank, the court held leave must precede filing, not be sought retrospectively, to verify the claim's validity and avoid a floodgate of actions. The record showed no leave was sought, so the prayer to strike out had merit.

p. 4
02

Whether the suit abated for failure to take out and serve summons to enter appearance

Holding

Yes - the plaintiffs never took out summons despite a court direction of 7 September 2017; under Order 5 rule 1(6) the suit abated

Reasoning

Order 5 places the duty to prepare, file and collect summons for service within thirty days on the plaintiff. The court had directed the plaintiffs on 7 September 2017 to take out summons, but five years later nothing was done. The delay was inordinate and inexcusable, and the stipulated consequence of non-compliance was abatement of the suit.

Legal principles established

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  • Where leave is mandatorily required to sue an institution under liquidation, it must be obtained before filing the suit; failure renders the suit liable to be struck out
  • Failure to collect and serve summons within thirty days of issue causes the suit to abate under Order 5 rule 1(6)

Court orders

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  1. 1.The plaintiffs' suit is struck out with costs to the defendant
  2. 2.The defendant shall also have the costs of the application

Authorities

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Legislation

  • Kenya Deposit Insurance ActSection 56(2)
  • Civil Procedure RulesOrder 5 Rule 1(1), (3), (5), (6); Order 5 Rule 6

Cases cited (4)

  • Dickson Jomo Kebatta v Deposit Insurance Corporation in Liquidation of Middle Africa Finance Ltd
    (2017) eKLR

    Proceedings instituted without leave against a bank in liquidation are improper and liable to be struck out

  • Feuze Investment Limited v Kenya Way Limited
    (2001) eKLR

    Failure to file and serve summons upon the defendants is fatal to the suit

  • Bisai & Another v Kenya Commercial Bank Ltd
    (2002) 2 EA 346

    Leave to sue a company in liquidation must be obtained before, not retrospectively to, commencing proceedings

  • Andrew G Muchai v Chase Bank Ltd
    (2016) eKLR

    Purpose of receivership and rationale for requiring leave before suing an institution under receivership

Jurisdiction invoked
Original civil jurisdiction of the Environment and Land Court over a dispute concerning suit property; application brought under Section 56(2) of the Kenya Deposit Insurance Act and Order 5 Rule 6 of the Civil Procedure Rules

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Onyango & another (Suing as administrators of the Estate of Dismas Juma Onyango Kamb (Deceased)) v Meridien Biao Bank Limited (In Liquidation)", Case Analysis (2022). Environment and Land Case Civil Suit 851 of 2015. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2022/12784/eng@2022-09-30

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.