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ELRCDismissedNot stated on the face of the judgment· [2022] KEELRC 1191 (KLR)

Nderitu v Chase Bank (K) Limited (In Receivership) (Cause 365 of 2017) [2022] KEELRC 1191 (KLR)

Employment and Labour Relations Court
7 July 2022
JGJacob Gakeri
2,048 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~8 min to read original · ~4 min brief

The bottom line

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Kenya's Employment Court ruled that a valid court permission obtained before Chase Bank's liquidation remained valid, allowing an employee's case to proceed against the bank.

What this practically means

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Executive summary

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The Respondents filed a preliminary objection dated 21st April 2017 seeking striking out of the Claimant's suit on the ground that the Claimant had neither sought nor obtained leave of the Court to commence or continue proceedings against Chase Bank Limited, an institution then under receivership and subsequently in liquidation, contrary to Section 56(2) of the Kenya Deposit Insurance Act, 2012. The Respondents relied on Bougainville Estate Limited v KDIC, Andrew Gikuni Muchai v Chase Bank, Kuza Farms v Dubai Bank and James Omari Meremo v Chase Bank, submitting that leave was a mandatory condition precedent and that the suit was a nullity ab initio. The Claimant filed neither grounds of opposition nor submissions, leaving the objection unopposed. The Court, per Dr. Jacob Gakeri J, framed two issues: whether a competent preliminary objection was before the Court, and whether it was merited. Applying Mukisa Biscuits, the Court found the objection competent as a pure point of law. On the merits, the Court noted from the record that Chase Bank was placed under receivership on 7th April 2016 with KDIC as Official Receiver, and KDIC was later appointed liquidator by Gazette Notice in April 2021. Critically, although the Claimant had not responded to the objection, the Court's own records showed that the Claimant had sought and obtained leave on 12th October 2017 to continue proceedings against the Receiver. Since the 2nd Respondent was now the liquidator, no further leave was necessary. In the interest of justice, the objection was not merited; the suit was to be set down for hearing, with the hearing date to be fixed by the Registry. No costs order appears on the face of the judgment.

Key legal issues

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01

Whether a competent preliminary objection was before the Court

Holding

The Court was satisfied that the objection met the Mukisa Biscuits threshold as a pure point of law

Reasoning

The Court applied the locus classicus definitions of Law JA and Newbold P in Mukisa Biscuits, and the authorities in Nitin Properties and Hassan Ali Joho, and found that the objection raised a threshold question of law that could dispose of the suit if allowed, and therefore had to be determined at the earliest instance.

p. 3
02

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

Holding

The objection failed because the Claimant had in fact obtained leave by an application dated 4th May 2017, granted on 12th October 2017, and no further leave was needed given the transition to liquidation

Reasoning

Chase Bank was placed under receivership on 7th April 2016 with KDIC as Official Receiver, and into liquidation in 2021 with KDIC as liquidator. Section 56 bars commencement or continuation of proceedings without court sanction. The court records showed the Claimant had obtained leave to continue proceedings against the Receiver in October 2017; with KDIC now liquidator, no further leave was necessary, and justice required the suit proceed to hearing.

p. 5

Legal principles established

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  • No suit or civil proceeding may be commenced or continued against an institution under receivership or liquidation, or its assets, without the prior sanction/leave of the Court, per Section 56 of the Kenya Deposit Insurance Act, 2012
  • A preliminary objection must be a pure point of law pleaded or arising by clear implication from the pleadings, capable of disposing of the suit, per Mukisa Biscuits

Court orders

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  1. 1.The Preliminary Objection is not merited and is dismissed
  2. 2.The suit should be set down for hearing
  3. 3.Hearing date to be fixed by the Registry

Authorities

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Legislation

  • Kenya Deposit Insurance ActSections 56(1), 56(2), 56(3), 43(1) and (2), 53(2)(b), 54(1)
  • Constitution of Kenya, 2010Articles 159(2)(d) and 48
  • Employment ActSections 66 and 67 (as discussed via Bougainville Estate)
  • Civil Procedure RulesOrder 21 Rule 1
  • Civil Procedure ActSection 1B

Cases cited (7)

  • Mukisa Biscuits Manufacturing Co. Ltd v West End Distributors Ltd
    [1969] EA 696
  • Nitin Properties Ltd v Jagjit S. Kalsi & another
    [1995] eKLR
  • Hassan Ali Joho & another v Suleiman Said Shahbal & 2 others
    [2014] eKLR
  • Bougainville Estate Limited v Kenya Deposit Insurance Corporation (sued in their capacity as Receiver Managers of Imperial Bank Limited (In Receivership) & 3 others
    [2019] eKLR
  • Andrew Gikuni Muchai v Chase Bank (Kenya) Limited
    [2016] eKLR
  • Kuza Farms & Allied Ltd v Dubai Bank Kenya Ltd (In Liquidation)
    [2017] eKLR
  • James Omari Meremo v Chase Bank Limited (In Liquidation)
    [2021] eKLR
Jurisdiction invoked
Original employment and labour relations jurisdiction of the Employment and Labour Relations Court; the Respondent's objection was expressed under Sections 56(2), 43(1) and (2) of the Kenya Deposit Insurance Act, 2012

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, "Nderitu v Chase Bank (K) Limited (In Receivership) (Cause 365 of 2017) [2022] KEELRC 1191 (KLR)", Case Analysis (2022). Not stated on the face of the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2022/1191/eng@2022-07-07

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