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

c. An order directing the defendant to deliver up to the Plainti or their appointee, the title documents and an executed instrument of discharge of charge against the suit property registered in the deceased’s names. d. An alternative prayer that a declaration be made that the defendant was in breach of agreement by failing to substitute the deceased’s security for Third Party’s security and as such the Defendant be estopped and barred from claiming and recovering any sums from the deceased’s estate. 2. The Plaint was accompanied by a certicate of urgency and a notice of motion application seeking injunctive orders against the defendant from interfering with the suit property. 3. Justice L Gacheru who had the conduct of this matter at the time in her ruling delivered on the September 7, 2017, granted the prayers as sought in the Plaintis’ Application. She further directed the Plaintis to take out summons to enter appearance and serve them upon the Defendant to enable the Defendant enter appearance accordingly and le its statement of Defence. 4. The Defendant has now moved this court vide the Notice of Motion dated the April 7, 2022 under the provisions of Section 56 (2) of the Kenya Deposit Insurance Act , 2012 and Order 5 Rule 6 of the Civil Procedure Rules. The defendant prays for orders that the suit is fatally defective and should be struck out. In the alternative, the defendant seeks that the suit be marked as having abated. The Defendant prays for costs of the application and the suit as well. 5. The Application is based on the grounds that the Plaintis led the suit contrary to the provisions of Section 56 (2) of the Kenya Deposit Insurance Act, Cap 487C of the Laws of Kenya. The proceedings herein are therefore a nullity. Further, that the Plainti has never taken out Summons to enter appearance as directed by the court hence the suit has abated and should be struck out with costs. 6. The Application is further supported by the Adavit of Daniel Kiragu deponed on the April 7, 2022.The deponent restates the grounds in support of the application and prays that the suit should be dismissed for failure by the Plaintis to seek leave before ling the case against a bank under liquidation. The suit is therefore incurably defective and ought to be struck out. Secondly on the premises that the suit has in any event abated for failure to take out Summons to enter appearance. Court’s Directions 7. The Plaintis’ counsel was served with the Application and conrmed service in court. He was present in court when the directions on the disposal of the application were given on the May 30, 2022. The Plaintis’ Advocate sought more time to le a response, which additional time was granted. The court then directed that the application be dispensed with by way of written submissions. The defendant complied. It led its submissions dated the July 21, 2015. 8. The Plaintis did not le any document in response to the application. The application is therefore unopposed. The Plaintis too did not le any submissions. Defendant’s Submissions 9. The Defendant sets out the facts of the case and aver that sometime back in the year 1995, it oered various loan facilities to Sunwise Travel Limited. The suit property was registered as security to the facility. The charge was signed by the registered owner of the suit property, Mr Dismus Juma Onyango (deceased). The Borrower and the Chargor failed to pay the loan and the arrears stood at Kshs 49,622,007.45 as at August 6, 2013. https://new.kenyalaw.org/akn/ke/judgment/keelc/2022/12784/eng@2022-09-30 2

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10. Consequently, Kenya Deposit Insurance Corporation (KDIC) issued statutory notices to the borrower and the chargor. The chargor failed to comply with the notice prompting the defendant to issue a further notice. Consequently, when the notices crystallized, the Lender then instructed Auctioneers who issued a 45 days’ notice but the loan was not settled. The Auctioneers advertised the suit property for sale after the expiry of the notice. It is then that the Plaintis led this suit on September 4, 2015. 11. It is the defendant’s submission that the defendant Bank was under liquidation and KDIC was appointed as the Liquidator by the time the Plaintis led this suit. Therefore, no suit could be instituted without leave of court. Failure to seek leave of the court renders the suit defective for breach of Statute. The suit should therefore be struck out. 12. The Defendant relies on amongst others, the case of Dickson Jomo Kebatta v Deposit Insurance Corporation in Liquidation of Middle Africa Finance Ltd (2017) eKLR where the court held the proceedings instituted without leave of the court against a bank in liquidation, improper and struck them out. 13. The defendant further avers that although the Plaintis were directed to take out summons to enable the defendant enter appearance, that has not been done to date. Failure to do so contradicts the provisions of Order 5 Rule 1 (6) of the Civil Procedure Rules. The defendant cites the case of Feuze Investment Limited v Kenya Way Limited (2001) eKLR where the court held that “failure to le and serve summons upon the defendants was fatal to the suit.” The defendant therefore submits that the delay in taking out the summons by the Plainti is inordinate and inexcusable. The Plainti’s suit should therefore be dismissed with costs. Issues for Determination 14. In this court’s opinion, the only issue for determination is whether the defendant/applicant’s notice of motion is meritorious. Analysis and Determination 15. I will rst start with the issue of failure by the Plaintis to seek leave of the court before instituting these proceedings. Section 56(2) of the Kenya Deposit Insurance Act (No 10 of 2012) provides as follows: “ No injunction may be brought or any other action or civil proceedings may be commenced or continued against an institution or in respect of its assets without the sanction of the Court.” 16. In Bisai & Another v Kenya Commercial Bank Ltd (2002)2 EA 346, Mwera J (as he then was) stated that; “ in order to commence any action or proceedings against the 3rd defendant (a company in Liquidation), the Plaintis were obliged, mandatorily by the companies Act to rst obtain leave from the court. That the Leave ought to be sought before bringing an action or proceedings and not retrospectively.” 17. Explaining the import of the said provision in the case of Andrew G Muchai v Chase Bank Ltd (2016) eKLR, Nzioka J observed and I concur as follows:“ …. In my opinion to answer this question, one needs to appreciate what receivership is all about. In my opinion, receivership in legal terms entails an order/directive where all https://new.kenyalaw.org/akn/ke/judgment/keelc/2022/12784/eng@2022-09-30 3

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the property and aairs of an institution are placed in the dominion and control of an independent person known as a receiver. Thus receivership is a preservation process put in place to protect the assets, liabilities and business aairs of a bank with the aim of protecting the interests of its depositors, creditors and members of the public. In this case to preserve the bank’s liquidity, assets, and to nd the best way to return it into normal business.” The essence of seeking leave to commence a suit, is to verify that the applicant has a valid claim, which they need to pursue against the institution and by extension the corporation. The main aim is thus to create orderliness, decency and avoid a oodgate of actions, which may involve some of the matters placed under supervision.” 18. I agree with the opinions expressed in the above cited cases. Where leave is mandatorily required as in the instant case, it is a prerequisite prior to the ling of the case. Arising from the foregoing and noting that from the record the Plaintis never sought leave of the court before ling this suit, I am persuaded that the defendant’s prayer to strike out the suit has merit. 19. The defendant’s application was two-pronged. Apart from seeking to strike out the suit for failure by the Plaintis to seek leave of the court, the defendant also seeks an alternative prayer that the suit be struck out on the basis that it has abated for failure to take out and serve the summons to enter appearance as required in law and as directed by the court. 20. Order 5 of the Civil Procedure Rules (2010) places the duty upon the Plainti to prepare and serve summons. On preparation, Order 5 rule (1) (5) provides that: “ (5) 21. Every summons shall be prepared by the plainti or his advocate and led with the plaint to be signed in accordance with sub rule (2) of this rule.” There are consequences for inaction on the part of a Plainti as order 5 rule 1 sub rule 6 provides that: “ (6) Every summons, except where the court is to eect service, shall be collected for service within thirty days of issue, failing which the suit shall abate.” 22. The court had earlier on noted from the record that a ruling was delivered in this matter on the September 7, 2017 where the court directed the Plaintis to take out summons and serve them upon the defendant to enable the defendant enter appearance accordingly and le its defence. 23. Unfortunately, ve years after, the Plaintis have not acted on the direction. The Plainti led the Plaint without the summons despite the provisions of Order 5 Rule 1 (1), (3), (5) and (6) of the Rules. The Court exercised its discretion and granted the Plainti leave to extract the Summons and serve them out of time. The delay is not only inordinate but inexcusable. The consequences of the said noncompliance are clearly stipulated in Order 5 Rule 1(6) of the civil Procedure Rules; the suit has abated. 24. Consequently, the defendant succeeds on this aspect as well. Orders 25. The conclusion is that the defendant’s notice of motion application dated April 7, 2020 succeeds. The Plaintis’ suit is hereby struck out with costs to the defendant. The defendant shall also have the costs of the application. It is so ordered. DATED, SIGNED AND DELIVERED AT NAIROBI THIS 30TH DAYOF SEPTEMBER 2022 https://new.kenyalaw.org/akn/ke/judgment/keelc/2022/12784/eng@2022-09-30 4

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M.D. MWANGI JUDGE In the Virtual presence of: Mr. Kiragu for the Defendant/Applicant. No appearance for the Plaintis. Court Assistant- Hilda M.D. MWANGI JUDGE https://new.kenyalaw.org/akn/ke/judgment/keelc/2022/12784/eng@2022-09-30 5

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