Mzuri Flour Mills v Dib Bank Kenya Limited

3. That the Defendant took over the loan portfolio without the prior knowledge and consent of the Plaintiff. That parties were at all material times engaged in negotiations with a view of regularizing the unlawful takeover. That in the negotiations the Defendants demanded that the Plaintiff sells its suit motor vehicles and the proceeds therefrom channeled to the Defendant as a demonstration of good faith on the part of the Plaintiff so as to start the regularization process. 4. That the Plaintiff complied with the Defendant’s demands out of which one suit motor vehicle has been successfully been sold to a third party and the proceeds therefrom channeled to the Defendant as agreed. 5. The Plaintiff further stated that the Defendant advertised their property known as Land Title Number Kilifi/Mtwapa/2113 (hereinafter referred to as the suit property), for sale in an auction which was scheduled for 11/07/2025 despite the negotiations and ongoing sale transactions. The Plaintiff never executed any charge document in favour of the Defendant over the suit property and the purported impending exercise of the Chargee’s power of sale is non-existent. 6. That the Plaintiff has now obtained a forensic document examination report dated 09/07/2025 demonstrating that their signatures and those of its Directors appearing on the purported charge dated 06/03/2023 are all forgeries. That it is therefore in the interest of justice that this court grants the prayers sought. 7. In response, the Defendant filed a Replying Affidavit dated 03/09/2025 by James Karanja, the Senior Manager – Collections & Special Assets Management. It is deponed that in September 2022, the Defendant and First Community bank, now Premier Bank Limited, entered into a facility takeover agreement where the Defendant agreed to take over various accounts from First Community Bank. 8. That part of the agreement was that the Defendant would take over the Applicant’s account by financing 64.21% of the Musharaka units held by First Community Bank. That by the agreement dated 30/09/2022, the Defendant issued the Plaintiff a letter of offer for a facility of Kshs. 109,142,721.23. 9. The terms were that the Defendant would finance the Plaintiff by taking over 64.21 of the Musharaka units held by First Community Bank, and that the facility would be secured by the suit property registered in the name of the Plaintiff and motor vehicle registration numbers KDB 557Z, KDB 558Z, KDB 556Z KDD351D, and KDD349D, and that the Plaintiff would settle the loan facility by making monthly repayments of Kshs. 1,899,597.58. 10. The Defendant stated that on 04/11/2022, the Plaintiff, the Respondent and First Community Bank entered into a tripartite agreement together with guarantors of the facility. That a charge dated 06/03/2023 was registered in favour of the Defendant over the suit property. However, the Plaintiff defaulted in its contractual obligations by failing to make the monthly repayment of Kshs. 1,899,597.58 and as a result, the Defendant sought to realize the suit property and issued the Plaintiff with 3-months’ statutory notice dated 05/03/2024 through registered post in compliance with Section 90 of the Land Act, 2012. 11. That the Plaintiff did not make good the default and consequently, the Defendant issued the Plaintiff with the 40-days statutory notice dated 30/09/2024 through the registered post. That upon lapse of the 40 days, the Defendant instructed Keysian Auctioneers to issue the Plaintiff with the 45-days’ redemption notice on 17/04/025 through registered post and WhatsApp. 12. The Respondent further stated that a court will only grant an injunction relating to the claim in the main suit and that the Plaintiff’s prayer for a temporary injunction is at a variance with the plaint. That https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19448/eng@2025-11-06 2

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therefore, the temporary injunction sought cannot be granted as it is at a variance with the permanent orders sought in the plaint dated 23/01/2024. 13. That first, the Plaintiff signed the letter of offer and charge in the years 2022 and 2023 respectively but did not raise any complaint, objection or dispute as to their authenticity and secondly, the sum of Kshs. 110,065,649.87 being a takeover from First Community Bank was duly disbursed and the Plaintiff has continued to enjoy the benefit of the facility extended without any objection. 14. The Defendant further pointed out that the land registry would not have registered a charge in favour of the Defendant against the Plaintiff’s title without its consent and issued official documentation in that regard without the requisite due diligence and compliance with registration requirements which includes execution of documents by the registered proprietor. 15. Further, the Business Registration Service would not have issued the certificates of registration of mortgage and the certificate of registration of a debenture in 2023 without consent of the Plaintiff. The Plaintiff has neither lodged formal complaint with the Land Registrar seeking cancellation of registration of the charge nor written to the Business Registration Service to cancel the certificates of registration of mortgage based on the alleged forgeries. Finally, the Plaintiff has not denied that it has been issued with the statutory notices. 16. On leave to amend the Plaint, the Defendant stated that amendment of pleadings is discretionary and the Defendant does not oppose the prayer for leave to amend, save that the Plaintiff should be condemned to pay costs. 17. The Plaintiff filed a Supplementary Affidavit sworn on 03/10/2025 by Ali Salim Saleh and maintained that they never executed any of the said documents and never obtained any loan facility from the Defendant as alleged or at all. That the Plaintiff was not aware and is not a party to the said facility takeover agreement entered into between the Defendant and First Community Bank, and that they are not privy to the alleged arrangement between the two banks. 18. That the Letter of Offer dated 30/09/2022 allegedly executed by Hanaan Ghalib Salim, Bakari Said Bakari and Noor Baya Pwani was shown to the said guarantors who confirmed that they never executed the document, and that the signatures appearing thereon are forgeries and do not belong to any of them. That as at the time when the letter was alleged to have been executed, Noor Baya Pwani was in Ghana as indicated by a copy of his passport at the time. 19. That the letter purports that the Defendant was taking over an existing term facility from Gulf African Bank yet on the same breath purports that it was taking over from First Community Bank, and that the Plaintiff did not have any facility with Gulf African Bank. That the forensic report confirmed that all the signatures attributed to the Plaintiff’s directors or guarantors on the impugned documents were forgeries and not authored by the persons whose names appear thereon. 20. The Plaintiff deponed that the disbursement of Kshs. 109,142,721.23 was never made to their accounts and that the Defendant has failed to produce any single bank statement or transfer instruction as evidence of the remittance. That the Defendant unilaterally settled certain inter-bank obligations with First Community Bank during a loan portfolio transfer between the two banks, without the Plaintiff’s consent or participation, and later sought to bind the Plaintiff to the terms through fabricated documents. 21. That the Defendant has attempted to force the Plaintiff to agree to their terms which are different from terms of the existing facilities with First Community Bank as a result of which there has been a lot of back and forth, and the reason why no letter of offer with the Respondent has been executed. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19448/eng@2025-11-06 3

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22. The Plaintiff stated that when they received the letter of offer dated 30/09/2022 from the Defendant, they notified the Defendant that the terms therein were at variance with terms of the facility with First Community Bank. The Plaintiff informed the bank to reschedule the terms for the remaining tenure especially with regard to the interest rates applicable to each ticket being taken over for the remaining tenure and payable monthly repayments. 23. That after raising the concerns on 09/12/2022, the Defendant shared a revised letter of offer dated 17/11/2022 for the Plaintiff’s perusal, approval and/or execution. That however, upon perusal, the letter still had errors which required rectification before execution. By way of an email dated 25/01/2023, the Defendant informed the Plaintiff that they would not revise the faulty letter of offer and ordered them to execute the earlier letter of offer that had been shared. That in the email of 02/02/2023, the Plaintiff sent a reminder for rectification of which the Defendant promised to rectify within one week, but they did not. 24. The Plaintiff averred that they only became aware of the impugned charge document after receiving the auction advert for the suit property hence filing the current application. That registration of a forged document does not validate the forgery and the registration cannot confer any lawful or enforceable rights upon the Defendant. That the Plaintiff did not request for any moratorium as alleged and that if such moratorium was granted, it was unilaterally issued by the Defendant without involvement of the Plaintiff, and cannot be construed as acknowledgment of indebtedness or ratification of a fraudulent facility. 25. The court gave directions for the application to be canvassed by way of written submissions. Only the Plaintiff complied by filing the submissions dated 03/10/2025. Analysis 26. I have considered the Plaintiff’s Notice of Motion, the Defendant’s Replying Affidavit, the Plaintiff’s Supplementary Affidavit and the Plaintiff’s Submissions. The issues for determination are: a. Whether the application to amend the plaint was merited b. Whether the Plaintiff met the threshold for grant of temporary injunction c. What orders on costs should issue 27. The general power to amend pleadings draws from Section 100 of the Civil Procedure Act. Parties to a suit also have a right to amend their pleadings at any stage of the proceedings, albeit that right is not absolute, for it is dependent upon the discretion of the court. 28. However, this discretion should be exercised judiciously and in line with criteria set out under Order 8 Rule 3 of the Civil Procedure Rules. Order 8 Rule 3 of the Civil Procedure Rules provides for amendment of pleadings with leave of court as follows: “ (1) 29. Subject to Order 1, rules 9 and 10, Order 24, rules 3, 4, 5 and 6 and the following provisions of this rule, the court may at any stage of the proceedings, on such terms as to costs or otherwise as may be just and in such manner as it may direct, allow any party to amend his pleadings.” Further, Order 8, rule 5 gives the court the general power to amend in the following terms: “ 5. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19448/eng@2025-11-06 4

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(1) 30. For the purpose of determining the real question in controversy between the parties, or of correcting any defect or error in any proceedings, the court may either of its own motion or on the application of any party order any document to be amended in such manner as it directs and on such terms as to costs or otherwise as are just.” The court has the power to amend pleadings which power can be exercised at any stage of the proceedings before judgment as per Bullen and Leake & Jacob's Precedents of Pleading, 12th Edition, which provides as follows concerning amendment of pleadings: “ …power to so amend can be exercised by the court at any stage of the proceedings (including appeal stages); that as a general rule, however late, the amendment is sought to be made it should be allowed if made in good faith provided costs can compensate the other side; that the proposed amendment must not be immaterial or useless or merely technical; that if the proposed amendments introduce a new case or new ground of defence it can be allowed unless it would change the action into one of a substantially different character which could more conveniently be made the subject of a fresh action…” 31. In Institute for Social Accountability & another v Parliament of Kenya & 3 others [2014] eKLR, the court held as follows: “ …The object of amendment of pleadings is to enable the parties to alter their pleadings so as to ensure that the litigation between them is conducted, not on the false hypothesis of the facts already pleaded or the relief or remedy already claimed, but rather on the basis of the true state of the facts which the parties really and finally intend to rely on. The power of amendment makes the function of the court more effective in determining the substantive merits of the case rather than holding it captive to form of the action or proceedings….The court will normally allow parties to make such amendments as may be necessary for determining the real questions in controversy or to avoid a multiplicity of suits, provided there has been no undue delay, no new or inconsistent cause of action is introduced, and no vested interest or accrued legal right is affected and that the amendment can be allowed without an injustice to the other side…” 32. Having now set out the guiding principles and decided cases, it is now the court’s duty to apply the same to the case at hand. The Plaintiff states that it had filed a fresh suit in respect to the suit property. The Defendant objected on grounds that the same was res judicata. The suit was withdrawn so that the interests can be pursued in this matter. 33. The Defendant has got no objection to the amendment of the Plaint save for costs. The court was urged to exercise is discretion in allowing the application. I find no new cause of action has been introduced in the draft Amended Plaint. I find no reason to deny the order as prayed. 34. On whether the Plaintiff has made a case for grant of temporary injunction, I make reference to the case of East African Industries v Trufoods [1972] EA 420, Giella v Cassman Brown & Co. Ltd [1973] EA 358 and Nguruman Limited v Jan Bonde Nielsen & 2 others [2014] eKLR. 35. I also make reference to the ruling of this court dated 19/07/2024. The draft Amended plaint introduced the suit property to the proceedings in addition to the suit properties subject to the said ruling of the court. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19448/eng@2025-11-06 5

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36. In this application, the Plaintiff claims that the charge documents in respect to the suit property were forged. They annexed a Forensic Document Examination Report by Emmanuel Kenga, a Forensic Document examiner disputing the signatures on the charge documents. I find that this issue can only be resolved at the hearing of the matter. The Plaintiff has established its case at a prima facie level. 37. Having made reference to the ruling if this court dated 19/07/2024, where temporary injunction was issued against the Defendant on grounds that allegations of forgery of documents used in the subject loan, I adopt the argument in paragraph 10 to 17 and find that the Plaintiff has established a case for temporary order of injunction pending the hearing and determination of the suit. 38. On costs, this being an interlocutory application, cost shall follow the outcome of the suit. Determination 39. The upshot of the foregoing, the Notice of Motion application dated 10/07/2025 is allowed on the following terms; a. Leave to amend the Plaint is granted. The draft Amended Plaint is deemed as properly filed. b. Temporary order of injunction is hereby granted as per prayer no. 4 pending the hearing and the determination of the suit. c. Costs to abide the outcome of the suit. It is so ordered. DATED, SIGNED AND DELIVERED AT MOMBASA THIS 6TH DAY OF NOVEMBER, 2025. ………………………… HON. F. WANGARI JUDGE In the presence of: Ms. Mwakizozo Advocate h/b for Mr. Oduor Advocate for the Plaintiff Ms. Kiiru Advocate h/b for Ms. Muthee Advocate for the Defendant Ms. Salwa, Court Assistant https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19448/eng@2025-11-06 6

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