Arrow Hi-Fi Limited & another v Habib Bank Zurich & 3 others; Cars Direct Limited & another (Intended Interested Party) [2025] KEHC 157 (KLR)

Arrow Hi-Fi Limited & another v Habib Bank Zurich & 3 others; Cars Direct Limited & another (Intended Interested Party) (Commercial Case E598 of 2021) [2025] KEHC 157 (KLR) (Commercial and Tax) (16 January 2025) (Ruling)

Neutral citation: [2025] KEHC 157 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts)

Commercial and Tax

Commercial Case E598 of 2021

JWW Mong'are, J

January 16, 2025

Between

Arrow Hi-Fi Limited

1st Plaintiff

Aakif Nizarali Virani

2nd Plaintiff

and

Habib Bank Zurich

1st Defendant

Dalali Traders

2nd Defendant

Peter Kage

3rd Defendant

Ram Equity

4th Defendant

and

Cars Direct Limited

Intended Interested Party

Jasvinder Mahal

Intended Interested Party

Ruling

1. For determination before this court are two applications. The first being an application dated 1/3/2022 by Cars Direct Limited, the 1st Intended Interested Party, and the second being an application dated 31/3/2022 by Jasvinder Mahal, the 2nd Intended Interested Party.

2. In the first application, Cars Direct Limited (the 1st Applicant), sought to be enjoined in this suit and be provided with the opportunity to respond to all the applications filed by the parties in this matter.

3. In the second application, Jasvinder Mahal (the second Applicant), sought an order to be enjoined as an Interested Party in this suit or in such capacity as this court may direct.

4. The Applicants argued that they are relevant parties to this suit and they were and continue to be interested in purchasing the property known as LR NO.209/11801/7(the suit property) as advertised by the 2nd Defendant in the newspaper for a public auction.

5. Both the 1st and 2nd Applicants averred that they made a bid for the suit property as per the advertisement but their bids were not considered despite being above the alleged forced market value of the property.

6. The Applicants further averred that the auction was handled illegally as they met all the requirements and offered a better price for the suit property and that they would therefore suffer loss should the court fail to intervene and issue the orders sought in the application. The Applicants asserted that they had a good claim and craved the opportunity to be heard in this suit.

7. The 4th Defendant opposed the 1st application vide a replying affidavit sworn on 29/3/2022 by KAUSHIK RAMJI GUDKA, its director. The deponent averred that the auction was conducted on 18/5/2021, where the 4th Defendant, through the 3rd Defendant, submitted the highest bid and subsequently paid the full purchase price of Kshs. 52,500,000/= and that the auction adhered to due process throughout the auction and acquisition process, refuting allegations of fraud or irregularity.

8. The 4th Defendant further argued that the 1st Applicant has not exhausted remedies under the Auctioneers Act and that the court lacks jurisdiction until the Auctioneers Licensing Board has addressed the matter.

9. The 4th Defendant described the 1st application as an afterthought, having been raised 10 months post-auction, and that it was intended to frustrate the transfer process of the suit property to the successful purchaser at the auction.

10. In opposition to the applications, the 2nd Defendant filed replying affidavits sworn by Stephen Karanja on 4/4/2022 and 10/5/2022.

11. Mr. Karanja averred that the Applicants’ alleged payment toward obtaining a bidding number, the offers to purchase the suit property and the attached personal cheques of the Applicants were not delivered to the 2nd Defendant as they do not bear its stamp acknowledging the receipt thereof; that the offers allegedly made were not valid for failure to provide a banker’s cheque for the mandatory sum of Kshs.500,000. 00/= and without it the Applicants could not participate in the auction.

12. It was further argued that the 2nd Defendant sold the suit property to the 4th Defendant for Kshs.52,500,000/=, who were represented in the auction by the 3rd Defendant and that the said price was reached on the basis of the valuation report that had been availed by the 1st Defendant.

Analysis and Determination: 13. Having carefully analyzed and considered the pleadings before the court, I note that the issue that the arises for determination by the court is: “Whether the Applicants ought to be enjoined in these proceedings.”

14. In Trusted Society of Human Rights Alliance v Matemo & 5 others [2014] KESC 32 (KLR), the Supreme court held as follows on the issue of who qualifies to be enjoined as an Interested Party to a suit :“Suffice it to say that while an interested party has a ‘stake interest’ directly in the case, an amicus’s interest is its ‘fidelity’ to the law: that an informed decision is reached by the Court having taken into account all relevant laws, and entertained legal arguments and principles brought to light in the Courtroom.Consequently, an interested party is one who has a stake in the proceedings, though he or she was not party to the cause ab initio. He or she is one who will be affected by the decision of the Court when it is made, either way. Such a person feels that his or her interest will not be well articulated unless he himself or she herself appears in the proceedings, and champions his or her cause.”

15. In addition, Mativo J (as he then was) further explained when an interested party ought to be enjoined in proceedings in Kenya Medical Laboratory Technicians and Technologists Board & 6 Others v Attorney General & 4 Others [2017] KEHC 8776 (KLR), where he stated:“A person is legally interested in the proceedings only if he can say that it may lead to a result that will affect him legally that is by curtailing his legal rights.[4] In determining whether or not an Applicant has a legal interest in the subject matter of an action sufficient to entitle him to be joined as an interested party the true test lies not so much in an analysis of what are the constituents of the Applicant's rights, but rather in what would be the result on the subject-matter of the action if those rights could be established.[5] It is apparent that a party claiming to be enjoined in proceedings must have an interest in the pending litigation, but the interest must be legal, identifiable or demonstrate a duty.”

16. I concur with the authorities above and the holding that a party seeking to be enjoined in a suit must have a stake or interest in a suit’s subject matter. The interest must be legal and identifiable.

17. In the present case, the 1st Applicant alleged to have expressed interest in the public auction carried out by the 2nd Defendant for the sale of the suit property through writing a letter dated 12/5/2021 to the 2nd Defendant. The 1st Applicant further stated that it offered the 2nd Defendant a cheque for a refundable deposit of Kshs.500,000/=.

18. The 2nd Applicant claimed to have expressed interest in the auction vide a letter to the 2nd Defendant dated 15/5/2021 and that she paid the requisite refundable deposit to the 2nd Defendant through a cheque. She argued that her bid was not considered and therefore the auction was irregular and unfair.

19. However, while analyzing the annexures in the affidavits, I found that there was no proof adduced to confirm that the letters expressing interest in the auction were received by the 2nd Defendants as the same were not stamped as received by it. Additionally, the cheques referred to by the Applicants for the deposit of the sum of Kshs.500,000/= were personal cheques and not bankers’ cheques as required under the notice send out by the Auctioneer.

20. The facts above indicate that the alleged bids made by the two Applicants were irregular from the start therefore they did not create any legal right in relation to the suit property. In other words, the Applicants have failed to establish a legal and identifiable interest in the suit property as they have not demonstrated that their bids during the auction were done in the proper manner. Further, the Applicants have not illustrated how the issues raised in this suit would not be properly adjudicated upon in their absence.

21. It is therefore my finding that any decision made by this court on the suit property will not affect the Applicants. The upshot of the forgoing analysis is that the court finds that the 1st and 2nd Applicants’ applications lack merit and the same are dismissed with cost awarded to the Plaintiffs. It is so ordered.

DATED, SIGNED AND DELIVERED VIRTUALLY AT NAIROBI THIS 16TH DAY OF JANUARY 2025J.W.W. MONG’AREJUDGEIn the Presence:-No appearance for the Plaintiff.Ms. Ngode for the 1st and 2nd Defendants.Mr. Khan for the 5th Defendant.Mr. Musawa holding brief for Mr. Macharia for 2nd Intended Interested Party.Ms. Njoroge holding brief for Mr. Omamo for the 2nd Defendant.Amos - Court Assistant