Benisa Limited v CMC DI Ravenna, Kenya Limited; BSA Bank Kenya PLC (Objector) [2022] KEHC 3401 (KLR)

Benisa Limited v CMC DI Ravenna, Kenya Limited; BSA Bank Kenya PLC (Objector) (Civil Case E121 of 2019) [2022] KEHC 3401 (KLR) (Commercial and Tax) (6 May 2022) (Ruling)

Neutral citation: [2022] KEHC 3401 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts Commercial and Tax Division)

Commercial and Tax

Civil Case E121 of 2019

DAS Majanja, J

May 6, 2022

Between

Benisa Limited

Plaintiff

and

CMC DI Ravenna, Kenya Limited

Defendant

and

BSA Bank Kenya PLC

Objector

Ruling

1. The application before the court today has been brought by ABSA Bank KenyaPLC (“the objector”) by way of the Notice of Motion dated February 5, 2022. It is made, inter alia, under Order 22 Rule 51 (2) of the Civil Procedure Rules and it seeks to lift the attachment over the objector’s assets. The application is supported by the affidavit of the objector’s Head of Business Support and Corporate Recoveries, Faith Mutuku, sworn on February 8, 2022. The application is supported by the defendant, the judgment debtor herein. It is opposed by the Plaintiff through the affidavit of its Managing Director Benjamin Kubai Macharia sworn on April 5, 2022.

2. It is not in dispute that the Plaintiff has attached motor vehicles registration numbers KCK 287C, KCN 090G, KCK 284C, KCK 285C, KCN 087G, KCN 089G, KCN 100G, KCN 088G, KCK 291C, KCK 293C, KCJ 009X, KCN 252G, KCN 030M and KCK 359Y (‘the subject motor vehicles’’) through Anfield Auctioneers (‘’the Auctioneers’’).

3. Under Order 22 Rule 51, the objector bears the burden of showing that it has a legal and/or equitable interest in the property attached. Once this interest is established, the court raises the attachment and the execution is set aside.

4. In this case, the objector’s interest is based on several Asset Finance Agreements and Credit Facility Letters between the defendant and the objector by which the defendant agreed to transfer its ownership interest in the subject motor vehicles as security in consideration for certain financial facilities. These facilities were ultimately secured by a charge over the subject motor vehicles. All these securities over the subject motor vehicles were the basis of a charge registered under the Movable Property Security Rights Act, 2017 (‘’the MPSRA’’) and a MPSR Certificate No. AA US758 duly issued to the objector. To date, the objector has neither terminated nor discharged the interests registered on each of the subject motor vehicles and it is on this basis that it makes the application.

5. In its response and opposition to the application, the plaintiff states that the Auctioneers conducted a search of the motor vehicles at the National Transport and Safety Authority (NTSA) registry on October 28, 2019. That the search indicated that the subject motor vehicles were in the defendant’s name hence it was decided to proceed with execution. In its view, it was not aware of the objector’s interests and that the said interests were not in fact registered.

6. Counsel for the parties have made brief oral submissions on the matter but as I have stated, the key issue here is whether the objector has established its interest, whether legal or equitable.

7. I find and hold that the objector has demonstrated that the subject motor vehicles are the subject of a security interest which has been registered under the MPSRA and a certificate issued thereunder confirming the said interests. The defendant has not contested this certificate otherwise impugned it. Under section 15 of the MPSRA, “A security right in any moveable asset is effective against third parties, if a notice to the security is registered with the Registrar”. This effectively means that the plaintiff is deemed to have knowledge of these interests and it is bound by them. In the circumstances, I find and hold that the objector has established its interest in the subject motor vehicles. Consequently, the attachment is now raised. As the objector has a security interest in the subject motor vehicles and has a right to their possession, it shall be entitled to them forthwith.

8. The parties have raised and submitted at length of the existence or non-existence of court orders staying execution. Having resolved the objection raised by the objector, I do not think it is necessary to deal with all the other issues. However, I would be remiss if I did comment on the fact that the defendant is the subject of ongoing insolvency proceedings in Ravenna Italy. Counsel for the plaintiff admitted as much and conceded that they were party to the proceedings where the foreign insolvency proceedings were recognised.

9. The fact that the defendant is the subject of insolvency proceedings has consequences under the Insolvency Act, 2015. Under section 22(b) of the Fifth Schedule to the Insolvency Act dealing with Cross Border Insolvency, execution against the debtor’s assets is stayed. This stay is by operation of law. By proceeding with execution, it is clear that the Plaintiff, as an unsecured creditor, violated the statutory moratorium in place in an attempt to gain preference over the other unsecured creditors which is contrary to the objects of the Insolvency Act. Such execution cannot be allowed to proceed.

10. For the reason I have given, the objectors application dated February 8, 2022 succeeds on the following terms:a.The attachment of the motor vehicles KCK 287C, KCN 090G, KCK 284C, KCK 285C, KCN 087G, KCN 089G, KCN 100G, KCN 088G, KCK 291C, KCK 293C, KCJ 009X, KCN 252G, KCN 030M and KCK 359Y is now raised and the warrants of attachment and sale set aside.b.For the avoidance of doubt, the subject motor vehicles shall be released to the objector forthwith.c.The plaintiff shall bear the costs of the execution and the objector’s costs which I assess at KES. 150,000. 00 to be paid to the objector.

DATED ANDDELIVERED ATNAIROBI THIS6THDAY OF MAY 2022. D. S. MAJANJAJUDGEMr Githinji with him Mr Njagi instructed by Mugendi Karigi and Company Advocates for the Plaintiff.Mr Anami instructed by Kidenda, Onyango and Associates Advocates for the Defendant.Ms Ogula with her Ms Athman instructed by Iseme, Kamau and Maema Advocates for the Objector.