CFC STANBIC BANK LIMITED v TEDDY ODHIAMBO ULALO & Another [2011] KEHC 4134 (KLR)

REPUBLICOF KENYA

IN THE HIGH COURT OF KENYA

AT NAIROBI

COMMERCIAL & TAX DIVISION – MILIMANI

CIVIL CASE NO.343 OF 2010

CFC STANBIC BANK LIMITED …………………………. PLAINTIFF

VERSUS

TEDDY ODHIAMBO ULALO ……………………… 1ST DEFENDANT

JOHN GICHUHI NDIRANGU ……………………… 2ND DEFENDANT

R U L I N G

The application before the Court is brought by a Chamber Summons dated 20th May, 2010 and taken out under Sections 1A, 1Band3Aof theCivil Procedure Act; Order XXXIX Rules 1and9 of the Civil Procedure Rules;andall other enabling provisions of the law.  The Plaintiff/Applicant prays from the Court the following orders –

That a temporary injunction do issue freezing the 1st Defendant’s Bank Account No. 241 785 971 with the Kipande House Branch of Kenya Commercial Bank Ltd., and restraining the 1st Defendant from demanding payment of Kshs.9,634,153. 15 from his bankers or any other party pending the hearing and determination of this application.

A temporary injunction do issue freezing the 1st Defendant’s Bank Account No. 241 785 971 with the Kipande House Branch of the Kenya Commercial Bank Ltd., and restraining the 1st Defendant from demanding payment of Kshs.9,634,153. 15 from his bankers or any other party pending the hearing and determination of this suit.

Any other relief the Court deems fit in the interest of justice.

The costs of this application be the Plaintiff’s in any event.

The application is supported by the annexed affidavit of Alfred Mugambi, the Applicant’s Company Secretary and Head of its Legal Affairs Division, and is based on the following grounds –

The Plaintiff has a case for the orders sought that is clearly

strong on the merits and has overwhelming chances of

success in that -

On 13th October, 2006, Kshs.9,634,153. 15 was credited into the 1st Defendant’s Bank Account Number from the Plaintiff’s internal suspense account.

The Plaintiff’s case is that the 2nd Defendant, who was an accomplice of the 1st Defendant, while employed by the Plaintiff, caused the aforesaid credit without any lawful authority or basis.

The Plaintiff’s case is further and/or in the alternative that there was no supporting or underlying transaction against which the aforesaid credit  was made.

There was no payment due to the 1st Defendant from the Plaintiff at the time his account was credited as aforesaid as he never held any account with the Plaintiff.

There was also no payment by any 3rd party in favour of the 1st Defendant through his above-mentioned account against which the aforesaid credit was made in his account.

The Plaintiff’s case is therefore that the 1st Defendant is not entitled to make any demand for the sum of Kshs.9,634,153. 15 from his Bankers.

(b) The 1st Defendant has made demand upon his Bankers,Kenya Commercial Bank Ltd., who may be served with anorder from the Criminal Case for payment of the sum ofKshs.9,634,153. 15, which said sum was repaid to thePlaintiff.

(c) If the money is credited back to the 1st Defendant’saccount, the Plaintiff will be forced to refund the sum toKenya Commercial Bank and will therefore sufferirreparable loss that cannot be compensated in damages asthe Defendant’s means are unknown.

(d) There has been an element of fraud by the Defendantswhich will further be perpetuated if the orders sought arenot granted.

(e) If this suit ultimately succeeds in a situation where theorders sought herein were not granted, the result will havebeen futility in the course of justice.

(f) The balance of convenience is in favour of grant of theprayers sought.

(g) It is therefore in the interest of justice that the prayerssought be granted.

Although the application seems to seek restraining orders against the 1st Defendant alone, both Defendants filed their respective affidavits of service.  In his replying affidavit, the 1st Defendant insists that the money which was credited into his account was credited by his sister towards the purchasing of property for and on her behalf.  The property was to be bought at a consideration of Kshs.6,100,000. 00 thereby leaving a balance of about Kshs.3 million in the 1st Defendant’s account to be applied as per instructions from his sister on another project that was being undertaken.  The money in his account is therefore rightly his money and the Applicant is not entitled to lay any claim on it.

I have considered the pleadings and submissions of the respective parties.  In order to be entitled to an interlocutory injunction, an Applicant has to demonstrate a prima faciecase with a probability of success.  Secondly, such an injunction will not be granted unless the Applicant might otherwise suffer irreparable injury.  Thirdly, when the Court is in doubt, it will decide the application on the balance of convenience.  These principles were clearly articulated in GIELLA v. CASSMAN BROWN & CO. LTD. [1973] E.A. 358.

On the basis of the statements of the record, I find that on 13th October, 2006, an amount of Kshs.9,634,153. 15 was remitted to the 1st Defendant’s account at Kipande House Branch of the Kenya Commercial Bank.  It is not contested that the 1st Defendant did not have an account with the Plaintiff Bank, yet the money that was wired to the 1st Defendant’s account originated from the Plaintiff’s suspense account.  Three days later, that is on 16th October, 2006, the 1st Defendant drew a cheques for Kshs.6,100,000. 00 in favour of the 2nd Defendant who was also a customer at Kipande House Branch of the Kenya Commercial Bank.  The 2nd Defendant was an employee of the Plaintiff Bank from where the funds in question originated.  The suggestion by the 1st Defendant that the money was sent to his account by his sister does not hold water.  If that had been the case, he would have given her name, address and her Bank Account Number.  But he provided none of these particulars.  In the circumstances, having demonstrated that the said money originated from their suspense account, the Plaintiff has established a prima facie case with a probability of success, which satisfies the first condition for the grant of an interlocutory injunction.

The second issue is whether the Plaintiff might suffer irreparable injury if the injunction is not granted.  The amount in question is a fairly large amount of more than Kshs.9,000,000/=.  In the event that the injunction is not granted, and the 1st Defendant withdraws that money, it is not certain that he will be able to refund it if judgment is entered in the Plaintiff’s favour as his means are uncertain.  The Plaintiff might therefore suffer irreparable damage in the absence of such an injunction.  Thirdly, if the Court is in doubt, it has to make a decision on the balance of convenience.  The convenience in this matter dictates that the money be kept in safe custody pending the hearing and finalization of this case so that whoever wins will have ready access to all the money.

For the above reasons, I find that the Plaintiff has satisfied the conditions for the grant of an interlocutory injunction and prayer (3) of the application by Chamber Summons dated 20th May, 2010 is hereby granted as prayed.  Costs in the cause.

Orders accordingly.

DATEDand DELIVERED at NAIROBI this 20th day of January, 2011.

L. NJAGI

JUDGE