Emma Mwongeli v National Bank of Kenya Limited [2021] KEELRC 1032 (KLR)

REPUBLIC OF KENYA

IN THE EMPLOYMENT AND LABOUR

RELATIONS COURT AT NAIROBI

CAUSE NUMBER 756 OF 2016

BETWEEN

EMMA MWONGELI....................................................................CLAIMANT

VERSUS

NATIONAL BANK OF KENYA LIMITED...........................RESPONDENT

RULING

1. Judgment was entered in favour of the Claimant, for the sum of Kshs. 7,150,000, costs and interest, on 25th October 2019.

2. Costs were subsequently taxed by the Deputy Registrar at Kshs. 310,060.

3. The Respondent paid Kshs. 5,078,563 of the principal sum and Kshs. 310,060 of the sum awarded as costs, while a sum of Kshs. 2,071,563 is argued to have been paid to Kenya Revenue Authority, as Claimant’s Income Tax [PAYE], arising from the award.

4. The Claimant disputes that such PAYE was made, and has applied for execution on the balance, by way of attachment and sale of Respondent’s property.

5. The Respondent applies, through an Application filed on 12th February 2021, to have execution of the warrants of attachment and sale stayed, and the whole execution process set aside. Its position, as explained in the Affidavit of Acting Director of Legal Services Samuel Mundia, sworn on 12th February 2021, is that it has fully satisfied Judgment on record. PAYE has been deducted and remitted to KRA, in accordance with the law.

6. The Claimant states PAYE has not been remitted, and is not reflected in her KRA General Ledger. She insists on proceeding with execution, and argues, that stay of execution cannot be granted, while there is no pending Appeal.

7. Ruling was scheduled for 14th October 2021 but its preparation has been finalized earlier, and Parties notified of its delivery, on the date indicated below.

The Court Finds: -

8. It was affirmed by the Court of Appeal sitting at Mombasa, in Kioko Joseph [suing as the Legal Representative of the estate of Joseph Kilinda v. Bamburi Cement Limited [2017] e-KLR,that Sections 19 [1] [f], and 49 [2] of the Employment Act 2007, mandate Employers to deduct and remit PAYE from Employees’ remuneration to KRA.

9. The Court also invoked Section 37[1] of the Income Tax Act, and the KRA Employers’ Guide on PAYE, as mandating Employers to deduct PAYE from any lump sum amount due to Employees, before releasing the difference.

10. The Court of Appeal also endorsed the view that where Employers and Employees disagree on tax payment or assessment, they ought to engage KRA’s dispute settlement mechanisms. After all this secondary dispute, is a tax dispute.

11. In the light of the law as laid down above, there is no reason for the Claimant to proceed with execution, on the amount paid by the Respondent as PAYE.

12. There is prima facie evidence on record, that PAYE was remitted. If investigations carried out by the Claimant leads her to believe that it has not been remitted, or was not correctly assessed, the Claimant ought to seek the intervention of KRA, not proceed with execution as though she did not have legal obligation to pay income tax.

13. The Court does not think that orders of stay of execution issue, only where there is a pending Appeal. They can issue whenever the Court is satisfied that execution is defective or unwarranted, such as in this Claim, where execution is being pursued, although the Respondent seems to have satisfied the decree in accordance with the applicable law. The record does not indicate that the Respondent was dissatisfied with Judgment on record, so as to lodge an Appeal and an Application for stay of execution pending that Appeal. The Respondent was granted the order of stay, pending hearing of the Application inter partes. The Application includes and prayer for setting aside the entire process of execution.

IT IS ORDERED: -

a. The warrants of attachment and sale issued pursuant to execution on the balance of the decretal amount in this Cause, are recalled and execution process set aside in its entirety.

b. No order on the costs.

DATED, SIGNED AND RELEASED TO THE PARTIES UNDER MINISTRY OF HEALTH AND JUDICIARY COVID-19 GUIDELINES, AT NAIROBI, THIS 10TH DAY OF SEPTEMBER  2021.

James Rika

Judge