Fina Bank Limited v Maizena Millers Limited & 4 others [2022] KEHC 11561 (KLR)

Fina Bank Limited v Maizena Millers Limited & 4 others (Civil Suit 379 of 2005) [2022] KEHC 11561 (KLR) (Commercial and Tax) (13 May 2022) (Ruling)

Neutral citation: [2022] KEHC 11561 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Commercial and Tax

Civil Suit 379 of 2005

A Mabeya, J

May 13, 2022

Between

Fina Bank Limited

Plaintiff

and

Maizena Millers Limited

1st Defendant

Dinesh Kumar Zaverchand Jetha

2nd Defendant

Avinash Premchand Shah

3rd Defendant

Rajesh Zaverchand Jetha

4th Defendant

Rashmkant Zaverchand Jetha

5th Defendant

Ruling

1. Before court is a motion on notice brought, inter-alia, under order 42 rule 6(1) & 9 of the Civil Procedure Rules. In the motion, the applicants sought a stay of execution pending appeal against the judgment made on 21/2/2020. There was an alternative prayer for a temporary injunction staying the order of 21/2/2020 pending appeal.

2. The grounds for the application were that, on 21/2/2020, the plaintiff obtained judgment against the 1st, 2nd and 3rd defendants jointly and severally a sum of Kshs.42,000,000/-; that the defendants were granted a temporary stay of execution for 30 days. Thereafter, the applicants filed a notice of appeal on 26/2/2020.

3. The applicants are apprehensive of imminent execution of the decree by the plaintiff and argue that if a stay of execution is not granted, their appeal will be rendered nugatory and they will suffer substantial loss if the decree is executed by the plaintiff.

4. The applicants aver that they are willing and able to give the requisite security as the court may order.

5. Vide a replying affidavit sworn by its legal officer on 30/8/2021, the plaintiff opposed the application.

6. It was averred that the interest to the date of judgment amounted to Ksh.73,735,200/-, bringing the decretal amount to Ksh.115,735,200/- with further interest thereon at 12% per annum from 21/2/2020 plus costs. That the plaintiff’s advocates had on request extended the stay of execution by 60 days which expired on 21/5/2020. That the costs against the 1st, 2nd and 3rd defendant were taxed on 22/2/2021 at Kshs 1,625,016. 67.

7. That the plaintiff’s advocates wrote on more than one occasion to the advocates of the 1st, 2nd and 3rd defendants requesting for a payment plan however no response had been received. Hat as at the time of swearing the affidavit, the amount outstanding on the decree was Kshs. 138,l92,552. 67 and interest continued to accrue on Ksh. l15,735,200 at 12 per cent per annum from 22/8/2021.

8. The plaintiff contended that the first defendant had apparently ceased business and that none of the defendants have made any proposals for payment or shown the financial means to settle the decretal amount.

9. Further, that the plaintiff, now known as Guaranty Trust Bank (Kenya) Ltd has the means to repay any sums paid by the defendants in the event that their appeal is successful.

10. The court has considered the application and the record and the issue for determination is whether a stay of execution should issue against the judgment made on 21/2/2020.

11. Order 42 rule 6(1) of the Civil Procedure Rules clothes the court with the jurisdiction to grant a stay of execution pending appeal. The principles applicable are that; an applicant must show that he will suffer substantial loss if stay is not granted, must offer security for the due performance of the order or decree that might ultimately be binding on him and finally, the application should be made timeously.

12. The applicants submit that they will suffer substantial loss as they will bear the brunt of execution by themselves as the 1st defendant is no longer a going concern and the suit against the 4th and 5th defendants abated. Further, that they have an arguable appeal and if the stay is not granted they stand to suffer substantial loss as the decretal sum is colossal.

13. The applicants further contend that the plaintiff has not demonstrated the attributes of an established bank capable of repaying the decretal sum in the event that the appeal is successful.

14. Conversely, the plaintiff argued that the applicants did not prove that they would suffer substantial loss.

15. The case of Antoine Ndiaye v African Virtual University [2015] eKLR, described what should be illustrated to prove substantial loss. It held: -“So the applicant must show that he will be totally ruined in relation to the appeal if he pays over the decretal sum to the Respondent. in other words he will be reduced to a mere explorer in the judicial process if he does what the decree commands him to do without any prospects of recovering his money should the appeal succeed. Therefore, in a money decree, like is the case here, substantial loss lies in the inability of the Respondent to refund the decretal sum should the appeal succeed. It matters not the amount involved as long as the Respondent cannot pay back.”

16. Judgment in this suit was delivered on 21/2/2020. The subject application was lodged on 9/8/2021. There was an initial temporary stay of 30 days which was extended for another 60 days. That brought the period to 21/5/2021. There was then a period of two and a half months before the application was filed. In the view of this Court, since the costs were yet to be determined and the plaintiff’s position had not greatly altered, the application was filed timeously.

17. The applicants contended that they had an arguable appeal which will be rendered nugatory if the stay is not granted. That the decretal sum is colossal and they may not be able to recover the same, if paid over, as the plaintiff was not an established bank capable of repaying the same. That they were only two from the original 5 defendants.

18. The plaintiff retorted that it was a reputable bank capable of repaying he decretal sum if the appeal is successful.

19. This court takes cognizance that there were originally 5 parties whose liability was found to be join for a consolidated sum of Kshs.42 million. Two of the defendants passed on and their cases abated. The 1st defendant is said to have folded. The two applicants now have to contend with a claim of in excess of Kshs.138 million. By any means, that is a colossal sum. While the bank posits that it is capable of repaying the amount if the appeal is successful, the court finds that it would be fair if the applicants gave the security they have offered.

20. Accordingly, there shall be a stay of execution subject to the applicants giving security for the sum of Kshs.20,000,000/- within 30 days. The plaintiff will have the costs of the application in any event.

It is so ordered.DATED AND DELIVERED AT NAIROBI THIS 13TH DAY OF MAY, 2022. A. MABEYA, FCIArbJUDGE