FULCHAND V PANACHANDA J SHAH & 6 OTHERS [2009] KEHC 2103 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT NAIROBI (MILIMANI LAW COURTS)

CIVIL SUIT 261 OF 2004

FULCHAND …………………………………………………………………………….. PLAINTIFF

VERSUS

PANACHANDA J SHAH …………………………………………………………1ST DEFENDANT

DIPAK P. SHAH …………………………………………………………………..2ND DEFENDANT

AZIZ A. LALANI …………………………………………………………………. 3RD DEFENDANT

HANSRAJ F. GUDKA ……………………………………………………………  4TH DEFENDANT

P.J. DEDHIA ………………………………………………………………………. 5TH DEFENDANT

AJUL H. GUDKA ………………………………………………………………….. 6TH DEFENDANT

RELIANCE BANK LTD (in liquidation) being sued through

THE DEPOSIT PROTECTION FUND BOARD ……………………………. 7TH DEFENDANT

RULING

By way of restating the brief background of this matter, the plaintiff by  an amended plaint filed on 10th November 2005, he sued the 1st to the 7th defendants.  The plaintiff’s claim is that on or about 1999, the 7th defendant was placed under statutory management of the Central Bank of Kenya and as that date, the plaintiff had a credit balance of Ksh.13,134. 016/15 in his account.  The plaintiff lodged a claim with the Liquidation Agent, he but was informed that his account with the 7th defendant could not be traced.  The plaintiff thus claims that the 1st to the 5th defendants  who were directors of the 6th defendant,   failed in their contractual duty and or negligently omitted to do certain acts as a result of which the plaintiff lost his deposit.

The particulars of the negligence are pleaded, and so are the particulars of fraud.  The 1st, 2nd, 3rd and 7th defendants filed their statement of defence and denied liability both in general and specific terms.  The 4th and 5th defendants have never been served with the summonses to enter appearance.  Several orders have been given for the 4th and 5th defendants to be served with summonses to enter appearance outside the jurisdiction

On 23rd July 2007 the 7th defendant filed a notice of motion seeking to dismiss the plaintiff’s suit for want of prosecution.  By a ruling dated 22nd February 2008, the plaintiff was ordered to pay thrown away costs and to take appropriate steps within three months to set down the suit for hearing, in default of any of the two conditions the plaintiffs suit was to stand dismissed as against the 7th defendant.

On 15th September 2008 the 1st and 2nd defendants filed an application under order X Rule 11 (2) of the Civil Procedure Rules, seeking for an order directing the plaintiff to make discovery on oath of all documents which are in his possession.  That application was settled by a consent order made on 30th July 2008 in the following terms:-

“By consent the plaintiff do make discovery on oath of all documents stated in the 1st and 2nd defendants’ request for discovery dated 01. 07. 08 within 14 days from today.  Applicant given leave to apply”.

The 1st and 2nd defendant have now filed  the  Notice of Motion dated 25th February 2009, which is for determination seeking for the dismissal of the plaintiff’s suit for want or prosecution.  The 3rd defendant similarly filed a Notice of Motion dated 26th June 2007 seeking for an order that the plaintiffs’ suit be dismissed for want of prosecution.  These two applications were heard together and I will endeavor to determine them in this ruling.

The application by the 1st and 2nd defendant is supported by the affidavit of Mr. Wasuna sworn on 26th February 2009. This application is premised on the grounds that the 1st and 2nd defendants requested the plaintiff to make discovery on oath by providing the following:-

1. Claims forms lodged by the plaintiff with the Liquidation Agent, Reliance Bank Ltd and referred to in paragraphs 6 and 7 of the Plaint.

2. Copy of the demand letter dated on or about 11th September 2002 by the plaintiff to the Liquidation Agent of the Reliance Bank Ltd.

3. In-depth investigation report of the Liquidation Agent of the Reliance Bank Ltd of March, 2003 and referred to in paragraph 25 of the plaint.

4. Passbooks given by the Reliance Bank Ltd to the Plaintiff and referred to interalia in paragraph 25 of the plaint.

5. All or any other document material to the suit.

According to the 1st and 2nd defendants’ counsel the plaintiff is aware that the documents he is  supposed to avail to enable the defendants prepare their case as they  are referred to in the pleadings.  Those documents are necessary for the defendants’ defence  and in order  to avoid ambush.  The plaintiff has refused to provide the list of documents under oath.  All the Advocate for the plaintiff  did, was to say the documents were are in  possession of the 7th defendant which contradicts the fact that counsel for the plaintiff agreed when the consent order was recorded to avail the documents.

The plaintiff has not made any attempt to set aside order by consent which order by consent cannot in any event  be set aside, unless if there are grounds such as fraud, mistake or collusion which is contrary to public policy.  Thus the consent order recorded on 30th July 2008 is still valid.  It is now over ten months and the plaintiff has not complied.  Since the plaintiff has failed to comply with the order of discovery the suit should be struck off.  It is not fair to keep the defendants anxious about their defence or as counsel put it,  to have the sword of Damocles hanging over the defendant’s neck all the time. Moreover the claim by the plaintiff is based in tort which should be prosecuted within three years.  The cause of action according to the plaint arose in 1999 when the 7th defendant was placed under receivership.  Pursuant to order X Rule 20 of the Civil Procedure Rules, the suit should be dismissed for want of prosecution.

Counsel for the 3rd defendant urged the application dated 26th June 2007 seeking for the plaintiff’s suit is dismissed for want of prosecution or in the alternative the suit be struck out as against the 3rd defendant.  This suit was filed way back in 2004.  To date no significant steps have been taken towards the prosecution.  Before a party lodges a case in the court, he must have the facts and the documents to support his claim.  It is now five years since the suit was filed and the 3rd defendant has not been served with the list of documents, so that he can prepare for his defence.

The other reasons that  the 4th and 5th defendants have not been served with the summonses cannot keep every party in abeyance.  The 3rd defendant cannot be held at ransom for years on end because some defendants have not been traced.  The plaintiff could have sought to prosecute the suit against the available defendants.  The 3rd defendant pleaded that he resigned as the director of the 5th defendant in 1995, as per paragraph 13 of his defence, which fact is not controverted.  Since the plaintiff alleges that he discovered a fraud by the defendants in 2003, his claim is time barred.

Moreover the plaintiff has not disclosed if he applied any due diligence to discover the fraud.  Since the claim is filed outside the limitation period the plaintiff has a duty to show due diligence leading to the discovery of fraud.  Counsel was of the view that the suit was time barred as against the 3rd defendant.  In any case the plaintiff has gone to sleep and the so called sword of Damacles should be lifted from the shoulders of the 3rd defendant.

This application was opposed by Mr. Mose on behalf of the plaintiff.  He relied on his replying affidavit sworn on 27th March 2009.  He contends that they filed a list of documents on 5th August 2008,  pursuant to the consent order on  discovery which was also served upon all the defendants.  When counsel entered into consent order, he contended that he was under the mistaken impression that his client was in possession of the documents requested.  He has now sworn an affidavit saying that after careful consideration of the documents he has realized that some were  in  possession of the 7th defendant.  He urged the court to allow the plaintiff to proceed to prove the case against the defendants after full hearing.

As regards service of summonses against the 4th and 5th defendants, counsel argued that all the defendants are necessary parties for the effectual determination of this matter.  The plaintiff has made strenuous efforts to serve them with summonses outside the jurisdiction.  The summonses are supposed to be served by substituted service through the Kenya High Commission in London but they have not succeeded in doing so. As regards the application by the 3rd defendants the pleadings have not closed since the summons have not been served.

Having set out the back ground of this matter as well as the rival arguments by counsel for the 1st and 2nd defendants,  3rd defendant and counsel for the plaintiff, the issue for determination is whether the plaintiffs’ suit should be dismissed for want of prosecution as against the 1st, 2nd  and 3rd defendants.  It is not in dispute that a consent order was entered into between the 1st, 2nd defendants counsel and the plaintiffs’ counsel wherein the plaintiff agreed to make discovery on oath on all the documents requested for on 1st July 2008.

Counsel for the plaintiff now contends that the consent order was entered into by mistake because he has recently discovered that the documents are in possession of the 7th defendant.  That argument is without basis because  counsel for the plaintiff has not sought to set aside the consent order.  After the consent order was entered nothing was done until the 1st and 2nd defendants woke the plaintiff once more  from slumber, when they applied to dismiss  the suit.

The essence of discovery in civil litigation is for purposes of ensuring the trial is conducted fairly, openly and without surprises as far as possible.  Discovery is also meant to inform the other side of the nature of the case that they have to meet so that they can be prepared for the trial.   Thus under order X Rule 20  of the Civil Procedure Rules, it is also provided, where a party fails to comply with an order to answer interrogatories the suit can be dismissed for want of prosecution.

After considering this case, it is evident that the plaintiff has been lethargic in the prosecution of this matter.  For a suit which was filed in May 2004 it has taken five years for summonses to be served upon the 4th and 5th defendants.  The plaintiff has not filed  a single document in support of his claim against the 1st , 2nd and 3rd defendants, for a cause of action that arose on or about 1999, when the 7th defendant was placed under receivership.

On the other hand, the defendants have to bear the burden of worrying about their defence which I agree is like a sword of Damocles hanging round their necks.  The plaintiff has not been able to show any good reason why they have failed to comply with the consent order and to get on with this case.  Accordingly the application by the 1st, 2nd and 3rd defendants are allowed and the suit as against them is hereby struck out in its entirety with costs.

RULING READ AND SIGNED AT NAIROBI THIS 3RD DAY OF JULY 2009.

M.K. KOOME

JUDGE