IBRAHIM SEIKEI T/A MASCO ENTERPRISES v DELPHIS BANK [2004] KEHC 89 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT KISUMU

Civil Appeal 160 of 2003

IBRAHIM SEIKEI T/A MASCO ENTERPRISES.........APPELLANT

AND

DELPHIS BANK........................................................... RESPONDENT

[An Appeal from the decision and ruling of Chief Magistrate'sCourt, Kisumu delivered on 3rd October 2003 by J.M. MungutiEsq.  R.M.INCMCC No. 623 OF 2003]

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RULING OF THE COURT

The application for my determination is aninterlocutory appealfrom the ruling of Hon Mr. Munguti the Resident Magistrate,Kisumu who rejected the application for anorder of injunction to restrainthe respondentfrom advertising for sale land parcelnumber Kisumu/Manyatta "A'/2927. The trial magistrate in hisbrief ruling held:

"It isclear that the applicant wants to hide underhis business name to frustrate the defendant.  The merefact that the applicant's land may be sold is not anirreparable damage.  Onecan buy a parcel of landanywhere and I believe when the applicant offeredit assecurity he knew very well that the same canbe sold."The appellate wasaggrieved by the ruling above andpreferred sixgrounds of appeal in that the trial court did notconsider the principles of granting injunction, the merit of thematter wasnot considered and above all there was nochargecreated upon the applicant's property upon which the respondentwould exerciseits statutory power of sale, as therewas nofurther charge over the parcel of land to entitle the respondentto exercise the power its alleging to exercise.The applicantstated that he had a financial accommodation with the defendantfor KSh.40, 000/= and therefore a charge was created over hisproperty. It wasthe submission of Mr. Muma Advocate for theappellant that a further facility was requested and granted,though no further charge was created entitling the respondent to

Exerciseits statutory power ofsale. The terms and conditions ofthe two facilities weredifferent; hence, Mr.Muma Advocatesubmitted that was a prima facie casewith a probability ofsuccess.And onthe balance of probability we demonstrated byway of deposit slips that the earlierfacility was paid. The trialmagistrate failed to appreciate that the property the defendantwere intending to sell did not have a charge overit. The propertywas overKSh.550, 000/= in value and the balance ofconvenienceheavily tilted in favour of the appellant. He further submittedthat the second facility was granted to Masco Hauliers and therelationship between the first recipient Masco Enterprises andthe secondrecipient should have been determined at a fullhearing. Mr. Muma Advocate referredme to the famous Mboqo& Another Vs. Shah Civil Appeal No. 5/1967 which laid downthe principles an appellate court would consider beforeinterfering with the exercise of the discretion of the trial court.He also referred to Civil Appeal No. 68/1986 Banana HillInvestment Ltd. Vs. Pan AfricanBank and 2 Others. TheCourt interalia held: thatin borderlinecase and where the courtis in doubt, it would decide the application on the balance ofconvenience.

The respondent through Mr. Odongo Advocate opposed theapplication who stated that both the appeal and the applicationhave nomerit. He stated that under the charge, the respondentreserved its right under Sec.83 and84 of RLA and there was noneedto create a further change. The charge itself created,provision that the charge shall be a continuing security forfurther advances to protect the interest ofthe respondent.Itis not for the appellant to cry that the statutory power of salehad not accrued, the moment he defaulted.

Mr.Odongo submitted that there was no material beforethe learnedmagistrate, that the charge was either defective orinvalid. He stated that the defendant/appellant wasjustchanging his trade names from fiascoEnterprises to MascoHauliers, while actually the person who received the monies is theappellant. He referred me to order 29 Rule 1 and I entirely agreewith him that the two names do not make any difference, as therealentity with capacity is IBRAHIM SEIKEI, the recipient ofthe monies advanced. He referredto Milimani Commercial CourtCivil Case No. 360 of 2001: Dr. Simon Waiharo Chege Vs.Paramount Bank of Kenya Ltd. Where it was held by RinqeraJ.: (ashe was then)

"In my view once land has been charged it Ipsofacto, becomes a commodity for sale.  And there is nocommodity for sale whose sale would be uncompensablebydamages.  It stands to reasonthat if any property cannot be sold, it becomes useless as security---------------- the

Law has always been settled that if damages would be anadequate remedy,equity would not normally intervene.Anapplicant who seeks an injunction in thosecircumstances must show that his is exceptional."I must appreciate that what is beforeme for determinationisaninterlocutory appeal and the case ispending beforethelower court. Anddefinitely there is a lot in store to be canvassedbeforethe trial court, soI must not make conclusive finding slest not to prejudice the caseof the parties. The injunction wasrejected by the trialcourt andthe exerciseof my powers andthat ofthe trial court ispurely discretionary, it would not beright to whimsically substitute my discretion withthat ofthe trial court unless:

"1)  the magistrate misdirected himself on law or

2)  That he misapprehended the facts or

3)  That he took accountof matters of which heshould not have taken anaccount or

4)    That he failed to take account of matters ofwhich he should have considered or

5)    That his decision though discretionary wasexpressly wrong and did not have the supportof the law and facts of the case.  See MbogoVs. Shah (Supra)"

The factorsto be considered in the grant of aninterlocutory injunction arewell settled and known and I can dono better then quote the case ofE.A. Industries Vs. Trufoods(1972) E.A. 420:

"A first anapplicant must show a prima facie casewith a probability of success.  Secondly, aninterlocutoryinjunction will not normally be granted unless theapplicant might otherwise suffer irreparable injury,which would not adequately be compensated  by anaword of damages.  Thirdly if the Court is in doubt, itwill decide anapplication in the balance of convenience."It is not in dispute that the appellate is indebted to therespondent and it is also not in dispute monies were advanced atthe request of the appellant. The monies advanced were in twoportions though the security provided is one, in which a chargewas created andvalidly registered. What the appellant wants me to do is to restrict and/or prevent the respondent from theexerciseof its statutory power, which it acquired by virtue ofthe charge which was created over the suit property. I muststate that our courts would be reluctant to prevent the exerciseof statutory power of sale. Unless there is nobasis or if it wasexercised to oppress the chargor or if the chargee had no suchpower in the first instance. I am saying so because the powerstems from an Act ofParliament, which gave due consideration toall factorsin respect of a relationship concluded under thatspecific Act of Parliament. The statute breaths its air from thecontractual obligation of the parties which has been reduced intoa document and a court cannot restrict or prevent the exerciseof such right acquired through an Act of Parliament and fortifiedby a contractual document: We must protect the intention of theparties so that every party adheres to his contractual duty to theother. The appellant wasadvanced the money on the strength ofthe security he provided to the Bank andhe had anobligation torepay the monies under the terms agreed.

In HCCCNo. 2/2000 Mombasa Mrao Ltd. Vs. FirstAmerican Bank of Kenya Ltd. &2 Others. S. K.Shah aCommissioner of Assizeheld:

"That a property ceases to be a security andbecomes a millstone instead if it cannot be realizedupon default."

The appellant admits to have received two differentamounts of money from the respondent, However he states thatthe second loan was advanced to Masco Hauliers and there was nofurther charge inrespect of the secondloan. The main object ofour Banks is to make profits and the moment he requested thesecond loan and he was advanced, the appellant knew or ought tohave known such monies was payable since the Banks do not givetheir monies as a gratuity or love for human kind. I must say thatMascoEnterprises and Masco Hauliers do not have legal capacitybut the person who has the capacity to request and be advancedmonies is the appellant and does not matter whether he wastrading under so many different trade names. The securitydocument provided is in the names of Ibrahim A. Seikai and thetitle No. is Kisumu/Manyatta "A'72927 and that is the propertythe Banks wants to sell in exercise of its statutory power of sale.There is no evidence that the first loan was repaid, although itwas rightly submitted by Mr. Odongo the charge had a provisionmaking it a continuing security for other and/or further advancesto the appellant. In any case Sec.83 and 84 of Cap300 adequately protects the interest of the respondent in thesecurity document. Since the appellant has failed to honour hisobligation under the terms of the charge the respondents had toexercise its powers of sale either through a public auction or bya private treaty.

There is nomaterial beforeme that a prima facie case wasestablished by the appellant and I cannot issue aninjunctionagainst a party wanting to exercise its statutory power of salemerely because the amount due isin dispute. No monies whetherdisputed or admitted was paid into court to make feel that theappellant isacting in good faith, even though he has notestablished a clear case, which is bound to succeed at the trial orhas a chance of successduring the hearing of the matter. I amnot satisfied that the appellant's casefails under the first limpof the requirement of the grant of injunction.

In terms of damages and whether the appellant wouldsuffer irreparable damages which the respondent is incapable ofcompensating, I state the current value of the property is K5h.550,000/= and in my view the Bank would be in financialposition to pay the amount in the event such Isordered. Theword used is "normally" an injunction should not be granted eventhough the applicant has a strong case, However I must state at this juncture the appellant's caseis less than strong to benefitfrom the discretion of the court. In my view the appellant canbeadequately and sufficiently be compensated in damages astheBank has the power and capacity to compensate for the value ofthe property. And since the property was offered as asecurityit become an automatic commodity for sale forit is not agravestone. When the appellant put his hand into the mouth of alion he cannotbe heard crying that the lion is about to bite hishand, for he knew the consequencesof his action or his in action.Having received the monies from the respondent and havingdefaulted he has no other excuse apart from the spuriousallegation, which to me are not tangible and credible evidence toenable me grant the orders sought.

Onbalance of convenience, my assessment isthat there isno doubt in my mind and the balance of convenience heavily tilts infavour ofthe respondent who wants to legitimately exerciseitsrightful statutory power without any infringement on the rightsof the appellant.

Lastly, having gone through all the documents filed by theparties hereto, I have discovered that the appellant made severalrepayment proposals and he failed to honour any of them. He hasbeen given time in order to redeem the charged property by making the necessarypayments to the respondent. He evenaccepted several proposals that were made to him but he appearsless inclined to play fairly. If the appellant wantsto redeem hisproperty the avenue isnot to seek refuge incourt but to pay thedebt.

I have objectively consideredthe application and have tothe conclusion that there is no material, there is no evidenceandthereis no reasonto disturb the ruling of the trial court. Theapplication is dismissed with costs.Dated and delivered at Kisumu this 19 day ofMay 2004.

MOHAMED WARSAMEAG.JUDGE

Delivered in the presence of:

Mr. Ongeri holding brief for Muma forthe appellant.

Mr.Odongo forthe respondent.

Mr. Ongeri:  We pray forleave to appeal.

Mr. Odongo: No objection.

Court: Leave to appeal is granted.

MOHAMED WARSAME

AG.JUDGE

making the necessary payments to the respondent. He evenaccepted several proposals that were made to him but he appearsless inclined to play fairly. If the appellant wants to redeem hisproperty the avenue is not to seek refuge incourt but to pay thedebt.

I have objectively considered the application and have tothe conclusion that there is no material, there is no evidence andthere isno reasonto disturb the ruling of the trial court. Theapplicationis dismissedwith costs.

Dated anddelivered at Kisumu this 19th day of May 2004.

MOHAMED WARSAME

A.G.JUDGE