Makwana & 2 others & another v M’Oriental Bank Limited & another [2025] KEELC 4335 (KLR)

Makwana & 2 others & another v M’Oriental Bank Limited & another (Environment & Land Case E103 of 2024) [2025] KEELC 4335 (KLR) (5 June 2025) (Ruling)

Neutral citation: [2025] KEELC 4335 (KLR)

Republic of Kenya

In the Environment and Land Court at Mombasa

Environment & Land Case E103 of 2024

YM Angima, J

June 5, 2025

Between

Mohit Lalji Mohanlala Makwana, Mansukhlal Mohanlal Manji Makwana & Chandrakant Mohanlal Manji Makwana

1st Plaintiff

Millbrook Garment

2nd Plaintiff

and

M’Oriental Bank Limited

1st Respondent

Sportlight Intercepts

2nd Respondent

Ruling

A. Introduction 1. By a plaint dated 24. 11. 2024 the plaintiffs sued the defendants seeking the following reliefs;a.An order of permanent injunction preventing the defendants either by themselves, their agents, assigns and/or servants employee or anybody acting on its behalf from any irregular selling, auctioning, advertising for sale or offering for sale whether by public auction or private treaty or in any way interfering with property known as Title No. Mombasa/Block XVIII/807. b.A declaration that the procedure for statutory power of sale by the defendants is unlawful and incorrect procedure.c.An order for general damages for mental anguish from date of issuance of the notification of sale.d.Costs of the suit and interests.e.Any other relief that the honourable court may deem fair and just to grant.

2. The plaintiffs pleaded that vide a loan agreement dated August 2017 they obtained a loan facility from the 1st defendant on the security of Title No. Mombasa Block XVIII/507 (the suit property). They pleaded that they always serviced the loan facility as required but the 1st defendant had on or about 20. 11. 2024 advertised the suit property for sale without any lawful justification and without following due process of the law.

3. They pleaded that they were neither issued with the mandatory 90-day statutory notice or the 40 days’ notification of sale as required by law. It was further contended that the defendants had not conducted any forced sale valuation of the suit property prior to its intended sale by public auction.

B. Plaintiffs’ application 4. Simultaneously with the filing of the suit the plaintiffs filed an application dated 07. 11. 2024 seeking, inter alia, a temporary injunction to restrain the defendants from selling, auctioning, foreclosing, attaching, transferring or offering for sale the suit property pending the hearing and determination of the suit.

5. The application was based essentially on the same grounds set out in the plaint. It was supposed by an affidavit sworn by the Mohit Lalji Mohanlal Makwana. It was the plaintiffs’ case that they had never defaulted on the loan facility of Kshs.98 million they had obtained from the 1st defendant and that they were totally surprised to see the suit property advertised for sale by the defendants on 20. 11. 2024. It was contended that the 1st defendant had unlawfully inflated the loan amount and that it was demanding unconscionable interest and penalties. The plaintiffs also denied service of the requisite statutory notices under the law prior to the said advertisement.

C. Defendants’ response 6. The 1st defendant filed a bulky replying affidavit sworn by its Mombasa Branch Manager, Arif Gulamhussein, in opposition to the application. The 1st defendant deposed that the plaintiffs had defaulted in servicing their obligations under the loan facility in terms of payment of both the principal sum and interest. It was contended that a 90-day statutory notice dated 30. 04. 2024 was served upon the plaintiffs by registered post and that upon expiry of the stated period a 40-day notification of sale was served through registered post. The 1st defendant disputed that no valuation was undertaken prior to the advertisement of the suit property for sale and exhibited a copy of a valuation report prepared by coral property consultants. It also disputed that it had levied any unconscionable interest or penalties and contended that the rate of interest was agreed upon as per the terms of the loan agreement and charge documents.

D. Directions on submissions 7. When the application was scheduled for inter partes hearing it was directed that the same shall be canvassed through written submissions. The court also, of its own motion, directed the parties address the court on the issue of the court’s jurisdiction to entertain the suit. The material on record shows that the 1st defendant filed submissions dated 28. 01. 2025 whereas the plaintiffs’ submissions were not on record by the time of preparation to the ruling.

E. Issues for determination 8. The court has considered the plaintiffs’ notice of motion dated 27. 11. 2024, the 1st defendant’s replying affidavit in opposition thereto as well as the material on record. The court is of the view that the main issues for determination in this matter are the following;a.Whether the court has jurisdiction to entertain the suit.b.Whether the plaintiffs have satisfied the principles for the grant of an interim injunction.

F. Analysis and determination a. Whether the court has jurisdiction to entertain the suit 9. The court is of the opinion that the jurisdiction of the Environment and Land Court both under Article 261(2)(b) of the Constitution and Section 13 of the ELC Act was authoritatively interpreted by the Court of Appeal in Cooperative Bank of Kenya Ltd vs Patrick Kangethe Njuguna & 5 Others (2017) eKLR. The Court of Appeal also authoritatively interpreted the meaning of the terms “use”, “occupation” and “title to land”. Anything else failing outside the definition of those terms would usually fall outside the jurisdiction of the court.

10. In the Cooperative Bank of Kenya Ltd case, the Court of Appeal summarized the respondents’ grievances as follows;“As stated earlier, the mainstay of the Kang’ethes’ application was that the statutory sale was unlawful for having been commenced prior to the issuance of the mandatory 90 day statutory notices as by law required. Consequently, that the instruction of the auctioneers was reckless and unlawful as not only was the rightful procedure ignored, but that the sum claimed was in excess of what was owed……”Those grievances are quite similar to the plaintiff’s grievances before this court.

11. In rejecting the appellants submissions that charging of land constituted use of land within the meaning of Article 162 2(b) of the Constitution and Section 13 of the Environment and Land Court Act, the Court of Appeal held as follows;36. By definition, a charge is an interest in land securing the payment of money or money’s worth or the fulfillment of any condition (see Section 2 of the Land Act). As such, it gives rise to a relationship where one person acquires rights over the land of another as security in exchange for money or money’s worth. The rights so acquired are limited to the realization of the security so advanced (see Section 80 of the Land Act). The creation of that relationship therefore, has nothing to do with use of the land (as defined above). Indeed, that relationship is simply limited to ensuring that the chargee is assured of the repayment of the money he has advanced the chargor.

12. Similarly, in the case of Diamond Trust Bank Limited vs FHH Civil Appeal No. 18 of 2020 [2022] ICECA 769 KLR it was held that;28. In Co-operative Bank of Kenya Limited v Patrick Kangethe Njuguna & 5 others (above) it had been contended that the High Court lacked jurisdiction to entertain a matter where the plaintiffs therein had sought to restrain a bank therein from taking steps to sell charged property in exercise of statutory power of sale and that the jurisdiction over the matter lay with the ELC. It was contended in that case that charging the suit land constituted “use” of land within Article 162(2)(b) of the Constitution. In rejecting that contention, this Court stated:“36. By definition, a charge is an interest in land securing the payment of money or money’s worth or the fulfilment of any the condition (see Section 2 of the Land Act). As such, it gives rise to a relationship where one person acquires rights over the land of another as security in exchange of money or money’s worth. The rights so acquired are limited to the realization of the security so advanced (see Section 80 of the Land Act). The creation of that relationship therefore, has nothing to do with use of land (as defined above). Indeed, that relationship is simply limited to ensuring that the chargee is assured of the repayment of the money he has advanced of a charger.37. Further, Section 2 aforesaid recognizes a charge as a disposition in land. A disposition is distinguishable from land use.”29. The Court went on to say that “in addition, the cause of action herein was not the validity of the charge, but a question of accounts.” The other contention on jurisdiction in Co- operative Bank of Kenya Limited v Patrick Kangethe Njuguna & 5 others (above) that was rejected by this Court was the contention that the dispute fell under ELC on account of Section 13(2)(d) of the Environment and Land Court Act which provides that the ELC has power to hear and determine disputes “relating to…land and contracts, choses in action or other instruments granting any enforceable interests in land”. In that regard, the Court expressed that the jurisdiction of the ELC to deal with disputes relating to contracts should be understood within the context of the court’s jurisdiction to deal with disputes connected to “use” of land; that such contracts ought to be incidental to the “use” of land and do not include mortgages, charges, collection of dues and rents which fall within the civil jurisdiction of the High Court.30. The holding by the learned Judge in the present case that “a charge is an instrument granting and enforceable interest in land meaning therefore that this court has jurisdiction to hear disputes relating to charges” therefore flies in the face of the decision of this Court in Co-operative Bank of Kenya Limited v Patrick Kangethe Njuguna & 5 others (above). Recently, this Court in P. J. Dave Flowers Limited v Limuru Hills Limited, Malindi Civil Appeal No. 123 of 2019 in affirming that the ELC had, in the circumstances of that case, jurisdiction to entertain the dispute noted that the appellant therein “clearly had an interest in the suit premises as a purchaser” and had therefore acquired interest that conferred jurisdiction on the ELC to hear and determine the matter.31. In the present case, although the respondent is not privy to the instrument of legal charge, there is no doubt that what the respondent is seeking before the ELC, is to restrain the Bank from exercising its statutory power of sale. That in our view, following the decision of this Court in Co-operative Bank of Kenya Limited v Patrick Kangethe Njuguna & 5 others (above), is a commercial matter for adjudication before the High Court. In our view therefore, the Judge erred in holding that the ELC was the correct forum and that it was properly seized of the matter.”

13. It is evident from the material on record that the plaintiffs’ claim is not a dispute about the use, occupation or title to land. The predominant issue is whether the 1st defendant was entitled to exercise its statutory power of sale under the charge and whether the process was lawfully and procedurally executed. The court is thus of the opinion that it has no jurisdiction to entertain the plaintiffs’ suit since their claim does not fall within the parameters of Article 162(2)(b) of the Constitution of Kenya and Section 13(1) of the Environment and Land Court Act.

14. It has been held that the jurisdiction of a court or tribunal is everything and that a court or tribunal should down its tools the moment it forms the opinion that it has no jurisdiction to entertain a matter. In the case of Owners of Motor Vessel “Lilian S” vs Caltex Oil (Kenya) Ltd [1989] KLR1 it was held by the Court of Appeal that;“Jurisdiction is everything. Without it, a court has no power to make one more step. Where a court has no jurisdiction, there would be no basis for a continuation of proceedings pending other evidence. A court of law down tools in respect of the matter before it the moment it holds the opinion that it is without jurisdiction….”

15. Since the court is of the view that it has no jurisdiction to entertain the suit and application, it must down its tools. It has been held by both the Court of Appeal and the Supreme Court of Kenya that a suit which has been filed in a court without jurisdiction is not transferable to the right forum. The consequence of this is that the plaintiffs’ suit ought to be struck out in its entirety.

b. Whether the plaintiffs have satisfied the principles for the grant of an interim injunction. 16. In view of the court’s finding on the issue of jurisdiction it shall not be necessary to consider this issue since a court without jurisdiction has to down its tools.

G. Conclusion and disposal orders 17. The upshot of the foregoing is that the court finds and holds that it has no jurisdiction to entertain the suit and the application for interim orders. As such, the court makes the following disposal orders;a.The plaintiffs’ notice of motion dated 27. 11. 2024 is hereby struck out.b.The plaintiffs’ suit is hereby struck out in its entirety.c.For the avoidance of doubt, any interim orders in place are hereby vacated.d.There shall be no order as to costs.Orders accordingly.

RULING DATED AND SIGNED AT MOMBASA AND DELIVERED VIRTUALLY VIA MICROSOFT TEAMS ON THIS 5TH DAY OF JUNE, 2025. ……………………Y. M. ANGIMAJUDGEIn the presence of:Gillian - Court assistantMr. Waweru holding brief for Mr. Ngeno for the plaintiffsMr. Masese for the 1st defendantNo appearance for the 2nd defendant