Uba Kenya Bank Limited v Mits Electrical Company Limited & 2 others; Development Bank of Kenya Limited (Interested Party) [2023] KEHC 24100 (KLR)

Uba Kenya Bank Limited v Mits Electrical Company Limited & 2 others; Development Bank of Kenya Limited (Interested Party) (Civil Case 171 of 2014 & 20 of 2016 (Consolidated)) [2023] KEHC 24100 (KLR) (Commercial and Tax) (19 October 2023) (Ruling)

Neutral citation: [2023] KEHC 24100 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts Commercial and Tax Division)

Commercial and Tax

Civil Case 171 of 2014 & 20 of 2016 (Consolidated)

DAS Majanja, J

October 19, 2023

Between

Uba Kenya Bank Limited

Plaintiff

and

Mits Electrical Company Limited

1st Defendant

Satya Bhama Gandhi

2nd Defendant

Prieya Darshani Gandhi

3rd Defendant

and

Development Bank Of Kenya Limited

Interested Party

Ruling

Introduction and Background 1. On 03. 02. 2020, the court entered judgment for the Plaintiff (“the Bank”) against the Defendants, jointly and severally, for USD 427,400. 68, interest at 9. 5% per annum from 06. 02. 2014 and costs until payment in full. A Decree was subsequently issued on 12. 07. 2021 and costs were taxed and certified at Kshs. 2,178,330. 12.

2. The Bank has now approached the court by way of the Notice of Motion dated 16. 08. 2023 seeking the Interested Party to preserve any surplus monies and/or funds obtained from the sale of the property known as L.R No. 3734/96 (“the charged property”) and pay to the Bank any surplus money and/or funds obtained from the sale in satisfaction of the Decree. The application is supported by the grounds on its face and the supporting affidavit of the Bank’s Collections Officer, Joseph Lule sworn on 16. 08. 2023. It is opposed by the Defendants through the replying affidavits of the 2nd Defendant and the Legal Representative of the 3rd Defendant’s estate, Raj Kumar Gandhi, all sworn on 31. 08. 2023.

3. The Bank avers that its attempts to execute the Decree has failed and the only asset known belonging to the Defendants capable of satisfying the Decree is the charged property. It is currently charged to the Interested Party to secure Kshs 57,500,000. 00 which the Defendants have defaulted in repaying and that the Interested Party is in the process of selling the charged property in order to recover the loan amount due to it and there is a high likelihood that there will be a surplus remaining from the proceeds of its sale.

4. The Bank’s is apprehensive that the Defendants may waste away/transfer and/or utilize any surplus proceeds from the sale while the Decree still remains unpaid. It therefore urges the court to allow the application so that surplus proceeds from the sale of the charged property by the Interested party be utilized to settle the Decree.

5. The Defendants oppose the application. They contend that despite knowing that the 3rd Defendant had passed away in 2017, the Bank still went ahead with the hearing of this matter. That the 2nd Defendant personally communicated this position to the court to the extent of adducing a death certificate but the Bank failed to comply with Order 24 of the Civil Procedure Rules. As the 3rd Defendant died, the Defendants contend that the suit against her abated on or about 07. 11. 2018 by dint of the provisions of Order 24 hence the Bank cannot proceed with execution against her as contemplated in the current application.

6. The Defendants urge that the Bank has not demonstrated that there is an imminent sale of the charged property to warrant the court’s intervention. That the present application mirrors a similar application the Bank filed dated 27. 01. 2016 which the court dismissed on the ground that it did not meet the threshold required under Order 39 of the Civil Procedure Rules. The Defendants point out that the valuation report adduced therein is dated 19. 07. 2017 and was used at the initial loan application stage and does not demonstrate an imminent threat of sale. They submit that the document should not be relied on as it is irregularly obtained by the Bank contrary to the Data Protection Act.

7. The Defendants contend that the charged property belongs to the estate of the 3rd Defendant who was never heard in this matter and currently the charged property is being occupied by their elderly mother. The Defendants state that the Bank’s actions are malicious as it has concurrently also instituted execution proceedings in the form of extraction of warrants of arrest against them and instituted a criminal suit against the 2nd Defendant in Kibera where it has been desperately trying to have her cash bail revoked and upon failure of the same, they instituted an unwarranted application against the magistrate in an attempt to have him recuse himself from the matter.

8. The Defendants also point out the judgment of this court is pending appeal before the Court of Appeal which issued a conditional stay of proceedings in Civil Appeal No. Appeal E397 of 2020.

Analysis and Determination 9. Disposal of the Bank’s application depends on whether the Bank can execute a decree against a deceased person. There is no dispute that the 3rd Defendant against whom the decree is sought to be executed died in 2017 and the Bank was aware of this fact. The Defendants’ contention is that the Decree cannot be executed as against the 3rd Defendant as the suit against her abated once she passed away and the Bank failed to take necessary steps to regularize the pleadings in compliance with Order 24 of the Civil Procedure Rules which part that is material provides as follows:4. Procedure in case of death of one of several defendants or of sole defendant [Order 24, rule 4. ](1)Where one of two or more defendants dies and the cause of action does not survive or continue against the surviving defendant or defendants alone, or a sole defendant or sole surviving defendant dies and the cause of action survives or continues, the court, on an application made in that behalf, shall cause the legal representative of the deceased defendant to be made a party and shall proceed with the suit.(2)Any person so made a party may make any defence appropriate to his character as legal representative of the deceased defendant.(3)Where within one year no application is made under subrule (1), the suit shall abate as against the deceased defendant

10. The question for the court is whether the suit abates as a matter of law or whether the court has to make an order to that effect bearing in mind that the court has heard the suit and rendered judgment. It is as plain as a pikestaff that the suit abates by operation of law under Order 24 Rule 4(3) above when no substitution is made within one year of the death of a defendant. The Bank’s suit against the 3rd Defendant abated on 07. 11. 2018 by operation of law whether in fact the Bank informed the court of the death or not as the point of reference is the fact of death of the Defendant.

11. Whether abatement operates as a matter of law has been discussed in several cases among them Kenya Farmers Cooperative Union Ltd v Charles Murgor (deceased) t/a Kaptabei Coffee Estate [2005] eKLR where the court observed:In the instant case there was no application for substitution made within one year since the death of the defendant. Therefore as a matter of law the suit against him abated .... It had abated on or about 23rd April, 1996, that is, one year since the death of the defendant... a suit has abated it has ceased to exit. There is no suit upon which a trial can be conducted and judgment pronounced. Purporting to hear a suit which has abated is really an exercise in futility...

12. The position that suit abates automatically is fortified by Order 24 Rule 7(2) of the Civil Procedure Rules which permits a plaintiff to, “apply for an order to revive the suit which has abated or to set aside an order for dismissal….” It is therefore beyond peradventure that the suit against the 3rd Defendant having abated and there being no application for revival and substitution, the judgment against her cannot stand or otherwise be enforced in the manner the Plaintiff seeks.

Disposition 13. For these reasons, I make the following dispositive orders:a.The Plaintiff’s application dated 16. 08. 2023 is dismissed.b.As the Plaintiff’s suit against the 3rd defendant has abated, the Judgment dated 03. 02. 2020 be and is hereby set aside only as against the 3rd Defendant.c.The Plaintiff is to pay costs of this application.

DATED AND DELIVERED AT NAIROBI THIS 19TH DAY OF OCTOBER 2023. D. S. MAJANJAJUDGE