1.By a Plaint dated August 10, 2021, V. G. Patel & Sons Limited (the Plaintiff) sought inter alia a permanent order of injunction restraining the Defendants from advertising for sale, offering for sale, selling or transferring the suit properties being Title No. 2787/1/12 in the name of Lenana Steelcom and Title No. 2787/140 in the name of Laikipia Saw Mill Limited. In addition, the Plaintiff also sought an order restraining the Registrar of Titles in Nairobi from registering or transferring the said properties to any third Party at the instance of the 1st and 2nd defendants.
2.Upon being served with the suit as well as a Notice of Motion application filed by the plaintiff and dated August 10, 2021the 1st defendant filed a notice of preliminary objection dated October 13, 2021 objecting to both the suit and the application on the grounds:
3.Having heard the objection and by a Ruling rendered herein on May 26, 2022, this court overruled the 1st defendant’s preliminary objection while allowing the plaintiff’s Motion dated August 11, 2021.
4.By this second notice of preliminary objection dated November 1, 2022, the 1st defendant objects to the suit and the earlier motion filed by the plaintiff on the grounds:
5.Following directions given herein, it was agreed that the said objection be disposed of by way of written submissions. I have accordingly carefully perused and considered the saidpreliminary objection as well as the written submissions and authorities placed before me by the Learned Advocates representing the Parties herein.
6.By their newpreliminary objection, the 1st defendant asserts that the suit herein is fatally defective on account that the plaintiff never sought the leave of the court prior to the institution of the suit as provided for under Section 56(2) of the Kenya Deposit Insurance Act No. 10 of 2012.
7.In response to the said preliminary objection, the plaintiff asserts that the 1st defendant having filed another preliminary objection earlier, the present one is an afterthought and an attempt to abuse the process of the court by delaying this matter and thereby circumventing justice. It is the plaintiff’s case that the 1st defendant is not an institution capable of taking refuge under section 56(2) of the cited Act and that in any event the 1st defendant has been sued in his individual capacity and as a liquidating agent of the Kenya Deposit Insurance Corporation.
8.Section 56 of the said Kenya Deposit Insurance Act, 2012 provides as follows:(1)No cause of action which subsisted against the directors, management or the institution prior to liquidation shall be maintained against the liquidator.(2)No injunction may be brought or any other action or civil proceedings may be commenced or continued against the institution or in respect of its assets without the sanction of the Court.”
9.Explaining the rationale of the said provision in Andrew G. Muchai v Chase Bank Limited (2016) eKLR, Nzioka J., observed as follows:
10.In the matter before me, the plaintiff describes the 1st defendant John Masega Ombasa at Paragraph 2 of the Plaint filed herein on August 11, 2021 as the Liquidation agent, Middle Africa Finance Company Limited (in liquidation). From the pleadings filed herein, it was apparent that the said Middle Africa Finance Company Limited is a company in liquidation and that as a micro-finance company, it qualifies as an institution which is defined under section 2 of the Kenya Deposit Insurance Act No 10 of 2012 as “a bank, financial institution or mortgage financial company as defined in the Banking Act (cap 488) or a Micro-Finance Bank as defined in the Micro-Finance Act 2008 or any other deposit taking entity licensed by the Central Bank.”
11.As a Liquidating Agent, it was apparent the 1st defendant was reporting to a principal which is disclosed in these proceedings as the Kenya Deposit Insurance Corporation. The plaintiff does not dispute that no leave was sought prior to the commencement of this suit. Nothing would have been easier to demonstrate if leave was sought herein. It is apparent from the prayers made in the Plaint that this suit touches on the assets of the institution under liquidation.
12.In the result I am persuaded that the sanction of the court was required prior to the commencement of the suit. That being the case and this suit have been so filed without leave, the same is defective and misconceived. I strike it out with costs to the 1st defendant.