Background and Introduction
1. This Ruling is concerned solely with the question of whether the Magistrates Court has jurisdiction to hear and determine the present suit. The issue arises following the decision of this Court dated 23rd May 2025, in which the Court allowed the joinder of the 2nd respondent, Chase Bank (in receivership), but declined to join the 1st respondent, Kenya Deposit Insurance Corporation (KDIC), in its capacity as receiver manager of the said bank. KDIC contends that, by virtue of the Kenya Deposit Insurance Act (KDIA), only the High Court is vested with the jurisdiction to determine matters relating to the assets of an institution placed under administration.
2. The applicant, however, contends that Section 55(2) of the KDIA does not mandate that all suits involving KDIC must be instituted in the High Court. It is the applicant’s position that the dispute before the Magistrates Court is a purely contractual claim for specific performance, which does not implicate the exercise of KDIC’s statutory powers. The applicant further argues that there exists no statutory bar preventing the Magistrates Court from adjudicating such a claim, particularly where it falls within the court’s pecuniary jurisdiction.
3. Lastly, the applicant submits that it would serve the interests of judicial economy to have all issues arising from the transaction resolved in the same suit, rather than fragmenting the dispute into multiple proceedings.
Analysis and Determination
4. I have carefully considered the submissions by the respective parties on the issue of jurisdiction. Section 7 of the Magistrates Courts Act, 2015 provides that a magistrate’s court shall have jurisdiction over civil claims, so long as they fall within the prescribed pecuniary limits. There is no dispute that the subject matter falls within the financial jurisdiction of the Magistrate’s court.
5. KDIC on its part relies on Sections 55 (1)(o), 55 (2), 45 (5) and 50 (5) of the KDIA to support its contention that the suit, in so far as it involves a challenge to the acts of a statutory receiver or touches on the assets of an institution under its administration, lies exclusively within the jurisdiction of the High Court.
6. Section 55(1) sets out the powers conferred upon KDIC when acting as a liquidator, while Section 55(2) provides that any person aggrieved by the exercise of such powers may apply to the High Court for appropriate relief. However, as I understand the applicant’s case, the suit against Chase Bank does not invoke any of the powers enumerated under Section 55(1), nor does it challenge KDIC’s actions in its statutory capacity. Rather, both parties agree that the matter before the Magistrates Court concerns civil proceedings arising from a private contractual dispute.
7. The applicant confirms that the dispute arose from a contractual claim in which she seeks specific performance following the purchase of the property known as Nairobi/Block 140/516/045 for a consideration of Kshs. 7,500,000/= from a third party. She asserts that she is the bona fide purchaser for value of the said parcel. It is her case that, subsequent to the purchase, she discovered that the property had been previously charged to Chase Bank by the vendor as security for certain loan facilities, leading to the suit before the Magistrate’s court.
8. In this regard, the applicable provision is Section 56(2) of the Act, which states:
“No injunction may be brought or any other action or civil proceeding may be commenced or continued against the institution or in respect of its assets without the sanction of the Court”.
9. A literal reading of Section 56(2) of the KDIA may suggest that once leave is obtained from the High Court, the statutory bar on commencing or continuing proceedings is effectively lifted. However, KDIC appears to advance a different interpretation, that not only must leave be sought from the High Court, but that the High Court is also the only forum competent to hear and determine such disputes.
10. That construction, however, finds no support either in the wording of the statute or in judicial authority. The term “Court” as used in Section 56(2) is not expressly defined under the KDIA. Nonetheless, when read contextually alongside Sections 54 and 55, it is evident that the reference to “Court” for purposes of granting leave is intended to mean the High Court, in its supervisory capacity. Beyond this, there is no express provision in the Act that ousts the jurisdiction of other courts, such as the Magistrates Court, from entertaining proceedings that are otherwise properly within their jurisdiction.
11. From a holistic reading of the Act, it is evident that not all proceedings touching on an institution under receivership must be heard and determined by the High Court. The statutory framework set out under Sections 55 and 56 of the Act is designed primarily to safeguard the integrity of the resolution and insolvency processes, rather than to oust the general civil jurisdiction of other competent courts.
12. Moreover, even where a judgment is ultimately entered against an institution in receivership, the KDIA provides mechanisms for the handling of such liabilities. Sections 33 and 57 specifically outline the procedure for lodging and proving claims against the estate of the institution. This further supports the position that subordinate courts may entertain claims that do not engage the statutory functions of KDIC, so long as the requisite leave under Section 56(2) has been obtained.
13. I am therefore satisfied that, while the High Court retains supervisory jurisdiction over KDIC in the exercise of its statutory mandate, the grant of leave under Section 56(2) of the KDIA serves solely as a procedural safeguard and does not, in itself, vest exclusive jurisdiction in the High Court to hear all related disputes. Once such leave has been duly obtained, the substantive dispute may proceed before any court that is otherwise legally and procedurally competent to adjudicate it including the Magistrates Court, provided that the claim does not relate to, nor purport to impugn, the exercise of KDIC’s statutory functions as receiver, manager, or liquidator.
Disposition
14. Accordingly, I find no legal impediment to the Magistrates Court proceeding with the hearing and determination of the civil claim.
DATED, SIGNED AND DELIVERED IN NAIROBI
THIS 19th DAY OF JUNE 2025.
F. MUGAMBI
JUDGE
1. This Ruling is concerned solely with the question of whether the Magistrates Court has jurisdiction to hear and determine the present suit. The issue arises following the decision of this Court dated 23rd May 2025, in which the Court allowed the joinder of the 2nd respondent, Chase Bank (in receivership), but declined to join the 1st respondent, Kenya Deposit Insurance Corporation (KDIC), in its capacity as receiver manager of the said bank. KDIC contends that, by virtue of the Kenya Deposit Insurance Act (KDIA), only the High Court is vested with the jurisdiction to determine matters relating to the assets of an institution placed under administration.
2. The applicant, however, contends that Section 55(2) of the KDIA does not mandate that all suits involving KDIC must be instituted in the High Court. It is the applicant’s position that the dispute before the Magistrates Court is a purely contractual claim for specific performance, which does not implicate the exercise of KDIC’s statutory powers. The applicant further argues that there exists no statutory bar preventing the Magistrates Court from adjudicating such a claim, particularly where it falls within the court’s pecuniary jurisdiction.
3. Lastly, the applicant submits that it would serve the interests of judicial economy to have all issues arising from the transaction resolved in the same suit, rather than fragmenting the dispute into multiple proceedings.
Analysis and Determination
4. I have carefully considered the submissions by the respective parties on the issue of jurisdiction. Section 7 of the Magistrates Courts Act, 2015 provides that a magistrate’s court shall have jurisdiction over civil claims, so long as they fall within the prescribed pecuniary limits. There is no dispute that the subject matter falls within the financial jurisdiction of the Magistrate’s court.
5. KDIC on its part relies on Sections 55 (1)(o), 55 (2), 45 (5) and 50 (5) of the KDIA to support its contention that the suit, in so far as it involves a challenge to the acts of a statutory receiver or touches on the assets of an institution under its administration, lies exclusively within the jurisdiction of the High Court.
6. Section 55(1) sets out the powers conferred upon KDIC when acting as a liquidator, while Section 55(2) provides that any person aggrieved by the exercise of such powers may apply to the High Court for appropriate relief. However, as I understand the applicant’s case, the suit against Chase Bank does not invoke any of the powers enumerated under Section 55(1), nor does it challenge KDIC’s actions in its statutory capacity. Rather, both parties agree that the matter before the Magistrates Court concerns civil proceedings arising from a private contractual dispute.
7. The applicant confirms that the dispute arose from a contractual claim in which she seeks specific performance following the purchase of the property known as Nairobi/Block 140/516/045 for a consideration of Kshs. 7,500,000/= from a third party. She asserts that she is the bona fide purchaser for value of the said parcel. It is her case that, subsequent to the purchase, she discovered that the property had been previously charged to Chase Bank by the vendor as security for certain loan facilities, leading to the suit before the Magistrate’s court.
8. In this regard, the applicable provision is Section 56(2) of the Act, which states:
“No injunction may be brought or any other action or civil proceeding may be commenced or continued against the institution or in respect of its assets without the sanction of the Court”.
9. A literal reading of Section 56(2) of the KDIA may suggest that once leave is obtained from the High Court, the statutory bar on commencing or continuing proceedings is effectively lifted. However, KDIC appears to advance a different interpretation, that not only must leave be sought from the High Court, but that the High Court is also the only forum competent to hear and determine such disputes.
10. That construction, however, finds no support either in the wording of the statute or in judicial authority. The term “Court” as used in Section 56(2) is not expressly defined under the KDIA. Nonetheless, when read contextually alongside Sections 54 and 55, it is evident that the reference to “Court” for purposes of granting leave is intended to mean the High Court, in its supervisory capacity. Beyond this, there is no express provision in the Act that ousts the jurisdiction of other courts, such as the Magistrates Court, from entertaining proceedings that are otherwise properly within their jurisdiction.
11. From a holistic reading of the Act, it is evident that not all proceedings touching on an institution under receivership must be heard and determined by the High Court. The statutory framework set out under Sections 55 and 56 of the Act is designed primarily to safeguard the integrity of the resolution and insolvency processes, rather than to oust the general civil jurisdiction of other competent courts.
12. Moreover, even where a judgment is ultimately entered against an institution in receivership, the KDIA provides mechanisms for the handling of such liabilities. Sections 33 and 57 specifically outline the procedure for lodging and proving claims against the estate of the institution. This further supports the position that subordinate courts may entertain claims that do not engage the statutory functions of KDIC, so long as the requisite leave under Section 56(2) has been obtained.
13. I am therefore satisfied that, while the High Court retains supervisory jurisdiction over KDIC in the exercise of its statutory mandate, the grant of leave under Section 56(2) of the KDIA serves solely as a procedural safeguard and does not, in itself, vest exclusive jurisdiction in the High Court to hear all related disputes. Once such leave has been duly obtained, the substantive dispute may proceed before any court that is otherwise legally and procedurally competent to adjudicate it including the Magistrates Court, provided that the claim does not relate to, nor purport to impugn, the exercise of KDIC’s statutory functions as receiver, manager, or liquidator.
Disposition
14. Accordingly, I find no legal impediment to the Magistrates Court proceeding with the hearing and determination of the civil claim.
DATED, SIGNED AND DELIVERED IN NAIROBI
THIS 19th DAY OF JUNE 2025.
F. MUGAMBI
JUDGE