REPUBLIC OF KENYAIN THE HIGH COURT OF KENYA AT NAIROBICOMMERCIAL & TAX DIVISION
CIVIL CASE NO. E433 OF 2003
ROSE FLORENCE WANJIRU (Suing on her own behalf and on behalf of and representing and for the benefit of all persons interested in and being past, present and future account holders with specified banks/institutions in Kenya and includes all those persons enjoined pursuant to the Honourable Court’s Order issued on 27th August 2015)...............................................................................................................1ST PLAINTIFF
AND
THE ESTATE OF PETER JOSEPH NGIGI........................................187TH PLAINTIFF
VERSUS
STANDARD CHARTERED BANK KENYA LIMITED.....................1ST DEFENDANT
KENYA BANKERS ASSOCIATION................................................2ND DEFENDANT
CENTRAL BANK OF KENYA..........................................................3RD DEFENDANT
IDB CAPITAL LIMITED....................................................................4TH DEFENDANT
JUDGMENT
Introduction and Background
1. This suit has had a long and protracted history before the Court. It was initially instituted in 2003 as a representative action brought by the 1st Plaintiff on behalf of account holders against various banking institutions and entities associated with the banking sector.
2. The Plaintiffs’ case is based on unlawful and fraudulent increases in bank charges, ledger fees, commissions and other banking-related charges imposed by various member banks/institutions of the 2nd Defendant association. The Plaintiffs contended that such increases were implemented without the prior approval of the Minister for Finance as allegedly required under section 44 of the Banking Act. They pleaded that the impugned charges were imposed upon depositors, account holders, mortgagors and borrowers over several years, resulting in unlawful enrichment by the banks at the expense of customers.
3. The Plaintiffs contended that the 2nd Defendant, being the Kenya Bankers Association, represented the interests of member banks and participated in or supported the implementation of the impugned charges. They also alleged that the 3rd Defendant, the Central Bank of Kenya, failed in its statutory duty to supervise and regulate the banking institutions and to prevent the alleged contraventions of section 44 of the Banking Act.
4. They sought several declaratory orders, including declarations that the member banks/institutions of the 1st and 2nd Defendants acted in contravention of section 44 of the Banking Act from November 1989; that the income accruing from the allegedly unlawful increases belongs to the affected customers and not the banks; and that the 3rd Defendant failed in its statutory duty to regulate and supervise the banking institutions. The Plaintiffs also sought a monetary award against the 1st Defendant in the sum pleaded in the Plaint, together with interest at court rates from the date of filing suit. In addition, they prayed for general damages, costs of the suit, and any further relief that the Court may deem fit and just to grant.
5. The Defendants filed and served their respective defences in which they denied all the allegations. In addition, the 2nd Defendant pleaded that the suit was time-barred in accordance with the Limitation of Actions Act; the issues raised are res judicata; and that the suit is defective. The 3rd Defendant denied allegations of negligence on its part and contended that the suit against it is misconceived; and in short, urged the court to find that it has been misjoined as a party to the proceedings
6. Following various interlocutory applications and appellate proceedings, additional parties were joined to the suit pursuant to orders issued by the Court on 27th August 2015. The operative pleading is the Amended Plaint dated 13th April 2016.
7. By a ruling delivered on 13th May 2022, the Court struck out the claims by the 183rd and 188th Plaintiffs and stayed the claim of the 184th Plaintiff for being sub judice. Consequently, the claims that ultimately proceeded to hearing were the claims by the 1st Plaintiff against the 1st and 3rd Defendants and the claim by the 187th Plaintiff relating to facilities advanced to Kenya Shoe Company Limited.
8. The Court heard oral evidence from the witnesses called by the surviving parties and thereafter directed parties to file written submissions.
9. On 9th March 2026, after the hearing of the suit, but prior to this judgment, the 1 st Plaintiff and the 1 st Defendant filed a consent, duly adopted by this court as an order marking the suit between the said parties as fully and finally settled with no order as to costs.
10. Having considered the pleadings, evidence, submissions and authorities cited by counsel, the Court now renders its judgment.
The Claims Before the Court
11. The 1st Plaintiff’s claim against the 3rd Defendant is predicated on allegations that the Central Bank of Kenya failed in its statutory duty to regulate and enforce compliance with section 44 of the Banking Act. Save for the claim advanced by the 187th Plaintiff, no independent claim remained against the 2nd Defendant.
12. The 187th Plaintiff’s claim concerns facilities advanced to Kenya Shoe Company Limited by Kenya Commercial Finance Company Limited, now KCB Bank Kenya Limited, represented by the 2 nd Defendant, Kenya Bankers Association (KBA).
13. The 187th Plaintiff contends that illegal and excessive interest was charged without ministerial approval contrary to section 44 of the Banking Act and that this resulted in the forced sale of a portion of LR No. 170/7 belonging to the estate of Peter Joseph Ngigi.
14. The 187th Plaintiff seeks, inter alia, refund of Kshs. 3,500,000 paid to discharge the charge, damages, interest and costs.
15. No specific live claim was pending against the 4 th Defendant at the date of the trial and the 4 th Defendant did not participate in the proceedings before this court.
Issues for Determination
16. Two preliminary questions ought to be determined at the outset before the court may consider the evidence in relation to the Plaintiffs’ claims. These are the questions relating to the jurisdiction of the court; and the question of whether or not the 3 rd Defendant has been misjoined to the proceedings.
17. It is trite that jurisdiction is everything and without it a court may not take a further single step. Jurisdiction must therefore be established in light of the submission and defence that the 187 th Claim is statute barred.
18. A further issue that must be determined from the outset is whether the 187 th Plaintiff’s claims have been made against the correct parties, or as the 3 rd Defendant put it, whether or not it has been misjoined to the proceedings.
19. The issues that fall for determination are accordingly as follows:
a) Whether the 187th Plaintiff’s claim is statute barred?
b) Whether the Central Bank of Kenya was misjoined to the proceedings?
c) Whether the Plaintiffs are entitled to the reliefs sought?
d) Which party should bear the costs of the suit?
Analysis and Determination
Whether the 187th Plaintiff’s Claim is statute barred?
20. Briefly, returning to the background, the 2nd Defendant, Kenya Bankers Association (“KBA”), was sued in a representative capacity on behalf of its member banks. By the time the suit proceeded to hearing, the only surviving claim against the 2nd Defendant concerned the claim by the 187th Plaintiff arising from facilities advanced by Kenya Commercial Finance Company Limited (“KCFC”), now KCB Bank Kenya Limited, to Kenya Shoe Company Limited.
21. The 187th Plaintiff’s case, in summary, is that illegal and excessive interest was charged on facilities advanced to Kenya Shoe Company Limited contrary to section 44 of the Banking Act and that as a consequence the estate of Peter Joseph Ngigi was compelled to sell a portion of LR No. 170/7 in order to discharge the indebtedness.
22. As stated, the Court will first address the issue of limitation of actions before considering the factual merits of the claim. If the claim is statute barred, that finding is dispositive of the claim.
Chronology of events
23. The evidence placed before the Court establishes the following chronology and sequence of events:
a) On or about 1983, Kenya Shoe Company Limited obtained loan facilities from KCFC.
b) On 10th December 1987, an overdraft facility was advanced and a legal charge was created over LR No. 170/7.
c) By correspondence dated 10th May 1995, Pauline Ngigi proposed sale of a portion of LR No. 170/7 in order to raise settlement funds.
d) On 27th March 1998, leave was granted in the succession proceedings permitting sale of the property.
e) By conveyance dated 16th June 1998, a portion of LR No. 170/7 was sold for Kshs. 14,000,000.
f) Out of the sale proceeds, approximately Kshs. 3,500,000 was remitted to discharge the charge held by KCFC/KCB.
g) The 187th Plaintiff was joined into these proceedings in 2016 pursuant to the amended pleadings. This was the first time that a claim was made in respect of the estate of Mr. Ngigi against KCB.
24. Accordingly, based on the timeline as set out above, approximately eighteen years elapsed between the payment complained of and the institution of the claim by the 187th Plaintiff.
25. It is also evident from the letter dated 6 th December, 1995, found in the Plaintiff trial bundle, that the 187 th Plaintiff was aware of the amount outstanding, the interest charged, and the rate of interest applied as at December 1995.
26. The question therefore, is, is the claim time bound?
27. Section 19(1) of the Limitation of Actions Act provides:
“An action shall not be brought to recover a principal sum of money secured by a mortgage or other charge on immovable property, or to recover proceeds of the sale of land, after the end of twelve years from the date when the right to receive the money accrued.”
28. Further, section 4(1) of the Limitation of Actions Act provides:
“The following actions may not be brought after the end of six years from the date on which the cause of action accrued—(a) actions founded on contract.”
29. The Court of Appeal in Iga v Makerere University [1972] EA 65 stated:
“A plaint which is barred by limitation is a plaint barred by law. The Limitation Act does not extinguish a suit or action itself but operates to bar the claim or remedy sought for, and when a suit is time barred, the Court cannot grant the remedy or relief sought.”
30. The rationale behind limitation statutes is settled. They exist to ensure finality in litigation and to prevent revival of stale claims long after the relevant transactions and evidence have faded with time.
30. In the present matter, the 187th Plaintiff’s claim is fundamentally one seeking recovery of monies paid from proceeds of sale of charged property and damages allegedly arising therefrom.
31. The evidence before Court establishes that the payment complained of occurred in 1998. The present claim was only introduced in 2016.
32. The Court is unable to accept the submission by the Plaintiff that the orders permitting joinder of additional Plaintiffs in 2014 and 2015 operated to revive claims already extinguished by statute.
33. The relevant order issued by His Lordship merely permitted joinder into the representative proceedings. They did not expressly enlarge statutory limitation periods nor grant leave to institute time barred causes of action. The relevant ruling of Gikonyo, J, stated as follows:
“I belong to the school of thought who posits that matters of limitation of actions should be determined at the trial and not at preliminary stage… Therefore, arguments on limitation should be used at the trial as a defence….And as Section 44 of the Banking Act has its delineated scope of application in law, these are matters which the trial court shall determine at the trial.”
34. It is therefore clear to me that Gikonyo, J. did not consider the issue of limitation at the time of making orders relating to joinder. That issue was reserved for the trial court, being this court, for determination.
35. The Plaintiff argued that the orders which allowed amendment and or joinder defeated the limitation of action. He relied on the decision of the Court of Appeal in James Ochieng’ Oduol T/A Ochieng Oduol & Co. Advocates v Richard Kuloba [2008] KECA 53 (KLR) , where the court stated that:
“ In special circumstances amendment of a plaint may be allowed, notwithstanding that the effect will be to defeat a defence of limitation (BARCLAYS BANK D.C.O. VS. SHAMSUDIN [1973] E.A. 451). However, such amendments can only be allowed where peculiar circumstances are present.”
36. However, that decision is distinguishable from the facts in the present matter because here Gikonyo, J. expressly stated that he did not consider the issue of limitation at the time of making his orders relating to amendment and or joinder. The said orders could not have defeated the limitation because they were not in the contemplation of the court at the time the orders were made.
37. Moreover, if the Plaintiff intended to rely on James Ochieng’ Oduol T/A Ochieng Oduol & Co. Advocates v Richard Kuloba, he ought to have established the presence of special or “peculiar circumstances” to warrant the extension of or to “defeat” of the limitation period. This was not done either.
38. Therefore, based on the chronology and sequence of events as set out above, it is evident that by the time the 187th Plaintiff was joined into the proceedings, any cause of action arising from the remittance of the proceeds of sale in 1998 had long become statute barred.
39. Once a claim is barred by limitation, the Court lacks jurisdiction to grant the substantive remedies sought in relation to that cause of action.
40. Consequently, the Court finds that the claim by the 187th Plaintiff is statute barred. In light of that finding, it would not be appropriate for this court to determine the remaining substantive issues raised in relation to the merits of its claim or to consider the defence of res judicata raised by the 2 nd Defendant
41. The claim is accordingly struck out with costs.
Whether the 3 rd Defendant was misjoined to the proceedings?
42. The answer to the above question requires a review of the statutory and constitutional duties and powers of the CBK. As stated, such an inquiry must precede a factual interrogation of the lawfulness of each and every increase in rates or charges because the court must first determine if the CBK is responsible for the actions that are the subject matter of the suit.
43. In the event the above is affirmative, the court may then move to consider whether or not breach, and or negligence was occasioned, and consider the appropriate reliefs.
Whether the Central Bank of Kenya breached any statutory duty
44. The CBK is established by Article 231(1) of the Constitution. Article 231(2) provides that:-
“The Central Bank of Kenya shall be responsible for formulating monetary policy promoting price stability, issuing currency and performing other functions conferred on it by an act of Parliament.
45. At the material time, it was established by Section 3(1) of the Central Banking Act with the principal object of formulating and implementing monetary policy directed to achieving stability in the general level of prices and to foster the liquidity, solvency and proper functioning of a stable market based financial system.
46. It also had powers under Section 39 of the Act, acting in consultation with the Minister then in charge of Treasury and Finance to determine and publish the maximum and minimum rates of interest which specified banks may charge for loans or advances. Save that Section 44 of the Banking Act provides that no institution shall increase its rate of banking or other charges except with the prior approval of the Cabinet Secretary.
47. A reading of the above section clarifies that approval of increases in banking rates and other charges was vested in the Minister, now the Cabinet Secretary. Article 153(2) of the Constitution, further clarifies that a Cabinet Secretary is accountable to the President of the Republic of Kenya, and not the 3rd Defendant.
48. Section 45 of the Banking Act further states as follows:-
“1. The Cabinet Secretary shall consult with the Central Bank in the exercise of his functions under this Act.
2. Where the approval of the Cabinet Secretary is required under any provision of this Act, the application for such approval shall be submitted through the Central Bank.” (emphasis mine)
49. The above provisions establish that the statutory power of approval is expressly vested in the Minister, now Cabinet Secretary, responsible for finance. Section 45 of the Banking Act further provides that the Cabinet Secretary will consult with the Central Bank and that applications requiring approval would be submitted through the Central Bank.
50. My understanding of the above is that the statutory framework distinguishes between the approval function and the consultative and administrative role of the Central Bank.
51. It is not in dispute that prior to 2003, there existed no formalised regulatory framework prescribing the procedure for obtaining approvals under section 44. Subsequently, guidelines and regulations were introduced and applications were thereafter routed through the Central Bank for onward transmission and approval as provided under section 45(2) of the Banking Act.
52. The evidence before the court shows that the Minister provided several guidelines through the 3rd Defendant by way of various circulars in relation to this process. These include Banking Circular No. 3 of 2003 dated the 17th June, 2003 and Banking Circular No. 05 of 2003 dated 22nd July, 2003 . From the said dates, banks and financial institutions commenced the submissions of their rates of charges through the 3rd Defendant, who then submitted the same for approval by the Cabinet Secretary.
53. The said approvals were then to be granted by the then Minister of finance as per Section 45(2) of the Banking Act. Subsequently, the then Minister for Finance on 12th May 2006 published regulations in the Kenya Gazette, Legal Notice No. 34 of 2006 being the “Banking (Increase of Rate of Banking and other charges) Regulations” prescribing the procedure for submitting application for increase of rate of banking and other charges through the 3rd Defendant for the Minister’s approval.
54. Together with the said Regulations, the then Minister of Finance published a Gazette Notice No. 35 of 2006 delegating his powers under Section 44 of the Banking Act to the Governor of the Central Bank of Kenya.
55. The question that arises is whether or not such delegation was lawful? In HCC Petition E007 of 2025 Kenya Bankers Association vs Attorney General, the High Court stated the following:
“ The Supreme Court judgment of 28 th June 2024 and the ruling of 14 th March 2025 have settled the position and confirmed with finality that the Cabinet Secretary responsible for matters relating to finance has the responsibility and authority on restricting the increase in banking rates, including the interest rates to be charged on loans advanced to customers.”
56. I return to the Plaintiff’s argument, which in short, was that no such approvals had been issued by the Minister to support the increase in charges complained of. The 3 rd Defendant’s position, on the other hand, is that Section 38 of the Interpretation and General Provisions Act (the “IGP Act”) applies to the present situation. The same reads as follows:
“Where by an Act, the exercise of a power or the performance of a duty is conferred upon or is vested in the President, the Attorney General or a Cabinet Secretary , the President, the Attorney-General or the Cabinet Secretary, may, unless by law expressly prohibited from so doing delegate by notice in the Gazette to a person by name, or if the person for the time being holding office specified in the notice, the exercise of that power or the performance of that duty subject to such conditions, exceptions or qualifications as the President, the Attorney General or Cabinet Secretary may specify in the notice.” (emphasis mine)
57. The 3 rd Defendant submitted that the Banking Act does not contain any restriction or limitation on the power of the Cabinet Secretary to delegate his powers to the Governor of CBK, which was delegated pursuant to the above circular, and in accordance with the law.
58. The 3 rd Defendant explained that the process relating to an increase in rates or charges therefore required banks or financial institutions to commence application for prior approval under the various Regulations, and the then Minister of Finance processed such approvals as provide for under the Regulations and the law. It also pointed out that the said process does not impose a duty on the 3 rd Defendant to enforce compliance with section 44 of the Banking Act.
59. I am persuaded that this interpretation is based on a plain reading of the law. Reading the various provisions, I am further persuaded that the Central Bank’s role under section 45 is limited to consultation and transmission of applications. The statute does not confer upon the Central Bank the primary approval mandate contemplated under section 44.
60. The duty and obligation of the 3rd Defendant as conferred by Article 231(2) of the Constitution is to be responsible for formulating monetary policy, promoting price stability, issuing currency and performing other functions conferred on it by an Act of Parliament.
61. The Banking Act by contrast confers the function of approval of any increase on rates and charges by financial institutions on the Cabinet Secretary who has, at his discretion, as permitted by the Interpretation and General Provisions Act, delegated the said function but not ultimate responsibility to the Governor of the Central Bank of Kenya.
62. The Defendant submitted, and I accept the view that because the duty for enforcement is placed on the Cabinet Secretary and prescribed by Section 44, then the obligation to set up a compliance framework must also rest with the Cabinet Secretary, and not the Central Bank of Kenya. This is found at Section 45 of the Act which provides that the Cabinet Secretary shall consult with the 3rd Defendant in exercise of his powers. It further limits the role of the 3rd Defendant to that of receiving applications and forwarding for Cabinet Secretary’s approval.
63. I am guided by the decision of the court in Republic v Minister for Finance & Another ex parte Nyong’o & 2 Others [2007] eKLR, where the court emphasized that executive powers and regulatory frameworks are creatures of statute and must be exercised within the limits conferred by Parliament. In my view, it would not be appropriate for this court to extend the role of the CBK beyond the statutory framework.
64. I am further guided by text set out in F A R Bennion MA on “Statutory Interpretation A code” 4th edn, which states as follows at Page 70:
“ In a 2001 case Buston LJ said: (1) A public body can only do that which it is authorised to do by positive law. In other words of Laws J in R -vs Somerset County Council ex p Fewings [1995] 1 All ER 513 at 524, that is a sinew of the rule of law. (2) In practical terms, the powers and duties of a local authority under that rule will only be found in statutory form.”
65. The above text, although not binding, is persuasive. The statute in this case, through Section 45 of the Act, limits the role of the 3rd Defendant to consultation with the Cabinet Secretary, and to receiving applications. The duty to approve such applications is solely left to the Cabinet Secretary, who, this court notes is not a party to the present suit.
66. This limited duty was affirmed by the Supreme Court in Stanbic Bank Kenya Ltd v Santowels Ltd [2024] KESC 31 (KLR). The court found that banks/financial institutions are required to seek the approval of the Cabinet Secretary responsible for matters relating to finance prior to increasing interest rates on loans and facilities advanced.
67. It is therefore evident to me that CBK had neither the powers to approve the rates nor did it have the power to require the Minister to do the same. In the circumstances, I am not satisfied that the Plaintiffs proved negligence or breach of statutory duty against the 3rd Defendant. It simply could not purport to do what it is not authorized in law to do.
68. The question therefore is who, if anyone, is liable for enforcement and accountability of Section 44. The Supreme Court in Petition No. E005 supra, stated as follows:
“ As a result, the Cabinet Secretary as the delegating authority remains accountable for the outcome of the delegated power and the Cabinet Secretary can only donate his authority but not responsibility. He retains residual authority to vary or cancel a delegation as explained in Section 38(4) of the Interpretation and General Provisions Act as follows:
“No delegation under Subsection (I) of a power or duty shall exclude the exercise of the power or the performance of the duty by the person by whom the delegation made”
69. Based on the law as set out above, it is the Minister or Cabinet Secretary that remains liable despite delegation to the Governor of the CBK, vide Legal Notice No. 35 of 2006.
70. The above position is in line with the Carltona principle set out in the decision of the Court of Appeal in England in the case of Carltona Ltd Vs Commissioners of Works & Others [1943] 2 AII ER 560. In the said decision the court stated as follows:
“In the administration of government in this country the functions which are given to the ministers (and constitutionally properly given to the ministers, because they are responsible) are functions so multifarious that no minister could ever personally attend to them…”
71. The principle recognises that ministerial powers are frequently exercised through authorised officials. The court further stated that:
“The duties imposed upon ministers and the powers given to ministers are normally exercised under the authority of the minister by responsible officials of the department. Public business could not be carried on if that were not the case. Constitutionally the decision of such an official is of course the decision of the minister. The minister is responsible.” (emphasis mine)
72. The equivalent to the above principle is found in Section 38 of the Interpretation and General Provisions Act which gives effect to the same logic relation to delegation of authority, but not responsibility.
73. Applying the above principle, the logical conclusion is that approvals granted pursuant to the delegated framework were permissible under the applicable legal framework. The Governor of the CBK carried out a delegated function, lawfully delegated, but did so on behalf of the Cabinet Secretary, who retained ministerial accountability. Responsibility therefore remains with the delegating authority. This is the premise upon which the Carltona principle is based.
74. I therefore find that that the 3rd Defendant acted within the law in undertaking the transactions under Section 44 of the Banking Act as mandated and delegated by Legal Notice No. 35 of 20th April 2006 in its capacity as the donee of delegated authority. It did not, and could not, however retain responsibility for the outcome of its actions or decision made in such capacity. That responsibility remained with the Minister.
75. Having stated the above, the upshot is that any further inquiry is academic. The relevant Cabinet Secretary is not a party to these proceedings and no relief may issue against the 3 rd Defendant for actions that are the responsibility of a different party.
76. I therefore accept the submission by the 3 rd Defendant and hereby find and hold that it has been misjoined to the suit.
Reliefs
77. In view of the findings above, the 1 st Plaintiff failed to establish liability against the Defendants.
78. The Court is not satisfied that the Plaintiffs proved breach of statutory duty, negligence, unlawful conduct or recoverable loss as pleaded against the Defendants.
79. The claims for damages, refund, interest and declaratory relief consequently fail.
80. The 187 th Plaintiffs’ case is barred by limitation.
Costs
81. Costs shall follow the event pursuant to section 27 of the Civil Procedure Act.
82. The Court finds no basis for departing from the ordinary rule.
Disposition
83. The 187 th Plaintiff’s suit is hereby struck out with costs.
84. The 1 st Plaintiff’s case is dismissed with costs.
CIVIL CASE NO. E433 OF 2003
ROSE FLORENCE WANJIRU (Suing on her own behalf and on behalf of and representing and for the benefit of all persons interested in and being past, present and future account holders with specified banks/institutions in Kenya and includes all those persons enjoined pursuant to the Honourable Court’s Order issued on 27th August 2015)...............................................................................................................1ST PLAINTIFF
AND
THE ESTATE OF PETER JOSEPH NGIGI........................................187TH PLAINTIFF
VERSUS
STANDARD CHARTERED BANK KENYA LIMITED.....................1ST DEFENDANT
KENYA BANKERS ASSOCIATION................................................2ND DEFENDANT
CENTRAL BANK OF KENYA..........................................................3RD DEFENDANT
IDB CAPITAL LIMITED....................................................................4TH DEFENDANT
JUDGMENT
Introduction and Background
1. This suit has had a long and protracted history before the Court. It was initially instituted in 2003 as a representative action brought by the 1st Plaintiff on behalf of account holders against various banking institutions and entities associated with the banking sector.
2. The Plaintiffs’ case is based on unlawful and fraudulent increases in bank charges, ledger fees, commissions and other banking-related charges imposed by various member banks/institutions of the 2nd Defendant association. The Plaintiffs contended that such increases were implemented without the prior approval of the Minister for Finance as allegedly required under section 44 of the Banking Act. They pleaded that the impugned charges were imposed upon depositors, account holders, mortgagors and borrowers over several years, resulting in unlawful enrichment by the banks at the expense of customers.
3. The Plaintiffs contended that the 2nd Defendant, being the Kenya Bankers Association, represented the interests of member banks and participated in or supported the implementation of the impugned charges. They also alleged that the 3rd Defendant, the Central Bank of Kenya, failed in its statutory duty to supervise and regulate the banking institutions and to prevent the alleged contraventions of section 44 of the Banking Act.
4. They sought several declaratory orders, including declarations that the member banks/institutions of the 1st and 2nd Defendants acted in contravention of section 44 of the Banking Act from November 1989; that the income accruing from the allegedly unlawful increases belongs to the affected customers and not the banks; and that the 3rd Defendant failed in its statutory duty to regulate and supervise the banking institutions. The Plaintiffs also sought a monetary award against the 1st Defendant in the sum pleaded in the Plaint, together with interest at court rates from the date of filing suit. In addition, they prayed for general damages, costs of the suit, and any further relief that the Court may deem fit and just to grant.
5. The Defendants filed and served their respective defences in which they denied all the allegations. In addition, the 2nd Defendant pleaded that the suit was time-barred in accordance with the Limitation of Actions Act; the issues raised are res judicata; and that the suit is defective. The 3rd Defendant denied allegations of negligence on its part and contended that the suit against it is misconceived; and in short, urged the court to find that it has been misjoined as a party to the proceedings
6. Following various interlocutory applications and appellate proceedings, additional parties were joined to the suit pursuant to orders issued by the Court on 27th August 2015. The operative pleading is the Amended Plaint dated 13th April 2016.
7. By a ruling delivered on 13th May 2022, the Court struck out the claims by the 183rd and 188th Plaintiffs and stayed the claim of the 184th Plaintiff for being sub judice. Consequently, the claims that ultimately proceeded to hearing were the claims by the 1st Plaintiff against the 1st and 3rd Defendants and the claim by the 187th Plaintiff relating to facilities advanced to Kenya Shoe Company Limited.
8. The Court heard oral evidence from the witnesses called by the surviving parties and thereafter directed parties to file written submissions.
9. On 9th March 2026, after the hearing of the suit, but prior to this judgment, the 1 st Plaintiff and the 1 st Defendant filed a consent, duly adopted by this court as an order marking the suit between the said parties as fully and finally settled with no order as to costs.
10. Having considered the pleadings, evidence, submissions and authorities cited by counsel, the Court now renders its judgment.
The Claims Before the Court
11. The 1st Plaintiff’s claim against the 3rd Defendant is predicated on allegations that the Central Bank of Kenya failed in its statutory duty to regulate and enforce compliance with section 44 of the Banking Act. Save for the claim advanced by the 187th Plaintiff, no independent claim remained against the 2nd Defendant.
12. The 187th Plaintiff’s claim concerns facilities advanced to Kenya Shoe Company Limited by Kenya Commercial Finance Company Limited, now KCB Bank Kenya Limited, represented by the 2 nd Defendant, Kenya Bankers Association (KBA).
13. The 187th Plaintiff contends that illegal and excessive interest was charged without ministerial approval contrary to section 44 of the Banking Act and that this resulted in the forced sale of a portion of LR No. 170/7 belonging to the estate of Peter Joseph Ngigi.
14. The 187th Plaintiff seeks, inter alia, refund of Kshs. 3,500,000 paid to discharge the charge, damages, interest and costs.
15. No specific live claim was pending against the 4 th Defendant at the date of the trial and the 4 th Defendant did not participate in the proceedings before this court.
Issues for Determination
16. Two preliminary questions ought to be determined at the outset before the court may consider the evidence in relation to the Plaintiffs’ claims. These are the questions relating to the jurisdiction of the court; and the question of whether or not the 3 rd Defendant has been misjoined to the proceedings.
17. It is trite that jurisdiction is everything and without it a court may not take a further single step. Jurisdiction must therefore be established in light of the submission and defence that the 187 th Claim is statute barred.
18. A further issue that must be determined from the outset is whether the 187 th Plaintiff’s claims have been made against the correct parties, or as the 3 rd Defendant put it, whether or not it has been misjoined to the proceedings.
19. The issues that fall for determination are accordingly as follows:
a) Whether the 187th Plaintiff’s claim is statute barred?
b) Whether the Central Bank of Kenya was misjoined to the proceedings?
c) Whether the Plaintiffs are entitled to the reliefs sought?
d) Which party should bear the costs of the suit?
Analysis and Determination
Whether the 187th Plaintiff’s Claim is statute barred?
20. Briefly, returning to the background, the 2nd Defendant, Kenya Bankers Association (“KBA”), was sued in a representative capacity on behalf of its member banks. By the time the suit proceeded to hearing, the only surviving claim against the 2nd Defendant concerned the claim by the 187th Plaintiff arising from facilities advanced by Kenya Commercial Finance Company Limited (“KCFC”), now KCB Bank Kenya Limited, to Kenya Shoe Company Limited.
21. The 187th Plaintiff’s case, in summary, is that illegal and excessive interest was charged on facilities advanced to Kenya Shoe Company Limited contrary to section 44 of the Banking Act and that as a consequence the estate of Peter Joseph Ngigi was compelled to sell a portion of LR No. 170/7 in order to discharge the indebtedness.
22. As stated, the Court will first address the issue of limitation of actions before considering the factual merits of the claim. If the claim is statute barred, that finding is dispositive of the claim.
Chronology of events
23. The evidence placed before the Court establishes the following chronology and sequence of events:
a) On or about 1983, Kenya Shoe Company Limited obtained loan facilities from KCFC.
b) On 10th December 1987, an overdraft facility was advanced and a legal charge was created over LR No. 170/7.
c) By correspondence dated 10th May 1995, Pauline Ngigi proposed sale of a portion of LR No. 170/7 in order to raise settlement funds.
d) On 27th March 1998, leave was granted in the succession proceedings permitting sale of the property.
e) By conveyance dated 16th June 1998, a portion of LR No. 170/7 was sold for Kshs. 14,000,000.
f) Out of the sale proceeds, approximately Kshs. 3,500,000 was remitted to discharge the charge held by KCFC/KCB.
g) The 187th Plaintiff was joined into these proceedings in 2016 pursuant to the amended pleadings. This was the first time that a claim was made in respect of the estate of Mr. Ngigi against KCB.
24. Accordingly, based on the timeline as set out above, approximately eighteen years elapsed between the payment complained of and the institution of the claim by the 187th Plaintiff.
25. It is also evident from the letter dated 6 th December, 1995, found in the Plaintiff trial bundle, that the 187 th Plaintiff was aware of the amount outstanding, the interest charged, and the rate of interest applied as at December 1995.
26. The question therefore, is, is the claim time bound?
27. Section 19(1) of the Limitation of Actions Act provides:
“An action shall not be brought to recover a principal sum of money secured by a mortgage or other charge on immovable property, or to recover proceeds of the sale of land, after the end of twelve years from the date when the right to receive the money accrued.”
28. Further, section 4(1) of the Limitation of Actions Act provides:
“The following actions may not be brought after the end of six years from the date on which the cause of action accrued—(a) actions founded on contract.”
29. The Court of Appeal in Iga v Makerere University [1972] EA 65 stated:
“A plaint which is barred by limitation is a plaint barred by law. The Limitation Act does not extinguish a suit or action itself but operates to bar the claim or remedy sought for, and when a suit is time barred, the Court cannot grant the remedy or relief sought.”
30. The rationale behind limitation statutes is settled. They exist to ensure finality in litigation and to prevent revival of stale claims long after the relevant transactions and evidence have faded with time.
30. In the present matter, the 187th Plaintiff’s claim is fundamentally one seeking recovery of monies paid from proceeds of sale of charged property and damages allegedly arising therefrom.
31. The evidence before Court establishes that the payment complained of occurred in 1998. The present claim was only introduced in 2016.
32. The Court is unable to accept the submission by the Plaintiff that the orders permitting joinder of additional Plaintiffs in 2014 and 2015 operated to revive claims already extinguished by statute.
33. The relevant order issued by His Lordship merely permitted joinder into the representative proceedings. They did not expressly enlarge statutory limitation periods nor grant leave to institute time barred causes of action. The relevant ruling of Gikonyo, J, stated as follows:
“I belong to the school of thought who posits that matters of limitation of actions should be determined at the trial and not at preliminary stage… Therefore, arguments on limitation should be used at the trial as a defence….And as Section 44 of the Banking Act has its delineated scope of application in law, these are matters which the trial court shall determine at the trial.”
34. It is therefore clear to me that Gikonyo, J. did not consider the issue of limitation at the time of making orders relating to joinder. That issue was reserved for the trial court, being this court, for determination.
35. The Plaintiff argued that the orders which allowed amendment and or joinder defeated the limitation of action. He relied on the decision of the Court of Appeal in James Ochieng’ Oduol T/A Ochieng Oduol & Co. Advocates v Richard Kuloba [2008] KECA 53 (KLR) , where the court stated that:
“ In special circumstances amendment of a plaint may be allowed, notwithstanding that the effect will be to defeat a defence of limitation (BARCLAYS BANK D.C.O. VS. SHAMSUDIN [1973] E.A. 451). However, such amendments can only be allowed where peculiar circumstances are present.”
36. However, that decision is distinguishable from the facts in the present matter because here Gikonyo, J. expressly stated that he did not consider the issue of limitation at the time of making his orders relating to amendment and or joinder. The said orders could not have defeated the limitation because they were not in the contemplation of the court at the time the orders were made.
37. Moreover, if the Plaintiff intended to rely on James Ochieng’ Oduol T/A Ochieng Oduol & Co. Advocates v Richard Kuloba, he ought to have established the presence of special or “peculiar circumstances” to warrant the extension of or to “defeat” of the limitation period. This was not done either.
38. Therefore, based on the chronology and sequence of events as set out above, it is evident that by the time the 187th Plaintiff was joined into the proceedings, any cause of action arising from the remittance of the proceeds of sale in 1998 had long become statute barred.
39. Once a claim is barred by limitation, the Court lacks jurisdiction to grant the substantive remedies sought in relation to that cause of action.
40. Consequently, the Court finds that the claim by the 187th Plaintiff is statute barred. In light of that finding, it would not be appropriate for this court to determine the remaining substantive issues raised in relation to the merits of its claim or to consider the defence of res judicata raised by the 2 nd Defendant
41. The claim is accordingly struck out with costs.
Whether the 3 rd Defendant was misjoined to the proceedings?
42. The answer to the above question requires a review of the statutory and constitutional duties and powers of the CBK. As stated, such an inquiry must precede a factual interrogation of the lawfulness of each and every increase in rates or charges because the court must first determine if the CBK is responsible for the actions that are the subject matter of the suit.
43. In the event the above is affirmative, the court may then move to consider whether or not breach, and or negligence was occasioned, and consider the appropriate reliefs.
Whether the Central Bank of Kenya breached any statutory duty
44. The CBK is established by Article 231(1) of the Constitution. Article 231(2) provides that:-
“The Central Bank of Kenya shall be responsible for formulating monetary policy promoting price stability, issuing currency and performing other functions conferred on it by an act of Parliament.
45. At the material time, it was established by Section 3(1) of the Central Banking Act with the principal object of formulating and implementing monetary policy directed to achieving stability in the general level of prices and to foster the liquidity, solvency and proper functioning of a stable market based financial system.
46. It also had powers under Section 39 of the Act, acting in consultation with the Minister then in charge of Treasury and Finance to determine and publish the maximum and minimum rates of interest which specified banks may charge for loans or advances. Save that Section 44 of the Banking Act provides that no institution shall increase its rate of banking or other charges except with the prior approval of the Cabinet Secretary.
47. A reading of the above section clarifies that approval of increases in banking rates and other charges was vested in the Minister, now the Cabinet Secretary. Article 153(2) of the Constitution, further clarifies that a Cabinet Secretary is accountable to the President of the Republic of Kenya, and not the 3rd Defendant.
48. Section 45 of the Banking Act further states as follows:-
“1. The Cabinet Secretary shall consult with the Central Bank in the exercise of his functions under this Act.
2. Where the approval of the Cabinet Secretary is required under any provision of this Act, the application for such approval shall be submitted through the Central Bank.” (emphasis mine)
49. The above provisions establish that the statutory power of approval is expressly vested in the Minister, now Cabinet Secretary, responsible for finance. Section 45 of the Banking Act further provides that the Cabinet Secretary will consult with the Central Bank and that applications requiring approval would be submitted through the Central Bank.
50. My understanding of the above is that the statutory framework distinguishes between the approval function and the consultative and administrative role of the Central Bank.
51. It is not in dispute that prior to 2003, there existed no formalised regulatory framework prescribing the procedure for obtaining approvals under section 44. Subsequently, guidelines and regulations were introduced and applications were thereafter routed through the Central Bank for onward transmission and approval as provided under section 45(2) of the Banking Act.
52. The evidence before the court shows that the Minister provided several guidelines through the 3rd Defendant by way of various circulars in relation to this process. These include Banking Circular No. 3 of 2003 dated the 17th June, 2003 and Banking Circular No. 05 of 2003 dated 22nd July, 2003 . From the said dates, banks and financial institutions commenced the submissions of their rates of charges through the 3rd Defendant, who then submitted the same for approval by the Cabinet Secretary.
53. The said approvals were then to be granted by the then Minister of finance as per Section 45(2) of the Banking Act. Subsequently, the then Minister for Finance on 12th May 2006 published regulations in the Kenya Gazette, Legal Notice No. 34 of 2006 being the “Banking (Increase of Rate of Banking and other charges) Regulations” prescribing the procedure for submitting application for increase of rate of banking and other charges through the 3rd Defendant for the Minister’s approval.
54. Together with the said Regulations, the then Minister of Finance published a Gazette Notice No. 35 of 2006 delegating his powers under Section 44 of the Banking Act to the Governor of the Central Bank of Kenya.
55. The question that arises is whether or not such delegation was lawful? In HCC Petition E007 of 2025 Kenya Bankers Association vs Attorney General, the High Court stated the following:
“ The Supreme Court judgment of 28 th June 2024 and the ruling of 14 th March 2025 have settled the position and confirmed with finality that the Cabinet Secretary responsible for matters relating to finance has the responsibility and authority on restricting the increase in banking rates, including the interest rates to be charged on loans advanced to customers.”
56. I return to the Plaintiff’s argument, which in short, was that no such approvals had been issued by the Minister to support the increase in charges complained of. The 3 rd Defendant’s position, on the other hand, is that Section 38 of the Interpretation and General Provisions Act (the “IGP Act”) applies to the present situation. The same reads as follows:
“Where by an Act, the exercise of a power or the performance of a duty is conferred upon or is vested in the President, the Attorney General or a Cabinet Secretary , the President, the Attorney-General or the Cabinet Secretary, may, unless by law expressly prohibited from so doing delegate by notice in the Gazette to a person by name, or if the person for the time being holding office specified in the notice, the exercise of that power or the performance of that duty subject to such conditions, exceptions or qualifications as the President, the Attorney General or Cabinet Secretary may specify in the notice.” (emphasis mine)
57. The 3 rd Defendant submitted that the Banking Act does not contain any restriction or limitation on the power of the Cabinet Secretary to delegate his powers to the Governor of CBK, which was delegated pursuant to the above circular, and in accordance with the law.
58. The 3 rd Defendant explained that the process relating to an increase in rates or charges therefore required banks or financial institutions to commence application for prior approval under the various Regulations, and the then Minister of Finance processed such approvals as provide for under the Regulations and the law. It also pointed out that the said process does not impose a duty on the 3 rd Defendant to enforce compliance with section 44 of the Banking Act.
59. I am persuaded that this interpretation is based on a plain reading of the law. Reading the various provisions, I am further persuaded that the Central Bank’s role under section 45 is limited to consultation and transmission of applications. The statute does not confer upon the Central Bank the primary approval mandate contemplated under section 44.
60. The duty and obligation of the 3rd Defendant as conferred by Article 231(2) of the Constitution is to be responsible for formulating monetary policy, promoting price stability, issuing currency and performing other functions conferred on it by an Act of Parliament.
61. The Banking Act by contrast confers the function of approval of any increase on rates and charges by financial institutions on the Cabinet Secretary who has, at his discretion, as permitted by the Interpretation and General Provisions Act, delegated the said function but not ultimate responsibility to the Governor of the Central Bank of Kenya.
62. The Defendant submitted, and I accept the view that because the duty for enforcement is placed on the Cabinet Secretary and prescribed by Section 44, then the obligation to set up a compliance framework must also rest with the Cabinet Secretary, and not the Central Bank of Kenya. This is found at Section 45 of the Act which provides that the Cabinet Secretary shall consult with the 3rd Defendant in exercise of his powers. It further limits the role of the 3rd Defendant to that of receiving applications and forwarding for Cabinet Secretary’s approval.
63. I am guided by the decision of the court in Republic v Minister for Finance & Another ex parte Nyong’o & 2 Others [2007] eKLR, where the court emphasized that executive powers and regulatory frameworks are creatures of statute and must be exercised within the limits conferred by Parliament. In my view, it would not be appropriate for this court to extend the role of the CBK beyond the statutory framework.
64. I am further guided by text set out in F A R Bennion MA on “Statutory Interpretation A code” 4th edn, which states as follows at Page 70:
“ In a 2001 case Buston LJ said: (1) A public body can only do that which it is authorised to do by positive law. In other words of Laws J in R -vs Somerset County Council ex p Fewings [1995] 1 All ER 513 at 524, that is a sinew of the rule of law. (2) In practical terms, the powers and duties of a local authority under that rule will only be found in statutory form.”
65. The above text, although not binding, is persuasive. The statute in this case, through Section 45 of the Act, limits the role of the 3rd Defendant to consultation with the Cabinet Secretary, and to receiving applications. The duty to approve such applications is solely left to the Cabinet Secretary, who, this court notes is not a party to the present suit.
66. This limited duty was affirmed by the Supreme Court in Stanbic Bank Kenya Ltd v Santowels Ltd [2024] KESC 31 (KLR). The court found that banks/financial institutions are required to seek the approval of the Cabinet Secretary responsible for matters relating to finance prior to increasing interest rates on loans and facilities advanced.
67. It is therefore evident to me that CBK had neither the powers to approve the rates nor did it have the power to require the Minister to do the same. In the circumstances, I am not satisfied that the Plaintiffs proved negligence or breach of statutory duty against the 3rd Defendant. It simply could not purport to do what it is not authorized in law to do.
68. The question therefore is who, if anyone, is liable for enforcement and accountability of Section 44. The Supreme Court in Petition No. E005 supra, stated as follows:
“ As a result, the Cabinet Secretary as the delegating authority remains accountable for the outcome of the delegated power and the Cabinet Secretary can only donate his authority but not responsibility. He retains residual authority to vary or cancel a delegation as explained in Section 38(4) of the Interpretation and General Provisions Act as follows:
“No delegation under Subsection (I) of a power or duty shall exclude the exercise of the power or the performance of the duty by the person by whom the delegation made”
69. Based on the law as set out above, it is the Minister or Cabinet Secretary that remains liable despite delegation to the Governor of the CBK, vide Legal Notice No. 35 of 2006.
70. The above position is in line with the Carltona principle set out in the decision of the Court of Appeal in England in the case of Carltona Ltd Vs Commissioners of Works & Others [1943] 2 AII ER 560. In the said decision the court stated as follows:
“In the administration of government in this country the functions which are given to the ministers (and constitutionally properly given to the ministers, because they are responsible) are functions so multifarious that no minister could ever personally attend to them…”
71. The principle recognises that ministerial powers are frequently exercised through authorised officials. The court further stated that:
“The duties imposed upon ministers and the powers given to ministers are normally exercised under the authority of the minister by responsible officials of the department. Public business could not be carried on if that were not the case. Constitutionally the decision of such an official is of course the decision of the minister. The minister is responsible.” (emphasis mine)
72. The equivalent to the above principle is found in Section 38 of the Interpretation and General Provisions Act which gives effect to the same logic relation to delegation of authority, but not responsibility.
73. Applying the above principle, the logical conclusion is that approvals granted pursuant to the delegated framework were permissible under the applicable legal framework. The Governor of the CBK carried out a delegated function, lawfully delegated, but did so on behalf of the Cabinet Secretary, who retained ministerial accountability. Responsibility therefore remains with the delegating authority. This is the premise upon which the Carltona principle is based.
74. I therefore find that that the 3rd Defendant acted within the law in undertaking the transactions under Section 44 of the Banking Act as mandated and delegated by Legal Notice No. 35 of 20th April 2006 in its capacity as the donee of delegated authority. It did not, and could not, however retain responsibility for the outcome of its actions or decision made in such capacity. That responsibility remained with the Minister.
75. Having stated the above, the upshot is that any further inquiry is academic. The relevant Cabinet Secretary is not a party to these proceedings and no relief may issue against the 3 rd Defendant for actions that are the responsibility of a different party.
76. I therefore accept the submission by the 3 rd Defendant and hereby find and hold that it has been misjoined to the suit.
Reliefs
77. In view of the findings above, the 1 st Plaintiff failed to establish liability against the Defendants.
78. The Court is not satisfied that the Plaintiffs proved breach of statutory duty, negligence, unlawful conduct or recoverable loss as pleaded against the Defendants.
79. The claims for damages, refund, interest and declaratory relief consequently fail.
80. The 187 th Plaintiffs’ case is barred by limitation.
Costs
81. Costs shall follow the event pursuant to section 27 of the Civil Procedure Act.
82. The Court finds no basis for departing from the ordinary rule.
Disposition
83. The 187 th Plaintiff’s suit is hereby struck out with costs.
84. The 1 st Plaintiff’s case is dismissed with costs.