Background
1. For determination is the application dated 4/01/2024 in which the applicant seeks prohibitory injunctive orders to stop the respondent from restricting access and orders to lift the continued freezing of Account Number 01020061321000 held at Harambee Avenue Branch.
2. The applicant contends that the bank account in question was opened in the year 2010. That it only came to the plaintiff’s notice that the account had been frozen when a cheque issued to a supplier bounced. This was in September 2023. Upon writing to the respondent, it was confirmed that indeed the account had been frozen pursuant to a Court order issued on 20/12/2018.
3. The application is opposed by way of a replying affidavit sworn by CHRISPUS MAITHYA, the respondent’s Head of Commercial Transactions and Litigation Department, on 6/2/2024. The respondent has raised a preliminary issue noting that the suit as drawn is fatally defective as it is in breach of Order 4 Rule 1(4) of the Civil Procedure Rules. The respondent further contends that the plaint discloses no cause of action against it but rather that the dispute is an internal one relating to the control and management of the plaintiff company.
4. The respondent confirms having received a letter on the applicant company’s letter head, dated 27/7/2023 as well as the Court Orders issued in HC Succession Cause No 264 of 1994, issued on 20/12/2018. It was pursuant to the said orders that the respondent froze the bank account held by the applicant company.
5. It is the respondent’s case that prudence and standard banking practice demanded that the respondent freeze the account in accordance with the court order pending the determination of the dispute that was apparently between the directors and shareholders of the applicant company. The respondent confirms that it is a stranger to the dispute.
6. By way of supplementary affidavit, the applicant blames the respondent for not having conducted due diligence before freezing the said account. The applicant also takes issue with the respondent for failing to confirm the legitimate instructions of the applicant which ought to have been by way of a resolution and not a letter written by a director.
7. The application was canvassed by way of written submissions which I have considered together with the pleadings and evidence presented before this Court.
Analysis and determination
8. I will start by addressing the preliminary point that was raised by the respondent under Order 4 rule (4). That is because the application herein stands on the suit and should this Court find that the suit is fatally defective, then the suit as well as the application both fall to the cracks. Order 4 rule (4) is couched in mandatory terms and states that:
“Where the plaintiff is a corporation, the verifying affidavit shall be sworn by an officer of the company duly authorized under the seal of the company to do so.”
9. I align myself with the reason given for the rationale behind Order 4 rule 1 (4) as was stated in Spire Bank Limited v Land Registrar & 2 Others, [2019] eKLR. The Court of Appeal stated that this:
“… was to safeguard the corporate entity by ensuring that only an authorized officer could institute proceedings on its behalf. This was to address the mischief of unauthorized persons instituting proceedings on behalf of corporations, and obtaining fraudulent or unwarranted orders from the court.”
10. Of importance is the observation by the Court that:
“… the provision was not intended to be utilized as a procedural technicality to strike out suits, particularly where no evidence was produced to demonstrate that the officer was unauthorized.”
11. As such, going by the directions of the Court of Appeal whose tenure is to uphold the tenets of Article 159 of the Constitution, I take the view that the evidence of the authorization should be produced before the commencement of the trial, and I do so order.
12. Turning now to the substance of the application. It is not in doubt that the prayer sought is a mandatory injunction, which is a very exceptional form of relief to grant, but it can be granted.
13. The Court of Appeal in the Case of Malier Unissa Karim V Edward Oluoch Odumbe, [2015] eKLR stated as follows:
“The test for granting a mandatory injunction is different from that enunciated in the Giella v Cassman Brown case which is the locus classicus case of prohibitory injunctions. The threshold in mandatory is higher than the case of prohibitory injunction and the Court of Appeal in the case of “Kenya Breweries Limited v Washington Okeyo [2002] EA 109” had the occasion to discuss and consider the principles that govern the grant of a mandatory injunction. This was as in Vol. 24 Halsbury Laws of England 4th Edition Paragraph 948 which states as follows:
A Mandatory Injunction can be granted on an interlocutory application as well as at the hearing but in the absence of special circumstances, it will not normally be granted. However, it the case is clear and one which the Court thinks ought to be decided at once or if the act done is simple and summary one which can be easily remedied, or if the Defendant attempts to steal a match on the Plaintiff, a Mandatory Injunction will be granted on an Interlocutory application”.
Moreover, before granting a mandatory interlocutory injunction, the court had to feel a higher degree of assurance that at the trial it would appear that the injunction had rightly been granted, that being a different and higher standard than was required for a prohibitory injunction.”
14. Testing the evidence before me against the established jurisprudence, I note that the applicant does not explicitly challenge the veracity of the Court Orders issued on 20/12/2018. What the applicant is questioning is why the respondent did not conduct due diligence to confirm the orders and also confirm that SHRIKESH GHEEWALA had authority to write the letter on behalf of the Company and most importantly, inform the Company about the freezing orders.
15. The question that this Court will also be called upon to determine at the substantive hearing of the matter is whether the Bank acted with care and skill by freezing the applicant’s account and denying the applicant access to the subject funds. That is not a matter for determination at this interlocutory stage.
16. As with other injunctions, a court may decline to grant the injunctive relief if it is of the view that an applicant can be compensated adequately by way of damages. Moreover, it is my opinion that granting an injunction against those Court Orders which were issued in a matter that is not before this court is likely to have significant repercussions on numerous other active matters.
Disposition
17. Accordingly, the application dated 4/01/2024 is hereby dismissed. The applicant is at liberty to pursue the claim against the Bank for damages. The freezing orders on the account shall remain in place pending the resolution of the underlying dispute in HC Succession Cause No 264 of 1994 as ordered by the court. The costs of this application shall await the outcome of the suit.