SELECTA KENYA GMBH & CO.KG VERSUS CHASE BANK KENYA LIMITED

1. The plaintiff instituted two suits against the defendants being HCCC 547 of 2013 and HCCC 548 of 2013. In a ruling dated 20th March the two suits were consolidated and the parties were granted leave to amend their pleadings. I have noted that while the 1st defendant was not a party to the suit in HCCC 548 of 2013, it is still a party in HCCC 547 of 2013.

2. Subsequently, the Central bank of Kenya appointed Kenya Deposit Insurance Corporation as a liquidator for the 1st defendant. This was on 16th April 2021 after which the 1st defendant filed an application dated 3rd May 2021 seeking to strike out the plaintiff’s pleadings against it. The plaintiff filed a replying affidavit and grounds of opposition to the application, dated on 5th July 2021 to this application.

3. I note that these were all filed in HCCC 547 of 2013. The plaintiff’s opposition to the application was mainly that at the time the suit was filed, the 1st defendant had not been placed under receivership and that the 1st defendant was not even a party to the suit (HCCC 547) as per the plaint dated 16th December 2013.

4. The plaintiff confirms that as a consequence of this application and following the receivership it sought to regularize the position by filing the application dated 2nd July 2021, this time in HCCC 548. The application seeks leave to sue the liquidator on behalf of the 1st defendant as well as leave to amend the plaint so as to substitute the 1st defendant with the liquidator. The 1st defendant did not oppose the application.

5. I have carefully considered the pleadings, evidence and submissions that have been made by opposing sides. As to whether the Court should strike out the plaint against the 1st defendant, I have considered the provisions of Order 2 Rule 15 of the Civil Procedure Rules alongside the draft amended plaint dated 12th March 2020 and I note that the plaint raises a valid claim against the 1st defendant that would require the 1st defendant’s rebuttal.

6. I also note that the application of 3rd May 2021 was premised on section 56(2) of the Kenya Deposit Insurance Act. The provision states as follows: -

Section 56 (1) “No cause of action which subsisted against the directors, management or the institution prior to liquidation shall be maintained against the liquidator.”

Section 56 (2) “No injunction may be brought or any other proceeding may be commenced or continued against the institution or in respect of its assets without the sanction of the court.”

7. The plaintiff does not controvert the need to comply with these provisions, which is what led to the the plaintiff’s application. My reading of section 56(2) of the referenced Act is that the sanction of the court is required when a litigant institutes a suit or wishes to continue with a suit against an Institution which has been placed under liquidation. Needless to say, either way, the plaintiff would be covered even though a plaint had already been filed.

8. The purpose of the requirement to seek leave is to imbue order in the process and ensure validity of the claim against the receiver or liquidator. In Bougainville Estate Limited v Kenya Deposit Insurance Corporation Olola J. stated as follows:-

“… The essence of seeking leave to commence a suit, is to verify that the applicant has a valid claim, which they need to pursue against the institution and by extension the corporation. The main aim is thus to create orderliness, decency and avoid a floodgate of actions which may involve some of the matters placed under supervision…”

9. It is not in dispute that the provisions of section 56(2) of the referenced Act apply to the 1st defendant with effect from 16th April 2021. No reasons have been placed before me not to grant the leave sought by the plaintiff.

10. For the avoidance of doubt, and for the reasons that I have stated, I therefore find and order as follows: -

i. That the application dated 3rd May 2021 seeking to strike out the plantiff’s pleadings as against the 1st defendant is hereby dismissed with costs to the plaintiff.

ii. That the application dated 2nd July 2021 is hereby allowed and consequently;

a) leave is hereby granted to the plaintiff to join the liquidator in the proceedings on behalf of the 1st defendant.

b) leave is hereby granted to amend the plaint. The draft amended plaint dated 12th March 2020 shall be deemed as filed upon payment of the filing fees not later than 5 days from the date of this order.

iii. There shall be no order on costs for the application of 2nd July 2021 as it was unopposed.

iv. Parties will take directions for the expeditious disposal of the suit.