Case ID:168978
Parties: None
Date Delivered: None
Case Type: None
Court: None
Judges: None
Citation: None
Timber Treatment International Limited v Bank of India & another [2021]eKLR
Case Metadata
Case Number:
Civil Case E202 of 2020
Parties:
Timber Treatment International Limited v Bank of India & Garam Investments Auctioneers
Date Delivered:
21 Jan 2021
Case Class:
Civil
Court:
High Court at Nairobi (Milimani Commercial Courts Commercial and Tax Division)
Case Action:
Ruling
Judge(s):
David Amilcar Shikomera Majanja
Citation:
Timber Treatment International Limited v Bank of India & another [2021]eKLR
Advocates:
Mr Apondi instructed by Muga Apondi and Associates Advocates for the Plaintiff
Ms Koranje instructed by Mahida and Maina Company Advocates for the Defendants
Court Division:
Civil
County:
Nairobi
Advocates:
Mr Apondi instructed by Muga Apondi and Associates Advocates for the Plaintiff
Ms Koranje instructed by Mahida and Maina Company Advocates for the Defendants
History Advocates:
Both Parties Represented
Case Outcome:
Notice of motion dismissed with costs to the Defendants
Disclaimer:
The information contained in the above segment is not part of the judicial opinion delivered by the Court. The metadata has been prepared by Kenya Law as a guide in understanding the subject of the judicial opinion. Kenya Law makes no warranties as to the comprehensiveness or accuracy of the information
IN THE HIGH COURT OF KENYA AT NAIROBI
MILIMANI LAW COURTS
COMMERCIAL AND TAX DIVISION
CORAM: D. S. MAJANJA J.
CIVIL CASE NO. E202 OF 2020
BETWEEN
TIMBER TREATMENT INTERNATIONAL LIMITED....................................PLAINTIFF
AND
BANK OF INDIA.................................................................................1
ST
DEFENDANT
GARAM INVESTMENTS AUCTIONEERS....................................... 2
ND
DEFENDANT
RULING
Introduction
1. The Plaintiff (“the Company”) has approached the Court by a Plaint dated 18
th
June 2020 accompanied by a Notice of Motion Application of the same date made, inter alia, under
Order 40 Rule 1
of the
Civil Procedure Rules
seeking a temporary injunction restraining the Defendants from selling or otherwise dealing or interfering with its ownership of the Title LR NO.s, ELDORET MUNICIPALITY/BLOCK9/2502, 2522, 2526, 2527 & 2528, 2519, 2520, 2516 & 2521, 2511 & 2518, 2501, ELDORET MUNICIPALITY (“the suit properties”).
2. The application is supported by the undated affidavit of Hon. Hosea Mundui Kiplagat, the Company’s Chairman. It is opposed by the 1
st
Defendant (“the Bank”) through affidavits sworn on 9
th
July 2020 by Rohit Yadav, its Eldoret Branch Senior Manager and its Chief Executive, Sharda Bhushan Rai. The application was canvassed by way of written submissions.
The Plaintiff’s Case
3. In its Plaint and deposition, the Company does not dispute that the Bank advanced it KES 275,610,000.00 secured by a legal charge dated 14
th
August, 2017 and a further charge dated 6
th
June 2018 over the suit properties in favour of the Bank for the purpose of purchasing a tractor, importing plant and machinery and financing capital requirements
4. The Company states that,
“due to the hostile and unpredictable business environment in the County, coupled with Covid-119 pandemic, (it) defaulted on scheduled repayments.”
It further admits that due to default, the amount outstanding continues to accrue interest at the rate of 4% above the Central Bank Rate (CBR) per annum which stood at KES. 185,311, 562.81 as at 24
th
September 2019.
5. The Company pleads that following threats by the Bank to exercise its statutory power of sale, its counsel and counsel for the Bank held a meeting on 27
th
March 2020 where it was agreed that the Company would write a letter to the Bank requesting for 90 days to enable it regularize its loan account. It accused the Bank of failing to respond to the letter and to other entreaties to resolve the matter. The Bank instead proceeded to instruct the 2
nd
Defendant (“the Auctioneer”) to issue a Notification of Sale dated 30
th
April 2020 intending to sell the suit properties without prior notice.
6. The Company contends that the threatened sale of the suit properties is wrongful and intended to deny the Company its right to redeem the suit properties. It contends that the sole cause of the dispute between it and the Bank is that the it failed to meet some repayments following an unfavorable and harsh business environment.
The Defendants’ Case
7. The Bank’s position is that the Company had never approached it to show good will towards repaying the loan. It only responded through its advocates when the Bank issued notices of default dated 2
nd
September 2019 and 24
th
September 2019 which was well before the
COVID-19
pandemic. Regarding the meeting referred to by the Company, the Bank states that the meeting was informal. That at the meeting, the Company’s advocate suggested that the Company be given a grace period for 90 days to settle the arrears. This was followed up by a letter dated 27
th
March 2020 making the request. The Bank rejected the request on the ground that it had given the Company several opportunities from September 2019 to remedy the default through four notices but it failed to respond to them.
8. As the Company failed to remedy its default, the Bank instructed its advocates to proceed with the necessary steps for the sale of the suit properties. It issued a 90-day notice dated 12
th
November 2019 under
section 90
of the
Land Act
. When the Company failed to respond to the notices, it issued 40 day notices dated 26
th
February 2020 under
section 96
of the
Land Act
.
9. The Bank contends that it only when the Company received the notices from the Auctioneer that Mr Kiplagat visited Mr Rai. After discussions, he promised that the Company would deposit Kshs. 50,000,000.00 with the Bank within a week in order to regularize the account. In that regard, the Bank instructed the Auctioneer, who has already issued notices, to hold off any advertisement of the suit properties. The Company did not comply with the promise but instead filed the suit and application.
10. The Bank submits that is has issued notices adhering to
sections 90
and
96
of the
Land Act
and has given the Company more than sufficient time to make good the default and to exercise its right of redemption. The Bank submitted that the application cannot be granted since the Company has not established a
prima facie
warranting grant of the orders of injunction.
Analysis and Determination
11. The main issue for determination is whether the court should grant an injunction restraining the Bank from exercising its statutory power of sale. The parameters for the grant of such an order are grounded on the principles established in
Giella v Cassman Brown
[1973] EA 358
. In order to succeed an applicant must demonstrate that it has a prima facie case with a probability of success, demonstrate irreparable injury which cannot be compensated by an award of damages if a temporary injunction is not granted, and if the court is in doubt, show that the balance of convenience is in its favour.
12. In
Nguruman Limited v Jane Bonde Nielsen and 2 Others
NRB CA Civil Appeal No. 77 of 2012 [2014] eKLR
the Court of Appeal reiterated the three conditions to be fulfilled before an interim injunction is granted as set out in
Giella v Cassman Brown
(Supra)
and further clarified that they are to be applied as separate, distinct and logical hurdles which the applicant is expected to surmount sequentially. This means that if an applicant does not establish a
prima facie
case then irreparable injury and balance of convenience do not require consideration. On the other hand, if a prima facie case is established, then the court will consider the other conditions.
13. In
Mrao Ltd v First American Bank of Kenya Limited and 2 Others
MSA CA Civil Appeal No. 39 of 2002 [2003] eKLR,
the Court of Appeal explained that a prima facie case is,
“a case in which on the material presented to the Court, a tribunal properly directing itself will conclude that there exists a right which has apparently been infringed by the opposite party to call for an explanation or rebuttal from the latter.”
Since the Company seeks to restrain the Bank from exercising its statutory power of sale, it must show that the Bank is violating its right in the suit property.
14. The Company has admitted indebtedness and default to the Bank. It blames its indebtedness on the
COVID -19
pandemic though the evidence is clear that the default commenced in 2019. This admission undermines the Company’s case for an injunction as indebtedness is the foundation for the Bank to initiate the process of exercising its statutory power of sale by first issuing and serving on the Company a 90-day statutory notice under
section 90
of the
Land Act
. The Bank has exhibited the notice and evidence that it was served on the Company by registered post at its known address.
15. Despite being given a chance, the Company failed to settle the arrears or redeem the properties whereupon the Bank issued and served on the Company by registered post a 40-day notice to sell the suit property as a mandatory requirement under
section 96
of the
Land Act
. Once again the Company failed to avail itself of the opportunity to resolve the default. The Company did not contest the validity of these notices nor dispute the fact that it received them. It also admits that it received the Auctioneer’s notice which, in fact, precipitated this suit.
16. Based on the facts pleaded by the Company, I fail to see how the Bank has violated the Company’s rights as the statutory notices were issued in accordance with the law and were received by the Company. In as much as the Company has pleaded that it has been unable to repay the debt due to the harsh business environment and the
COVID-19
pandemic, I am also alive to the fact that the Bank has granted the Company some accommodation but the Company has still not demonstrated how it has attempted to make any repayments. In any case, the court cannot compel the Bank to accept the Company’s proposals to restructure the facilities by restraining it from exercising its legal remedies as this would amount to re-writing the parties’ bargain.
17. Since the Company has admitted indebtedness and having found that the statutory notices were properly issued and served upon the Company, it follows that the Bank cannot be restrained from exercising its statutory power of sale in accordance with the law. I need not to say more as the direction the court ought to take is obvious. I find that the company has failed to establish a prima facie case with a probability of success. Consideration of the other grounds is unnecessary in view of the dicta in
Nguruman Limited v Jane Bonde Nielsen and 2 Others
(Supra)
that once an applicant fails to establish a prima facie case with a probability of success, the inquiry comes to an end.
Disposition
18. The Notice of Motion dated 18
th
June 2020 is now dismissed with costs to the Defendants. The interim orders in place are discharged forthwith.
DATED and DELIVERED at NAIROBI this 21
st
day of JANUARY 2021.
D. S. MAJANJA
JUDGE
Court of Assistant: Mr M. Onyango
Mr Apondi instructed by Muga Apondi and Associates Advocates for the Plaintiff.
Ms Koranje instructed by Mahida and Maina Company Advocates for the Defendants.