[2017] KEHC 3493 (KLR)
The court found that the applicant, Bank of Africa Kenya Limited, had established its claim under the debenture executed by the respondent, Techspa General Supplies Limited. The debenture created a first fixed specific charge over all book debts, revenues, claims, including bank deposits and credit balances. The...
Source-derived case information.
- Citation
- [2017] KEHC 3493 (KLR)
- Parties
- Applicant: Bank of Africa Kenya Limited; Respondent: Techspa General Supplies Limited; Garnishee: Guaranty Trust Bank (Kenya) Limited
- Court
- High Court
- Court Station
- High Court at Nairobi (Milimani Commercial Courts)
- Jurisdiction
- Kenya
- Case Number
- Miscellaneous Application 161 of 2016
- Procedural Posture
- Miscellaneous Application / Ruling on Originating Summons
- Outcome
- application allowed
- Judges
- F Tuiyott
- Legal Topics
- Debenture Enforcement, Fixed and Floating Charges, Foreclosure Rights, Bank Deposits, Credit Balances, Originating Summons
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Bank of Africa Kenya Limited
Applicant
Techspa General Supplies Limited
Respondent
Guaranty Trust Bank (Kenya) Limited
Garnishee
Procedural Posture
Miscellaneous Application / Ruling on Originating Summons
Legal Issues
- 1 Whether the applicant is entitled to enforce its security under the debenture against the respondent's bank deposits and credit balances.
- 2 Whether the applicant is entitled to the reliefs sought in the originating summons, including foreclosure of the respondent's bank deposits and credit balances.
- 3 Whether the applicant has established its claim for the outstanding debt and related remedies.
Ratio Decidendi
The court found that the applicant, Bank of Africa Kenya Limited, had established its claim under the debenture executed by the respondent, Techspa General Supplies Limited. The debenture created a first fixed specific charge over all book debts, revenues, claims, including bank deposits and credit balances. The respondent defaulted on its obligations, and the applicant demonstrated the existence of outstanding indebtedness and the presence of credit balances held by the garnishee bank. The respondent did not contest the applicant's evidence or assertions. The court held that, pursuant to the terms of the debenture and Order 37 Rule 4 of the Civil Procedure Rules, the applicant was...
Court Disposition
application allowed
Orders
- Prayer 3 of the Originating Summons dated 5th April, 2016 is granted in favour of the applicant.
- The applicant is awarded costs of these proceedings.
Full Case Text
Judgment text and source record
30 paragraphs
REPUBLIC OF KENYA
IN THE HIGH COURT OF KENYA AT NAIROBI
COMMERCIAL & ADMIRALTY DIVISION
MISC. APPL. NO. 161 OF 2016
BANK OF AFRICA KENYA LIMITED.................................APPLICANT
VERSUS
TECHSPA GENERAL SUPPLIES LIMITED.................RESPONDENT
AND
GUARANTY TRUST BANK(KENYA) LIMITED...............GARNISHEE
RULING
1. These Originating Summons are proceedings commenced under the Provisions of Order 37 Rule 4 of the Civil Procedure Rules which provides:-
“Any mortgagee or mortgagor, whether legal or equitable, or any person entitled to or having property subject to a legal or equitable charge, or any person having the right to foreclose or redeem any mortgage, whether legal or equitable, may take out as of course an originating summons, returnable before the judge in chambers, for such relief of the nature or kind following as may be by the summons specified, and as the circumstances of the case may require; that is to say, sale, foreclosure, delivery of possession by the mortgagor, redemption, reconveyance, delivery of possession by the mortgagee”.
2. The Summons which are dated 5th April, 2016 sets out the Claim by Bank of Africa Kenya Limited (The Applicant or Bank) against Techspa General Supplies Limited (The Respondent or Techspa) and the Affidavit of Charles Waiyaki sworn on the same day provides the evidence in support thereto.
3. On 30th August, 2010, Techspa executed a Debenture in favour of the Bank. The Bank asserts that Clauses 4 and 5 of the Debenture are of significance to the matter herein. Clause 4, in part, provides:-
“The Company as beneficial owner HEREBY CHARGES as a continuing Security in favour of the Bank:-
‘THIRDLY all book and other debts revenues and claims (including bank deposits and credit balances) and the proceeds of sale of all the Land and Fixtures the Securities the stock-in-trade and all thins in action due or owing or which may become due or owing to or purchased or otherwise acquired by the Company and the full benefit of all rights and remedies relating thereto including but not limited to any negotiable or non-negotiable instruments guarantees indemnities debentures legal and inequitable charges and other security reservation of proprietary rights rights of tracing liens and all other rights and remedies of whatsoever nature in respect of the same in all cases both present and future”. (my emphasis)
4. And then the purport of Clause 5 is that the charge created by the Debenture would rank as a first charge on all the property and assets thereby charged and as regards all book and other debts revenues and claims (including bank deposits and credit balances), it shall constitute a first fixed specific charge.
5. It is stated by the Bank that as at 8th February 2016, Techspa was indebted to the Bank in the sum of Kshs.47,746,488 cents 75 which sum continued to attract interest at 28% per annum until payments in full.
6. The Bank also asserts that between December 2014 and December 2015 Guaranty Trust Bank (Kenya) ltd held sums of Khs.2,292,392 cents 85 to the Credit of Techspa.
7. Techspa has not controverted any of the allegations above and this Court has no reason to disbelieve them.
8. Techspa having defaulted in its obligations, the Bank is entitled to call in its security. One of the remedies under the Debenture is a right to foreclose Techspa’s Bank Deposits and Credit Balances. In my Ruling of 16th February 2017, herein I observed:-
“The Debenture is in the nature of a charge and so the Applicant bank would in that sense be a chargee. Order 37 Rule 4 seems to permit a mortgagee (reads as well a chargee) who has the right to foreclose any charge to take out, as of course, an Originating Summons for such relief”.
9. I hold that the Bank has established its claim and is entitled to prayer 3 of the Originating Summons of 5th April, 2016. The Bank shall also have costs of these proceedings.
Dated, Signed and Delivered in Court at Nairobi this 13thday of July,2017.
F. TUIYOTT
JUDGE
PRESENT;
Omino for Applicant
N/A for Respondent
Carlos - Court Clerk