[2025] KEHC 2319 (KLR)

D Chandulal K Vora & Company Limited v M’Oriental Bank Limited & another (Civil Suit E055 of 2024) [2025] KEHC 2319 (KLR) (20 February 2025) (Ruling)

Neutral citation: [2025] KEHC 2319 (KLR)

Republic of Kenya

In the High Court at Mombasa

Civil Suit E055 of 2024

JK Ng'arng'ar, J

February 20, 2025

Between

D Chandulal K Vora & Company Limited

Plaintiff

and

M’Oriental Bank Limited

1st Defendant

Peter N Gichuki T/A Spotlight Intercepts

2nd Defendant

Ruling

1. The Plaintiff filed a Notice of Motion application dated 16th August 2024 under Certificate of Urgency pursuant to Section 90 and 96 (2) of the Land Act, 2012, Sections 1A and 3A of the Civil Procedure Act and Order 40 Rule 1 of the Civil Procedure Rules, 2010.

2. The Plaintiff prays for orders that pending the hearing and determination of this suit, there be an order of injunction to restrain the Defendants either by themselves, officers, agents, employees, assigns or any other person acting for them from auctioning, selling, disposing of or in any other manner interfering with the ownership of any and/or all of the properties known as Land Reference Numbers Mombasa/Block XIX/281 and Mombasa/Block XXIII/190 Flat No. 4A. That costs of this application be borne by the Defendants jointly and severally.

3. The application is premised on grounds on its face and the Supporting Affidavit of Darshan Dipak Vora sworn on 16th August 2024 that the Plaintiff and the 1st Defendant had long-standing banker/customer relationship under which the 1st Defendant advanced to the Plaintiff various credit facilities in the form of overdraft, discounting and term loans. That the credit facilities were initially secured by charges over the properties known as Land Reference No. Mombasa/Block XIX/281 and Mombasa/Block XXIII/190 Flat No. 4A. That however, the loan of Kshs. 22 million which was secured by Mombasa/Block XXIII/190 Flat No. 4A was fully repaid by the Plaintiff and the said property ought to have been discharged by the 1st Defendant.

4. The Plaintiff pointed out that they started experiencing financial challenges which made it difficult to timeously service the term loan and they approached the 1st Defendant with a view to finding an amicable way of clearing the credit facilities. That the Plaintiff and the 1st Defendant engaged in negotiations in an effort to finding a lasting solution which negotiations were ongoing at the time of filing the Plaint herein. That however, the 1st Defendant purported to exercise its statutory power of sale. That the 1st Defendant advertised the suit properties for sale despite ongoing negotiations with the last letter on the negotiations coming from the 1st Defendant on 5th August 2024.

5. The Plaintiff/Applicant stated that the statutory notices dated 24th January 2024 were not served upon the Plaintiff’s address which was given in the letter of offer as dck@dckvora.com. That the Notice to redeem and Notification of sale were not served upon the Plaintiff’s email address. That it is on that basis that the exercise of the statutory power of sale as commenced and is being undertaken by the Defendants is illegal, and irregular for failure to serve the requisite notices upon the Plaintiff. That the Defendants served the Plaintiff’s guarantor, Darshan Dipak Vora with the statutory notices dated 24th January 2024 and 25th January 2024 via email on 18th April 2024.

6. According to the Plaintiff, the fact that the Plaintiff was not served with the statutory notices, the effective date for purposes of the statutory notices was 18th April 2024 when the same was served upon the guarantor and the three months provided for in Section 90 (2)(b) of the Land Act, 2012 started running on 18th April 2024 with the net consequent effect that the demand notice under Section 96 (1) and (2) of the Land Act could only be served after 18th July 2024. That however, on 30th April 2024 before the three months’ mandatory period from the date of service of the statutory notice had lapsed, the 1st Plaintiff purported to serve the Plaintiff’s guarantor, Darshan Dipak Vora with demand notices dated 30th April 2024 by Kosgey & Masese Advocates.

7. The Plaintiff/Applicant averred that on 4th July 2024, the 1st Defendant, through the 2nd Defendant served the Plaintiff’s guarantor Darshan Dipak Vora, with notification of sale dated 24th June 2024 and an undated Notice to Redeem both of which indicated that the Plaintiff’s property No. Mombasa/Block XIX/281 shall be sold on 29th August 2024. That the notification of sale dated 24th June 2024 and the undated Notice to Redeem were only served upon the Plaintiff’s guarantor but not upon the Plaintiff whose email address was given in the letter of offer as dck@dckvora.com. That as at 4th July 2024 when the Defendants served the Plaintiff’s guarantor, Darshan Dipak Vora, 3 months had not lapsed from the date the statutory notices were served which was on 18th April 2024. That the 3 months were due to expire on 18th July 2024. That the 2nd Defendant then advertised the two suit properties for sale on 29th August 2024 and the notice of sale was published at page 25 of the Daily Nation dated 12th August 2024. That the exercise of the statutory power of sale as commenced and/or undertaken by the Defendants is therefore irregular, illegal, unlawful and therefore null and void.

8. That the interest charged by the 1st Defendant on the loans advance to the Plaintiff is illegal, null and void for the reason that the 1st Defendant increased the interest rate without seeking consent of the Minister/Cabinet Secretary. That the 1st Defendant overcharged and overloaded the Plaintiff’s loan accounts with illegal, excessive, unconscionable and unreasonable interest. That the Plaintiff engaged Interest Rates Advisory Center (IRAC) to ascertain the extent of the interest charged by the 1st Defendant which revealed that the Plaintiff was overcharged by Kshs. 8,063,308. 05. That one of the properties namely Mombasa/Block XXIII/190 Flat No. 4A is owned by Praksha Kumar Rajesh Vora who is a very old lady and who uses the said property as he only home. That if the property is sold by the Defendants, she will be rendered homeless and destitute and no amount of damages can compensate loss of the only home.

9. The 1st Defendant filed a Replying Affidavit sworn by Arif Gulamhusein that the Plaintiff and the 1st Defendant had a customer – banker relationship with effect from the year 2014. That by a letter of offer dated 21st January 2021, the 1st Defendant sanctioned the renewal and restructuring of various facilities that the Plaintiff had into a new term loan on terms and conditions set out in the offer letter. That the Plaintiff accepted the terms and conditions of the aforesaid offer letter and executed an acceptance form. That pursuant to various financial facilities afforded to the Plaintiff, the Plaintiff executed an all assets debenture over the assets of Sweet R Us Limited dated 9th December 2014 stamped at Kshs. 90,000,000as security for the financial accommodation granted to it by the 1st Defendant.

10. The 1st Defendant stated that the Plaintiff requested the 1st Defendant to create a sublease in its favour and a charge in favour of the 1st Defendant over title number Mombasa/Block XIX/281 to secure an advance of Kshs. 45,000,000. That the property was already charged to the 1st Defendant to secure advances made to DCK Vora & Company Limited. However, the registration and creation of sublease and charge was not concluded because the Plaintiff failed to pay the requisite stamp duty. That prior to the restructuring and renewal of the Plaintiff’s financial facilities with the 1st Defendant vide the letter dated 21st January 2021, DCK Vora & Company Limited, an affiliate of the Plaintiff company had charged all that property known as Flat No. 4A on Title Number Mombasa Block/XXIII/190 to secure all previous and continuing advances to it by the 1st Defendant. That to further secure the Plaintiff’s loan amount from the 1st Defendant, the Plaintiff’s director Rajesh Vora executed a personal guarantee of Kshs. 170,500,000.

11. The 1st Defendant deposed that throughout the tenure of the aforesaid financial facility to the Plaintiff, the Plaintiff has been in default of repayment of the principal and interest amount as and when they have fallen due. That to that extent, the 1st Defendant on several occasions reached out to the Plaintiff requesting it to regularize its loan account and the Plaintiff would make promises which promises it never observed. That the Plaintiff made an offer for part settlement of its loan with the 1st Defendant by payment of part disposal of the collateral securing banking facilities to the Plaintiff. That by a letter dated 22nd December 2021, the 1st Defendant accepted the Plaintiff’s proposal for part disposal of its assets to partially pay off the loan which was ballooning due to the default. That by a letter dated 25th March 2024, the Plaintiff’s director, Rajesh Vora, wrote to the 1st Defendant and offered a proposal to settle the Plaintiff’s indebted ness to the 1st Defendant. That the Plaintiff’s director proposed a partial sale of assets and machinery of the Plaintiff under the instrument of debenture in force in favour of the 1st Defendant but none of the proposals were honoured. That as at 31st August 2024, the due and outstanding amount owed to the 1st Defendant stood at Kshs. 249,424,132.

12. The 1st Defendant stated that the only security perfected over the facility advanced to the Plaintiff is an all assets debenture of Kshs. 90,000,000 dated 9th December 2014. That the Plaintiff has rushed to this court seeking to restrain the 1st Defendant from exercising its statutory power of sale over the charged properties on the ground that it was not served with the requisite statutory notices of sale, notifications of sale and the auctioneer’s notices as required by law. That by a statutory notice dated 24th January 2024 sent by registered post to the Plaintiff and its director Darshan Dipak Vora to their known postal address P.O. Box 80713 – 00100 Mombasa, the 1st Defendant demanded that the Plaintiff rectify its default in repayment of the loan failing which it would exercise its statutory power of sale over Title Number Mombasa/Block XIX/281.

13. The 1st Defendant averred that by a statutory notice dated 25th January 2024 sent by registered post to the Plaintiff and Praksha Kumar Rajesh Vora to rectify the default on the Plaintiff’s loan and overdraft facility, failing which it would exercise its statutory power of sale over Title Number Mombasa/Block XXIII/190 Flat No. 4A. That upon expiry of the statutory notices sent to the Plaintiff and its guarantor, the 1st Defendant served the 40 days notification of sale vide the letter dated 30th April 2024 upon the Plaintiff and Darshan Dipak Vora. That similarly upon expiry of the statutory notice dated 25th January 2024 served on the Plaintiff and its guarantor Praksha Kumar Rajesh Vora, the 1st Defendant served the 40 days’ notification of sale. That the notices were also served by email to the Plaintiff and its guarantors out of abundance of caution. That upon expiry of the 40 days notification of sale, the 1st Defendant through its auctioneer’s M/s Spotlight Intercepts served upon the Plaintiff and its directors and guarantors by registered post the 45 days notification of sale, the 1st Defendant duly placed an advertisement in the Daily Newspaper dated 12th August 2024 advertising the charged properties for auction on 29th August 2024.

14. The application was canvassed by way of written submissions. The Plaintiff filed submissions dated 18th December 2024 and pointed out that the main issues for determination are whether the 1st Defendant’s Replying Affidavit is fatally defective for failing to indicate the date when it was sworn and whether the application for injunction is merited. On the former issue, the Plaintiff submitted that failure to date the Replying Affidavit is fatal and contrary to Section 5 of the Oaths and Statutory Declarations Act. The Plaintiff relied on the case of Mulusiah Land Consultants & Another v Industrial Development Bank Ltd & 2 Others (2005) eKLR where the high court dealt with the undated affidavit. That the Replying Affidavit cannot be relied upon, it must be struck out and the Plaintiff’s application is therefore unopposed and the same should be allowed.

15. On whether the application is merited, the Plaintiff submitted that the principles which should guide the court in determining an application for interlocutory injunction were laid out in the case of Giella v Cassman Brown & Co. Ltd (1973) EA 358 to the effect that the applicant must show a prima facie case with a probability of success or that if the injunction is not granted the applicant will suffer irreparable injury that cannot be compensated by an award of damages, and if in doubt, the court should decide the application on a balance of convenience. On whether a prima facie case had been established, the Plaintiff cited the case of Mrao Ltd v First American Bank of Kenya Ltd & 2 Others (2003) KLR 125, highlighted the grounds on the face of their application and submitted that they had established a prima facie case. On whether there will be irreparable injury, the Plaintiff argued that the property that is due for auction namely Land Reference Number Mombasa/Block XXIII/190 Flat No. 4A is owned by Praksha Kumar Rajesh Vora who is a very old lady and who uses the said property as her only home and that if the said property is sold she will be rendered homeless, which cannot be compensated by an award of damages. The Plaintiff cited the case of Joseph Siro Musioma v Housing Finance Company of Kenya & 3 Others (2008) eKLR which clearly shows that the financial strength of a party is not a reason to refuse injunction. On the balance of convenience, the Plaintiff submitted that the same tilts in favour of granting the injunction as the intended sale is illegal, unprocedural and in breach of the Plaintiff’s rights which should not be permitted to continue.

16. The 1st Defendant filed submissions dated 6th January 2025 that the Plaintiffs are not entitled to any injunctive orders for reasons that they have not established a prima facie case with probability of success as was held in the case of Mrao Ltd v First American Bank of Kenya Ltd & 2 Others (2003) eKLR. The 1st Defendant states that statutory notices were issued to the Plaintiff’s last known postal address 80713-80100 Mombasa as evidenced by the certificates of postage. That pursuant to Section 90 and 96 of the Land Act, 2012, the 1st Defendant procedurally and lawfully has a right to sell the suit properties following the default of the Plaintiff to repay the same.

17. The 1st Defendant placed reliance on the case of Kenya Revenue Authority v Kenya Bankers Association (2020) eKLR and Beatrice Atieno Onyango v Housing Finance Company Limited & 3 Others (2020) eKLR. The 1st Defendant further cited the cases of Mrao Ltd case (supra), Housing Finance Company of Kenya v Ngige Kitson Mondo (2006) eKLR and Daniel Kamau Mugambi v Housing Finance Company of Kenya Limited (2006) eKLR and submitted that the Plaintiff admits being indebted to the 1st Defendant who ought to be allowed to exercise its statutory power of sale. That further, the 1st Defendant is a financially stable bank capable of meeting an award of damages. The balance of convenience therefore tilts in their favour.

18. I have considered the Notice of Motion application dated 16th August 2024, the 1st Defendant’s Replying Affidavit and submissions by the parties. The issues for determination are: -a.Whether the 1st Defendant’s Replying Affidavit is fatally defective for failing to indicate the date when it was swornb.Whether the application for temporary injunction is merited

19. On the first issues, the Plaintiff submitted that failure to date the Replying Affidavit is fatal, that the Replying Affidavit cannot be relied upon, it must be struck out.

20. Section 5 of the Oaths & Statutory Declarations Act provides: -Every commissioner for oaths before whom any oath or affidavit is taken or made under the Act shall state truly in the jurat or attestation at what place and date the oath is taken or made.

21. The above provision is mandatory. This court relies on the holding in the case of Charles Muturi Mwangi v Invesco Assurance Co. Ltd (2014) eKLR as follows: -“These are mandatory provisions. There is no discretion for this court to vary these provisions as these are statutory provisions with regard to what constitutes a valid disposition to matters before court. The omission to indicate the date of swearing of the affidavit attached to the application before the court renders the same defective… The defect on the affidavit is not a mere technicality that can be addressed as under Article 159 of the Constitution. The undated affidavit violates a statutory mandatory provision and thus the striking out.”

22. The omission by the Defendants/Respondents to date the Replying Affidavit renders it defective and the same should therefore be struck out.

23. On the second issue, the Defendants/Respondents’ Replying Affidavit having been struck out renders the Plaintiff/Applicant’s application unopposed. This court will however consider whether the Plaintiff/Applicant has satisfied the principles for grant of temporary injunction.

24. The court in Giella v Cassman Brown (1973) EA 358 set out conditions for grant of temporary injunction as follows: -“The conditions for the grant of an interlocutory injunction are now, I think, well settled in East Africa. First, an applicant must show a prima facie case with a probability of success. Secondly, an interlocutory injunction will not be normally granted unless the applicant might otherwise suffer irreparable injury which would not adequately be compensated by an award of damages. Thirdly, if the court is in doubt, it will decide an application on the balance of convenience.”

25. On whether the Plaintiff/Applicant has established a prima facie case with a probability of success, the court in Mrao Ltd v First American Bank of Kenya Ltd & 2 Others (2003) eKLR held that: -“a prima facie case in a civil application includes but is not confined to a ‘genuine and arguable case’. It is a case 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 as to call for an explanation or rebuttal from the latter.”

26. The Plaintiff/Applicant stated that the 1st Defendant advanced them various credit facilities in the form of overdraft, discounting and term loans. That the credit facilities were initially secured by charges over the properties known as Land Reference No. Mombasa/Block XIX/281 and Mombasa/Block XXIII/190/Flat No. 4A. That however, the loan of Kshs. 22 million which was secured by Mombasa/Block XXIII/190 Flat No. 4A was fully repaid by the Plaintiff and the said property ought to have been discharged by the 1st Defendant. That the 1st Defendant advertised the suit properties for sale despite and statutory notices were not served upon the Plaintiff’s address which was given in the letter of offer.

27. The Plaintiff/Applicant stated that the Defendants served their guarantor, Darshan Dipak Vora, with the statutory notices dated 24th January 2024 and 25th January 2024 via email on 18th April 2024 which was the effective date for purposes of the statutory notices. That the 3 months provided for in Section 90 (2) (b) of the Land Act, 2012 started running on the said 18th April 2024 with the net consequent effect that the demand notice under Section 96 (1) and (2) of the Land Act could only be served after 18th July 2024. That however, on 30th April 2024 before the 3 months mandatory period from the date of service of the statutory notice had lapsed, the 1st Defendant purported to serve the Plaintiff’s guarantor with demand notices dated 30th April 2024.

28. The Plaintiff/Applicant averred that on 4th July 2024, the 1st Defendant through the 2nd Defendant served the Plaintiff’s guarantor with notification of the sale dated 24th June 2024 and an undated Notice to Redeem both of which indicated that the Plaintiff’s property No. Mombasa/Block XIX/281 shall be sold on 29th August 2024. That the exercise of the statutory power of sale as commenced and/or undertaken by the Defendant is therefore irregular, illegal, unlawful and therefore null and void. That the 1st Defendant also overcharged and overloaded the Plaintiff’s loan accounts with illegal, excessive, unconscionable and unreasonable interest which are illegal, null and void as the 1st Defendant did not seek consent of the Minister/Cabinet Secretary.

29. Pursuant to the above, I am satisfied that the Applicant has established a prima facie case with a probability of success.

30. On whether the Plaintiff/Applicant may suffer irreparable injury which would not adequately be compensated by an award of damages, the Plaintiff/Applicant stated that Land Reference Number Mombasa/Block XXIII/190 Flat No. 4A is owned by Praksha Kumar Rajesh Vora who is a very old lady and who uses the said property as her only home which if it is sold she will be rendered homeless. I find that the Plaintiff/Applicant has established irreparable harm which cannot adequately be compensated by an award of damages.

31. On whose favour the balance of convenience tilts, the Plaintiff/Applicant submitted that the intended sale is illegal, unprocedural and in breach of the Plaintiff’s rights which should not be permitted to continue. I find that the balance of convenience tilts in favour of the Plaintiff/Applicant.

32. In the upshot, the Notice of Motion application dated 16th August 2024 is merited and allowed in the following terms: -a.Pending the hearing and determination of the suit, this court grants an order of temporary injunction to restrain the Defendants either by themselves, officers, agents, employees, assigns or any other person acting for them from auctioning, selling, disposing of or in any other manner interfering with the ownership of any and/or all of the properties known as Land Reference Numbers Mombasa/Block XIX/281 and Mombasa/Block XXIII/190 Flat No.b.Costs be in the cause.

DATED AND DELIVERED VIRTUALLY AT MOMBASA THIS 20TH DAY OF FEBRUARY, 2025. ………………………J.K. NG’ARNG’AR, HSCJUDGEIn the presence of: -……………………… Advocate for the Plaintiff……………………… Advocate for the 1st Defendant……………………… Advocate for the 2nd DefendantCourt Assistant – ShitemiJ.K. NG’ARNG’AR, J.