[2022] KEHC 13285 (KLR)

Kenya Deposit Insurance Corporation (As the liquidator of Dubai Bank Kenya Limited) v Zubeidi & 5 others (Civil Case 467 of 2015) [2022] KEHC 13285 (KLR) (Commercial and Tax) (2 September 2022) (Ruling)

Neutral citation: [2022] KEHC 13285 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts Commercial and Tax Division)

Commercial and Tax

Civil Case 467 of 2015

A Mshila, J

September 2, 2022

Between

Kenya Deposit Insurance Corporation (As the liquidator of Dubai Bank Kenya Limited)

Plaintiff

and

Hassan Ahmed Abdul Hafedi Zubeidi

1st Defendant

Africa Energy Limited

2nd Defendant

Suleiman Enterprises Company

3rd Defendant

Kamp General Engineering Company

4th Defendant

Kemu Salt Parkers Production Company

5th Defendant

Maestro Properties Company

6th Defendant

Ruling

1. The applicant filed a notice of motion dated June 10, 2021 under the provisions of sections 1A, 1B, 3A 63e of the Civil Procedure Act, order 5 rule 2 of the Civil Procedure Rules and section 59 of the Interpretation and General Provisions Act of theCivil Procedure Rules. The applicant sought the following orders;a.The court to grant leave to the plaintiff to extract summons to enter appearance for the 1st, 2nd, 3rd, 4th, 5th and 6th defendants in this matter.b.The court to extend time within which to serve summons to enter appearance upon the 1st, 2nd, 3rd, 4th, 5th and 6th defendants.c.The costs of the application herein be in the cause.

2. The application was supported by the sworn affidavit of Justus Obuya who stated that the instant suit was filed by the firm of Muema Kitulu & Company Advocates together with an Application for preservatory Orders dated September 25, 2015.

3. The firm of Triple OKLaw Advocates came on record in November 2015 but due to the fact that the matter had active applications, the summons to enter appearance were not extracted and served upon the defendants.

4. All the defendants have actively participated in the various applications and case management. All defendants except the 2nd defendant have also filed their defences and documents.

5. The claim in this case is substantial and the proceeds thereof are intended to compensate the depositors of Dubai Bank Limited (IL). The defendants herein owe the collapsed bank over 2 billion shillings and were the architects of its collapse.

6. No prejudice will be suffered by the defendants should the orders be allowed.

7. The respondents filed their respective replying affidavits to the application herein and they all held one common ground that failure to extract summons makes the suit incurably defective and that the application should be dismissed.

Applicant’s Case 8. It was the applicant’s case that the summons in this case were not extracted and served on the defendants by the plaintiff. However, notwithstanding the failure to extract and serve the summons, all the defendants have actively participated in the proceedings including filing their defences, and responses to 3 applications that have been heard and determined in the matter since inception.

9. The Applicant relied on the case of Mary Wariara Mbugua v Chase Bank Kenya Ltd [2018] eKLR where it was held thus: -“I find that the applicants by conduct of actively participating in this matter led all sundry to believe that they are fully informed of the matter and were ready to proceed with the same. The striking out of the suit at this state for want of extraction and service of summons will not be in the interest of justice. Even if the court were to hold that there has been failure on the part of the respondent, parties having come this far, it will only be in the interest of justice to order that the summons be exacted and served. On that ground I will not allow prayer (1) of the application.”

10. Further, the applicant submitted that the plaintiff did not intend to disregard the rules of procedure. No prejudice will be occasioned to the defendants if these orders as granted. In the case of Philip Chemwolo & Another v Augustine Kubede[19821-881 KAR 103, the court held that:“Blunder will continue to be made from time to time and it does not follow that because a mistake has been made that a party should suffer the penalty of not having his case heard on merit. I think the broad equity approach to this matter is that unless there is fraud or intention to overreach, there is no error or default that cannot be put right by payment of costs. This court as is often said exists for the purpose of deciding the rights of the parties and not for the purpose of imposing discipline.”

11. It was the applicant’s submission that the plaintiff stands to suffer immeasurable prejudice should the application not be allowed since the claim against the defendants is in excess of Kshs 2, 000,000,000 (Two Billion Shillings) siphoned out of the collapsed Dubai Bank Kenya Limited (In Liquidation). The plaintiff as the trustee of depositors in the bank relies on the recovery in this suit to compensate the depositors.

Respondents’ Case 12. The 1st respondent submitted that the provisions of order 5 rules 1 & 2 of the Civil Procedure Rules are very clear on the place of summons to enter appearance in civil proceedings. In the present suit, neither of the respondents has been served with summons and up until the time the applicant filed the instant application a period of over 5 years had elapsed.

13. The applicant has since the inception of this suit failed to extract summons to enter appearance without any lawful excuse. Even after the court directed a year ago that summons should be extracted and served upon the Respondents within 48 hours, the Applicant failed to obey the court order and no cogent explanation was provided for the delay. The Respondent submitted that the delay is inexcusable since it appears intentional and affronting, especially since the same amounts disobedience of a peremptory order of the court.

14. To merely state that the respondents have participated in the proceedings from the onset is not sufficient reason for failure to extract and serve summons. The respondent urged the court to find persuasive the case of Tana Trading Limited v National Cereals and Produce Board [2014] eKLR where the court stated that “the failure to serve process cannot be wished away as a mere technicality. Failure to serve process where process is required is a failure which goes to the root of the conceptions of proper procedure in litigation.”

15. Further, the respondent argued that even though section 59 of the Interpretation and General Provisions Act on construction of the power of court to enlarge time provides that, "Where in a written law a time is prescribed for doing an act or taking a proceeding, and power is given to a court or other authority to extend that time, then, unless a contrary intention appears, the power may be exercised by the court or other authority although the application for extension is not made until after the expiration of the time prescribed", this power is discretionary and ought to be guided by the law.

16. The respondent reiterated that the prayers sought in the present application cannot and ought not to be granted. The applicant has not provided any grounds that would warrant the extraction of summons 6 years after commencement of this suit.

17. It was the 2nd respondent’s submission that leave to extract and serve summons out of time should not be granted because the suit abated as per order 5 rule 1 (6) considering the summons were never prepared and/or collected by the plaintiff/applicant within the stipulated time (thirty days) contrary to the decision inElegant Colour Labs Nairobi Limited v Housing Finance Company K Limited & 2 Others [2010] eKLR.

18. The suit abated thirty (30) days after it was filed and the defect is incurable since there is neither a provision for reissuance of summons in theCivil Procedure Rules as was stated by Rawal J (as she then was) inJulius Njoroge Muira v Harrison Kiambuthi Mburu[2011] eKLR nor can the summons be revived as was stated in Zakaria Somi Nganga v Kenya Commercial Bank Limited & 3 Others [2008] eKLR considering the plaintiff/applicant or its advocate ought to have prepared and filed summons together with the plaint and served the same bearing in mind the limitations as to time.

19. The 2nd respondent will be highly prejudiced if the orders sought in the application are to be allowed since there is no moral or legal reason why the 2nd respondent should continue to shoulder orders in this matter.

20. Furthermore, the essence of the 2nd respondent participating in some applications and case management cannot be construed to be an unconditional appearance and participation in the proceedings or a voluntary and complete waiver of any defect as noted through the respondent's insistence during the pendency of the main suit and as evidenced the fact that the respondent never filed their defence and documents.

21. It was the 3rd respondent’s submissions that the suit as filed by the plaintiff without accompanying summons was fatally defective ab initio and abated 30 days after its filing. Civil Procedure Rules do not contemplate that a plaint can be filed separately without an accompanying summons. That would not be a suit. A suit under the Civil Procedure Act is defined to mean all the subsequent proceedings are thus a nullity. They do not resuscitate the suit which was dead on arrival.

22. The respondent submitted that Lord Denning in the case of Macfoy v United Africa Limited 1961 3 ALL ER 1169 at 1172 opined that:“If an act is void then it is in law a nullity and not a mere irregularity. It is not only bad but incurably bad and every proceeding which is founded on it is also bad and incurably bad. You cannot put something on nothing and expect it to stay there. It will collapse.”

23. There has been inordinate delay by the plaintiff in filing the purported application for extraction / reissue of summons.

24. It was the 5th respondent’s position that that the failure to extract and serve the said summons inevitably causes serious prejudice to the defendant. When the plaintiff failed to discharge their obligation of not only informing the defendant of the existence of a suit but also calling upon them to come and enter appearance, it becomes possible, which is true in this case, that a defendant will have been deprived of the material documents sufficient for them to mount a credible defence against the claims in question. In this case, it will be impossible for the defendant to access or retrieve documents to allow them make out a reasonable defence. The applicant took up the management of Dubai Bank with all records in their possession and failed to release them to the 5th defendant even at their express request.

25. The respondent urged the court to take cognizance of the importance of procedure in litigation and particularly the importance of serving summons to a defendant, the harm that defendants are likely to be subjected to not just in this case but in subsequent cases where plaintiffs are made to believe that failing to extract and serve summons is not fatal as they can simply call upon the court to exercise its discretion under section 1A, 1B, 3A of the Civil Procedure Act to sanitize their otherwise illegal actions and dismiss this Application.

Issues For Determination 26. Having carefully considered the application, the responses and the written submissions by the parties herein, the court frames only one issue for determination;a.Whether the applicant should be granted leave to extract and serve summons to enter appearance for the 1st, 2nd, 3rd, 4th, 5th and 6th defendants?

Analysis 27. It is not in dispute that the plaintiff failed to extract summons enter appearance ab initio. Order 5 rule 1 of theCivil Procedure Rulesprovides that: -

1. When a suit has been filed a summons shall issue to the defendant ordering him to appear within the time specified therein.2. very summons shall be signed by the judge or an officer appointed by the judge and shall be sealed with the seal of the court without delay, and in any event not more than thirty days from the date of filing suit.3. Every summons shall be accompanied by a copy of the plaint.4. The time for appearance shall be fixed with reference to the place of residence of the defendant so as to allow him sufficient time to appear:Provided that the time for appearance shall not be less than ten days.5. Every summons shall be prepared by the plaintiff or his advocate and filed with the plaint to be signed in accordance with sub rule (2) of this rule.6. Every summons, except where the court is to effect service, shall be collected for service within thirty days of issue, failing which the suit shall abate.

28. The above provisions of order 5 rule 1 of the Civil Procedure Rules, are coached in mandatory terms and therefore a failure to extract, collect and or serve summons to enter appearance within the prescribed timelines, is fatal and invalidates a suit.

29. This notwithstanding, on July 20, 2020 Hon Lady Justice Grace Nzioka granted the applicant leave to remedy the fault and directed that summons in this matter be extracted and served within 48 hours.

30. The applicant's nonfeasance is quite apparent in its failure to extract and serve summons upon the respondents even after the court issued directions about one year ago that summons be served upon the respondents within 48 hours.

31. Moreover, after failing to comply with the court order of July 20, 2020 the applicant went ahead to file the present application for extension 12 months after the court gave its directions.

32. In T N Gadavarman Thiru Mulpad v Ashok Khot and Anor [2006] 5 SCC, the Supreme Court of India also emphasized on the dangers of disobeying court orders, thus:“Disobedience of this court's order strikes at the very root of the rule of law on which the judicial system rests. The rule of law is the foundation of a democratic society. Judiciary is the guardian of the rule of law. Hence, it is not only the third pillar but also the central pillar of the Democratic State. If the judiciary is to perform its duties and functions effectively and remain true to the spirit with which they are sacredly entrusted to it, the dignity and authority of the courts have to be respected and protected at all costs. Otherwise, the very corner stone of our constitutional scheme will give way and with it will disappear the rule of law and the civilized life in the society. That is why it is imperative and invariable that court's orders are to be followed and complied with.

33. Furthermore, Order 5 rule 2 (2) of the Civil Procedure Rules only allows the court to extend the validity of summons that have been extracted but not served on a defendant from time to time if it is satisfied it is just to do so, which is not the position in the applicant's case since the summons in question were never extracted.

34. Order 5 rule 2 (7) of theCivil Procedure Rulesfurther provides that if no application is made under sub-rule (2) within 24-months after the issue of the original summons, the court may without notice dismiss the suit.

35. The Court of Appeal in the caseMisnak International (UK) Limited v 4MB Mining Limited c/o Ministry of Mining Juba Republic of South Sudan & 3 Others[2019] eKLR adopted that point of view when it upheld the high court thus:“we concur with and adopt the following sentiments of Aburili, J in Law Society of Kenya v Martin Day & 3 Others (supra):“It is not sufficient for a plaintiff to institute suit against a party. That party must be invited to submit to the authority of the court in order for the legal process of setting down the suit for trial to commence. The circumstances of this case are such that Summons must be served in the manner provided for in the rules to enable the defendants who have no registered office or business in Kenya submits to the jurisdiction of this court. It therefore follows that their knowledge of the existence of the suit is not sufficient enough to proceed against them. They may be aware of the suit but unless they are prompted by the summons in the manner provided for in the rules, the jurisdiction of this court is not invoked.”

36. As already stated herein above by the Court of Appeal, the knowledge of the existence of the suit is not sufficient for the suit to proceed against the respondents. Summons must be served to invoke the jurisdiction of the court. The applicant cannot therefore argue that the respondents have participated in a number of applications relating to the suit.

37. The Court associates itself with the sentiments in Firenze Investment Limited v Kenya Way Limited [2001] eKLR where it was held thus:“A summons to enter appearance is not a piece of paper of little consequence. It is a necessary and vital document governing the timetable of pleadings and the rules governing Issuance and Service thereof must be complied with for the pleadings to acquire legitimacy. Such seriousness was underscored by the Court of Appeal in CA 85/96Uday Kumar Chandullal Rajani & Ors T/a Lit Petrol StationvCharles Thaithi (UR) …….the Court of Appeal held that:“Order V R 1 ( now order 5 of the Rules) provided a comprehensive Code for the duration and renewal of summons and therefore the non -compliance with the procedural aspect caused by failure to renew the summons under this rule is such a fundamental defect in the proceedings that the inherent powers of the court under s 3A of the Civil Procedure Act cannot cure”.

38. The applicant’s counsel has had conduct of the suit for over 5 years and cannot in this instance shift blame to the counsel who previously handled the matter. This being the only explanation given by the applicant, there was no satisfactory reason advanced for the delay in extraction of the summons. In addition, the applicant has not made any attempt to give a satisfactory explanation as to why it did not comply with the court order of July 20, 2020. This court reiterates that the failure to extract, collect and/or serve summons to enter appearance within the prescribed timelines, is fatal and invalidates a suit.

39. The rules of procedure must be followed and the court cannot come to the aid of a party that sleeps on its rights. This is found to be indolence of the highest order. It suffices to say that equity does not aid the indolent but the vigilant.

40. In a nutshell the applicant failed to perform all that was required within forty-eight (48) hour timeline. The applicant has also not placed before this court sufficient material to explain the delay and/or failure to comply. Under all the obtaining circumstances of this case this court is satisfied that this is not a suitable case to warrant the exercise of its discretion in favour of the applicant.

Findings And Determination 41. For the foregoing reasons this court makes the following findings and determinations;i.This court finds the application devoid of merit and it is hereby dismissed.ii.The applicant is found to have failed to extract the summons to enter appearance within the prescribed timelines thereby invalidating the suit. The suit is therefore deemed to be null and void.iii.To bring closure to this matter, each party shall bear its own costs of the application and of the suit.

Orders Accordingly.

DATED, SIGNED AND DELIVERED ELECTRONICALLY AT NAIROBI THIS 2NDDAY OF SEPTEMBER, 2022. HON. A. MSHILAJUDGEIn the presence of;Obuya holding brief for Ochieng Oduol for the plaintiff/ApplicantRono holding brief for Muchoki for the 1st defendantsNo appearance for the 5th and 6th defendantsLucy----------------------Court Assistant