https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1330

Metro Plaza Ltd v Dubai Bank Kenya Ltd (In liquidation) & another (Civil Appeal 526 of 2019) [2026] KECA 1330 (KLR) (10 July 2026) (Judgment) Neutral citation: [2026] KECA 1330 (KLR) Republic of Kenya In the Court of Appeal at Nairobi Civil Appeal 526 of 2019 W Karanja, LA Achode & LM Njuguna, JJA July 10, 2026 Between Metro Plaza Limited Appellant and Dubai Bank Kenya Limited (In liquidation) 1st Respondent Seo & Sons Limited 2nd Respondent (Being an appeal from the ruling of the High Court at Nairobi (Sewe, J.) dated 4th May 2018 in HCC No. 29 of 2017) Judgment 1.The appellant, Metro Plaza Limited, filed a suit against the 1st respondent vide a plaint dated 20th January 2017, where it averred that it was the proprietor of a parcel of land known as LR No. 209/2379 - City of Nairobi (hereinafter referred to as “the suit property”). The appellant prayed for, inter alia, a permanent injunction to restrain the 1st defendant from dealing with the suit property and the nullification of any charge over the suit property and any sale thereof. 2.Contemporaneous with the plaint, the appellant filed a notice of motion application dated 20th January 2017, wherein it sought a temporary injunction to halt the sale of the suit property by way of auction, which was scheduled to take place on 24th January 2017. 3.The trial court heard the application on 24th January 2017 and granted the interim orders as prayed by the appellant pending the hearing and determination of the said application. The appellant, however, avers that despite the court order and its knowledge, the 1st respondent proceeded with the sale by public auction of the suit property on 24th January 2017. 4.Consequently, the appellant filed another application before the trial court dated 6th February 2017, seeking to have the 1st respondent cited for contempt of the court’s order of 24th January 2017, and the committal to civil jail of the 1st respondent’s liquidation agents, Adan Mohamed Boru and Ms. Jane Ikunua. In response, the 1st respondent filed grounds of opposition dated 3rd March 2017, contending that the appellant’s supporting affidavit, sworn by Justus Lidambiza Tito, was incompetent and inadmissible as the deponent was not a director in the company. 5.Further, the 1st respondent averred that the application was defective as the appellant failed to obtain leave and issue notice to the Registrar and Attorney General before commencing the contempt proceedings. It was further contended that the application had been overtaken by events, as the sale had already taken place. The respondents also contended that the appellant failed to obtain leave and serve the Attorney General before filing the application against a state corporation. 6.Upon hearing both parties, the trial court issued its ruling on 4th May 2018, in which it found the application to be incompetent due to non-compliance with the requirements of section 30(2) of the Contempt of Court Act and proceeded to strike it out. This ruling is the subject of this appeal. 7.In its memorandum of appeal dated 14th October 2019, the appellant challenges the trial court’s ruling and order of 4th May 2018, primarily contending that the learned Judge erred in failing to determine the entirety of its application dated 6th February 2017 by dismissing the said application on a technicality which resulted in the loss of the suit property. 8.The appeal was canvassed by way of written submissions. In its written submissions dated 30th January 2025 and subsequent supplementary submissions dated 27th October 2025, the appellant argues that the 1st respondent is a private legal entity incorporated under the Banking Act, and not a state corporation. It argues that the supervision of the 1st respondent by the Kenya Deposit Insurance Corporation (KDIC) did not change the bank's legal character. The appellant has placed reliance on the High Court decision in Star Coffee (K) Limited & 2 Others vs. Imperial Bank Limited (Under Liquidation) & Another [2025] KEHC 1846 (KLR) and Metto vs. Chase Bank (Kenya) Limited [2023] KEELC 19886 (KLR), which enunciated that KDIC’s obligations include receiving, liquidating, and winding up any institution for which it is appointed, and in so doing, it acts as an agent of the institution. However, by assuming control, KDIC does not take on or incur the institution’s liabilities as its own. 9.The appellant asserts that the injunctive orders issued on 24th January 2017 were clear and that the 1st respondent’s officers had actual and constructive knowledge of them. The appellant submitted that the 1st respondent’s advocate, Ms. Jane Ikunya, was present in court when the orders were made and was served within the court corridors, but despite this service, the auction proceeded. The appellant has placed reliance on the case of Shimmers Plaza Limited vs. National Bank of Kenya Limited [2015] KECA 945 (KLR). 10.The appellant further argues that the dismissal of the application based on section 30 of the Contempt of Court Act was an elevation of procedural technicalities over substantive justice, and has cited the case of Nicholas Kiptoo Arap Korir Salat vs. Independent Electoral and Boundaries Commission & 6 Others [2013] KECA 113 (KLR). 11. In its submissions dated 3rd February 2025, the 2nd respondent maintains that the trial court properly exercised its discretion by striking out the appellant’s application for failing to comply with section 30 of the Contempt of Court Act. The 2nd respondent placed reliance on the cases of June Seventeenth Enterprises Limited vs. Cabinet Secretary for Ministry of Interior and Coordination of National Government & 2 others (Judicial Review Case 100 of 2015); Republic vs. Principal Secretary, Ministry of Defence Ex-Parte George Kariuki Waithaka [2018] eKLR, Njenga Mwangi Wachira & Partners vs. County Secretary, City County of Nairobi [2018] eKLR. Analysis and Determination: 12.Before delving into the application, this Court bears in mind that the substantive dispute involving the suit property and the charges thereto by the 1st respondent is yet to be heard on merit by the High Court. To that extent, we shall refrain from making any definitive findings on disputed issues which are best resolved by the trial court after a full hearing of the parties. 13.On the first issue on the competency of the application for contempt, the appellant's position is that the 1st respondent's placement under liquidation under the Kenya Deposit Insurance Corporation (KDIC) did not alter its legal character as to require issuance of notice under Section 30 (2) of the State Corporations Act. 14.In the replying affidavit of Mr. Adan Mohamed Boru, sworn on 30th January 2017, he deposed that he was the appointed Liquidation Agent of the 1st respondent, having been duly appointed as such by KDIC. The Kenya Deposit Insurance Act establishes the KDIC, whose mandate is outlined in Section 5 of the Act. Specifically, its role includes providing a deposit insurance scheme for customers of member institutions and overseeing the liquidation and winding up of any institution for which it has been appointed as receiver or liquidator, in accordance with the Act. The relationship between KDIC and such an Institution is as specified in section 45 of the Act as follows;“Submission by institutions:45.(1)Where control of an institution has been assumed under section 44(2)(b):a.the institution and its officers shall -i.immediately submit its assets, liabilities, businesses, and affairs to such control; andii.provide the Corporation and, if the control is assumed by the appointed person, to such appointed person, all such facilities as may be required to carry on the businesses and to manage the assets, liabilities, and affairs, including disposal of assets, of the institution;b.the Corporation or the appointed person, as the case may be, shall -i.remain in control of the assets, liabilities, businesses, and affairs of the institution concerned; andii.carry on the businesses and manage the assets, liabilities, and affairs of that institution in the name and on behalf of that institution, including disposal of assets until such appointment is revoked by the Corporation.Section 45 (2) provides that:“Throughout the period of control of an institution, there shall be vested in the Corporation or in the appointed person, as the case may be, all the powers of the institution, and of its directors, under the constituent documents of that institution, or exercisable by the institution or its directors under any law, regardless of whether such powers are exercisable by resolution, special resolution or in any other manner.”Section 45 (3) (a) provides that:“During the period of control of an institution -(a)No director of the institution shall, either directly or indirectly, engage in any activity in relation to the institution, except as may be required or authorized by the Corporation or the appointed person, as the case may be…” 15.Upon the appointment of KDIC as liquidator, the legal character of the 1st respondent changed. Its capacity to act independently was effectively exhausted. The control of its assets, operations, and decision-making was wholly transferred to KDIC, which assumed authority to manage, represent, and bind the 1st respondent. 16.Section 45(5) then proceeds as follows:Where the Corporation or the appointed person has assumed control of an institution, the Corporation or the appointed person shall:i.be deemed to be acting as the agent of the institution in carrying on the businesses and managing the assets, liabilities, and affairs of the institution or in carrying out any transaction relating to the institution or its assets, businesses, and affairs, including disposal of assets; andii.not, by reason of having assumed control of the institution or any action taken by it, be held to have assumed or incurred any obligation or liability of the institution for its own account. 17.As the trial court held, an application against the 1st respondent was essentially an application against KDIC as the corporation was in full control of the 1st respondent. Being a state corporation, the contempt application fell under the purview of section 30 (2) of the Contempt of Court Act. This Court takes judicial notice of the decision in Kenya Human Rights Commission vs. Attorney General; Law Society of Kenya (Interested Party) [2024] KEHC 2998 (KLR) vide which the Contempt of Court Act was declared unconstitutional. However, it is not in dispute that the contempt application giving rise to the present appeal was instituted before that declaration. In those circumstances, the rights and obligations of the parties must be determined in accordance with the law as it stood at the time the alleged contempt was committed. Section 30 (2) of the Act provides:“No contempt of court proceedings shall be commenced against the accounting officer of a State organ, government department, ministry, or corporation, unless the court has issued a notice of not less than thirty days to the accounting officer to show cause why contempt of court proceedings should not be commenced against the accounting officer.” 18.It is clear that, according to section 30 (2) of the Contempt of Court Act, the appellant ought to have issued a notice of not less than 30 days to the accounting officer to show cause why contempt of court proceedings should not be commenced. The importance of the notice cannot be overstated due to the criminal nature of the proceedings. Section 5 (1) of the Judicature Act provides as follows:(2)An order of the High Court made by way of punishment for contempt of court shall be appealable as if it were a conviction and sentence made in the exercise of the ordinary original criminal jurisdiction of the High Court.” 19.This Court in Christine Wangari Gachege vs. Elizabeth Wanjiru Evans & 11 others [2014] KECA 840 (KLR) held:“… Because in terms of section 5(2) of the Judicature Act, the court in punishing for contempt exercises ordinary criminal jurisdiction, it is paramount that the procedure for instituting such proceedings be scrupulously followed.” 20.The second issue raised by the appellant was on determination of prayer 1 of the application, on the cancellation of the sale of the suit property by public auction. Having found that the notice is a prerequisite under the Contempt of Court Act, the appellant was mandatorily required by the law to first issue notice before instituting the contempt proceedings. As a result, the application was incurably defective, and the court lacked jurisdiction to entertain the other prayers, and it did not err in striking it out. 21.The upshot is that this appeal lacks merit and it is hereby dismissed with no order as to costs. 22.Orders accordingly. DATED AND DELIVERED AT NAIROBI THIS 10TH DAY OF JULY 2026.W. KARANJAJUDGE OF APPEAL...................................L. ACHODEJUDGE OF APPEAL...................................L. NJUGUNAJUDGE OF APPEALI certify that this is a True copy of the originalSignedDEPUTY REGISTRAR