Paramount Universal Bank Ltd v Mirage Supply & Contractors Ltd & another (Civil Appeal E1392 of 2024) [2026] KEHC 8397 (KLR) (Civ) (11 June 2026) (Judgment)

Paramount Universal Bank Ltd v Mirage Supply & Contractors Ltd & another (Civil Appeal E1392 of 2024) [2026] KEHC 8397 (KLR) (Civ) (11 June 2026) (Judgment) Neutral citation: [2026] KEHC 8397 (KLR) Republic of Kenya In the High Court at Nairobi (Milimani Law Courts) Civil Civil Appeal E1392 of 2024 WA Okwany, J June 11, 2026 Between Paramount Universal Bank Limited Appellant and Mirage Supply & Contractors Limited 1st Respondent Hexagon Ventures Limited 2nd Respondent Judgment Background 1.Judgment was on 4th November 2022, delivered by the Small Claims Court in favour of the 1st Respondent against the 2nd Respondent (in Small Claims Court Claim No. E4281 of 2022) for the sum of Kshs. 1,283,109.39 together with costs and interest. 2.The 1st Respondent thereafter sought to execute the decree through garnishee proceedings but instead of commencing execution proceedings before the Small Claims Court which had delivered the judgment, it instituted Milimani CMCC Miscellaneous Application No. E996 of 2024 before the Chief Magistrate's Court. A Garnishee Order Nisi was issued on 25th June 2024. 3.The Appellant entered appearance as Garnishee and filed a Replying Affidavit sworn by Mr. Timothy Kimani who explained that Account No. 0300020611246 belonging to the 2nd Respondent was overdrawn and reflected an accruing debit balance of Kshs. 23,311,312.62 and therefore contained no funds capable of attachment. 4.Despite the Appellant’s explanation, the learned magistrate delivered a ruling on 5th November 2024 issuing a Garnishee Order Absolute thereby precipitating the filing of the instant appeal. The Appeal 5.The Memorandum of Appeal contains several grounds which may be condensed into the following issues:a.Whether the Chief Magistrate's Court had jurisdiction to entertain garnishee proceedings founded upon a decree issued by the Small Claims Court.b.Whether the learned magistrate erred in issuing a Garnishee Order Absolute despite evidence that the judgment debtor's account was overdrawn and contained no attachable funds. 6.The appeal was canvassed by way of written submissions which I have considered. Appellant's Submissions 7.The Appellant submitted that the execution proceedings ought to have been commenced before the court that issued the decree. 8.Reliance was placed upon Section 30 of the Civil Procedure Act and Order 22 Rule 6 of the Civil Procedure Rules for the argument that a decree holder must first apply to the court which passed the decree unless the decree has formally been transmitted to another court for execution. 9.It was submitted that the Small Claims Court never transmitted the decree to the Chief Magistrate's Court and therefore the latter lacked jurisdiction to entertain the garnishee proceedings. The Appellant relied on the decision in Stephens Kithi Ngombo vs. China Wu Yi Company Ltd & Standard Chartered Bank Kenya Ltd [2021] KEHC where it was held that execution must first be sought before the court that passed the decree and that transfer of execution proceedings to another court lies within the discretion of the court issuing the decree and not the decree holder. 10.Further reliance was placed on Cherono (Administrator of the Estate of Henry Cherono) vs. Rotich [2023] KEELC where the court held that execution jurisdiction primarily vests in the court that passed the decree. 11.The Appellant therefore contends that the Chief Magistrate's Court exercised jurisdiction unlawfully. 12.On the Garnishee Order Absolute, it was submitted that garnishee liability only extends to monies actually held for the judgment debtor. Reference was made to Order 23 Rule 1 Civil Procedure Rules which permits attachment of debts due from a garnishee to a judgment debtor. 13.The Appellant argued that its evidence demonstrated that the account was overdrawn and reflected a negative balance of Kshs. 23,311,312.62. According to the Appellant, the bank statement annexed to the Replying Affidavit showed that no funds existed capable of attachment. Reliance was placed upon Safaricom Limited vs. King'oo & Another (Civil Appeal No. 174 of 2021) [2024] KEHC where the Court held that a Garnishee Order Absolute can only issue where funds exist and are held to the credit of the judgment debtor. 14.The Appellant also relied on Ngaywa Ngigi & Kibet Advocates vs. Invesco Assurance Co. Ltd & 2 Others [2024] KEHC where the Court held that a garnishee should not be condemned where it demonstrates the absence of funds held on behalf of a judgment debtor. 15.The Appellant therefore urged the Court to allow the appeal and set aside the Garnishee Order Absolute. Respondents' Position 16.The Respondents did not file any submissions on the appeal but from the impugned ruling and the record before the Court, the 1st Respondent's position was that the bank statement relied upon by the Appellant was unreliable and failed to establish the actual status of the account. 17.The learned magistrate agreed with that position and found that the statement annexed by the Appellant was not properly verified as it reflected an earlier date rather than the position as at the date of swearing the affidavit. The trial court held that the Appellant had not adequately demonstrated that the account lacked funds and concluded that the Appellant had not to discharged its burden and proceeded to issue a Garnishee Order Absolute. Issues for Determination 18.The main issues for determination are whether the Chief Magistrate's Court possessed jurisdiction to entertain and determine the garnishee proceedings and whether the learned magistrate properly exercised discretion in issuing the Garnishee Order Absolute. 19.It is trite that jurisdiction is everything without which a court has no power to make one more step. (See Owners of the Motor Vessel 'Lillian S' v Caltex Oil (Kenya) Ltd [1989] KLR 1). 20.Section 30 of the Civil Procedure Act provides that a decree may be executed either by the court which passed it or by a court to which it is sent for execution. 21.Similarly, Order 22 Rule 6 of the Civil Procedure Rules provides that where the holder of a decree desires to execute it, he shall apply to the court which passed the decree, or if the decree has been sent under the provisions hereinbefore contained to another court, then to such court. 22.From the above provisions, the statutory scheme is clear that execution begins before the court that passed the decree. This means that a different court only acquires execution jurisdiction after a formal transfer or transmission of the decree. The authorities cited by the Appellant correctly interpret the above stated framework. 23.The record before this Court shows that the decree emanated from Small Claims Court Claim No. E4281 of 2022. There is however no evidence to show that the decree was transmitted by the Small Claims Court to the Chief Magistrate's Court for purposes of execution. Instead, the decree holder directly commenced Miscellaneous Application No. E996 of 2024 before a different court. 24.In my considered view, the procedure adopted by the decree holder offended the clear provisions of Section 30 of the Civil Procedure Act and Order 22 Rule 6 of the Civil Procedure Rules. 25.I therefore find that the learned magistrate assumed jurisdiction that had not been lawfully conferred to it and that the proceedings were therefore incompetent from inception. 26.My findings on the issue of jurisdiction would have been sufficient to determine this appeal but I am still minded to consider the issue of whether the Garnishee Order Absolute was properly issued even assuming jurisdiction existed. 27.Under Order 23 Rule 1 of the Civil Procedure Rules, a garnishee order can only attach debts due or accruing due from the garnishee to the judgment debtor. In other words, a garnishee cannot be compelled to pay money that it does not hold. 28.The evidence presented by the Appellant showed that the account in question was overdrawn by Kshs. 23,311,312.62. 29.An overdrawn account does not constitute a debt owing by the bank to the customer. Rather, it constitutes a debt owing by the customer to the bank. Consequently, I find that no attachable debt existed. 30.In the instant case, the learned magistrate rejected the bank statements on grounds that they were not sufficiently verified and did not reflect the position as at the affidavit date. 31.My finding is that while a court is entitled to scrutinize documentary evidence, it must also consider Section 176 of the Evidence Act which recognizes bank records as prima facie evidence of entries contained therein. 32.I note that the Appellant produced documentary evidence showing the account status and no contrary evidence was tendered to demonstrate that funds existed. In other words, the decree holder did not place any material before the court showing a positive balance in the account. 33.In Safaricom Ltd vs. King'oo & Another (supra) the Court emphasized that garnishee liability arises only where funds are actually held for the judgment debtor and similarly, in Ngaywa Ngigi & Kibet Advocates vs. Invesco Assurance Co. Ltd & 2 Others (supra) the Court held that a garnishee should not be condemned where evidence demonstrates absence of sufficient funds. 34.This Court agrees with those decisions and finds that a garnishee order cannot be transformed into a mechanism for imposing liability upon a bank merely because a judgment debtor owes money. As I have already noted in this judgment, the garnishee's obligation extends only to the funds actually held. 35.In the circumstances of this case, I find that the learned magistrate erred in issuing a Garnishee Order Absolute despite the evidence presented. 36.Having re-evaluated the record and the applicable law, I find that the instant appeal is merited and I therefore allow it in the following terms:a.The Ruling and Orders of Hon. B.M. Cheloti delivered on 5th November 2024 in Milimani CMCC Miscellaneous Application No. E996 of 2024 are hereby set aside in their entirety.b.The 1st Respondent's Amended Notice of Motion dated 7th June 2024 is hereby dismissed.c.The Garnishee Order Absolute issued against the Appellant is hereby vacated and discharged.d.Any consequential execution proceedings commenced against the Appellant pursuant to the impugned ruling are hereby set aside.e.Costs of the garnishee proceedings before the subordinate court shall be borne by the 1st Respondent.f.Costs of this appeal are awarded to the Appellant.It is so ordered. DATED, SIGNED AND DELIVERED AT NAIROBI THIS 11TH DAY OF JUNE 2026.W. A. OKWANYJUDGEIn the presence of:Kinyua for Muchui for AppellantNo appearance for RespondentAbdirizak – Court Assistant