RAMESH POPATLAL SHAH & ANOTHER v NATIONAL INDUSTRIAL CREDIT BANK [2004] KEHC 35 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT NAIROBI (MILIMANI COMMERCIAL COURTS COMMERCIAL AND TAX DIVISION)

CIVIL CASE 515 OF 2003

RAMESH POPATLAL SHAH & ANOTHER.......PLAINTIFF

-  VERSUS-

                        NATIONAL INDUSTRIAL CREDIT BANK...DEFENDANT                                                              

RULING

There are two applications before the court.  The first one isdated 31^st July, 2003 and was filed in court on 1^st August 2003.  Itwas brought by way of chamber summons under O.XXXIX rules1,2,2A,3 and 9 of the Civil Procedure Rules and under section 3A of.  the Civil Procedure Act, Cap. 21, Laws of Kenya; under the HighCourt Vacation Rules and all other enabling provisions of the law.The application seeks several orders:   1   That this application be certified as urgent and be heard exparte in the first instance.

2. That this Honourable Court be pleased to admit this matterfor hearing during the High Court Vacation.3.That this Honourable Court be pleased to issue a temporaryinjunction restraining the Respondent, by itself, its servants,employees and/or agents from selling, leasing parting withphysical possession of or disposing off motor vehicleregistration Number KAH 758C pending the hearing anddetermination of this application.

4.That this Honourable Court be pleased to issue an order ofinjunction restraining the respondent from applyingappropriating and or utilizing the proceeds of the deceased'slife insurance policies numbers J/H64793, J/H64794,J/H64795 and J/H64796 released to the respondent by M/sAxa Equity and Law, United Kingdom, pending the hearingand determination of this suit.

5.That this Honourable Court be pleased to order therespondent to forthwith release and deliver to the applicantsthe motor vehicle registration number KAH 758C.

6.   That this Honourable Court be pleased to order therespondent to forthwith deposit in court all the payments itreceived from M/s Axa Equity & Law in respect of thedeceased's life insurance policies numbers J/H64793,J/H64794, 3/H64795 and J/H64796 pending the hearing anddetermination of this suit.

7.   That the costs of this application be provided for.

The application is based on the grounds that the respondent hasunlawfully and irregularly repossessed the motor vehicle registrationnumber KAH 758C which belongs to the estate of the deceased, andhas refused to disclose to the applicants the basis upon which itrepossessed the said motor vehicle; that the respondent has calledfor the proceeds of the deceased's life insurance policies from AxaEquity & Law on the grounds that the deceased had assigned thesame to it as security while at the same time refusing to disclose tothe applicants the origins, nature and extent of the debts allegedlyowed by the deceased. It is a further ground of the application thatas the personal representatives of the estate of the deceased whoare appointed by this Honourable Court, the applicants are entitled to

full information regarding the assets, debts and other affairs of thedeceased, which information the respondent has refused to divulge.Consequently, the applicants contend, it is in the interests of justicethat the respondent be compelled to make a full disclosure of andproduce the accounts sought for verification and ascertainmentbefore any assets in the estate are distributed. Unless the orderssought are granted, the applicants say, the estate may be wastedand depleted to the detriment of the rightful beneficiaries. Theapplication is also supported by the annexed affidavit of SurekhaShobhagchandra Shah, one of the administrators of the estate of thedeceased, Shobhagchandra Ratilal Shah, and also his widow.

At the hearing of the two applications, Mr. Kamau and Mr.Bengi appeared for the applicants. The respondent did not attend.The record shows that the hearing date was taken ex parte on 9^thDecember, 2003. The hearing notice dated 10^th December, 2003 wasserved on counsel for the respondents on 11^th December, 2003 asper the affidavit of service sworn on 4^th January, 2004 and filed incourt on 7^th January, 2004 by one Elizabeth Kiasyo, an advocate ofthe High Court of Kenya.

In spite of service having been effected, the respondent did notattend. Furthermore, the respondent has filed neither a replyingaffidavit nor grounds of opposition.

The court was satisfied that the hearing notice was served insufficient time for the respondent to attend. However, it did not doso. When this matter was last adjourned on 13^th October, 2003, itwas at the instance and behest of the respondent/and the courtgranted that adjournment as a last opportunity. For these reasons,the court found it prudent to proceed ex parte, the respondent'sabsence notwithstanding.

In canvassing the above application, Mr. Kamau for theapplicants said he was seeking entirely on the affidavit of SurekhaShah, and also on the grounds set out in the application. He alsopleaded that the applicants were seeking prayers 5, 6, and 7 of theapplication, other prayers having been spent.

Prayer no. 5 seeks a release of motor vehicle No. KAH 758Cwhich, according to the affidavit of Mrs. Shah, forms part of theassets of the deceased, and which the respondent attached withoutjustification.

In prayer no. 6, the applicants apply for the release and deposit incourt of all the payments which the respondent received in respect ofthe deceased's four life assurance policies. The sum assured in eachpolicy was £12,500 sterling, exclusive of all interests earned andaccrued. Mr. Kamau therefore argued that since there were fourinsurance policies, the respondent should deposit in court a total of£50,0000 sterling as these were the sums received by the respondentfrom the insurers, M/s Axa Equity & Law. He added that this is acolossal sum of money and it forms the bulk of the estate of thedeceased. The applicants are apprehensive that the respondentmight utilize these funds to the detriment of the inheritors and theirentitlement. The applicants therefore pray that the moneys in issuebe deposited in court so that the respondent does not have theopportunity of using funds to which they are not entitled.

The plaint herein was filed on 1^st August, 2003. Although thedefendant was duly served, it did not file a memorandum ofappearance within the prescribed period, consequent upon whichfailure the court entered an interlocutory judgment against thedefendant on 26^th September, 2003.

Mr. Kamau further submitted that the only step outstanding is formalproof, in which circumstances the applicants have established a verygood case and have substantially succeeded so as to warrant theorders prayed for. In addition thereto, counsel continued, therespondent herein has demonstrated that it is not interested inassisting the applicants or the court in finalizing this matter.Therefore, the balance of convenience tilts in favour of theapplicants. At this juncture, Mr. Kamau referred the court to Giellav. Cassman Brown & Co. Ltd[ 19731] E.A. 358. He also arguedthat on the issue of whether damages would be an adequate remedy,even if such damages were adequate, that does not, perse, precludethe court from issuing an injunction. In support of that position, hecited LUCY NJ0KI WAITHAKA V. INDUSTRIAL ANDCOMMERCIAL DEVELOPMENT CORPORATION, Civil Case no.321 of 2001 (U.R.).

He concluded by submitting that the applicant had made out a goodcase to warrant the issuance of orders sought in the application, andthat the applicant should also be awarded costs of the application.

So much for the application dated 31^st July, 2003. The secondapplication is similarly brought by way of a Chamber Summons dated17^th October, 2003 and filed in court on the same day, under O.XIXrules 1 and 2 of the Civil Procedure Rules, and S. 3A of the CivilProcedure Act. The application seeks an order that this court bepleased to order the defendant to render to the plaintiffs a full, trueand accurate account of all its financial dealings with the lateShobhagchandra Ratilal Shah as prayed in the plaint, and inparticular-

(a)       a full, true and accurate account of all the financial dealingsbetween the defendant and the late Shobhagchandra RatilalShah giving full and separate statements for eachtransaction from inception to conclusion as at 1^st February2003 being the date of demise of the deceased showing allthe advances, payment from the accounts and paymentsinto the accounts.

(b)       Certified copies of all agreements and security documentsagainst each of the advances made to the deceased.

(c) A true and accurate disclosure to the plaintiffs of the detailsand/or particulars set out in paragraphs (i), (ii), (iii), (iv), (v)and (vi) therein.

The grounds upon which the application is based are that thedefendant has failed, neglected and/or refused to render a full trueand accurate statement of account of all the financial dealingsbetween itself and the late Shobhagachandra Ratilal Shah to theadministrators of the estate without any reasonable cause andinstead has continued to appropriate the estate of the deceased.Secondly, the defendant failed to enter appearance within theprescribed period as a result of which interlocutory judgment wasentered on 26^th September, 2003, and there is no preliminaryquestion pending between the parties relating to the accounts.Finally, it is not possible for this court to determine the issues inquestion in this suit without the defendant rendering a true and fullaccount of all its transactions with the deceased. The application isalso supported by the annexed affidavit of ERIC BENGI, the advocatefor the plaintiffs/applicants.

In his affidavit, Mr. Bengi traces the history of the case from the

date it was filed to the date when interlocutory judgment was

entered.  He also avers that the defendant continues to appropriate

the assets of the deceased without disclosing what the deceased

owed them.  There is therefore imminent danger that the property

and assets of the estate will be wasted unless a full and true account

is rendered to the plaintiff. He concludes his affidavit by stating that

he believes that it is not possible for the court to determine the

issues in dispute between the parties until a true and full account is

rendered by the defendant.

While canvassing the application, Mr. Kamau referred the court

to O.XIX rules 1 and 2 of the Civil Procedure Rules. Rule 1 states-

"Where a plaint prays for an account, orwhere the relief sought or the plaint involvesthe taking of an account, if the defendanteither fails to appear or does not afterappearance by affidavit or otherwise satisfythe court that there is some preliminaryquestion to be tried, an order for the properaccounts with all the necessary inquiries and

directions   usual   in  similar  cases  shallforthwith be made."

Mr. Kamau submitted that the position in this matter falls

squarely under the provisions of O.XIX r. 1. Firstly, the plaintiff seeksan account; secondly, the defendant has failed to appear andinterlocutory judgment has issued. He therefore submitted that theplaintiff has satisfied all requirements for orders sought, and prayedthat these accounts be furnished within 14 days.

This is a very sensitive matter. It touches upon the estate of adeceased person who passed away suddenly without revealing to anyliving soul his affairs and transactions with the defendant, andwithout any or any proper account of such affairs and transactions.Between the administrators of the estate of the deceased and thedefendant, only the latter is in the know as to the nature and extentof its dealings with the deceased. No doubt the defendant knowswhy it instructed auctioneers to go to the deceased's businesspremises and attach motor vehicle registration number KAH 758C, aMercedes Benz Prime Mover, and it alone knows the circumstancesunder which the life insurance policies which the deceased had takenout with Axa Equity & Law, United Kingdom, being Policy Numbers

J/H64793, J/H64794, J/H64795 and J/H64796 were assigned to it.

Upon the defendant's failure to enter appearance and file a defence,

and its subsequent failure to respond to any or both of the above

applications by way of a replying affidavit or affidavits, or by grounds

of opposition, the defendant has elected to play its cards close to its

chest instead of playing them on the table, facing upwards.  As a

result, the applicants are none the wiser.

In his submissions on the application dated 31^st July, 2003, Mr.

Kamau contended that the applicants have satisfied the formula laid

down in GIELLA V. CASSMAN BROWN & CO. LTD T19731 E.A.

358 for the grant of interlocutory injunctions.  In that case, Justice

Spry, V.P of the then Court of Appeal for East Africa, immortalized

that formula at page 360 in the following words-

"The conditions for the grant of aninterlocutory injunction are now... wellsettled in East Africa. First, an applicant mustshow a prima facie case with a probability ofsuccess. Secondly, an interlocutory injunctionwill not normally be granted unless theapplicant might otherwise suffer irreparableinjury,  which  would  not  adequately  be

compensated by an award of damages.Thirdly, if the court is in doubt, it will decidean application on the balance ofconvenience'

An interlocutory judgment has already been entered in this

matter. Only formal proof stands between the applicants and a finaljudgment, In view of that interlocutory judgment, one is entitled tothink that, on the face of the record, and as matters stand now, theapplicants have established a prima facie case with a probability ofsuccess. Secondly, it would be relatively easy to assess damages forthe loss to the estate of the motor vehicle. However, it is not equallyeasy, I think, for the applicants to evaluate the loss to the estate inrespect of the insurance policies unless they know the liability, if any,of the deceased to the defendant. It becomes imperative thereforethat the defendant should provide an account of their transactionswith the deceased, otherwise they will never know what they may belosing. This court is not in any doubt that the applicants havesatisfied the first two prongs of the test laid down in Cassman's case.For that reason, I need not look into the third limb of that test. But if

I had any doubt, I would take the view that as the record stands, thebalance of convenience tilts in favour of the applicants.

As said earlier on, the respondent did not deem it fit or properto respond to these applications. It did not file any replying affidavit,or any grounds of opposition.; On the day for the hearing of theapplications, it did not attend. The applications are thereforeunopposed. By reason thereof, the court hereby orders that thedefendant/respondent do, within 14 days of the date of service ofthese orders-

1.   Release and deliver to the plaintiffs/applicants the motorvehicle registration number KAH 758C.

2.   Deposit in court all the payments they received from M/sAxa Equity & Law in respect of the deceased's policiesnumbers J/H64793, J/H64794, J/H64795 and J/H64796pending the determination of this suit.

3.   Render to the plaintiffs a full, true and accurate account ofall its financial dealings with the late Shobhagchandra RatilalShah as prayed in the plaint and particularized as follows:

(a)             A full, true and accurate account of all the financialdealings between the defendant and the lateShobhagchandra Ratilal Shah giving full andseparate statements for each transaction frominception to conclusion as at 1^st February, 2003being the date of demise of the deceased showingall the advances, payment from the accounts andpayments into the accounts.

(b)             Certified copies of all agreements and securitydocuments against each of the advances made tothe deceased.

(c)             A true and accurate disclosure to theplaintiffs/applicants and the details and/orparticulars of the following:-

(i)         all documents and securities pledged, lodged or assigned tothe defendant by the late Shobhaganchandra Ratilal Shahwhether in his capacity as the proprietor of Lento Agenciesor through his nominees, assigns, agents, or businesses assecurity for the financial facilities or accommodation thatwas advanced or availed by the defendant

(ii)         certified true copies of all the statements issued by the defendant to the late Shobhagchandra Ratilal Shah whether in his capacity as the sole proprietor of Lento Agencies or inany other manner howsoever, from the time of the openingof the accounts until the date of this order.

(iii) A disclosure of all concluded accounts and disclosure of allthe proceeds received from any repossessed assets of thedeceased supported by all relevant vouchers, receipts andstatements.

(iv) A full, true and accurate account of all monies and orpayments received from M/s Axa Equity & Law in respect ofthe deceased's life policies numbers J/H 64793, J/H64794,J/H64795 and J/H64796 taken out in the name of thedeceased plus an account of any disbursements for whichthe policies form security.

(v) Disclosure of all securities/assets for the time being held bythe defendant.

(vi) Disclosure of the rate(s) of interest(s) charged in eachaccount.

Costs   of   both   applications   to   be   borne   by   thedefendant/respondent.

Dated and delivered at Nairobi this 23 the day of January 2004

L.NJAGI

JUDGE

By admitting the description in the plaint, however, the defendant ledthe plaintiff to believe that all was well only to surprise the plaintiff atthe trial by revealing its true identify at the last moment.  For thatreason, the defendant will meet the costs of this application.Orders accordingly.Dated and delivered at Nairobi this 27^th day of January, 2004.

L.NJAGI

JUDGE