Aggarwal (Suing as Administrator of the Estate of Gurcharan Dass Aggarwal) v National Bank of Kenya Limited (Civil Case 5 of 2016) [2023] KEHC 25383 (KLR) (17 November 2023) (Ruling)
Neutral citation:
[2023] KEHC 25383 (KLR)
Republic of Kenya
Civil Case 5 of 2016
JRA Wananda, J
November 17, 2023
Between
Amit Aggarwal (Suing as Administrator of the Estate of Gurcharan Dass Aggarwal )
Plaintiff
and
National Bank of Kenya Limited
Defendant
Ruling
1.By the Plaint filed on 14/12/2015, the Plaintiff, suing as the Administrator of the said deceased, filed this suit. The Plaintiff sought, inter alia, Judgment barring the Defendant, a bank, from exercising its statutory power of sale over various properties which had secured financial facilities advanced to the deceased by the Defendant. The Court granted an interlocutory injunction pending determination of the suit.
2.From the record, I gather that the suit was initially filed before this Court in 2015, then sometime in 2016 was transferred to the Environment & Land Court at Kitale before being re-transferred in 2022 back to this Court at Eldoret.
3.In the course of the matter, the Plaintiff filed the Application dated 21/11/2016 seeking leave to deposit the sum of Kshs 7,658,191.40 as security, in exchange for release of the titles held by the Defendant, pending determination of the suit. The said sum was the amount alleged by the Defendant to be owing, as at that time, from the deceased. The parties then recorded a consent on terms that, pending determination of the Application, the Plaintiff would deposit in an interest earning account in the joint names of the Advocates for the parties, a sum of Kshs 9,000,000/- to be held as security pending agreement by the parties and/or upon such orders as shall be made by the Court. The account was to be opened at the Defendant bank. Upon deposit of the amount as aforesaid, the Defendant would, not later than 3 days, release to the Plaintiff the Certificate of Lease for the property Eldoret Municipality/Block 6/6 among those held by the Defendant. Also to be released was discharge of Charge for the same one property.
4.Now before the Court is the Plaintiff’s Application (Notice of Motion) dated 23/08/2022 seeking orders as follows:i.Spent.ii.That the Honourable Court be pleased to issue an order to review, vary and/or set aside the Consent Order dated 21st December, 2016 and adopted by the Court on 9th February 2017 to the effect that;a.The Plaintiff/Applicant to deposit in an interest earning account in the joint names of the advocates for the parties that is M/s. Nyairo and Company, Advocates and M/s. Gumbo & Associates, Advocates the sum of Kenya Shillings Nine Million (KShs.9,000,000/=) to be held pending agreement by the parties and/or upon such orders as shall be made by the Court. The said account to be opened at National Bank of Kenya Limited, Eldoret Branch.b.Upon deposit of the amount referred to in paragraph (a) above the Defendant/Respondent forthwith and in any event not later than three (3) days to release to the Plaintiff/Applicant's advocate the following documents;• Certificate of Lease over title number Eldoret Municipality/Block 6/6.• Duly executed discharge of charge in respect of title Eldoret Municipality/Blockiii.The amount of Kenya Shillings Nine Million (KShs.9,000,000/=) held by the Defendant/Respondent in account number 01282130554700 in the joint names of the advocates for the parties herein, that is M/s. Nyairo and Company, Advocates and M/s. Gumbo and Associates, Advocates be transferred to an independent joint interest earning account to be opened in the joint names of the advocates for the parties herein stated above.iv.The Defendant/Respondent and/or its Directors be compelled to provide statements of account for the period between 21st December, 2016 to date.v.That the Court be pleased to order interest on the said sum of Kenya Shillings nine million (Kshs. 9,000,000/=) for the period between 21st December, 2016 to date.vi.That upon opening and transferring the said funds into an independent joint interest earning account, there be an order directing the Defendant/Respondent to provide quarterly statements of account to the Plaintiff/Applicant not later than the 5th day of the next quarter.vii.That there be an order compelling the Defendant/Respondent to release to the Plaintiff Applicant's Advocate the original lease certificate for Eldoret Municipality/Block 6/6 and a duly executed discharge of charge in respect of the said in line with the Court order aforesaid.viii.That in default of item 7 above, warrants of arrest do issue against the Directors and the Managers of the Defendants/Respondents bank automatically for disobeying Court orders.ix.That costs for the Application be provided for.
5.The Application is filed through Messrs Nyairo & Co. Advocates and is expressed to be brought under Order 45 Rule 1(b) and Order 51 Rule 1 of the Civil Procedure Rules, Section 1A, 1B, 3, 3A and 63(e) of the Civil Procedure Act and “all other enabling provisions of the law”. It is premised on the grounds set out thereon and the contents of the Supporting Affidavit sworn by the Plaintiff, Amit Aggarwal.
6.In the Affidavit, the Plaintiff deponed that upon the said consent order being adopted as an order of the Court, he paid the sum of Kshs 9,000,000/- to the Defendant which was to be deposited in a joint interest earning account in the names of the parties’ Advocates herein, upon receiving the funds, in blatant disregard to the Court order, the Defendant deposited or placed the same in a non-interest earning account, the Defendant has kept him in the dark as to the account and its performance and has declined or failed to provide him with statements of account to date, the move by the Defendant to deposit the amount in a non-interest earning account is against the Court order and only intended to benefit the Defendant, Court orders are not for decorative purposes but must be specifically adhered to, despite compliance on the Plaintiff’s part, the Defendant has also failed to deliver the Certificate of Lease and discharge of Charge for the said property. He then reiterated the prayers made in the Application and added that it is now over 5 years since the amount was placed in a non-interest earning account thus causing him tremendous loss and that the Defendant does not stand to suffer any loss if the prayers are granted.
Defendant’s Response
7.The Defendant opposed the Application vide the Replying Affidavit sworn by one Margaret Jepkemo and filed on 31/10/2022 through Messrs G&A Advocates LLP. She described herself as the Respondent’s Eldoret Branch Manager and deponed that in compliance with the consent Court order and after the Advocates had executed the account opening Forms, a Business Banking Account was consequently operationalized and assigned a number in the joint names of the Advocates on record, on 19/01/2017 the Plaintiff’s Advocates deposited the Kshs. 9,000,000/- into the account, given the nature of the account sought being an interest earning account, a Call Deposit Account was opened alongside the business Banking Account, a Call Deposit Account acts as an ancillary to the main account for the purposes of earning interest, on 14/09/2017 the Kshs 9,000,000/- was deposited into the Call Deposit Account to enable the account attract interest as ordered by the Court, as at the date of swearing the Affidavit, the accrued interest stood at Kshs. 2,348,876.71, the averments that there is non-compliance with the Court order is far-fetched and un-informed, as opposed to filing the instant Application, the Applicant’s Counsel would have exercised some diligence by visiting the Defendant and obtained proper information regarding the status of the account.
8.She deponed further that the Respondent, through its Advocates, released the Certificate of Lease and duly executed the discharge to the Plaintiff’s Advocates vide letters which were duly received and acknowledged. In conclusion, he deponed that from the foregoing, it is clear that the Defendant has fully complied with the terms of the Court order.
Plaintiff’s Supplementary Affidavit
9.In a rejoinder, the Applicant filed a Supplementary Affidavit on 2/11/2022. He deponed that the Defendant’s Replying Affidavit is a confirmation that the Defendant did not comply with the terms of the consent because the funds were to be deposited in a joint interest earning account in the names of both Advocates, from the bank statement exhibited by the Defendant, it is clear that no interest has accrued as was contemplated by the parties in the consent, the call deposit account, if indeed it is in existence, is not an account opened in the names of both Advocates, there is no evidence that either he or his Advocates were notified of the opening of a Call Deposit Account or signed the account opening forms for the same, this is evidenced by the statement of account which reveals that only the Defendant’s Advocates are the Account holders, there is no telling whether the said account has any relation with the account opened by both Advocates and the consent executed by the parties, in any event, from the statement exhibited, it is evident that the Call Deposit Account has also not accrued interest, the fact that the Defendant moved the Kshs 9,000,000/- to a different account which the Plaintiff has no control over and without his consent is reason enough to grant the orders sought, he has no control of how the purported Call Deposit Account is operated, the statement also reveals that the said account was opened on 14/09/2017 yet there is no account of the interest that accrued from the date the Plaintiff deposited the Kshs. 9,000,000/- on 19/01/2017 to September 2017 when the purported Call Deposit Account was opened.
Hearing of the Application
10.With concurrence of the parties, I directed that they file written Submissions. Pursuant thereto, the Plaintiff filed Submissions on 26/10/2022 while the Defendant filed on 30/01/2022.
Plaintiff’s Submissions
11.Counsel for Applicant submitted that upon the consent order being adopted, the Plaintiff released the Kshs. 9,000,000/- to the Respondent which amount was to be deposited in a joint interest earning account in the names of the parties’ Advocates, upon receiving the amount, and in blatant disregard to the Court order, the Defendant deposited the amount in a non interest earning account no. 01282130554700, it is the Plaintiff’s fear that the Defendant may have appropriated the funds given that the Defendant has kept the Plaintiff in the dark, further, the Defendant has also failed to deliver to the Plaintiff the Certificate of Lease over title no. Eldoret Municipality/Block 6/6 and the duly executed discharge of Charge over the same property in breach of the consent order, Order 45 of the Civil Procedure Rules empowers the Court to grant an order for Review where sufficient grounds are demonstrated, the Defendant’s action to continue retaining funds million without any interest accruing is to the detriment of the Plaintiff and the beneficiaries of the estate of the deceased, whereas the monies have been held at the Defendant’s bank since 2016 and the Defendant can trade in it for commercial gain, the Plaintiff has not benefited from the same as he has not only been denied use of the funds but also denied the interest which would have automatically accrued if the Defendant had complied with the terms of the consent order, it is because of the Defendant’s action to defraud the Plaintiff of the interest on the sum is sufficient reason to warrant this Court’s intervention to review the consent order and allow the prayer to have the money deposited in account no. 01282130554700 transferred in an independent interest earning account, to order the Defendant to provide the statement of account for the joint account between 21/12/2016 to date and order the Defendant to account for the interest that ought to have accrued thereon since 2016 on the Kshs 9,000,000/-. She cited the case of Alberto Carnavale v Giovanni Gremmo [2005] eKLR.
12.Counsel submitted further that the Defendant’s failure to release the title and discharge of Charge for the property Eldoret Municipality/Block 6/6 which would have enabled the estate of the deceased to put to good use the said property is sufficient reason to grant the orders.
Defendant’s Submissions
13.Counsel for Applicant submitted that upon receipt of the Kshs 9,000,000/- from the Plaintiff, the Defendant opened a Business Banking Account No. 01282130554700 in the joint names of the Advocates on record, since the Court directed that the sums ought to incur interest, an ancillary account referred to as Call Deposit Account No. 01400130554700 was opened for the sole purposes of earning interest, as at 25/10/2022, the interest stood at Kshs 2,348,867.71, in further compliance with the consent order, the Defendant also forwarded the duly executed discharge of Charge for the property Eldoret Municipality Block 6/6 to the Plaintiff, seemingly unaware of the above transactions, rather than carrying out due diligence with the Defendant, the Plaintiff filed the present Application.
14.According to Counsel, the Plaintiff has not laid a foundation with regards to discovery of new and important evidence, or shown any mistake or error apparent on the face of the record, or any sufficient reason as to why the order ought to be reviewed. He cited the case of Alpha Fine Foods Limited v Horeca Kenya Limited & 4 Others [2021] eKLR. He then submitted that the Plaintiff has also not specified the ground upon which he is seeking review and cited the cases of Wilfred Murungi Mboroki & 16 Others v Mutua Mugambi M’Rewa & 2 Others [2002] eKLR which, he submitted, quoted the case of Otieno, Ragot & Company Advocates vs National Bank of Kenya Limited [2020] eKLR.
15.Counsel submitted further that in reality the Plaintiff seeks variation of the Court order, which cannot be said to be review, he attempts to re-write the terms of the order rather than correct an error apparent. He cited the case of Hosea Nyandika Mosagwe & 2 Others v County Government of Nyamira [2002] eKLR.
16.He contended further that at no point has the Applicant ever sought for the account statement, nothing would have been easier for the Plaintiff than walking to the bank and requesting for one.
17.Counsel concluded by maintaining that the order was fully complied with and as such all the prayers sought are moot, if at all the Plaintiff is raising valid and legitimate concerns, then he would have taken the more drastic route of citing the Defendant’s officers for contempt.
Analysis & Determination
18.The issue for determination in this matter is “whether the Court should review, vary or set aside the consent order dated 21/12/2016 and also grant the consequential orders prayed for”.
19.It is trite law that any party seeking review of Court orders is bound by the provisions of Order 45 of the Civil Procedure Rules. In respect thereto, Order 45 provides as follows:1.(1)Any person considering himself aggrieved—(a)by a decree or order from which an appeal is allowed, but from which no appeal has been preferred; or(b)by a decree or order from which no appeal is hereby allowed, and who from the discovery of new and important matter or evidence which, after the exercise of due diligence, was not within his knowledge or could not be produced by him at the time when the decree was passed or the order made, or on account of some mistake or error apparent on the face of the record, or for any other sufficient reason, desires to obtain a review of the decree or order, may apply for a review of judgment to the Court which passed the decree or made the order without unreasonable delay.
20.In Paul Mwaniki vs. National Hospital Insurance Fund Board of Management [2020] eKLR, it was said:
21.It is therefore clear that Order 45 provides for three circumstances under which an order for review can be made. The first one is where there has been discovery of new and important matter or evidence. The second is where there has been a mistake or error apparent on the face of the record. The third ground is “for any other sufficient reason”. Although the Application does not disclose the ground under which it has been brought, in the Submissions filed on his behalf, reference has been made to the ground of “for any other sufficient reason” ground.
22.Further, noting that the order in question was made pursuant to a consent letter signed by the parties, it is imperative to note the circumstances within which a consent order can be reviewed, varied or set aside. On this point, the Court of Appeal, in the case of Brooke Bond Liebig v Mallya 1975 E.A 266 held as follows:
23.Again, the Court of Appeal in the case of Kenya Commercial Bank Ltd. v. Specialized Engineering Co. Ltd (1982) KLR P.485 held that;
24.Finally, Hancox JA (as he then was), in the case of Flora Wasike v. Destimo Wamboko (1982 -1988)1 KAR 625 stated as follows:
25.From my analysis of the facts set out in the Application, the Plaintiff’s grievance is in regard to the manner in which the Defendant has chosen to implement the consent order or the mode of compliance adopted, and not the contents thereof. Applying the above principles to the matter at hand, I find that the Plaintiff has failed to demonstrate any basis for review, variation or setting aside of the consent order. Although the Plaintiff has termed the Defendant’s alleged failure to comply with the consent order as an act of “fraud”, I do not find any circumstances giving rise to an inference of “fraud” on the part of the Defendant. I therefore find that none of the recognized grounds for review of a consent order has been demonstrated. Accordingly, I decline the invitation to review, vary or set aside the consent order dated 21/12/2016.
26.This however is not the end of the matter. The Plaintiff seeks orders to compel the Defendant to comply with the terms of the consent order. On its part, the Defendant contends that it has fully complied with the order as directed.
27.To demonstrate that it has so complied, the Defendant exhibited a copy of the account opening Application Form signed by Advocates for both the respective parties in respect to account No. 01282130554700 opened at the Defendant bank. Also exhibited is a copy of a statement of account confirming the deposit of the said amount of Kshs. 9,000,000/- on 19/01/2017 into the account. The same statement then indicates that subsequently on 14/09/2017, about 8 months later, a Call Deposit transfer of the whole amount was made. The account therefore reflected a nil balance. There is however no evidence supplied to indicate under whose instructions the transfer was made. There is also no evidence to confirm that the name of the Plaintiff’s Advocates appears in the account as joint or co-account holders. There is also no evidence to demonstrate that the Defendant was consulted or agreed or was even informed of this call deposit transfer.
28.As regards the Call Deposit Account itself, the Defendant has exhibited a statement bearing the account number 01400130554700 (a different number) indicating that indeed the said Kshs 9,000,000/- was transferred thereto. However, the statement only bears the name of the Defendant’s Advocates with no reference whatsoever to the Plaintiff’s Advocates as joint holders. The Defendant has then exhibited what appears to an extract of a further statement indicating that, as at October 2022, the Call Deposit Account had accrued interest at an amount of Kshs 2,348,876.71/-.
29.From the foregoing, my view is that the money is in safe custody and available when required. I do not think that the Defendant’s fears are merited. From my understanding, placing funds in a Call Deposit for a specified period of time is a normal practice and is mostly adopted to attract higher interest on dormant funds lying in a bank account. Needless to state however, it is the Account holder, the owner of the funds, not the bank, who makes a request for such transfer and to whom, in any event, all the interest accrued belongs to, not the bank.
30.It is therefore very well possible, as I believe, that the transfer of the funds to the Call Deposit Account was done in utmost good faith and meant, in the long run, to benefit and be advantageous to both parties. As aforesaid, perhaps it would even fetch a higher interest and perhaps serve as a more convenient tool to the bank in handling the money. However, being a consent order, the same must be implemented strictly as per its terms. It does not matter how well-intentioned the Defendant could have been when it transferred the funds to the Call Deposit Account. Save with the concurrence of the Plaintiff, the Defendant had no right to unilaterally, and without consultation, transfer the funds to any different Account, whether ancillary, associated, connected or related to the main account as argued by the Defendant.
31.I also agree with the Plaintiff’s observation that the Call Deposit Account statement reveals that the same was opened on 14/09/2017, about 8 months after the amount of Kshs 9,000,000/- was deposited by the Plaintiff on 19/01/2017 yet there is no account or mention of any interest that accrued for that 8 months period as was required under the terms of the consent order.
32.Further, without evidence that the name of the Plaintiff’s Advocates appears in the Call Deposit Account as a co-Account holder and without any evidence that the Call Deposit Account is even associated, ancillary, connected or related to the main account as alleged, the Plaintiff is left with no avenue of assuring himself that his interest over the account is secured. I therefore find that the Defendant’s act of transferring the funds to the Call Deposit Account was irregular, not necessarily in breach of the order, but clearly irregular.
33.Regarding release of the Certificate of Lease for the property Eldoret Municipality/Block 6/6 and the duly executed discharge of Charge for the same property, the Defendant has alleged that the same were released to the Plaintiff in January 2017. The Defendant has then exhibited a copy of the letter dated 20/01/2017 which however only indicates release of the discharge of Charge. Although in the Replying Affidavit the Defendant has referred to a second letter dated 11/01/2017, no such letter appears among the exhibits as indicated. I however note that the Plaintiff did not in his Supplementary Affidavit, comment on this allegation of release of the said documents. The Court is therefore not in a position to ascertain whether indeed the said documents were released in full.
Final Orders
34.In the premises, the Plaintiff’s Application dated 23/08/2022 only partially succeeds in the following terms:i.The Defendant shall, within seven (7) days from the date hereof, with no deduction or any kind of penalty levied against the account, re-transfer all the funds, monies or amounts placed in the Call Deposit Account number 01400130554700 or any other Call Deposit Account, together with all interest accrued thereon from the date that the account was opened, back into the main Account number 01282130554700 held at the Defendant bank and ensure that, at all times, the name of the Plaintiff’s Advocates, namely, Nyairo & Co. Advocates appears and/or is included as a joint or co-holder of the account, together with the Defendant’s Advocates and also ensure that the account is and remains, at all times, interest earning.ii.For avoidance of doubt, interest on the amount of Kshs 9,000,000/- paid or deposited by the Plaintiff into the account number 01282130554700 shall or is required to have accrued as from 19/01/2017, the date when the amount was paid or deposited by the Plaintiff.iii.If by its nature, the main account number 01282130554700 is not capable of attracting interest, then the Defendant must, with the approval and/or concurrence of the Plaintiff, forthwith open a new interest earning bank account in the joint names of the Advocates on record for the respective parties and deposit all the funds, including interest accrued to date, into the new account. In whatever case, the Defendant must still account for and remit the interest that was required to have accrued as from 19/01/2017, the date when the amount of Kshs 9,000,000/- was paid or deposited by the Plaintiff.iv.The Defendant shall, within fourteen (14) days from the date hereof, and at no cost to the Plaintiff, supply to the Plaintiff, up to date statement or statements of account showing the manner in which the amount of Kshs 9,000,000/- deposited and/or paid by the Plaintiff to the Defendant pursuant to the said consent order dated 21/12/2016 has been handled or applied, as from the date when the amount was paid and/or deposited, to the present date, including interest accrued thereon.v.Thereafter, the Defendant shall continue to provide to the Plaintiff regular quarterly statements of account for each year as from the date hereof, not later than on the 5th day of the next quarter of each year.vi.Regarding release by the Defendant of the Certificate of Lease for the property Eldoret Municipality/Block 6/6 and the duly executed discharge of Charge for the same property to the Plaintiff, in the event that the same have not yet been so released as directed in the consent order dated 21/12/2016, then the Defendant shall forthwith, and in any event not later than seven (7) days from the date hereof release the same to the Plaintiff.vii.Costs of the Application is awarded to the Plaintiff.viii.The parties shall now take steps to ensure expeditious prosecution of this suit.
DELIVERED, DATED AND SIGNED AT ELDORET THIS 17TH DAY OF NOVEMBER 2023…………………WANANDA J. R. ANUROJUDGE