Kenya Union of Savings & Credit Co-operatives Limited v Kencom Co-operative Savings & Credit Society Limited & Kenya Commercial Bank Limited [2020] eKLR Case Summary

Court
Co-operative Tribunal at Nairobi
Category
Civil
Judge(s)
Hon. B. Kimemia (Chairman), Hon. F. Terer (Deputy Chairman), P. Gichuki (Member)
Judgment Date
July 22, 2020
Country
Kenya
Document Type
PDF
Number of Pages
3
Explore the 2020 case summary of Kenya Union of Savings & Credit Co-operatives Limited v Kencom Co-operative Savings & Credit Society Limited & Kenya Commercial Bank Limited. Gain insights into the ruling and its implications in Kenyan financial law.

Case Brief: Kenya Union of Savings & Credit Co-operatives Limited v Kencom Co-operative Savings & Credit Society Limited & Kenya Commercial Bank Limited [2020] eKLR

1. Case Information:
- Name of the Case: Kenya Union of Savings & Credit Co-operatives Limited v. Kencom Co-operative Savings & Credit Society Limited & Kenya Commercial Bank Limited
- Case Number: Tribunal Case No. 157 of 2020
- Court: Co-operative Tribunal, Nairobi
- Date Delivered: July 22, 2020
- Category of Law: Civil
- Judge(s): Hon. B. Kimemia (Chairman), Hon. F. Terer (Deputy Chairman), P. Gichuki (Member)
- Country: Kenya

2. Questions Presented:
The court must resolve the following legal issues:
a. Whether the Claimant has established a proper basis for an order of attachment of the 1st Respondent's funds before judgment.
b. Whether the Claimant has established a proper basis for issuing summons against the officials of the 1st Respondent to show cause why they should not furnish security for their appearance.
c. Who should bear the costs of the Application.

3. Facts of the Case:
The Claimant, Kenya Union of Savings & Credit Co-operatives Limited, advanced two loans to the 1st Respondent, Kencom Co-operative Savings & Credit Society Limited, totaling Kshs. 183,000,000. The 1st Respondent defaulted on repayment, leading to an outstanding balance of Kshs. 246,829,584. The Claimant alleged that the 1st Respondent was disposing of its properties without considering the debt owed. The 2nd Respondent, Kenya Commercial Bank Limited, also had financial interests in the 1st Respondent, including loans secured against the 1st Respondent's properties.

4. Procedural History:
The Claimant filed an application on May 24, 2020, seeking urgent orders for attachment of the 1st Respondent’s funds and security from its officials. The 1st and 2nd Respondents opposed the application through affidavits and grounds of opposition. The matter was canvassed through written submissions, and the Tribunal directed parties to submit their responses and witness statements.

5. Analysis:
- Rules: The court referred to Order 39 of the Civil Procedure Rules, which allows for attachment before judgment under specific conditions. The court emphasized that such orders should not be made lightly and require clear proof of intent to dispose of property to evade judgment.
- Case Law: The court cited the case of Kuria Kanyokonha Amigos Ban and Restaurant v. Francis Kinuthia Nderu & others (1988) eKLR, which established that attachment before judgment requires clear evidence that the defendant intends to dispose of property to obstruct a decree.
- Application: The court found that the Claimant failed to demonstrate that the 1st Respondent intended to dispose of its properties to avoid judgment. The properties in question were encumbered to other financial institutions, indicating that the Claimant's concerns were unfounded. Consequently, the court ruled against the Claimant's application for attachment before judgment and summons against the 1st Respondent's officials.

6. Conclusion:
The Tribunal disallowed the Claimant’s application dated May 24, 2020, and directed that the Respondents file their responses and witness statements within specified timelines. The ruling underscores the necessity of clear evidence when seeking attachment before judgment and highlights the protections afforded to defendants in civil proceedings.

7. Dissent:
There were no dissenting opinions noted in the ruling.

8. Summary:
The Tribunal ruled against Kenya Union of Savings & Credit Co-operatives Limited's application for attachment of funds and security from the officials of Kencom Co-operative Savings & Credit Society Limited. The decision emphasizes the importance of substantiating claims of potential property disposal to avoid judgment and the need for due process in financial disputes. The ruling has implications for the protection of defendants' rights in civil cases involving financial obligations.

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