SUMMARY OF THE SUPREME COURT OF KENYA JUDGEMENT IN SURYA HOLDINGS LIMITED & 2 OTHERS V CFC STANBIC BANK LIMITED

PETITION NO.8 OF 2019

This appeal arises from a Court of Appeal judgement which upheld the High Court’s decision. The brief background to this matter is that the 3rd Appellant, Karuturi Limited, defaulted in its repayment obligations to the 1st Respondent, CFC Stanbic Bank Limited, which led to the appointment of receivers. The High Court confirmed the appointment of receivers, but restrained them from selling the charged properties, and ordered the 3rd Appellant to continue carrying out its operations, in the interest of all the parties. Later, the High Court issued Winding Up Orders against the 3rd Appellant.

By a ruling on October 2016, the High Court found that the Appellants had made an admission that Karuturi Limited owed CFC Stanbic Bank a pre-receivership sum together with interest. The Court further directed for an appointment of a forensic auditor.  The audit report was duly filed and the parties addressed the court extensively on it. The High Court found that the 3rd Appellant owed the 1st Respondent a sum of USD 4,028,194.30 and Kshs 2,706,994. 13, together with contractual interest, as contained in the facility agreement. It held that this was the pre-receivership debt. Justice Tuiyott ordered payment within 60 days. The orders of injunction that had previously been granted were discharged, and the Bank was now at liberty to exercise all or any of its rights in respect of the advances made to the Karuturi Limited.

It is from this ruling that the Appellants filed an appeal and faulted the judge, raising various issues. The Court narrowed it down to one issue for determination: Whether the orders granted by the High Court directing the Appellants to make payments to the 1st Respondent to be at liberty to exercise its powers of sale constituted a wrong exercise of jurisdiction. The Court of Appeal was not convinced that those orders constituted a wrongful exercise of judicial discretion. The Court did not, therefore, interfere with the orders made by the High Court and dismissed the Appeal.

The Appellants, aggrieved by this decision, then moved to the Supreme Court. They faulted the Court of Appeal for evading the determination of the real issues in the appeal before it, which were the right to fair hearing and that whether it is constitutional for a court to exercise judicial discretion in a manner that negates fair trail.

ISSUES FOR DETERMINATION BEFORE THE SUPREME COURT

The following two issues arise for determination before the Supreme Court:

  1. Whether the appeal before the court meets the Constitutional threshold under Article 163(4)(a) of the Constitution.
  2. If the answer to the issue (i) is in the affirmative, what remedies are available in the circumstances?

ANALYSIS

Under Article 163(4) of the Constitution, the court has jurisdiction to entertain appeals from the Court of Appeal as a matter of right in any case involving the interpretation or application of the Constitution. Section 15(1) of the Supreme Court Act makes a provision for the Court’s appellate jurisdiction with regards to appeals under Article 163(4)(b) of the Constitution.

The Court set guiding principles in the case Lawrence Nduttu & 6000 others v Kenya Breweries Ltd & Another with regards to its appellate jurisdiction under Article 163(4)(a) of the Constitution, where it stated that an appeal must originate from a Court of Appeal case where issues of contestation revolved around the interpretation or application of the Constitution. In other words, an Appellant must be challenging the interpretation or application of the Constitution which the Court of Appeal used to dispose of the matter.

The Court has previously found that it lacks jurisdiction to entertain appeals from interlocutory decisions, save where the interlocutory decision in question is a substantive determination of a constitutional issue that has been canvassed through the superior courts.

The Supreme Court concluded by stating that it would have been pre-mature for the Court of Appeal to make a finding on the constitutional issue raised, since the trial court had not fully determined the rights of the parties before it.

The Court dismissed the appeal, ordering that costs be borne by the Appellants.

By Wendy Kuyoh

wkuyoh@mmsadvocates.co.ke

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