Absa Bank Kenya can pursue a Sh215.3 million refund from Kenya Deposit Insurance Corporation (KDIC) after the High Court ruled that the law the State firm was using to block the suit was archaic and unconstitutional.
The court has declared sections of the Government Proceedings Act, which requires litigants to notify the Attorney General before filing suits against the government or its agencies, unconstitutional.
Terming Section 13a and Section 21 as a colonial relic that has no place in modern society, Justice Nixon Sifuna ruled that no notice shall be required before instituting a case or permission before executing a judgment or decree against the government or its agencies.
The judge said the laws frustrate rather than facilitate the processing and expeditious disposal of cases.
“The legislation is an archaic colonial outfit that inadvertently escaped the post-2010 legal reforms that sought to align the laws with the Kenya Constitution 2010 and the new legal order it had established as well as the wind of change that it brought,” the judge said.
The said section states that “No proceedings shall lie or instituted until after expiry of a period of 30 days after a notice in writing in the prescribed form have been served on the government in relation to those proceedings.”
Absa had sued KDIC seeking a refund for annual contributions mistakenly overpaid over the years.
According to Section 75 of the Banking Act, commercial banks are required to make annual premiums to KDIC.
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Absa said it mistakenly overpaid its contributions but later obtained a judgment against KDIC. However, the corporation challenged the decision arguing that the suit was instituted without notifying the Attorney General.
Justice Sifuna said that Order 10 Rule 8 of the Civil Procedure Rules, which requires one to get the court’s permission before getting an interlocutory judgment, does not apply to KDIC.
The judge added that the rules only apply to departments and agencies that fall under the control of the central government.
On Section 13 of the Government Proceedings Act, the judge said to the extent that the provisions make parties unequal in litigation, uneven the playing field or pulls the rug under the feet of others, it was unconstitutional.
“I find Section 13a ( and even Section 21) of the Act discriminatory in the sense of discriminating against ordinary litigant and giving preferential, differentiated treatment to the government,” said the judge.
Justice Sifuna said all litigants whether government or non-governmental are supposed to be equal before the law with equality of arms.
He noted that other than impeding access to justice, the sections contribute to case backlog and undermine the administration of justice.
“It (the sections) is a colonial relic that was conceived during the colonial time to control litigation against the repressive, unelected and therefore, illegitimate regime,” said the judge.
The judge added that the sections had outlived their usefulness and needed to be abandoned or refashioned in a way that it was in sync with the current circumstances and prevailing legal order.
The judge ordered KDIC to pay the amount plus interest of 14 percent from the date when the case was filed in 2022.
