Auction of State assets by litigants suspended

Justice Nixon Sifuna. [File, Standard] 

The High Court has suspended the execution of its orders that allowed litigants to auction government assets to recover debts.

Justice Nixon Sifuna stayed the execution of his March 15 verdict until an appeal by Kenya Deposit Insurance Corporation (KDIC) is heard and determined.

The judge had ruled against KDIC and ordered it to refund Sh215 million to ABSA Bank, which mistakenly overpaid as annual contributions over three years. 

Aggrieved, KDIC challenged the decision, claiming it had heavy repercussions on the government.

Lawyer Clifford Odhiambo argued that the court needed to await the outcome of the appeal they had filed before the Court of Appeal. 

Odhiambo said that the decision would lead to litigants auctioning government assets anyhow, leading to unbearable losses.

"The impugned orders risked opening an avalanche of executions against the government both national and counties which may lead to the loss of public assets and funds held in trust by the government of Kenya," he submitted.

Odhiambo argued that the huge amount awarded to ABSA would also cripple KDIC.

Following the application, Sifuna stayed the decision until the application is heard interparte on April 16.

KDIC was directed to serve the application to the bank, “Let there be a temporary stay of execution, pending the inter-parties hearing of the application,” ruled Sifuna.

On March 15, Sifuna declared Sections 13 and 21 of the Government Proceedings Act as unconstitutional.

The sections allow individuals and companies to attach government property and bank accounts in their debt recovery process.

The sections also require all litigants to notify the Attorney General before filing cases or executing judgments or decrees against the government or its agencies.

However, Sifuna termed the sections as colonial relics that had no space in modern society.

Sifuna said the sections were discriminatory to ordinary litigants and gave an unfair advantage to the government.

Section 21 (4) for instance barred anyone from attaching government property to recoup an award. It also shielded government officials from personal liability.

Sifuna ruled that many litigants are languishing with awards on paper as the government and its officials take them in circles. 

“The Act is skewed to give the Government an unconscionable and discriminatory comparative advantage in suits against it. Right from the filing of the suit to the execution process,” he said.

Justice Alfred Mabeya’s ruling that it was time for officials to be personally answerable for failing to pay debts.