The Milimani Small Claims Court in Nairobi has struck out 139 cases filed by various debt collectors for failure to comply with the Central Bank of Kenya (CBK) regulations that require all lenders to be recognized as such.
In his ruling delivered by Resident Magistrate Kiongo Kagenyo dismissed the cases raising questions about the legality of certain debt collection practices and the growing trend of abuses within the small claims court system.
“This abandonment pattern was evident across the cases filed by the aforementioned debt collection firms, with no further action taken after the initial submission of documents,” the magistrate stated
The court observed a troubling trend of large-scale filings by debt collectors against various loan defaulters, who abandoned their cases shortly after initiating them.
The 139 cases, filed by six notable debt collection firms, including Kalita System Debt Holding Kenya Limited, Garnet Portfolio Management Limited, Aventus Technology Limited, Sirius Collect Limited, Maxlev-Finance Limited, and M-Collect Limited, were found to be lacking the necessary legal documentation and adherence to the regulations stipulated by the Central Bank of Kenya Act, specifically Section 335
The magistrate noted the need for proper oversight and regulation in the debt collection industry, which has seen an increasing number of lawsuits filed without adequate compliance with the law.
The totality of the foregoing is that the court is compelled to make a finding that the complaint is abusing the court process making it a candidate of being declared a vexatious litigant pursuant to section(1) of the Vexatious Proceedings Act, and consequently dismiss the suit in limine, at this stage, hih it hereby does,” The Magistrate ruled
The ruling was made in the case of M-Collect Limited against Mbwana Kalua, where the court observed a troubling trend of large-scale filings by debt collectors who abandoned their cases shortly after initiating them.
“The conduct of claimants takes the shape, form, and color of a Litigant who is abusing the court process. Indeed a keen look at the documents filed by the six claimants shows a strictly similar and it not so hard to discern that they are all but a Meramorphosis of one and sadly only metamorphosing in form but inherently retaining the character of abandoning the filed suits,” The magistrate stated.
These firms, which have been filing claims in a seemingly hasty manner, were found by the court to be neglecting their responsibilities and not following through with the litigation process.
In the case at hand, the court noted that the claimant, M-Collect Limited, was merely interested in obtaining a case number and summons to enter an appearance in court, rather than pursuing the matter to its logical conclusion.
The magistrate observed in several other similar cases failed to attend court hearings or take any meaningful action in the proceedings once the same is filed.
The court described this as an abuse of the judicial process aimed at simply creating the appearance of legitimate legal action rather than engaging in genuine dispute resolution.
For instance, the magistrate referred to Aventus Technology Limited on January 6, 2025, by one of the employees of the firm Mr Donald Nyaga, the court inquired from him whether the company had complied with the provision of Section 33S CBK Act.
In his response, Nyaga informed the court that the company is in the pipeline of compliance.
“As it stands therefore Aventus Technology Limited is operating in non-conformity with the dictates of the regulating Authority and the court can not dignify an illegality by presiding over such matter,” Kagenyo ruled.
” For the foregoing, all the matters filed by Aventus Technology Limited as appearing in today’s cause list are hereby dismissed for the complainant is operating contrary to the law.”
