Big win for Safaricom in Sh356bn M-Pesa case
The High Court has dismissed a Sh356 billion case against Safaricom and United Kingdom-based Vodafone.
The High Court has dismissed a Sh356 billion case against Safaricom and United Kingdom-based Vodafone filed by three M-Pesa users.
In dismissing the case, Justice Nixon Sifuna said Mr Gichuki Waigwa, Ms Lucy Nzola and Mr Godfrey Okutoyi had failed to comply with court orders issued on October 4, 2023, requiring them to serve the defendants, which included Safaricom and Vodafone, with their pleadings.
The three petitioners, who filed the case on behalf of over 52 million M-Pesa subscribers, were seeking over Sh356 billion M-Pesa cash from Vodafone.
They wanted the court to declare that the M-Pesa business was and is a banking business and should have been regulated by the Central Bank of Kenya.
While declaring that there was no case to answer, the judge said that his orders had not been issued in vain.
"The court orders are not issued in vain. The orders of October 4, 2023, were very clear and unambiguous," ruled Justice Sifuna.
The judge also said that the three petitioners had admitted before him that they had not complied with the court orders.
“By the plaintiffs’ own indolence and consistent non-compliance of the court orders, they dismissed their own suit," the judge ruled.
He, however, said the petitioners were at liberty to file a fresh case. He added that the applications by Safaricom and Vodafone to have the case referred for arbitration had equally died with the petitioners’ case.
The judge struck out the suit after the petitioners failed to serve suit papers and evidence to the 21 defendants.
Declaring the suit non-existent, Justice Sifuna said the orders he had given on October 4, 2023, were self-regulating and he had directed that the plaintiffs should serve the suit papers within 21 days which they failed to date.
He wondered why the petitioners never returned to him to seek an extension of his orders.
Safaricom, through lawyer Njoroge Regeru, applied for the case to be struck out.
His argument was supported by Senior Counsel Kioko Kilukumi, who said the petitioners' failure to obey the court order had killed the case.
The petitioners' lawyer, Wilfred Nderitu, apologised to the court for the non-compliance, saying five applications had been filed to have the matter referred to arbitration and he was therefore unable to comply with the initial court orders.
Though lawyer Nderitu did not apply to have the case revived, he sought 14 days to comply with the court orders, an attempt which the court declined.
In the case, the petitioners wanted the court to compel Vodafone to refund Sh356 billion which they claim belongs to M-Pesa account holders.
The petitioners have sued Safaricom Plc, Vodafone Group Plc, Vodafone Kenya Limited, and M-Pesa Holding Company Limited.
Also sued were Vodafone International Holdings B.V, M-Pesa Foundation Charitable Trust, Safaricom Foundation Charitable Trust, and Carepay Limited.
The petitioners also targeted Fuliza, which they argued is a banking service that is not regulated by law.
"M-Pesa service as provided by Safaricom Plc and the Vodafone Group Plc amounted to "banking business" and or "financial business" and was provided in contravention of Section 2(1) of the Banking Act. It is therefore contended that the overdraft service is a clear example of how Safaricom, in conjunction with NCBA, has been engaging in the banking business and financial business despite not being a bank or a financial institution for the purposes of the Banking Act," court papers stated.
The petitioners allege that M-Pesa was developed to reduce the high cost of banking while offering an efficient banking infrastructure to mitigate poverty in rural Kenya.
Court documents read that when M-Pesa started in March 2007, Safaricom registered at least 20,000 customers.
