The High Court has thrown out a class action case against Safaricom and the UK-based Vodafone filed by three M-Pesa account holders who wanted to compel the telco to compensate clients of its mobile money service to the tune of Sh305 billion.
Dismissing the case, Justice Nixon Sifuna said the three petitioners, namely Gichuki Waigwa, Lucy Nzola, and Godfrey Okutoyi, failed to comply with the orders of court issued on October 4, 2023, requiring them to serve 21 defendants, including Safaricom and Vodafone, with the pleadings.
They sued Safaricom together with Vodafone Group Plc and M-Pesa Holding Company, among others, seeking a raft of declarations, including compensation for alleged misappropriation of M-Pesa funds in dealings among Safaricom and its affiliate companies.
The three filed the case on their behalf and on behalf of M-Pesa account holders seeking to compel M-Pesa Holding Company—the firm that holds hundreds of billions of shillings powering the mobile money service—to disclose its annual reports and accounts from the date of its incorporation on September 11, 2006, to date. While declaring that there exists no suit, the judge said his orders were not 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 further said the three petitioners admitted before him that they did not comply 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 further said the petitioners are at liberty to file a fresh case, but the current one is dead. Further, the judge ruled that the applications by Safaricom and Vodafone to have the case referred for arbitration equally die with the petitioners’ case.
The judge struck out the suit after the three petitioners failed to serve suit papers and evidence to the 21 defendants. He wondered why the three petitioners never returned before him to seek the extension of his orders or explain the difficulties they had experienced in complying with his orders.
Safaricom, through lawyer Njoroge Regeru, applied for the case to be struck out for want of compliance with the court orders. He said although the case had been listed for hearing today, there exists no suit.
His argument was supported by Central Bank of Kenya lawyer Kioko Kilukumi, who said failure by the petitioners to obey the court order renders the case null and the court should not attempt to review the already dead case.
Also sued were Vodafone International Holdings B.V, M-Pesa Foundation Charitable Trust, Safaricom Foundation Charitable Trust, and Carepay Limited among others. The petitioners also targeted Fuliza, arguing that it is a banking service that is not regulated by law.
They alleged that the money borrowed emanates from other account holders who have not withdrawn the money. Further they claimed that they are suing on behalf of their own behalf and on behalf of 52 million Mpesa account holders.
"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 read in part.
According to the court papers, the three allege that M-Pesa was developed with the sole intention of reducing the high cost of banking while offering an efficient banking infrastructure to mitigate poverty in rural Kenya. Court documents read that when Mpesa started in March 2007, Safaricom registered at least 20,000 customers.