[2005] KEHC 811 (KLR)
The court found that the plaintiff had established, on a balance of probability, that it was entitled to the injunctive relief sought. The defendant's failure to respond or contest the application meant the plaintiff's evidence and submissions were unchallenged. The court accepted the plaintiff's argument that the...
Source-derived case information.
- Citation
- [2005] KEHC 811 (KLR)
- Parties
- Plaintiff: Mechanised Cargo Systems Limited; Defendant: Fina Bank Limited
- Court
- High Court
- Court Station
- High Court at Nairobi (Milimani Law Courts)
- Jurisdiction
- Kenya
- Case Number
- Civil Suit 383 of 2005
- Procedural Posture
- Civil Suit / Ruling on Interlocutory Injunction Application
- Outcome
- injunction granted in favour of the plaintiff; costs awarded to the plaintiff
- Judges
- MM Kasango
- Legal Topics
- Injunctions, Bank Customer Relationship, Interest Rate Disputes, Breach of Banking Act, Appointment of Receiver, Security for Loans
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Mechanised Cargo Systems Limited
Plaintiff
Fina Bank Limited
Defendant
Procedural Posture
Civil Suit / Ruling on Interlocutory Injunction Application
Legal Issues
- 1 Whether the defendant levied unlawful interest rates and penalties contrary to the Banking Act.
- 2 Whether the plaintiff is entitled to an injunction restraining the defendant from appointing a receiver/manager over its business and assets.
- 3 Whether the debentures created as additional security are null and void for lack of registration.
Ratio Decidendi
The court found that the plaintiff had established, on a balance of probability, that it was entitled to the injunctive relief sought. The defendant's failure to respond or contest the application meant the plaintiff's evidence and submissions were unchallenged. The court accepted the plaintiff's argument that the defendant breached section 44 of the Banking Act by levying unlawful interest rates and penalties, and that the threatened appointment of a receiver/manager would cause prejudice to the plaintiff. The court further noted that the debentures created as additional security were not registered, raising questions as to their validity. Accordingly, the court granted an injunction...
Court Disposition
injunction granted in favour of the plaintiff; costs awarded to the plaintiff
Orders
- An injunction is issued restraining the defendant, its agents or servants, from appointing a receiver/manager over the business and assets of the plaintiff and from interfering in any way whatsoever in the management or operations of the plaintiff, pending determination of this suit.
- The defendant shall pay the plaintiff’s costs of the application dated 12th July 2005.
Full Case Text
Judgment text and source record
19 paragraphs
REPUBLIC OF KENYA IN THE HIGH COURT OF KENYA AT NAIROBI COMMERCIAL DIVISION, MILIMANI
CIVIL SUIT 383 OF 2005
MECHANISED CARGO SYSTEMS LIMITED …………………..PLAINTIFF
VERSUS
FINA BANK LIMITED……………………………………………DEFENDANT
R U L I N G
The plaintiff and defendant have had a customer banker relationship since 1996.
The plaintiff during that time has obtained from the defendant various banking facilities such as; on 23rd October 1996 an overdraft facility of kshs 60, 000, 000; 3rd April 1997 the overdraft facility was increased to kshs 65, 000, 000; in June 2000, the plaintiff negociated for a loan account with the defendant for kshs 15, 000, 000.
The defendant has from time to time informed the plaintiff of changes in the lending rate of interest. In June 2000 the plaintiff discovered that the defendant was levying unlawful interest rates and penalties and requested for a complete statement, which the defendant failed to give. The plaintiff by its letter dated 11th July 2001, letter dated 11th July 2001, complained to the defendant about the excessive rate of interest, which the defendant failed to acquiesce. The plaintiff in an attempt to redeem the facilities arranged for sale of property L.R. No. 209/1006/9 for kshs 42, 000, 000 further to secure the facilities deposited 5 log books of five motor vehicles. The debentures created on the additional security was not registered immediately and it was contended on behalf of the plaintiff that those debentures are null and void.
The plaintiff accounts with the defendant were re-calculated by ‘Interest Rates Advisory Centre’ (IRAC), which revealed that the plaintiff should have a credit of kshs 3, 773, 986. 05 in its favour.
The defendant, in calculation of interest, breached section 44 Banking Act. The defendant has attempted to force the plaintiff to admit indebtedness to the defendant and failure to so admit the defendant has threatened to place the plaintiff under receivership. Such an action of appointing a receiver manager would prejudice the plaintiff and would enable debenture, held by others, to crystallize.
The plaintiff argued these points in support of an application dated 12th July 2003, which seeks an order of injunction to stop the defendant appointing a receiver manager. The application is brought under Order XXXIX Rules 1,2,3,7 and 9 of the Civil Procedure Rules.
The application was served on defendant’s risk manager, Mr. Stephen Wachira and although he acknowledged receipt there was no appearance, at the hearing of this application, on behalf of the defendant. The plaintiff’s submissions, therefore, and the averments in the affidavit in support were uncontradicted.
I find that the plaintiff has on a balance of probability proved that it is entitled to the prayers sought in the application. The orders of the court are: -
1) That an injunction to issue restraining the defendant, its agent or servants, from appointing a Receiver/Manager over the business and assets of the plaintiff and from interfering in any way whatsoever in the management or operations of the plaintiff, pending determination of this suit.
2) That the defendant shall pay the plaintiff’s costs of the application dated 12th July 2005.
Dated and delivered this 15th July 2005.
MARY KASANGO
JUDGE