https://new.kenyalaw.org/akn/ke/judgment/scc/2026/129

Wanjala v Progressive Credit Ltd (Commercial Case E358 of 2026) [2026] SCC 129 (KLR) (11 May 2026) (Ruling) Neutral citation: [2026] SCC 129 (KLR) Republic of Kenya In the Small Claims Court at Mombasa Commercial Case E358 of 2026 TN Mwangeka, RM May 11, 2026 Between Michael Wanjala Applicant and Progressive Credit Ltd Respondent Ruling 1.The Applicant herein seeks a mandatory injunction compelling immediate release of motor-vehicle registration number KTWB 800D(TUK-TUK) to him pending the hearing and determination of the suit following its repossession by an auctioneer at the instruction of the Respondent as a result of loan default by the Applicant amounting to Kshs. 46,828/- which the Applicant disputes. In the alternative, a temporary injunction restraining the Respondent from selling, transferring the Claimant's motor-vehicle registration number KTWB 800D(TUK-TUK) to any 3rd party pending the hearing and determination of this application or suit. The Applicant’s case is that the loan has been settled in full. 2.On the other hand, the Respondent opposes the release of the tuktuk as the loan arrears amounting to Kshs. 66,828.37/- as at 10th May 2026 triggered a demand notice dated 15th July 2025 specifying the arrears to the Applicant and consequently Rigid Auctioneers were instructed to repossess the tuktuk that had secured the loan. Further, that on 7th April 2026, a 7-days proclamation notice was physically served to the claimant/applicant, who accepted service but refused to sign the auctioneer’s principal copy. The Applicant ignored the proclamation notice hence the auctioneers repossessed the collateral upon expiry of the 7 days, being on 14th April 2026. However, the Respondent admits that the Applicant has paid a total sum of Kshs. 38,130/- which is equivalent to 3 months and not 4 months as agreed and that the loanamount received was Kshs. 39,693/-. 3.The court has perused the loan agreement filed by the Respondent. From the terms, the amount advanced was Kshs. 39,693/- on 8th April 2025. The same was to be repaid within 4 months with weekly installments of Kshs. 3.178/-. Further, the loan attracted an interest rate of 7% per month on the principal sum. There is no mention of a penalty charge on the loan document despite the Respondent charging the Applicant 2% penalty on interest. 4.The law on grant of injunctive reliefs is set out in a thread of cases, notably, in Giella v Cassman Brown. The Court of Appeal in Nguruman Limited v Jan Bonde Nielsen & 2 Others [2014] eKLR clarified that the three principles set out in Giella v Cassman Brown are to be applied sequentially, and that if a prima facie case is not established, the court need not proceed to consider the other two limbs. 5.In the present case, the Respondent states that the Applicant is in arrears totaling to Kshs. 66,828.37/- despite admitting that the outstanding loan amount is Kshs 1,563/- as the Applicant has already paid Kshs. 38,130/- of the original Ksh 39,693 borrowed. 6.The Applicant on the other hand states that they have fully settled the loan and have attached an Mpesa Statement as well as a loan statement account which this court has perused and established that the Applicant has paid Kshs. 37,928/-. The remaining balance is therefore is Kshs. 1,765/-. 7.The arrears of Kshs. 66,828.37/- have thus clearly been compounded contrary to the induplum rule which stipulates that interest and or penalties must stop growing once they equal the principal. Any interest charged should legally be based on the Kshs. 1,765/- outstanding and not the original Ksh 39,693. 8.In Faulu Microfinance Bank Limited v Kilonzo (Civil Appeal E032 of 2024) [2025] KEHC 14937 (KLR) the Court while relying on the Court of Appeal decision in Mwambeja Ranching Company Limited & another v Kenya National Capital Corporation [2019] eKLR held as follows: -“The duplum rule is concerned with public interest and its key aim was to protect borrowers from exploitation by lenders who permit interest to accumulate to astronomical figures. It was also meant to safeguard the equity of redemption and safeguard against banks making it impossible to redeem a charged property. In essence, a clear understanding and appreciation of the in duplum rule is meant to protect both sides”. 9.The Applicant has therefore established a prima fascie case on account of the exploitative accounting and wrongful repossession of his tuktuk. Additionally, as earlier noted, the Applicant was not liable to penalty fees as the same are not provided for in the loan agreement and their charging is thus unconscionable. From the parties' arguments, the Court is of the view that the issues raised by the Applicants are substantive, warranting preservation of the subject matter. 10.A regards irreparable harm, the Applicant contend that he relies on the motor-vehicle to generate income for sustenance. The Court agrees that the deprivation of the motor-vehicle, essential for livelihood, particularly before reconciliation of disputed accounts, would result in losses that are not easily quantifiable. I rely on High Court Commercial Case NO. E1317 OF 2025 Fairbanks Limited & Another versus Alliance Leasing Limited & Anor 2026 KEHC4122(KLR) and find that damages would not be an adequate remedy in the present case. 11.Accordingly, the Court is persuaded that the Applicants have demonstrated a likelihood of suffering irreparable harm if injunctive relief is denied. Final Ordersa)A temporary injunction hereby issues restraining the Respondent from selling, transferring the Applicant's motor-vehicle registration number KTWB 800D (TUK-TUK) to any 3rd party pending the hearing and determination of this suit. b)Parties are to file and exchange full pleadings by the 29th of May 2026.c)Hearing of the main suit shall proceed on 8th June 2026. DATED SIGNED AND READ VIRTUALLY AT MOMBASA THE 11th DAYOF MAY 2026HON. THERESA N. MWANGEKARESIDENT MAGISTRATE/ADJUDICATORIn the presence of;N/A...for Claimant;N/A…… for RespondentC/A Esther