https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/8416

**REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA AT ELDORET** **CIVIL SUIT NO. E024 OF 2025** **MOIBEN CONNECTIONS LIMITED……………………….1ST PLAINTIFF/APPLICANT** **ANTONIO MUSYOKA DAVID…………………………........2ND PLAINTIFF/APPLICANT** **BELINDA MAINA………………………….............................3RD PLAINTIFF/APPLICANT** **VERSUS** **KCB BANK KENYA LIMITED…..……………………….................................DEFENDANT** **RULING** 1. This case concerns a lender’s intention to exercise its statutory power of sale as a consequence of alleged non-repayment of a loan advanced by the lender (Defendant) to the borrowers (Plaintiffs). The suit therefore seeks to block a charge redemption attempt. The Plaintiff, through **Messrs J.L. Cheruiyot & Co. Advocates**, filed the suit by way of the Plaint dated 24/07/2025 praying for among others, a declaration that the Plaintiff does not owe the Defendant any monies arising from the loan facility, and that the intended sale of properties advanced as securities for the loan is null and void. The Plaintiffs therefore also seek an order of permanent injunction to bar the Defendant from selling off the properties, and also an order that the Defendant regularize its accounts to charge the correct and/or lawful interest rates. 2. Together with the Plaint and the other usual Pleadings accompanying it, the Plaintiff also filed the Notice of Motion, the subject of this Ruling, of the same date. The prayers now remaining in the Application are the following: “**3.** This Honourable Court do issue a temporary injunction restraining the Respondents their agents and their servants from selling, dealing, interfering, alienating, auctioning, or disposing of the suit properties known as title numbers **Mwingi/Mwingi/1330** & **3254** pending the hearing and determination of this suit. **4.** The Defendant/Respondent be and is hereby ordered to supply the 1st Plaintiff/Applicants with certified copies of loan application and approval documents, loan statements as well as insurance policies in respect of the impugned loan. **5.** Pending hearing and determination of the suit, the Defendant be and is hereby ordered to delist the Plaintiffs from the Credit Reference Bureau: and. **6.** That costs of this Application be provided for.” 1. The Application is supported by the lengthy Affidavit sworn by the 2nd Plaintiff, **Anthony Musyoka David**,whoalsointroduced himself as a director of the 1st Plaintiff. He deponed that in the year 2023, there was a sugar shortage in Kenya and the 1st Plaintiff, intending to import sugar, approached the Defendant seeking financial accommodation to fund importation of the sugar, which financial facility was advanced reduced into the Letter of Offer dated 24/10/2023, and later varied by the Letter of Offer dated 17/11/2023. He deponed that it was a term of the Letter of Offer that the purpose of the facility was to finance importation of 2500 MT of sugar through letters of credit under custody of the Defendant’s appointed collateral manager and to finance payment of taxes, government levies, handling costs and bank charges, and that as security for the facility, the 1st Plaintiff offered, **(i)** a specific debenture of Kshs 89,166,880/- and USD 1,596,000 over imported the sugar stocks, and **(ii)** Deed of Assignment of all rights over the sugar stocks and receivables due from sale of the stocks, **(iii)** lien over 20% cash cover in US Dollars to be held for the term of the facilities. He urged that as a director of the 1st Plaintiff, and as registered owner of the said two parcels of land but holding the same in trust for his siblings, he had earlier charged the properties to the Defendant to secure other existing loan facilities and the Defendant retained the title documents as secondary securities for the new loan facility. He deponed that as such secondary securities, the 1st Plaintiff thus offered to the Defendant legal charge for Kshs 25,025,000/- and Kshs 4,725,000/- over the said two parcels of land, Board Resolutions authorizing the borrowing of Kshs 29,750,000/-, Personal Guarantees & Indemnity by the 2nd Plaintiff as the registered owner of the parcels of land, and Director’s Guarantees & Indemnity from the 2nd and 3rd Plaintiffs as co-directors of the 1st Plaintiff. 2. He stated further that the facility was indeed disbursed and the sugar imported at the approximate price of Kshs 6,800/- (exclusive of taxes and bank charges) per 50 KG Bag, that at the time of importation, the selling price of such 50 KG Bag of sugar was in Kenya was at least Kshs 9,200/- and the projected total sales of the entire consignment was therefore Kshs 460,000,000/-, an amount that was expected to clear the entire loan. He contended that however in early 2024, due to high cost of living in Kenya, the Government directed that the price of household commodities be reduced and local sugar manufacturers to sell one bag of 50 KG Bag of sugar at not more than Kshs 5,000/-, a reduction of the market price by close to Kshs 4,200/-, and that despite this reduction, the Defendant still directed the 1st Plaintiff to sell the sugar at the market price of Kshs 5,000/- per bag resulting in sales to the tune of Kshs 250,000/- thus diluting the primary security and making it impossible for the Plaintiffs to service the loan. 3. He contended that in further breach of the agreement, the Defendant, although the 1st Plaintiff already had customers lined up to purchase the sugar at prices of at least Kshs 7,600/-, declined to release the sugar at that price but directed the 1st Plaintiff to sell it to brokers at the extremely low prices of Kshs 5,000/-, that the Defendant insisted that the 1st Plaintiff’s customers cater for transportation costs yet the initial agreement between the 1st Plaintiff and the customers provided that the 1st Plaintiff would deliver the goods to the customers after which the customers would pay on delivery, that this group of customers declined the bank’s position and bolted out of the transaction leaving the 1st Plaintiff to deal with the brokers as suggested by the Defendant, and the brokers, as such, ended up purchasing the sugar at such extremely low prices. He asserted that since the reduction of the price of sugar was a result of a government directive and the resultant market forces beyond the control of the Plaintiffs, the Defendant ought to have accommodated the 1st Plaintiff in its attempts to secure the deficit between the loan amount and the sale proceeds but the Defendant has adamantly declined to consider any proposals on repayments and is hell-bent on recalling the securities. He deponed that he has attended the Defendant’s offices seeking audience with its officers but such meetings have not borne fruit and that the Defendant’s actions could lead to total collapse of the 1st Plaintiff’s business thereby shutting any further possibility of repayment of the loans. 4. He added that despite the 1st Plaintiff’s business performing poorly, they have nonetheless continued to make monthly repayments of at least Kshs 200,000/-. that the nature of the securities is that the Specific Debenture and the Deed of Assignment would be the primary securities for the loan but the Defendant has sought to recall the existing securities, specifically, all the legal charges over the suit properties by issuing a Statutory Demand Notice dated 14/01/2025 and a 40 days Statutory Demand Notice dated 14/05/2025 with the later lapsing on 24/06/2025 with the Defendant seeking to recover the sum of Kshs 129,452,870.25 with the said amount continuing to accrue interest. In addition to the instances of breach of contract alleged, he added that the Defendant has failed to factor in the sums paid by the Plaintiff as deposit for the loan, and the proceeds of the sale of the sugar in determining the balance outstanding, has also loaded unlawful interest and penalties on the loan, and has also irregularly listed the Plaintiffs at the Credit Reference Bureau (CBR). He also reiterated that he holds the titles in trust for his siblings as they were still minors when their late father transferred the properties into his name when he was still alive. 5. When the Application first came before ***ex parte*** under a Certificate of Urgency, I declined to issue any ***ex parte*** orders of temporary injunction as sought by the Plaintiffs since, among others, no date for public auction had been fixed. 6. In opposing the Application, the Defendant, through **Messrs Kibichiy & Co. Advocates**, filed the similarly lengthy 36-paragraph Replying Affidavit sworn by one **Juvinalis Mutua**, who simply introduced himself as working for gain at the Defendant. He basically confirmed the advancement of the loan facility to the 1st Plaintiff, the revised Letter of Offer dated 13/02/2023, the loan amount of Kshs 29,750,000/- and Kshs 4,725,000/-, respectively, and also, existence of the Legal Charges registered over the two suit properties, save that he referred to the facility as a SME Seasonal Agri-business loan advanced for purposes of financing working capital requirements for the 1st Plaintiff, repayable by monthly instalments of Kshs 1,646,771/-, inclusive of interest, over a maximum of 36 months. He deponed that the Plaintiffs have breached the terms of the Letter of Offer by defaulting in repayment, and that the Letter of Offer allows the Defendant to enforce the securities. 7. He stated further that the 1st Plaintiff later applied for Import Finance Facility by way of the varied corrigendum letter dated 17/11/2023 and was issued with a non-revolving finance loan of USD 1,596,000/- under terms and conditions of the subject Letter of Offer, secured by a Specific Debenture, for the purpose of financing the sugar importation of 2,500 MT of Sugar as described in the Plaintiffs’ Affidavit. 8. In response to the allegation that the Defendant compelled the Plaintiffs to sell the sugar at the low price of Kshs 5,000/-, he contended that 80% of business receivables were to be channelled through the 1st Plaintiff’s account in line with the Letter of Offer which the Plaintiffs failed to honour hence prompting the Defendant to issue the letter dated 1/10/2024. He contended further that the Plaintiffs made inconsistent instalment repayments with uncommendable results, and, as such, the account remained in default status causing the Defendant to issue the demand notice dated 14/01/2025, and subsequently, the 40 days demand notice dated 14/05/2025. He asserted that as a result of the loan still remaining in default, the Defendant’s Auctioneers, under the Defendant’s instructions, issued the 45 days Redemption Notice, together with the Notification of Sale. He deponed that the said notices were served via email and registered post as per postage receipts dated 19/08/2025. He also averred that the charge, under Clause 28, allowed for consolidation of the debt in any or all existing accounts in the name of the chargor, without notice, and, as such, consolidation the securities was not a breach, that the allegation of difficulty in conducting business are special claims which goes beyond the scope of law, that the Defendant is inviting the Court to re-write the loan agreement which is ***ultra vires***, and that no prejudice will be suffered by the Plaintiffs as compared to the financial loss the Defendant continues to suffer as a result of the default. He contended further that the Plaintiffs have not approached the Court with “***clean hands***” as the amount in default continues to accumulate. 9. With leave of the Court, the Plaintiff filed the Supplementary Affidavit again sworn by the 1st Plaintiff on 11/09/2025. In the Affidavit, he simply deponed that a date for public auction of the two parcels of land had since been fixed for 30/10/2025 and prayed that in view thereof, the Court do now issue the temporary orders of injunction. He exhibited a copy of the Notice. I accepted the prayer and issued such temporary orders of injunction pending hearing and determination of the Application. 1. The parties then filed written Submissions. The Plaintiffs’ Submissions is dated 7/11/2025, while the Defendant’s is dated 10/11/2025. **Plaintiff’s Submissions** 1. In his admirably brief and concise Submissions, **Mr. Cheruiyot**, Counsel for the Plaintiff, basically summarized the Plaintiff’s case and then submitted that the main concern is the manner in which the Defendant intends to sell the suit properties since it has committed the various illegalities pointed out in the Supporting Affidavit, and has inflated the loan and arrears in a manner which is in breach of **Section 44** of the **Banking Act**. He contended that the Plaintiff has established a ***prima facie*** case in that the issue of the extent of the alleged balance outstanding has not been addressed in the Defendant’s response as the loan statement exhibited does not do much to explain the manner in which the balance of Kshs 139,598.50 is arrived at, which issue therefore deserves to be resolved at a full hearing, and that the suit will be rendered an academic exercise if the injunction is not granted. He also submitted that the Plaintiff will suffer irreparable harm, and that the balance of convenience favours grant of the injunction, and also pointed out that the Defendant has not responded to the prayer for delisting of the Plaintiffs from the Credit Reference Bureau (CBR). Counsel also cited various authorities in support of his various limbs of submissions highlighted above. **Defendant’s Submissions** 1. On his part, **Mr. Cheruiyot**, Counsel for the Defendant, responded to the allegation that the Defendant has inflated the loan and arrears in breach of **Section 44** of the **Banking Act** by submitting that the Defendant has exhibited the loan statement demonstrating the Plaintiff’s’ history of servicing the loan, and the interest levied. In response to the allegation that the 2nd Plaintiff holds the suit properties in trust for his siblings, Counsel submitted that the Defendant’s dealings with the charged properties are strictly governed by the charge instruments and the terms of the Letter of Offer, and thus, the Defendant is not bound to inquire into unregistered or undisclosed equitable interests such as alleged family trusts. He asserted that in any event, the Defendant was never a party to, nor had notice of any trust arrangements nor was any endorsed on the title documents. In respect to the allegation that the Defendant seeks to realize the properties before first realizing the primary securities, he submitted that under Clause 28 of the charge instrument, consolidation of the debt and/or the securities is permitted. Regarding the claim that the Defendant has failed to factor in the 20% cash cover in US Dollars paid by the Plaintiffs, he termed it both misleading and unfounded since the 20% cash was the equity portion or borrower’s deposit required under the facility terms as the funding ratio and was never meant to reduce the principal amount of the financing, but under which the Plaintiff financed the remaining 80% of the purchase price of the imported sugar. The Defendant therefore submitted that the Plaintiff has failed to demonstrate the existence of any ***prima facie*** case with a probability of success. 2. Regarding the prayer that the Defendant be ordered to supply the Plaintiffs with certified copies of loan application and approval documents, loan statements as well as insurance policies in respect to the loan, Counsel basically submitted that the Plaintiff is prematurely seeking discovery of documents through an interlocutory Application yet the **Civil Procedure Rules** under **Order 11** clearly provide clear mechanisms and stages for discovery. He urged that in any case, even on merits, the Plaintiffs have failed to present justifiable reasons for the prayer. In response to prayer that the Defendant be ordered to delist the Plaintiffs from the CRB, he basically submitted that the listing of a borrower with the CRB is a statutory and regulatory process governed by the **Central Banking Act of Kenya Act**, not a contract between the parties, and once reported becomes part of a centralized credit information system administered by the Central Bank, and as such, the reporting institution cannot arbitrarily alter or delete it except as permitted by the Regulations. He submitted that, in any case, the Plaintiffs having defaulted, the Defendant was under a legal duty to report such non-performance to the CRB. Counsel, too, cited various authorities in support of his various limbs of submissions highlighted above. **Determination** 1. The broad issue herein is evidently **“whether an interim injunction should issue to restrain the Defendant from exercising its statutory power of sale pending hearing and determination of the suit”** 2. Determination on whether to grant interim injunctions is governed by **Order 40 Rule 1** of the **Civil Procedure Rules** which provides as follows; **“Where in any suit it is proved by affidavit or otherwise —** **(a) that any property in dispute in a suit is in danger of being wasted, damaged, or alienated by any party to the suit, or wrongfully sold in execution of a decree; or** **(b) that the defendant threatens or intends to remove or dispose of his property in circumstances affording reasonable probability that the plaintiff will or may be obstructed or delayed in the execution of any decree that may be passed against the defendant in the suit, the court may by order grant a temporary injunction to restrain such act, or make such other order for the purpose of staying and preventing the wasting, damaging, alienation, sale, removal, or disposition of the property as the court thinks fit until the disposal of the suit or until further orders.** 1. The principles that apply in applications for injunctions were well settled in the case of **Giella –vs-Cassman Brown and Company Limited, Civil Appeal No. 51 of 1972**,in which it was held that the Applicant must establish or demonstrate; **(**i**) the existence of a *prima facie* case** **with a probability of success**, **(**ii**) that he will suffer irreparable injury which cannot be compensated by damages**,and **(**iii**) that the balance of convenience tilts in his favour.** 2. The Court of Appeal, in the case of **Nguruman Limited v Jane Bonde Nielsen and 2 Others NRB CA Civil Appeal No. 77 of 2012 [2014] eKLR**, explained the sequential application of the above principles as follows: **“These are the three pillars on which rests the foundation of any order of injunction, interlocutory or permanent. It is established that all the above three conditions and stagesare to be applied as separate, distinct and logical hurdles which the applicant is expected to surmount sequentially. (See Kenya Commercial Finance Co. Ltd V. Afraha Education Society [2001] Vol. 1 EA 86). If the applicant establishes a prima facie case that alone is not sufficient basis to grant an interlocutory injunction, the court must further be satisfied that the injury the respondent will suffer, in the event the injunction is not granted, will be irreparable. In other words, if damages recoverable in law is an adequate remedy and the respondent is capable of paying, no interlocutory order of injunction should normally be granted, however strong the applicant’s claim may appear at that stage. If prima facie case is not established, then irreparable injury and balance of convenience need no consideration. The existence of a prima facie case does not permit “leap-frogging” by the applicant to injunction directly without crossing the other hurdles in between.”** 1. It is also settled that in interim applications, such as in this case, the Court should avoid making final determinations on matters of fact made on the basis of the conflicting Affidavit evidence. In connection thereto, in **Mbuthia vs Jimba Credit Finance Corporation & Another [1988] KLR 1,** the Court of Appeal guided as follows: **“…the correct approach in dealing with an application for an interlocutory injunction is not to decide the issues of fact, but rather to weigh up the relevant strength of each side’s propositions.”** 1. The first limb that I have to therefore determine is whether the Plaintiff has established a ***prima facie*** case. What constitutes a “***prima facie****”* case was discussed in the case of **Mrao Ltd vs. First American Bank of Kenya Ltd & 2 Others [2003] KLR 125**, in which the Court of Appeal held as follows: **“It may not be easy to define what is meant by “*prima facie case*”, but at least it must mean one on which a reasonable tribunal, properly directing its mind to the law and the evidence could convict if no explanation is offered by the defence ... The terms “*prima facie*” case, and “*genuine and arguable*” case do not necessarily mean the same thing, for in using another term, namely a sustainable cause of action, the words “*prima facie*” are frequently used to refer to a case which shifts the evidential burden of proof, rather than as giving rise to a legal burden of proof in the manner of considering, which was in relation to the pleadings that had been put forward in the case. It would be in the appellant’s interest to adopt a genuine and arguable case standard rather than one of a *prima facie* case, the former being the lesser standard of the two ... In civil cases** **a *prima facie* case is a case in which on the material presented to the Court a tribunal properly directing itself will conclude that there exists a right which has apparently been infringed by the opposite party to call for an explanation or rebuttal from the latter. A *prima facie* case is more than an arguable case. It is not sufficient to raise issues but the evidence must show an infringement of a right, and the probability of success of the Applicant’s case upon trial. That is clearly a standard, which is higher than an arguable case.”** 1. Before I venture into determination of this matter, I may also mention that it cannot be a point of debate that a person who receives a loan from a lender and who voluntarily and lawfully gives out his property as collateralorsecurity for the loan is presumed to be fully aware that in the event of default in repayment thereof under the terms and within the timelines agreed, the lender assumes liberty to sell off the property to recover its money.On this point, **Pall J** in **Muhani & Another vs. National Bank of Kenya Ltd [1990] KLR 73** held as follows; “**The mortgagor who has given an express power of sale cannot by starting a suit perhaps a perfectly hopeless suit derogate from that which it has in express terms conferred upon the mortgagee by the instrument namely a statutory power of sale and to hold otherwise would be simply to tear up the instrument which contains the contract agreed upon by the parties ....... The very object of the legislation granting a chargee a statutory power of sale would be negated if the courts interfere with his statutory or contractual powers unless, of course there is an allegation of fraud or improper exercise of the power of sale”.** 1. Further, in the case of **Maltex Commercial Supplies Limited & Another v Euro Bank Limited (In Liquidation)***,* **HCCC No. 82 of 2006)**, **Warsame J** (**as he then was**) observed as follows: **“….. Any property whether it is a matrimonial or spiritual house, which is offered as security for loan/overdraft is made on the understanding that the same stands the risk of being sold by the lender if default is made on the payment of the debt secured”.** 1. Similarly, **Ringera J**, in the case of **Martha Khayanga Simiyu vs. Housing Finance Co. of Kenya & 2 Others Nairobi HCCC No. 937 of 2001 [2001] 2 EA 540**, also held that: **“Once a property has been charged to secure financial accommodation it *ipso facto* becomes a commodity for sale and there is no commodity for sale whose loss cannot be compensated in damages but the law is not that an interlocutory injunction can never issue where damages would be an adequate remedy and the Respondent is in a position to pay them.”** 1. In this case, it is not disputed that the 1st Plaintiff, sometime between December 2022 and February 2023 applied for and was advanced by the Defendant what is described as an SME Seasonal Agri-business loan of Kshs 29,750,000/- and Kshs. 4,725,000/-, respectively, for purposes of what was described as “financing working capital requirements”. The loan was to attract interest at the Defendant’s base lending rate, a variable rate which at the time of entering into the agreement, stood at 13% per annum, and the loan was repayable in 36 monthly instalments of Kshs 1,646,771/- each. It is also not in dispute that the loan facilities were secured by two legal charges over the parcels of land known as L.R. No. **Mwingi/Mwingi/1330** and **Mwingi/Mwingi/3254** both registered in the name of the 2nd Plaintiff, and the charge instruments registered in favour of the Defendant over the titles. 2. It is further not in dispute that the 1st Plaintiff later sometime between October-November 2023 applied for and was advanced by the Defendant a second facility described as Import Finance Facility, as a non-revolving finance loan of USD 1,596,000/-, and non-revolving Post Import Finance of Kshs 89,166,880/- for purposes of financing the importation of 2,500 MT Sugar, related taxes, government levies, handling costs and bank charges. There is also no dispute that the security for this second facility included the existing legal charges over the said two parcels of land, a specific debenture of the loan amounts over the imported sugar stocks, Deed of Assignment of all rights over the sugar stocks and receivables due from sale thereof, andlien over 20% cash cover in US Dollars to be held for the term of the facilities. It is also agreed that subsequently, additional securities, including, Personal Guarantees & Indemnity by the 2nd Plaintiff as the registered owner of the parcels of land, and Director’s Guarantees & Indemnity from the 2nd and 3rd Plaintiffs as co-directors owere also incorporated. 3. In respect to the right of a lender to exercise its statutory power of sale in the event of the borrower’s default in making repayments, it is indeed true that before the Defendant can exercise such right, the law requires it to issues notices to the borrower as follows: 4. 90 days’ statutory notice of default, pursuant to **Section 90(1)** and **(2)** of the **Land Act, 2012**. 5. 40 days’ notice of intention to sell, pursuant to **Section 96(2)** of the **Land Act, 2012**. 6. 45 days’ redemption notice pursuant to **Rule 15(d)** of the **Auctioneers’ Rules, 1997**. 7. 14 days’ notification of sale, pursuant to **Rule 25(e)** of the **Auctioneers’ Rules, 1997**. 8. In this case, the Plaintiffs have not challenged or disputed service or receipt of the above notices. I note that indeed, copies of the exhibited notices correctly bear the postal addresses captured in the charge documents as the addresses for service submitted by the 1st Plaintiff, they are also supported by copies of postage receipts, and the Auctioneer’s notices also bear the signatures of the recipients thereof. 9. In respect to the issue whether the loan is in debt, although the Plaintiffs claim that they have been servicing the loans, a look at the statements exhibited by the Defendant, reveals that such repayment has been irregular and sporadic, and mostly below the amounts agreed upon as monthly instalments. There is also the letter dated 16/05/2025 from the Plaintiffs’ pleading with the Defendant to accommodate the Plaintiffs by restructuring the loan to a repayment plan proposed by the Plaintiffs. In that letter, the Plaintiffs seem to admit that outstanding principal amount was Kshs 120,000,000/- as at 16/05/2025 and ask for a grace period of 2 years when it should be exempted from making payments. I also note that by the demand letter dated 24/10/2024, the loan was declared as “***non-performing***” and the amount demanded thereunder was Kshs 112,331,597.65, by the statutory demand notice dated 14/01/2025, the amount demanded had increased to Kshs 122,993,532.45, by the 40 days’ notice, the amount had accumulated to Kshs 129,452,870.25, and by the Notification of Sale dated 19/08/2025, the amount demanded had escalated to Kshs 137,127,653.55. An open-minded reading of the Plaintiffs’ Supporting Affidavit in fact indicates that the Plaintiffs actually, but tacitly, admit being in default but blame the Defendant for “shifting goal-posts” that rendered the Plaintiffs unable to service the loan. That the Plaintiffs are indebted to the Defendant therefore seems not to be in doubt 10. The Plaintiffs allege that the Defendant has inflated the loan and arrears in breach of **Section 44** of the **Banking Act**, which Section, with a view to cushion borrowers from arbitrary or unilateral rate hikes, requires financial institutions to obtain prior approval from the Cabinet Secretary in-charge before increasing rates of interest. Application of that Section has now indeed been upheld and confirmed as mandatory by the Supreme Court in the case of **Stanbic Kenya Kenya Ltd v Santowels Ltd** **(Petition E005 of 2023) [2024] KESC 31 (KLR) (28 June 2024) (Judgment)**,and its application even where the loan contract purports to give the lender the absolute right to increase interest rates without notice. In this case however, I cannot find any attempt whatsoever by the Plaintiffs to demonstrate the correctness of the allegation made by the Plaintiffs. The Defendant having exhibited the loan account statements, it was incumbent upon the Plaintiffs, who bore the burden of proof, to show that there was indeed inflating of the loan or arrears as alleged. It was not therefore enough for the Plaintiff to have simply made that allegation generally and leave it at that. It is not the Court’s duty to speculate. The duration of the statement exhibited by the Defendant is only about 3 years (2022-2025) and is thus a relatively short statement. The Plaintiff ought to have therefore made an attempt to demonstrate, even at this interlocutory stage, perhaps through a re-calculation of interest Report by a qualified expert, that a ***prima facie*** perusal of the statement shows an increase in the rates of interest levied, and if so, by what proportion increased interest rate therefore inflated the loan arrears. Of course, the final determination would then be made at the full trial but even at this stage, the Plaintiffs ought to have given the Court a general basis of the allegation. Only then would the Court have been in a position to reach an informed opinion, on whether a prima ***facie case*** had been established, and give appropriate orders, if justified. 11. The Plaintiffs have also stated that they imported the sugar at Kshs 6,800/- per 5kg bag while the market price at which such bag was expected to be sold at was Kshs 9,200/-, thus ensuring a viable return in profits which would, in turn, clear the loan. The Plaintiffs state that however, due to the high cost of living in Kenya in 2024, the Government directed manufacturers to sell the 5kg sugar at no more than Kshs 5,000/-, and that the Defendant also took cue and compelled the Plaintiffs to sell at that low price of Kshs 5,000/- despite the Plaintiffs having customers ready to purchase the sugar at Kshs 7,200/- per 5kg. According to the Plaintiffs therefore, this “shifting of goal posts” amounted to a breach of the contract by the Defendant, and a significant reduction of the sale proceeds, and is what made it difficult for the Plaintiff to service the loan. However, again, this criticism of the Defendant is made very generally, entirely in a vacuum, with no attempt whatsoever to substantiate it. I say so because no single support for the criticism has been presented, no letter, no emails, and no correspondence of any nature tabled. How then is the Court supposed to make a determination in favour of the Plaintiffs on this allegation? In fact, all the letters exhibited by the Plaintiffs show that it is the Plaintiffs who would make requests for release of the consignments of sugar and propose the price it was to be sold at on each occasion. The Defendant’s letters before me simply approved the Plaintiff’s requests and none even mentions the price at which the consignments were to be sold at. This is what is apparent from the correspondence exhibited. If there was any other arrangement, then nothing is before me to reveal it. 12. In respect to the allegation that the 2nd Plaintiff holds the suit properties in trust for his siblings, I agree with the Defendant’s contention that dealings with the charged properties are strictly governed by the charge instruments and the terms of the Letter of Offer. It will be to re-write the contract for this Court to hold that the Defendant was bound to inquire into unregistered or undisclosed equitable interests such as alleged family trusts when no such obligation was included in the loan contract. The Defendant was never a party to, nor has it been demonstrated to had notice of any trust arrangements within the 2nd Plaintiff’s family, nor was any endorsed on the title documents. This ground does not therefore disclose any ***prima facie*** case. 13. In respect to the allegation that the Defendant seeks to realize the properties before first realizing the primary securities, the Plaintiff has pointed out that under Clause 28 of the charge instruments, consolidation of the debt and/or the securities is permitted. The Plaintiffs have not rebutted this contention either in the Supplementary Submissions or in their Submissions. 14. Regarding the claim that the Defendant has failed to factor in the 20% cash cover in US Dollars paid by the Plaintiffs, the Defendant has answered that 20% cash was the equity portion or borrower’s deposit required under the facility terms as the funding ratio, and was never therefore meant to reduce the principal amount of the financing, but was only an arrangement whereof the Plaintiff financed only 80% of the purchase price of the imported sugar. Again, the Plaintiffs have not rebutted this contention either in the Supplementary Submissions or in their Submissions. 15. For the above further reasons, my finding is that the Plaintiff have failed to demonstrate the existence of a ***prima facie*** case. 16. Having found that no ***prima facie*** case has been established, it is no longer necessary, as was affirmed by the Court of Appeal in the **Nguruman Limited v Jane Bonde Nielsen** **case** **(supra)**, to consider the second and third limbs of the rule in **Giella vs Cassman Brown**. 17. Nevertheless, even on these other two limbs, I am constrained to rule against the Plaintiffs. It has been argued that the Plaintiff will be greatly prejudiced by the auction and stands to suffer irreparably. However, as already pointed out above, Courts have on numerous occasions affirmed the position that **a property offered as security for a loan is so offered on the understanding that the same stands the risk of being sold by the lender if there is default in repayment of the debt. Such property therefore becomes a “**commodity for sale”. The trial Court will be entitled to order the Defendants to compensate the Plaintiffs should the latter prove their claims and succeed before after the full trial. In my view, the 1st Defendant, one of the largest banks in Kenya, is capable of compensating the Plaintiff for any eventual loss or injury, if any. 18. On “***balance of convenience***”, it is also the position that auction of a property securing the repayment of a loan in the event of default in repayment is legal as long as the requisite procedures have been followed. When charging such property, the borrower is deemed to be fully aware of the consequences of default. In the circumstances, I find that the “***balance of convenience***”, too, tilts towards allowing the Defendant to proceed with recovery. On this view, I find company in the holding of **F. Ochieng J (as he then was)** in the case of **Andrew Muriuki Wanjohi v Equity Building Society Ltd & 2 others [2006] eKLR** in which that: **“In my considered view if the 1st and 2nd defendants were restrained from selling off the suit property until the suit was heard and determined, there is a very real risk that the debt may outstrip the value of the suit property, as the borrower has never made any repayments for more than three years. That fact, coupled with the status of the 1st and 2nd defendants, persuades me that the balance of convenience is in favour of the said defendants. If the property were sold, the plaintiff can find other accommodation. And if it were finally held that the property should not have been sold, the 1st and 2nd defendants would be able to compensate the plaintiff. In contrast, the stoppage of the intended sale by the chargor would result in the continued growth of debt, thus exposing them to potentially substantial irrecoverable losses. I therefore find that provided the chargee complies with all other legal requirements, he should be permitted to realise the security.”** 1. For the foregoing reasons, I find that the Application fails to meet the threshold required for grant of an interlocutory injunction. 2. Regarding the prayer that the Defendant be ordered to supply the Plaintiffs with copies of the loan applications, approval documents, loan statements and insurance policies in respect to the loan, I agree with Counsel for the Defendant that the prayer is premature as it appears to seek discovery of documents through an interlocutory Application yet the **Civil Procedure Rules** under **Order 11** stipulate the stages of the proceedings at which, and the clear mechanisms within which discovery is to be made. That stage having not been reached as yet, the Plaintiffs ought to wait and see what documents the Defendant will include in its List of Documents when the pre-trail stage is reached. It is only then that the Plaintiff ought to make request should they wish that more documents in the Defendant’s possession to be produced. 3. Regarding prayer that the Defendant be ordered to delist the Plaintiffs from the **Credit Reference Bureau** (**CRB**), the legal basis for listing loan defaulters with the Credit Reference Bureaus (CRBs) is found in the **Banking (Credit Reference Bureau) Regulations, 2020**, made under **Section 33(4)** ofthe **Banking Act (Cap 488)**, which Regulations mandate and/or compel financial institutions to share credit information on loan defaulters to facilitate ease of management of risks within the industry. Although neither of the parties brought it to the Court’s attention, I am on my own aware that the High Court (**M.** **Thande J** in **Benjamin Bogongo v Cabinet Secretary National Treasury and Planning & Another (Petition E255 of 2021, Judgment on August 28, 2023)**, did nullify the Regulations, declaring them void for failure to comply with statutory requirements for tabling before Parliament. I am however also aware that subsequently, the **Court of Appeal suspended this nullification pending** appeal. To my knowledge, that appeal is yet to be determined, which therefore means that the Regulations still remain in force a. Under the Regulations, a borrower is liable to be listed at the CRB when his loan is categorized as “***non-performing***”, which means that the principal or interest has remained unpaid for at least 90 days. Lenders are also required to inform borrowers in writing at least 30 days before submitting their names to the CRB. In this case, as aforesaid, the Plaintiffs have not discharged the burden of demonstrating that the loan is not in default, and have also not demonstrated that any procedure or pre-requisite for listing a borrower at the CRB was not followed or was breached. In the circumstances, I find no grounds to grant the prayer, pending determination of the suit for delisting of the Plaintiffs at the CRB. **Final Orders** 1. The upshot of my findings above is as follows: 2. The Plaintiffs’ Notice of Motion dated 24/07/2025 is hereby dismissed. 3. Accordingly, the interim orders of injunction earlier granted now stand discharged. 4. As costs follow the event, the Defendant is awarded costs of this suit. **DELIVERED, DATED AND SIGNED AT ELDORET THIS 22ND DAY OF MAY 2026** **……………………..** **WANANDA JOHN R. ANURO** **JUDGE** **Delivered in the presence of:** | | | | --- | --- | | **Mr. Cheruiyot for the Plaintiffs** | | | **Mr. Lagat h/b for Ruto for the Defendant** | | | **Court Assistant: Rodgers Tshombe** | |