https://new.kenyalaw.org/akn/ke/judgment/scc/2026/80

Wanjala v Progressive Credit Ltd (Commercial Case E358 of 2026) [2026] SCC 80 (KLR) (29 June 2026) (Judgment) Neutral citation: [2026] SCC 80 (KLR) Republic of Kenya In the Small Claims Court at Mombasa Commercial Case E358 of 2026 TN Mwangeka, RM June 29, 2026 Between Michael Wanjala Claimant and Progressive Credit Ltd Respondent Judgment 1.The Statement of Claim herein filed on 22nd April 2026 seeks the following orders;1.A declaration that the actions of repossession by the Respondent on motor-vehicle registration(tuk-tuk) number KTWB 800D on the 14/4/2026 were unlawful without a proper notice and failing to provide proper documentation of default & repossession.2.Mandatory injunction compelling immediate release of motor-vehicle registration number KTWB 800Dto the claimant or any other order this court deems fit within the circumstances.3.Damages for loss of user of motor-vehicle registration number KTWB 800D calculated from the day of repossession being on the 14/4/2026 until the day of the judgement at the amount of kshs.3,000/-per day;4.A declaration that the interest charged offend the in duplum rule contrary to section 44A of the Banking Act.5.Interest of the amount awarded on (III) above herein at the court rates.6.Costs of the suit. 2.In rendering its judgment, the court has considered the respective pleadings and documents filed in support of each case as well as the oral testimony of the respective witnesses. 3.From the evidence on record, the court distills the following as the issues for determination;1.Whether the Claimant was in default.2.Whether the Respondent issued the Claimant with notice of default.3.Whether the process of repossession was proper.4.Whether the Claimant is liable to pay Kshs. 62,462/- as per the Counterclaim5.Whether the Claimant is entitled to the reliefs claimed. Whether the claimant was in default. 4.It is not in dispute that the Claimant took out a loan with the Respondent for Kshs. 39,673/- this is evidenced by the Claimant himself as well as the letter of offer filed by the Respondent. The letter of offer is the binding contract between the parties. The Claimant in his testimony in court admitted to signing the offer letter. He did not dispute the terms of the offer letter to be illegal, arrived at through coercion or fraud. As such this court will uphold the terms of the offer letter as binding and not attempt to rewrite the same. 5.It was a term of the offer letter that the sum of Kshs. 39,693/- was to be repaid in four monthly installments of Kshs. 12,702/-. Further, the loan would attract an interest of 7%. The same was agreeable to the Claimant at the time of taking the loan and does not offend the induplum rule in this court’s view which applies to all money lenders as was held in Francis Maria Wambugu vs Jitegemee Credit Ltd (2020) KEHC 2586 (KLR) and Mugure & 2 Others vs Higher Education Loans Boards (2022) KEHC 11951 (KLR). 6.It has not been disputed that the Claimant repaid Kshs. 38,130/- of the loan and that he had repaid the same in three months. This however was not the agreement as per the letter of offer. Once the Claimant elected to satisfy his loan within three months and not four as agreed, he was to restructure the monthly installments due in order to reflect this position. The Claimant was to pay Kshs. 50,808/- in total if there was no default. He has however paid Kshs. 38,130/- translating to a default of Kshs. 12,678/-equivalent to one month’s default. This court therefore finds that the Claimant is in default of Kshs. 12,678/-. Whether the respondent issued the claimant with notice of default. 6.The Claimant being in default meant that the Respondent was obligated to notify him of the same. As per Clause 7 of the offer letter any notice by the lender shall be deemed to have been properly served on the borrower if delivered by hand or sent by post or by personalized electronic media including phone, SMS, social media, email, internet or other convenient means as notified to the lender by the borrower or through print media by a notice published in a local daily of nationwide circulation in Kenya. 7.From the evidence on record, the Respondent relied on a demand letter dated 15th July 2025 as proof of notice of default to the Claimant. However, the said letter does not evidence receipt by the Claimant. The postal address written is equally erroneous. The Respondent possesses all the contact information relating to the Claimant, they were even able to trace him through their auctioneers and repossess the security herein. How then were they not able to effect proper service of the notice of default despite there being numerous avenues to effect the same is the question that tis court remains with. As such, the court finds that no proper notice was ever given to the Claimant of his default for him to be aware of the same and act on it. Whether the process of repossession was proper. 8.It therefore follows that the repossession of the security herein was improper as the Claimant was not made aware of his default. According to the Claimant, he had repaid his loan in full, he still maintains this. The Respondent as per its documents deals with borrowers through a relationship manager. It is the duty of this relationship manager to actively engage the borrower once a loan is in default especially where the borrower has previously been making regular payments as the case herein before taking the aggressive action of repossessing the security. 9.The Claimant stated that the auctioneers came and took his tutktuk on 14th April 2026 and that they never identified themselves. The Respondent never called the auctioneers as a witness to rebut the evidence of the Claimant but relied on the affidavit file of Rose Waithira Kahiga in respect of the circumstances leading up to the repossession and that the Claimant refused to sign the Proclamation Notice and the Notice of Sale of Movable Properties. This court finds the same to contain a bare narration of the events and not enough to dislodge the Claim by the Claimant that by the time the Claimant came back to where the tutktuk was on the material day the auctioneers had already repossessed the tuktuk and was not served with the notice. As such, the attachment and repossession was illegal and resultantly void. I rely on the case of Mogo Auto Limited Ochola (Civil Appeal E071 of 2023) [2023] KEHC 17527 (KLR) 4th May 2023). Whether the claimant is liable to pay kshs. 62,462/- as per the counterclaim 10.The Respondent has filed a counterclaim for Kshs. 62,462/- against the Respondent. Kshs. 22,000/- being auctioneer fees and Kshs. 40,462/- being the loan default amount as at the time of filling. As already stated herein, the repossession of the Claimant’s tutktuk was illegal, the Respondent can therefore not be entitled to any money from the Claimant for an illegal act. Additionally, this court has already found that the Claimant is in default of Kshs. 12,678/-. Consequently, the counterclaim fails and is dismissed. Whether the claimant is entitled to the reliefs claimed. 11.As herein explained, the repossession of the Claimant’s tuktuk was illegal. Consequently, a declaration hereby issues that the actions of repossession by the Respondent on motor-vehicle registration(tuk-tuk) number KTWB 800D on the 14/4/2026 were unlawful without a proper notice and failing to provide proper documentation of default & repossession. 12.The prayer for mandatory injunction compelling immediate release of motor-vehicle registration number KTWB 800D to the claimant is allowed with the rider that the Respondent reserves its right to upon proper and lawful notification of default and proclamation, to repossess the security herein if the Claimant remains to be in default. 13.The claim for damages for loss of user of motor-vehicle registration number KTWB 800D calculated from the day of repossession being on the 14/4/2026 until the day of the judgement at the amount of kshs.3,000/-per day is allowed at the rate of Kshs.1,500/- per day up to date of judgment. The amount shall earn interest from date of judgment and each party to bear its own costs. DATED SIGNED AND READ VIRTUALLY AT MOMBASA THE 29TH DAY OF JUNE 2026HON. THERESA N. MWANGEKARESIDENT MAGISTRATE/ADJUDICATORIn the presence of;Mr. Tindi….. for Claimant;Mr. Musamali….… for RespondentC/A Esther