1. By way of a plaint dated 22nd November 2023, the Plaintiff sued the Defendant for orders that:
a. A declaration that the Plaintiff was not issued with a 45 days auctioneer’s notice to sell and was never and or not served upon the Plaintiff a 40 days’ Notice to sell as required by Section 96 (2) of the Land Act No. 6 of 2012 hence a nullity.
b. A permanent order of injunction restraining the Defendant whether by themselves, their agents, servants and or employees from alienating, transferring, leasing or in any other manner interfering with all the property as known as LR No. 12715/7376 (LR NO. 132706) ORIGINAL NO. 12715/470/13 SYOKIMAU MACHAKOS COUNTY;
c. An order allowing the Plaintiff to complete repayment of the loan with new varied terms.
d. Any other and/or further order or relief that this Honourable may deem fit and just to grant and;
e. Costs of and/or incidental to this suit.
2. The Plaintiff alleges that in the year 2013, he took out a mortgage facility with the Defendant wherein he diligently performed his obligation but was affected by his business suffering a set back and the outbreak of Covid 19 pandemic subsequent to which he experienced financial difficulties. He avers further that the property was valued at Kshs.22,000,000/- in 2013 when the property was 75% complete and before the Defendant disbursed the facility. He states that the Defendant has allegedly sold the property for Kshs.9,000,000/= which is way below the forced sale value and the current market value. He alleges that no notice of default or demand for payment was issued to or received by him prior to the auction by the Defendant. He therefore seeks an order of injunction to restrain the Defendant whether by itself or its agents from alienating, transferring, leasing or in any other manner interfering with all the property known as LR No. 12715/7376 (LR NO. 132706) ORIGINAL NO. 12715/470/13 SYOKIMAU MACHAKOS COUNTY (hereinafter referred to as “the subject property”)
3. In the Defendant’s Defence dated 4th December 2023, the Defendant states that the Plaintiff applied for and was granted a banking facility worth Kshs.9,100,000/- made up of a mortgage loan of Kshs.8,600,000/- and an overdraft facility of Kshs.500,000/- for purposes of construction of a residential house on L.R No. 12715/7376 Syokimau. That the loan application was accepted vide an offer letter dated 25th July 2013 duly executed by the Plaintiff. It avers that the loan was repayable over a period of 120 months with monthly instalments of Kshs.158,028/- each. That the said facility was secured by a first legal charge for Kshs.9,100,000/- over title number L.R No. 12715/7376 Syokimau in the name of Anthony Gitari Muriithi registered in favour of the Defendant and whose interest was entered on the subject title on 24th October 2013.
4. The Defendant avers that the Plaintiff failed to remit the monthly instalments as and when they fell due and therefore the loan account fell into and is still in arrears. The Defendant avers further that the property in issue remains incomplete 10 years after the loan was disbursed and that the valuation reports have placed the completion of the property at below the alleged 75%. It states further that the valuation reports that informed the forced sale value were conducted by professional firms of valuers and nothing has been placed before court by the Plaintiff to challenge the valuation reports as required in law. Further that the property in issue was sold in strict compliance with the law with the Defendant having tolerated the Plaintiff’s default for 10 years.
5. The Defendant avers that the Plaintiff was served with all the notices as required by law that is, the 90 days’ notice dated 15th May 2014 via registered post; the 40 days’ notice dated 15th August 2014 via registered post and the redemption notices dated 2nd December 2017, 9th March 2020 and June 2022, served upon the Plaintiff physically and via registered post. It therefore avers that the order of an injunction cannot issue in light of the obvious admitted default that is ten years old; that the plaintiff has not come to court with clean hands which conduct does not endear him to a court of equity such as this one; that the loan account herein is still in arrears as admitted by the Plaintiff himself in his pleadings before court; that a valuation was conducted before the intended sale; that the statutory power of sale has accrued and the Defendant’s right cannot be curtailed by belligerent defaulters like the Plaintiff; that the subject property was offered as security for the loan by the Plaintiff voluntarily and is therefore entitled to be sold off in satisfaction of the loan obligations. The Defendant states that a permanent injunction would only turn out unjustified as the contractual obligations bestowed upon the parties to the loan instruments must be performed and they cannot escape liability so long as the loan remains outstanding. The Defendant prays that the claim be dismissed.
6. The suit proceeded to hearing on 18th June 2025 during which each party herein had a witness. Thereafter, parties filed their respective submissions.
7. At the trial, PW1, Antony Gitari Muriithi, adopted his witness statement dated 22nd November 2023 and produced his list and bundle of documents of the same date. He testified that he did not continue servicing the loan as he intended to secure additional funds to complete the remaining portion of the construction. He stated that the title was held by KCB Bank, to which he had paid Kshs. 2,000,000/-. He further testified that his truck was stolen, which adversely affected his financial position, prompting him to approach the Defendant to request a restructuring of the loan repayment terms. He stated that the current value of the property is approximately Kshs.25,000,000/-, with the land valued at Kshs.7.5 million and the developments at about Kshs.18 million. His prayer before the Court is to be granted an opportunity to resume servicing the loan rather than having the property sold at Kshs.9,000,000/-.
8. On cross-examination, he confirmed that he received the loan facility from the Defendant pursuant to a letter of offer dated 25th July 2013. He testified that he was advanced a total sum of Kshs. 9.1 million, disbursed around November 2013, which was repayable over a period of 120 months and was to mature in 2023. He acknowledged that the loan has since matured. He further testified that he initially made monthly instalments but later defaulted. He stated that the agreed monthly instalment was Kshs.158,028/-. Upon being referred to the loan statement, he conceded that only four instalments had been made. He stated that the outstanding balance is approximately Kshs. 20 million, although he did not have the exact figure.
9. He confirmed that he wrote letters seeking restructuring of the loan and, upon being referred to a letter dated 9th October 2018, acknowledged that it was one such request, but that he did not receive a response from the Defendant. He further testified that the valuation conducted by the Defendant amounted to an undervaluation, noting that a valuation had been undertaken at the time the loan was issued. He suggested that the Defendant’s valuer ought to be consulted. He reiterated that he seeks an opportunity to service the loan and clarified that he is not asking the Court to rewrite the contract but to vary the repayment terms. He admitted that he has not fully repaid the loan.
10. Upon re-examination, he stated that the amount disbursed was Kshs.9,000,000/- and that the current outstanding balance is approximately Kshs. 20,000,000/-.
11. The above marked the close of the Plaintiff’s case.
12. DW1, Wilson Mwangi Waithaka, the Relationship Manager at the Defendant’s Westlands branch, adopted his witness statement dated 17th March 2025 and produced the Defendant’s bundle of documents dated 4th December 2023, together with the further list and bundle of documents dated 17th March 2025.
13. Upon cross-examination, he was referred to the letter dated 27th November 2018. He testified that the said letter was sent to the Plaintiff and that the loan balance indicated therein was Kshs. 19,512,548.04. He further stated that the current loan balance stands at Kshs. 19,805,832.95. He maintained that the interest charged is not double the principal amount, noting that the sum advanced was Kshs. 9,100,000. He further testified that the notice of sale was not served upon the Plaintiff’s spouse, although spousal consent had been obtained at the time the property was charged. He also stated that he did not know the successful bidder at the auction and that, owing to the pendency of this matter, the purchaser had not completed payment of the purchase price.
14. DW1 further testified that the development on the suit property comprises a residential house which is incomplete. He stated that a valuation report was prepared in October 2023 covering both the land and the developments thereon, which indicated a market value of Kshs. 12,000,000/- and a forced sale value of Kshs. 9,000,000/-. He added that although a valuation had been conducted at the time the facility was issued, the same was not available. When referred to the valuation report dated 16th October 2023, he confirmed that the development was approximately 80% complete and that the forced sale value was Kshs. 9,000,000/-. He further clarified that the valuation was not a joint valuation but one commissioned by the bank.
15. DW1 testified that the statutory notices were served upon the Plaintiff through his postal address, and he referred to the list of registered postal dispatches to demonstrate that the notices were duly sent.
16. Upon re-examination, he stated that the redemption notice and the statutory notices contained in the Defendant’s bundle were the documents served upon the Plaintiff. He further testified that the receipt at page 114 of the Defendant’s bundle evidences payment to the Postal Corporation of Kenya for delivery of the redemption notices. He confirmed that the address used bears the name “Antony Gitari Mureithi,” the Plaintiff herein. He also stated that there is a certificate of service of the statutory notice sworn by Leakey’s Auctioneers. Additionally, he clarified that the valuers engaged were independent professionals on the bank’s panel and not employees of the bank. He further testified that the auction purchaser is not an employee of the Defendant.
17. After hearing the evidence of the parties, this court directed parties to file their respective submissions. The Plaintiff’s submissions are dated 24th August 2025 while the Defendant’s submissions are dated 29th September 2025.
Plaintiff’s submissions
18. The Plaintiff commenced his submissions with brief facts of the matter. He submits that he obtained a loan facility from the Defendant in 2013 in the sum of Kshs.9,100,000/- and initially complied with the repayment obligations as agreed until his business collapsed. Following this setback, he sought restructuring of the facility from the Defendant but received no response.
19. The Plaintiff contends that the Defendant mismanaged the loan account and acted in breach of the in duplum rule under Section 44A of the Banking Act. He points out a discrepancy in the amounts claimed by the Defendant, noting that the sum indicated in the auctioneers’ letter of instruction dated 6th June 2022 was Kshs. 20,509,289.50, whereas the loan statement as at the same date reflected Kshs. 19,805,832.95/=. He argues that the amount demanded, being upwards of Kshs. 20,000,000/- against a principal sum of Kshs. 9,100,000/- exceeds the statutory limit, which prohibits recovery of interest beyond the principal amount when a loan becomes non-performing. In support of this position, the Plaintiff relies on the decision in Mwambeja Ranching Company Limited and Another v Kenya National Capital Corporation where the Court emphasized that the in duplum rule serves to protect borrowers from oppressive accumulation of interest and to preserve the equity of redemption.
20. On the issue of statutory compliance, the Plaintiff submits that no valid redemption notice was served by the Auctioneers prior to the auction scheduled for 10th November 2023. He asserts that the notices relied upon by the Defendant relate to a previous auction in 2022 that did not materialize due to lack of bidders and therefore cannot support a subsequent sale. He further challenges the affidavits of service for failing to indicate whether service was effected personally or by registered post, maintaining that he never received the notices. Additionally, the Plaintiff states that no notification of sale was issued prior to the impugned auction. He also raises concerns of possible conflict of interest, alleging that the purchaser may be a proxy of the Defendant’s employee.
21. The Plaintiff further submits that although spousal consent was obtained at the time of charging the property, his spouse was not served with the mandatory 40-days’ notice to sell as required under Section 96(3)(c) of the Land Act. He emphasizes that compliance with statutory notice requirements is mandatory and non-negotiable.
22. With respect to valuation, the Plaintiff argues that the suit property has been grossly undervalued. He notes that at the time of the charge in 2013, the property was valued at Kshs.22,000,000/-, inclusive of land and a structure that was 95% complete. He disputes the Defendant’s current valuation of approximately Kshs.8,000,000/-, asserting that the property has appreciated over time and that the reduced valuation is indicative of manipulation intended to facilitate the sale at an undervalue, in breach of the Defendant’s duty.
23. In conclusion, the Plaintiff maintains that the Defendant has violated statutory provisions, misapplied the loan account contrary to the in duplum rule, failed to issue and properly serve mandatory notices, and undervalued the property. On that basis, the Plaintiff submits that he has met the threshold for the grant of injunctive relief and prays that the orders sought in the Plaint be allowed with costs.
Defendant’s submissions
24. The Defendant’s submissions contains brief facts of the case. The Defendant submits that the Plaintiff applied for and was granted a loan facility in 2013 amounting to Kshs.9,100,000/-, comprising a mortgage loan of Kshs.8,600,000/- and an overdraft facility of Kshs. 500,000/-, for the construction of a residential house on L.R. No. 12715/7376 Syokimau. The facility was secured by a first legal charge over the suit property pursuant to a charge instrument dated 8th October 2013. The loan was repayable over 120 months in monthly instalments of Kshs.158,028/-. The Defendant contends that the Plaintiff only made payment of one full instalment on 25th October 2013 and thereafter defaulted throughout the life of the loan, which eventually matured in 2023.
25. Following the Plaintiff’s persistent default, the Defendant proceeded to exercise its statutory power of sale. It maintains that it complied with all legal requirements by issuing the requisite statutory notices and engaging auctioneers. The Defendant asserts that it served the Plaintiff with the 90-days statutory notice on 15th May 2014 and the 40-days statutory notice on 15th August 2014 via registered post, as evidenced by documents in its trial bundle. It further submits that it is illogical for the Plaintiff to claim non-service of the 90-day notice when the 40-day notice, which presupposes the former was issued.
26. On the issue of spousal service, the Defendant argues that the Plaintiff’s claim that his spouse was not served with the 40-days notice is an afterthought, as it was not pleaded and only arose during trial. Relying on the principle that parties are bound by their pleadings, as affirmed in High Court Civil Appeal No. 52 of 2017 Daniel Otieno Migore v South Nyanza Sugar Co. Ltd, the Defendant submits that this argument should be disregarded. It further contends that, given the marital relationship and shared residence, it is reasonable to presume that the Plaintiff’s spouse was aware of the notices.
27. Regarding auctioneers’ notices, the Defendant submits that multiple auctioneers, Leakey’s Auctioneers, Norern Auctioneers and Ruol Auctioneers were instructed on different occasions on 2nd December 2017, 9th March 2020 and 13th June 2022 respectively and each served the Plaintiff with the requisite notices, supported by affidavits of service. The Defendant argues that this evidence conclusively disproves the Plaintiff’s assertion that he was never served.
28. On valuation of the property, the Defendant submits that it undertook due diligence by commissioning three independent valuation reports between 2021 and 2023 from Clayton Valuers, Fortune Realtors and Liaison Valuers. These reports placed the forced sale value within a narrow range, culminating in a valuation of Kshs. 9,000,000/- in October 2023. The property was ultimately sold at public auction on 10th November 2023 at this forced sale value to a purchaser, Janeliza Mkoji. The Defendant argues that the consistency in valuation demonstrates accuracy and compliance with Section 97 of the Land Act. It relies on Olkakasi Limited v Equity Bank Limited [2015] eKLR to argue that mere allegations of undervaluation are insufficient and must be supported by cogent evidence demonstrating professional or procedural flaws in the valuation. Further, citing Ecobank Kenya Limited v Moru Ridge Limited & another [2020] eKLR, the Defendant submits that undervaluation alone cannot justify an injunction as any loss can be remedied by damages. The Defendant maintains that it strictly adhered to all procedural requirements governing the exercise of the statutory power of sale, including issuance of notices, appointment of auctioneers, valuation of the property and conduct of the public auction.
29. On the issue of whether the court can vary the loan agreement, the Defendant submits that the letter of offer and charge instrument constitute binding contracts between the parties, and the Court cannot rewrite their terms. It relies on National Bank of Kenya Ltd v Pipeplastic Samkolit (K) Ltd & another [2001] eKLR where it was held that courts cannot interfere with contractual terms absent fraud, coercion, or undue influence. The Defendant argues that the Plaintiff’s request to restructure the loan amounts to an impermissible attempt to vary contractual obligations. With respect to the in duplum rule under Section 44A of the Banking Act, the Defendant acknowledges its applicability but argues that it has not violated the rule. It submits that the Plaintiff’s sporadic repayments meant that the loan repeatedly became non-performing, and the applicable cap should be assessed based on the last point of default. As at 28th February 2025, the outstanding amount stood at Kshs. 19,805,832.95 against a principal of Kshs.9,100,000 with the statutory cap being Kshs. 18,200,000/-. The Defendant explains that the excess is attributable to recovery costs, including legal fees, valuation fees, insurance premiums, and auctioneer charges, which are permissible under Section 44A(2)(c). Upon deducting these costs and certain insurance charges (HOCI), the Defendant contends that the recoverable amount falls within the statutory limit. It therefore maintains that there has been no breach of the in duplum rule.
30. On costs, the Defendant invokes Section 27 of the Civil Procedure Act and submits that costs should follow the event. While relying on Patrick Masila Mulwa v Douglas Mutinda Kilonzo & 3 others [2024] eKLR, it argues that it has incurred substantial expenses in recovery efforts, including statutory notices, valuation, auctioneers’ fees, and legal representation, and is therefore entitled to costs.
31. Finally, on equitable principles, the Defendant submits that the Plaintiff is undeserving of injunctive relief as he has come to court with unclean hands, having persistently defaulted on his obligations. It relies on Kyangavo v Kenya Commercial Bank Ltd & Another [2004] 1 KLR 126 as cited in Patrick Waweru Mwangi & Another v Housing Finance Co. of Kenya Ltd [2013] eKLR, emphasizing that a party seeking equity must first do equity. The Defendant argues that the Plaintiff’s continued default and failure to repay the loan disentitle him to equitable remedies such as injunctions.
32. In conclusion, the Defendant submits that it lawfully exercised its statutory power of sale, that the loan agreements remain valid and enforceable, that the Plaintiff has failed to establish any legal or equitable basis for relief and that the suit is frivolous, misconceived, and an abuse of the court process. The Defendant therefore prays that the Plaintiff’s suit be dismissed with costs.
Analysis and Determination
33. I have carefully considered the pleadings, the oral and documentary evidence presented by both parties, as well as their respective submissions. The key issues arising for determination are;;
a.) Whether the Defendant lawfully exercised its statutory power of sale, including compliance with the issuance and service of statutory notices;
b.) Whether the Plaintiff has established grounds to impeach the sale on account of breach of the in duplum rule and/or alleged undervaluation of the suit property;
c.) Whether the Plaintiff is entitled to the equitable reliefs sought.
Whether Defendant lawfully exercised its statutory power of sale, including compliance with the issuance and service of statutory notices
34. The statutory power of sale is governed primarily by Sections 90 and 96 of the Land Act, 2012. It is trite that before a chargee can exercise this power, strict compliance with the law on issuance and service of statutory notices is mandatory. The Plaintiff’s core argument is that he was not served with the requisite statutory notices including the 90 days’ notice, the 40 days’ notice to sell and the redemption notice. He further contends that his spouse was not served as required under Section 96(3)(c) of the Land Act. On the other hand, the Defendant maintains that all notices were duly issued and served via registered post and through auctioneers with supporting documentary evidence including certificates of posting and affidavits of service.
35. In Mafuta Products Ltd and Another v Barclays Bank of Kenya Ltd & Another [2017] eKLR the court held that while a chargee’s power of sale arises upon default, its exercise must strictly follow the prescribed procedural and legal requirements. The law is settled that the burden of proving service lies with the party alleging service. In Muthoni v K-Unity Sacco Limited [2024] KEHC 3638 (KLR), the Court held that a chargee must demonstrate proper service of statutory notices before exercising the power of sale.
36. In the present case, the Defendant has produced copies of the statutory notices and certificates of posting showing dispatch to the Plaintiff’s postal address. The burden of proof then shifted back to the Applicant to prove that he did not receive the notices sent through the registered post as was the finding in the case of Mombasa High Court Civil Commercial & Admiralty - Division Case No. 31 of 2013, Fredrick A. Makumbi –vs- Kenya Commercial Bank Limited in which the Court in its Ruling relied on the case Maithya –vs- Housing Finance Corporation of Kenya HCCC No. 1129 of 2002 as follows:-
“It is the Plaintiff who alleged that he was not served with the Statutory Notice. Once the Defendant provided evidence of that service the burden of proof shifted to the Plaintiff. This shifting of burden of proof is based on the rule that “he who asserts must prove.” See the book of Principles of Evidence by Alan Taylor 2nd Edition. The onus was on the Plaintiff to prove non-service of the Plaintiff. In view of the fact that the Plaintiff failed to prove the same the Plaintiff has failed to satisfy that burden. It is obvious that the Plaintiff could have obtained information from the Post Master General on whether the said notice was posted and the whereabouts of it. The Plaintiff did not on prima facie basis do so.”
37. It is clear in this case that while the Plaintiff denies receipt, he did not discharge his burden of proof to show that he was not served with the statutory notices of sale as evidence by the Defendant.
38. Further, the evidence shows that multiple redemption notices were issued by different auctioneers over time - in December 2017 by Leakey Auctioneers, in March 2020 by Norern Auctioneers 2020, and Ruol Auctioneers in 2022, supported by proof of service. This lends credence to the Defendant’s position that the Plaintiff was aware of the impending sale. His allegation that the notices in issue related to previous attempts to auction the property only demonstrates that the Defendant has sought to have the subject property auctioned in the past.
39. On the issue of spousal service, Section 96(3)(c) of the Land Act requires service upon a spouse where applicable. It provides that;
“96. Chargee’s power of sale
(1)…………………….
(2)………………………
(3)A copy of the notice to sell served in accordance with subsection (2) shall be served on—
(a)the Commission, if the charged land is public land;
(b)the holder of the land out of which the lease has been granted, if the charged land is a lease;
(c)a spouse of the chargor who had given the consent;
(d) …………………………………………..”
40. However, the Defendant correctly raises that this issue was not pleaded by the Plaintiff. The law is clear that parties are bound by their pleadings. In Tolksdorf v Mwangi & 3 others (2025) KEELC 848 (KLR) the court restated this principle by holding that:
“Additionally, this is an issue that was not pleaded in them Plaint dated 8th April 2022. It is trite that parties are bound by their pleadings and cannot be allowed to depart from the same.”
41. Be that as it may, DW1 admitted that the spouse of the chargor who gave consent was not served. The provisions of Section 96(3) of the Land Act are couched in mandatory terms, and there is no latitude for a chargee to circumvent them. I therefore note that there is no evidence of service of the Plaintiff’s spouse, one Catherine Mbula Maundu, who executed the spousal consent. The question that then arises is whether such non-service is fatal so as to invalidate the exercise of the statutory power of sale.
42. The requirement to serve a spouse who has given consent is not a mere procedural technicality; it is a substantive safeguard intended to protect proprietary and matrimonial interests. Section 96(3)(c) of the Land Act specifically requires that a copy of the notice to sell be served upon a spouse who gave consent. The use of the word “shall” denotes a mandatory obligation. The purpose of this provision is to ensure that a spouse, who may have an interest in the matrimonial property, is made aware of the impending sale and afforded an opportunity to take protective steps. Failure to comply with this requirement therefore goes to the root of the validity of the process. While the Defendant has demonstrated substantial compliance with respect to service upon the Plaintiff himself, the omission to serve the spouse cannot be cured by presumption or inference. The argument that the spouse was likely aware by virtue of them being together is not supported in law. Service of statutory notices is a matter of proof, not conjecture.
43. However, the Defendant has correctly raised that the issue of failure to serve the Plaintiff’s spouse was not pleaded in the Plaint. A perusal of the pleadings shows that the Plaintiff’s case was anchored on alleged non-service upon himself and not on non-service upon his spouse. The issue of non-service upon the spouse only arose during cross-examination and submissions and was not part of the Plaintiff’s pleaded case. The Defendant therefore did not have an opportunity to respond to it in its pleadings. To base a determination on such an unpleaded issue would be prejudicial and contrary to the rules of fair trial. Consequently, notwithstanding that Section 96(3)(c) of the Land Act imposes a mandatory requirement to serve a spouse who has given consent, this court is constrained from making a definitive finding on non-compliance in this regard, the issue having not been properly pleaded and particularly the spouse not being a party to the suit.
44. In that regard, I find that the Defendant has sufficiently demonstrated compliance with the statutory requirements relating to the issuance and service of notices as against the Plaintiff and the challenge based on non-service of the spouse cannot be sustained as it was not pleaded.
45. Accordingly, I am satisfied that the Defendant substantially complied with the statutory requirements governing the exercise of the power of sale.
Whether the Plaintiff has established grounds to impeach the sale on account of breach of the in duplum rule and/or alleged undervaluation of the suit property;
46. The Plaintiff alleges that the Defendant breached Section 44A of the Banking Act by demanding a sum exceeding twice the principal amount. The in duplum rule, as codified under Section 44A, limits recoverable interest on a non-performing loan to a sum not exceeding the principal outstanding at the time the loan becomes non-performing.
47. The Plaintiff relies on Mwambeja Ranching Company Limited and Another v Kenya National Capital Corporation where the Court underscored that the rule protects borrowers from excessive interest accumulation. The Defendant, however, has explained that the apparent excess arises from recoverable expenses, including legal fees, valuation charges, insurance premiums, and auctioneers’ fees, which are expressly permissible under Section 44A(2)(c). It further demonstrated that upon excluding such costs and certain insurance charges, the o
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a. A declaration that the Plaintiff was not issued with a 45 days auctioneer’s notice to sell and was never and or not served upon the Plaintiff a 40 days’ Notice to sell as required by Section 96 (2) of the Land Act No. 6 of 2012 hence a nullity.
b. A permanent order of injunction restraining the Defendant whether by themselves, their agents, servants and or employees from alienating, transferring, leasing or in any other manner interfering with all the property as known as LR No. 12715/7376 (LR NO. 132706) ORIGINAL NO. 12715/470/13 SYOKIMAU MACHAKOS COUNTY;
c. An order allowing the Plaintiff to complete repayment of the loan with new varied terms.
d. Any other and/or further order or relief that this Honourable may deem fit and just to grant and;
e. Costs of and/or incidental to this suit.
2. The Plaintiff alleges that in the year 2013, he took out a mortgage facility with the Defendant wherein he diligently performed his obligation but was affected by his business suffering a set back and the outbreak of Covid 19 pandemic subsequent to which he experienced financial difficulties. He avers further that the property was valued at Kshs.22,000,000/- in 2013 when the property was 75% complete and before the Defendant disbursed the facility. He states that the Defendant has allegedly sold the property for Kshs.9,000,000/= which is way below the forced sale value and the current market value. He alleges that no notice of default or demand for payment was issued to or received by him prior to the auction by the Defendant. He therefore seeks an order of injunction to restrain the Defendant whether by itself or its agents from alienating, transferring, leasing or in any other manner interfering with all the property known as LR No. 12715/7376 (LR NO. 132706) ORIGINAL NO. 12715/470/13 SYOKIMAU MACHAKOS COUNTY (hereinafter referred to as “the subject property”)
3. In the Defendant’s Defence dated 4th December 2023, the Defendant states that the Plaintiff applied for and was granted a banking facility worth Kshs.9,100,000/- made up of a mortgage loan of Kshs.8,600,000/- and an overdraft facility of Kshs.500,000/- for purposes of construction of a residential house on L.R No. 12715/7376 Syokimau. That the loan application was accepted vide an offer letter dated 25th July 2013 duly executed by the Plaintiff. It avers that the loan was repayable over a period of 120 months with monthly instalments of Kshs.158,028/- each. That the said facility was secured by a first legal charge for Kshs.9,100,000/- over title number L.R No. 12715/7376 Syokimau in the name of Anthony Gitari Muriithi registered in favour of the Defendant and whose interest was entered on the subject title on 24th October 2013.
4. The Defendant avers that the Plaintiff failed to remit the monthly instalments as and when they fell due and therefore the loan account fell into and is still in arrears. The Defendant avers further that the property in issue remains incomplete 10 years after the loan was disbursed and that the valuation reports have placed the completion of the property at below the alleged 75%. It states further that the valuation reports that informed the forced sale value were conducted by professional firms of valuers and nothing has been placed before court by the Plaintiff to challenge the valuation reports as required in law. Further that the property in issue was sold in strict compliance with the law with the Defendant having tolerated the Plaintiff’s default for 10 years.
5. The Defendant avers that the Plaintiff was served with all the notices as required by law that is, the 90 days’ notice dated 15th May 2014 via registered post; the 40 days’ notice dated 15th August 2014 via registered post and the redemption notices dated 2nd December 2017, 9th March 2020 and June 2022, served upon the Plaintiff physically and via registered post. It therefore avers that the order of an injunction cannot issue in light of the obvious admitted default that is ten years old; that the plaintiff has not come to court with clean hands which conduct does not endear him to a court of equity such as this one; that the loan account herein is still in arrears as admitted by the Plaintiff himself in his pleadings before court; that a valuation was conducted before the intended sale; that the statutory power of sale has accrued and the Defendant’s right cannot be curtailed by belligerent defaulters like the Plaintiff; that the subject property was offered as security for the loan by the Plaintiff voluntarily and is therefore entitled to be sold off in satisfaction of the loan obligations. The Defendant states that a permanent injunction would only turn out unjustified as the contractual obligations bestowed upon the parties to the loan instruments must be performed and they cannot escape liability so long as the loan remains outstanding. The Defendant prays that the claim be dismissed.
6. The suit proceeded to hearing on 18th June 2025 during which each party herein had a witness. Thereafter, parties filed their respective submissions.
7. At the trial, PW1, Antony Gitari Muriithi, adopted his witness statement dated 22nd November 2023 and produced his list and bundle of documents of the same date. He testified that he did not continue servicing the loan as he intended to secure additional funds to complete the remaining portion of the construction. He stated that the title was held by KCB Bank, to which he had paid Kshs. 2,000,000/-. He further testified that his truck was stolen, which adversely affected his financial position, prompting him to approach the Defendant to request a restructuring of the loan repayment terms. He stated that the current value of the property is approximately Kshs.25,000,000/-, with the land valued at Kshs.7.5 million and the developments at about Kshs.18 million. His prayer before the Court is to be granted an opportunity to resume servicing the loan rather than having the property sold at Kshs.9,000,000/-.
8. On cross-examination, he confirmed that he received the loan facility from the Defendant pursuant to a letter of offer dated 25th July 2013. He testified that he was advanced a total sum of Kshs. 9.1 million, disbursed around November 2013, which was repayable over a period of 120 months and was to mature in 2023. He acknowledged that the loan has since matured. He further testified that he initially made monthly instalments but later defaulted. He stated that the agreed monthly instalment was Kshs.158,028/-. Upon being referred to the loan statement, he conceded that only four instalments had been made. He stated that the outstanding balance is approximately Kshs. 20 million, although he did not have the exact figure.
9. He confirmed that he wrote letters seeking restructuring of the loan and, upon being referred to a letter dated 9th October 2018, acknowledged that it was one such request, but that he did not receive a response from the Defendant. He further testified that the valuation conducted by the Defendant amounted to an undervaluation, noting that a valuation had been undertaken at the time the loan was issued. He suggested that the Defendant’s valuer ought to be consulted. He reiterated that he seeks an opportunity to service the loan and clarified that he is not asking the Court to rewrite the contract but to vary the repayment terms. He admitted that he has not fully repaid the loan.
10. Upon re-examination, he stated that the amount disbursed was Kshs.9,000,000/- and that the current outstanding balance is approximately Kshs. 20,000,000/-.
11. The above marked the close of the Plaintiff’s case.
12. DW1, Wilson Mwangi Waithaka, the Relationship Manager at the Defendant’s Westlands branch, adopted his witness statement dated 17th March 2025 and produced the Defendant’s bundle of documents dated 4th December 2023, together with the further list and bundle of documents dated 17th March 2025.
13. Upon cross-examination, he was referred to the letter dated 27th November 2018. He testified that the said letter was sent to the Plaintiff and that the loan balance indicated therein was Kshs. 19,512,548.04. He further stated that the current loan balance stands at Kshs. 19,805,832.95. He maintained that the interest charged is not double the principal amount, noting that the sum advanced was Kshs. 9,100,000. He further testified that the notice of sale was not served upon the Plaintiff’s spouse, although spousal consent had been obtained at the time the property was charged. He also stated that he did not know the successful bidder at the auction and that, owing to the pendency of this matter, the purchaser had not completed payment of the purchase price.
14. DW1 further testified that the development on the suit property comprises a residential house which is incomplete. He stated that a valuation report was prepared in October 2023 covering both the land and the developments thereon, which indicated a market value of Kshs. 12,000,000/- and a forced sale value of Kshs. 9,000,000/-. He added that although a valuation had been conducted at the time the facility was issued, the same was not available. When referred to the valuation report dated 16th October 2023, he confirmed that the development was approximately 80% complete and that the forced sale value was Kshs. 9,000,000/-. He further clarified that the valuation was not a joint valuation but one commissioned by the bank.
15. DW1 testified that the statutory notices were served upon the Plaintiff through his postal address, and he referred to the list of registered postal dispatches to demonstrate that the notices were duly sent.
16. Upon re-examination, he stated that the redemption notice and the statutory notices contained in the Defendant’s bundle were the documents served upon the Plaintiff. He further testified that the receipt at page 114 of the Defendant’s bundle evidences payment to the Postal Corporation of Kenya for delivery of the redemption notices. He confirmed that the address used bears the name “Antony Gitari Mureithi,” the Plaintiff herein. He also stated that there is a certificate of service of the statutory notice sworn by Leakey’s Auctioneers. Additionally, he clarified that the valuers engaged were independent professionals on the bank’s panel and not employees of the bank. He further testified that the auction purchaser is not an employee of the Defendant.
17. After hearing the evidence of the parties, this court directed parties to file their respective submissions. The Plaintiff’s submissions are dated 24th August 2025 while the Defendant’s submissions are dated 29th September 2025.
Plaintiff’s submissions
18. The Plaintiff commenced his submissions with brief facts of the matter. He submits that he obtained a loan facility from the Defendant in 2013 in the sum of Kshs.9,100,000/- and initially complied with the repayment obligations as agreed until his business collapsed. Following this setback, he sought restructuring of the facility from the Defendant but received no response.
19. The Plaintiff contends that the Defendant mismanaged the loan account and acted in breach of the in duplum rule under Section 44A of the Banking Act. He points out a discrepancy in the amounts claimed by the Defendant, noting that the sum indicated in the auctioneers’ letter of instruction dated 6th June 2022 was Kshs. 20,509,289.50, whereas the loan statement as at the same date reflected Kshs. 19,805,832.95/=. He argues that the amount demanded, being upwards of Kshs. 20,000,000/- against a principal sum of Kshs. 9,100,000/- exceeds the statutory limit, which prohibits recovery of interest beyond the principal amount when a loan becomes non-performing. In support of this position, the Plaintiff relies on the decision in Mwambeja Ranching Company Limited and Another v Kenya National Capital Corporation where the Court emphasized that the in duplum rule serves to protect borrowers from oppressive accumulation of interest and to preserve the equity of redemption.
20. On the issue of statutory compliance, the Plaintiff submits that no valid redemption notice was served by the Auctioneers prior to the auction scheduled for 10th November 2023. He asserts that the notices relied upon by the Defendant relate to a previous auction in 2022 that did not materialize due to lack of bidders and therefore cannot support a subsequent sale. He further challenges the affidavits of service for failing to indicate whether service was effected personally or by registered post, maintaining that he never received the notices. Additionally, the Plaintiff states that no notification of sale was issued prior to the impugned auction. He also raises concerns of possible conflict of interest, alleging that the purchaser may be a proxy of the Defendant’s employee.
21. The Plaintiff further submits that although spousal consent was obtained at the time of charging the property, his spouse was not served with the mandatory 40-days’ notice to sell as required under Section 96(3)(c) of the Land Act. He emphasizes that compliance with statutory notice requirements is mandatory and non-negotiable.
22. With respect to valuation, the Plaintiff argues that the suit property has been grossly undervalued. He notes that at the time of the charge in 2013, the property was valued at Kshs.22,000,000/-, inclusive of land and a structure that was 95% complete. He disputes the Defendant’s current valuation of approximately Kshs.8,000,000/-, asserting that the property has appreciated over time and that the reduced valuation is indicative of manipulation intended to facilitate the sale at an undervalue, in breach of the Defendant’s duty.
23. In conclusion, the Plaintiff maintains that the Defendant has violated statutory provisions, misapplied the loan account contrary to the in duplum rule, failed to issue and properly serve mandatory notices, and undervalued the property. On that basis, the Plaintiff submits that he has met the threshold for the grant of injunctive relief and prays that the orders sought in the Plaint be allowed with costs.
Defendant’s submissions
24. The Defendant’s submissions contains brief facts of the case. The Defendant submits that the Plaintiff applied for and was granted a loan facility in 2013 amounting to Kshs.9,100,000/-, comprising a mortgage loan of Kshs.8,600,000/- and an overdraft facility of Kshs. 500,000/-, for the construction of a residential house on L.R. No. 12715/7376 Syokimau. The facility was secured by a first legal charge over the suit property pursuant to a charge instrument dated 8th October 2013. The loan was repayable over 120 months in monthly instalments of Kshs.158,028/-. The Defendant contends that the Plaintiff only made payment of one full instalment on 25th October 2013 and thereafter defaulted throughout the life of the loan, which eventually matured in 2023.
25. Following the Plaintiff’s persistent default, the Defendant proceeded to exercise its statutory power of sale. It maintains that it complied with all legal requirements by issuing the requisite statutory notices and engaging auctioneers. The Defendant asserts that it served the Plaintiff with the 90-days statutory notice on 15th May 2014 and the 40-days statutory notice on 15th August 2014 via registered post, as evidenced by documents in its trial bundle. It further submits that it is illogical for the Plaintiff to claim non-service of the 90-day notice when the 40-day notice, which presupposes the former was issued.
26. On the issue of spousal service, the Defendant argues that the Plaintiff’s claim that his spouse was not served with the 40-days notice is an afterthought, as it was not pleaded and only arose during trial. Relying on the principle that parties are bound by their pleadings, as affirmed in High Court Civil Appeal No. 52 of 2017 Daniel Otieno Migore v South Nyanza Sugar Co. Ltd, the Defendant submits that this argument should be disregarded. It further contends that, given the marital relationship and shared residence, it is reasonable to presume that the Plaintiff’s spouse was aware of the notices.
27. Regarding auctioneers’ notices, the Defendant submits that multiple auctioneers, Leakey’s Auctioneers, Norern Auctioneers and Ruol Auctioneers were instructed on different occasions on 2nd December 2017, 9th March 2020 and 13th June 2022 respectively and each served the Plaintiff with the requisite notices, supported by affidavits of service. The Defendant argues that this evidence conclusively disproves the Plaintiff’s assertion that he was never served.
28. On valuation of the property, the Defendant submits that it undertook due diligence by commissioning three independent valuation reports between 2021 and 2023 from Clayton Valuers, Fortune Realtors and Liaison Valuers. These reports placed the forced sale value within a narrow range, culminating in a valuation of Kshs. 9,000,000/- in October 2023. The property was ultimately sold at public auction on 10th November 2023 at this forced sale value to a purchaser, Janeliza Mkoji. The Defendant argues that the consistency in valuation demonstrates accuracy and compliance with Section 97 of the Land Act. It relies on Olkakasi Limited v Equity Bank Limited [2015] eKLR to argue that mere allegations of undervaluation are insufficient and must be supported by cogent evidence demonstrating professional or procedural flaws in the valuation. Further, citing Ecobank Kenya Limited v Moru Ridge Limited & another [2020] eKLR, the Defendant submits that undervaluation alone cannot justify an injunction as any loss can be remedied by damages. The Defendant maintains that it strictly adhered to all procedural requirements governing the exercise of the statutory power of sale, including issuance of notices, appointment of auctioneers, valuation of the property and conduct of the public auction.
29. On the issue of whether the court can vary the loan agreement, the Defendant submits that the letter of offer and charge instrument constitute binding contracts between the parties, and the Court cannot rewrite their terms. It relies on National Bank of Kenya Ltd v Pipeplastic Samkolit (K) Ltd & another [2001] eKLR where it was held that courts cannot interfere with contractual terms absent fraud, coercion, or undue influence. The Defendant argues that the Plaintiff’s request to restructure the loan amounts to an impermissible attempt to vary contractual obligations. With respect to the in duplum rule under Section 44A of the Banking Act, the Defendant acknowledges its applicability but argues that it has not violated the rule. It submits that the Plaintiff’s sporadic repayments meant that the loan repeatedly became non-performing, and the applicable cap should be assessed based on the last point of default. As at 28th February 2025, the outstanding amount stood at Kshs. 19,805,832.95 against a principal of Kshs.9,100,000 with the statutory cap being Kshs. 18,200,000/-. The Defendant explains that the excess is attributable to recovery costs, including legal fees, valuation fees, insurance premiums, and auctioneer charges, which are permissible under Section 44A(2)(c). Upon deducting these costs and certain insurance charges (HOCI), the Defendant contends that the recoverable amount falls within the statutory limit. It therefore maintains that there has been no breach of the in duplum rule.
30. On costs, the Defendant invokes Section 27 of the Civil Procedure Act and submits that costs should follow the event. While relying on Patrick Masila Mulwa v Douglas Mutinda Kilonzo & 3 others [2024] eKLR, it argues that it has incurred substantial expenses in recovery efforts, including statutory notices, valuation, auctioneers’ fees, and legal representation, and is therefore entitled to costs.
31. Finally, on equitable principles, the Defendant submits that the Plaintiff is undeserving of injunctive relief as he has come to court with unclean hands, having persistently defaulted on his obligations. It relies on Kyangavo v Kenya Commercial Bank Ltd & Another [2004] 1 KLR 126 as cited in Patrick Waweru Mwangi & Another v Housing Finance Co. of Kenya Ltd [2013] eKLR, emphasizing that a party seeking equity must first do equity. The Defendant argues that the Plaintiff’s continued default and failure to repay the loan disentitle him to equitable remedies such as injunctions.
32. In conclusion, the Defendant submits that it lawfully exercised its statutory power of sale, that the loan agreements remain valid and enforceable, that the Plaintiff has failed to establish any legal or equitable basis for relief and that the suit is frivolous, misconceived, and an abuse of the court process. The Defendant therefore prays that the Plaintiff’s suit be dismissed with costs.
Analysis and Determination
33. I have carefully considered the pleadings, the oral and documentary evidence presented by both parties, as well as their respective submissions. The key issues arising for determination are;;
a.) Whether the Defendant lawfully exercised its statutory power of sale, including compliance with the issuance and service of statutory notices;
b.) Whether the Plaintiff has established grounds to impeach the sale on account of breach of the in duplum rule and/or alleged undervaluation of the suit property;
c.) Whether the Plaintiff is entitled to the equitable reliefs sought.
Whether Defendant lawfully exercised its statutory power of sale, including compliance with the issuance and service of statutory notices
34. The statutory power of sale is governed primarily by Sections 90 and 96 of the Land Act, 2012. It is trite that before a chargee can exercise this power, strict compliance with the law on issuance and service of statutory notices is mandatory. The Plaintiff’s core argument is that he was not served with the requisite statutory notices including the 90 days’ notice, the 40 days’ notice to sell and the redemption notice. He further contends that his spouse was not served as required under Section 96(3)(c) of the Land Act. On the other hand, the Defendant maintains that all notices were duly issued and served via registered post and through auctioneers with supporting documentary evidence including certificates of posting and affidavits of service.
35. In Mafuta Products Ltd and Another v Barclays Bank of Kenya Ltd & Another [2017] eKLR the court held that while a chargee’s power of sale arises upon default, its exercise must strictly follow the prescribed procedural and legal requirements. The law is settled that the burden of proving service lies with the party alleging service. In Muthoni v K-Unity Sacco Limited [2024] KEHC 3638 (KLR), the Court held that a chargee must demonstrate proper service of statutory notices before exercising the power of sale.
36. In the present case, the Defendant has produced copies of the statutory notices and certificates of posting showing dispatch to the Plaintiff’s postal address. The burden of proof then shifted back to the Applicant to prove that he did not receive the notices sent through the registered post as was the finding in the case of Mombasa High Court Civil Commercial & Admiralty - Division Case No. 31 of 2013, Fredrick A. Makumbi –vs- Kenya Commercial Bank Limited in which the Court in its Ruling relied on the case Maithya –vs- Housing Finance Corporation of Kenya HCCC No. 1129 of 2002 as follows:-
“It is the Plaintiff who alleged that he was not served with the Statutory Notice. Once the Defendant provided evidence of that service the burden of proof shifted to the Plaintiff. This shifting of burden of proof is based on the rule that “he who asserts must prove.” See the book of Principles of Evidence by Alan Taylor 2nd Edition. The onus was on the Plaintiff to prove non-service of the Plaintiff. In view of the fact that the Plaintiff failed to prove the same the Plaintiff has failed to satisfy that burden. It is obvious that the Plaintiff could have obtained information from the Post Master General on whether the said notice was posted and the whereabouts of it. The Plaintiff did not on prima facie basis do so.”
37. It is clear in this case that while the Plaintiff denies receipt, he did not discharge his burden of proof to show that he was not served with the statutory notices of sale as evidence by the Defendant.
38. Further, the evidence shows that multiple redemption notices were issued by different auctioneers over time - in December 2017 by Leakey Auctioneers, in March 2020 by Norern Auctioneers 2020, and Ruol Auctioneers in 2022, supported by proof of service. This lends credence to the Defendant’s position that the Plaintiff was aware of the impending sale. His allegation that the notices in issue related to previous attempts to auction the property only demonstrates that the Defendant has sought to have the subject property auctioned in the past.
39. On the issue of spousal service, Section 96(3)(c) of the Land Act requires service upon a spouse where applicable. It provides that;
“96. Chargee’s power of sale
(1)…………………….
(2)………………………
(3)A copy of the notice to sell served in accordance with subsection (2) shall be served on—
(a)the Commission, if the charged land is public land;
(b)the holder of the land out of which the lease has been granted, if the charged land is a lease;
(c)a spouse of the chargor who had given the consent;
(d) …………………………………………..”
40. However, the Defendant correctly raises that this issue was not pleaded by the Plaintiff. The law is clear that parties are bound by their pleadings. In Tolksdorf v Mwangi & 3 others (2025) KEELC 848 (KLR) the court restated this principle by holding that:
“Additionally, this is an issue that was not pleaded in them Plaint dated 8th April 2022. It is trite that parties are bound by their pleadings and cannot be allowed to depart from the same.”
41. Be that as it may, DW1 admitted that the spouse of the chargor who gave consent was not served. The provisions of Section 96(3) of the Land Act are couched in mandatory terms, and there is no latitude for a chargee to circumvent them. I therefore note that there is no evidence of service of the Plaintiff’s spouse, one Catherine Mbula Maundu, who executed the spousal consent. The question that then arises is whether such non-service is fatal so as to invalidate the exercise of the statutory power of sale.
42. The requirement to serve a spouse who has given consent is not a mere procedural technicality; it is a substantive safeguard intended to protect proprietary and matrimonial interests. Section 96(3)(c) of the Land Act specifically requires that a copy of the notice to sell be served upon a spouse who gave consent. The use of the word “shall” denotes a mandatory obligation. The purpose of this provision is to ensure that a spouse, who may have an interest in the matrimonial property, is made aware of the impending sale and afforded an opportunity to take protective steps. Failure to comply with this requirement therefore goes to the root of the validity of the process. While the Defendant has demonstrated substantial compliance with respect to service upon the Plaintiff himself, the omission to serve the spouse cannot be cured by presumption or inference. The argument that the spouse was likely aware by virtue of them being together is not supported in law. Service of statutory notices is a matter of proof, not conjecture.
43. However, the Defendant has correctly raised that the issue of failure to serve the Plaintiff’s spouse was not pleaded in the Plaint. A perusal of the pleadings shows that the Plaintiff’s case was anchored on alleged non-service upon himself and not on non-service upon his spouse. The issue of non-service upon the spouse only arose during cross-examination and submissions and was not part of the Plaintiff’s pleaded case. The Defendant therefore did not have an opportunity to respond to it in its pleadings. To base a determination on such an unpleaded issue would be prejudicial and contrary to the rules of fair trial. Consequently, notwithstanding that Section 96(3)(c) of the Land Act imposes a mandatory requirement to serve a spouse who has given consent, this court is constrained from making a definitive finding on non-compliance in this regard, the issue having not been properly pleaded and particularly the spouse not being a party to the suit.
44. In that regard, I find that the Defendant has sufficiently demonstrated compliance with the statutory requirements relating to the issuance and service of notices as against the Plaintiff and the challenge based on non-service of the spouse cannot be sustained as it was not pleaded.
45. Accordingly, I am satisfied that the Defendant substantially complied with the statutory requirements governing the exercise of the power of sale.
Whether the Plaintiff has established grounds to impeach the sale on account of breach of the in duplum rule and/or alleged undervaluation of the suit property;
46. The Plaintiff alleges that the Defendant breached Section 44A of the Banking Act by demanding a sum exceeding twice the principal amount. The in duplum rule, as codified under Section 44A, limits recoverable interest on a non-performing loan to a sum not exceeding the principal outstanding at the time the loan becomes non-performing.
47. The Plaintiff relies on Mwambeja Ranching Company Limited and Another v Kenya National Capital Corporation where the Court underscored that the rule protects borrowers from excessive interest accumulation. The Defendant, however, has explained that the apparent excess arises from recoverable expenses, including legal fees, valuation charges, insurance premiums, and auctioneers’ fees, which are expressly permissible under Section 44A(2)(c). It further demonstrated that upon excluding such costs and certain insurance charges, the o
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