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 (1 st Defendant) to the borrowers (Plaintiffs). The suit therefore seeks to block a charge redemption attempt.
2. The Plaintiff filed the suit through Messrs NJK Advocates , by way of the Plaint dated 16/02/2026 praying for, basically, an injunction to stop the redemption attempt targeted at selling the Plaintiff’s property described as 1 Apartment No A102, on 2nd Floor, Block “A” Poonam Apartments, in Parklands, situated on Title No. 209/21731 (original No. 209/3355) , charged as security for the loan. In the alternative, the Plaintiffs prayed for more time to redeem the property upon payment of the amount found due upon taking of accounts.
3. In the Plaint, it was pleaded that on or about 28/02/2025, the Plaintiffs obtained a loan facility (home loan) of Kshs 20,865,000 from the 1st Defendant for which the Plaintiffs, as security for the loan, charged the suit property. It was then pleaded that the Plaintiffs had already paid the vendor an initial deposit of Kshs 7,000,000 and the facility by the 1st Defendant was therefore only a part-financing, and that the repayment amount under the loan agreement was Kshs 50,016,060. It was stated that the Auctioneer`s Notice dated 16/01/2026 demands a sum of Kshs 25,937,874.80 allegedly outstanding, that by the time the 1st Defendant purported to issue the statutory notice, the Plaintiffs had repaid a total sum of Kshs 18,181,218.79, which amount constitutes a substantial portion of the principal sum advanced, that it is inequitable and contrary to the principles governing exercise of the statutory power of sale for the 1st Defendant to seek to sell the charged property when the Plaintiffs have repaid the substantial portion of the loan and when the exact amount outstanding, if any, remains disputed and unascertained. It was also contended that the amount demanded is exaggerated, irregular and unsupported by lawful breakdown of the principal, interest and charges but that the 1st Defendant, through the 2nd Defendant, has advertised the suit property for public auction. It was claimed further that the 1st Defendant has clogged the Plaintiff's equity of redemption by levying exaggerated, unconscionable and illegal interest rates as it has applied interest, penalties and default charges in violation of the in duplum rule by demanding sums exceeding double the principal amount advanced while the loan was non-performing, and by reason thereof, the amount demanded by the Defendants is illegal, inflated and irrecoverable in law.
4. Together with the Plaint and the other usual Pleadings accompanying it, the Plaintiffs also filed the Notice of Motion the subject of this Ruling, dated 16/02/2026. The Motion, basically, seeks, pending hearing and determination of the suit, a temporary injunction restraining the Defendants from advertising for sale, transferring, or in any manner dealing with the suit property. The Application is supported by the Affidavit sworn by the 1 st Plaintiff, Ashok D. Panchal , who restated the matters contained in the Plaint already recounted above.
5. In opposing the Application, the 1 st Defendant, through Messrs Ondati Mogaka & Associates Advocates , filed the unnecessarily lengthy 39-paragraph Replying Affidavit sworn by one Alred Inganga Arunga , who introduced himself as a Legal Officer at the 1 st Defendant. Reading through the Affidavit, one notices that with a little bit of brevity, the contents could have easily been condensed to not more than 10 paragraphs at most.
6. Be that as it may, Mr. Arunga , after confirming the advancement of the loan facility, deponed that the Loan Facility as appears in the Ofer Letter dated 28/02/2017 attracted an interest rate of Central Bank Rate plus 4% together with additional interest at 3% on excess/overdues and a further penal interest at 3% for non-compliance of terms and conditions of the loan. He deponed that the loan was disbursed on or about 22/06/2017, and the charge dated 1/08/2018 was then registered over the property. He urged that the Plaintiffs however defaulted in repayments upon which the 1st Defendant served them with the letter dated 20/01/2021, informing them of the arrears of Kshs 891,878.40/- and a total outstanding amount of Kshs 19,105,252.40/-, and that by the notices dated 22/08/2021 and 2/02/2023, the 1st Defendant later sent the Plaintiffs pre-listing Notices with the Credit Reference Bureau (CRB) on account of their failure to settle the arrears but despite this, the Plaintiff's did not regularize the account.
7. He urged that by various modes of communication, including the letters dated 23/09/2021 and 10/03/2023, the 1st Defendant reminded the Plaintiffs of the arrears but there was no response. He deponed that by the letter dated 18/03/2022, the Plaintiffs requested for a moratorium of 12 months in terms of payment of the principal amount and that during that period, the Plaintiffs be only paying interest, which request the 1st Defendant accepted and entered into the restructuring agreement dated 21/03/2022 with the Plaintiffs. He deponed further that by the email sent on 13/12/2022, the 1st Defendant informed the Plaintiff that the insurance policy over the property had since expired and a renewal was due, but there was no response from the Plaintiffs. According to him, this non-renewal of the policy in itself was a fundamental breach of the terms of the facility but despite the 1st Defendant accommodating the Plaintiffs, they still did not make payment as agreed causing the account to fall into further default. He urged that the 1st Defendant then issued to the Plaintiffs the 90-days’ Statutory Notice dated 5/07/2024, followed by the 40-day’s Statutory Notice to Sell dated 24/06/2025 when no payment was received, and subsequently, through the 2nd Defendant’s letter dated 16/01/2026, issued to the Plaintiffs the Auctioneer's 45-days Statutory Notice. He observed that the Plaintiffs have not disputed receipt of these notices.
8. He admitted that the Plaintiffs have since the inception of the facility paid a total sum of Kshs 18,181,218.79 but averred that the amount advanced was Kshs 20,865,000/- which is yet to be fully repaid. He also contended that the sum of Kshs 18,181.218.79 is less than the principal sum advanced to the Plaintiffs excluding interest, and denied that the sum of Kshs 25,937,874/- exceeds the recoverable interest under the provisions of Section 44 of the Banking Act urging that what the in duplum rule provides is that it is the accrued interest on a facility that should not supersede the total sum of loan advanced. He urged that in this case, the applicable interest has not been disputed and neither has it superseded the loan amount asserting that the Plaintiffs were well aware of the consequences of charging the property and non-adherence to the terms of the facility, and that in view thereof, they have not made out a prima facie case to warrant issuance of an injunction. According to him, injunctive orders being equitable by nature, damages can be an adequate remedy, which can be computed and paid after the suit has been heard and determined on merits, and that the entire suit is based on a misapprehension of the provisions of Section 44A of the Banking Act . He also asserted that the Plaintiffs will not suffer irreparable harm, and that the 1st Defendant operates its business with monies belonging to members of the public who have deposited the same, which monies are at risk if the 1st Defendant is stopped Court from exercising its statutory powers yet the Plaintiffs have failed in their obligation to repay the loan.
9. The parties then filed written Submissions. The Plaintiffs’ Submissions is dated 8/05/2026, while the Defendants’ is dated 17/03/2026.
Plaintiff’s Submissions
10. Counsel for the Plaintiff pointed out that the loan amount advanced being Kshs 20,865,000/- repayable in 180 monthly installments of Kshs 277,867/- each, on simple computation, the total repayable amounts to Kshs 50,016,060/-, which is more than double the principal sum advanced, which is unconscionable and offends the in duplum rule as stipulated in Section 44 of the Banking Act , and also that the 1 st Defendant has failed to demonstrate how the rates and penalties were arrived at. He contended that for this reason, the 1 st Defendant’s statements of account are inconsistent with the loan agreement contract, and as such, the Statutory Notices served are also defective insofar as they contain illegally levied amounts. He submitted further that the Plaintiffs stand to suffer irreparable injury incapable of compensation by way of damages should the property be sold as it constitutes the Plaintiffs’ only home, that as the Plaintiffs had already paid a sum of Kshs 7,000,000/- to the vendor, the loan facility herein was simply a top-up financing arrangement, and that, therefore, the intended sale threatens to deprive the Plaintiffs of their investment. He cited several authorities to support the various limbs of his Submissions.
Defendant’s Submissions
11. On his part, the Defendant’s Counsel reiterated that the Plaintiffs’ argument on the in duplum rule is skewed as the amount of Kshs 18,181,218.79 paid by the Plaintiffs so far is less than the loan amount advanced at Kshs 20,865,000/-, excluding interest accrued. He thus denied that the amount of Kshs 25,937,874/- demanded in the Statutory Notices exceeds the recoverable interests under Section 44A of the Banking Act . He also pointed out that the Plaintiffs have not disputed the rate of interest. Counsel thus submitted that the Plaintiffs’ failure to fully repay the outstanding in itself is clear reason to decline to issue the orders sought and lack of a prima facie case. He also asserted that the Plaintiffs have not demonstrated how they will suffer “ irreparable harm ” incapable of compensation by damages since they offered the security as a commodity well aware of the possibility of sale as a consequence of default. He further submitted that it is the 1st Defendant who will suffer more if the sale is stopped as the value of the property might turn out to be insufficient to satisfy the debt, and as such, the “ balance of convenience ” favours refusal to grant the injunction. He, too, cited various authorities to buttress his arguments.
Determination
12. The broad issues for determination in this matter are evidently the following:
i) Whether the Defendant is demanding an exaggerated loan repayment balance containing excessive interest in breach of the in duplum rule .
ii) Whether an interim injunction should therefore issue to restrain the Defendants from exercising the statutory power of sale pending hearing and determination of the suit.
13. 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.
14. 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.
15. 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 stages are 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.”
16. It is also agreed that in interim applications such as in this case, the Court should avoid making final determinations on matters of fact on the basis of the conflicting Affidavit evidence. In respect thereto, the Court of Appeal, in Mbuthia vs Jimba Credit Finance Corporation & Another [1988] KLR 1, 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.”
17. The first limb that I have to therefore determine is whether the Plaintiffs have 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.”
18. 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 collateral or security 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”.
19. In this matter, the contractual rates of interest are not disputed. There is also substantial evidence, both by way of correspondence from the Plaintiffs, including proposals for restructuring of the loan, which amounts to admission, and, and also by way of the bank statements produced by the 1 st Defendant, whose contents have not been disputed. There is also no allegation that the Plaintiffs have reduced the arrears stated in the Statutory Notice. There cannot therefore be any serious contestation to the inevitable conclusion that the 1 st Defendant’s right to invoke its statutory power of sale has indeed arisen. The question is however whether in exercising that right, the 1 st Defendant has followed the law by serving upon the 1 st Defendant the stipulated notices.
20. 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, before the lender can exercise such right, the law requires it to issue and serve notices upon the borrower and/or chargor as follows:
a) 90 days’ statutory notice of default, pursuant to Section 90(1) and (2) of the Land Act, 2012 .
b) 40 days’ notice of intention to sell, pursuant to Section 96(2) of the Land Act, 2012 .
c) 45 days’ redemption notice pursuant to Rule 15(d) of the Auctioneers’ Rules, 1997 .
d) 14 days’ notification of sale, pursuant to Rule 25(e) of the Auctioneers’ Rules, 1997 .
21. In this case, all the above notices are indicated to have been served between 2024 and 2026. The Plaintiffs have not challenged or disputed service or receipt of any of the notices.
22. Regarding the term in duplum , it is derived from the Latin phrase “ in duplo ” denoting “ in double .” The Rule provides that interest on a non-performing facility stops running the moment accrued interest equals the principal amount owing. The Rule is a common law doctrine which was introduced in Kenya in 2007 through an amendment that gave rise to Section 44A of the Banking Act . The amendment was meant to tame the unconscionable appetite by financial institutions of unreasonably lumping accrued excessive interest on non-performing loans thus rendering the loans beyond reach of redemption. The relevant portions of Section 44A provide as follows:
44A. Limit on interest recovered on defaulted loans.
1. An institution shall be limited in what it may recover from a debtor with respect to a non-performing loan to the maximum amount under subsection (2).
2. The maximum amount referred to in subsection (1) is the sum of the following—
a) the principal owing when the loan becomes non-performing;
b) interest, in accordance with the contract between the debtor and the institution, not exceeding the principal owing when the loan becomes non-performing; and
c) expenses incurred in the recovery of any amounts owed by the debtor.
23. The rule therefore applies when a loan becomes non-performing , which, in my understanding, generally, refers to a loan whose instalments have remained unpaid and/or in arrears for more than 90 days. Simply put, once a loan becomes non-performing, interest accumulation therefore stops if the unpaid interest equals the principal amount due at that exact time, thus preventing endless ballooning of the debt.
24. Regarding evidence, it is and has always been that it is a Plaintiff who bears the burden of proof thereof. The Evidence Act, Cap 80 is clear on this insofar as Sections 107 and 108 of thereof provide as follows:
Section 107
(1) Whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts must prove that those facts exist.
(2) When a person is bound to prove the existence of any fact it is said that the burden of proof lies on that person.
Section 108
The burden of proof in a suit or proceeding lies on that person who would fail if no evidence at all were given on either side.
25. It is the Plaintiffs who allege that the 1 st Defendant have lumped illegal charges on the loan. Applying the provisions of Section 108 of the Evidence Act above, it is therefore the Plaintiffs who would fail if no evidence was presented to prove that allegation. Regrettably, the Plaintiffs did not make any effort to demonstrate the accuracy of the claim that the 1 st Defendant levied illegal charges or varied interest rates. Merely alleging that the amount demanded is in breach of the in duplum rule because it is more than double the loan advanced, without going further to demonstrate this alleged position is not, and cannot be sufficient. Similarly, merely alleging that the amount demanded is in breach of the in duplum rule merely because the loan advanced was Kshs 20,865,000/- and the total repayable amounts to Kshs 50,016,060/-, more than double the principal loan advanced, is also not by itself, without more, sufficient. In this case, the Plaintiffs have simply thrown in an allegation at the Court and left it to the Court to unravel its accuracy. Burden of proof cannot be discharged in such manner.
26. In any case, as already explained, what the in duplum rule as codified under Section 44A of the Banking Act does in simple terms, is to dictate that the total unpaid interest and late fees cannot exceed the outstanding principal amount at the time the loan became non-performing, I may give the example that if, for instance, a borrower owes Ksh 1,000,000 /- in remaining principal when he defaults, the maximum amount of interest and penalties the bank can collect from him is also up to Ksh 1,000,000 /- . His maximum exposure, excluding recovery expenses, would therefore be capped at the aggregate sum of Ksh 2,000,000/-. In this case, the amount of Kshs 18,181,218.79 admittedly paid by the Plaintiffs so far is still less than even the loan amount of Kshs 20,865,000/-advanced, excluding interest accrued. The Plaintiffs have therefore not even completed payment of the principal sum. How the amount of Kshs 25,937,874/- demanded in the Statutory Notices therefore exceeds the recoverable interest has not been demonstrated by the Plaintiffs at all.
27. Since the 1 st Defendant supplied the bank statements, the Plaintiffs could have, perhaps, to lay a basis for their argument on the in duplum rule, presented to Court their own independent version of what they deem to be the correct computation after deducting what they deem to be the illegal charges. They could have approached a professional or expert in accounting matters to recalculate for them the computation. Such professional could have scrutinized, dissected and interpreted the bank statements and presented a Report to the Court. It was upon the Plaintiffs to clearly identify and take the Court through the items or entries that they allege were illegally included by the 1 st Defendant in the computation, and the manner in which they deem the same to be illegal. Had the Plaintiff sufficiently established those matters, then the evidential burden could have shifted to the 1 st Defendant. On this point, I refer to the case of Mbuthia Macharia v Annah Mutua & Another [2017] eKLR in which the Court of Appeal stated as follows:
“[16] The legal burden is discharged by way of evidence, with the opposing party having a corresponding duty of adducing evidence in rebuttal. This constitutes evidential burden. Therefore, while both the legal and evidential burdens initially rested upon the appellant, the evidential burden may shift in the course of trial, depending on the evidence adduced .” ( Emphasis mine )
28. In this case, the Plaintiffs have made no effort whatsoever to establish their allegations, the evidential burden therefore never shifted to the Defendants. As such, I find that the Plaintiffs have failed to establish, at least at this stage, their claim that the 1 st Defendant lumped the loan account with illegal interest or penalties, or that the 1 st Defendant has breached the in duplum rule .
29. It is also not lost on me that the statutory notices were served gradually upon the Plaintiffs over a long period time, between 2022 and 2024, and earlier loan arrears reminders served as early as 2018. There is no evidence that at any time the Plaintiffs ever raised any issue with the 1 st Defendant’s computation of the arrears, not even the issue of illegal interest or breach of the in duplum rule that they are now raising. On the contrary, they even approached the 1 st Defendant and procured a restructuring of the loan, whose terms they again failed to honour. They have not explained why they have only now, very belatedly, seen it fit to challenge the computation right at the tail end of the recovery process, after the date for auction has already been fixed.
30. The Plaintiffs may indeed still surmount that hurdle at the full trial but for now, they have failed to establish that their claim meets the threshold set in Giella v Cassman Brown (supra) . In other words, no prima facie case has been demonstrated to warrant grant of an interim injunction.
31. Despite the finding above, the 1 st Defendant is forewarned that it has a legal duty to unconditionally and at all times to comply with and observe the in duplum rule in full. It is not a matter of choice or a discretion but a legal obligation on lenders. If at all therefore the Defendant has breached the said rule, then this will be the best opportunity for it to remedy the situation at this early stage before proceeding to exercise its statutory power sale. Imposing any unlawful charges will amount to a clog on the Plaintiff’s equity of redemption and which the law does not permit. This, therefore, is not the end of the matter and any breach by the Defendants, as may be demonstrated by the Plaintiffs at the full trial, will still therefore attract adverse consequences against the Defendants.
32. Having found that no prima facie case has been established, it is no longer necessary for me to consider the second and third limbs of the rule in Giella vs Cassman Brown . For this position, I refer to the case of In Nguruman Limited v Jane Bonde Nielsen and 2 Others , NRB CA Civil Appeal No. 77 of 2012 [2014] eKLR , where the Court of Appeal reiterated 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 stages are 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 prima facie case is not established, then irreparable injury and balance of convenience need no consideration …...”
33. Nonetheless, suffice to mention that even on these other two limbs, I still rule against the Plaintiffs.
34. On whether the Plaintiff will suffer “ irreparable injury ” incapable of being satisfactorily compensated by damages, it must be recalled that is a settled principle of law that parties to a contract are bound by the terms and conditions thereof, and it is not the business of the Courts to re-write contracts. This was aptly restated in the Court of Appeal case of National Bank of Kenya Ltd vs. Pipe Plastic Samkolit (K) Ltd (2002) 2 E.A. 503, (2011) eKLR , as follows:
“A court of law cannot rewrite a contract between the parties. The parties are bound by the terms of their contract, unless coercion, fraud or undue influence are pleaded and proved.”
35. Further, regarding a property voluntarily given out by a borrower as security, Warsame J ( as he then was ), in the case of Maltex Commercial Supplies Limited & Another v Euro Bank Limited (In Liquidation) , HCCC No. 82 of 2006) , 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”.
36. On his part, 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 held as follows:
“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.”
37. It is not therefore automatic that an Applicant must be denied a grant of injunction simply because his loss is quantifiable and can be compensated by damages. Each
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2. The Plaintiff filed the suit through Messrs NJK Advocates , by way of the Plaint dated 16/02/2026 praying for, basically, an injunction to stop the redemption attempt targeted at selling the Plaintiff’s property described as 1 Apartment No A102, on 2nd Floor, Block “A” Poonam Apartments, in Parklands, situated on Title No. 209/21731 (original No. 209/3355) , charged as security for the loan. In the alternative, the Plaintiffs prayed for more time to redeem the property upon payment of the amount found due upon taking of accounts.
3. In the Plaint, it was pleaded that on or about 28/02/2025, the Plaintiffs obtained a loan facility (home loan) of Kshs 20,865,000 from the 1st Defendant for which the Plaintiffs, as security for the loan, charged the suit property. It was then pleaded that the Plaintiffs had already paid the vendor an initial deposit of Kshs 7,000,000 and the facility by the 1st Defendant was therefore only a part-financing, and that the repayment amount under the loan agreement was Kshs 50,016,060. It was stated that the Auctioneer`s Notice dated 16/01/2026 demands a sum of Kshs 25,937,874.80 allegedly outstanding, that by the time the 1st Defendant purported to issue the statutory notice, the Plaintiffs had repaid a total sum of Kshs 18,181,218.79, which amount constitutes a substantial portion of the principal sum advanced, that it is inequitable and contrary to the principles governing exercise of the statutory power of sale for the 1st Defendant to seek to sell the charged property when the Plaintiffs have repaid the substantial portion of the loan and when the exact amount outstanding, if any, remains disputed and unascertained. It was also contended that the amount demanded is exaggerated, irregular and unsupported by lawful breakdown of the principal, interest and charges but that the 1st Defendant, through the 2nd Defendant, has advertised the suit property for public auction. It was claimed further that the 1st Defendant has clogged the Plaintiff's equity of redemption by levying exaggerated, unconscionable and illegal interest rates as it has applied interest, penalties and default charges in violation of the in duplum rule by demanding sums exceeding double the principal amount advanced while the loan was non-performing, and by reason thereof, the amount demanded by the Defendants is illegal, inflated and irrecoverable in law.
4. Together with the Plaint and the other usual Pleadings accompanying it, the Plaintiffs also filed the Notice of Motion the subject of this Ruling, dated 16/02/2026. The Motion, basically, seeks, pending hearing and determination of the suit, a temporary injunction restraining the Defendants from advertising for sale, transferring, or in any manner dealing with the suit property. The Application is supported by the Affidavit sworn by the 1 st Plaintiff, Ashok D. Panchal , who restated the matters contained in the Plaint already recounted above.
5. In opposing the Application, the 1 st Defendant, through Messrs Ondati Mogaka & Associates Advocates , filed the unnecessarily lengthy 39-paragraph Replying Affidavit sworn by one Alred Inganga Arunga , who introduced himself as a Legal Officer at the 1 st Defendant. Reading through the Affidavit, one notices that with a little bit of brevity, the contents could have easily been condensed to not more than 10 paragraphs at most.
6. Be that as it may, Mr. Arunga , after confirming the advancement of the loan facility, deponed that the Loan Facility as appears in the Ofer Letter dated 28/02/2017 attracted an interest rate of Central Bank Rate plus 4% together with additional interest at 3% on excess/overdues and a further penal interest at 3% for non-compliance of terms and conditions of the loan. He deponed that the loan was disbursed on or about 22/06/2017, and the charge dated 1/08/2018 was then registered over the property. He urged that the Plaintiffs however defaulted in repayments upon which the 1st Defendant served them with the letter dated 20/01/2021, informing them of the arrears of Kshs 891,878.40/- and a total outstanding amount of Kshs 19,105,252.40/-, and that by the notices dated 22/08/2021 and 2/02/2023, the 1st Defendant later sent the Plaintiffs pre-listing Notices with the Credit Reference Bureau (CRB) on account of their failure to settle the arrears but despite this, the Plaintiff's did not regularize the account.
7. He urged that by various modes of communication, including the letters dated 23/09/2021 and 10/03/2023, the 1st Defendant reminded the Plaintiffs of the arrears but there was no response. He deponed that by the letter dated 18/03/2022, the Plaintiffs requested for a moratorium of 12 months in terms of payment of the principal amount and that during that period, the Plaintiffs be only paying interest, which request the 1st Defendant accepted and entered into the restructuring agreement dated 21/03/2022 with the Plaintiffs. He deponed further that by the email sent on 13/12/2022, the 1st Defendant informed the Plaintiff that the insurance policy over the property had since expired and a renewal was due, but there was no response from the Plaintiffs. According to him, this non-renewal of the policy in itself was a fundamental breach of the terms of the facility but despite the 1st Defendant accommodating the Plaintiffs, they still did not make payment as agreed causing the account to fall into further default. He urged that the 1st Defendant then issued to the Plaintiffs the 90-days’ Statutory Notice dated 5/07/2024, followed by the 40-day’s Statutory Notice to Sell dated 24/06/2025 when no payment was received, and subsequently, through the 2nd Defendant’s letter dated 16/01/2026, issued to the Plaintiffs the Auctioneer's 45-days Statutory Notice. He observed that the Plaintiffs have not disputed receipt of these notices.
8. He admitted that the Plaintiffs have since the inception of the facility paid a total sum of Kshs 18,181,218.79 but averred that the amount advanced was Kshs 20,865,000/- which is yet to be fully repaid. He also contended that the sum of Kshs 18,181.218.79 is less than the principal sum advanced to the Plaintiffs excluding interest, and denied that the sum of Kshs 25,937,874/- exceeds the recoverable interest under the provisions of Section 44 of the Banking Act urging that what the in duplum rule provides is that it is the accrued interest on a facility that should not supersede the total sum of loan advanced. He urged that in this case, the applicable interest has not been disputed and neither has it superseded the loan amount asserting that the Plaintiffs were well aware of the consequences of charging the property and non-adherence to the terms of the facility, and that in view thereof, they have not made out a prima facie case to warrant issuance of an injunction. According to him, injunctive orders being equitable by nature, damages can be an adequate remedy, which can be computed and paid after the suit has been heard and determined on merits, and that the entire suit is based on a misapprehension of the provisions of Section 44A of the Banking Act . He also asserted that the Plaintiffs will not suffer irreparable harm, and that the 1st Defendant operates its business with monies belonging to members of the public who have deposited the same, which monies are at risk if the 1st Defendant is stopped Court from exercising its statutory powers yet the Plaintiffs have failed in their obligation to repay the loan.
9. The parties then filed written Submissions. The Plaintiffs’ Submissions is dated 8/05/2026, while the Defendants’ is dated 17/03/2026.
Plaintiff’s Submissions
10. Counsel for the Plaintiff pointed out that the loan amount advanced being Kshs 20,865,000/- repayable in 180 monthly installments of Kshs 277,867/- each, on simple computation, the total repayable amounts to Kshs 50,016,060/-, which is more than double the principal sum advanced, which is unconscionable and offends the in duplum rule as stipulated in Section 44 of the Banking Act , and also that the 1 st Defendant has failed to demonstrate how the rates and penalties were arrived at. He contended that for this reason, the 1 st Defendant’s statements of account are inconsistent with the loan agreement contract, and as such, the Statutory Notices served are also defective insofar as they contain illegally levied amounts. He submitted further that the Plaintiffs stand to suffer irreparable injury incapable of compensation by way of damages should the property be sold as it constitutes the Plaintiffs’ only home, that as the Plaintiffs had already paid a sum of Kshs 7,000,000/- to the vendor, the loan facility herein was simply a top-up financing arrangement, and that, therefore, the intended sale threatens to deprive the Plaintiffs of their investment. He cited several authorities to support the various limbs of his Submissions.
Defendant’s Submissions
11. On his part, the Defendant’s Counsel reiterated that the Plaintiffs’ argument on the in duplum rule is skewed as the amount of Kshs 18,181,218.79 paid by the Plaintiffs so far is less than the loan amount advanced at Kshs 20,865,000/-, excluding interest accrued. He thus denied that the amount of Kshs 25,937,874/- demanded in the Statutory Notices exceeds the recoverable interests under Section 44A of the Banking Act . He also pointed out that the Plaintiffs have not disputed the rate of interest. Counsel thus submitted that the Plaintiffs’ failure to fully repay the outstanding in itself is clear reason to decline to issue the orders sought and lack of a prima facie case. He also asserted that the Plaintiffs have not demonstrated how they will suffer “ irreparable harm ” incapable of compensation by damages since they offered the security as a commodity well aware of the possibility of sale as a consequence of default. He further submitted that it is the 1st Defendant who will suffer more if the sale is stopped as the value of the property might turn out to be insufficient to satisfy the debt, and as such, the “ balance of convenience ” favours refusal to grant the injunction. He, too, cited various authorities to buttress his arguments.
Determination
12. The broad issues for determination in this matter are evidently the following:
i) Whether the Defendant is demanding an exaggerated loan repayment balance containing excessive interest in breach of the in duplum rule .
ii) Whether an interim injunction should therefore issue to restrain the Defendants from exercising the statutory power of sale pending hearing and determination of the suit.
13. 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.
14. 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.
15. 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 stages are 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.”
16. It is also agreed that in interim applications such as in this case, the Court should avoid making final determinations on matters of fact on the basis of the conflicting Affidavit evidence. In respect thereto, the Court of Appeal, in Mbuthia vs Jimba Credit Finance Corporation & Another [1988] KLR 1, 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.”
17. The first limb that I have to therefore determine is whether the Plaintiffs have 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.”
18. 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 collateral or security 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”.
19. In this matter, the contractual rates of interest are not disputed. There is also substantial evidence, both by way of correspondence from the Plaintiffs, including proposals for restructuring of the loan, which amounts to admission, and, and also by way of the bank statements produced by the 1 st Defendant, whose contents have not been disputed. There is also no allegation that the Plaintiffs have reduced the arrears stated in the Statutory Notice. There cannot therefore be any serious contestation to the inevitable conclusion that the 1 st Defendant’s right to invoke its statutory power of sale has indeed arisen. The question is however whether in exercising that right, the 1 st Defendant has followed the law by serving upon the 1 st Defendant the stipulated notices.
20. 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, before the lender can exercise such right, the law requires it to issue and serve notices upon the borrower and/or chargor as follows:
a) 90 days’ statutory notice of default, pursuant to Section 90(1) and (2) of the Land Act, 2012 .
b) 40 days’ notice of intention to sell, pursuant to Section 96(2) of the Land Act, 2012 .
c) 45 days’ redemption notice pursuant to Rule 15(d) of the Auctioneers’ Rules, 1997 .
d) 14 days’ notification of sale, pursuant to Rule 25(e) of the Auctioneers’ Rules, 1997 .
21. In this case, all the above notices are indicated to have been served between 2024 and 2026. The Plaintiffs have not challenged or disputed service or receipt of any of the notices.
22. Regarding the term in duplum , it is derived from the Latin phrase “ in duplo ” denoting “ in double .” The Rule provides that interest on a non-performing facility stops running the moment accrued interest equals the principal amount owing. The Rule is a common law doctrine which was introduced in Kenya in 2007 through an amendment that gave rise to Section 44A of the Banking Act . The amendment was meant to tame the unconscionable appetite by financial institutions of unreasonably lumping accrued excessive interest on non-performing loans thus rendering the loans beyond reach of redemption. The relevant portions of Section 44A provide as follows:
44A. Limit on interest recovered on defaulted loans.
1. An institution shall be limited in what it may recover from a debtor with respect to a non-performing loan to the maximum amount under subsection (2).
2. The maximum amount referred to in subsection (1) is the sum of the following—
a) the principal owing when the loan becomes non-performing;
b) interest, in accordance with the contract between the debtor and the institution, not exceeding the principal owing when the loan becomes non-performing; and
c) expenses incurred in the recovery of any amounts owed by the debtor.
23. The rule therefore applies when a loan becomes non-performing , which, in my understanding, generally, refers to a loan whose instalments have remained unpaid and/or in arrears for more than 90 days. Simply put, once a loan becomes non-performing, interest accumulation therefore stops if the unpaid interest equals the principal amount due at that exact time, thus preventing endless ballooning of the debt.
24. Regarding evidence, it is and has always been that it is a Plaintiff who bears the burden of proof thereof. The Evidence Act, Cap 80 is clear on this insofar as Sections 107 and 108 of thereof provide as follows:
Section 107
(1) Whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts must prove that those facts exist.
(2) When a person is bound to prove the existence of any fact it is said that the burden of proof lies on that person.
Section 108
The burden of proof in a suit or proceeding lies on that person who would fail if no evidence at all were given on either side.
25. It is the Plaintiffs who allege that the 1 st Defendant have lumped illegal charges on the loan. Applying the provisions of Section 108 of the Evidence Act above, it is therefore the Plaintiffs who would fail if no evidence was presented to prove that allegation. Regrettably, the Plaintiffs did not make any effort to demonstrate the accuracy of the claim that the 1 st Defendant levied illegal charges or varied interest rates. Merely alleging that the amount demanded is in breach of the in duplum rule because it is more than double the loan advanced, without going further to demonstrate this alleged position is not, and cannot be sufficient. Similarly, merely alleging that the amount demanded is in breach of the in duplum rule merely because the loan advanced was Kshs 20,865,000/- and the total repayable amounts to Kshs 50,016,060/-, more than double the principal loan advanced, is also not by itself, without more, sufficient. In this case, the Plaintiffs have simply thrown in an allegation at the Court and left it to the Court to unravel its accuracy. Burden of proof cannot be discharged in such manner.
26. In any case, as already explained, what the in duplum rule as codified under Section 44A of the Banking Act does in simple terms, is to dictate that the total unpaid interest and late fees cannot exceed the outstanding principal amount at the time the loan became non-performing, I may give the example that if, for instance, a borrower owes Ksh 1,000,000 /- in remaining principal when he defaults, the maximum amount of interest and penalties the bank can collect from him is also up to Ksh 1,000,000 /- . His maximum exposure, excluding recovery expenses, would therefore be capped at the aggregate sum of Ksh 2,000,000/-. In this case, the amount of Kshs 18,181,218.79 admittedly paid by the Plaintiffs so far is still less than even the loan amount of Kshs 20,865,000/-advanced, excluding interest accrued. The Plaintiffs have therefore not even completed payment of the principal sum. How the amount of Kshs 25,937,874/- demanded in the Statutory Notices therefore exceeds the recoverable interest has not been demonstrated by the Plaintiffs at all.
27. Since the 1 st Defendant supplied the bank statements, the Plaintiffs could have, perhaps, to lay a basis for their argument on the in duplum rule, presented to Court their own independent version of what they deem to be the correct computation after deducting what they deem to be the illegal charges. They could have approached a professional or expert in accounting matters to recalculate for them the computation. Such professional could have scrutinized, dissected and interpreted the bank statements and presented a Report to the Court. It was upon the Plaintiffs to clearly identify and take the Court through the items or entries that they allege were illegally included by the 1 st Defendant in the computation, and the manner in which they deem the same to be illegal. Had the Plaintiff sufficiently established those matters, then the evidential burden could have shifted to the 1 st Defendant. On this point, I refer to the case of Mbuthia Macharia v Annah Mutua & Another [2017] eKLR in which the Court of Appeal stated as follows:
“[16] The legal burden is discharged by way of evidence, with the opposing party having a corresponding duty of adducing evidence in rebuttal. This constitutes evidential burden. Therefore, while both the legal and evidential burdens initially rested upon the appellant, the evidential burden may shift in the course of trial, depending on the evidence adduced .” ( Emphasis mine )
28. In this case, the Plaintiffs have made no effort whatsoever to establish their allegations, the evidential burden therefore never shifted to the Defendants. As such, I find that the Plaintiffs have failed to establish, at least at this stage, their claim that the 1 st Defendant lumped the loan account with illegal interest or penalties, or that the 1 st Defendant has breached the in duplum rule .
29. It is also not lost on me that the statutory notices were served gradually upon the Plaintiffs over a long period time, between 2022 and 2024, and earlier loan arrears reminders served as early as 2018. There is no evidence that at any time the Plaintiffs ever raised any issue with the 1 st Defendant’s computation of the arrears, not even the issue of illegal interest or breach of the in duplum rule that they are now raising. On the contrary, they even approached the 1 st Defendant and procured a restructuring of the loan, whose terms they again failed to honour. They have not explained why they have only now, very belatedly, seen it fit to challenge the computation right at the tail end of the recovery process, after the date for auction has already been fixed.
30. The Plaintiffs may indeed still surmount that hurdle at the full trial but for now, they have failed to establish that their claim meets the threshold set in Giella v Cassman Brown (supra) . In other words, no prima facie case has been demonstrated to warrant grant of an interim injunction.
31. Despite the finding above, the 1 st Defendant is forewarned that it has a legal duty to unconditionally and at all times to comply with and observe the in duplum rule in full. It is not a matter of choice or a discretion but a legal obligation on lenders. If at all therefore the Defendant has breached the said rule, then this will be the best opportunity for it to remedy the situation at this early stage before proceeding to exercise its statutory power sale. Imposing any unlawful charges will amount to a clog on the Plaintiff’s equity of redemption and which the law does not permit. This, therefore, is not the end of the matter and any breach by the Defendants, as may be demonstrated by the Plaintiffs at the full trial, will still therefore attract adverse consequences against the Defendants.
32. Having found that no prima facie case has been established, it is no longer necessary for me to consider the second and third limbs of the rule in Giella vs Cassman Brown . For this position, I refer to the case of In Nguruman Limited v Jane Bonde Nielsen and 2 Others , NRB CA Civil Appeal No. 77 of 2012 [2014] eKLR , where the Court of Appeal reiterated 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 stages are 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 prima facie case is not established, then irreparable injury and balance of convenience need no consideration …...”
33. Nonetheless, suffice to mention that even on these other two limbs, I still rule against the Plaintiffs.
34. On whether the Plaintiff will suffer “ irreparable injury ” incapable of being satisfactorily compensated by damages, it must be recalled that is a settled principle of law that parties to a contract are bound by the terms and conditions thereof, and it is not the business of the Courts to re-write contracts. This was aptly restated in the Court of Appeal case of National Bank of Kenya Ltd vs. Pipe Plastic Samkolit (K) Ltd (2002) 2 E.A. 503, (2011) eKLR , as follows:
“A court of law cannot rewrite a contract between the parties. The parties are bound by the terms of their contract, unless coercion, fraud or undue influence are pleaded and proved.”
35. Further, regarding a property voluntarily given out by a borrower as security, Warsame J ( as he then was ), in the case of Maltex Commercial Supplies Limited & Another v Euro Bank Limited (In Liquidation) , HCCC No. 82 of 2006) , 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”.
36. On his part, 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 held as follows:
“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.”
37. It is not therefore automatic that an Applicant must be denied a grant of injunction simply because his loss is quantifiable and can be compensated by damages. Each
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