1. The Notice of Motion application before me is dated 19th August 2024. It has been brought under the provisions of Article 40 of the Constitution of Kenya, 2010, Order 40 Rule 1(a) of the Civil Procedure Rules, 2010, and Section 97 of the Land Act, No. 6 of 2012. The applicants seek the following orders:-
a) Spent;
b) Spent;
c) That a temporary injunction do issue restraining the 1st and 2nd defendants/respondents, their employees, servants and/or agents, jointly and severally from advertising for sale, auctioning, selling, transferring, disposing (sic), dealing and/or interfering whatsoever with the plaintiff’s/applicant’s (sic) land L.R. NO. 19148/3 (original Number 1948/1/2 pending the hearing and determination of the suit; and
d) That the costs of this application be provided.
2. The application is supported by an affidavit sworn on 19th August 2024, by Ms Wairimu Kanina, the 1st plaintiff’s Director. She averred that the 2nd plaintiff is the owner of all that parcel of land known as L.R. No. 19148/3 (Original Number 1948/1/2), and has a banker – customer relationship with the 1st defendant, and that the 2nd plaintiff has a chargor – chargee relationship with the 1st defendant.
3. She also averred that the relationship between the 1st plaintiff and the 1st defendant begun with letters of credit which later mutated through various illegal restructures starting with a letter of offer dated 15th December 2014, wherein the 1st defendant approved a restructure of the facilities i.e. PIF OI US 2.524 Million and USD 1.674 Million, followed by a letter of offer dated 9th June 2016, wherein the 1st defendant approved a restructure of facilities and renewal of LC/PIF/Guarantee limit of USD 1 Million. Ms Kanina deposed that the third restructuring of the existing term loan was vide a letter of offer dated 28th March 2019, where an additional financing of Kshs.105 Million was approved.
4. That vide a letter of offer dated 13th August 2019, the 1st defendant approved extension of the principal and interest on the short term facility, and that vide a letter of offer dated 7th November 2019, the 1st defendant approved extension of repayment for thirty (30) days. Ms Kanina averred that vide another letter of offer dated 28th June 2021, the 1st defendant approved restructure of the 1st plaintiff’s facilities with a moratorium of the principal (amount) and interest for six (6) months.
5. She contended that the aforesaid multiple restructures of the initial letters of credit issued to the 1st plaintiff were illegal and irregular for being devoid of the plaintiff’s approval through Board Resolutions and were generally forced down the throats of the plaintiffs, resulting in the current confusion on the actual amount owed by the plaintiffs and the amounts paid by them to the 1st defendant.
6. Ms Kanina deposed that as a result of the multiple restructuring, various bank accounts namely; 026B3190427700, 026B3190427701, 026B3190427702, 016B3190427700, 016B3190427701, 016B3190427702, 016B3190427716, 016B3190427719, 016B3190427722, 016B3190427723, 016B3190427729, 016B3190427736, 016B3190427739, 01136190427700, 016B3190427738, 01894190427700, and 016B3190427737, were opened for the plaintiffs by the 1st defendant. She contended that the accounts further led to the misuse of the loan facility and made it difficult to track on loan repayments, and was generally meant to confuse the plaintiffs and make it difficult to understand the set up.
7. Ms Kanina stated that the initial letters of credit advanced to the 1st plaintiff/applicant were secured by a legal charge over the 2nd plaintiff’s land L.R. No. 19148/3 (Original Number 1948/1/2) dated 16th July 2014, and registered on 21st July 2014, a variation of charge and further charge over the 2nd plaintiff’s land LR. No. 19148/3 (Original Number 1948/1/2) dated 30th July 2014, and registered on 5th August 2014, a second further charge over the 2nd plaintiff’s land LR No. 19148/3 (Original Number 1948/1/2) dated 23rd December 2014 and registered on 29th December 2014 and a further variation of charge of Kshs.540,000,000/= over the 2nd plaintiff’s land L.R No. 19148/3 registered on 4th September 2017.
8. She further stated that other securities were in the form of an existing all asset fixed and floating debenture for Kshs.397,025,650.00 over the assets of the 1st plaintiff, Directors’ personal guarantees of Kshs.600,000,000/= for each Director, corporate guarantee from the 2nd plaintiff for Kshs.397,000,000/=, corporate guarantee from the 2nd plaintiff for USD 544,850.00 and corporate guarantee from Greystone Industries Limited for Kshs.600,000,000/=
9. Ms Kanina averred that the sum claimed of Kshs.490,450,873.38.00 was vehemently disputed by the 1st plaintiffs, who appointed M/S Nahashon Ngugi & Associates, an Audit firm, to analyze the 1st plaintiff’s bank account statements at the 1st defendant.
10. She further averred that an analysis of the 1st plaintiff’s bank account statements by the said Audit firm identified fundamental flaws which led to the arrears fictitiously accumulating to the said Kshs.490,450,873.38, which flaws were inconsistencies in the closing and opening balances and transaction from USD to Kenya Shillings, which created a difference of Kshs.200,958,050.00. She stated that other flaws were in converting the loan from USD to Kenya Shillings.
11. She contended that the 1st defendant used a higher exchange rate than the Central Bank of Kenya’s authorized conversion rate obtaining at the time, and that there were unexplained debits in the 1st plaintiff’s bank statements. She asserted that the Audit Report by the plaintiffs’ Auditors M/S Nahashon Ngugi & Associates concluded that the 1st defendant’s demand constitutes an unexplained colossal amount of Kshs.218,162,118.00, an amount that contravenes the in duplum Rule, which is applicable in Kenya.
12. The plaintiffs contended that they are set to suffer irreparable loss as their right to redeem the 2nd plaintiff’s land, L.R. No. 19148/3 (Original Number 1948/1/2) is irreplaceable and/or unsubstitutable in the event that the substratum of the application and suit is defeated by the defendants selling of the 2nd plaintiff’s land.
13. She stated that her Advocate had advised her that the plaintiffs have satisfied the conditions for consideration in being granted an injunction as was settled in the case of Giella v Cassman Brown & Company Limited .
14. Ms Kanina contended that the alleged statutory Notices of sale by the defendants do not meet the required standard in law, as they were not properly served upon the plaintiffs, thereby making them a nullity.
15. The 1st defendant filed a lengthy replying affidavit sworn on 5th November 2024, by Ms Florence W. Njuguna, the Legal Manager in charge of Litigation and Debt Recovery and Special Assets in the Legal Services Department.
16. She stated that the order for temporary injunction to restrain the defendants, their employees, servants and or agents, jointly and severally from advertising for sale, auctioning, selling, transferring, disposing of, dealing and/or interacting with property L.R. No. 19148/3) (Original Number 1948/1/2) (I.R. No. 120208) issued on 21st August 2024, does not refrain the plaintiffs from performing their obligations inter alia, servicing the outstanding liabilities to the bank, or varying their obligations under the facilities.
17. She stated that the plaintiffs should continue complying with their contractual obligations to pay the sum of Kshs.639,442,062.63 as at 5th November 2024 in servicing the outstanding facility, which amount continues to accrue interest until payment in full.
18. She confirmed the existence of a banker-customer relationship between the 1st defendant and the plaintiffs, respectively, as a result of which the 1st defendant advanced to the plaintiffs and Greystone Industries Limited various facilities and restructures of debt payment, inter alia, vide a letter of offer dated 24th February 2012, wherein the 1st defendant granted the 1st plaintiff two (2) facilities, a letter of credit in the amount of USD.3,692,470.00 and a short term loan in the amount of USD.600,000.00, wherein the terms listed in paragraph 5(a) of the replying affidavit were introduced into the relationship.
19. Ms Njuguna averred that vide an offer letter dated 25th October 2012 the interest rate applicable on the short term loan was reviewed to LIBOR plus 10% with a floor of 10.5% per annum, and 3 months plus 9.5 % with a floor of 9.5 % per annum and a restructuring fee of 0.5% in addition to the bank recovering structuring (sic) fees on the total facility at 1%.
20. She further averred that vide an offer letter dated 25th October 2012, the 1st defendant granted the 1st plaintiff five (5) facilities inter alia, post import financing for the sum of USD 1,450,000.00 to be used to liquidate the maturing letters of credit and reviewing various facilities, that is, the existing letters of credit of USD 900,000.00, short term loan of USD 135,000.00, letter of credit of USD 3,692,470.00, and a short term loan in the sum of USD 600,000.00
21. It was stated by Ms Njuguna that vide an offer letter dated 18th April 2013, the 1st plaintiff was granted sight letters of credit/post import finance of USD 1,800,000.00 for 180 days; advance payment guarantee of USD 875,890.45 for 12 months; an overdraft of USD 1,411,000.00 for 12 months and letters of credit of USD 585,000.00 for 6 months, whose terms of the offer letter are as captured in paragraph 5(d) of the replying affidavit.
22. She averred that the 1st plaintiff vide an application dated 31st October 2014, and an offer letter dated 15th December 2014, was granted a term loan facility of USD 4,198,000.00, an overdraft facility of USD 300,000.00, and an advance payment guarantee of the sum of USD 875,890.00, whose consequences are as captured in paragraph 5(e)(i) to (iii) of the replying affidavit.
23. Further, that vide an offer letter dated 9th June 2016, the 1st defendant approved restructuring of facilities and renewal of the LC/PIF/Guarantee limit of USD 1 Million.
24. Ms Njuguna deposed that vide an offer letter dated 5th February, 2018, the 1st defendant approved consolidation and refinancing of the existing term loan, overdraft and overdraft current account.
25. In addition, that vide an offer letter dated 28th March 2019, the 1st defendant approved a restructuring of the existing term loan and additional financing of Kshs.105 Million.
26. Further, that the said facility was reviewed through a letter dated 21st May 2019, providing that the LPO financing would be up to a maximum of 80% of the LPO value and all the proceeds from the LPO contracts would be utilized towards paying off the LPO facility as well as existing term facility, while the 1st plaintiff would not have access to LPO contract proceeds.
27. Ms Njuguna stated that vide a letter dated 13th August 2019, the 1st defendant approved the extension of the principal and interest of the short term facility of Kshs.6,679,520.00 under account No. 016B3190427710 for a further 60 days making the facilities due in November 2019.
28. That vide an offer letter dated 7th November 2019, the 1st respondent reviewed the facilities which resulted in extension of the repayment date for a further period of 30 days for loan account 016B319042770 and 016B319042779 of Kshs.28,332,000/= and Kshs.287,367,798.00, respectively, and the revision of the short term facility from 90 days to 120 days.
29. Further, that the 1st defendant vide an offer letter dated 3rd April 2020, reviewed the facilities to the 1st plaintiff by consolidating the overdrawn amount of Kshs.30,472,823.00 and restructuring it with the loans on account 016B3190427724 and account 016B3190427727 which were outstanding at Kshs.17,000,000/= and Kshs.422,606.05 excluding accrued penalty and interest in arrears and requiring the restructured amount to be paid within 60 days, and also as set out in paragraphs 5(l)(i) and (ii).
30. Ms Njuguna deposed that the 1st plaintiff’s facilities were varied vide an offer letter dated 25th June 2020, and the parties agreed to extend the performance bond of Kshs.30,076,161.00 in favour of KPLC for 6 months, extend the unsecured bid bond limit of Kshs.6,000,000/= in favour of Savanna Cement for a period of 12 months, restructure the short term loans on loan account 016B3190427732, 016B319042773 and 016B3190427730, with a moratorium on both principal and interest for a period of 6 months.
31. She also referred to another offer letter dated 25th June 2020, where the plaintiffs and the 1st defendant agreed that any principal and interest in arrears would be loaded to the new principal loan account for 12 months, all accrued interest would be moved to new loan accounts, the applicable interest would be based on the 1st defendant’s base rate, then at 9% plus a margin of 3.5 %, and the interest during the moratorium was to be paid by the 1st plaintiff after the expiry of the moratorium period.
32. She also stated that there was another variation to the facilities granted to the 1st plaintiff vide an offer letter dated 3rd August 2020 with the effect that the 1st defendant would allow one off issuance of a performance bond to KPLC of Kshs.3,557,487.00 issuance and inter-availing of a performance bond of USD 38,400.00 in favour of the World Food Programme to the 2nd plaintiff as a one-off basis from its existing limits; and financing and inter-availing of LPO financing of USD 614, 400.00 being 80% of the contract value on a one-off basis from its existing limits and also as per paragraph 5(0)(i) of the replying affidavit.
33. She stated that the 1st plaintiff and the 1st defendant thereafter entered into an offer letter dated 26th October 2020, whose terms are as set out in paragraph 5(p)(i) to (ix) of the replying affidavit.
34. She referred to an additional offer letter dated 28th June 2021, in which the 1st defendant approved the restructure of the 1st plaintiff’s moratorium of the principal and interest for six (6) months.
35. Ms Njuguna admitted that the 2nd plaintiff is the registered proprietor of all that piece of land known as L.R. No. 19148/3 (Original Number 1948/1/2) and asserted that the 2nd defendant offered the said facility as a continuing security for the payment of the secured obligations or so much thereof as may from time to time be outstanding notwithstanding the death, bankruptcy or incapacity of the chargor or any settlement of account or other matter whatsoever.
36. She agreed with the plaintiffs that L.R. No. 19148/3 (Original Number 1948/1/2) was provided to the 1st defendant as security for facilities obtained by the 1st plaintiff and Greystone Industries Limited.
37. Like Ms Kanina, she outlined the securities guaranteeing the loan and stated that pursuant to the further variation of charge, there is a borrower-lender relationship between the 1st plaintiff and Greystone Industries as the borrowers, and the 1st defendant as the lender.
38. She expressed the view that the primary dispute between the parties herein arises from the plaintiff disputing the statement of accounts and the loan arrears with the 1st defendant in the sum of Kshs.490,450,873.00, as the plaintiffs allege that the 1st defendant applied punitive interest and unexplained penalties to the loan facilities.
39. She denied the contention by Ms Kanina that the initial letter of credit was illegal and irregular, and devoid of the plaintiffs’ approval through Board Resolutions and was issued under duress, which duress has not been demonstrated. Ms Njuguna referred to Board Resolutions exhibited at pages 301 and 324 of the annexures to her affidavit.
40. She asserted that the plaintiffs and Greystone Industries Limited have at all material times represented and warranted that they had the necessary authority to borrow under the terms and conditions set out in the various offer letters, demonstrating that consent was given.
41. Ms Njuguna averred that the 1st defendant was aware of the facilities disbursed to the 1st plaintiff and Greystone Industries Limited, the amounts paid thereof and outstanding as at 6th June 2024. She outlined the said amounts in paragraphs 17 and 18 of her affidavit. She listed the account numbers opened by the 1st defendant for the 1st plaintiff as per the offer letters and general terms and conditions, subsequent to restructuring of the facilities between the 1st defendant, the 1st plaintiff and Greystone Industries Limited.
42. She denied the plaintiffs’ contention that multiple accounts resulted in the misuse of the loan facility or made it difficult to track loan payments thereby confusing the plaintiffs and making it difficult to understand the set up.
43. Ms Njuguna stated that the 1st defendant opted to exercise its statutory power of sale and served a Statutory Notice dated 7th December 2021, upon the plaintiffs and Greystone Industries Limited via registered and ordinary post, as well as to the email addresses previously used by the parties in correspondence before issuance of the said Statutory Notice. She stated that as at 7th December 2021, the plaintiffs and Greystone Industries Limited owed the 1st defendant the sum of Kshs.443,465,216.88 an amount that continued to accrue interest, in breach of the addendum Ref: OLA/30254/2021/06/28.
44. She further stated that the plaintiffs and Greystone Industries Limited were obliged under the terms of the offer letter addendum to pay the term loan facility by debiting to its account in sixty (60) months exclusive of six (6) months moratorium on the principal amount and interest, and to repay the short term facility in one bullet instalment of both the principal and interest, after six (6) months of the offer letter.
45. She stated that the plaintiffs and Greystone Industries Limited were also required to build up escrow funds of Kshs.2,000,000/= to be utilized to pay interest on the short term loan and the balance thereof to reduce the debt upon expiry of the extension, failure to which the moratorium extension granted in the offer letter would lapse, and a Statutory Notice would be issued.
46. She averred that the plaintiffs and Greystone Industries Limited did not comply with the provisions of the addendum offer letter and have refused, failed and/or neglected to disclose to this Court that they were serial defaulters having not made any payment towards servicing the facilities since the 30th June 2022, when the last restructure was done and they have never completed payment of the facilities since 2012, when the facilities were initially granted.
47. She stated that the plaintiffs, Greystone Industries Limited and the 1st defendant have also been engaged in negotiations about the settlement of outstanding liabilities to the 1st defendant and she was aware that the plaintiffs in the meeting of 6th December 2021, pledged to repay the outstanding debt through disposal of non-core assets; furnishing a schedule of assets to be disposed of effecting a lump sum payment of Kshs.200,000,000/= to the 1st defendant by 28th March 2022; and issuing an undertaking for the payment of the said sum, but they failed to honour their pledge and the proposal to date.
48. She deposed that she was aware that the plaintiffs vide a letter dated 2nd March 2022, proposed to pay 45% of the outstanding debt for the 1st defendant to hold off instructing the 2nd defendant herein to issue a 45 days’ Notification, and that the plaintiffs were aware that the 1st defendant had commenced the process to sell off the charged property.
49. She contended that the plaintiffs could settle the instalments due on the facility but have been unwilling to do so for the past 41 months and have unduly prejudiced the 1st defendant and its depositors by continuing to carry on business with their funds and obstinately refusing to pay what they claim is due as per the computations, but which is denied by the 1st defendant.
50. Ms Njuguna stated that the 1st defendant thereafter issued the plaintiffs with a 40 days’ Notification of Sale vide a letter dated 9th March 2022, advising them to rectify the default and settle all outstanding balances owed to the 1st defendant within 40 days from the date of service of the Notification of Sale, failure to which the 1st defendant would exercise its statutory power of sale as per the law. She stated that through their Advocates then, J. Louis Onguto Advocates, the plaintiffs in a letter dated 15th June 2022, expressly admitted to being served with the 2nd defendant’s Notification of Sale.
51. That thereafter, a valuation of the charged property was done and sent to the plaintiffs’ deponent and Dr. Peter Munga and the plaintiffs’ Financial Analyst via email, as well as to the plaintiffs and Greystone Industries Limited.
52. Ms Njuguna stated that the 2nd respondent issued a 45 days’ Redemption Notice dated 3rd June 2022, informing the 2nd plaintiff of the time within which it was required to redeem is property by paying Kshs.490,450,873.38 to avert the risk of the said property being sold by public auction on 23rd August 2022.
53. In reference to the Audit Report prepared on behalf of the 1st plaintiff by M/s Nahashon Ngugi & Associates, she averred that the same is inaccurate, prepared in bad faith to deceive and mislead this Court to the extent that it does not indicate the amount due and outstanding as at June 2022 when it was prepared, or take into account the accrued interest to the facilities as a result of the plaintiffs’ default.
54. She further stated that the Audit Report did not take into account several documents listed in paragraphs 39(a) to (s) of the 1st defendant’s affidavit, and the various letters of credit issued to the 1st plaintiff, the maturity dates thereof and applicable commissions. She contended that the said Report is inconclusive.
55. Ms Njuguna contended that there were no fundamental flaws in computation of the amounts outstanding from the 1st defendant as alluded to by the plaintiff, and explained the alleged inconsistencies in paragraph 44(a) to (e) of her affidavit.
56. She denied that the amounts being demanded by the 1st defendant are in breach of the in duplum rule, given that the borrowers have been in default of the principal amount and interest since they were granted the facilities in 2012. She further stated that the plaintiffs had requested for multiple restructures on both the said principal and interest leading to capitalization. She asserted that they acknowledged indebtedness in the amount of Kshs.405,159,005.00 vide letters of offer dated 25th February 2021 and 4th June 2021 which amount continues to accrue interest until payment in full.
57. She contended that the 1st defendant is at the risk of being unable to recover the outstanding loan amount which has already outstripped the value of the charged property and continues to suffer undue prejudice as it has been kept out of its money which it might not be able to recover if the orders being sought in the application herein are granted.
58. Ms Njuguna stated that the plaintiffs are underserving of the equitable relief of injunction as it was obtained through material non-disclosure and concealment of material facts, trickery and bad faith, which successfully misled the Court into believing that the 1st defendant did not comply with substantial and procedural steps in pursuing the remedy of the statutory power of sale.
59. The plaintiffs filed a further affidavit sworn on 22nd November 2024 by Ms Kanina, in which she mostly reiterated her earlier averments. In the defendants’ further affidavit sworn on 17th December 2024 by Ms Njuguna, she largely reiterated earlier averments made in her replying affidavit.
60. The plaintiffs’ written submissions dated 22nd November 2024 were filed by the firm of J. K. Gachie & Co. Advocates. The defendants’ written submissions dated 27th January 2025 were filed by TripleOKLaw LLP.
61. In regard to their written submissions, Mr. Okoli, learned Counsel for the plaintiffs cited the case of Giella v Cassman Brown and Company Limited (1973) EA 358, where the Court outlined the conditions that a party must satisfy in order for a Court to grant an interlocutory injunction. As to whether the plaintiffs have established a prima facie case against the defendants, he submitted that the initial letters of credit issued to the 1st plaintiff and the subsequent restructuring of the loan facilities were devoid of the plaintiffs’ approval through Board Resolutions and were generally what has resulted in the current confusion on the amount owed by the plaintiffs and the amounts they have paid to the 1st defendant.
62. Counsel referred to the Audit Report annexed to the plaintiffs’ affidavit, which he submitted exposed fundamental flaws which led to the arrears fictitiously accumulating to the amount of Kshs.490,450,873.38, which Report concluded that the 1st defendant’s demand constitutes an unexplained colossal amount of Kshs.218,162,118.00 which contravenes the in duplum rule, applicable in Kenya.
63. Mr. Okoli contended that the Statutory Notices of sale allegedly sent to the plaintiffs do not meet the required standard in law as they were not properly served upon the plaintiffs and are a nullity. The plaintiffs’ Counsel further contended that although the 1st defendant attempted to sell the plaintiff’s land via public auction, the said sale was conducted without the plaintiff being properly served with a 90 days’ Statutory Notice under Section 90 of the Land Act, a 40 days’ Statutory Notice under Section 96(2) of the Land Act and a 45 days’ Redemption Notice pursuant to Rule 15(d) of the Auctioneers Rules of 1997.
64. In regard to the applicability of the in duplum rule to this case, Mr. Okoli relied on the case of Kenya Hotels Limited v Oriental Commercial Bank Limited (formerly known as Delphis Bank Limited [2019] eKLR, where the Court stated that the in duplum rule is to the effect that interest ceases to accumulate upon any amount of the loan owing, once the accrued interest equals the amount of loan advanced.
65. Counsel submitted that if the 1st defendant is to proceed with the sale of the 2nd plaintiff’s land L.R. No. 19148/3 (Original Number 1948/1/2), the said plaintiff’s rights of ownership over the said land will be breached contrary to the provisions of Article 40 of the Constitution of Kenya, 2010, as well as Sections 24, 25 and 26 of the Land Registration Act, No. 3 of 2012. He cited the case of Mrao Limited v First America bank of Kenya Limited & 2 others [2003] eKLR 125, where the Court of Appeal defined what a prima facie case is.
66. The plaintiffs’ Counsel contended that if this Court allows the sale of the 2nd plaintiff’s property contrary to known sale procedures, the plaintiffs will suffer irreparable injury that cannot be compensated by way of damages. He relied on the case of Family Bank Limited v Tassels Limited & 20 others [2021] eKLR, to support the plaintiff’s position.
67. On the issue of the balance of convenience, Mr. Okoli submitted that the balance of convenience tilts in the plaintiffs’ favour. He relied on the case of Pius Kipchirchir Kogo v Frank Kimeli Tenai [2018] eKLR, on what constitutes a balance of convenience. He asserted that if the injunction being sought by the plaintiffs herein is not granted, they are bound to suffer greater inconvenience as opposed to the defendants, since the 2nd plaintiff will lose its ownership rights over Land L.R. No. 19148/3 (Original Number 1948/1/2) on account of the failure to serve the plaintiffs with the said Statutory Notices prior to advertisement of the said land via public auction.
68. Counsel submitted that the plaintiffs have proved the principles necessary for being granted the injunctive relief being sought.
69. Mr. Muthee, the defendants’ Counsel relied on the case of Giella v Cassman Brown & Co. Ltd (supra), on the principles for a restraining injunction. He also relied on the case of Mrao v First American Bank of Kenya Ltd & 2 others (supra), which defined what a prima facie case is. He cited the case of Shiva Carriers Limited v Imperial Bank Limited & another [2018] eKLR, also on the same issue.
70. In addressing the issue of whether the plaintiffs have established a prima facie case, Mr. Muthee submitted that the instant case is peculiar in that while the plaintiffs’ deny service of the requisite Notices in their submissions, they have expressly admitted in their letter dated 18th January 2022 to having received the Statutory Notices, and they have expressly admitted in the affidavit of Wairimu Kanina that they were served with the Statutory Notice demanding Kshs.490,450,873.38.
71. Further, that the plaintiffs have also admitted to having been served by the Auctioneer with the 45 days’ Redemption Notice in the letter dated 15th June 2020, from Louis Onguto & Co. Advocates and the supporting affidavit of Ms Kanina sworn on 19th June 2022.
72. Mr. Muthee submitted that given the plaintiffs’ admission and acknowledgment on oath that they were served with the requisite Notices, the burden of proof does not shift to the defendants. He contended that the plaintiffs have failed to demonstrate that the 1st defendant is exercising its statutory power of sale without issuing the requisite Notices
73. He stated that the 1st defendant’s threat of selling the charged property is lawful having issued the plaintiffs with Notices as per Sections 90(2)(d) and 90(3)(e) of the Land Act, and complying with statutory requirements cannot be in breach, violation or result to the perceived breach of the plaintiffs’ rights.
74. On the issue of the plaintiffs’ assertions that there were no Board Resolutions authorizing restructuring of the facilities, Mr. Muthee stated that the plaintiffs have not indicated that the Resolutions
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a) Spent;
b) Spent;
c) That a temporary injunction do issue restraining the 1st and 2nd defendants/respondents, their employees, servants and/or agents, jointly and severally from advertising for sale, auctioning, selling, transferring, disposing (sic), dealing and/or interfering whatsoever with the plaintiff’s/applicant’s (sic) land L.R. NO. 19148/3 (original Number 1948/1/2 pending the hearing and determination of the suit; and
d) That the costs of this application be provided.
2. The application is supported by an affidavit sworn on 19th August 2024, by Ms Wairimu Kanina, the 1st plaintiff’s Director. She averred that the 2nd plaintiff is the owner of all that parcel of land known as L.R. No. 19148/3 (Original Number 1948/1/2), and has a banker – customer relationship with the 1st defendant, and that the 2nd plaintiff has a chargor – chargee relationship with the 1st defendant.
3. She also averred that the relationship between the 1st plaintiff and the 1st defendant begun with letters of credit which later mutated through various illegal restructures starting with a letter of offer dated 15th December 2014, wherein the 1st defendant approved a restructure of the facilities i.e. PIF OI US 2.524 Million and USD 1.674 Million, followed by a letter of offer dated 9th June 2016, wherein the 1st defendant approved a restructure of facilities and renewal of LC/PIF/Guarantee limit of USD 1 Million. Ms Kanina deposed that the third restructuring of the existing term loan was vide a letter of offer dated 28th March 2019, where an additional financing of Kshs.105 Million was approved.
4. That vide a letter of offer dated 13th August 2019, the 1st defendant approved extension of the principal and interest on the short term facility, and that vide a letter of offer dated 7th November 2019, the 1st defendant approved extension of repayment for thirty (30) days. Ms Kanina averred that vide another letter of offer dated 28th June 2021, the 1st defendant approved restructure of the 1st plaintiff’s facilities with a moratorium of the principal (amount) and interest for six (6) months.
5. She contended that the aforesaid multiple restructures of the initial letters of credit issued to the 1st plaintiff were illegal and irregular for being devoid of the plaintiff’s approval through Board Resolutions and were generally forced down the throats of the plaintiffs, resulting in the current confusion on the actual amount owed by the plaintiffs and the amounts paid by them to the 1st defendant.
6. Ms Kanina deposed that as a result of the multiple restructuring, various bank accounts namely; 026B3190427700, 026B3190427701, 026B3190427702, 016B3190427700, 016B3190427701, 016B3190427702, 016B3190427716, 016B3190427719, 016B3190427722, 016B3190427723, 016B3190427729, 016B3190427736, 016B3190427739, 01136190427700, 016B3190427738, 01894190427700, and 016B3190427737, were opened for the plaintiffs by the 1st defendant. She contended that the accounts further led to the misuse of the loan facility and made it difficult to track on loan repayments, and was generally meant to confuse the plaintiffs and make it difficult to understand the set up.
7. Ms Kanina stated that the initial letters of credit advanced to the 1st plaintiff/applicant were secured by a legal charge over the 2nd plaintiff’s land L.R. No. 19148/3 (Original Number 1948/1/2) dated 16th July 2014, and registered on 21st July 2014, a variation of charge and further charge over the 2nd plaintiff’s land LR. No. 19148/3 (Original Number 1948/1/2) dated 30th July 2014, and registered on 5th August 2014, a second further charge over the 2nd plaintiff’s land LR No. 19148/3 (Original Number 1948/1/2) dated 23rd December 2014 and registered on 29th December 2014 and a further variation of charge of Kshs.540,000,000/= over the 2nd plaintiff’s land L.R No. 19148/3 registered on 4th September 2017.
8. She further stated that other securities were in the form of an existing all asset fixed and floating debenture for Kshs.397,025,650.00 over the assets of the 1st plaintiff, Directors’ personal guarantees of Kshs.600,000,000/= for each Director, corporate guarantee from the 2nd plaintiff for Kshs.397,000,000/=, corporate guarantee from the 2nd plaintiff for USD 544,850.00 and corporate guarantee from Greystone Industries Limited for Kshs.600,000,000/=
9. Ms Kanina averred that the sum claimed of Kshs.490,450,873.38.00 was vehemently disputed by the 1st plaintiffs, who appointed M/S Nahashon Ngugi & Associates, an Audit firm, to analyze the 1st plaintiff’s bank account statements at the 1st defendant.
10. She further averred that an analysis of the 1st plaintiff’s bank account statements by the said Audit firm identified fundamental flaws which led to the arrears fictitiously accumulating to the said Kshs.490,450,873.38, which flaws were inconsistencies in the closing and opening balances and transaction from USD to Kenya Shillings, which created a difference of Kshs.200,958,050.00. She stated that other flaws were in converting the loan from USD to Kenya Shillings.
11. She contended that the 1st defendant used a higher exchange rate than the Central Bank of Kenya’s authorized conversion rate obtaining at the time, and that there were unexplained debits in the 1st plaintiff’s bank statements. She asserted that the Audit Report by the plaintiffs’ Auditors M/S Nahashon Ngugi & Associates concluded that the 1st defendant’s demand constitutes an unexplained colossal amount of Kshs.218,162,118.00, an amount that contravenes the in duplum Rule, which is applicable in Kenya.
12. The plaintiffs contended that they are set to suffer irreparable loss as their right to redeem the 2nd plaintiff’s land, L.R. No. 19148/3 (Original Number 1948/1/2) is irreplaceable and/or unsubstitutable in the event that the substratum of the application and suit is defeated by the defendants selling of the 2nd plaintiff’s land.
13. She stated that her Advocate had advised her that the plaintiffs have satisfied the conditions for consideration in being granted an injunction as was settled in the case of Giella v Cassman Brown & Company Limited .
14. Ms Kanina contended that the alleged statutory Notices of sale by the defendants do not meet the required standard in law, as they were not properly served upon the plaintiffs, thereby making them a nullity.
15. The 1st defendant filed a lengthy replying affidavit sworn on 5th November 2024, by Ms Florence W. Njuguna, the Legal Manager in charge of Litigation and Debt Recovery and Special Assets in the Legal Services Department.
16. She stated that the order for temporary injunction to restrain the defendants, their employees, servants and or agents, jointly and severally from advertising for sale, auctioning, selling, transferring, disposing of, dealing and/or interacting with property L.R. No. 19148/3) (Original Number 1948/1/2) (I.R. No. 120208) issued on 21st August 2024, does not refrain the plaintiffs from performing their obligations inter alia, servicing the outstanding liabilities to the bank, or varying their obligations under the facilities.
17. She stated that the plaintiffs should continue complying with their contractual obligations to pay the sum of Kshs.639,442,062.63 as at 5th November 2024 in servicing the outstanding facility, which amount continues to accrue interest until payment in full.
18. She confirmed the existence of a banker-customer relationship between the 1st defendant and the plaintiffs, respectively, as a result of which the 1st defendant advanced to the plaintiffs and Greystone Industries Limited various facilities and restructures of debt payment, inter alia, vide a letter of offer dated 24th February 2012, wherein the 1st defendant granted the 1st plaintiff two (2) facilities, a letter of credit in the amount of USD.3,692,470.00 and a short term loan in the amount of USD.600,000.00, wherein the terms listed in paragraph 5(a) of the replying affidavit were introduced into the relationship.
19. Ms Njuguna averred that vide an offer letter dated 25th October 2012 the interest rate applicable on the short term loan was reviewed to LIBOR plus 10% with a floor of 10.5% per annum, and 3 months plus 9.5 % with a floor of 9.5 % per annum and a restructuring fee of 0.5% in addition to the bank recovering structuring (sic) fees on the total facility at 1%.
20. She further averred that vide an offer letter dated 25th October 2012, the 1st defendant granted the 1st plaintiff five (5) facilities inter alia, post import financing for the sum of USD 1,450,000.00 to be used to liquidate the maturing letters of credit and reviewing various facilities, that is, the existing letters of credit of USD 900,000.00, short term loan of USD 135,000.00, letter of credit of USD 3,692,470.00, and a short term loan in the sum of USD 600,000.00
21. It was stated by Ms Njuguna that vide an offer letter dated 18th April 2013, the 1st plaintiff was granted sight letters of credit/post import finance of USD 1,800,000.00 for 180 days; advance payment guarantee of USD 875,890.45 for 12 months; an overdraft of USD 1,411,000.00 for 12 months and letters of credit of USD 585,000.00 for 6 months, whose terms of the offer letter are as captured in paragraph 5(d) of the replying affidavit.
22. She averred that the 1st plaintiff vide an application dated 31st October 2014, and an offer letter dated 15th December 2014, was granted a term loan facility of USD 4,198,000.00, an overdraft facility of USD 300,000.00, and an advance payment guarantee of the sum of USD 875,890.00, whose consequences are as captured in paragraph 5(e)(i) to (iii) of the replying affidavit.
23. Further, that vide an offer letter dated 9th June 2016, the 1st defendant approved restructuring of facilities and renewal of the LC/PIF/Guarantee limit of USD 1 Million.
24. Ms Njuguna deposed that vide an offer letter dated 5th February, 2018, the 1st defendant approved consolidation and refinancing of the existing term loan, overdraft and overdraft current account.
25. In addition, that vide an offer letter dated 28th March 2019, the 1st defendant approved a restructuring of the existing term loan and additional financing of Kshs.105 Million.
26. Further, that the said facility was reviewed through a letter dated 21st May 2019, providing that the LPO financing would be up to a maximum of 80% of the LPO value and all the proceeds from the LPO contracts would be utilized towards paying off the LPO facility as well as existing term facility, while the 1st plaintiff would not have access to LPO contract proceeds.
27. Ms Njuguna stated that vide a letter dated 13th August 2019, the 1st defendant approved the extension of the principal and interest of the short term facility of Kshs.6,679,520.00 under account No. 016B3190427710 for a further 60 days making the facilities due in November 2019.
28. That vide an offer letter dated 7th November 2019, the 1st respondent reviewed the facilities which resulted in extension of the repayment date for a further period of 30 days for loan account 016B319042770 and 016B319042779 of Kshs.28,332,000/= and Kshs.287,367,798.00, respectively, and the revision of the short term facility from 90 days to 120 days.
29. Further, that the 1st defendant vide an offer letter dated 3rd April 2020, reviewed the facilities to the 1st plaintiff by consolidating the overdrawn amount of Kshs.30,472,823.00 and restructuring it with the loans on account 016B3190427724 and account 016B3190427727 which were outstanding at Kshs.17,000,000/= and Kshs.422,606.05 excluding accrued penalty and interest in arrears and requiring the restructured amount to be paid within 60 days, and also as set out in paragraphs 5(l)(i) and (ii).
30. Ms Njuguna deposed that the 1st plaintiff’s facilities were varied vide an offer letter dated 25th June 2020, and the parties agreed to extend the performance bond of Kshs.30,076,161.00 in favour of KPLC for 6 months, extend the unsecured bid bond limit of Kshs.6,000,000/= in favour of Savanna Cement for a period of 12 months, restructure the short term loans on loan account 016B3190427732, 016B319042773 and 016B3190427730, with a moratorium on both principal and interest for a period of 6 months.
31. She also referred to another offer letter dated 25th June 2020, where the plaintiffs and the 1st defendant agreed that any principal and interest in arrears would be loaded to the new principal loan account for 12 months, all accrued interest would be moved to new loan accounts, the applicable interest would be based on the 1st defendant’s base rate, then at 9% plus a margin of 3.5 %, and the interest during the moratorium was to be paid by the 1st plaintiff after the expiry of the moratorium period.
32. She also stated that there was another variation to the facilities granted to the 1st plaintiff vide an offer letter dated 3rd August 2020 with the effect that the 1st defendant would allow one off issuance of a performance bond to KPLC of Kshs.3,557,487.00 issuance and inter-availing of a performance bond of USD 38,400.00 in favour of the World Food Programme to the 2nd plaintiff as a one-off basis from its existing limits; and financing and inter-availing of LPO financing of USD 614, 400.00 being 80% of the contract value on a one-off basis from its existing limits and also as per paragraph 5(0)(i) of the replying affidavit.
33. She stated that the 1st plaintiff and the 1st defendant thereafter entered into an offer letter dated 26th October 2020, whose terms are as set out in paragraph 5(p)(i) to (ix) of the replying affidavit.
34. She referred to an additional offer letter dated 28th June 2021, in which the 1st defendant approved the restructure of the 1st plaintiff’s moratorium of the principal and interest for six (6) months.
35. Ms Njuguna admitted that the 2nd plaintiff is the registered proprietor of all that piece of land known as L.R. No. 19148/3 (Original Number 1948/1/2) and asserted that the 2nd defendant offered the said facility as a continuing security for the payment of the secured obligations or so much thereof as may from time to time be outstanding notwithstanding the death, bankruptcy or incapacity of the chargor or any settlement of account or other matter whatsoever.
36. She agreed with the plaintiffs that L.R. No. 19148/3 (Original Number 1948/1/2) was provided to the 1st defendant as security for facilities obtained by the 1st plaintiff and Greystone Industries Limited.
37. Like Ms Kanina, she outlined the securities guaranteeing the loan and stated that pursuant to the further variation of charge, there is a borrower-lender relationship between the 1st plaintiff and Greystone Industries as the borrowers, and the 1st defendant as the lender.
38. She expressed the view that the primary dispute between the parties herein arises from the plaintiff disputing the statement of accounts and the loan arrears with the 1st defendant in the sum of Kshs.490,450,873.00, as the plaintiffs allege that the 1st defendant applied punitive interest and unexplained penalties to the loan facilities.
39. She denied the contention by Ms Kanina that the initial letter of credit was illegal and irregular, and devoid of the plaintiffs’ approval through Board Resolutions and was issued under duress, which duress has not been demonstrated. Ms Njuguna referred to Board Resolutions exhibited at pages 301 and 324 of the annexures to her affidavit.
40. She asserted that the plaintiffs and Greystone Industries Limited have at all material times represented and warranted that they had the necessary authority to borrow under the terms and conditions set out in the various offer letters, demonstrating that consent was given.
41. Ms Njuguna averred that the 1st defendant was aware of the facilities disbursed to the 1st plaintiff and Greystone Industries Limited, the amounts paid thereof and outstanding as at 6th June 2024. She outlined the said amounts in paragraphs 17 and 18 of her affidavit. She listed the account numbers opened by the 1st defendant for the 1st plaintiff as per the offer letters and general terms and conditions, subsequent to restructuring of the facilities between the 1st defendant, the 1st plaintiff and Greystone Industries Limited.
42. She denied the plaintiffs’ contention that multiple accounts resulted in the misuse of the loan facility or made it difficult to track loan payments thereby confusing the plaintiffs and making it difficult to understand the set up.
43. Ms Njuguna stated that the 1st defendant opted to exercise its statutory power of sale and served a Statutory Notice dated 7th December 2021, upon the plaintiffs and Greystone Industries Limited via registered and ordinary post, as well as to the email addresses previously used by the parties in correspondence before issuance of the said Statutory Notice. She stated that as at 7th December 2021, the plaintiffs and Greystone Industries Limited owed the 1st defendant the sum of Kshs.443,465,216.88 an amount that continued to accrue interest, in breach of the addendum Ref: OLA/30254/2021/06/28.
44. She further stated that the plaintiffs and Greystone Industries Limited were obliged under the terms of the offer letter addendum to pay the term loan facility by debiting to its account in sixty (60) months exclusive of six (6) months moratorium on the principal amount and interest, and to repay the short term facility in one bullet instalment of both the principal and interest, after six (6) months of the offer letter.
45. She stated that the plaintiffs and Greystone Industries Limited were also required to build up escrow funds of Kshs.2,000,000/= to be utilized to pay interest on the short term loan and the balance thereof to reduce the debt upon expiry of the extension, failure to which the moratorium extension granted in the offer letter would lapse, and a Statutory Notice would be issued.
46. She averred that the plaintiffs and Greystone Industries Limited did not comply with the provisions of the addendum offer letter and have refused, failed and/or neglected to disclose to this Court that they were serial defaulters having not made any payment towards servicing the facilities since the 30th June 2022, when the last restructure was done and they have never completed payment of the facilities since 2012, when the facilities were initially granted.
47. She stated that the plaintiffs, Greystone Industries Limited and the 1st defendant have also been engaged in negotiations about the settlement of outstanding liabilities to the 1st defendant and she was aware that the plaintiffs in the meeting of 6th December 2021, pledged to repay the outstanding debt through disposal of non-core assets; furnishing a schedule of assets to be disposed of effecting a lump sum payment of Kshs.200,000,000/= to the 1st defendant by 28th March 2022; and issuing an undertaking for the payment of the said sum, but they failed to honour their pledge and the proposal to date.
48. She deposed that she was aware that the plaintiffs vide a letter dated 2nd March 2022, proposed to pay 45% of the outstanding debt for the 1st defendant to hold off instructing the 2nd defendant herein to issue a 45 days’ Notification, and that the plaintiffs were aware that the 1st defendant had commenced the process to sell off the charged property.
49. She contended that the plaintiffs could settle the instalments due on the facility but have been unwilling to do so for the past 41 months and have unduly prejudiced the 1st defendant and its depositors by continuing to carry on business with their funds and obstinately refusing to pay what they claim is due as per the computations, but which is denied by the 1st defendant.
50. Ms Njuguna stated that the 1st defendant thereafter issued the plaintiffs with a 40 days’ Notification of Sale vide a letter dated 9th March 2022, advising them to rectify the default and settle all outstanding balances owed to the 1st defendant within 40 days from the date of service of the Notification of Sale, failure to which the 1st defendant would exercise its statutory power of sale as per the law. She stated that through their Advocates then, J. Louis Onguto Advocates, the plaintiffs in a letter dated 15th June 2022, expressly admitted to being served with the 2nd defendant’s Notification of Sale.
51. That thereafter, a valuation of the charged property was done and sent to the plaintiffs’ deponent and Dr. Peter Munga and the plaintiffs’ Financial Analyst via email, as well as to the plaintiffs and Greystone Industries Limited.
52. Ms Njuguna stated that the 2nd respondent issued a 45 days’ Redemption Notice dated 3rd June 2022, informing the 2nd plaintiff of the time within which it was required to redeem is property by paying Kshs.490,450,873.38 to avert the risk of the said property being sold by public auction on 23rd August 2022.
53. In reference to the Audit Report prepared on behalf of the 1st plaintiff by M/s Nahashon Ngugi & Associates, she averred that the same is inaccurate, prepared in bad faith to deceive and mislead this Court to the extent that it does not indicate the amount due and outstanding as at June 2022 when it was prepared, or take into account the accrued interest to the facilities as a result of the plaintiffs’ default.
54. She further stated that the Audit Report did not take into account several documents listed in paragraphs 39(a) to (s) of the 1st defendant’s affidavit, and the various letters of credit issued to the 1st plaintiff, the maturity dates thereof and applicable commissions. She contended that the said Report is inconclusive.
55. Ms Njuguna contended that there were no fundamental flaws in computation of the amounts outstanding from the 1st defendant as alluded to by the plaintiff, and explained the alleged inconsistencies in paragraph 44(a) to (e) of her affidavit.
56. She denied that the amounts being demanded by the 1st defendant are in breach of the in duplum rule, given that the borrowers have been in default of the principal amount and interest since they were granted the facilities in 2012. She further stated that the plaintiffs had requested for multiple restructures on both the said principal and interest leading to capitalization. She asserted that they acknowledged indebtedness in the amount of Kshs.405,159,005.00 vide letters of offer dated 25th February 2021 and 4th June 2021 which amount continues to accrue interest until payment in full.
57. She contended that the 1st defendant is at the risk of being unable to recover the outstanding loan amount which has already outstripped the value of the charged property and continues to suffer undue prejudice as it has been kept out of its money which it might not be able to recover if the orders being sought in the application herein are granted.
58. Ms Njuguna stated that the plaintiffs are underserving of the equitable relief of injunction as it was obtained through material non-disclosure and concealment of material facts, trickery and bad faith, which successfully misled the Court into believing that the 1st defendant did not comply with substantial and procedural steps in pursuing the remedy of the statutory power of sale.
59. The plaintiffs filed a further affidavit sworn on 22nd November 2024 by Ms Kanina, in which she mostly reiterated her earlier averments. In the defendants’ further affidavit sworn on 17th December 2024 by Ms Njuguna, she largely reiterated earlier averments made in her replying affidavit.
60. The plaintiffs’ written submissions dated 22nd November 2024 were filed by the firm of J. K. Gachie & Co. Advocates. The defendants’ written submissions dated 27th January 2025 were filed by TripleOKLaw LLP.
61. In regard to their written submissions, Mr. Okoli, learned Counsel for the plaintiffs cited the case of Giella v Cassman Brown and Company Limited (1973) EA 358, where the Court outlined the conditions that a party must satisfy in order for a Court to grant an interlocutory injunction. As to whether the plaintiffs have established a prima facie case against the defendants, he submitted that the initial letters of credit issued to the 1st plaintiff and the subsequent restructuring of the loan facilities were devoid of the plaintiffs’ approval through Board Resolutions and were generally what has resulted in the current confusion on the amount owed by the plaintiffs and the amounts they have paid to the 1st defendant.
62. Counsel referred to the Audit Report annexed to the plaintiffs’ affidavit, which he submitted exposed fundamental flaws which led to the arrears fictitiously accumulating to the amount of Kshs.490,450,873.38, which Report concluded that the 1st defendant’s demand constitutes an unexplained colossal amount of Kshs.218,162,118.00 which contravenes the in duplum rule, applicable in Kenya.
63. Mr. Okoli contended that the Statutory Notices of sale allegedly sent to the plaintiffs do not meet the required standard in law as they were not properly served upon the plaintiffs and are a nullity. The plaintiffs’ Counsel further contended that although the 1st defendant attempted to sell the plaintiff’s land via public auction, the said sale was conducted without the plaintiff being properly served with a 90 days’ Statutory Notice under Section 90 of the Land Act, a 40 days’ Statutory Notice under Section 96(2) of the Land Act and a 45 days’ Redemption Notice pursuant to Rule 15(d) of the Auctioneers Rules of 1997.
64. In regard to the applicability of the in duplum rule to this case, Mr. Okoli relied on the case of Kenya Hotels Limited v Oriental Commercial Bank Limited (formerly known as Delphis Bank Limited [2019] eKLR, where the Court stated that the in duplum rule is to the effect that interest ceases to accumulate upon any amount of the loan owing, once the accrued interest equals the amount of loan advanced.
65. Counsel submitted that if the 1st defendant is to proceed with the sale of the 2nd plaintiff’s land L.R. No. 19148/3 (Original Number 1948/1/2), the said plaintiff’s rights of ownership over the said land will be breached contrary to the provisions of Article 40 of the Constitution of Kenya, 2010, as well as Sections 24, 25 and 26 of the Land Registration Act, No. 3 of 2012. He cited the case of Mrao Limited v First America bank of Kenya Limited & 2 others [2003] eKLR 125, where the Court of Appeal defined what a prima facie case is.
66. The plaintiffs’ Counsel contended that if this Court allows the sale of the 2nd plaintiff’s property contrary to known sale procedures, the plaintiffs will suffer irreparable injury that cannot be compensated by way of damages. He relied on the case of Family Bank Limited v Tassels Limited & 20 others [2021] eKLR, to support the plaintiff’s position.
67. On the issue of the balance of convenience, Mr. Okoli submitted that the balance of convenience tilts in the plaintiffs’ favour. He relied on the case of Pius Kipchirchir Kogo v Frank Kimeli Tenai [2018] eKLR, on what constitutes a balance of convenience. He asserted that if the injunction being sought by the plaintiffs herein is not granted, they are bound to suffer greater inconvenience as opposed to the defendants, since the 2nd plaintiff will lose its ownership rights over Land L.R. No. 19148/3 (Original Number 1948/1/2) on account of the failure to serve the plaintiffs with the said Statutory Notices prior to advertisement of the said land via public auction.
68. Counsel submitted that the plaintiffs have proved the principles necessary for being granted the injunctive relief being sought.
69. Mr. Muthee, the defendants’ Counsel relied on the case of Giella v Cassman Brown & Co. Ltd (supra), on the principles for a restraining injunction. He also relied on the case of Mrao v First American Bank of Kenya Ltd & 2 others (supra), which defined what a prima facie case is. He cited the case of Shiva Carriers Limited v Imperial Bank Limited & another [2018] eKLR, also on the same issue.
70. In addressing the issue of whether the plaintiffs have established a prima facie case, Mr. Muthee submitted that the instant case is peculiar in that while the plaintiffs’ deny service of the requisite Notices in their submissions, they have expressly admitted in their letter dated 18th January 2022 to having received the Statutory Notices, and they have expressly admitted in the affidavit of Wairimu Kanina that they were served with the Statutory Notice demanding Kshs.490,450,873.38.
71. Further, that the plaintiffs have also admitted to having been served by the Auctioneer with the 45 days’ Redemption Notice in the letter dated 15th June 2020, from Louis Onguto & Co. Advocates and the supporting affidavit of Ms Kanina sworn on 19th June 2022.
72. Mr. Muthee submitted that given the plaintiffs’ admission and acknowledgment on oath that they were served with the requisite Notices, the burden of proof does not shift to the defendants. He contended that the plaintiffs have failed to demonstrate that the 1st defendant is exercising its statutory power of sale without issuing the requisite Notices
73. He stated that the 1st defendant’s threat of selling the charged property is lawful having issued the plaintiffs with Notices as per Sections 90(2)(d) and 90(3)(e) of the Land Act, and complying with statutory requirements cannot be in breach, violation or result to the perceived breach of the plaintiffs’ rights.
74. On the issue of the plaintiffs’ assertions that there were no Board Resolutions authorizing restructuring of the facilities, Mr. Muthee stated that the plaintiffs have not indicated that the Resolutions
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