J.B. MAINA & CO LTD v BANK OF INDIA [2012] KEHC 5009 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT MOMBASA

CIVIL CASE  NO. 42 OF 2012

J.B. MAINA & CO LTD ……………………………………………………..…PLAINTIFF

VERSUS

BANK OF INDIA ………………………………………………………….RESPONDENT

Coram:

Mwera J.

Azizi for plaintiff

Gor for defendant

RULING

By notice of motion dated 8/2/12 brought notice SS. 1A, 3A of Civil Procedure Act , o40 rr. 1, 2 and 050 r. 1 Civil Procedure Rules , the plaintiff company put forth a prayer:

i)that the defendant bank be restrained form advertising for sale, attaching or disposing of four (4) motor vehicles  subject herein.

In the grounds it was contended that the defendant granted the plaintiff a loan facility of shs. 27. 8 m repayable on agreed terms. The plaintiff has been making regular repayments but when ever  any default occurred the 2 agreed and the same would be rectified.

On 3/12/2010 the plaintiff instructed the defendant to credit its foreign account with US$ 673,744. 8, and debit  the same to its local account  towards the loan repayment. Instead the defendant credited the plaintiff’s off-shore account and debited the plaintiff’s various local accounts  – a step that frustrated efforts to repay the loan herein. That unauthorized act has caused large accruals in interest on the loan account, all of which the plaintiff disputes. So if the defendant proceeds to attach and sell the subject  motor vehicles that will cause the plaintiff to suffer irreparable loss.

Ramesh Shimji Patel, a donee of power of attorney from one Harshil Mahesh Patel, a director of the plaintiff company averred in the supporting affidavit that the company had authorized him to execute any court papers here  on the strength of the said power of attorney (see Ann. RSP1,2 ). Of his own knowledge, the deponent knew of the loan facility  agreement between the plaintiff and the defendant bank for shs. 27,840, 000/- referred to here. That he also knew that the plaintiff company had repaid that loan up to shs. 11m and was still repaying. That the plaintiff maintained an off-shore account with the defendant which  was used as security for the subject loan and besides, the plaintiff company executed a debenture over  the 4 motor vehicles (ann. RSP 3). On 3/12/2010 the plaintiff company instructed the defendant bank to credit US$ 673,744. 89 off-shore account to its local account to repay the loan. But contrary to those  instructions  the defendant proceeded to make transfers to various accounts, not as authorized, thereby interfering with the progress in making repayments (Ann. RSP 5 a, b,).

Further, the defendant delayed in making the said transfers occasioning accrual of interest which the plaintiff disputes. A default in the  repayment  was caused,  and that saw the defendant instruct a firm of auctioneers  to attach the said motor vehicles with a view to  have the same sold.   If that is not stopped, it   will cause irreparable loss to the plaintiff since those motor vehicles are used in running its business. In any event the defendant holds a lien on some funds together with a guarantee to the loan. Interim  orders sought were issued on 9/2/2012 and on 22/2/1012 the bank’s branch manager, Raj Kishore Mohanty filed a replying affidavit.

In it, it was averred that on 15/12/09 the defendant gave the plaintiff the loan herein-above referred to in account No. 4202224100 (Ann. RKM 1). The plaintiff company had an overdraft of shs. 8m in the current account No. 2202224100 with the defendant. That sum was secured by pledge over the plaintiff ‘sfixed deposit receipts No. 61647,60851, 60702, 62163 and 62147 issued by the defendant for a sum of shs. 10,370,667/55. The overdraft and the loan were repayable on demand but the defendant permitted the plaintiff to repay the loan by 48 equal but regular monthly installments of shs. 781,833/- (ann. RKM2).

The overdraft was repayable at 3% p.a interest over the deposit rate repayable on the fixed deposits pledged by the plaintiff. The loan was repayable at the rate of 1% over the base rate of the defendant. The rate of interest on the loan account was subject to change based on changes in the base rate of the defendant. In the event of any sums overdrawn above the overdraft limit a penalty of interest of 6% was payable on the amount  overdrawn and in default of payment of the installments or interest on the term loan on due dates, penalty interest of 6% was payable on the overdue installments and interest in addition to the applicable rate of interest which was based on the defendant having adequate security for the facilities granted. And several annextures making up RKM 9 were placed before the court.

At this point the court had gone over seventeen (17) paragraphs of the replying affidavit. The next is:

“18. That since 30th September, 2011 the plaintiff has not paid any amount.”

There was no rebuttal of this from the plaintiff.

Remaining to be perused with notes are paragraphs 19 to 38.   Quite a long way to go for an interlocutory proceeding. Near the end of that effort the court was told that the subject motor vehicles, though attached were still in the possession of the plaintiff.  The defendant feared that the motor vehicles value was likely to reduce further.

A defence statement was filed on 28/2/1012 followed by a further affidavit  by the defendant bank consisting  of another  38 paragraphs and so many more annextures.

Directed to submit each side put up a serious case for or against granting orders of injunction, each citing several authorities. What can be observed at this stage is that the material placed before the court tends more towards evidence that should be adduced at the trial. The material goes beyond establishing a prima facie case to warrant a temporary injunction or refuting that such a case has been established.

Accordingly, the court is minded to order and in orders that there be a temporary order of injunction in favour of the plaintiff. This however, is on condition that the plaintiff  resumes and continues to service the financial facilities it is enjoying from the defendant with regular and full repayments being made on each as agreed.

The plaintiff will remain with the subject motor vehicles using and service them all the time so that their value does not go down beyond what normal wear and tear permits. If the plaintiff has fallen in any arrears on any of the financial facilities it is enjoying, the same to be made good in the next sixty (60) days. The parties to mention this cause in 15 days thereafter to inform the court whether they have settled the dispute or not. If there has been no arrangement in that regard the parties to exchange witness statements, bundles of paginated copies of documents to be relied on at the trial plus issues. Costs will be in the cause. Mention to be fixed  for directions.

Delivered on 22/3/2012

J.W. MWERA

JUDGE