The High Court has backed a bid by I&M Bank to recover Sh864.7 million from Buzeki Enterprises Limited, a logistics company associated with businessman and politician Zedekiah Kiprop Bundotich, popularly known as Buzeki.
The decision allows the lender to enforce a promissory note issued by Buzeki Enterprises, concluding a commercial dispute that began in 2019 over the purchase of heavy trucks and trailers worth more than Sh864 million. A promissory note is a written promise to repay a loan.
In the ruling that reinforces the binding power of signed financial instruments, the court affirmed that the promissory note signed in October 2016 constituted a valid, unconditional promise to pay and could not be invalidated by claims of side agreements or unmet conditions.
“The instrument is pristine. It contains no reference to Taru Ranch, no reference to a land sale, and no contingencies. It promises payment on a fixed future date, November 30, 2016,” the court stated. It emphasised that the document clearly stipulated payment of a fixed sum on a fixed date without any conditions.
The dispute arose from a deal between Buzeki Enterprises and RT (East Africa) Limited for the supply of over 100 trucks and trailers. To settle the purchase price, Buzeki Enterprises issued promissory notes totaling Sh864,758,278.
RT, which is a customer of I&M Bank, later assigned the promissory note to the bank as security. The bank discounted the note, advancing funds to RT based on Buzeki Enterprises’ payment commitment.
When the note matured on November 30, 2016, no payment was made, prompting I&M Bank to seek legal recourse as the holder of the instrument.
Buzeki Enterprises contested the claim, arguing that payment was contingent upon the sale of Taru Ranch in Kwale County, which had not occurred; therefore, the debt had not crystallised. The company’s director, Mr Bundotich, testified that the promissory notes were not meant to create immediate liability.
The court dismissed this argument, ruling that oral conditions could not override written financial instruments without undermining commercial certainty.
“To admit oral evidence would convert a note payable at a fixed time into one payable on contingency. The written instrument must prevail,” the judge declared. The court also noted that Buzeki Enterprises raised the Taru Ranch claim too late, constituting litigation by ambush.
The Milimani Law Courts.
Photo credit: File | Nation Media Group
However, the court rejected that argument outright. It held that allowing oral conditions to override a written promissory note would undermine commercial certainty and the very purpose of negotiable instruments.
“To admit the oral evidence would be to convert a note payable at a fixed time into a note payable on a contingency. I hold that the oral evidence regarding Taru Ranch is inadmissible for the purpose of contradicting the express maturity date of the note. The written instrument must prevail,” said the judge.
The court further found that the law looks first to the face of the document. If a promissory note contains an unconditional promise to pay at a fixed time, that promise stands. Any attempt to introduce a different timeline through oral evidence was ruled inadmissible.
The court also faulted Buzeki Enterprises for raising the Taru Ranch story late in the case, noting that it was not pleaded in the company’s original defence. That omission, the judge said, amounted to litigation by ambush and could not be allowed.
Bound to pay
Another key issue was whether I&M Bank had the right to sue, given that the original deal was between Buzeki Enterprises and RT. The court distinguished assignment and novation.
It held that RT had assigned its right to receive payment to the bank. That transfer did not require Buzeki’s consent because it did not change Buzeki’s obligations. The company was already bound to pay the amount stated in the note, regardless of who held it.
By signing a negotiable instrument payable to order, the court said, the maker effectively accepts that it can be transferred to third parties.
The court also dismissed claims that the bank had not given value for the note. It accepted evidence that the bank had discounted the instrument and, in any event, the law recognises even existing debt as valid consideration.
“A party cannot be allowed to succeed on a case not set up in their pleadings, as this causes a failure of justice and denies the opposing party fair notice,” said the court.
An attempt to block the suit based on another related case was also rejected, with the court holding that the bank’s claim on the promissory note was separate from disputes surrounding the underlying supply contract.
“The allegation of fraud or collusion between the Bank and RT in filing separate suits is equally unproven. A bank has an independent right to pursue its security, distinct from its customer's contractual disputes,” said the court, finding Buzeki liable on the promissory note, and the bank is entitled to judgment.
In the end, the court entered judgment in favour of I&M Bank for Sh864.7 million, with interest at court rates from the date the case was filed and awarded costs against Buzeki Enterprises.
The court held that once a promissory note is signed, courts will enforce it as written, and commercial promises will not be undone by after-the-fact explanations.
