Bakhresa says it purchased the property by way of private treaty from KCB, under the presumption that the bank had acted procedurally and lawfully in exercise of its power of sale.
The miller, the property owner, TSS Investments Ltd, obtained orders from the environment court restraining the parties from dealing and disposing the property, which was the basis of the loan advancement.
Bakhresa Ltd says in view of restriction imposed on it against any dealings with the property, it continues to suffer loss and harm through payment of installments of interest and principal to the defendant.
A grain miller has sued the Kenya Commercial Bank (KCB) #ticker:KCB seeking an order suspending any interest, charges, fees or penalties on a Sh600 million loan advanced by the bank.
Bakhresa Grain Milling (K) Ltd also seeks an order reversing any of the said payments debited from its account in respect of the loan taken to buy a parcel of land.
The milling company said it purchased the property by way of private treaty from KCB, under the presumption that the bank had acted procedurally and lawfully in exercise of its power of sale.
The purchase, according to Bakhresa Grain Milling (K) Ltd, was fully financed by the bank and was secured by a legal charge over the property.
“The terms of the loan was that the plaintiff would repay it over a period of eight years commencing with a monthly sum of Sh7 million as interest alone from October 2017 and thereafter from July 2018 an aggregate monthly sum of Sh11 million,” states the company.
Environment court
The grain milling company says the former owner of the property (TSS Investment Ltd), being aggrieved by the manner and procedure for sale by KCB, filed a case at the environment court alleging wrongdoings on the part of the bank.
The company says TSS Investments Ltd obtained orders from the environment court restraining the parties from dealing and disposing the property, which was the basis of the loan advancement.
Bakhresa says as an innocent third party purchasing the property for value and without notice of any illegality or impropriety, it stands to suffer harm from the accrued bank charges and interests and matters allegedly done by the bank in the sale of the property.
“The plaintiff stands to suffer irreparable losses in the form of accruing interest being charged under the loan advanced by the defendant for the purposes of the purchase,” the grain milling company states in its suit papers.
Bakhresa Ltd further says that despite the restraint at the environment court, interest continues to accrue and rise incrementally in favour of the bank and at an exorbitant monthly rate when it is denied opportunity to present any documents in respect of the property.
“The plaintiff will aver that they are innocent and legal purchasers for value, having bought the suit property from the defendant by private treaty pursuant to alleged legally accrued power of sale, at a consideration free from allegations of any unlawfully or irregular conduct,” the milling company says.
Restrictions on property
Bakhresa Ltd says in view of restriction imposed on it against any dealings with the property, it continues to suffer loss and harm through payment of installments of interest and principal to the defendant.
The company says that in the event the environment court finds that the sale was irregular, the loan agreement and the charge between itself and the bank would be affected for failure of consideration and the bank would not be entitled to either interest or principal amount on the loan.
“The defendant continues to enjoy the privilege of the impugned contract through receipt of money by way of interest in installments notwithstanding the court having prevented any dealings with the property,” says the grain milling company.
Bakhresa Ltd also wants an order restraining KCB from enforcing or attempting to enforce any interest, charge, fee or penalty on the loan.
It is also seeking a declaration discharging the charge and loan agreement between the plaintiff and the defendant for failure of consideration.
The High Court Thursday directed the parties to file their respective submissions on an application by the milling company for interim orders restraining the bank from charging any interest on the loan pending hearing and determination of the suit.
Justice Njoki Mwangi fixed the application for hearing on June 19.
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