Centum-owned Sidian Bank has been stopped from selling the properties of a Coast-based organisation over an undisbursed loan.
Court of Appeal judges Fatuma Sichale, Jamila Mohamed and Sankale Ole Kantai issued the injunctive orders after finding that an appeal by Golden Services Organisation(GSO) was not frivolous.
The judges said that the reasons advanced by GSO, Kang’alikya Maluki, Ibrahim Magiri and Paul Jesse Mungatia had demonstrated sufficient grounds for an appeal.
“Should these properties be auctioned, the appeal will be rendered nugatory as the applicants may not be able to recover the properties and developments thereon, which they depend on for income and residence, should the intended appeal succeed,” the judges said.
The orders only apply to two land parcels with permanent buildings, which include matrimonial homes and commercial houses.
GSO and the three people have appealed against the Environment and Land Court’s ruling that dismissed a claim of Sh142 million against Sidian.
The ruling was delivered last year by Justice Anne Omollo, who found that the bank was not entirely responsible for the collapse of a table banking business that benefited young people and women in the region.
In the ruling, the judge noted that GSO and its trustees had not proved their claim of loss suffered as a result of the unreleased loans of Sh50 million.
"The claim herein was based on breach of contractual obligations hence an award for general damages could only accrue if the alleged breach was proved. Since I have found that there was no breach on the part of the bank, I award nil damages," the judge noted.
GSO accused the bank of sabotaging and stifling its business to death by promising and refusing to disburse the loan.
The ruling exposed GSO's properties to sale after the court declined to issue orders preventing the bank from selling them to recover Sh20 million that it owes Sidian.
Justice Omollo awarded GSO Sh31,140 plus interest, which was a claim for a refund of uncredited deposits.
GSO had sued the bank for allegedly killing the table banking services by failing to disburse the loan.
The collapsed microfinance business, which claimed to have been banking with the lender since 2005, was claiming general damages amounting to Sh140 million.
Through its trustees, GSO claimed the lender, formerly known as K-Rep Bank, was envious of its competing business and hence plotted to sabotage the enterprise by denying it funds.
GSO trustees Trifosa Jesse, Mr Maluki, Mr Magiri, and Mr Mungatia say the organisation borrowed money for working capital from the bank for more than 10 years and faithfully repaid it.
But in November 2015, GSO said, it applied for a Sh50 million loan, which was allegedly approved by the bank, but without any reason and after nine months, the bank reneged on the loan deal.
GSO said denial of the loan facility without any reason crippled its financial capabilities to carry on with the project, leading to its collapse.
It then asked for an order for the immediate release of all title security documents and another directing the bank to pay Sh140 million, the value of lost income and business.
The bank, through its credit manager in charge of recoveries Collins Sabatia, denied approving the Sh50 million loan to GSO that led to the filing of the court case against it.
"The bank had not yet approved the said facility, leave alone agreeing to disburse the money,” he said.
The bank argued it was illogical and irresponsible of GSO to make promises to its clients and hinge its entire business model and cash-flow projection on a loan request that had not been approved.
