Parked buses at the Modern Coast yard in Mombasa.
A dispute over payment of a Sh485 million loan advanced by Stanbic Bank Kenya Ltd to Modern Coast Coaches Ltd, which operates public service buses, has landed in court.
Modern Coast and its director, Mr Haroon Shahid Butt, accuse the bank of advertising its business yard and his matrimonial home, respectively, for sale by public auction. They claim this was done without giving them an opportunity to restructure and continue servicing the loan.
The High Court has since granted Mr Butt, who is the son of slain Mombasa tycoon Shahid Pervez Butt, and Modern Coast an injunction against the sale of the properties pending hearing and determination of their application for conservatory orders.
Among the orders Modern Coast and Mr Butt want in their application is to be allowed to settle the loan through a monthly payment of Sh2.2 million.
According to the plaintiffs, sometime in 2016, the bus company took out various loans with the bank totaling Sh485 million. Over the years, they said, they have paid the bank Sh344 million - leaving a balance of Sh110 million.
“The plaintiffs state that owing to the prevailing harsh economic times, they have from time to time engaged the bank in discussions with a view to restricting the outstanding loan facilities to enable them service the loan without serious hardships,” part of the suit documents state.
Modern Coast Coaches Ltd and Mr Butt are seeking a declaration that the bank cannot sell their properties without complying with Sections 90 and 96 of the Land Act.
They also want an order issued compelling the bank to restructure the loans and allow them to repay within an agreed period.
Stanbic: 'We served all statutory notices'
However, Stanbic Bank, in its application, wants to have the temporary injunction stopping it from selling the properties set aside.
According to the lender, Modern Coast and Mr Butt have obtained the orders through material non-disclosure by claiming that they were not served with the requisite statutory notices.
The bank says that it served all notices, hence the plaintiffs are not entitled to seek any equitable remedy as they have approached the court with unclean hands.
“There is no reasonable cause of action against the bank as it has always complied with the law in exercise of its statutory power of sale...therefore, this matter is frivolous, vexatious and amounts to an abuse of the court process,” part of the documents filed by the bank state.
Stanbic argues that it continues to suffer significant loss from the substantial loan that was advanced to the plaintiffs, citing numerous indulgences it granted them from 2021 to date.
The plaintiffs have since filed a notice of preliminary objection against the application by the bank on grounds that the court lacks jurisdiction to hear and determine it.
