Court extends order stopping payment of Imperial Bank depositors

An interim order suspending a scheme of payment to depositors of the troubled Imperial Bank which is under receivership being implemented by two commercial banks was on Friday extended.

Justice Patrick Otieno extended the orders which were issued following an application by a Mombasa based billionaire Ashok Doshi and his wife Amit who have sued the bank and Central Bank of Kenya.

At the same time, through lawyer Philip Murgor, the bank which is under receivership is seeking to challenge the jurisdiction of the court to handle the case.

Through a preliminary objection filed in court, Mr Murgor argues that the suit by the Doshis was filed without the court’s permission.

“In the absence of the application seeking and an order of the court granting the requisite sanction, this court lacks jurisdiction and cannot entertain the application,” read the preliminary objection.

Through lawyer Paul Chege, the CBK told Justice Otieno that it will support the preliminary objection by Imperial Bank challenging the jurisdiction of the court.

The Doshis, through lawyer Francis Kadima said they will oppose the preliminary objection by showing that the court has jurisdiction to hear the case.

In its grounds of opposition, CBK claims the application by the Mombasa billionaire and his wife has been overtaken by events as 89 per cent of the depositors have been paid.

CBK further argued that except for the insured amount, the Doshis deposits are not protected or guaranteed by the bank (CBK) as alleged.

In their application, Mr Doshi and his wife who have a Sh1 billion deposit at the troubled bank also want the court to order the defendants to deposit the same amount of money into an Escrow account in the names of their advocates.

The plaintiffs are associated with the Doshi Group, a company with interests in manufacturing and trading, including sale of building materials and power cables.

Through Mr Kadima, the two want an injunction restraining CBK and Imperial bank from further continuing with any dealing of their (couple’s) money in any manner either by investing, transferring to banks or Kenya Insurance Deposit Corporation.

They also want an order directing the defendants to file Imperial bank statement of account showing liquidity in the deposit account, audit statement published and approved for 2014/2015 and any other liquid and tangible securities held by CBK as at October 13 last year.

The application by the couple is based on the grounds that they held both dollar and shillings accounts with Imperial bank which is under receivership as at October 13 last year.

Mr Kadima argues that the court has jurisdiction to intervene before or after an institution is placed under receivership and deal with any questions arising.

“The defendants are liable to pay both insured amounts and protected deposits once an institution is put under receivership,” Mr Kadima further argued through suit papers.

Mr Kadima further argued that the deposits held by Imperial Bank at the time it was put under receivership were sufficient to pay all depositors.