Mining Cabinet Secretary Hassan Ali Joho has denied owing SBM Bank (Kenya) Ltd Sh54.5 million loan arrears as at August 1 last year.
Mr Joho, who wants the case against him by the bank dismissed with costs, says that in 2014 he was advanced a loan of Sh40 million by Chase Bank Kenya Ltd, which later went into receivership, and not SBM Bank (Kenya) Ltd that took over in 2018.
In his defence, Mr Joho further says that Sh20.2 million — part payment of the loan — was made through a law firm, leaving an outstanding loan balance of Sh19.7 million.
According to the CS, on July 22 2016, another law firm wrote to the Chase Bank Ltd receiver manager indicating that the collapsed financial institution held Sh23 million in its account on his (Mr Joho’s) behalf and told the official to use the money to offset part of the outstanding amount.
“By July 22, 2016, the defendant (Mr Joho) had made payments to Chase Bank (Kenya) Ltd amounting to 43.2 million. This was a sum of Sh3.3 million over and above the borrowed governed by Islamic principles of lending,” part of the defence states.
The CS says that the bank account he operated was maintained at Chase Bank Kenya Ltd and was never operated in SBM Bank (Kenya) Ltd.
Mr Joho says that the money advanced to him by Chase Bank on January 3, 2014 has been fully paid and that there is no outstanding sum of the loan advanced to him which could have been accruing profit up to January 3 last year as alleged by SBM Bank (Kenya) Ltd.
“Therefore and in circumstances, the suit now filed against the defendant is fully lacking on any factual foundation on which to stand,” says the CS.
Mr Joho says that even if there was any balance — something he denies — outstanding after he made payments of Sh43.2 million then any profits on any outstanding sum calculated on the principles of Islamic Banking cannot under any circumstances amount to Sh54.5 million, which SBM Bank (Kenya) now claims.
“The defendant (Mr Joho) denies the entire claim of the plaintiff and prays that the same be dismissed with costs to the defendant,” says Mr Joho.
SBM Bank (Kenya) had already filed a request for judgement against Mr Joho seeking to recover the money.
It told the court that Mr Joho has failed to file and serve his memorandum of appearance and defence within stipulated time.
This, the court heard, was despite Mr Joho having been served with summons to enter appearance and case documents.
However, Mr Joho has since entered appearance and has filed an application seeking for orders that the time fixed for entering appearance and filing of the defence be enlarged or extended although the period originally granted in the summons and rules had expired.
Consequent to the order, he wants the memorandum of appearance and defence be deemed as filed within time and timeously served.
In its case, SBM Bank (Kenya) Ltd says Mr Joho operated a loan account with it and was a beneficiary of a loan facility advanced by Chase Bank (Kenya) Ltd through a letter of offer dated December 16 2013.
SBM Bank (Kenya) Ltd acquired 75 per cent of Chase Bank (Kenya) Ltd almost six years ago by virtue of a Gazette Notice No 6833.
SBM Bank says that on or about January 3, 2014 it disbursed to Mr Joho Sh40 million loan under Islamic banking principles.
“The loan facility disbursed to the defendant was to be secured by a first legal charge over Apartment 42, Tamarind Village, Nyali Mombasa,“ part of the case documents filed in court state.
SBM Bank says that Mr Joho failed to provide the original title deed for purposes of registration of the charge despite several requests to him and that he failed to sign the charge document.
It argues that the loan advanced to Mr Joho was to finance the purchase of the apartment at Tamarind village to be secured by the same property (apartment).
According to the bank, Mr Joho maintained an account with it in which the loan was to be paid.
“In flagrant breach of the terms of the subject contract, the defendant failed, neglected and refused to make good the payment of the monthly installments hence the account remained in arrears to the detriment of the bank’s interests,” case documents filed in court state in part.
The bank further says that upon numerous reminders between 2014 to 2021, only partial payment of Sh20,250,000 million was netted off its advocates-clients account held by a law firm upon their approval leaving an outstanding arrears of Sh54.5 as at August 1.
SBM Bank says that the loan matured and stopped accruing profit on January 3 2024 as according to Islamic Banking Principles.
“Due to the defendants’ default, the plaintiff could not issue the relevant statutory notices in a bid to exercise its statutory power of sale under the charge instrument as the transfer and charge were not registered as the defendant failed to provide title deed,” argue SBM Bank.
According to the bank, the exercise of its statutory power of sale was frustrated and the only other available option for the plaintiff was to seek court’s intervention to recover the outstanding amounts.
“Despite issuing several demand notices to the defendant requesting him to make good of the default, he has neglected, failed or refused to make any payment whatsoever necessitating the plaintiff to file this suit,” says the bank in its court documents.
In his witness statement Mr Peter Chege, the SBM Bank Manager at the debt recovery department, says that the loan accounts stand in arrears of Sh54.5 million and the outstanding amount continues to accrue default charges until payment in full.
“I therefore humbly request this court to enter judgement against the defendant plus costs and interests of the suit,” says Mr Chege.
On Wednesday, the case was to be mentioned before the Deputy Registrar (of the High Court) but the court file could not be traced thus set for mention on June 5.
