Mahesh Kumar v Oriental Commecial Bank Ltd & 2 others [2017] KEELC 2830 (KLR)
The bottom line
#A Kenyan court refused to stop a bank auction of Nakuru land because the loan default, valid charge, and proper statutory notices left the borrower with no case.
What this practically means
#Executive summary
#Key legal issues
#Validity of the charge dated 15th May 2014
The charge was validly prepared, executed by both the plaintiff and the interested party, attested by an advocate, and registered at their instance following the plaintiff's own request for amalgamation of facilities; the plaintiff cannot disown it.
The court noted the certificate of official search confirming the charge on the register, the signatures and advocate's attestation on the charge, the plaintiff's 23rd January 2014 letter requesting amalgamation, the executed letter of offer of 8th February 2014 acknowledging liability of KShs 40 million, and the plaintiff's 22nd September 2014 letter stating the suit property would continue as security. The court applied Mrao Ltd v First American Bank on defaulters attempting to avoid valid securities.
Validity of the statutory notice, notification of sale and redemption notice under the Land Act, 2012
The notices were valid; the notification of sale constituted a notice under section 96(2), the statutory notice complied with section 90(2), and a forced-sale valuation under section 97(2) was done by Daytons Valuers Ltd.
The plaintiff admitted service of all three notices and acknowledged receipt of the notification of sale and redemption notice by signing on 11th December 2015. The sale was scheduled for 18th February 2016, more than two months later. A valuation report dated 19th January 2016 existed. Any non-compliance with section 97 would afford the plaintiff ample remedy under that section.
Whether an interlocutory injunction should issue under the Giella test
No prima facie case with a probability of success was established; given the sequential approach in Nguruman, the remaining limbs of irreparable injury and balance of convenience need not be examined.
The plaintiff admitted default in repayments and admitted service of the statutory notice, notification of sale and redemption notice. The existence of a valid charge and valid notices defeated the claim that the exercise of statutory power of sale was null and void. Following Nguruman, the court declined to investigate the other two hurdles once the first failed.
Legal principles established
#- The three Giella v Cassman Brown conditions are applied as separate, sequential hurdles; if no prima facie case is established, irreparable injury and balance of convenience need not be considered.
- A borrower who has taken money on the strength of a charge he executed cannot disown the security to escape repayment of the debt.
- A notification of sale served and acknowledged by the charged proprietor, well before the scheduled sale date, constitutes a notice under section 96(2) of the Land Act, 2012.
Court orders
#- 1.Notice of Motion dated 4th February 2016 dismissed
- 2.Costs awarded to the defendants
- Jurisdiction invoked
- Original civil jurisdiction over the suit and interlocutory application (Notice of Motion dated 4th February 2016); statutory provisions of the Land Act, 2012 invoked
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Mahesh Kumar v Oriental Commecial Bank Ltd & 2 others [2017] KEELC 2830 (KLR)", Case Analysis (2017). Case No 37 of 2017. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2017/2830/eng@2017-05-30
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.