REPUBLIC OF KENYA IN THE SMALL CLAIMS COURT AT KITALE COMMERCIAL CASE NO. E108 OF 2024 FAULU MICROFINANCE BANK LIMITED………………………... ……….CLAIMANT VERSUS PHILIP EBENYO AKUTU…………………………………………………...RESPONDENT JUDGMENT 1. Vide a Statement of Claim dated 30th May 2024 the Claimant prayed for judgment against the Respondent for: a) Judgment in the sum of Kshs. 345,822.29/= b) Costs of the claim c) Interest at court rates till payment in full 2. It was the Claimant’s claim that on or about 26 th May 2021, it advanced a loan facility of Kshs. 294,100/= to the Respondent at an interest rate of 20.53% per annum repayable within 84 months and that the Principal and interest accruing would be liquidated through monthly instalments of Kshs. 6,732.00/=. 3. The loan advanced to the Respondent became non-performing on 15 th March 2024 hence this claim. 4. Despite being duly served, the Respondent neither entered appearance nor filed a Response to the Statement of Claim causing this claim to proceed by way of formal proof. Issues for Determination 5. The Claimant’s pleadings, documents, and oral evidence placed before this court have been duly considered by this court. The only issue for Kitale SCC CC. No. E088 of 2024 Page 1 of 4 Judgment
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determination is whether the Claimant proved their claim to the required standards. 6. The averments in the Claimant’s Statement of Claim herein were supported the Personal Loans Verification Form dated 07 th May 2021, the Loan Statement dated 23rd January 2024, and the Demand Letter dated 04th April 2024. In the absence of contrary evidence to controvert the contents of the documents above placed before this court by the Claimant, this court holds and finds that the Claimant advanced a personal loan facility of Kshs. 294,100/= to the Respondent on 26th May 2021 which the Respondent has defaulted in repaying. 7. CW1 Fredrick Nyabuti who is the Claimant’s Legal Officer stated that at the time the Respondent defaulted in servicing the loan advanced to him, he had already repaid a sum of Kshs. 115,221.20/=. He added that the outstanding principal at the time of default was Kshs. 275,590/= while the outstanding interest was Kshs. 222,430/=. 8. CW1 having stated that at the time of default the Respondent had already repaid Kshs. 115,221.20/=, it follows that the outstanding principal at the time of default can not be Kshs. 275,590/=. The principal loan being Kshs. 294,100/=, it follows that the outstanding principal at the time of default ought to be less Kshs. 115,221.20/= making the outstanding principal at the time of default to be Kshs. 178,878/=. 9. It is the law in this jurisdiction that the in duplum rule applies to loans advanced by banks and other money lenders (see Mugure & 2 others v Higher Education Loans Board (Petition E002 of 2021) [2022] KEHC 11951 (KLR)). Section 44 A of the Banking Act provides in part as follows:Kitale SCC CC. No. E088 of 2024 Page 2 of 4 Judgment
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44A Limit on interest recovered on defaulted loans. 1.An institution shall be limited in what it may recover from a debtor with respect to a non-performing loan to the maximum amount under subsection (2). 2. The maximum amount referred to in subsection (1) is the sum of the following—a. the principal owing when the loan becomes nonperforming; b. interest, in accordance with the contract between the debtor and the institution, not exceeding the principal owing when the loan becomes non-performing; and c. expenses incurred in the recovery of any amounts owed by the debtor. 10. From the authority above, it follows that the Claimant can only claim the outstanding principal of Kshs. 275,590/= plus accrued interest not exceeding Kshs. 275,590/= making the total allowable claim to be Kshs. 551,180/=. The claimed sum herein is Kshs. 345,822.29/=. This sum is below the allowable maximum claim of Kshs. 551,180/= that the Claimant can claim in the event of default. 11. The foregoing shows that the claim herein does not offend the in duplum rule. In the circumstances the Respondent must be called to honour the terms of the loan facility herein that he voluntarily executed. DISPOSITION 12. The upshot of the foregoing is that: a) Judgment is entered against the Respondent for the sum of Kshs. 345,822.29/= Kitale SCC CC. No. E088 of 2024 Page 3 of 4 Judgment
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b) The sum of Kshs. 345,822.29/= in (a) above shall earn interest at court rate from the date of filing this claim until payment in full c) The costs due to the Claimant are assessed at Kshs. 30,000/= 13. Judgment accordingly. 14. Decree and Certificate of Costs to issue forthwith. Read, signed, and delivered in open court at Kitale this 30th day of September 2024 …………………. T.O. OMONO ADJUDICATOR In the presence of: Kitale SCC CC. No. E088 of 2024 Page 4 of 4 Judgment
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