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Central Bank fights off order stopping liquidation of bank

NEWS
By Joackim Bwana | Jan 12th 2022 | 2 min read
By Joackim Bwana | January 12th 2022
NEWS

 

Imperial Bank ATM [File]

The Central Bank of Kenya (CBK) has faulted a High Court order temporarily stopping the liquidation of Imperial Bank over a Sh741 million deposit belonging to Mombasa tycoon Ashok Doshi.

Yesterday, CBK and Imperial Bank said the court lacks the jurisdiction to revoke the appointment of Kenya Deposit Insurance Corporation (KDIC) as the liquidator of Imperial Bank that has been under receivership since October 13, 2015.

On December 21, 2021, Justice John Onyiego temporarily stopped KDCI from winding up Imperial Bank until the case filed by Doshi and his wife over a Sh741 million deposit is heard and determined.

“Pending hearing and determination of this application, there be and is hereby issued an order to restrain CBK and Imperial Bank through KDIC or agents from paying out deposits in execution and implementation of CBK’s decision to appoint KDIC as liquidator of Imperial Bank in receivership,” said Justice Onyiego in an order issued on December 22.

Imperial Bank went into receivership with Sh946,512,050 fixed deposit belonging to Doshi and his wife. The bank has so far paid him Sh204,802,342 and left with a net balance of Sh741,709,707.

Doshi, through his lawyer Willis Oluga, filed a notice of motion seeking to stop KDCI from liquidating the bank until he recovers all his money.

“Liquidation is the final burial rite of Imperial Bank Limited in receivership and our claim herein will be utterly defeated once the bank is buried,” said Doshi according to papers filed in court.

Oluga applied to have CBK and Imperial Bank deposit US$7,277,314.91 in a joint interest-earning account in the names of the advocates within 30 days.

However, yesterday, CBK lawyer James Gacoka said it is impossible and impractical for the regulator to comply with the ex-parte orders as they have been overtaken by events.

Gacoka said indeed the banking license for Imperial Bank was also revoked upon liquidation.

“In particular, the actions sought to be restrained by the ex-parte orders have already taken place and have been completed and the receivership of Imperial Bank cannot be re-instituted as no such provision of the law exists under the Kenya Deposit Insurance Act,” said Gacoka.

He said the KDIC and the CBK Act are Acts of Parliament that have vested and entrusted the two institutions with powers to regulate the financial sector.

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