A businessman has gone to court seeking to stop Fidelity Commercial Bank from auctioning his property to recover over Sh131 million.
Daula Mohamed Omar told the court that he only sought an overdraft of Sh15 million against the property he now risks losing.
However, he explained that the bank consolidated other loans and arrived at a figure that exceeds the Sh131 million, a move he maintains is unlawful.
"As a result of the unlawful actions, the amount owed in respect of which the bank wants payment has escalated and has not been shown how the amount was arrived at," he stated in his suit.
Omar said he had offered the piece of land as security for the Sh15 million overdraft he took through his company Richmond International, and he is aggrieved that the bank now wants to recover loans obtained before and after with the same property despite not using it as collateral.
He said he was not served with notices of violation of loan repayments and only found out that he was about to lose his property when he was served with notification of sale.
He explained that he was expected to pay the millions within 45 days, a period which has since lapsed. He is apprehensive that auctioneers will advertise his property for sale at any time.
"The suit property was only supposed to secure a maximum of Sh15 million plus interest. In violation, the bank has consolidated this borrowing with other prior and later borrowings not secured by the said property and tied the redemption of those borrowings," he said.
The actions of lumping together the said borrowings not secured by the property, he said, is unlawful.
He said the bank had no backing in law to lump all his loans together to justify the selling of the property to recover the extra funds.
The overdraft was offered on November 3, 2011, at a 17.5 per cent interest rate and notification of sale of the property registered under his name, issued on June 10, this year.