Court comes to companies' rescue in Sh22m loan dispute
By Paul Ogemba | August 12th 2016
The High Court rescued two companies that were on the verge of losing land over varied interest rates.
Retired Judge Jonathan Havelock stopped Fidelity Bank Ltd from disposing the land owned by Kisimani Holdings Ltd and Comcarrier Satelitte Service Ltd on account that the demand for increased amount from the principal agreed amount was unlawful.
"Where it is contractually agreed that the rate of interest is variable, the decrease or increase must be through a written notice of at least 30 days. The companies never received any such notice which justifies their dispute of the 40 per cent contractual rate," the judge ruled.
Kisimani Holdings Ltd said the bank had loaned them Sh22 million in January 2012 and they surrendered the land's title as security.
However, in July 2012, the bank sent them a statutory notice demanding Sh54 million, failure to which it would sell the land.
The company's chief finance officer Giri Babu said the exorbitant amount demanded by the bank as a result of the varied interest rate was unlawful and was in breach of the agreement they had signed.
The bank said it told the companies of its intention to dispose of the property after the firms failed to make any payments to settle the loan for six months.
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