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The High Court in Mombasa has temporarily restrained Family Bank from advertising, selling by public auction or dealing with a parcel of land where a church is located in relation to a Sh37 million loan.
Justice Njoki Mwangi issued the order against Family Bank and Ms Susan Waweru, trading as Trevo Auctioneers, pending the hearing and determination of an application by Siloam Ministries.
Siloam Ministries and its senior pastor, Ms Jane Kiratu, have sued the bank seeking a ruling that the exorbitant interest rate and penalties charged on the loan were unlawful and should be set aside.
Siloam says it took a Sh32 million loan from the bank sometime in 2012 that was guaranteed by Ms Kiratu to complete the construction of a church building and a further Sh5 million to buy an adjacent parcel of land.
The plaintiffs say they have been making monthly payments to pay back the money and that by the time the case was filed, they had paid about Sh60 million.
They also claim that they have paid a total of Sh39 million, which exceeds the principal sum lent.
They say in court documents that they had the loan restructured during the Covid-19 period and that they continued making monthly payments.
They argue that they sought to know from the bank the percentage of interest it was charging but the information was not forthcoming.
“The plaintiffs further state that they also sought a statement to know what was owing but it was not [provided] by a branch manager which prompted Ms Kiratu to seek information from the bank’s headquarters before the statements were [provided],” court documents state.
The plaintiffs claim that despite assurances by the bank’s Nkrumah Road branch manager that they continue paying monthly instalments, instructions were given to auctioneers, who issued a 45-day statutory notice that the property is under threat of public auction.
“In the said notice, the bank is claiming Sh26.2 million, which the plaintiffs dispute as punitive interest and penalties which have been levied,” the plaintiffs argue.
They also claim that the bank’s action of levying punitive interest rates and penalties have made it almost impossible for them to redeem her property.
“The suit property houses the church which has a large following and will suffer enormous loss and damage if the defendants are not restrained [from proceeding] with the auction,” they say.
They also argue that the bank’s statutory power of sale has not arisen and the purported threat of public auction is illegal, null and void.
They accuse the bank of breach of duty by failing to disclose the amount of interest chargeable to date and refusing to provide statements on demand.
A hearing was fixed for January 31. BY DAILY NATION