The proprietor of Chogoria Junior School has lost bid to compel Cooperative Bank to remove his name from Credit Reference Bureau over 215.8 million loan owed to the bank.
“I do not find in the given circumstance, that the defendants were malicious , but find that they were more negligent. In the given circumstances, i find no basis for awarding the orders sought”. Ruled Judge Nzioka.
High Court also declined to compel the Bank to release the title number Mwimbi/chongoria/2092 to Obadhia Gitonga Micheu which he advanced as a loan to Chogoria Junior School based in Tharaka Nithi County.
The court held that, Obadhia should not pay interest of the loan of 800 million due to he bank negligence for not notifying him of the outstanding balance.
If the judgment was in favor of Obadhia, cooperative Bank could close to 1.2 billion shillings damages which could have wiped out the bank half a year profits.
The 36 page judgement said the referral of any information to the CRB is a requirement of the law and the Bank as a financial institution are entitled to do the same.
Mr Obadhia moved to court on 24 of June 2014 seeking judgement against cooperative bank.
He sought a mandatory injunction to compel the bank ,it agents, servants or employees to release the title documents in respect to title Number Mwimbi/Chogoria/2092, Injunction to compel the Bank to remove the adverse listing with the Credit Reference Bureau (CRB),Kshs.215,880,000,00,
He testified that, on 1 February 2011, he established Chogoria Heritage Hotel for outside catering which he required 50 million for a upgrading. In the year 2012 July he applied for loan of the same amount from Kenya Commercial Bank, Chogoria Branch , but the loan application was rejected by KCB on account of being listed with Credit Reference Bureau Africa Limited based on information from Cooperative Bank.
He further argued the listing was illegal and malicious as the bank did not give any reason for listing him with the Credit Bureau nor any adverse notice served on him before the listing and neither was he indebted to the bank.
“As the forsaid listing and being a village elder, a member of the Board of Chogoria Boys High School, chairman of Chogoria Water Project and member of Chogoria Forest Association, i suffered loss of dignity and intergrity among the members of the public and i cannot access any loan from banking institution for a period of 7 years”. Said Obadhia.
He said he was forced to resigned from the directorship of Chogoria College and lost income from the college.
He further claimed that Cooperative Bank actions violated his constitution right to eaen a decent living.
The Bank through lawyer Wambua Kilonzo told the court Obadhia advanced various loan facilities to the school which he guaranteed. The loans were for a sum of Kshs 340,000 taken on 14th November 2005, Kshs 600,000 advanced on 10th June and Kshs 265,000 granted on 2th August 2006 and were secured by the two properties stated.
The bank said the term of the loan facility that the interest shall be calculated daily and debited monthly. It was agreed that if the loan account falls into arrears, a penalty of 0.5% per month shall be charged calculated on the daily amount in arrears and payable monthly until the account is fully regularized.
” The borrower defaulted on the repayments on several occasions and on or about 12th May 2008, the defendant served the plaintiff and the the other the other guarantor Jediel Micheu , with statutory notices of sale of the same date , with respect to charged properties, in accordance with section 74 of the Registered Land Act. The Defendant overred on 12th May 2008, that the outstanding balance on the loan stoodat Kshs. 1,014,627,00 which amounted continued to accrue interests and penalties “. Lawyer Kilonzo submitted.
The Bank further told the court that, although the sum of Kshs.952,262,85 was sufficient to settle the debt secured by the property Tittle Number Mwimbi/Chogoria/2091 and balance was utilized towards liquidating the debt secured by the said property but that at the date of payment of the said amount on 20 November 2008, the debt had accrued additional interest and the funds were not adequate to off-set the entire outstanding loan.
