BY SAM ALFAN.
SBM Bank (Kenya) has been ordered to pay Mauritius-based Afrasia Bank more than Sh892 million which it had deposited in collapsed Chase Bank in 2016.
Justice Wilfrida Okwany ruled that SBM was liable to all the liabilities of the Chase bank Kenya ltd, including the claim by Afrasia Bank claim.
The judge directed the lender to refund the USD 7,500,000, which the Mauritius lender had deposited in 2016 plus an interest rate of 2.35%.
“Judgement is hereby entered in favour of the appellant (Afrasia Bank ltd) in the sum of USD 7,500,000 equivalent to (Sh892, 650,000.00) together with interest and costs,” ruled Judge Okwany.
In the decision, Justice Okwany set aside the arbitral award dated April 23, issued by the arbitrator Mwaniki Gachoka.
The deposit was to mature on April 18, 2016 but Chase Bank was placed under receivership by the Central Bank of Kenya and the Kenya Deposit Insurance Corporation, appointed the receiver.
Afrasia argued that SBM took over the assets and liabilities of Chase bank including the deposit it made in 2016.
Gachoka had dismissed Afrasia claim saying it was against public policy, prompting the appeal.
Afrasia Bank argued that given the agreed position that they deposited USD 7.5 million with chase Bank and given the sale agreement of April 17,208 required the seller to indemnify the purchaser with the funds which it avers it holds, then the Arbitrator erred in law and fact in falling to interpret the applicable statutes in a purposive manner which would achieve the result where no parties would actually lose the funds.
“The Arbitrator erred in law and fact by stating that a conflict existed between the Transfer of business Act, the Banking Act and the Kenya Deposit Insurance Act despite finding that” in so far as the intention of the requisite notices, the Tribunal finds that there is not inconsistences or conflict between the three Acts of parliament is the transfer of business act, the Kenya Deposit Insurance Act and the Banking Act, ” said Afrasia Bank.
Afrasia Bank accused the Arbitrator of introducing and creating doubt as to the party responsible for publishing the notice under section 3(1) of the Transfer of business Act when the law itself and existing practice was clear on this position and the parties themselves were not in doubt.
The judge said SBM did not publish the mandatory notice under the Transfer of Business Act, hence liable for all the liabilities of Chase Bank including the claim by the Mauritius-based lender.
