MyCredit Limited has been ordered to pay a borrower Sh. 860,000 after auctioning his lorry over a Sh. 169,000 debt. According to a ruling that has been given by the Micro and Small Enterprises Tribunal, MyCredit Limited repossessed the lorry belonging to Lawrence Jagiro Otieno in an unfair rush. They then sold the lorry at below the market price without giving him sufficient notice and hearing.
“The hurried repossession, unnotified sale, transfer, and registration of the subject motor vehicle by the 1st and 2nd Defendants to an innocent third party was not justified given the circumstances of this case and the status of the Plaintiff at the time,” the tribunal declared.
“The motor vehicle was not sold at the market value and the defendants were duty-bound. The Tribunal considers the forced market value of Sh. 860,000 as the least the defendants would have accepted in the circumstances.”
According to details of the dispute, Otieno who works as a farmer in Karachuonyo, Homa Bay County, had applied for a Sh. 200,000 loan from MyCredit Limited on April 26, 2023. He secured this loan using his lorry.
According to the loan agreement, he was to repay the money within six months in installments of Sh. 43,334 per month. When the loan was disbursed, Otieno received Sh. 169,400 after the micro credit made all processing deductions.
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After making payments of Sh. 100,000, Otieno fell sick. He approached the lender and asked to have the loan restructured due to his bad health. However, MyCredit Limited refused his request.
A month later, while Otieno was away from home undergoing treatment, MyCredit Limited sent David Moruri who is an auctioneer under the guise of inspecting the tracker on the lorry. Moruri repossessed the lorry and the lender sold it off at Sh. 500,000, way below its market value.
The lender and the auctioneer alleged that they were right to auction the lorry because Otieno had broken their contract which allowed them to realize the collateral immediately upon default.
However, the tribunal rebuked them, and stated that even though Otieno had defaulted, they had had failed to notify him about their intent to sell the vehicle as required under the Movable Property Security Rights Act.
In addition, the tribunal said that the lender and the auctioneer had failed to show sensitivity based on the health circumstances that Otieno was in, despite his effort to repay the debt. It was noted that a month before the lorry was repossessed and sold at a loss, Otieno had paid Sh. 100,000.
As compensation, the tribunal ordered MyCredit Limited to pay Otieno Sh. 860,000 and a monthly compensation of Sh. 60,000 for loss of income as at October 2023 up until the time all the money owed was settled.
