KCB has been ordered by the High Court to pay one of its customers Sh. 1.5 million after recovering a loan that had not been defaulted.
KCB will pay Mr. Peter Mathenge, Sh1.5 million plus interests after the court found that it used unorthodox ways to recover unpaid loan arrears.
Mathenge borrowed Sh2.94 million to buy a plot in Nairobi back in 2000 and was required to pay Sh65,885 every month, which was to be spread across 10 years. But in November 2007, he received a call from the lender notifying him that he had defaulted for two months and was required to settle Sh254,000 within a month. He paid the amount.
On January 28, 2008 KCB demanded that he pays the remaining Sh1.45 million within three months or else his property would be disposed.
High Court judge Geroge Odunga ruled: “It is my view that once the chargee opts for one remedy, it must comply with all the relevant legal provisions relating to that remedy. It cannot unless it expressly abandons that remedy, jump midstream for alternative remedy. In this case since the defendant had chosen the path of notification, the notice had to comply with the relevant statute. It is however clear that there was no such compliance.”
However, KCB defended its action, saying that Mr. Mathenge’s account was perpetually in arrears. According to the bank, the mortgage facility was not operated satisfactorily and Mathenge did not adhere to the terms set.
