Businessman Divyesh Indubhai Patel and his companies say they have already repaid more than Sh1 billion on a commercial loan that originally stood at Sh450 million.
Yet despite those repayments exceeding the principal, I&M Bank maintains they still owe more than Sh2.5 billion, and the Court of Appeal has now declined to stop the lender from auctioning four charged properties as it pursues recovery.
The recent ruling marks the latest chapter in a commercial dispute that has dragged through Kenyan courts for nearly a decade.
The applicants, Equip Agencies Limited, Unicom Limited, Interactor Company Limited, and directors Divyesh Indubhai Patel, Vinesh Indubhai Patel and Grishma Kumar Indubhai Patel, had asked the Court of Appeal to temporarily stop I&M Bank and Phillips International Auctioneers from selling four properties pledged as security for the loans.
The borrowers argue the bank unlawfully consolidated separate loan facilities, creating what they describe as an inflated debt after they had already made substantial repayments.
They also contend the figures claimed by the bank violate Kenya’s in duplum rule, which limits recoverable interest in certain banking transactions.
Court records show the parties signed a Deed of Settlement in June 2021, under which the bank agreed to accept Sh875 million instead of the then claimed Sh1.936 billion, provided payment was made within 180 days.
The applicants later alleged they signed the agreement under pressure after being led to believe their properties faced imminent auction.
I&M Bank rejected those allegations, arguing the borrowers voluntarily entered the settlement before defaulting on its terms.
The lender further told the Court that years of litigation and accumulated interest have pushed the outstanding debt beyond Sh2.5 billion, making further delays increasingly prejudicial.
The Court of Appeal found that the applicants had raised an arguable issue over the amount allegedly owed.
However, it ruled that this alone was insufficient to justify an injunction because the borrowers failed to prove their appeal would be rendered worthless if the auction proceeded.
The judges noted that the properties have ascertainable values and that I&M Bank would be capable of compensating the applicants through damages if they eventually succeed.
The decision clears the way for the bank to continue its recovery process while the substantive appeal over the validity of the settlement agreement and the true amount owed remains pending before the Court of Appeal.
