The Court of Appeal has upheld Fidelity Commercial Bank’s decision to auction a parcel of land in Kisaju, Kajiado, ruling that the lender lawfully exercised its statutory power of sale after the borrowers defaulted on a loan facility.
A three-judge bench comprising Patrick Kiage, Jamila Mohammed and William Korir dismissed an appeal lodged by L.N. Property Development Company Limited and Luore Nyoire Company Limited, thereby affirming the High Court’s earlier decision in favour of Fidelity Commercial Bank Limited.
At the centre of the dispute was a USD 125,000 loan advanced to L.N. Property Development Company Limited, which was secured by a legal charge over land parcel Kajiado/Kisaju/1189-Kisaju registered under Luore Nyoire Company Limited. The borrowers later fell into arrears, with the outstanding amount rising to more than KSh10.4 million.
Following the default, the bank issued statutory notices and instructed auctioneers to commence the recovery process through sale of the charged property. The borrowers, however, challenged the auction, arguing that it was unlawful and that they had not been properly served with the required notices.
They also told the court that they had engaged the bank in negotiations and agreed on a repayment arrangement that included partial payments and the transfer of a Treasury Bill valued at KSh5 million. They claimed the bank accepted the arrangement but mishandled the Treasury Bill, which they argued contributed to the eventual auction.
Fidelity Commercial Bank denied any wrongdoing, maintaining that all statutory procedures had been followed and that the borrowers were fully aware of the default and impending recovery action.
In its decision, the appellate court found that both the statutory notice and the 45-day redemption notice had been properly served. The judges further observed that the borrowers’ continued engagement with the bank demonstrated awareness of the intended sale.
The court also noted that despite negotiations and additional time granted, the debt remained unpaid and the proceeds from the Treasury Bill were never remitted to the lender.
“Ultimately, the debt remained unsettled, prompting the auctioneers to issue further notices before the suit property was sold,” the judges stated.
The court concluded that the borrowers had been afforded sufficient opportunity to redeem the property but failed to do so, and therefore found no basis for awarding damages against the bank. It added that any grievances relating to the auction process should have been directed at the auctioneers rather than the lender.
