Mineral Masters Company (MMC) Limited has suffered a setback after the High Court allowed Simple Pay Capital Limited (SPCL) to proceed with the auction of its parcel of land after the company defaulted on a loan.
Sitting at the High Court Milimani Commercial and Tax Division, Justice Nixon Sifuna allowed SPCL to proceed with the auction of Land Reference No. 1338/130 after MMC failed to settle loan arrears amounting to Ksh 15,379,925 as of August 30, 2022.
Mineral Masters Company admits loan default
Justice Sifuna found that Mineral Masters Company had unequivocally admitted failing to comply with the repayment terms of the loan agreement and acknowledged being indebted to SPCL.
The judge noted that MMC contested the interest rate charged by the lender but failed to produce evidence supporting its claim.
“Further, as has been held in various cases in our jurisdiction, this is not a sufficient ground to grant an injunction to prevent a chargee from the exercise of its statutory power of sale,” Justice Sifuna stated.
The court subsequently dismissed MMC’s application with costs.
Company sought to stop land auction
Mineral Masters Company had filed a suit seeking temporary orders restraining SPCL, its agents, servants, assignees or any other persons from auctioning, selling, transferring or otherwise interfering with Land Reference No. 1338/130.
The company wanted the orders to remain in force pending the hearing and determination of the suit.
MMC argued that SPCL had breached the loan agreement by delaying the disbursement of the loan and releasing the funds in tranches.
The company also accused the lender of failing to provide proper accounts for the loan and charging interest that exceeded the principal amount, allegedly contrary to Section 44A of the Banking Act.
MMC disputes outstanding loan amount
The company further alleged that SPCL had imposed unilateral interest and penalties outside the loan agreement, altered repayment timelines, made unlawful deductions and demanded recovery of unlawful interest.
MMC disputed the claimed outstanding amount of Ksh 24,041,559.66, arguing that it was not properly justified because of incomplete loan accounts.
The company consequently argued that the planned auction of its property was unlawful.
Lender says company failed to repay loan
In response, SPCL filed a replying affidavit sworn by Yashika Sagar.
The lender said it advanced MMC Ksh 10 million on February 21, 2022, under a loan agreement requiring repayment within nine months at a monthly interest rate of 10 percent.
The company provided security for the loan, including guarantees and charges over property, the court heard.
SPCL said MMC failed to repay the loan as agreed, prompting it to issue a demand letter in August 2022.
According to the lender, MMC later admitted the default in a letter dated September 2, 2022, and promised to repay the outstanding amount but failed to honour the commitment.
High Court dismisses Mineral Masters Company application
SPCL maintained that MMC’s application lacked merit and had been filed primarily to delay repayment without valid grounds.
Justice Sifuna dismissed the application with costs, paving the way for the lender to exercise its statutory power of sale over the secured property.
